NFTI NoFire Technologies Inc (PK)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 2009
[] 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

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.01 per share

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___

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 if there is no disclosure of delinquent filers contained in this form in response to Item 405 of Regulation S-K and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Issuer's revenues for its fiscal year ended August 31, 2009 $ 877,019

Aggregate market value of the voting stock held by

non-affiliates as of November 15, 2009 $19,763,074


Number of shares of common stock outstanding as of
November 15, 2009 40,635,715

Documents incorporated by reference: NONE


Transitional small business disclosure format.

 YES___ NO X

PART I

Item 1. DESCRIPTION OF BUSINESS

BACKGROUND OF THE COMPANY; REORGANIZATION

NoFire Technologies, Inc. ("NoFire" or the "Company") is engaged in the development, manufacture and marketing of fire retardant, intumescent products. The Company was organized under the laws of the State of Delaware on July 13, 1987.

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. (See Note 3 to Financial Statements.)

BUSINESS OF THE COMPANY

The business of the Company is the development, manufacture and marketing of fire retardant products and related consulting services. The Company manufactures a liquid fire retardant for use as a coating material, like paint, on many different kinds of substances to render them fire and heat resistant. The product can be manufactured in various liquid forms, specifically adapted for the particular substrate, application and degree of protection required; or as a coated textile product, typically a woven fiberglass material, coated with the NoFire liquid product.

The NoFire liquid product belongs to a class of materials called intumescents, which means that they expand in size when heated. Intumescents, which have been produced since the 1950's, have a high degree of fire retardation and add significant heat protection to a coated surface upon expansion. The major performance characteristics of intumescent products include: useful temperature range; degree of fire and heat protection; adhesion to substrate; degree of toxicity in both the liquid state and during combustion; amount of flame spread and smoke developed during combustion; ease of application; durability; resistance to weather; and price. Early intumescent products, as well as many current products, have had significant deficiencies with respect to several of these important performance characteristics (primarily the degree of fire and heat protection, useful temperature range, and/or toxicity) that have limited their usefulness.

The Company has developed intumescent products intended to eliminate or minimize these deficiencies and (i) provide significant protection for a wide range of substrates with relatively thin coats of fire protective material,
(ii) be useful over a wide temperature range and (iii) utilize a water based, nontoxic formula. The NoFire products are manufactured based on formulas that combine a fluid intumescent with fibers of various sizes and types, which together provide the desired fire protection. The NoFire liquid formulas are covered by a United States Patent and corresponding patents and patent applications in over 30 foreign countries. The United States Patent is:

No. 5,723,515 Intumescent Fire-Retardant Composition for High Temperature and Long Duration Protection, issued March 3, 1998.

The Company also has obtained United States Patents on certain applications:

No. 5,985,385 - Fire and Heat Protection Wrap for Conduits, Cable Trays, Other Electrical Transmission Lines and Gas and Oil Pipelines, issued November 16, 1999; No. 6,048,805 - Fire, Heat and Back Draft Protection Shield for Firefighters, issued April 11, 2000; No. 6,074,714 - Fire and Heat Protection Wrap for Structural Steel Columns, Beams and Open Web Joists, issued June 13, 2000; No. 6,114,003 - Insulation Blanket Having an Inner Metal Core Air Cell and Adjoining Outer Insulation Layers, issued September 5, 2000; and No. 6,510,807 Pre-Fabricated Fireproof Bulkhead with Special Interlocking Joints for a Ship, issued January 28, 2003.

The Company has submitted two additional patent applications to the United States Patent and Trademark Office.

Although the Company believes its patents are valid and enforceable, in the event of a challenge to their validity or an infringement of such patents, the Company's limited financial resources would restrict its ability to defend or enforce its rights under such patents in legal proceedings.

