UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



(Mark One)

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

For the quarterly period ended September 30, 2009

 ̈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.)

1200 N. Federal Highway, Suite 200, Boca Raton FL 33432

(Address of principal executive offices)

(866) 297,5070

(Issuer's telephone number)

550 W. Old Country Road, Suite #108, Hicksville, NY 11801

(Former address of principal executive offices)

Indicate buy check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No  ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ̈  No  ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 275,275,128 shares as of November 9, 2009.













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SAFE TECHNOLOGIES INTERNATIONAL, INC.

TABLE OF CONTENTS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PAGE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|PART I  FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Item 1.        Financial Statements
1
Condensed Consolidated Balance Sheets September 30, 2009 and December 31, 2008
1
Condensed Consolidated Statements of Operations for the Three Months Ended
September 30, 2009 and 2008
2
Condensed Consolidated Statements of Operations for The Nine Months Ended
September 30, 2009 and 2008
3
Condensed Consolidated Statement of Stockholders' Deficit September 30, 2009
4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2009 and 2008
5
Notes to Unaudited Condensed Consolidated Financial Statements
6
Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operation
10
Item 3.        Quantitative and Qualitative Disclosures About Market Risk.
10
Item 4.        Controls and Procedures
11
Item 4T.     Controls and Procedures.
11

PART II OTHER INFORMATION

Item 6.      Exhibits
12
Signatures
13











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PART I  FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | ----------------- | - | ---------- | -
|                                                                                                                                                                                           |  | September 30,
2009 |            | December 31,
2008 |  
|                                                                                                                                                                                           |  | (Unaudited)        |            | (Note 1(a))       |  
|ASSETS                                                                                                                                                                                     |  |                    |            |                   |   |            |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|CURRENT ASSETS                                                                                                                                                                             |  |                    |            |                   |   |            |  
|Cash and Cash Equivalents                                                                                                                                                                  |  | $                  | 3,408      |                   | $ | 3,956      |  
|Accounts receivable, net of allowance for doubtful accounts of 
$1,300 at September 30, 2009 and December 31, 2008                                                                         |  |                    | 567        |                   |   | 1,260      |  
|Total current assets                                                                                                                                                                       |  |                    | 3,976      |                   |   | 5,216      |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|PROPERTY AND EQUIPMENT                                                                                                                                                                     |  |                    |            |                   |   |            |  
|Furniture, fixtures, and equipment                                                                                                                                                         |  |                    | 5,644      |                   |   | 5,644      |  
|Less: Accumulated depreciation                                                                                                                                                             |  |                    | (5,644     | )                 |   | (5,644     | )
|Total property and equipment                                                                                                                                                               |  |                    |           |                   |   |           |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|OTHER ASSETS                                                                                                                                                                               |  |                    |            |                   |   |            |  
|Deposits                                                                                                                                                                                   |  |                    | 1,650      |                   |   | 939        |  
|Total other assets                                                                                                                                                                         |  |                    | 1,650      |                   |   | 939        |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|Total Assets                                                                                                                                                                               |  | $                  | 5,626      |                   | $ | 6,155      |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                      |  |                    |            |                   |   |            |  
|CURRENT LIABILITIES                                                                                                                                                                        |  |                    |            |                   |   |            |  
|Accounts payable and accrued expenses                                                                                                                                                      |  | $                  | 27,834     |                   | $ | 228,660    |  
|Notes and loans payable- related parties                                                                                                                                                   |  |                    | 15,500     |                   |   | 1,715,900  |  
|Deferred revenue                                                                                                                                                                           |  |                    | 1,577      |                   |   | 583        |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|Total current liabilites                                                                                                                                                                   |  |                    | 44,911     |                   |   | 1,945,143  |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|Total liabilites                                                                                                                                                                           |  |                    | 44,911     |                   |   | 1,945,143  |  
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|STOCKHOLDERS' DEFICIT                                                                                                                                                                      |  |                    |            |                   |   |            |  
|Common stock, $.00001 par value, 400,000,000 shares authorized;
275,075,128 shares and 93,263,160 shares issued and outstanding at 
September 30, 2009 and December 31, 2008, respectively |  |                    |            |                   |   |            |  
|Additional paid-in capital                                                                                                                                                                 |  |                    | 9,729,334  |                   |   | 7,462,196  |  
|Accumulated deficit                                                                                                                                                                        |  |                    | (9,771,370 | )                 |   | (9,402,117 | )
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|Total stockholders' deficit                                                                                                                                                                |  |                    | (39,285    | )                 |   | (1,938,988 | )
|                                                                                                                                                                                           |  |                    |            |                   |   |            |  
|Total Liabilities and Stockholders' Deficit                                                                                                                                                |  | $                  | 5,626      |                   | $ | 6,155      |  





