==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Commission File No. 000-17746
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
(Formerly Safe Aid Products Incorporated)
----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 22-2824492
------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
249 Peruvian Avenue
Suite F2
Palm Beach, Florida 33480
------------------------------- ----------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code: (561) 832-2700
--------------
Indicate by check mark whether the registrant(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 [X] NO [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $0.00001 Par Value - 723,489,700 shares as of
May 10, 1999.
<PAGE>
INDEX
- -----
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1999 (Unaudited) and December 31, 1998.............3
Consolidated Statements of Operations (Unaudited) -
Three Months Ended March 31, 1999 and March 31, 1998.........4
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended March 31, 1999 and March 31, 1998.........5
Notes to Unaudited Consolidated Financial Statements.........6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................13
PART II OTHER INFORMATION
Item 1. Legal Proceedings...........................................18
Item 2. Changes in Securities.......................................18
Item 3. Defaults Upon Senior Securities.............................18
Item 4. Submission of Matters to a Vote of Security Holders.........18
Item 5. Other Information...........................................18
Item 6. Exhibits and Reports on Form 8-K............................18
Signature............................................................20
<PAGE>
PART 1 - FINANCIAL STATEMENT PRESENTATION
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED BALANCE SHEETS
<CAPTION>
<S> <C> <C>
March 31, December 31,
1999 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 31,476 $ 66,473
Accounts receivable - principally trade 68,795 500
Inventory 0 0
Loans receivable 0 0
Notes receivable, stockholders 0 0
Prepaid expenses 0 0
-------------- -------------
TOTAL CURRENT ASSETS 100,271 66,973
MACHINERY AND EQUIPMENT
Net of accumulated depreciation 180,561 4,233
-------------- -------------
TOTAL MACHINERY AND EQUIPMENT 180,561 4,233
INTANGIBLE ASSETS
Net of accumulated amortization 333,667 324,968
-------------- -------------
TOTAL INTANGIBLE ASSETS 333,667 324,968
OTHER ASSETS 37,500 37,500
-------------- -------------
TOTAL ASSETS $ 651,999 $ 433,674
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Equipment lease $ 3,433 $ 0
Payroll taxes 12,484 0
Accounts payable, trade 75,467 57,776
Accrued expenses 67,452 37,452
Accrued income taxes 5,550 0
Loan payable stockholders 126,527 123,590
-------------- -------------
TOTAL CURRENT LIABILITIES 290,913 218,818
STOCKHOLDERS' EQUITY
Common stock $.00001 par value
999,999,000 shares authorized; 723,489,700 issued and outstanding 32,736 7,125
Capital subscribed 40,000 40,000
Less: subscription receivables (1,000)
Additional paid in capital 2,745,000 2,591,531
Retained earnings (deficit) (2,457,204) (2,422,800)
-------------- ------------
TOTAL STOCKHOLDERS' EQUITY 361,086 214,856
-------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 651,999 $ 433,674
============= ============
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Three For Three
Months Ended Months Ended
March 31, March 31
1999 1998
REVENUES $ 226,337 $ 346,721
COST OF REVENUE $ 9,890 $ 210,901
------------ ------------
GROSS PROFIT $ 216,447 $ 135,820
EXPENSES
Promotion 10,604 9,579
Bank charges 2,022 2,326
Interest 0 408
Depreciation 0 155,157
Equipment lease 615 9,462
Insurance 0 5,998
Office expenses 31,087 41,656
Officers' salary 51,780 54,608
Wages 55,492 4,680
Payroll taxes 5,076 1,695
Commissions paid 3,267 1,665
Subcontract labor 18,346 13,305
Legal & professional fees 42,811 64,772
Travel 4,762 5,904
Taxes/other 8,920 0
Internet access 3,506 0
Merger Expense 0 122.774
------------ ------------
TOTAL EXPENSES $ 237,659 $ 493,989
------------ ------------
OTHER INCOME
Interest on Deposit 110 1,037
Income Before Income Taxes ( 21,101) ( 357,132)
Provision For Income Taxes 0 0
NET LOSS $ ( 21,101) $ ( 357,132)
LOSS PER SHARE:
Net loss per share NIL NIL
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 715,156,365
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Three For Three
Months Ended Months Ended
March 31, March 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $( 22,124) $( 357,132)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 155,157
Changes in account balances:
Accounts receivable ( 67,295) ( 36,683)
Loans/notes receivable 6,955 0
Inventory 0 4,058
Deposits 0 214,802
Accounts payable 8,797 26,633
Accrued expenses 30,000 662
Payroll taxes payable 12,484 1,170
Federal/State taxes payable 5,550 4
--------- ---------
TOTAL ADJUSTMENTS (3,509) 365,803
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (25,633) 8,671
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (176,327) 0
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (176,327) 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Equipment lease ( 390) 0
Paid in Capital 141,333 0
Payment on line of credit - bank 0 ( 280)
Issuance of stock 25,000 122,774
--------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES 166,333 122,594
INCREASE (DECREASE) IN CASH 140,700 131,165
BEGINNING CASH BALANCE 66,471 56,742
--------- ---------
ENDING CASH BALANCE $ 207,171 $ 187,907
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest $ 0 408
</TABLE>
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description:
Safe Technologies International, Inc. ("Safe Tech") and its subsidiaries is a
multi-faceted company specializing in Internet services and products and in the
development of a nasal aspirin patent for which the Company has perpetual
worldwide rights.
