-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pq4M+9DFd0Q/zl/RjK2fk57iysOBo7Ot5KTLFJKRiP8VbGpRfFMOrN5hsrQVusY0 2cNJFUWW4rBt24SkYQHRiA== 0000823070-00-000004.txt : 20000411 0000823070-00-000004.hdr.sgml : 20000411 ACCESSION NUMBER: 0000823070-00-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000410 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOFIRE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000823070 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 133421355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19945 FILM NUMBER: 597343 BUSINESS ADDRESS: STREET 1: 21 INDUSTRIAL AVE CITY: UPPER SADDLE RIVER STATE: NJ ZIP: 07458 BUSINESS PHONE: 2018181616 10QSB 1 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 29, 2000 [ ] 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 (IRS 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: 16,595,151 shares of Common Stock as of April 3, 2000. 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. Unaudited Financial Statements: Balance Sheets as of February 29, 2000 and August 31, 1999 3 Statements of Operations for the Six Months ended February 29/28, 2000 and 1999; and the Three months ended February 29/28, 2000 and 1999 5 Statements of Cash Flows for the Six Months ended February 29/28, 2000 and 1999 6 Notes to Unaudited Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 Signatures 13 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS February 29, August 31, 2000 1999 ----------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 534,815 $ 338,089 Inventory 116,858 91,003 Prepaid expenses and other current assets 12,693 43,397 --------- ---------- Total Current Assets 664,366 472,489 --------- ---------- EQUIPMENT, less accumulated depreciation 14,363 7,333 --------- ---------- OTHER ASSETS: Patents, less accumulated amortization of $1,352,394 at February 29, 2000 and $1,201,596 at August 31, 1999 155,586 306,384 Excess of reorganization value over net assets, less accumulated amortization of $189,918 at February 29, 2000 and $168,816 at August 31, 1999 21,103 42,205 Security deposits 19,836 19,836 ---------- --------- 196,525 368,425 ---------- --------- $ 875,254 $ 848,247 ========== ========== See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS February 29, August 31, 2000 1999 ----------- ---------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Current portion of settled liabilities $1,235,469 $1,395,037 Accounts payable and accrued expenses 610,023 647,535 Loans, and advances payable to stockholders 10,250 26,250 Deferred salaries 650,226 650,226 8% convertible debentures - 436,002 ---------- --------- 2,505,968 3,155,050 ---------- --------- SETTLED LIABILITIES, LESS CURRENT MATURITIES 12,227 23,912 ---------- --------- STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.20 par value: Authorized - 50,000,000 shares Issued and outstanding - 16,595,151 shares at February 29, 2000 and 14,035,974 at August 31, 1999 3,319,030 2,807,195 Capital in excess of par value 2,319,748 1,158,217 Deficit accumulated in the development stage (7,281,719) (6,296,127) ---------- ---------- Total Stockholders' Equity (Deficiency) (1,642,941) (2,330,715) ---------- ---------- $ 875,254 $ 848,247 ========== ========== See accompanying notes to financial statements Page 4 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
July 13, 1987 (Date of For the Six Months For the Three Months Inception) Ended February 29/28, Ended February 29/28, through 2000 1999 2000 1999 February 29, 2000 ---------- ---------- ---------- ---------- ---------- (UNAUDITED) (UNAUDITED) NET SALES $ 63,726 $ 115,900 $ 18,313 $ 108,740 $ 735,315 ---------- ---------- ---------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 31,388 47,300 9,835 44,078 408,682 Write-down of excess inventory - - - - 35,000 General and administrative 961,294 707,276 513,650 342,911 10,287,070 ---------- ---------- ---------- ---------- ---------- 992,682 754,576 523,485 386,989 10,730,752 ---------- ---------- ---------- ---------- ---------- LOSS FROM OPERATIONS (928,956) (638,676) (505,172) (278,249) (9,995,437) ---------- ---------- ---------- ---------- ---------- OTHER EXPENSES: Interest expense 58,441 91,216 26,729 52,548 1,032,064 Interest income (1,805) (706) (150) (14) (11,517) Reorganization items - - - - 365,426 Litigation settlement - - - - 198,996 ---------- ---------- ---------- ---------- ---------- 56,636 90,510 26,579 52,534 1,584,969 ---------- ---------- ---------- ---------- ---------- LOSS BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM (985,592) (729,186) (531,751) (330,783) (11,580,406) DISCONTINUED OPERATIONS - - - - (1,435,392) ---------- ---------- ---------- ---------- ---------- LOSS BEFORE EXTRAORDINARY ITEM (985,592) (729,186) (531,751) (330,783) (13,015,798) EXTRAORDINARY ITEM - Gain on debt discharge - - - - 507,952 ---------- ---------- ---------- ---------- ---------- NET LOSS $ (985,592) $ (729,186) $ (531,751) $ (330,783) $(12,507,846) ========== ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 14,538,952 12,468,515 14,287,463 12,403,548 ========== ========== ========== ========== EARNINGS (LOSS) PER SHARE, BASIC AND DILUTED $ (0.07) $ (0.06) $ (0.04) $ (0.03) ========== ========== ========== ==========