The accompanying notes are an integral part of the unaudited condensed consolidated financial statements



1



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

|                                                                        |  |      |             |      |   |            |  
|----------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ---------- | -
|                                                                        |  | 2009 |             | 2008 |  
|REVENUES                                                                |  | $    | 4,327       |      | $ | 1,653      |  
|                                                                        |  |      |             |      |   |            |  
|COST OF OPERATIONS                                                      |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Cost of operations                                                      |  |      | 7,455       |      |   | 3,300      |  
|                                                                        |  |      |             |      |   |            |  
|Total cost of operations                                                |  |      | 7,455       |      |   | 3,300      |  
|                                                                        |  |      |             |      |   |            |  
|Gross Loss                                                              |  |      | (3,128      | )    |   | (1, 647    | )
|                                                                        |  |      |             |      |   |            |  
|OPERATING EXPENSES                                                      |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Selling, general and adminstrative expenses                             |  |      | 148,852     |      |   | 19,856     |  
|                                                                        |  |      |             |      |   |            |  
|Total operating expenses                                                |  |      | 148,852     |      |   | 19,856     |  
|                                                                        |  |      |             |      |   |            |  
|Operating loss                                                          |  |      | (151,980    | )    |   | (21,503    | )
|                                                                        |  |      |             |      |   |            |  
|OTHER INCOME (EXPENSE)                                                  |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Interest expense -related third parties                                 |  |      | (39,919     | )    |   | (50,840    | )
|                                                                        |  |      |             |      |   |            |  
|Total other income (expense)                                            |  |      | (39,919     | )    |   | (50,840    | )
|                                                                        |  |      |             |      |   |            |  
|Loss before provision for income taxes                                  |  |      | (191,899    | )    |   | (72,343    | )
|Income taxes                                                            |  |      |            |      |   |           |  
|                                                                        |  |      |             |      |   |            |  
|Net loss                                                                |  | $    | (191,899    | )    | $ | (72,343    | )
|                                                                        |  |      |             |      |   |            |  
|Net loss per common share, basic and diluted                            |  | $    | (0.00       | )    | $ | (0.00      | )
|                                                                        |  |      |             |      |   |            |  
|Weighted average number of common shares
outstanding, basic and diluted |  |      | 148,506,840 |      |   | 93,263,160 |  





The accompanying notes are an integral part of the unaudited condensed consolidated financial statements