Organization:
The Company was incorporated under the laws of the state of Delaware on May 21,
1987 as Safe Aid Products, Incorporated. On February 9, 1998, the Company
changed its name to Safe Technologies International, Inc.
The Company was considered to be in the development stage through December 31,
1997.
Basis of Consolidation:
The consolidated financial statements include the accounts of Safe Technologies
International Inc. and its subsidiaries, IAI, ICI and TMC. All material
intercompany transactions and balances have been eliminated in the consolidated
financial statements.
Wholly Owned Subsidiaries:
On June 16, 1997, Intelligence Network International, Inc. (INI) entered into
an agreement to acquire Total Micro Computers, Inc. (TMC) in Tampa, Florida in
exchange for 100% of the issued and outstanding common stock. TMC was to have
received 1,062,500 shares of the company which was valued at $.40 per share or
$425,000. Acquired assets were accounted as a purchase, and are being carried
on the balance sheet. After a theft loss incurred by TMC, the former
stockholders abandoned the business in June 1998. The Company intends to
resume business in 1999.
On May 21, 1998, Internet Commerce, Inc. (ICI) was incorporated under the laws
of the state of Florida. ICI was formed by the Company to engage in the
business of Internet services and products, and to develop the copyrights and
trademarks acquired by the Company.
On February 5, 1999, The Company entered into an agreement to acquire Internet
Associates International, Inc., (IAI) in Boca Raton, Florida in exchange for
100% of the issued and outstanding common stock. IAI former shareholders will
receive the Company common stock on February 5, 2000, at a formula of 10 times
the net profit which IAI can produce within the year 1999.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
Cash and Cash Equivalents:
For purposes of the statements of cash flows, the Company treats all short-
term investments with maturates of three months or less at acquisition to be
cash equivalents.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Change of Fiscal Year:
On February 9, 1998, the new management of Safe Tech decided to change Safe
Tech's fiscal year end from November 30th to December 31st.
Revenue Recognition:
Revenues of Safe Tech, ICI, IAI, and TMC are recognized at the time the
services are rendered to customers. Services are rendered when the Company's
representatives receive the customer's requests and completes the customer's
orders.
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 at their fair values. The carrying values of notes
payable are deemed to be reasonable estimates of their fair values.
Property and Equipment:
Property and equipment are stated at cost. Depreciation of depreciable assets
is computed using the straight-line method of depreciation over the estimated
useful lives of the assets. The estimated useful life is 7 years.
Amortization:
Amortization of trademarks and copyrights, and goodwill is determined utilizing
the straight-line method based generally on the estimated useful lives of the
intangibles as follows:
Trademarks and copyrights 15 years
Goodwill 15 years
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 131, Disclosures About Segments of an Enterprise and
Related Information (SFAS No. 131) which established presentation of financial
date based on the "management approach". SFAS No. 131 is applicable for fiscal
years beginning after December 15, 1997. For the current fiscal year we are
not going to present segment reporting because it is immaterial.
