10QSB 1 r10qsb022807filing.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 February 28, 2007 [] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ Commission File Number: 0-19945 NoFire Technologies, Inc. ------------------------- (Name of small business issuer in its charter) Delaware 22-3218682 --------- ----------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 21 Industrial Avenue, Upper Saddle River, New Jersey 07458 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number (201) 818-1616 ------------- Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by the Court. YES X NO --- --- State the number of shares of each of the issuer's classes of common equity outstanding at the latest practicable date: 37,927,741 shares of Common Stock as of April 10, 2007. Transitional Small Business Disclosure Format (check one): YES NO X --- --- Page 1 NOFIRE TECHNOLOGIES, INC. FORM 10-QSB INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements: Balance Sheets as of February 28, 2007(unaudited) and August 31, 2006 3 Statements of Operations for the Six Months and Three Months ended February 28, 2007 and 2006 (unaudited) 5 Statements of Cash Flows for the Six Months ended February 28, 2007 and 2006 (unaudited) 6 Notes to Unaudited Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Controls and Procedures 14 Part II - OTHER INFORMATION Item 1. Legal 14 2. Unregistered Sales of Equity Securities and use of proceeds 14 3. None 14 Item 6. Exhibits 15 Signatures 15 Certification of Financial Information Exhibits 31.1 31.2 Sarbanes-Oxley Act Section 906 Certification Exhibits 32.1 32.2 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NOFIRE TECHNOLOGIES, INC. BALANCE SHEETS February 28 August 31, 2006 2006 ----------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS Cash $ 5,339 $18,107 Accounts receivable - trade 94,748 4,411 Inventories 86,115 67,403 Prepaid expenses and other current assets 28,394 - --------- ---------- Total Current Assets 214,596 89,821 --------- ---------- EQUIPMENT, less accumulated depreciation 296 1,086 --------- ------- OTHER ASSETS: Security deposits 37,064 36,714 ---------- --------- $ 251,956 $ 127,721 ========== ========== See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. BALANCE SHEETS February 28, August 31, 2007 2006 ----------- ---------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Settled liabilities $ 378,031 $378,031 Accounts payable and accrued expenses 1,294,723 1,152,412 Loans and advances payable to Stockholders 462,038 475,538 Deferred salaries 2,064,211 1,875,218 Loans payable 314,935 389,415 Convertible Debentures 8% 469,928 469,928 Convertible Debenture 10% 165,000 165,000 Debt discount (12,764) (120,243) ---------- --------- Total Current Liabilities 5,136,102 4,785,299 ---------- --------- LONG TERM LIABILITY - - STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.01 par value: Authorized - 150,000,000 shares issued and outstanding 37,781,829 shares at February 28, 2007 and 35,806,621 at August 31, 2006 377,862 358,066 Capital in excess of par value 15,559,468 13,923,791 Accumulated Deficit (20,821,476) (18,939,435) ---------- ---------- Total Stockholders' Equity (Deficiency) (4,884,146) (4,657,578) ---------- ---------- $ 251,956 $ 127,721 ========== ========== See accompanying notes to financial statements Page 4 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF OPERATIONS
For the Six Months For the Three Months Ended February 28, Ended February 28, 2007 2006 2007 2006 ---------- ------ ------ ------ (UNAUDITED) (UNAUDITED) NET SALES $ 479,612 $ 162,347 $ 241,114 $ 100,116 ---------- --------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 233,527 77,416 106,008 41,184 Research and development costs 24,545 20,111 22,662 20,111 General and administrative (includes equity based compensation expense of $136,337 and $15,267 for the six months and $125,528 for the three months ended February 28) 641,849 516,019 394,760 289,027 ---------- ---------- ----------- ---------- 899,921 613,546 523,430 350,322 ---------- --------- ----------- ---------- LOSS FROM OPERATIONS (420,309) (451,199) (282,316) (250,206) ---------- ---------- ----------- ---------- OTHER EXPENSES: Interest expense (includes equity based interest expense of $1,338,234 and $94,821 for the six months and $1,276,010 for the three months ended February 28,2007) 1,499,608 253,749 1,358,196 77,878 ---------- ---------- ------------ --------- LOSS BEFORE INCOME TAXES (1,919,917) (704,948) (1,640,512) (328,084) DEFERRED INCOME TAX BENEFIT 37,876 35,783 - (73) ---------- ---------- ------------- ---------- NET LOSS (1,882,041)) $ (669,165) (1,640,512) (328,157) ========== ========== ============= ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -basic & diluted 36,791,540 34,868,050 36,791,540 34,917,122 ========== ========== ============= ========== BASIC AND DILUTED EARNINGS LOSS PER COMMON SHARE $ (0.05) $ (0.02) $ (0.04) (0.01) ========== ========== ============== =========
See accompanying notes to financial statements Page 5 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF CASH FLOWS
