-----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, O8V6RWBvEs9mYfQbXahcKlx78M1iRQckb+7fk1ESkdxUyMW3JSRvyYN5RamJGDfP rVtH6/z88lWgNy29kkdk6Q== 0000823070-01-000002.txt : 20010122 0000823070-01-000002.hdr.sgml : 20010122 ACCESSION NUMBER: 0000823070-01-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001130 FILED AS OF DATE: 20010105 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: 1502290 BUSINESS ADDRESS: STREET 1: 21 INDUSTRIAL AVE CITY: UPPER SADDLE RIVER STATE: NJ ZIP: 07458 BUSINESS PHONE: 2018181616 10QSB 1 0001.txt 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 November 30, 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 (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: 16,631,151 shares of Common Stock as of December 31, 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 November 30, 2000 and August 31, 2000 3 Statements of Operations for the Three Months ended November 30, 2000 and 1999 5 Statements of Cash Flows for the Three Months ended November 30, 2000 and 1999 6 Notes to Unaudited Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 Signatures 12 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS November 30, August 31, 2000 2000 ----------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 428,581 $ 103,607 Accounts receivable - trade 2,840 23,712 Inventory 127,066 102 694 Prepaid expenses and other current assets 49,475 54,522 --------- ---------- Total Current Assets 607,962 284,535 --------- ---------- EQUIPMENT, less accumulated depreciation 12,886 13,466 --------- ---------- OTHER ASSETS: Patents, less accumulated amortization of $1,504,844 at November 30, 2000 and $1,503,192 at August 31, 2000 28,187 29,839 Security deposits 19,379 19,379 ---------- --------- 47,566 49,218 ---------- --------- $ 668,414 $ 347,219 ========== ========== See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS November 30, August 31, 2000 2000 ----------- ---------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Current portion of settled liabilities $1,205,638 $1,211,416 Accounts payable and accrued expenses 707,723 795,859 Loans and advances payable to stockholders 10,250 10,250 Deferred salaries 650,226 650,226 Convertible debentures - current 500,000 500,000 ---------- --------- Total Current Liabilities 3,073,837 3,167,751 ---------- --------- OTHER LIABILITIES: Convertible debentures - 1/2% over prime due April 30, 2002 600,000 - ---------- --------- STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.20 par value: Authorized - 50,000,000 shares Issued and outstanding - 16,631,151 shares at November 30, 2000 and 16,595,151 at August 31, 2000 3,326,230 3,319,030 Capital in excess of par value 2,250,071 2,247,191 Deficit accumulated in the development stage (8,581,724) (8,386,753) ---------- ---------- Total Stockholders' Equity (Deficiency) (3,005,423) (2,820,532) ---------- ---------- $ 668,414 $ 347,219 ========== ========== 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 Three Months Inception) Ended November 30, through 2000 1999 November 30, 2000 ---------- --------- ---------- (UNAUDITED) (UNAUDITED) NET SALES $ 37,220 $ 45,413 $ 851,133 ---------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 16,758 21,553 466,730 Write-down of excess inventory - - 55,000 General and administrative 373,832 447,644 11,714,073 ---------- ---------- ---------- 390,590 469,197 12,235,803 ---------- ---------- ---------- LOSS FROM OPERATIONS (353,370) (423,784) (11,384,670) ---------- ---------- ---------- OTHER EXPENSES: Interest expense 50,361 31,712 1,156,940 Interest income (1,993) (1,655) (18,854) Reorganization items - - 365,426 Litigation settlement - - 198,996 ---------- ---------- ---------- 48,368 30,057 1,702,508 ---------- ---------- ---------- LOSS BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM (401,738) (453,841) (13,087,178) DISCONTINUED OPERATIONS - - (1,435,392) ---------- ---------- ---------- LOSS BEFORE EXTRAORDINARY ITEM (401,738) (453,841) (14,522,570) EXTRAORDINARY ITEM - Gain on debt discharge - - 507,952 ---------- ---------- ---------- LOSS BEFORE INCOME TAXES $ (401,738) $ (453,841) $(14,014,618) DEFERRED INCOME TAX BENEFIT 206,767 - 206,767 ---------- ---------- ---------- NET LOSS $ (194,971) $ (453,841) $(13,807,851) ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 16,610,151 14,035,974 ========== ========== EARNINGS (LOSS) PER SHARE, BASIC AND DILUTED $ (0.01) $ (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 Three Months Inception) Ended November 30, through 2000 1999 November 30, 2000 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (194,971) $ (453,841) $(13,807,851) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 2,232 86,366 1,819,321 Extraordinary gain on debt discharge - - (507,952) Amortization of interest expense for settled liabilities - - 634,522 Revaluation of assets and liabilities to fair value - - 482,934 Litigation settlement - - 198,996 Common stock issued in exchange for services 10,080 - 141,780 Write-down of excess inventory - - 55,000 Changes in operating assets and liabilities (net of effects from reverse purchase acquisition) Accounts receivable - trade 20,872 - (2,840) Inventories (24,372) (15,849) (182,066) Prepaid expenses 5,047 30,818 (49,475) Accounts payable and accrued expenses (88,136) 31,889 3,092,074 Security deposits - - (19,379) Deferred salaries - - 650,226 Obligation from discontinued operations - - 51,118 ---------- --------- ---------- Net cash flows from operating activities (269,248) (320,617) (7,443,592) ---------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment - (6,000) (40,712) Increase in patent costs - - (164,320) Acquisition accounted for as a reverse purchase - - (517,893) ----------- --------- ---------- Net cash flows from investing activities - (6,000) (722,925) ----------- --------- ----------