2



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

|                                                                        |  |      |             |      |   |            |  
|----------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ---------- | -
|                                                                        |  | 2009 |             | 2008 |  
|                                                                        |  |      |             |      |   |            |  
|REVENUES                                                                |  | $    | 6,957       |      | $ | 7,217      |  
|                                                                        |  |      |             |      |   |            |  
|COST OF OPERATIONS                                                      |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Cost of operations                                                      |  |      | 13,077      |      |   | 9,900      |  
|                                                                        |  |      |             |      |   |            |  
|Total cost of operations                                                |  |      | 13,077      |      |   | 9,900      |  
|                                                                        |  |      |             |      |   |            |  
|Gross Loss                                                              |  |      | (6,120      | )    |   | (2,683     | )
|                                                                        |  |      |             |      |   |            |  
|OPERATING EXPENSES                                                      |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Selling, general and administrative expenses                            |  |      | 205,719     |      |   | 62,722     |  
|                                                                        |  |      |             |      |   |            |  
|Total operating expenses                                                |  |      | 205,719     |      |   | 62,722     |  
|                                                                        |  |      |             |      |   |            |  
|Operating loss                                                          |  |      | (211,839    | )    |   | (65,405    | )
|                                                                        |  |      |             |      |   |            |  
|OTHER INCOME (EXPENSE)                                                  |  |      |             |      |   |            |  
|                                                                        |  |      |             |      |   |            |  
|Interest expense - related third parties                                |  |      | (157,414    | )    |   | (151,193   | )
|                                                                        |  |      |             |      |   |            |  
|Total other income (expense)                                            |  |      | (157,414    | )    |   | (151,193   | )
|                                                                        |  |      |             |      |   |            |  
|Loss before provision for income taxes                                  |  |      | (369,253    | )    |   | (216,598   | )
|Income taxes                                                            |  |      |            |      |   |           |  
|                                                                        |  |      |             |      |   |            |  
|Net loss                                                                |  | $    | (369,253    | )    | $ | (216,598   | )
|                                                                        |  |      |             |      |   |            |  
|Net loss per common share, basic and diluted                            |  | $    | (0.00       | )    | $ | (0.00      | )
|                                                                        |  |      |             |      |   |            |  
|Weighted average number of common shares
outstanding, basic and diluted |  |      | 104,125,752 |      |   | 93,263,160 |  



The accompanying notes are an integral part of the unaudited condensed consolidated financial statements



3



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
SEPTEMBER 30, 2009

(UNAUDITED)

|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|---------------------------------------------------- |  | ----------------- |  | ------------- | ----- | -------------------------- | - | ------------------- |  | - | ---------- | -
|                                                     |  | Number of 
Shares |  | Common 
Stock |       | Additional
Paid in Capital |   | Accumulated Deficit | 
|BALANCE, December 31, 2008                           |  | 93,263,160        |  | $             | 933   |                            | $ | 7,462,196           |  |   | (9,402,117 | )
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|Net (loss) for nine months ending
September 30, 2009 |  |                   |  |               |       |                            |   |                     |  |   | (369,253   | )
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|Common Stock issued for Reverse Split rounding       |  | 128               |  |               | 0     |                            |   | 0                   |  |   |            |  
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|Common Stock issued for Debt Conversion              |  | 180,811,840       |  | $             | 1,808 |                            | $ | 2,167,934           |  |   |            |  
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|Common Stock Issued for Services                     |  | 1,000,000         |  | $             | 10    |                            | $ | 14,510              |  |   |            |  
|Stock Options Issued for Services                    |  |                   |  |               |       |                            | $ | 84,694              |  |   |            |  
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|                                                     |  |                   |  |               |       |                            |   |                     |  |   |            |  
|BALANCE, September 30, 2009                          |  | 275,075,128       |  | $             | 2,751 |                            | $ | 9,729,334           |  | $ | (9,771,370 | )





The accompanying notes are an integral part of the unaudited condensed consolidated financial statements