The NoFire products are potentially useful on many different substrates, including wood and wood products, metals (steel, aluminum, and various alloys), certain plastics, fabrics and textiles (fiberglass, natural and synthetic fibers). Industries that are presently using these types of product or are evaluating applications for them include maritime, military, nuclear power plants, construction, wood products manufacturing, public and private housing, hotels, automotive, railway, and airports. In developing these opportunities, the Company has passed numerous tests and obtained various certifications for specific applications.

MARKETING/DISTRIBUTION

The Company markets its products using several different methods, depending upon the applications, industry, product, or territory being targeted. These methods include: direct marketing; use of independent agents/distributors; and exclusive and nonexclusive licensing arrangements. Because the Company has limited resources, it relies primarily upon independent parties to market and distribute its products. In the past two fiscal years the Company has added distributors for California, Hawaii, the South, Southwest and Middle Atlantic States, as well as Europe, the Middle East, India, Korea, China, South East Asia, Ghana and West Africa, Malaysia and Singapore, and Australia and Mexico.

COMPETITION

There are many types of fire retardant products in general use today for many different applications. In addition to intumescent products, ablative, insulative and cementitious products are used, depending on the particular application, severity of fire retardant requirements, weight, space restrictions and cost. Competition for the NoFire products may include all of these types of fire retardants and will depend on the particular application targeted. Typically, each application has a product or fire retardant technique of choice, which is usually the least expensive fire protection that meets the necessary requirements. Among the Company's primary competitors (products) are: W.R. Grace & Co. (Monocote); Carboline Company (Pyrocrete, Pyrolite, Nullifire); U.S. Gypsum (gypsum board); Stanchem Manufacturing (Albiclad); A/D Fireproofing (A/D Firefilm); PPG Industries (PittChar); DuPont (Nextel); Textron, Inc. (Chartek); Minerals Technology, Inc. (Firex); Herbert Co. (Unitherm); and various wood coatings manufactured by Albi, American Vamag, 3M and DuPont. Such products have a competitive advantage over the NoFire products because they either have an established share of the market, are well publicized and recognized, and/or are manufactured by companies having far greater resources than the Company.

SOURCES OF SUPPLY

The NoFire liquid products are a blend of numerous liquids and solids, purchased from various third party suppliers. Several of such components are currently available only from a small number of suppliers. In the event that such suppliers were to terminate the manufacture or sale of such components for any reason, then the manufacture of NoFire products could be interrupted. The Company has developed alternative sources of supply for components and intends to continue seeking additional alternatives as the demand for its products warrants.

MAJOR CUSTOMERS

The Companys six largest customers during the most recent fiscal year represented 13.5%, 12.0%, 11.2%, 9.4% 9.4% and 8.8% of total sales respectively

GOVERNMENT REGULATIONS AND APPROVALS; RESEARCH AND DEVELOPMENT

For most applications, fire retardant products are required to undergo testing for approvals by government or independent laboratories. These requirements are typically determined either by government agencies, such as the U.S. Nuclear Regulatory Commission, U.S. Coast Guard or U.S. Navy; or nationally recognized organizations, such as the American Society for Testing and Material ("ASTM") or Underwriters Laboratories, Inc. ("UL"); or international organizations such as the International Maritime Organization (IMO).

Product development is continuing in many different areas. New products have been approved and introduced into the market. Some of these products are S Barrier (structural steel fire protection), NoFire LP (lower price high performance), NOFIRE/SAFTEE arc and fireproof tape and OEM products.

Various NoFire products have been tested and certified by independent laboratories for various applications in the areas of: building materials and construction (ASTM E84-87, UL94, UL723, UL746C, ASTM E152 and UBC 8-
2); transportation (NFPA 417, FAR 25.855(c)); utilities (ASTM E814-88 and IEEE 383); nuclear power plants (NRC Generic Letter 86-10 Supplement 1); and high-speed ferries (IMO A.754 (18)). In maritime, naval and other government applications, products have been listed in the U.S. Navy s Qualified Product List (QPL), were accepted for listing by the General Service Administration for all U.S. Government applications, received type approval according to the International Maritime Organization, SOLAS codes by the U.S. Coast Guard and four of the world s major ship registries, and were approved by Det Norske Veritas for distribution in the European Community (EC). The Company also has state approvals from the states of California and Rhode Island and a MEA (Material Equipment Acceptance) from the City of New York.