For the Six Months Ended February 28, 2007 2006 --------- --------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,882,041) $ (669,165) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 790 790 Amortization of interest expense for discount on note payable 107,479 19,197 Warrants issued in exchange for loans by officer 139,908 92,875 Repricing of warrants (35,310) Equity issued in exchange for services 137,568 15,267 Warrants issued for debt extension 1,088,163 - Changes in operating assets and liabilities Inventory (18,712) 4,381 Accounts receivable - trade (90,337) (14,510) Prepaid expenses and other (28,934) (36,676) Accounts payable and accrued expenses 144,305 245,389 Deferred salaries 188,993 209,107 ---------- --------- Net cash flows from operating activities (212,818) (168,655) --------- ---------
See accompanying notes to financial statements Page 6 NOFIRE TECHNOLOGIES, INC. STATEMENTS OF CASH FLOWS
For the Six Months Ended February 28, 2007 2006 --------- --------- (UNAUDITED) CASH FLOWS FROM INVESTING ACTIVITIES Security deposits (350) (2,048) ---------- -------- Net cash flows from investing activities (350) (2,048) ---------- ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock, net of related expenses 288,380 25,000 Net proceeds from short term loans (74,480) 115,635 Payments on advances from stockholders (13,500) (38,500) Loans and advances from stockholders - 56,524 ---------- ---------- Net cash flows from financing activities 200,400 158,569 ---------- ---------- NET CHANGE IN CASH (12,768) (12,044) CASH AT BEGINNING OF PERIOD 18,107 14,099 ---------- ---------- CASH AT END OF PERIOD 5,339 $ 2,055 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid (received) (37,876) (35,783) ======== ========= Interest paid $ 31,830 $ 343 ========== ==========
See accompanying notes to financial statements Page 7 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 28, 2007 NOTE 1 - Basis of Presentation: The balance sheet at the end of the preceding fiscal year has been derived from the audited balance sheet contained in the Company's Form 10-KSB for the year ended August 31, 2006 (the "10-KSB") and is presented for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments that include only normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year. Footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and notes thereto included in the 10-KSB for the most recent fiscal year. NOTE 2 - Reorganization: Under a Chapter 11 proceeding, the Bankruptcy Court confirmed a Plan of Reorganization for the Company, which became effective on August 11, 1995. Claims of creditors, to the extent allowed under the Plan, were required to be paid over a four-year period. NOTE 3- Summary Of Significant Accounting Policies: Loss per Share - Loss per share is based on the weighted average number of shares outstanding during the periods. The effect of warrants outstanding is not included since it would be anti-dilutive. Estimates and Uncertainties - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affects the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Financial Instruments - Financial instruments include accounts receivable, other assets, accounts payable, accrued expenses, settled liabilities and due to stockholders. The amounts reported for financial instruments are considered to be reasonable approximations of their fair values. The fair value estimates presented herein were based on market or other information available to management. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. Equity Based Compensation- The Company adopted the provisions of SFAS 123R on September 1, 2005, under the modified prospective method. Page 8 NOFIRE TECHNOLOGIES, INC NOTES TO FINANCIAL STATEMENT (Unaudited) February 28, 2007 The equity-based employee compensation expense has been determined utilizing a fair value method, the Black-Scholes option-pricing model. The Company has recorded compensation expense for warrants granted to employees and consultants during the six months ended February 28, 2006 in the amount of $15,267. During the six months ended February 28, 2007 the Company recorded $137,568 in compensation expense for the issuance of stock and warrants.(see note 6) In accordance with SFAS 123, the fair value of each option grant has been estimated as of the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: For the Six Months ended February 28, 2007 2006 Risk free interest rate 4.74% 4.39% Expected life Yrs 5 5 Dividend rate 0.0% 0.0% Expected volatility 156% 59.9% New Accounting Pronouncements- FASB 157 - Fair Value Measurements In September 2006, the FASB issued FASB Statement No. 157. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is a relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practices. This Statement is effective for financial statements for fiscal years beginning after November 15, 2007. Earlier application is permitted provided that the reporting entity has not yet issued financial statements for that fiscal year. Management believes this Statement will have no impact on the financial statements of the Company once adopted. FASB 159 - Fair Value Option for Financial Assets and Financial Liabilities In February 2007, the FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115" (SFAS 159). This Statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years beginning after November 15, 2007, which is the first quarter of fiscal 2009. Management does not believe that the adoption of SFAS 159 will have a material impact Page 9 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 28, 2007 on the financial statements of the Company once adopted. NOTE 4 - Management's Actions to Overcome Operating and Liquidity Problems: The Company's financial statements have been presented on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's viability as a going concern is dependent upon its ability to achieve profitable operations through increased sales and/or obtaining additional financing. Without achieving these, there is substantial doubt about the Company's ability to continue as a going concern. The Company has a liability for settled claims payable to creditors in connection with its reorganization under the Plan. Without the achievement of profitable operations or additional financing, funds for repayment would not be available. Management believes that successful passing of stringent tests, obtaining various civil and government approvals, and actions it has undertaken to revise the Company's operating and marketing structure should provide it with the opportunity to generate revenues needed to realize profitable operations and to attract the necessary financing and/or capital for the payment of outstanding obligations. NOTE 5 - Convertible Debentures And Other Debt: On September 2, 2005 the Company borrowed from an accredited Investor $100,000 at the annual interest rate of 15%. The note has a one year maturity date. In October 2006 the Company paid $40,000 of the above debt with accrued interest. The balance remains outstanding. In conjunction with the above $100,000 note, ten year $.14 warrants were issued for the purchase of 1,000,000 shares of the Company's common stock. The recorded debt was discounted for the allocated value to the warrants issued of $65,734 and is shown on the balance sheet as $12,764 as of February 28, 2007. The discount is being amortized to expense at approximately $16,000 per quarter. On February 15, 2007, the Company and its lender extended the maturity date of The 10% Convertible Debenture in the amount of $165,000, to April 7, 2007. The Company issued a warrant to purchase 2,000,000 shares of common stock with a term of five years at an exercise price of $0.10 per share. The warrant contains a repricing provision should shares be issued at less than $0.10 during the term of the warrant. A cashless exercise provision and certain provisions similar to the holders of common stock for other equity related transactions are also provided. The market price of the Company's stock at the extension date was $0.53, hence the fair market value of $1,050,192 for such warrant was expensed as an extension fee during for the quarter ended February 28, 2007. NOTE 6- Equity Transactions: Warrants were issued during the six months as follows: Name Issue Expire Amount Exercise Price Investors September 06 September2011 90,000 $.20 Individuals (3) October 06 October 2011 80,000 $.11 to $.20 (A) Investors (11) October 06 October 2011 298,661 $.20 Individual November 06 November 2011 10,000 $.16 (A) Investors (4) November 06 November 2011 59,318 $.20 Investors (10) December 06 December 2011 252,595 $.20 Officer December 06 December 2016 1,400,000 $.20 (B) Investors (5) January 07 January 2012 104,792 $.20 to $.25 Employees (3) January 07 January 2012 310,000 $.20 Page 10 NOFIRE TECHNOLOGIES, INC. NOTES TO THE FINANCIAL STATEMENTS (Unaudited) February 28, 2007 Officer January 07 January 2012 472,668 $.20 Investors (5) February 07 February 2012 69,706 $.34 to $.52 Lender February 07 February 2012 2,000,000 $.10 (A) $13,493 was charged to interest expense in conjunction with 3 out of 4 of these issuances. In December 2006 the Company issued 1,400,000 warrants to an officer of the Company. The warrants are convertible into the Company's common stock at $.20 per share and expire in ten years. These warrants were issued in recognition of the substantial loans made to the Company. The Company will record $139,908 as interest expense in conjunction with this issuance. The warrants vested immediately. In May 2006, $469,928 of Convertible Debentures previously issued were reissued. In conjunction with the above the Company issued 1,200,000 $0.20 five- year warrants to purchase the Companys common stock. The warrants vested immediately. The Company charged $269,968 to interest expense on this transaction. $61,447 of debt discount is being written off at approximately $5345 per month. During the six months ended February 28, 2007 400,000 warrants expired. The Company raised $288,880 through the sale of 1,839,872 shares of unregistered common stock and the issuance of 919,936 warrants to purchase