SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 28, 2007
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _________
Commission File Number: 0-19945
NoFire Technologies, Inc.
-------------------------
(Name of small business issuer in its charter)
Delaware 22-3218682
--------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
21 Industrial Avenue, Upper Saddle River, New Jersey 07458
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (201) 818-1616
-------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
--- ---
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by the Court.
YES X NO
--- ---
State the number of shares of each of the issuer's classes of common equity
outstanding at the latest practicable date: 37,927,741 shares of Common
Stock as of April 10, 2007.
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ---
Page 1
NOFIRE TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Balance Sheets as of February 28, 2007(unaudited)
and August 31, 2006 3
Statements of Operations for the Six Months and
Three Months ended February 28, 2007 and 2006
(unaudited) 5
Statements of Cash Flows for the
Six Months ended February 28, 2007 and 2006
(unaudited) 6
Notes to Unaudited Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Controls and Procedures 14
Part II - OTHER INFORMATION
Item 1. Legal 14
2. Unregistered Sales of Equity Securities and
use of proceeds 14
3. None 14
Item 6. Exhibits 15
Signatures 15
Certification of Financial Information Exhibits 31.1 31.2
Sarbanes-Oxley Act Section 906 Certification Exhibits 32.1 32.2
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOFIRE TECHNOLOGIES, INC.
BALANCE SHEETS
February 28 August 31,
2006 2006
----------- ----------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 5,339 $18,107
Accounts receivable - trade 94,748 4,411
Inventories 86,115 67,403
Prepaid expenses and other current assets 28,394 -
--------- ----------
Total Current Assets 214,596 89,821
--------- ----------
EQUIPMENT, less accumulated depreciation 296 1,086
--------- -------
OTHER ASSETS:
Security deposits 37,064 36,714
---------- ---------
$ 251,956 $ 127,721
========== ==========
See accompanying notes to financial statements
Page 3
NOFIRE TECHNOLOGIES, INC.
BALANCE SHEETS
February 28, August 31,
2007 2006
----------- ----------
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Settled liabilities $ 378,031 $378,031
Accounts payable and accrued expenses 1,294,723 1,152,412
Loans and advances payable to
Stockholders 462,038 475,538
Deferred salaries 2,064,211 1,875,218
Loans payable 314,935 389,415
Convertible Debentures 8% 469,928 469,928
Convertible Debenture 10% 165,000 165,000
Debt discount (12,764) (120,243)
---------- ---------
Total Current Liabilities 5,136,102 4,785,299
---------- ---------
LONG TERM LIABILITY - -
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock $.01 par value:
Authorized - 150,000,000 shares
issued and outstanding 37,781,829
shares at February 28, 2007 and
35,806,621 at August 31, 2006 377,862 358,066
Capital in excess of par value 15,559,468 13,923,791
Accumulated Deficit (20,821,476) (18,939,435)
---------- ----------
Total Stockholders' Equity (Deficiency) (4,884,146) (4,657,578)
---------- ----------
$ 251,956 $ 127,721
========== ==========
See accompanying notes to financial statements
Page 4
NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
For the Six Months For the Three Months
Ended February 28, Ended February 28,
2007 2006 2007 2006
---------- ------ ------ ------
(UNAUDITED) (UNAUDITED)
NET SALES $ 479,612 $ 162,347 $ 241,114 $ 100,116
---------- --------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales 233,527 77,416 106,008 41,184
Research and development costs 24,545 20,111 22,662 20,111
General and administrative (includes
equity based compensation expense of
$136,337 and $15,267 for the six
months and $125,528 for the three
months ended February 28) 641,849 516,019 394,760 289,027
---------- ---------- ----------- ----------
899,921 613,546 523,430 350,322
---------- --------- ----------- ----------
LOSS FROM OPERATIONS (420,309) (451,199) (282,316) (250,206)
---------- ---------- ----------- ----------
OTHER EXPENSES:
Interest expense (includes
equity based interest expense of
$1,338,234 and $94,821 for the six
months and $1,276,010 for the three