See accompanying notes to financial statements Page 5 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
July 13, 1987 (Date of For the Six Months Inception) Ended February 29/28, through 2000 1999 February 29, 2000 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (985,592) $ (729,186) $(12,507,846) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 172,798 171,385 1,644,292 Extraordinary gain on debt discharge - - (507,952) Amortization of interest expense for settled liabilities - 34,234 634,522 Revaluation of assets and liabilities to fair value - - 482,934 Litigation settlement - - 198,996 Common stock issued in exchange for services - - 131,700 Write-down of excess inventory - - 35,000 Changes in operating assets and liabilities (net of effects from reverse purchase acquisition) Inventory (25,855) (43,530) (151,858) Prepaid expenses 30,704 (13,053) (12,693) Accounts payable and accrued expenses 99,852 13,129 2,994,374 Security deposits - - (19,836) Deferred salaries - 70,005 650,226 Obligation from discontinued operations - - 51,118 ---------- --------- ---------- Net cash flows from operating activities (708,093) (497,016) (6,377,023) ---------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (7,928) (1,773) (40,712) Increase in patent costs - - (139,270) Acquisition accounted for as a reverse purchase - - (517,893) ----------- --------- ---------- Net cash flows from investing activities (7,928) (1,773) (697,875) ----------- --------- ----------
See accompanying notes to financial statements Page 6 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
July 13,1987 (Date of For the Six Months Inception) Ended February 29/28, through 2000 1999 February 29, 2000 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable - - 721,000 Principal Payments on notes payable - - (75,000) Principal Payment of settled liabilities (171,253) (100,994) (2,815,152) Proceeds from issuance of common stock, net of related expenses 1,100,000 498,481 8,547,500 Proceeds from issuance of long-term debt - - 785,113 Net loans and advances from stockholders (16,000) (6,619) 10,250 Issuance (repayment) of 8% convertible debentures - 436,002 ---------- ---------- ---------- Net cash flows from financing activities 912,747 390,868 7,609,713 ---------- ---------- ---------- NET CHANGE IN CASH 196,726 (107,921) 534,815 CASH AT BEGINNING OF PERIOD 338,089 170,400 - ---------- ---------- ---------- CASH AT END OF PERIOD $ 534,815 $ 62,479 $ 534,815 ========== ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 27,485 $ 12,090 $ 89,859 ========== ========== ========== Income taxes paid $ - $ - $ - ========== ========== ========== Common stock issued in exchange for settlement of debt and accrued interest $ 573,366 $ 18,481 $ 845,176 ========== ========== ========== Common stock issued in exchange for subscriptions receivable $ - $ - $ 95,000 ========== ========== ========== Common stock issued in exchange for services $ - $ - $ 131,700 ========== ========== ==========
See accompanying notes to financial statements Page 7 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 29, 2000 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, 1999 (the "10-KSB")and is presented for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments which 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 generally accepted accounting principles 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. Loss per Share - Loss per share is based on the weighted average number of shares outstanding during the periods. The effect of warrants outstanding and shares issuable in connection with convertible debentures is not included since it would be anti-dilutive. NOTE 2 - Reorganization: Prior to August 11, 1995, the effective date of its confirmed Plan of Reorganization (the "Plan") pursuant to Chapter 11 proceedings under the United States Bankruptcy Code (the "Code"), the Company operated under the name of PNF Industries, Inc. ("PNF") and