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 Three Months Inception) Ended November 30, through 2000 1999 November 30, 2000 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt - - 1,506,113 Principal payments on notes payable - - (75,000) Principal payment of settled liabilities (5,778) (93,298) (2,857,210) Proceeds from issuance of common stock, net of related expenses - - 8,474,943 Payments on advances from stockholders - - (60,750) Loans and advances from stockholders - 194,500 79,053 Interest accrued on loans from stockholders - - (8,053) Proceeds from issuance of convertible debentures 600,000 - 1,536,002 ---------- ---------- ---------- Net cash flows from financing activities 594,222 101,202 8,595,098 ---------- ---------- ---------- NET CHANGE IN CASH 324,974 (225,415) 428,581 CASH AT BEGINNING OF PERIOD 103,607 338,089 - ---------- ---------- ---------- CASH AT END OF PERIOD $ 428,581 $ 112,674 $ 428,581 ========== ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 1,349 $ 1,370 $ 72,575 ========== ========== ========== Income taxes paid (received) $ (206,767) $ - $ (206,767) ========== ========== ========== Common stock issued in exchange for settlement of debt $ - $ - $ 845,176 ========== ========== ========== Common stock issued in exchange for subscriptions receivable $ - $ - $ 95,000 ========== ========== ========== Common stock issued in exchange for services $ 10,080 $ - $ 141,780 ========== ========== ==========
See accompanying notes to financial statements Page 7 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) November 30, 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, 2000 (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: The Company owned 89% of the outstanding common stock of both No Fire Ceramic Products, Inc. and No Fire Engineering, Inc. together with an option to acquire the remaining 11% of such stock. Both of those subsidiaries were dissolved during the fiscal year ended August 31, 1997. 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. Page 8 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) November 30, 2000 NOTE 3 - 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 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. Agreements for future infusion of capital are discussed in the Management's Discussion of Liquidity and Capital Resources section. NOTE 4 - Warrants: The Company has issued warrants for the purchase of common stock as follows: Shares Exercise Price ---------- -------------- 40,000 $ .40 2,940,000 .50 700,000 .5625 4,104,480 .67 2,777,780 .72 22,500 .75 4,668,718 1.00 52,000 1.25 178,500 1.50 3,435,275 2.00 422,500 3.00 ---------- 19,341,753 The warrants vest to the holders in various intervals ranging from issue date to seven years from issuance. Page 9 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 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 is substantially increasing its marketing efforts principally by retaining the services of specialized marketing 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, shipping, wood products, structural steel and nuclear power plants. Significant tests were passed and approvals received in the past fiscal year to qualify the Company's products in naval and other military and governmental 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, and most importantly, 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 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 commissioned independent agents. COMPARISON THREE MONTHS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999 Sales of $37,220 for the three months ended November 30, 2000 represented a decrease of 18% from the $45,413 for the comparable three-month period of the prior year. Cost of goods sold during the same periods decreased 22% from $21,553 to $16,758 resulting in a gross profit of $20,462 compared to $23,860 in the prior year. Selling, general and administrative expenses for the three months ended November 30, 2000 were $373,832, representing a decrease of $73,812 or 16% from the $447,644 of the similar period of the prior year. The most significant change was a decrease of $84,000 in the amortization of patents and other assets. The value of those assets was established at the conclusion of the Chapter 11 proceeding in 1995 and was amortized over five years ending in fiscal 2000. This reduced expense was partially offset by an increase of $33,900 in professional fees which included costs for resolution Page 10 of matters related to the issuance of the new convertible debentures and acceleration of the cost of the annual audit. The $18,311 increase in interest expense mainly results from the interest accrued on the new convertible debentures. During the quarter in 2000, the Company realized $206,767 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 November 30, 2000 the Company had cash balances of $428,581. In order to fund continuing operations during the three months ended on that date, $600,000 was obtained through issuance of convertible debentures. The debentures are convertible into common stock at a price of $0.50 per share, bear interest at 1/2% over the prime rate and mature on April 30, 2002. If interest payments are current, the Company may extend the maturity date to December 31, 2002. The issuance was to an accredited investor. An additional $206,767 was obtained through the sale of New Jersey Operating Loss Carry Forward as described above. In an existing agreement, at their option or when certain sales criteria are met, an investment group consisting of accredited investors 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 exercised prior agreements of this nature, and has advised the Company that it has and will continue to file all reports with the SEC that it deems appropriate including Schedules 13D and Forms 3 and 4. Because of its limited cash resources, the Company has deferred payment of $1,187,503 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. 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 such as sales under the agreement noted above. There is no assurance that the Company will be successful in securing requisite financing. Page 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended November 30, 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: January 2, 2001 NoFire Technologies, Inc. By: /s/ William A. Retz William A. Retz Chief Executive Officer By: /s/ Sam Oolie Sam Oolie Chairman of the Board, Chief Operating Officer and Treasurer Page 12 EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from the unaudited Balance Sheet as of November 30, 2000 and the unaudited Statement of Operations for the three months then ended and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-2001 NOV-30-2000 428,581 0 2,840 0 127,066 607,962 40,713 27,827 668,414 3,073,837 600,000 0 0 3,326,230 (6,331,653) 668,414 37,220 37,220 16,758 373,832 0 0 48,368 (401,738) 206,767 (194,971) 0 0 0 (194,971) (0.01) (0.01)
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