months ended February 28,2007) 1,499,608 253,749 1,358,196 77,878
---------- ---------- ------------ ---------
LOSS BEFORE INCOME TAXES (1,919,917) (704,948) (1,640,512) (328,084)
DEFERRED INCOME TAX BENEFIT 37,876 35,783 - (73)
---------- ---------- ------------- ----------
NET LOSS (1,882,041)) $ (669,165) (1,640,512) (328,157)
========== ========== ============= ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING -basic & diluted 36,791,540 34,868,050 36,791,540 34,917,122
========== ========== ============= ==========
BASIC AND DILUTED EARNINGS LOSS
PER COMMON SHARE $ (0.05) $ (0.02) $ (0.04) (0.01)
========== ========== ============== =========
See accompanying notes to financial statements
Page 5
NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months
Ended February 28,
2007 2006
--------- ---------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,882,041) $ (669,165)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Depreciation and amortization 790 790
Amortization of interest expense for
discount on note payable 107,479 19,197
Warrants issued in exchange for loans
by officer 139,908 92,875
Repricing of warrants (35,310)
Equity issued in exchange for services 137,568 15,267
Warrants issued for debt extension 1,088,163 -
Changes in operating assets and
liabilities
Inventory (18,712) 4,381
Accounts receivable - trade (90,337) (14,510)
Prepaid expenses and other (28,934) (36,676)
Accounts payable and accrued
expenses 144,305 245,389
Deferred salaries 188,993 209,107
---------- ---------
Net cash flows from operating activities (212,818) (168,655)
--------- ---------
See accompanying notes to financial statements
Page 6
NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months
Ended February 28,
2007 2006
--------- ---------
(UNAUDITED)
CASH FLOWS FROM INVESTING ACTIVITIES
Security deposits (350) (2,048)
---------- --------
Net cash flows from investing activities (350) (2,048)
---------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock,
net of related expenses 288,380 25,000
Net proceeds from short term loans (74,480) 115,635
Payments on advances from stockholders (13,500) (38,500)
Loans and advances from stockholders - 56,524
---------- ----------
Net cash flows from financing activities 200,400 158,569
---------- ----------
NET CHANGE IN CASH (12,768) (12,044)
CASH AT BEGINNING OF PERIOD 18,107 14,099
---------- ----------
CASH AT END OF PERIOD 5,339 $ 2,055
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid (received) (37,876) (35,783)
======== =========
Interest paid $ 31,830 $ 343
========== ==========
See accompanying notes to financial statements
Page 7
NOFIRE TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
February 28, 2007
NOTE 1 - Basis of Presentation:
The balance sheet at the end of the preceding fiscal year has been derived
from the audited balance sheet contained in the Company's Form 10-KSB for the
year ended August 31, 2006 (the "10-KSB") and is presented for comparative
purposes. All other financial statements are unaudited. In the opinion of
management, all adjustments that include only normal recurring adjustments
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of operations
for interim periods are not necessarily indicative of the operating results
for the full year.
Footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America have been omitted in accordance with the published rules and
regulations of the Securities and Exchange Commission. These financial
statements should be read in conjunction with the financial statements and
notes thereto included in the 10-KSB for the most recent fiscal year.
NOTE 2 - Reorganization:
Under a Chapter 11 proceeding, the Bankruptcy Court confirmed a Plan of
Reorganization for the Company, which became effective on August 11, 1995.
Claims of creditors, to the extent allowed under the Plan, were required to be
paid over a four-year period.
NOTE 3- Summary Of Significant Accounting Policies:
Loss per Share - Loss per share is based on the weighted average number
of shares outstanding during the periods. The effect of warrants outstanding
is not included since it would be anti-dilutive.
Estimates and Uncertainties - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affects 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, as determined at a later
date, could differ from those estimates.