The Company also conducts in-house fire and heat endurance tests exclusively for research and development and feasibility studies. These tests are used to develop applications and solutions to problems, but are not a substitute for tests by independent laboratories or government agencies that are generally required before the product can be sold for particular applications.

EMPLOYEES

As of December 07, 2009, the Company had seven employees, five of whom were full-time employees.

Item 2. DESCRIPTION OF PROPERTY

The Company occupies 12,700 square feet of space at 21 Industrial Avenue, Upper Saddle River, New Jersey. The facility includes office space, storage space and an area for the mixing and testing of products and is adequate for the Company's current requirements. The Company rents such space pursuant to a three year lease which expires December 31, 2012. Monthly rent payments for the year ended August 31, 2008 were approximately $13,171. Monthly rent payments for the year ended August 31, 2009 were approximately $12,795.

Item 3. LEGAL PROCEEDINGS

A complaint was filed in the Superior Court of New Jersey, Law Division, Bergen County on May 27, 2008. It is alleged by the plaintiff that the Company entered into a contract with Otis and June Hastings and $250,000 remains due and owing under said contract. The Company maintains that it has fully satisfied the terms of the contract, including all monetary obligations. In December 2009 a summary judgment was entered against the company.
The Company believes this lawsuit is without merit and intends to vigorously dispute the claim.

As a result of the bankruptcy reorganization proceeding referred to in Item 1, until unsecured creditors whose claims were recognized in the Plan are paid in full, the Bankruptcy Court has continuing jurisdiction relative to (i) the approval and payment of certain claims and expenses and (ii) the disposition of the two patents owned by the Company at the time of the bankruptcy.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None

PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) MARKET INFORMATION The Company's shares are quoted on the "OTC Bulletin Board". Pink Sheets, LLC, formerly The National Quotation Bureau, reported the following high and low bid quotations, which reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.

 2008-2009 2007-2008
Quarter Ended High Low High Low
------------- ---- --- ---- ---
November 30 $0.12 $0.10 $0.55 $0.38
February 28 $0.055 $0.055 $0.27 $0.22
May 31 $0.08 $0.06 $0.51 $0.24
August 31 $0.14 $0.08 $0.40 $0.13

(b) HOLDERS: As of December 3, 2009 there were approximately 287 holders of record of the Company's outstanding Common Stock.

(c) DIVIDENDS: The Company has not paid any cash dividends and intends to retain earnings, if any, during the foreseeable future for use in its operations. Payment of cash dividends in the future will be determined by the Company's Board of Directors based upon the Company's earnings, financial condition, capital requirements and other relevant factors.

RECENT SALES OF UNREGISTERED SECURITIES

The following table sets forth information regarding sales or issuances of Company securities without registration under the Securities Act of 1933, as amended Securities Act) during the two years ended August 31, 2008 and August 31, 2009. All sales were made solely to accredited investors, without a broker, and were made in reliance on Section 4(2) or 4(6) of the Securities Act, and Rule 506 under Regulation D.

 Conversion
 Price
Date Title Number Cash Price
09/07 common 126,077 0.60
10/07 common 179,862 0.50
11/07 common 30,000 0.55
12/07 common 60,000 0.40
1/08 common 62,500 0.25
2/08 common 90,909 0.235
6/08 common 272,500 0.202
2/09 common 250,000 0.10
6/09 common 112,500 0.03

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL

The Company continues product development and application testing. As a result of these activities, certifications have been obtained for specific applications as discussed in Item 1 - Government Regulations and Approvals; Research and Development, and additional patent applications have been filed resulting in the issuance of six patents since August 1995, and two applications awaiting action by the U.S. Patent and Trademark Office.