Basic Loss per Share and Diluted Loss per Share:
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128),
which specifies the computation, presentation and disclosure requirements for
earnings per share. SFAS No. 128 supercedes Accounting Principle Board Opinion
No. 15 entitled Earnings Per Share. Basic earnings per share are computed by
dividing income available to common stockholders (the numerator) by the
weighted-average number of common shares (the denominator) for the period. The
computation of diluted earnings per share is similar to basic earnings per
share, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potentially
dilutive common shares had been issued.
Basic Loss per Share and Diluted Loss per Share:
The numerator in calculating basic earnings per share is reported net loss.
The denominator is based on the following weighted-average number of common
shares:
1998 1997
Basic 652,071,619 612,933,835
The 14,727,280 shares of common stock, reserved in connection with warrants are
not included in the diluted earnings per share calculation since the exercise
price is greater than the average market price.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
2. CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation provide for the authorization of 950,000,000
shares of common stock at $.00001 par value. On January 30, 1999, the
stockholders approved increasing the authorized number of shares to
999,999,000.
In June of 1988, the Company completed a sale of 150,000 units to the public at
a price of $10 per unit. The Company received proceeds in the amount of
$1,213,841, net of commissions and expenses to the underwriter, legal,
accounting and other expenses related to the public offering in the amount of
$286,159. Each unit consisted of 1,000 shares of common stock, $.00001 par
value, and 500 redeemable common stock warrants designated redeemable Warrant
"A". Each redeemable Warrant "A" would, upon exercise, entitle the holder to
purchase one share of common stock for $.02 per share and to receive one
redeemable Class "B" Common stock purchase warrant. Each redeemable Class "B"
Common Stock purchase warrant would, upon exercise, entitle the holder to
purchase one share of common stock for $.05 per share. These exercise periods
of both Class "A" and Class "B" warrants have been extended by the Board of
Directors through January 9, 2000, after giving effect to the ten for one
reverse split on February 9, 1998. At December 31, 1998, 14,727,280 shares of
common stock, reserved in connection with such warrants remain outstanding.
There was no market activity for these warrants through December 31, 1998.
On February 9, 1998, INI merged with and into Safe Aid Products, Inc. The
Board of Directors of the Company authorized a ten for one reverse stock split
pursuant to which its outstanding common stock will be reduced to 70,547,720
shares with no change to the par value of the common stock. At the same time,
according to the merge, 585,819,936 shares of common stock were issued to INI
stockholders. A remaining 1,062,500 shares of TMC stock were not issued.
On February 9, 1998, per terms of the merge, 49,109,544 shares of common stock
were issued for consultant services.
On August 3, 1998, 500,000 shares of common stock were issued to an unrelated
party as repayment of a loan. The shares were valued at $0.04 per share.
On August 3, 1998, 250,000 shares of common stock were issued to a stockholder
in addition to previously issued shares (259,595,536) in exchange for $290,000.
In November 1998, 1,000,000 shares of common stock were issued to an unrelated
company as compensation for legal services rendered to the Company. These
shares have been valued by the Company at $0.04 per share.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
On December 31, 1998, 800,000 shares of common stock were issued to certain
officers and consultants of the Company in exchange for their services rendered
to the Company. These shares have been valued by the Company at $0.04 per
share. The Company recorded these shares as consultant fees.
On December 31, 1998, 1,325,000 shares of common stock were issued as
compensation for public relation services to an officer of the Company. These
shares have been valued by the Company at $0.04 per share. The Company
recorded these shares as consultant fees.
On December 31, 1998, 4,200,000 shares of common stock were issued to an
employee as compensation in lieu of cash payment. The Company has valued these
shares at $0.04 per share, and recorded them as salaries.
On February 2, 1999, 14,000,000 shares were cancelled and returned to the
Company Transfer Agent representing the unraveling of the GMG acquisition,
thereby reducing the company's issued stock by 14,000,000.
3. SUBSCRIPTIONS
The Company entered into a subscription agreement for the purchase of 4,405,882
shares common stock for $40,000 on November 4, 1998. At December 31, 1998, the
Company had received payments amounting to $39,000. No stock has been issued
relating to this subscription.
4. PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment at December 31, 1998 consisted of the following:
Telephone equipment $ 4,559
Less: accumulated depreciation (326)
--------
$ 4,233
========
Depreciation expense for the year ended December 31, 1998 was $326.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
5. INTANGIBLE ASSETS
At December 31, 1998, intangible assets were summarized by major classification
as follow
Copyrights and trademarks $ 199,455
Goodwill 146,088
---------
345,543
Less: Accumulated amortization (20,575)
$ 324,968
=========
Amortization expenses for the year ended December 31, 1998 were $20,575.
6. LEASES
The Company rents office space in Palm Beach, Florida on a month to month
basis. There is no lease in force. The monthly rent is currently $914. The
Company also rents office furniture and equipment on a month to month basis for
$1,000 per month from the president.
The Company leases telephone equipment through a capital lease. The term of
the lease is for 36 months, commencing July 22, 1998, in the amount of $119.48
plus sales tax per month. There is a $1.00 purchase option at the end of the
lease.
Rental expense for the year ended December 31, 1998 was $22,471. Future
anticipated minimum annual rental expense for subsequent years are as follows:
1999 $ 24,398
2000 24,398
2001 23,800
2002 22,964
2003 22,964
Thereafter 0
---------
Total $ 118,524
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
AND SUBSIDIARIES
Formerly known as
SAFE AID PRODUCTS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
7. INCOME TAXES
The Company and its subsidiaries file consolidated income tax returns. No
provision has been made in the accompanying financial statements for income
taxes payable because of the Company's operating loss from operations. At
November 30,1997, the Company has $1,590,710 of operating loss carryforwards
for financial reporting and income tax purposes that expire through the year
2012. Net operating loss of $666,206 from the year ended December 31, 1998
will expire in 2018. Additionally, the Company has approximately $44,000 of
research and development credits available to offset future income taxes
through the year 2005. There can, however, be no assurance that the Company
will have future operating profits.
8. SHORT-TERM DEBT
At March 31, 1999, short-term debt consisted of the following:
8% note payable to an officer, unsecured, due on
demand. Upon any default, the note becomes due
immediately at an interest rate of 18% per annum. $ 96,178
Note payable to an officer, unsecured, due on
demand, no interest. 1,350
Note payable to an individual, unsecured and
due on demand, no interest. 25,000
---------
Total short-term debt $ 122,528
=========
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Safe Technologies International, Inc., formerly known as Safe Aid Products,
Inc., (the 'Company'), concentrated on developing its Internet and E Commerce
focus business during the first quarter.
A significant Internet acquisition was closed on February 5, 1999 with Internet
Associates International, Inc., (IAI) based in Boca Raton, Florida. IAI is an
Internet marketing and web site development firm involved in the development,
marketing, and hosting of web sites, as well as the training of web developers.
Current IAI Customer Base is over 3000 web development/hosting customers. The
terms of the acquisition were based on an incentive plan for the IAI principals
to produce Net Profits and to send a minimum monthly payment of Seventy Five
Percent of IAI's monthly net profit, upstream to the Company. Pending the 1999
year end final total of IAI's Net Profit and the total Monthly Payments
forwarded to the Company throughout the Year 1999, a formula of Ten times that
Net Profit shall be paid to IAI's former shareholders in the form of SFAD 144
Restricted Common Stock. This would be basis for the calculation of the
purchase price for the IAI acquisition. Any stock issued under this agreement
is subject to a lock-up agreement significantly limiting the amount of stock
that can be sold in a quarter.
The IAI staff currently consists of 19 people. Two of IAI's former
shareholders have entered into three year Employment Agreements with the
Company, as President and Vice President, respectively.
Internet Commerce, Inc., the Company's existing E-Commerce subsidiary moved
forward throughout the first quarter in updating the design and copyrights for
its mall for the rich and famous, InCybermall.com. The purpose of the
reconstruction of the web site was to introduce an E-Commerce technology and
concentration into the web site which had been created and copyrighted in 1995
with a focus, popular at that time, of only information and content. With the
Company's increasing interest in E Commerce, a complete revision was necessary.
Two new features that were developed, ' The Famous Shopping Streets of the
World' (Trademark and Copyright Pending) and 'Cybermalls Castle' (Trademark and
Copyright Pending).