Financial Instruments - Financial instruments include accounts
receivable, other assets, accounts payable, accrued expenses, settled
liabilities and due to stockholders. The amounts reported for financial
instruments are considered to be reasonable approximations of their fair
values. The fair value estimates presented herein were based on market or
other information available to management. The use of different market
assumptions and/or estimation methodologies could have a material effect on
the estimated fair value amounts.
Equity Based Compensation- The Company adopted the provisions of SFAS
123R on September 1, 2005, under the modified prospective method.
Page 8
NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENT
(Unaudited)
February 28, 2007
The equity-based employee compensation expense has been determined
utilizing a fair value method, the Black-Scholes option-pricing model.
The Company has recorded compensation expense for warrants granted to
employees and consultants during the six months ended February 28, 2006
in the amount of $15,267. During the six months ended February 28, 2007 the
Company recorded $137,568 in compensation expense for the issuance of stock
and warrants.(see note 6)
In accordance with SFAS 123, the fair value of each option grant has been
estimated as of the date of the grant using the Black-Scholes option pricing
model with the following weighted average assumptions:
For the Six Months ended February 28,
2007 2006
Risk free interest rate 4.74% 4.39%
Expected life
Yrs 5 5
Dividend rate 0.0% 0.0%
Expected volatility 156% 59.9%
New Accounting Pronouncements-
FASB 157 - Fair Value Measurements
In September 2006, the FASB issued FASB Statement No. 157. This
Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement
applies under other accounting pronouncements that require or permit
fair value measurements, the Board having previously concluded in those
accounting pronouncements that fair value is a relevant measurement
attribute. Accordingly, this Statement does not require any new fair
value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective
for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting
entity has not yet issued financial statements for that fiscal year.
Management believes this Statement will have no impact on the financial
statements of the Company once adopted.
FASB 159 - Fair Value Option for Financial Assets and Financial
Liabilities
In February 2007, the FASB issued FASB Statement No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities - Including an Amendment
of FASB Statement No. 115" (SFAS 159). This Statement provides companies with
an option to measure, at specified election dates, many financial instruments
and certain other items at fair value that are not currently measured at fair
value. A company that adopts SFAS 159 will report unrealized gains and losses
on items for which the fair value option has been elected in earnings at each
subsequent reporting date. This Statement also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities
that choose different measurement attributes for similar types of assets and
liabilities. This Statement is effective for fiscal years beginning after
November 15, 2007, which is the first quarter of fiscal 2009. Management does
not believe that the adoption of SFAS 159 will have a material impact
Page 9
NOFIRE TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
February 28, 2007
on the financial statements of the Company once adopted.
NOTE 4 - Management's Actions to Overcome Operating and Liquidity
Problems:
The Company's financial statements have been presented on the going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company's viability as a
going concern is dependent upon its ability to achieve profitable operations
through increased sales and/or obtaining additional financing. Without
achieving these, there is substantial doubt about the Company's ability to
continue as a going concern.
The Company has a liability for settled claims payable to creditors in
connection with its reorganization under the Plan. Without the achievement
of profitable operations or additional financing, funds for repayment would
not be available.
Management believes that successful passing of stringent tests, obtaining
various civil and government approvals, and actions it has undertaken to
revise the Company's operating and marketing structure should provide it
with the opportunity to generate revenues needed to realize profitable
operations and to attract the necessary financing and/or capital for the
payment of outstanding obligations.
NOTE 5 - Convertible Debentures And Other Debt:
On September 2, 2005 the Company borrowed from an accredited
Investor $100,000 at the annual interest rate of 15%. The note has a
one year maturity date. In October 2006 the Company paid $40,000 of the
above debt with accrued interest. The balance remains outstanding.
In conjunction with the above $100,000 note, ten year $.14 warrants
were issued for the purchase of 1,000,000 shares of the Company's
common stock. The recorded debt was discounted for the allocated value
to the warrants issued of $65,734 and is shown on the balance sheet as
$12,764 as of February 28, 2007. The discount is being amortized to
expense at approximately $16,000 per quarter.
