-----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, NDzkENPz9F8xM9Yt8EFN88npieIatXk4sVctcrvuTb9f69paxXHxHIjlJj5gMD1+ LTaNhvfkCQTeplaoQNzHYw== 0000823070-03-000008.txt : 20030115 0000823070-03-000008.hdr.sgml : 20030115 20030114180303 ACCESSION NUMBER: 0000823070-03-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021130 FILED AS OF DATE: 20030115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOFIRE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000823070 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 223218682 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19945 FILM NUMBER: 03514106 BUSINESS ADDRESS: STREET 1: 21 INDUSTRIAL AVE CITY: UPPER SADDLE RIVER STATE: NJ ZIP: 07458 BUSINESS PHONE: 2018181616 FORMER COMPANY: FORMER CONFORMED NAME: NFW CAPITAL GROUP INC DATE OF NAME CHANGE: 19900427 FORMER COMPANY: FORMER CONFORMED NAME: PORTAFONE INTERNATIONAL CELLULAR COMMUNICATIONS INC DATE OF NAME CHANGE: 19920128 FORMER COMPANY: FORMER CONFORMED NAME: PNF INDUSTRIES INC DATE OF NAME CHANGE: 19950913 10QSB 1 r10q1102.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, 2002 [] 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: 20,622,352 shares of Common Stock as of January 08,2003. 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 November 30, 2002(unaudited) and August 31, 2002 3 Statements of Operations for the Three Months ended November 30,2002 and 2001 (unaudited) 5 Statements of Cash Flows for the Three Months ended November 30, 2002 and 2001 6 (unaudited) 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 Certification of Financial Information 13 Sarbanes-Oxley Act Section 906 Certification Exhibit 1 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS November 30, August 31, 2002 2002 ----------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 1,587 $ 483 Accounts receivable - trade 2,417 26,086 Inventories 121,485 138,285 Prepaid expenses and other current assets 40,692 52,219 Receivable for sale of tax loss carryforward 179,719 - --------- ---------- Total Current Assets 345,900 217,073 --------- ---------- EQUIPMENT, less accumulated depreciation 8,238 8,819 --------- ---------- OTHER ASSETS: Patents, less accumulated amortization of $1,518,057 at November 30, 2002 and $1,516,404 at August 31, 2002 14,974 16,627 Security deposits 19,379 19,379 ---------- --------- 34,353 36,006 ---------- --------- $ 388,491 $ 261,898 ========== ========== See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS
November 30, August 31, 2002 2002 ----------- ---------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Settled liabilities $1,178,432 $1,178,432 Accounts payable and accrued expenses 1,077,422 1,022,456 Loans and advances payable to stockholders 15,595 10,550 Deferred salaries 1,154,176 1,071,639 Loan payable 135,000 60,000 ---------- --------- Total Current Liabilities 3,560,625 3,343,077 ---------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.20 par value: Authorized - 50,000,000 shares Issued and outstanding - 20,627,530 shares at November 30, 2002 and August 31, 2002 $4,125,505 $ 4,125,506 Capital in excess of par value 3,308,919 3,352,919 Deficit accumulated in the development stage (10,606,558) (10,559,604) ---------- ---------- Total Stockholders' Equity (Deficiency) (3,172,134) (3,081,179) ---------- ---------- $ 388,491 $ 261,898 ========== ==========
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 2002 2001 November 30, 2002 ---------- --------- ---------- (UNAUDITED) (UNAUDITED) NET SALES $ 101,593 $ 61,088 $ 1,403,793 ---------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 52,636 34,038 734,378 Write-down of excess inventory - - 55,000 General and administrative 238,617 287,639 14,112,391 ---------- ---------- ---------- 291,253 321,677 14,901,769 ---------- ---------- ---------- LOSS FROM OPERATIONS (89,660) (260,589) (13,497,976) ---------- ---------- ---------- OTHER EXPENSES: Interest expense 37,088 32,629 1,459,508 Interest income ( 75) ( 102) (24,215) Reorganization item - - 365,426 Litigation settlement - - 198,996 ---------- ------- ---------- 37,013 32,5 1,999,715 ---------- ------- ---------- LOSS BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM (226,673) (293,116 (15,497,691) DISCONTINUED OPERATIONS - (1,435,392) ---------- ---------- ---------- LOSS BEFORE EXTRAORDINARY ITEM (226,673) (293,116) (16,933,083) EXTRAORDINARY ITEM - Gain on debt discharge - - 507,952 ---------- --------- ---------- LOSS BEFORE INCOME TAES (226,673) (293,11 (16,425,131) DEFERRED INCOME TAX BENEFIT 179,719 205,960 592,446 ---------- ---------- ---------- NET LOSS $ (46,954) $ (87,156) $(15,832,685) ========== ========= ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,627,530 19,820,430 ========== ========== BASIC AND DILUTED EARNINGS LOSS PER COMMON SHARE $ (0.00) $ (0.00) ========== ==========
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 2002 2001 November 30, 2002 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (46,954) $ ( 87,156) $(15,832,685) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 2,234 2,232 1,837,182 Extraordinary gain on debt dischare - - (507,952) Amortization of interest expense for Settled liabilities - 634,522 Amortization of interest expense for discount on note payable - 6,742 13,484 Revaluation of assets and liabilities to fair value - - 482,934 Litigation settlement - - 198,996 Common stock issued in exchange for services - - 141,780 Repricing of warrants (44,000) Write-down of excess inventory - - 55,000 Changes in operating assets and liabilities (net of effects from reverse purchase acquisition) Accounts receivable - trade 23,668 8,070 ( 2,418) Inventories 16,800 30,000 (176,485) Prepaid expenses 11,526 (1,230) (40,693) Receivable for sale of state tax loss carryforward (179,719) (205,960) (179,719) Accounts Payable and accrued exp. 60,012 17,820 3,561,459 Security deposits - - (19,379) Deferred salaries 82,537 56,819 1,154,476 Obligation from discontinued operations - - 51,118 ---------- --------- ---------- Net cash flows from operating activities ( 73,896) (172,663) (8,628,380) ---------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment - - (40,712) Increase in patent costs - - (164,320) Acquisition accounted for as a reverse purchase - - (517,893) ----------- --------- ---------- Net cash flows from investing activities - - (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 2002 2001 November 30, 2002 --------- --------- ---------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt - - 1,506,113 Principal payments on notes payable - - (75,000) Principal payment on settled liabilities - - (2,884,416) Proceeds from issuance of common stock, net of related expenses - - 8,724,943 Payments on advances from stockholders - - (60,750) Loans and advances from stockholders - - 79,053 Interest accrued on loans from stockholders - - (8,053) Proceeds from issuance of convertible debentures - - 1,936,002 Proceeds from short-term loans 75,000 150,000 135,000 ---------- ---------- --------- Net cash flows from financing activities 75,000 150,000 9,352,892 ---------- ---------- ---------- NET CHANGE IN CASH 1,104 (22,663) 1,587 CASH AT BEGINNING OF PERIOD 483 44,412 - ---------- ---------- ---------- CASH AT END OF PERIOD $ 1,587 $ 21,749 $ 1,587 ========== ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ - $ 817 $ 80,253 ========== ========== ========== Income taxes paid (received) $ $ (205,960) (592,446) ========== ========== ========== Common stock issued in exchange for settlement of debt $ - $ - $2,439,816 ========== ========== ========== 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) November 30, 2002 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, 2002 (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 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. 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. 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, 2002 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/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 4 - Loan Payable: In November 2002,the company borrowed $75,000 from an accredited investor. The loan bears interest of 12% and is secured by the assignment of the proceeds of the fiscal 2003 sale of the state operating loss carryforward. 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 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 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, the slow process of specifying new products in highly regulated industrial applications, and the decisions 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. William A. Retz, R. Adm., USN (Ret) resigned effective January 2, 2003 as chief executive officer, director, and employee of the Company for personal reasons Admiral Retz has not had any disagreements with the management of the Company. Admiral Retz is continuing to perform servies for the Company, and Admiral Retz and the Company are negotiating an agreement pursuant to which such services will be rendered. Dr. Samuel Gottfried, President of the Company has been selected by the Board of Directors to serve as chief executive officer. COMPARISON THREE MONTHS ENDED NOVEMBER 30, 2002 AND NOVEMBER 30, 2001 Sales of $101,593 for the three months ended November 30, 2002 represented an increase of 66% from the $61,088 for the comparable three-month period of the prior year. Cost of goods sold during the same periods increased 55.5% from $34,038 to $52,636 resulting in a gross profit of $48,957 compared to $27,050 in the prior year. Selling, general and administrative expenses for the three months ended November 30, 2002 were $238,617, representing a decrease of $49,022 or 17.3% from the $287,639 of the similar period of the prior year. The most significant reduction was $44,000 in repricing warrants. Page 10 During the quarters ended November 30, 2002 and 2001 the Company realized approximately $181,000 and $206,000, 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 November 30, 2002 the Company had cash balances of $ 1,587. In order to fund continuing operations during the three months ended on that date, $ 75,000 was obtained through a sale of a note to an accredited investor. The note bears interest of 12% and is secured by the assignment of the proceeds of the fiscal 2003 sale of the state operating loss carryforward described above. On December 17,2002, the Company received approximately $180,000due from the sale of their New Jersey State net operating loss carryforward, and repayment of this obligation was made. 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. 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, 2002. 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 12,2003 NoFire Technologies, Inc. By: /s/ Samuel Gottfreid Samuel Gottfreid Chief Executive Officer By: /s/ Sam Oolie Sam Oolie Chairman of the Board, Chief Financial Officer Page 12 I, Sam Oolie, certify that: 1. I have reviewed this annual report on Form 10-KSB of NoFire Technologies, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report,fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I indicated in this quarterly report that there were no significant changes in internal controls or in other factors that could significantly affect internal control subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date:January 12, 2003 /s/Sam Oolie --------------------------- Sam Oolie, Chief Financial Officer Page 13 I, Samuel Gottfried certify that: 1. I have reviewed this annual report on Form 10-KSB of NoFire Technologies, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report,fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 12,2002 /s/ Samuel Gottfreid --------------------- Samuel Gottfreid Chief Executive Officer Page 14 CERTIFICATION Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of NoFire Technologies, Inc., a Delaware corporation (the company), does hereby certify, to the best of such officer's knowledge and belief, that: The Quarterly Report on Form 10-QSB for the Quarter ended November 30,2002 of the Company fully complies with the requirements of section (a) or 15 (d) of the Securities Exchange Act of 1934: and The information contained in the Form 10-QSB fairly presents in all material respects, the financial condition and results of operations the Company. Dated: January 12, 2003 /s/ Samuel Gottfreid ----------------------- Chief Executive Officer Dated: January 12, 2003 /s/ Sam Oolie ----------------------- Chief Financial Officer EXHIBIT 1 -----END PRIVACY-ENHANCED MESSAGE-----