10QSB 1 r10qsb0506.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 May 31, 2006 [] 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: 35,156,622 shares of Common Stock as of July 19, 2006 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 May 31, 2006(unaudited) and August 31, 2005 3 Statements of Operations for the Nine Months and Three months ended May 31, 2006 and 2005 (unaudited) 5 Statements of Cash Flows for the Nine Months ended May 31, 2006 and 2005. (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 13 Part II - OTHER INFORMATION Item 1. Legal 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 6. Exhibits 14 Signatures 14 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 May 31, August 31, 2006 2005 ----------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 4,253 $14,099 Accounts receivable - trade 5,999 5,313 Inventories 52,051 81,628 Prepaid expenses and other current assets 25,841 6,645 --------- ---------- Total Current Assets 88,144 107,685 --------- ---------- EQUIPMENT, less accumulated depreciation 1,480 2,665 --------- ---------- OTHER ASSETS: Security deposits 28,048 26,000 ---------- --------- 28,048 26,000 ---------- --------- $ 117,672 $136,350 ========== ========== See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. BALANCE SHEETS May 31, August 31, 2006 2005 ----------- ---------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Settled liabilities $ 378,031 $ 378,031 Accounts payable and accrued expenses 1,213,794 841,036 Loans and advances payable to Stockholders 441,088 408,610 Deferred salaries 1,759,438 1,440,445 Loans payable 367,647 279,300 Convertible Debentures 8% (net) 408,481 469,928 ---------- -------- Total Current Liabilities 4,568,479 3,817,350 ---------- -------- LONG TERM LIABILITY - - STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.01 par value: Authorized - 150,000,000 shares Issued and outstanding 35,156,622 shares at May 31, 2006 and 34,806,622, as of August 31, 2005 351,566 348,066 Capital in excess of par value 13,737,149 13,160,269 Unearned compensation 0 (3,675) Accumulated Deficit (18,539,522) (17,185,660) ---------- ---------- Total Stockholders' Equity (Deficiency) (4,450,807) (3,681,000) ---------- ---------- $ 117,672 $ 136,350 ========== ========== See accompanying notes to financial statements Page 4 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF OPERATIONS
For the Nine Months For the Three Months Ended May 31, Ended May 31, 2006 2005 2006 2005 ---------- ------ ------ ------ (UNAUDITED) (UNAUDITED) NET SALES $ 222,273 $ 464,691 $ 60,026 $ 274,777 ---------- --------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 123,386 170,742 45,969 61,963 Research and development costs 34,190 36,773 14,079 14,805 General and administrative 790,118 939,685 282,815 457,553 Equity based compensation expense 43,443 70,565 78,753 20,560 ---------- ---------- ----------- ---------- 991,137 1,217,765 421,616 554,881 ---------- --------- ----------- -------- LOSS FROM OPERATIONS (768,764) (753,074) (361,590) (280,104) ---------- ---------- ----------- ---------- OTHER EXPENSES: Interest expense 338,997 136,863 87,195 49,555 Interest income - 70 - 225 Equity based interest expense 281,883 556,827 281,883 465,879 ---------- ---------- ------------ --------- 620,880 693,760 369,078 515,659 ---------- ---------- ------------ --------- LOSS BEFORE INCOME TAXES (1,389,644) (1,446,834) (730,668) (795,763) DEFERRED INCOME TAX BENEFIT 35,783 43,225 - - ---------- ---------- ------------- --------- NET LOSS $(1,353,861) $(1,403,609) (730,668) $(795,763) ========== ========== ============= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 34,956,622 31,401,705 35,131,622 31,401,705 ========== ========== ============= ========== BASIC AND DILUTED EARNINGS LOSS PER COMMON SHARE $ (0.04) $ (0.05) $ (0.02) $ (0.03) ========== ========== ============== =========
See accompanying notes to financial statements Page 5 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF CASH FLOWS
For the Nine Months Ended May 31, 2006 2005 --------- --------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,353,861) $(1,403,609) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 1,185 5,048 Amortization of interest expense for discount on convertible debentures 324,107 423,059 Warrants issued in exchange for loans 92,875 Repricing of warrants 20,178 50,860 Warrants issued with debt conversion and common stock in exchange for services 50,447 113,884 Changes in operating assets and liabilities Inventory 29,577 (2,678) Accounts receivable - trade (686) 12,751 Prepaid expenses and other (19,196) (5,590) Accounts payable and accrued expenses 372,758 139,491 Deferred salaries 319,993 198,677 Foreign tax credit - 46,500 ---------- --------- Net cash flows from operating activities (163,623) (421,607) ---------- ---------