4



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

|                                                                   |  |      |          |      |   |          |  
|------------------------------------------------------------------ |  | ---- | -------- | ---- | - | -------- | -
|                                                                   |  | 2009 |          | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                              |  |      |          |      |   |          |  
|                                                                   |  |      |          |      |   |          |  
|Net loss                                                           |  | $    | (369,253 | )    | $ | (216,598 | )
|Adjustments to reconcile net loss to net cash used in              |  |      |          |      |   |          |  
|operating activities:                                              |  |      |          |      |   |          |  
|Bad debt provision                                                 |  |      | 1,300    |      |   | 2,607    |  
|Common stock issued for services                                   |  |      | 14,520   |      |   |         |  
|Stock options issued for services                                  |  |      | 84,694   |      |   |         |  
|                                                                   |  |      |          |      |   |          |  
|Changes in operating assets and liabilites:                        |  |      |          |      |   |          |  
|(Increase) decrease in accounts receivable                         |  |      | 693      |      |   | (2,097   | )
|(Increase) Decrease in other assets                                |  |      | (711     | )    |   |         |  
|Increase (decrease) in accounts payable and accrued expenses       |  |      | 157,614  |      |   | 151,070  |  
|Increase (decrease) in deferred revenue                            |  |      | 994      |      |   | (551     | )
|                                                                   |  |      |          |      |   |          |  
|Net cash used in operating activities                              |  |      | (110,149 | )    |   | (65,569  | )
|                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                              |  |      |          |      |   |          |  
|                                                                   |  |      |          |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                              |  |      |          |      |   |          |  
|Increase in loans from shareholders                                |  |      | 109,600  |      |   | 63,500   |  
|                                                                   |  |      |          |      |   |          |  
|Net cash provided by financing activities                          |  |      | 109,600  |      |   | 63,500   |  
|                                                                   |  |      |          |      |   |          |  
|Net decrease in cash and cash equivalents                          |  |      | (549     | )    |   | (2,069   | )
|CASH and cash equivalents beginning of period                      |  |      | 3,957    |      |   | 6,777    |  
|                                                                   |  |      |          |      |   |          |  
|CASH and cash equivalents end of period                            |  | $    | 3,407    |      | $ | 4,708    |  
|                                                                   |  |      |          |      |   |          |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                  |  |      |          |      |   |          |  
|Payment of taxes in cash                                           |  | $    |         |      | $ |         |  
|Payment of interest in cash                                        |  | $    |         |      | $ |         |  
|Non-Cash Investing and Financing Activities                        |  | $    |         |      | $ |         |  
|Expenses paid with 1,000,000 shares of common stock issued         |  | $    | 14,520   |      | $ |         |  
|Expenses paid with 4,000,000 shares of common stock options issued |  | $    | 84,694   |      | $ |         |  







The accompanying notes are an integral part of the unaudited condensed consolidated financial statements



5



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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 holding company providing Internet website hosting on a limited basis.

a)

Principles of consolidation and basis of presentation

The condensed 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., as of September 30, 2009 and for the three and nine months ended September 30, 2009 and 2008, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. As such not all of the information and footnotes required by generally accepted accounting principles for complete financial statements have been presented.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature.  These financial statements and notes thereto should be read in conjunction with the financial statements for the year ended December 31, 2008 included in the Companys Annual Report on Form 10-K. The results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the results for the full fiscal year ended December 31, 2009.  The December 31, 2008 condensed consolidated balance sheet has been derived from the audited consolidated balance sheet included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.

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

d)

Net loss per common share.-

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

e)

Cash and cash equivalents.-

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.



6



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2009



(1)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f)

Fair value of financial instruments.-

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.

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 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 at September 30, 2009 and December 31, 2008.

(2)

GOING CONCERN

The accompanying condensed consolidated 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 $ 369,253 for the nine months ended September 30, 2009, $ 292,027 for the year ended December 31, 2008, and the total cumulative loss of approximately $9,770,000. The ability of the Company to continue as a going concern is dependent upon developing sales and obtaining additional capital and financing.  The condensed consolidated 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 contemplating expanding operations and market presence by entering into business combinations, investments, joint ventures or other strategic alliances with third parties. There can be no assurance that it will be successful in overcoming these risks or any other problems encountered in connection with such business combinations or expansion.

A major shareholder of the Company has been funding, and continues to fund, the Companys 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 cumulative net operating loss carry-forwards for income tax purposes at September 30, 2009 of approximately $ 7,400,000, expiring through December 31, 2023.

The company has established a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.



7



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2009



(3)

INCOME TAXES

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

|                                  |  |                   |  |                  
|--------------------------------- |  | ----------------- |  | -----------------
|                                  |  | September 30
2009 |  | December 31,
2008
|Statutory federal income tax rate |  | 34%               |  | 34%              
|Valuation allowance               |  | (34)              |  | (34)             
|Effective tax rate                |  |                 |  |                

(4)

DEBT CONVERSION INTO COMMON STOCK

Effective August 25, 2009, the principle stockholders of the company converted   $2,169,742 of debt and accrued interest into 180,811,840 shares of common stock at an average price of $ .012 per share, as determined by the fair market value of the shares over a 20 day period prior to the conversion date.

(5)

COMMITMENTS AND CONTINGENCIES

The Company rents office space in Boca Raton, Florida under a lease that commenced on July 1, 2009. The lease continues through June 30, 2010 at a base rent of $2,800 per month.