On February 15, 2007, the Company and its lender extended the maturity date of
The 10% Convertible Debenture in the amount of $165,000, to April 7, 2007.
The Company issued a warrant to purchase 2,000,000 shares of common stock with
a term of five years at an exercise price of $0.10 per share. The warrant
contains a repricing provision should shares be issued at less than $0.10
during the term of the warrant. A cashless exercise provision and certain
provisions similar to the holders of common stock for other equity related
transactions are also provided. The market price of the Company's stock at the
extension date was $0.53, hence the fair market value of $1,050,192 for such
warrant was expensed as an extension fee during for the quarter ended
February 28, 2007.
NOTE 6- Equity Transactions:
Warrants were issued during the six months as follows:
Name Issue Expire Amount Exercise Price
Investors September 06 September2011 90,000 $.20
Individuals (3) October 06 October 2011 80,000 $.11 to $.20 (A)
Investors (11) October 06 October 2011 298,661 $.20
Individual November 06 November 2011 10,000 $.16 (A)
Investors (4) November 06 November 2011 59,318 $.20
Investors (10) December 06 December 2011 252,595 $.20
Officer December 06 December 2016 1,400,000 $.20 (B)
Investors (5) January 07 January 2012 104,792 $.20 to $.25
Employees (3) January 07 January 2012 310,000 $.20
Page 10
NOFIRE TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
February 28, 2007
Officer January 07 January 2012 472,668 $.20
Investors (5) February 07 February 2012 69,706 $.34 to $.52
Lender February 07 February 2012 2,000,000 $.10
(A) $13,493 was charged to interest expense in conjunction with 3 out of 4 of
these issuances.
In December 2006 the Company issued 1,400,000 warrants to an officer of
the Company. The warrants are convertible into the Company's common stock at
$.20 per share and expire in ten years. These warrants were issued in
recognition of the substantial loans made to the Company. The Company will
record $139,908 as interest expense in conjunction with this issuance.
The warrants vested immediately.
In May 2006, $469,928 of Convertible Debentures previously
issued were reissued.
In conjunction with the above the Company issued 1,200,000 $0.20 five-
year warrants to purchase the Companys common stock. The warrants
vested immediately. The Company charged $269,968 to interest expense
on this transaction. $61,447 of debt discount is being written off at
approximately $5345 per month.
During the six months ended February 28, 2007 400,000 warrants expired.
The Company raised $288,880 through the sale of 1,839,872 shares of
unregistered common stock and the issuance of 919,936 warrants to purchase
common stock at prices between $.20 and $.52 per share to accredited
investors. (see item 2)
In January 2007 the Company issued 145,336 shares of the Companys common stock
and 72,668 warrants to consultants for a combined expense of $37,495 which
approximates the market value of such equities issued.
NOTE 7- Subsequent Events:
Subsequent to February 28, 2007 the Company repaid Mr. Oolie $5,500 of
the loan due to him.
In March 2007 a credito converted 20,000 warrants he was holding into
20,000 shares of the Companys common stock. The warrants were issued at
10,000 at $.07 and 10,000 at $.35. The Company reduced the creditors loan
by $4,200 to a current balance still due of $5,800. This loan bears no interest.
Also in March 2007 a warrant holder converted 100,000 warrants into
100,000 shares of the Companys common stock. These warrants were convertible
at $.20 per share. The Company received $20,000 in conjunction with the
conversion.
Also in March 2007 a creditor converted 56,000 warrants he was holding into
56,000 shares of the Companys common stock. The warrants were issued
at $.50. The company reduced the lender's loan by $26,800.
Also in March 2007 a creditor converted 65,000 warrants he was holding into
65,000 shares of the Companys common stock. The warrants were issued at
$.0.085,$.11 and $.30. The company reduced the lender's loan by $12,000 and
accounts payable by $600.