See accompanying notes to financial statements Page 6 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF CASH FLOWS
For the Nine Months Ended May 31, 2006 2005 --------- --------- (UNAUDITED) CASH FLOWS FROM INVESTING ACTIVITIES - - Security deposits (2,048) (870) ---------- -------- Net cash flows from investing activities (2,048) (870) ---------- ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock, net of related expenses 35,000 106,000 Net proceeds from short term loans 88,347 87,438 Payments on advances from stockholders (38,500) - Loans and advances from stockholders 70,978 204,550 ---------- ---------- Net cash flows from financing activities 155,825 397,988 ---------- ---------- NET CHANGE IN CASH (9,846) (12,489) CASH AT BEGINNING OF PERIOD 14,099 33,706 ---------- ---------- CASH AT END OF PERIOD $ 4,253 $ 9,217 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid (received) $ (35,783) $(43,225) ======== ========= Interest paid $ 24,254 $ 6,878 ========== ========== Common stock issued in exchange for subscription receivable - $ 1,614,434 for settlement of debt - 10,000 for debt conversion $ 65,009 - ========== ==========
See accompanying notes to financial statements Page 7 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) May 31,2006 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, 2005 (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. 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. NOTE 3- Summary Of Significant Accounting Polocies: 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. Equity Based Compensation- The Company follows the intrinsic value method of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations in accounting for its employee stock options because, in the opinion of management, Financial Accounting Standards Board Statement No. 123, Accounting for Stock-Based Compensation (FAS 123) requires use of option valuation models that were not developed for use in valuing employee stock options. FAS 123 permits a company to elect to follow the intrinsic value method of APB 25 rather than the alternative fair value accounting provided under FAS 123, but requires pro forma net income (loss) and earnings (loss) per share disclosures as well as various other disclosures. The Company has adopted the disclosure provisions required under Financial Accounting standards Board Statement No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (FAS 148). If the recognition provisions of SFAS 123 using the Black-Scholes option pricing model were applied, the resulting pro-forma net income (loss) available to common shareholders and pro-forma net income (loss) available, to common shareholders per share, would be as follows: Page 8 NOFIRE TECHNOLOGIES, INC NOTES TO FINANCIAL STATEMENT (Unaudited) May 31, 2006 Nine months ended Three months ended May 31, May 31, 2006 2005 2006 2005 Net loss as reported $(1,353,861) $ (1,403,609) (730,668)$(795,763) Deduct: Stock-based compensation, Net of tax 13,975 133,000 0 0 ------- ----------- ------- --------- Net loss, pro-forma $ (1,367,836) $(1,536,609) (730,668 (795,563) Basic earnings per share As reported $ (0.04) $ (0.047)) $(0.02) $ (.025) Pro-forma $ (0.04) $ (0.048)) $(0.02) $ (.025) The above stock-based employee compensation expense has been determined utilizing a fair value method, the Black-Scholes option-pricing model. The Company has recorded $38,532 of compensation expense for stock options and warrants granted to employees during nine months ended May 31, 2006. 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 Nine Months ended May 31, 2006 2005 Risk free interest rate 4.52 4.0 Expected life Yrs 5 5 Dividend rate 0.0% 0.0% Expected volatility 113% 73% FASB 155 Accounting for Certain Hybrid Financial Instruments In February 2006, the FASB issued FASB Statement No. 155, which is an amendment of FASB Statements No. 133 and 140. This Statement: a) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, b) clarifies which interest-only strip and principal-only strip are not subject to the requirements of Statement 133, c) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, d) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, e) amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This Statement is effective for financial statements for fiscal years beginning after September 15, 2006. Earlier adoption of this Statement is permitted as of the beginning of an entity s