subsidiaries. Effective August 6, 1991, PNF acquired the outstanding common stock of both No Fire Engineering, Inc. and No Fire Ceramic Products, Inc. in a transaction accounted for as a reverse acquisition. Both of those subsidiaries were dissolved during the fiscal year ended August 31, 1997. On August 31, 1994, involuntary petitions for relief under Chapter 11 of the Code were filed against the Company and certain of its subsidiaries. Under the provisions of the Code, claims against the Company in existence prior to the Petition Date were stayed. On April 7, 1995 the Bankruptcy Court confirmed the Plan. The Plan provided for a fixed amount that would pay in full over a four year period virtually all pre-petition claims known on the confirmation date. With additional claims approved after that date considered, the fixed amount covered 94% of final approved claims. On August 11, 1995, the effective date of the Plan, PNF emerged from Chapter 11 as a reorganized company under the name NoFire Technologies, Inc. As of that date, the Company adopted "fresh start reporting" and implemented the effects of such adoption in its balance sheet as of August 31, 1995. Page 8 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 29, 2000 NOTE 3 - Fresh Start Reporting: At August 31, 1995, under the principles of fresh start reporting, the Company's total assets were recorded at their estimated reorganization value of $1,750,000, with such value allocated to identifiable assets on the basis of their estimated fair value. The reorganization value included the patents for intumescent fire retardant products which patents were valued at $1,500,000. 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 obtaining additional financing. 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 actions it has undertaken to revise the Company's operating and marketing structure will provide it with the opportunity to generate revenues and improve its operating performance. Agreements for future infusion of capital are discussed in the Management's Discussion of Liquidity and Capital Resources section. Page 9 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 29, 2000 NOTE 5 - Warrants: The Company has issued warrants for the purchase of common stock as follows: Shares Exercise Price ---------- -------------- 2,400,000 $ .50 800,000 .5625 4,104,480 .67 2,777,780 .72 22,500 .75 4,564,718 1.00 52,000 1.25 978,500 1.50 3,459,275 2.00 35,000 2.50 1,222,500 3.00 50,000 3.25 12,000 5.00 ---------- 20,478,753 The warrants vest to the holders in various intervals ranging from issue date to seven years from issuance. Page 10 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 has several certifications for specific applications. Since August 1995, the Company has applied for eight patents, two of which have been issued and two others have been allowed so that patents will be issued shortly. The other four are pending. Additionally, one patent has been purchased. The Company is substantially increasing its marketing efforts by employing an experienced marketing executive and retaining the services of specialized marketing firms. Marketing efforts to date have brought the Company closer to achieving significant sales for applications in such diverse industries as naval and commercial ships including high-speed ferries, wood product building components, concrete and structural steel column protection and automotive. The Company's principal product was recently listed on the U.S. Navy's Qualified Products List (QPL). Aggressive marketing efforts have begun to obtain orders for applications in the Navy and other military and governmental agencies. In the high-speed ferry project, the Company's fire protection system has passed stringent tests and was approved for use by Transport of Canada. In the nuclear power generating industry, an unaffiliated contractor has been qualified to upgrade the fire protection of electrical cables at U.S. nuclear power plants specifying the Company's product. The first purchase orders, valued at $190,000, to provide materials for that application were shipped in the last fiscal year. Obstacles encountered in obtaining orders are the continuing tests and approvals required, competition against well established and better capitalized companies, cost, and the slow process of specifying new products in highly regulated industrial applications. In general, the Company's products perform their intended uses well and are beginning to be sold commercially 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 intends to continue its research and testing efforts to meet new market opportunities. 