Page 11
In April 2007 an employee converted 35,000 warrants into 35,000 shares of
common stock. These warrant were convertible at $0.25 per share. The Company
reduced the employees accrued salary by $8,750 leaving a balance due him of
$8,596.10.
As of April 16, 2007, the Convertible Debenture 10% in the amount of $165,000
has matured and remains unpaid.
Warrants were issued in March and April of 2007 as follows:
Name Issue Expire Amount Price
Accredited investors (2) March 07 March 2012 8492 $.45 to $.95
Accredited investors (1) April 07 April 2012 2702 $ 1.11
For the period March 1, 2007 through April 02,2007 the Company sold
21,498 shares of unregistered common stock and warrants for $15,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company continued its product development and application testing and now
have numerous certifications for specific applications. Since August 1995,
the Company has applied for eight patents, five of which have been issued. The
other three are pending. Additionally, one patent has been purchased by the
Company. The Company has been increasing its marketing efforts principally by
retaining the services of specialized distribution firms. The Company's
management believes that marketing efforts to date have brought the Company
closer to achieving greater sales for applications in many diverse industries
including: military, maritime, wood products, structural steel and nuclear
power plants. Significant tests have been passed and approvals received to
qualify the Company's products in naval and other military and governments
applications. Aggressive marketing efforts are underway to obtain orders in
these applications. Obstacles encountered in obtaining orders for most
applications are the continuing tests and approvals required, competition
against well established and better capitalized companies, cost,
the slow process of specifying new products in highly regulated industrial
applications and the decision not to use any fire retardant product.
In general, the Company's products perform their intended uses well and are
in a form that is safe and easy to use. The Company's most pressing need
continues to be cash infusion as discussed below in the section on Liquidity
and Capital Resources. The Company is limiting its research and development
efforts in order to concentrate on sales of existing products. While new
market opportunities frequently arise, the Company has opted to concentrate
on targeting sales of present products rather than developing new products.
Efforts to establish additional U.S. distributors are being accelerated.
Additional efforts are also being directed to increase international sales
by establishing distributor relationships in strategic locations throughout
the industrialized world.
The number of manufacturing and quality control employees will increase with
increased production. The salaried administrative and marketing staff will be
evaluated and may be increased to support sales and marketing initiatives.
Additional support for direct sales is expected to be provided by independent
commission agents or employees compensated principally by commission.
COMPARISON SIX MONTHS ENDED February 28, 2007 AND February 28, 2006
Sales of $479,612 for the six months ended February 28, 2007 represented an
increase of 196% from the $162,347 for the comparable six-month period of
the prior year. Cost of goods sold during the same period increased from
$77,416 to $233,527 resulting in a gross profit of $246,055 compared to
$84,930 in the prior year. Selling, general and administrative expenses for
the six months ended February 28, 2007 were $641,849, representing increase
of $125,830 or 24.3% from the $516,019 of the similar period of the prior
year. The increase is due to equity based compensation expense of$136,337.
Page 12
COMPARISON THREE MONTHS ENDED February 28, 2007 And February 28, 2006
Sales of $241,114 for the three months ended February 28, 2007 represented an
increase of 141% from the $100,116 for the comparable three-month period of
the prior year. Cost of goods sold during the same period increased from
$41,184 to $106,008 resulting in a gross profit of $135,105 compared to
$58,932 in the prior year. Selling, general and administrative expenses for
the three months ended February 28, 2007 were $349,760, representing a
increase of $60,733 or 21 % from the $289,027 of the similar period of the
prior year.
During the periods ended February 28, 2007 and 2006 the Company realized
approximately $37,876 and $35,856, respectively, through the sale of a
portion of its New Jersey Net Operating Loss Carry Forward under a program
sponsored by that state.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 2007 the Company had a cash balance of $5,839.
On September 2, 2005 the Company borrowed, from an accredited investor,
$100,000 at the interest rate of 15%. The note had a one-year maturity
date. In October 2006 the Company paid $40,000 of the above debt with
accrued interest. The balance remains outstanding.