Item 1 - Business of the Company. Marketing efforts to develop new
applications and establish new customers were continued in fiscal 2009. The efforts undertaken by the Company in application development, product approvals and marketing initiatives should assist it in creating greater sales in fiscal 2010 and beyond.

The greatest obstacles encountered in obtaining major sales contracts are the multitude of tests and approvals required, competition against well established, better-capitalized companies, cost, the slow process of specifying a new product in highly regulated applications and educating the public on the existence of fire protection products and the advantages of Nofire over other well publicized but low performance products. The Company intends to continue its research efforts to adapt its products to meet market requirements. Sales and marketing efforts will concentrate on current products and applications through direct sales and distributor license agreements. Continuing efforts are being made to obtain greater domestic and international sales by enlarging the Companys distributor network.

The number of manufacturing and quality control employees will increase with increased production. The salaried administrative and marketing staff will be evaluated and may be increased to support sales and marketing initiatives. Additional support for direct sales is expected to be provided by commissioned independent agents or new full time employees on a heavily weighted commission basis.

LIQUIDITY AND CAPITAL RESOURCES

During the fiscal year Mr. Oolie was repaid $58,726 by the Company. The Company is accruing interest on Mr. Oolies outstanding advance at the rate of 15% per annum.

During the year, the Companys officers deferred an additional $465,970 of their salaries.

Also in fiscal 2009, $18,923 was obtained through an additional sale of a portion of the Company s New Jersey Operating Loss Carry Forward under a program sponsored by that state.

Because of limited cash resources, the Company has deferred payment of $378,031 from the installments of the Chapter 11 liability to unsecured creditors that were 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 revenue from sales and/or financing efforts described above will be sufficient to fund the Companys cash requirements in the future.

RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED AUGUST 31, 2009 AND 2008

Sales of $877,019 represented an increase of $154,550 or 21% from sales of $722,469 in the prior year.

The net loss of $1,572,873 for fiscal year 2009 was $168,671 less than the net loss of $1,741,544 in the prior year.

General and administrative expenses and research and development costs of $1,293,132 in fiscal year 2009 were $48,939, or 4%, more than the prior year.

The main components of the changes are as follows:

 8/31/2009 8/31/2008 Difference


Material $ 464,257 286,604 177,653
Testing 48,326 66,756 (18,430)
Mfg O/H 49,659 80,952 (31,293)
Rent 155,053 159,420 (4,367)
Professional Fees 102,958 136,929 (33,971)
Insurance 69,067 46,064 23,003
NJ Tax Refund 19,023 48,152 (29,129)
Interest Expense 376,367 336,915 39,452
Commissions 25,433 31,366 (5,933)
Salaries management 555,469 526,023 29,446
Salaries administrative 62,629 64,326 (1,697)
Equity based compensation 45,207 194,353 (149,146)
Equity based interest expense 271,033 419,016 (147,983)

During the fiscal years 2008 and 2009, the Company realized approximately $48,152 and $18,923 through the sale of a portion of its New Jersey Net Operating Loss Carry Forward under a program sponsored by that state.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based upon the Companys financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure on contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. The Companys critical accounting policies are limited to those described below. For detailed discussion on the application of these and other accounting policies see note 1 to our financial statements.

Accounting for Income Taxes

As part of the process of preparing the Company s financial statements, the Company is required to estimate its income tax position. Management judgment is required in determining the provision of its deferred tax asset. The Company recorded a valuation for the full-deferred tax asset from its net operating losses carried forward due to the Company not demonstrating any consistent profitable operations. In the event that the actual results differ from these estimates or the Company adjusts these estimates in future periods the Company may need to adjust such estimates to a going concern basis.