fiscal year, provided the entity has not yet issued any financial statements for that fiscal year. Page 09 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) May 31, 2006 Management believes this Statement will have no impact on the financial statements of the Company once adopted. FASB 156 Accounting for Servicing of Financial Assets In March 2006, the FASB issued FASB Statement No. 156, which amends FASB Statement No. 140. This Statement establishes, among other things, the accounting for all separately recognized servicing assets and servicing liabilities. This Statement amends Statement 140 to require that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. This Statement permits, but does not require, the subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value. An entity that uses derivative instruments to mitigate the risks inherent in servicing assets and servicing liabilities is required to account for those derivative instruments at fair value. Under this Statement, an entity can elect subsequent fair value measurement to account for its separately recognized servicing assets and servicing liabilities. By electing that option, an entity may simplify its accounting because this Statement permits income statement recognition of the potential offsetting changes in fair value of those servicing assets and servicing liabilities and derivative instruments in the same accounting period. This Statement is effective for financial statements for fiscal years beginning after September 15, 2006. Earlier adoption of this Statement is permitted as of the beginning of an entity s fiscal year, provided the entity has not yet issued any financial statements for that fiscal year. Management believes this Statement will have no impact on the financial statement 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-Other Debt And Capital: On September 2, 2005 the Company borrowed, from an accredited investor, $100,000 at the interest rate of 15%. The note has a one year maturity date. Page 10 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) May 31, 2006 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. The discount will be amortized to expense at approximately $16,000 per quarter. During October 2005 the Company borrowed from two individuals $36,135. These loans bore no interest and have no specific due date. In January and February 2006 the Company sold to 4 accredited investors and one employee 250,000 shares of the Company s common stock for $25,000. In conjunction the Company issued five-year warrants to purchase 250,000 shares of the Company s common stock at an exercise price of $.085 to $.14 per share. During February 2006 the Company borrowed from three individuals $30,000. These loans will be paid back from the sale of the first 750 gallons of A-18 in the amount of $36,000 and have no specific due date. In March 2006 the Company borrowed, from an individual, $29,000 at an interest rate of 2% per month. In conjunction with the transaction the Company issued five-year warrants to purchase 20,000 shares of the Company s common stock at an exercise price of $.10 per share. In April $9,000 was repaid and an additional $10,000 was repaid in June 2006. In April 2006 the Company borrowed $25,000 from a director of the Company. The Note carries an interest rate of $500 per month and is due July 21, 2006. In conjunction with the transaction the Company issued five-year warrants to purchase 50,000 shares of the Company s common stock at an exercise price of $.20 per share. In May 2006, $469,928 of Convertible Debentures previously issued were reissued. In conjunction with the reissued debt 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 and $65,009 of debt discount is being written off at approximately $5345 per month. In March 2006 the Company sold to an accredited investor 100,000 shares of the Company s common stock for $10,000. In conjunction the Company issued five-year warrants to purchase 100,000 shares of the Company s common stock at an exercise price of $.15 per share. During the quarter ended May 31, 2006 two officers loaned the Company a total of $39,455. NOTE 6- WARRANTS Warrants were issued during the quarter as follows. Name Issue Expire Amount Exercise Price Noteholder March 06 March 2011 20,000 $ .10 Individuals(2) March 06 March 2011 125,000 $.08.5 to .15 Employee April 06 April 2011 2,000 $.20 Director April 06 April 2011 50,000 $.20 Employees (2) May 06 May 2011 140,000 $.20 Noteholder May 06 May 2011 1,200,000 $.20 Page 11 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) May 31, 2006 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. The warrants vested immediately except 100,000 shares issued to an employee in May of 2006 which vest 50,000 in November 2006 and 50,000 shares in May 2007 subject to an agreement still being in force. During the quarter ended May 31, 2006 no warrants expired. NOTE 7- SUBSEQUENT EVENTS In March 2006 the Company borrowed, from an individual, $29,000 at an interest rate of 2% per month. In conjunction with the transaction the Company issued five-year warrants to purchase 20,000 shares of the Company s common stock at an exercise price of $.10 per share. In April $9,000 was repaid and an additional $10,000 was repaid in June 2006. During June 2006 an officer loaned the company $ 13,500. 