In conjunction with the above $100,000 note, ten year $.14 warrants
were issued for the purchase of 1,000,000 shares of the Company's
common stock. The recorded debt was discounted for the allocated value
to the warrants issued of $65,734 and is shown on the balance sheet as
$12,764 as of February 28, 2007 . The discount was amortized to
expense at approximately $16,000 per quarter.
The Company raised $288,880 through the sale of 1,839,872 shares of
unregistered common stock and the issuance of 919,936 warrants to purchase
common stock at prices between$.20 and $.52 per share to accredited investors.
The Company has deferred payment of $378,031 of the installments of the
Chapter 11 liability to unsecured creditors that was due in September 1996,
1997, 1998 and 1999. In order to pay those liabilities and meet working
capital needs until significant sales levels are achieved, the Company will
continue to explore alternative sources of funding including exercise of
warrants, bank and other borrowings, issuance of convertible debentures,
issuance of common stock to settle debt, and the sale of equity securities in
a public or private offering. There is no assurance that the Company will be
successful in securing the requisite financing.
New Accounting Pronouncements-
FASB 157 - Fair Value Measurements
In September 2006, the FASB issued FASB Statement No. 157. This
Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement
applies under other accounting pronouncements that require or permit
fair value measurements, the Board having previously concluded in those
accounting pronouncements that fair value is a relevant measurement
attribute. Accordingly, this Statement does not require any new fair
value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective
for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting
entity has not yet issued financial statements for that fiscal year.
Management believes this Statement will have no impact on the financial
statements of the Company once adopted.
Page 13
FASB 159 - Fair Value Option for Financial Assets and Financial
Liabilities
In February 2007, the FASB issued FASB Statement No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities - Including an Amendment
of FASB Statement No. 115" (SFAS 159). This Statement provides companies with
an option to measure, at specified election dates, many financial
instruments and certain other items at fair value that are not currently
measured at fair value. A company that adopts SFAS 159 will report unrealized
gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date. This Statement also establishes
presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar
types of assets and liabilities. This Statement is effective for fiscal
years beginning after November 15, 2007, which for us is the first quarter
of fiscal 2009. We do not believe that the adoption of SFAS 159 will have a
material impact on our results of operations or financial condition.
Item 3. CONTROLS AND PROCEDURES
Our management, including the Chief Executive Officer and Chief Financial
Officer, have conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15
under the Securities Exchange Act of 1934, as amended, (the "1934 Act"), as of
the end of the period covered by this Quarterly Report on Form 10-QSB. Based
on that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in
ensuring that information required to be disclosed in the reports we file
or submit under the 1934 Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms.
There have been no changes in internal controls over financial
reporting that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting
during the period covered by this report.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the six months ended February 28,2007 the Company sold to accredited
investors 895,958 shares of the Companys common stock for $117,480. In
conjunction, the Company issued five-year warrants to purchase 447,979 shares
of the Companys common stock at an exercise price of $.20 per share.
Date Title Number Cash Price
9/06 common 180,000 $.14
10/06 common 361,557 $.10
10/06 common 99,999 $.11
10/06 common 135,776 $.17
11/06 common 118,636 $.10
12/06 common 584,919 $.14 to $.18
1/07 common 209,583 $.15 to $.25
1/07 common 145,336 $.16
2/07 common 139,412 $.34
The proceeds were used for working capital.
Item 3. None
Page 14
Item 6. EXHIBITS
Exhibits 31.1 31.2 Certification of Financial Information
Exhibit 32.1 32.2 Sarbanes-Oxley Act Section 906 Certification
SIGNATURES
In accordance with the requirements of the 1934 Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 20, 2007 NoFire Technologies, Inc.
By: /s/ Samuel Gottfried
Sam Gottfried
Chief Executive Officer
By: /s/ Sam Oolie
Sam Oolie
Chairman of the Board,
Chief Financial Officer
Page 15