Several significant alliances were formed with InCybermall.com, during the
first quarter, obtaining distribution rights for luxury products for sale on
the InCyberMall.com web site with, Amazon.com, Fran Murphy Interiors, Inc.,
J.C. Harris & Co, and the Frozen Pelican Gallery.
The Company intends to continue to build and add additional Internet and E-
Commerce elements, either through internal development or horizontal
acquisition (ever evolving toward its E Corporation stated goals, prior to
Y2K).
<PAGE>
In reassessing an open issue from fiscal 1998, the Company is evaluating the
merits of pursuing a claim against the former officers of TMC for breach of
their fiduciary duties to TMC. On September 5, 1997, a significant amount of
TMC's computer products and parts inventory were stolen from TMC's inventory
room in Tampa, Florida. Although TMC was insured by State Farm Insurance
Company, State Farm denied TMC's claim for coverage. It was State Farm's
opinion that the burglary was an inside job.
Regarding the Company's progress regarding the Nasal Aspirin Patent No.
4,885,287 for which the territory of the Pacific Rim had been Licensed to the
Chinese Company, Hangzhou Jiuyuan Gene Engineering Co., the Company reports
that Hangzhou Jiuyuan is not moving forward as expeditiously as previously
anticipated. Hangzhou Jiuyuan has yet to move forward to actual production of
the patent, and have not provided the Company with their Financial Projections,
as to potential Revenues, which the Company has requested several times. The
Company has, however, learned recently that some limited studies of human
testing of the nasal aspirin application had been performed in the late 1980's,
at an American University. This research had not been made available to the
current Management at the time of the former SFAD Management's resignation, and
is a significant revelation. The Company plans to pursue possession of this
research and seek US partners to try to develop this patent.
<PAGE>
Results of Operations
Revenues were $226,337 for the first quarter of 1999 and were $346,721 for the
first quarter of 1998, representing an decrease of 35%.
Approximately, $225,287 or 99% of these revenues were from IAI, and $1,050 or
1% of these revenues were from ICI.
Revenues during the first quarter of 1999 were slightly lower than the first
quarter of 1998, due to changes in the Company's subsidiaries and revenue
recognition policies.
Revenues for TMC were prominent in the first quarter of 1998, and were non
existent in the first quarter of 1999 emanating from TMC's former shareholders
and TMC's Officers abandoning TMC's business operation.
Additionally, TMC was notified by State Farm, the TMC insuring company, that
they did not intent to honor the TMC claim due to State Farm's opinion that the
burglary was an inside job. In the burglary, a significant amount of TMC's
computer products and parts inventory had been stolen from TMC's inventory
room.
The Company is evaluating the merits of pursuing the State Farm claim and the
two former TMC Stockholders for breach of fiduciary duty.
Cost of revenues were $9,890 for the first quarter of 1999 and were $210,901
for the first quarter of 1998, representing an decrease of 95%. The decreased
is based on the differences between the TMC operation which had significant
costs in assembling computer systems and IAI which is primarily a service
business with limited fixed costs expenses for their type of business
operation.
Selling, general and administrative expenses were $237,659 for the first
quarter of 1999 compared to $493,989 for the first quarter of 1998,
representing more than an 51% decrease. This decrease is attributable to the
stabilization of the Company's operation and lower non-reoccurring expenses
such as those relating to the merger.
As a result of the foregoing, the Company's operating loss for the first
quarter of 1999 was $21,101 compared to $357,132 for the first quarter of 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company had working capital deficit of $153,142
compared with a working capital deficit of $151,845 on December 31, 1998.
Net cash used in operating activities was $25,633 during the first quarter of
1999 compared to $8,671 for the first quarter of 1998. The Company used
$176,327 in investing activities in the first quarter of 1999 and $0 in the
first quarter of 1998. Net cash provided in financing activities was $166,333
during the first quarter of 1999 compared with $122,594 in the first quarter of
1998. As of March 31, 1999, the Company did not have any material commitments
for capital expenditures.
Management is in continual process of securing additional small lots of
capital. The Company believes that it has adequate resources for operations
until major funding is secured.