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 sales and marketing support is expected to be provided by commissioned independent agents. COMPARISON SIX MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999 Sales of $63,726 for the six months ended February 29, 2000 represented a decrease of $52,174 from the $115,900 of the comparable six-month period of the prior year. Cost of goods sold during the same periods were $31,388 compared to $47,300, resulting in a gross profit of $32,338 compared to $68,600 in the prior year. General and administrative expenses for the six months ended February 29, 2000 were $961,294 representing an increase of $254,018 or 36% from the $707,276 of the similar period of the prior year. The most significant increases were $129,100 in officers' salaries and $30,500 in testing expenses. These were partially offset by a reduction of $25,000 in professional fees. The $32,775 reduction in interest expense is mainly the result of the elimination in the later period of the amortization of interest expense for settled Chapter 11 liabilities. Page 11 COMPARISON THREE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999 Sales of $18,313 for the three months ended February 29, 2000 represented a decrease of $90,427 from the $108,740 for the comparable three-month period of the prior year. The earlier year's sales included a shipment of $100,000 to a contractor upgrading the fire protection of a U.S. nuclear power plant. Cost of goods sold for the same periods decreased from $44,078 to $9,835, resulting in a gross profit of $8,478 compared to $64,662 in the similar period of the prior year. General and administrative expenses for the three months ended February 29, 2000 were $513,650 representing an increase of $170,739 or 50% from the $342,911 of the similar period of the prior year. The most significant increases were $65,700 in officers' salaries and $25,000 in testing expenses. These were partially offset by a reduction of $40,000 in professional fees. The $25,819 reduction in interest expense is mainly the result of the elimination in the later period of the amortization of interest expense for settled Chapter 11 liabilities. LIQUIDITY AND CAPITAL RESOURCES At February 29, 2000 the Company had cash balances of $534,815. In order to fund continuing operations during the six months ended on that date, $1,100,000 was obtained by the sale of 1,641,791 units consisting of one share of common stock and five-year warrants to purchase two and one-half shares at an exercise price of $.67 per share. This sale was to the group of accredited investors noted below. In another agreement, at their option or when certain sales criteria are met, that same investment group will invest an additional $650,000 in exchange for 866,667 units consisting of one share of common stock and five-year warrants for two and one-half shares at an exercise price of $0.75 per share. The investment group has advised the Company that it has and will continue to file all reports with the SEC that it deems appropriate including Schedule 13D and Forms 3 and 4. Because of the Company's limited cash resources, it has deferred payment of $1,210,477 of the installments of the Chapter 11 liability to unsecured creditors that were due in September 1996, 1997, 1998 and 1999. Of that deferred amount, $790,686 is due to officers and directors of the Company. On January 31, 2000, the Company exchanged 917,385 shares of its common stock for the conversion of $436,002 8% debentures along with $137,364 of accrued interest on that debt. In order to meet its liabilities and 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 such as sales under the agreements noted above. Page 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended February 29, 2000. 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. Dated: April 10, 2000 NoFire Technologies, Inc. By: /s/ Robert R. Isen Robert R. Isen Chief Executive Officer By: /s/ Sam Oolie Sam Oolie Chairman of the Board, Chief Operating Officer and Treasurer Page 13 EX-27 2
5 This schedule contains summary financial information extracted from the unaudited Balance Sheet as of February 29, 2000 and the unaudited Statement of Operations for the six months then ended and is qualified in its entirety by reference to such financial statements. 6-MOS AUG-31-2000 FEB-29-2000 534,815 0 0 0 116,858 664,366 40,712 26,349 875,254 2,505,968 0 0 0 3,319,030 (4,961,971) 875,525 63,726 63,726 31,388 961,294 0 0 56,636 (985,592) 0 (985,592) 0 0 0 (985,592) (0.07) (0.07)
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