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 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. Page 12 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 NINE MONTHS ENDED May 31, 2006 AND May 31, 2005 Sales of $222,373 for the nine months ended May 31, 2006 represented a decrease of 52.1% from the $464,691 for the comparable nine-month period of the prior year. Cost of goods sold during the same periods decreased from $170,742 to $123,386 resulting in a gross profit of $98,987 compared to $293,949 in the prior year. Selling, general and administrative expenses for the nine months ended May 31, 2006 was $790,118,representing a decrease of $149,567 or 15.9% from the $939,685 of the similar period of the prior year. The main components of the decreases are approximately $62,000, $47,800 $17,000 and $17,00 in bad debts, commissions, insurance and professional fees respectively. COMPARISON THREE MONTHS ENDED May 31, 2006 AND May 31, 2005 Sales of $60,026 for the three months ended May 31, 2006 represented a decrease of 78.3% from the $274,777 for the comparable three-month period of the prior year. Cost of goods sold during the same periods decreased from $170,742 to $123,385 resulting in a gross profit of $98,987 compared to $293,949 in the prior year. Selling, general and administrative expenses for the three months ended May 31, 2006 was $282,815, representing a decrease of $174,815 or 38.2% from the $457,553 of the similar period of the prior year. The main components of the decreases are approximately $62,000, $47,000 $44,000 $5,000 and $15,000 in bad debts, commissions salaries insurance and professional fees, respectively. LIQUIDITY AND CAPITAL RESOURCES At May 31, 2006 the Company had cash balances of $4,253. In March 2006 the Company borrowed, from an individual, $29,000 at an interest rate of 2% per month. In conjunction with the transaction the Company issued five-year warrants to purchase 20,000 shares of the Company s common stock at an exercise price of $.10 per share. In April $9,000 was repaid and an additional $10,0 00 was repaid in June 2006. In April 2006 the Company borrowed $25,000 from a director of the Company. The Note carries an interest rate of $500 per month and is due July 21, 2006. In conjunction with the transaction the Company issued five-year warrants to purchase 50,000 shares of the Company s common stock at an exercise price of $.20 per share. In March 2006 the Company sold to an accredited investor 100,000 shares of the Company s common stock for $10,000. In conjunction the Company issued five-year warrants to purchase 100,000 shares of the Company s common stock at an exercise price of $.15 per share. During the quarter ended May 31, 2006 two officers loaned the Company a total of $ 39,455. 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 Page 13 a public or private offering. There is no assurance that the Company will be successful in securing requisite financing. 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/A. 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 by us 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 control over financial reporting that have materially affected, or are reasonably likely to materially affect, our 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 In March 2006 the Company sold to an accredited investor 100,000 shares of the Company s common stock for $10,000. In conjunction the Company issued five-year warrants to purchase 100,000 shares of the Company s common stock at an exercise price of $.15 per share. Date Title Number Cash Price 3/06 common 100,000 $.10 The proceeds were used for working capital. 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 Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: July 19, 2006 NoFire Technologies, Inc. By: /s/ Samuel Gottfried Samuel Gottfried Chief Executive Officer By: /s/ Sam Oolie Sam Oolie Chairman of the Board, Chief Financial Officer Page 14