The financial statements of the Company have been prepared assuming that the Company will continue as a going concern. The Company has had negative working capital for each of the last two years ended August 31, 2009 and 2008. The Company lacks sufficient capital to pay its debts timely. Those conditions raise substantial doubt about the ability to continue as a going concern. The financial statements of the Company do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Accounting for Stock Based Compensation

The computation of the expense associated with stock-based compensation requires the use of a valuation model. The accounting guidance is a complex accounting standard, the application of which requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility, expected option lives, and expected option forfeiture rates, to value equity-based compensation. The Company currently uses a Black-Scholes option pricing model to calculate the fair value of its stock options. The Company primarily uses historical data to determine the assumptions to be used in the Black-Scholes model and has no reason to believe that future data are likely to differ materially from historical data. However, changes in the assumptions to reflect future stock price volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. The accounting guidance requires the recognition of the fair value of stock compensation in net income. Although every effort is madeto ensure the accuracy of our estimates and assumptions, significant unanticipated changes in those estimates, interpretations and assumptions may result in recording stock option expense that may materially impact our financial statements.

Item 7. FINANCIAL STATEMENTS

The Company's annual financial statements for the fiscal years ended August 31, 2009 and August 31, 2008, together with the report thereon by the Company's independent auditors, are set forth herein commencing on page F-1 of this Form 10-K and are incorporated herein by reference.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

During the fiscal years ended August 31 2009 and August 31, 2008 there were no disagreements on any matter of accounting principles or practice s, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the accountant's satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report.

ITEM 8A (T). CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures Our management, with the participation of our president and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the Exchange Act) Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the Evaluation Date). Based upon that evaluation, the president and chief financial officer concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded processed, summarized and reported, within the time periods specified in the SECs rules and forms and (ii) is accumulated and communicated to our management, including our president and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our president and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within NoFire Technologies, Inc. will be detected.

(b) Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of August 31, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control- Integrated Framework. Our management has concluded that, as of August 31, 2009, our internal control over financial reporting is effective based on these criteria. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

(c) Changes in Internal Control over Financial Reporting There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

Item 9. DIRECTORS AND EXECUTIVE OFFICERS

MANAGEMENT

The following table sets forth the names of all directors and officers of the Company and the position in the Company held by them:

Name Age Position

Samuel Gottfried 63 Director, Chief
 Executive Officer,
 Chief Technical
 Officer and
 Assistant Treasurer

Sam Oolie 73 Director, Chairman
 of the Board, Chief
 Operating Officer,
 Chief Financial Officer
 and Treasurer

Bernard J. Koster 76 Director

Gerald H. Litwin 67 Director

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers are elected by the Board of Directors and serve at the pleasure of the Board of Directors.

Sam Oolie
Mr. Oolie has served as a Director of the Company since September 1993 and, as Chairman of the Board and Chief Operating Officer and Chief Financial Officer since August 16, 1995. He was Chief Executive Officer from August 16, 1995 to July 26, 1999. Since 1985, Mr. Oolie has been Chairman of Oolie Enterprises, a privately owned investment company.

Samuel Gottfried
Dr. Gottfried was named a director of the Company and appointed President of its fire retardant products subsidiaries in August 1991. He was appointed Interim Chairman of the Board and Chief Executive Officer on August 14, 1992 until August 15, 1995. On August 16, 1995 he was elected President, Chief Technical Officer and Assistant Treasurer of the Company. On January 1, 2003 he was elected Chief Executive Officer. Dr. Gottfried holds a doctorate in electrical engineering from New York University and a Ph.D. in electro physics from the Polytechnic Institute of New York.

Bernard J. Koster
Mr. Koster has served as a Director of the Company since September 1993. Mr. Koster is an attorney and accountant and since January 1, 1993 has been of counsel to the law firm of Litwin & Tierman, P.A..

Gerald H. Litwin
Mr. Litwin has served as a Director of the Company since August 16, 1995. During the past eight years, Mr. Litwin, an attorney, has been a principal in the law firm of Litwin & Tierman, P.A., and previously was the principal of Gerald H. Litwin, P.A. Mr. Litwin's firms served as the Company's Counsel, and his current firm continues to provide certain legal services to the Company.

