-----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, PjIXaVUqSzXESqAFu3EYRSDxk9zQmsOrAJP+J5+kJXhLXo9qcEcXxia/S/FFb9GQ gquYGRHDngSDgiSCPBjhGg== 0000823070-97-000010.txt : 19970710 0000823070-97-000010.hdr.sgml : 19970710 ACCESSION NUMBER: 0000823070-97-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970709 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOFIRE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000823070 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 133421355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19945 FILM NUMBER: 97637866 BUSINESS ADDRESS: STREET 1: 21 INDUSTRIAL AVE CITY: UPPER SADDLE RIVER STATE: NJ ZIP: 07458 BUSINESS PHONE: 2018181616 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 31, 1997 [ ] 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: 9,597,200 shares of Common Stock as of July 3, 1997. 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 May 31, 1997 and August 31, 1996 3 Statements of Operations for the Nine Months ended May 31, 1997 and 1996; and the Three Months ended May 31, 1997 and 1996 5 Statements of Cash Flows for the Nine Months ended May 31, 1997 and 1996 6 Notes to 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. (Development Stage Company) BALANCE SHEETS May 31, August 31, 1997 1996 ------------ ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 4,945 $ 2,474 Inventory 100,394 56,761 Prepaid expenses and other current assets 13,922 7,722 ------------ ------------ Total Current Assets 119,261 66,957 ------------ ------------ EQUIPMENT, less accumulated depreciation 4,631 6,240 ------------ ------------ OTHER ASSETS: Patents, less accumulated amortization of $525,000 at May 31, 1997 and $300,000 at August 31, 1996 975,000 1,200,000 Security deposits 18,473 18,473 Excess of reorganization value over net assets, less accumulated amortization of $73,857 at May 31, 1997 and $42,204 at August 31, 1996 137,164 168,817 ------------ ------------ 1,130,637 1,387,290 ------------ ------------ $ 1,254,529 $ 1,460,487 ============ ============ See accompanying notes to financial statements Page 3 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) BALANCE SHEETS May 31, August 31, 1997 1996 ------------ ------------ (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Current portion of settled liabilities $ 790,441 $ 592,853 Accounts payable and accrued expenses 439,405 323,773 Due to stockholders 101,153 76,253 Deferred salaries 339,822 200,970 Other current liabilities 20,000 20,000 ------------ ------------ 1,690,821 1,213,849 ------------ ------------ OTHER LIABILITIES Settled liabilities, less current maturities 1,555,823 1,895,089 Convertible debentures - 8% due January 31, 1999 436,002 436,002 ------------ ------------ 1,991,825 2,331,091 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIENCY): Common stock $.20 par value: Authorized - 25,000,000 shares Issued and outstanding - 9,423,500 shares at May 31, 1997 and 8,549,500 shares at August 31, 1996 1,884,700 1,709,900 Capital deficiency (1,440,706) (2,114,908) Retained earnings (deficit) (2,872,111) (1,634,802) Unearned stock compensation - (44,643) ----------- ------------ Total Stockholders' Equity (Deficiency) (2,428,117) (2,084,453) ----------- ------------ $ 1,254,529 $ 1,460,487 =========== ============ See accompanying notes to financial statements Page 4 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) STATEMENTS OF OPERATIONS
Cumulative For the Nine Months For the Three Months Development Ended May 31 Ended May 31 Stage 1997 1996 1997 1996 (Since Inception) ----------- ----------- ----------- ----------- ----------- (UNAUDITED) (UNAUDITED) NET SALES $ 35,067 $ 35,274 $ 7,484 $ 6,054 $ 392,992 COSTS AND EXPENSES: Cost of sales 16,270 21,650 3,369 3,694 240,024 Selling, general and administrative 1,033,728 1,106,912 302,702 368,058 6,224,447 ----------- ----------- ----------- ----------- ----------- 1,049,998 1,128,562 306,071 371,752 6,464,471 ----------- ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (1,014,931) (1,093,288) (298,587) (365,698) (6,071,479) ----------- ----------- ----------- ----------- ----------- OTHER EXPENSES: Interest expense 222,378 184,394 78,815 65,756 483,302 Interest income - - - - (6,774) Reorganization items - - - - 365,426 Litigation settlement - - - - 198,996 ----------- ----------- ----------- ----------- ----------- 222,378 184,394 78,815 65,756 1,040,950 ----------- ----------- ----------- ----------- ----------- LOSS BEFORE DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEM (1,237,309) (1,277,682) (377,402) (431,454) (7,112,429) DISCONTINUED OPERATIONS - - - - (1,435,392) ----------- ----------- ----------- ----------- ----------- LOSS BEFORE EXTRAORDINARY ITEM (1,237,309) (1,277,682) (377,402) (431,454) (8,547,821) EXTRAORDINARY ITEM - Gain on debt discharge - - - - 449,583 ----------- ----------- ----------- ----------- ----------- NET LOSS $(1,237,309) $(1,277,682) $ (377,402) $ (431,454) $(8,098,238) =========== =========== =========== =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 9,066,833 8,188,782 8,998,583 8,188,782 =========== =========== =========== =========== EARNINGS (LOSS) PER SHARE $ (0.14) $ (0.16) $ (0.04) $ (0.05) =========== =========== =========== ===========
See accompanying notes to financial statements Page 5 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) STATEMENTS OF CASH FLOWS
During For the Nine Months Development Ended May 31 Stage 1997 1996 (Since Inception) ----------- ----------- ----------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,237,309) $(1,277,682) $(8,098,238) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 259,296 259,068 697,660 Extraordinary gain on debt discharge - - (449,583) Interest expense incurred to state settled liabilities at present value 173,760 164,504 382,018 Revaluation of assets and liabilities to fair value - - 482,934 Litigation settlement - - 198,996 Common stock released in exchange for services 44,643 - 62,500 Changes in operating assets and liabilities (net of effects from reverse purchase acquisition) Inventory (43,633) (19,889) (100,394) Prepaid expenses (6,200) 1,245 (13,922) Accounts payable and accrued expenses 115,632 (123,467) 2,706,392 Security deposits - (8,714) (18,473) Deferred salaries 138,852 138,852 339,822 Obligation from discontinued operations - - 51,118 ----------- ----------- ----------- Net cash flows from operating activities (554,959) (866,083) (3,759,170) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (1,032) (3,485) (27,801) Increase in patent costs - - (131,290) Acquisition accounted for as a reverse purchase - - (517,893) ----------- ----------- ---------- Net cash flows from investing activities (1,032) (3,485) (676,984) ----------- ----------- ----------
See accompanying notes to financial statements Page 6 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) STATEMENTS OF CASH FLOWS
Cumulative During For the Nine Months Development Ended May 31 Stage 1997 1996 (Since Inception) ----------- ----------- ----------- (UNAUDITED) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds of notes payable - - 721,000 Payments on notes payable - - (75,000) Payment of settled liabilities (315,438) (1,310,370) (1,747,509) Proceeds from issuance of common stock 849,000 - 4,125,340 Collection of stock subscription receivable - 95,000 95,000 Proceeds from issuance of long-term debt - - 785,113 Advances received from stockholders 24,900 165,000 101,153 Proceeds from issuance of 8% convertible debentures - 436,002 436,002 ----------- ----------- ----------- Net cash flows from financing activities 558,462 (614,368) 4,441,099 ----------- ----------- ----------- NET CHANGE IN CASH 2,471 (1,483,936) 4,945 CASH AT BEGINNING OF PERIOD 2,474 1,496,442 - ----------- ----------- ----------- CASH AT END OF PERIOD $ 4,945 $ 12,506 $ 4,945 =========== =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 8,072 $ 27,938 $ 40,903 =========== =========== =========== Income taxes paid $ - $ - $ - =========== =========== =========== Common stock issued in exchange for settlement of debt $ - $ - $ 46,750 =========== =========== =========== Common stock issued in exchange for subscriptions receivable $ - $ - $ 95,000 =========== =========== =========== Common stock issued in exchange for services, net of unearned compensation $ 44,643 $ - $ 62,500 =========== =========== ===========