(6)

SHORT-TERM DEBT-RELATED PARTIES

At September 30, 2009 and December 31, 2008, total short-term debt consisted of the following:

|                                                                                                                                                                                                                                       |  |   |               |  |   |             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------------- |  | - | ------------
|                                                                                                                                                                                                                                       |  |   | September 30, |  |   | December 31,
|                                                                                                                                                                                                                                       |  |   | 2009          |  |   | 2008        
|Notes and Loans payable to a shareholder, unsecured, and due upon demand, with the interest at 12% as to Notes and Loans as of September 30, 2009. Upon default, the notes and loans become due immediately at an interest rate of 18% |  | $ | 15,500        |  | $ | 1,715,900   
|                                                                                                                                                                                                                                       |  |   |               |  |   |             
|Total short-term notes                                                                                                                                                                                                                 |  | $ | 15,500        |  | $ | 1,715,900   

See Note 4 above regarding debt conversion.

Interest expense was $39,919 and $157,414 for the three and nine months ended September 30, 2009 and 2008, respectively, and $50,840 and $151,193 for the three and nine months ended September 30, 2008, respectively.  All the balances were unpaid and accrued.

(7)

COMMON STOCK AND OPTIONS ISSUED FOR SERVICES

On August 25, 2009, the company issued 1,000,000 shares of restricted common stock to its president, valued at $14,520 for services. The company also issued to its president, 4,000,000 common stock options, valued at $84,694. The options vest 1,000,000 a year over 4 years at a conversion price of $ 0.01452 per share as calculated per the Black Scholes pricing model.

(8)

REVERSE STOCK SPLIT

On June 18, 2009, the directors adopted, and the shareholders approved, proposals to amend the Companys Certificate of Incorporation to effect a 10-to-1 reverse stock split, and to amend the Companys Certificate of Incorporation to decrease the Companys total number of authorized shares from 999,999,000 shares to 400,000,000 shares, all of which shall be common stock, par value $.00001 per share.   The new symbol for the company is SFAZ



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SAFE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2009



(8)

REVERSE STOCK SPLIT (continued)

As a result of the 10-to-1 reverse stock split, the Financial Statements included in this report have been retroactively presented as if the reverse split were in place.

(9)

RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issued Accounting Standards Codification  (ASC) 105-10 in June 2009, to be effective September 15, 2009. This establishes the ASC codification as the single source of authoritative nongovernmental Generally Accepted Accounting Principles (GAAP).  All existing accounting standards are superseded as described in FASB Accounting Standards Codification  (SFAS) No. 168, aside from those issued by the SEC. All other accounting literature not included in the Codification is non-authoritative. Adoption of  this  Codification as of September 30, 2009, which is reflected in our disclosures and references to accounting standards, had no change to our financial position or results of operations.

In May 2009, the FASB issued SFAS No. 165, (ASC 855) Subsequent Events(SFAS 165). This  offers assistance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 does not result in material changes in the subsequent events that an entity reports. This SFAS requires disclosure of the date through which events subsequent to the Balance Sheet date have been evaluated and whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 (ASC 855) is effective for interim and annual periods ending after June 15, 2009. The disclosures required by this statement follow. We evaluated events occurring between the end of our fiscal quarter, September 30, 2009 and November 11, 2009 when the financial statements were available to be issued.

(10)

SUBSEQUENT EVENTS

As required by ASC Topic 855, Subsequent Events, the Company has evaluated subsequent events through November 13, 2009, which is the date its September 30, 2009 consolidated condensed financial statements were issued.





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ITEM 2.

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

Our business activities currently consist of (a) the website hosting operations of Internet Associates International, Inc., (IAI) our sole active wholly owned subsidiary, and (b) the development of new business activities in the Company related to IT solutions.

As previously reported, we have recently restructured the company, naming a new Board of Directors and new officers, effecting a 10 to 1 reverse stock split, and reducing our authorized shares to 400,000,000. At the time of that report, we were awaiting a new CUSIP number in order for the reverse split to be effective. We have since received our new CUSIP number, and the reverse split and reduction in authorized shares are effective. Our new trading symbol is SFAZ.