YEAR 2000 READINESS
The Company has completed an assessment of whether its systems and those of
third parties which could have a material impact on its business will function
properly with respect to dates in 2000 and thereafter. The Company has
determined that none of its systems require modification. The Company believes
the only third parties that could have a material impact on its business are
the major financial institutions that process its collections of accounts
receivables and monthly dues by the electronic payment methods. The Company
believes these financial institutions are currently working on modifications to
their internal systems to insure these systems will function properly with
respect to dates in 2000 and thereafter and expects these modifications will be
completed in 1999. The Company does not anticipate that noncompliance, if any,
with Year 2000 of any non-information technology systems, such as embedded
micro controllers, will materially or adversely affect its business. The
Company is currently undertaking an analysis of worst-case scenarios and
developing contingency plans to deal with these scenarios.
<PAGE>
CAUTIONARY STATEMENTS
Forward-looking statements in this Form 10-QSB including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. The following factors,
among others, could cause actual results to differ materially from those set
forth in the forward-looking statements: the Company's ability to successfully
(i) develop and profitable grow its InCyberMall web site, including entering
into agreements with merchants to sell upmarket products in the CyberMall Caste
Store, (ii) to develop IAI's Internet web design, hosting and marketing
business, (iii) identify and finalize acquisition agreements with select
Internet companies and/or enter into partnership agreements with established
companies in high technology deals, and (v) raise additional capital to finance
its operations in the next fiscal year. Additional factors, include, but are
not limited to the following: the size and growth of the market for the
Company's products, competition, pricing pressures, market acceptance of the
Company's products and services, the effect of economic conditions, the
availability of management, risks in product development and other risks
identified in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998 and the Company's other SEC filings.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27
Financial Data Schedule (filed herewith electronically)
(b) Reports on Form 8-K
The Company filed ten reports on Form 8-K and two reports
on form 8-K/A during the three months ended March 31,1999.
(i) The Company filed a report on Form 8-K dated January 6,
1999 which reported information under Item 5 - Other
Information.
(ii) The Company filed a report on Form 8-K/A dated January 6,
1999 which reported information under Item 5 - Other
Information.
(iii) The Company filed a report on Form 8-K dated January 12,
1999 which reported information under Item 5 - Other
Information.
(iv) The Company filed a report on Form 8-K dated January 21,
1999 which reported information under Item 5 - Other
Information.
(v) The Company filed a report on Form 8-K dated February 2,
1999 which reported information under Item 5 - Other
Information.
<PAGE>
(vi) The Company filed a report on Form 8-K dated February 8,
1999 which reported information under Item 5 - Other
Information.
(vii) The Company filed a report on Form 8-K dated February 23,
1999 which reported information under Item 5 - Other
Information.
(viii) The Company filed a report on Form 8-K dated March 9,
1999 which reported information under Item 5 - Other
Information.
(ix) The Company filed a report on Form 8-K dated March 11,
1999 which reported information under Item 5 - Other
Information.
(x) The Company filed a report on Form 8-K dated March 26,
1999 which reported information under Item 5 - Other
Information.
(xi) The Company filed a report on Form 8-K dated March 31,
1999 which reported information under Item 5 - Other
Information.
(xii) The Company filed a report on Form 8-K/A dated March 31,
1999 which reported information under Item 5 - Other
Information.
<PAGE>
Safe Technologies International, Inc.
In accordance with the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Safe Technologies International, Inc., Registrant
Date: May 14, 1999 By: /s/Barbara Tolley
- ------------------ ---------------------
Date President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10QSB - CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1999 AND
CONSOLIDATED STATEMENT OF EARNINGS (LOSS) FOR THE THREE MONTH PERIOD
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 31,476
<SECURITIES> 0
<RECEIVABLES> 68,795
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,771
<PP&E> 180,561
<DEPRECIATION> 0
<TOTAL-ASSETS> 651,999
<CURRENT-LIABILITIES> 290,913
<BONDS> 0
<COMMON> 32,736
0
0
<OTHER-SE> 328,350
<TOTAL-LIABILITY-AND-EQUITY> 651,999
<SALES> 226,337
<TOTAL-REVENUES> 226,337
<CGS> 9,890
<TOTAL-COSTS> 9,890
<OTHER-EXPENSES> 237,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21,101)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,101)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,101)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