See accompanying notes to financial statements Page 7 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Unaudited) May 31, 1997 NOTE 1 - Basis of Presentation: The balance sheet at the end of the preceding fiscal year has been derived from the audited consolidated balance sheet contained in the Company's Form 10-KSB for the year ended August 31, 1996 (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 issueable in connection with convertible debentures is not included since it would be anti-dilutive. NOTE 2 - Reorganization: Prior to August 11, 1995, the effective date of its confirmed Plan of Reorganization (the "Plan") pursuant to Chapter 11 proceedings under the United States Bankruptcy Code (the "Code"), the Company operated under the name of PNF Industries, Inc. ("PNF") and subsidiaries. PNF was organized under the laws of the State of Delaware on July 13, 1987. Effective February 27, 1990, PNF acquired all the outstanding common stock of Portafone Communications, Inc. ("Portafone") with its wholly owned subsidiary, Unicell Corporation ("Unicell"). Portafone was engaged in the business of selling, installing and renting cellular telephones. Unicell was licensed to act as a reseller of cellular services in New York and Massachusetts. The cellular phone business was discontinued during calendar year 1993. Effective August 6, 1991, PNF acquired 89% of the outstanding common stock of both No Fire Engineering, Inc. and No Fire Ceramic Products, Inc. in a transaction accounted for as a reverse acquisition. Collectively, those two companies developed, manufactured and sold fire retardant intumescent products. Both these subsidiaries were disolved during the present fiscal year. Page 8 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Unaudited) May 31, 1997 On August 31, 1994, involuntary petitions for relief under Chapter 11 of the Code were filed against the Company and certain of its former subsidiaries. Under the provisions of the Code, claims against the Company in existence prior to the Petition Date were stayed. The Company continued its business operations and was managed by a Bankruptcy Trustee. On April 7, 1995 the Bankruptcy Court confirmed the Plan. The Plan provided that virtually all pre-petition claims of the Company would be paid in full over a four-year period. On August 11, 1995, the effective date of the Plan, PNF emerged from Chapter 11 as a reorganized company under the name NoFire Technologies, Inc. For financial reporting purposes, the Company reported the effective date as of August 31, 1995. As of August 11, 1995, the Company adopted "fresh start reporting" and implemented the effects of such adoption in its balance sheet as of August 31, 1995. NOTE 3- Fresh Start Reporting: At August 31, 1995, under the principles of fresh start reporting, the Company's total assets were recorded at their estimated reorganization value of $1,750,000, with such value allocated to identifiable assets on the basis of their estimated fair value. The reorganization value included the patents for intumescent fire retardant products which patents were valued at $1,500,000. NOTE 4 - Management's Actions to Overcome Operating and Liquidity Problems: The Company's financial statements have been presented on the going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's viability as a going concern is dependent upon its ability to achieve profitable operations through increased sales and raising additional financing. The Company has a liability for settled claims payable to creditors and accrued expenses incurred in connection with the Plan. Without the achievement of profitable operations or additional financing, funds for repayment would not be available. Page 9 NOFIRE TECHNOLOGIES, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Unaudited) May 31, 1997 Management believes that actions currently being undertaken to obtain significant sales contracts will provide it with the opportunity to realize profitable operations and to attract the necessary financing and/or capital for the payment of outstanding obligations. NOTE 5 - Warrants: The Company has issued warrants for the purchase of common stock as follows: Shares Exercise Price ------- -------------- 990,000 $1.00 1,426,500 2.00 35,000 2.50 100,000 3.00 50,000 3.25 12,000 5.00 ---------- 2,613,500 The warrants vest to the holders in various intervals ranging from issue date to three years from issuance. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company continued its product improvement and testing. It now has several certifications for specific applications and has filed for three additional patents. Continuing marketing efforts have brought the Company closer to achieving significant sales for applications in such diverse industries as nuclear generation plants, high-speed ferries, electric utilities, low-cost manufactured homes, and automotive. The Company believes that important supply contracts will be obtained from one or more of these areas within the next year permitting the Company to leave the development stage. The greatest obstacles to obtaining such contracts are the continuing tests and approvals required and the high price of the product. The Company's most pressing need is a cash infusion as discussed below in the section on Liquidity and Capital Resources. Page 10 The Company's products perform their intended functions well and have been developed to the stage where they can be sold commercially in a form that is safe and easy to use. The Company intends to continue its research and testing efforts to meet market opportunities. The number of manufacturing and quality control employees will increase with increased production. The salaried administrative and marketing staff is anticipated to remain constant with additional sales and marketing efforts provided by commissioned independent contractors. COMPARISON NINE MONTHS ENDED MAY 31, 1997 AND MAY 31, 1996 The Company remained a development stage company. Sales of $35,067 for the nine months ended May 31, 1997 represented a decrease of 1% from the $35,274 for the comparable nine-month period of the prior year. Cost of goods sold during the same periods decreased 25% from $21,650 to $16,270 resulting in a gross profit of $18,797 compared to $13,624 in the prior year. Selling, general and administrative expenses for the nine-months ended May 31, 1997 were $1,033,728 representing a decrease of $73,184 or 7% from the $1,106,912 of the similar period of the prior year. Interest expense of $222,378 in the current period was an increase of $37,984 or 21% from the $184,394 of the similar period of the prior year. The change is represented by interest accrued on delinquent payments to a supplier of services and the interest expense accrued on the convertible debentures issued in the prior fiscal year. COMPARISON THREE MONTHS ENDED MAY 31, 1997 AND MAY 31, 1996 Sales of $7,484 for the three months ended May 31, 1997 represented an increase of 24% from the $6,054 for the comparable three-month period of the prior year. Cost of goods sold during the same periods decreased 9% from $3,694 to $3,369 resulting in a gross profit of $4,115 compared to $2,360 in the prior year. Selling, general and administrative expenses for the three months ended May 31, 1997 were $302,702 representing a decrease of $65,356 or 18% from the $368,058 of the similar period of the prior year. Most ongoing expenses were lower in the current year. The largest reductions were in testing, $12,700, salaries, $13,200, and professional fees, $13,600. Interest expense of $78,815 in the current period was an increase of $13,059 or 20% from the $65,756 of the similar period of the prior year. The change is represented by the interest accrued on delinquent payments to a supplier of services and interest accrued on the convertible debentures issued in the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES At May 31, 1997 the Company had cash balances of $4,945. In order to fund continuing operations during the nine months ended on that date, $849,000 was obtained by the private sales of unregistered common stock with warrants to several accredited investors. Because of limited cash resources, the Company has deferred payment of $271,772 of the second installment of the Chapter 11 liability to unsecured creditors that was due in late September 1996. In order to meet that liability and meet working capital needs until significant sales Page 11 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 and the sale of equity securities in a public or private offering. From June 1 to July 3, 1997, an additional $173,700 was obtained in private sales of unregistered common stock with warrants to accredited investors. Part II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended May 31, 1997. 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 7, 1997 NoFire Technologies, Inc. By: /s/ Sam Oolie Sam Oolie Chairman and Chief Executive Officer By: /s/ Charles R. Stone Charles R. Stone Vice President and Chief Financial Officer (Chief Accounting Officer) Page 12 EX-27 2
5 This schedule contains summary financial information extracted from the unaudited Balance Sheet as of May 31, 1997 and the unaudited Statement of Operations for the nine months then ended and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1997 MAR-1-1997 MAY-31-1997 4,945 0 0 0 100,394 119,261 27,802 23,171 1,254,529 1,690,821 436,002 0 0 1,884,700 (4,312,817) 1,254,529 7,484 7,484 3,369 306,071 0 0 78,815 (377,402) 0 0 0 0 0 (377,402) (0.04) (0.04)
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