The restructuring of the Company is intended to facilitate the development of one or more new business activities, and to provide for the development of proprietary IT solutions we intend to offer to small and mid sized businesses on an outsource basis.

RESULTS OF OPERATIONS

Revenues were $4,327 and $1,653, respectively, for the three months ended September 30, 2009 and 2008, and $6,957 and $7,217, respectively, for the nine months ended September 30, 2009 and 2008. The increase in revenues during the third quarter of 2009 is attributable to the completion of an introductory IT consulting transaction. Year to date revenue for the nine month period is reflecting a slight decrease in overall sales activity as compared to the same period in 2008, as a result of the diminished demand for IAIs single, limited offering of website hosting services.

Costs of Operations were $7,455 and $3,300, respectively, for the three months ended September 30, 2009 and 2008, and $13,077 and $9,900, respectively, for the nine months ended September 30, 2009 and 2008. The increases in costs of operation for 2009, as compared to 2008, reflect primarily one time vendor software, license fees, and setup charges as we increased our technological capacities in anticipation of new lines of business.

General and administrative expenses were $148,852 and $19,856, respectively, for the three months ended September 30, 2009 and 2008, and $205,719 and $62,722, respectively, for the nine months ended September 30, 2009 and 2008. The increase in general and administrative costs for 2009, as compared to 2008, is primarily attributable to increased legal and accounting expenses in connection with our restructuring of the Company, including the reverse stock spilt, the conversion of debt to stock, and the issuance certain incentive stock and options to the Companys President in August 2009. This, together with the move to a new office location and certain initial software and hardware costs incurred in connection with the expansion of the Companys IT solutions and activities, contributed to the increase.

During the third quarter of 2009, loans and interest due to a shareholder and his affiliate totaling approximately $2,170,000 were converted to equity. As a result, our interest expense is dramatically decreased beginning in September 2009. This reduction in interest expense on the converted loans will reduce our net losses going forward, but we will continue to incur interest on new loans and will sustain net losses from existing operations until significant new revenues can be generated.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2009, we had a working capital deficit of $40,935, compared to a $1,939,927 working capital deficit as of December 31, 2008. The decrease reflects the conversion of debt to equity, as noted above. Until we begin to generate new revenues, we will continue to operate at a loss and we will continue to be dependant on shareholders to fund operating shortfalls. There can be no assurance that our cash flow will increase in the near future from the anticipated new business activities, or that revenues generated from our existing subsidiary operations will be sufficient to allow us to pursue new profitable ventures.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Required



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ITEM 4.

CONTROLS AND PROCEDURES

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2009 (the Evaluation Date). This evaluation was carried out under the supervision and with the participation of our President, who is also our principal financial officer. Based upon that evaluation, management concluded that our disclosure controls and procedures were effective as of the Evaluation Date.

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

ITEM 4T.

CONTROLS AND PROCEDURES.

There has been no change in the Companys internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.





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PART II -- OTHER INFORMATION

ITEM 6.

EXHIBITS

|            |  |                                                                                                                                                                                                                                                            
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                
|3.1         |  | Certificate of Incorporation and Amendment to the Company's Certificate of Incorporation (filed as an Exhibit to the Company's Registration Statement on Form S-18 filed February 18, 1988 and incorporated herein by this reference).                     
|            |  |                                                                                                                                                                                                                                                            
|3.2         |  | Amendment to the Company's Certificate of Incorporation filed with the Delaware Secretary of State on February 6, 1998 (filed as an Exhibit to the Company's definitive proxy statement filed December 31, 1997 and incorporated herein by this reference).
|3.3         |  | Bylaws (filed as an Exhibit to Company's registration statement on Form S-18 filed February 18, 1988).                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                            
|21          |  | Subsidiaries of the Company (filed as Exhibit 21.1 to the Companys annual report on Form 10KSB/A for the year ended December 31, 1999).                                                                                                                   
|            |  |                                                                                                                                                                                                                                                            
|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: November 13, 2009 |  | By:                                   | /s/ Christopher L. Kolb
|                        |  |                                       | Christopher L. Kolb    
|                        |  |                                       | President              





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