common stock at prices between $.20 and $.52 per share to accredited investors. (see item 2) In January 2007 the Company issued 145,336 shares of the Companys common stock and 72,668 warrants to consultants for a combined expense of $37,495 which approximates the market value of such equities issued. NOTE 7- Subsequent Events: Subsequent to February 28, 2007 the Company repaid Mr. Oolie $5,500 of the loan due to him. In March 2007 a credito converted 20,000 warrants he was holding into 20,000 shares of the Companys common stock. The warrants were issued at 10,000 at $.07 and 10,000 at $.35. The Company reduced the creditors loan by $4,200 to a current balance still due of $5,800. This loan bears no interest. Also in March 2007 a warrant holder converted 100,000 warrants into 100,000 shares of the Companys common stock. These warrants were convertible at $.20 per share. The Company received $20,000 in conjunction with the conversion. Also in March 2007 a creditor converted 56,000 warrants he was holding into 56,000 shares of the Companys common stock. The warrants were issued at $.50. The company reduced the lender's loan by $26,800. Also in March 2007 a creditor converted 65,000 warrants he was holding into 65,000 shares of the Companys common stock. The warrants were issued at $.0.085,$.11 and $.30. The company reduced the lender's loan by $12,000 and accounts payable by $600. Page 11 In April 2007 an employee converted 35,000 warrants into 35,000 shares of common stock. These warrant were convertible at $0.25 per share. The Company reduced the employees accrued salary by $8,750 leaving a balance due him of $8,596.10. As of April 16, 2007, the Convertible Debenture 10% in the amount of $165,000 has matured and remains unpaid. Warrants were issued in March and April of 2007 as follows: Name Issue Expire Amount Price Accredited investors (2) March 07 March 2012 8492 $.45 to $.95 Accredited investors (1) April 07 April 2012 2702 $ 1.11 For the period March 1, 2007 through April 02,2007 the Company sold 21,498 shares of unregistered common stock and warrants for $15,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company continued its product development and application testing and now have numerous certifications for specific applications. Since August 1995, the Company has applied for eight patents, five of which have been issued. The other three are pending. Additionally, one patent has been purchased by the Company. The Company has been increasing its marketing efforts principally by retaining the services of specialized distribution firms. The Company's management believes that marketing efforts to date have brought the Company closer to achieving greater sales for applications in many diverse industries including: military, maritime, wood products, structural steel and nuclear power plants. Significant tests have been passed and approvals received to qualify the Company's products in naval and other military and governments applications. Aggressive marketing efforts are underway to obtain orders in these applications. Obstacles encountered in obtaining orders for most applications are the continuing tests and approvals required, competition against well established and better capitalized companies, cost, the slow process of specifying new products in highly regulated industrial applications and the decision not to use any fire retardant product. In general, the Company's products perform their intended uses well and are in a form that is safe and easy to use. The Company's most pressing need continues to be cash infusion as discussed below in the section on Liquidity and Capital Resources. The Company is limiting its research and development efforts in order to concentrate on sales of existing products. While new market opportunities frequently arise, the Company has opted to concentrate on targeting sales of present products rather than developing new products. Efforts to establish additional U.S. distributors are being accelerated. Additional efforts are also being directed to increase international sales by establishing distributor relationships in strategic locations throughout the industrialized world. The number of manufacturing and quality control employees will increase with increased production. The salaried administrative and marketing staff will be evaluated and may be increased to support sales and marketing initiatives. Additional support for direct sales is expected to be provided by independent commission agents or employees compensated principally by commission. COMPARISON SIX MONTHS ENDED February 28, 2007 AND February 28, 2006 Sales of $479,612 for the six months ended February 28, 2007 represented an increase of 196% from the $162,347 for the comparable six-month period of the prior year. Cost of goods sold during the same period increased from $77,416 to $233,527 resulting in a gross profit of $246,055 compared to $84,930 in the prior year. Selling, general and administrative expenses for the six months ended February 28, 2007 were $641,849, representing increase of $125,830 or 24.3% from the $516,019 of the similar period of the prior year. The increase is due to equity based compensation expense of$136,337. Page 12 COMPARISON THREE MONTHS ENDED February 28, 2007 And February 28, 2006 Sales of $241,114 for the three months ended February 28, 2007 represented an increase of 141% from the $100,116 for the comparable three-month period of the prior year. Cost of goods sold during the same period increased from $41,184 to $106,008 resulting in a gross profit of $135,105 compared to $58,932 in the prior year. Selling, general and administrative expenses for the three months ended February 28, 2007 were $349,760, representing a increase of $60,733 or 21 % from the $289,027 of the similar period of the prior year. During the periods ended February 28, 2007 and 2006 the Company realized approximately $37,876 and $35,856, respectively, through the sale of a portion of its New Jersey Net Operating Loss Carry Forward under a program sponsored by that state. LIQUIDITY AND CAPITAL RESOURCES At February 28, 2007 the Company had a cash balance of $5,839. On September 2, 2005 the Company borrowed, from an accredited investor, $100,000 at the interest rate of 15%. The note had a one-year maturity date. In October 2006 the Company paid $40,000 of the above debt with accrued interest. The balance remains outstanding. In conjunction with the above $100,000 note, ten year $.14 warrants were issued for the purchase of 1,000,000 shares of the Company's common stock. The recorded debt was discounted for the allocated value to the warrants issued of $65,734 and is shown on the balance sheet as $12,764 as of February 28, 2007 . The discount was amortized to expense at approximately $16,000 per quarter. The Company raised $288,880 through the sale of 1,839,872 shares of unregistered common stock and the issuance of 919,936 warrants to purchase common stock at prices between$.20 and $.52 per share to accredited investors. The Company has deferred payment of $378,031 of the installments of the Chapter 11 liability to unsecured creditors that was due in September 1996, 1997, 1998 and 1999. In order to pay those liabilities and meet working capital needs until significant sales levels are achieved, the Company will continue to explore alternative sources of funding including exercise of warrants, bank and other borrowings, issuance of convertible debentures, issuance of common stock to settle debt, and the sale of equity securities in a public or private offering. There is no assurance that the Company will be successful in securing the requisite financing. New Accounting Pronouncements- FASB 157 - Fair Value Measurements In September 2006, the FASB issued FASB Statement No. 157. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is a relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practices. This Statement is effective for financial statements for fiscal years beginning after November 15, 2007. Earlier application is permitted provided that the reporting entity has not yet issued financial statements for that fiscal year. Management believes this Statement will have no impact on the financial statements of the Company once adopted. Page 13 FASB 159 - Fair Value Option for Financial Assets and Financial Liabilities In February 2007, the FASB issued FASB Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115" (SFAS 159). This Statement provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We do not believe that the adoption of SFAS 159 will have a material impact on our results of operations or financial condition. Item 3. CONTROLS AND PROCEDURES Our management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, (the "1934 Act"), as of the end of the period covered by this Quarterly Report on Form 10-QSB. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed in the reports we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no changes in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting during the period covered by this report. PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the six months ended February 28,2007 the Company sold to accredited investors 895,958 shares of the Companys common stock for $117,480. In conjunction, the Company issued five-year warrants to purchase 447,979 shares of the Companys common stock at an exercise price of $.20 per share. Date Title Number Cash Price 9/06 common 180,000 $.14 10/06 common 361,557 $.10 10/06 common 99,999 $.11 10/06 common 135,776 $.17 11/06 common 118,636 $.10 12/06 common 584,919 $.14 to $.18 1/07 common 209,583 $.15 to $.25 1/07 common 145,336 $.16 2/07 common 139,412 $.34 The proceeds were used for working capital. Item 3. None Page 14 Item 6. EXHIBITS Exhibits 31.1 31.2 Certification of Financial Information Exhibit 32.1 32.2 Sarbanes-Oxley Act Section 906 Certification SIGNATURES In accordance with the requirements of the 1934 Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 20, 2007 NoFire Technologies, Inc. By: /s/ Samuel Gottfried Sam Gottfried Chief Executive Officer By: /s/ Sam Oolie Sam Oolie Chairman of the Board, Chief Financial Officer Page 15