During the past five years none of the foregoing persons (a) has served as a general partner or an executive officer of any business as to which a bankruptcy petition was filed during his service in such capacity or within two years thereafter; (b) was convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or (c) has been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, by any court of competent jurisdiction, permanently or temporarily barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activity.

The Board of Directors of the Company has established an Executive Committee (Dr. Gottfried, Mr. Oolie), an Audit Committee (Mr. Litwin and Mr. Koster), and a Compensation Committee (Mr. Koster, Mr. Litwin and Mr. Oolie).

Item 10. EXECUTIVE COMPENSATION

The Company's Summary Compensation Table is set forth below. The Company had no Option/SAR Grants, Aggregated Option/SAR Exercises or Fiscal Year End Option/SAR's for the years ended August 31, 2009, 2008, and 2007, nor were there any long-term incentive plan awards, stock options or stock appreciation rights.

Non-employee Directors are not compensated for Board of Directors meetings or committee meetings attended.

SUMMARY COMPENSATION TABLE

For the Years Ended August 31, 2009, 2008, and 2007

Name and Year Ended Salary Salary Options All other
Principal Position August 31 Paid Deferred(1) SAR's Compensation
------------------ ---------- ------ ----------- ----- -----------

Samuel Gottfried
Chief Executive Officer 2009 None $213,100
from January 1, 2003 2008 None $212,992
 2007 None $213,100
and Chief Technical
Officer And Assistant
Treasurer from
August 1, 2003


Sam Oolie
Chairman of the Board, 2009 $ None $230,121
Chief Operating Officer 2008 $ None $230,022
 2007 $ None $216,400

And Chief Executive Officer
until July 26, 1999, and
Chief Financial Officer
Since January 2, 2003

Note (1) Amounts shown as salary deferred are payable when revenues or
financings permit payment as determined by the Board of Directors.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of November 15, 2009 the number of shares of Common Stock owned of record or beneficially by each of the Company's officers, directors, and stockholders owning at least 5% of the Company's

issued and outstanding shares of Common Stock, by all of the Company's officers and directors as a group, and the percentage of the total outstanding shares represented by such shares.

Name and Address Shares Beneficially Approximate
Beneficial Owner Owned including Percent of Class
 (1) Warrants
---------------- ------------------- ------------------
Sam Oolie
NoFire Technologies, Inc. 19,784,127 32.7%
21 Industrial Avenue
Upper Saddle River, NJ 07458

Samuel Gottfried
NoFire Technologies, Inc. 15,700,123 27.8%
21 Industrial Avenue
Upper Saddle River, NJ 07458

Bernard J. Koster
7 Old Smith Road 1,317,652 3.1%
Tenafly, NJ 07670

Gerald H. Litwin
Two University Plaza 7,621,600 15.8%
Hackensack, NJ 07601

Stephanie Cook
NoFire Technologies, Inc. 9,448,838 18.9%
21 Industrial Avenue
Upper Saddle River, NJ 07458


Lavin Holdings, LLC
483 Winthrop Road 8,354,632 17.0%
Teaneck, NJ 07666


Carole Salkind
18911 Collins Ave 8,140,436 16.7%
Sunny Isles Beach, FL. 33160

John Cavanna
2337 Lemoine Ave 4,747,480 10.5%
Fort Lee, NJ 07024

Iroquois Capital Management LLC 6,000,000 12.9%
641 Lexington Ave
New York. NY 10022


All officers and directors 44,423,502 61.3%
as a group (four persons)

Note (1) As of November 15, 2009, there were 40,635,715 shares of Common
Stock issued and outstanding. Percentage of class for all officers and directors as a group is computed on 72,476,963 shares which includes 31,841,028 warrants held by these individuals. Percentage of class for Lavin Holdings LLC, Carole Salkind, John Cavanna and Iroquois Capital Management LLC and Stephanie Cook is computed on outstanding common stock in the amount of 40,635,715

COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT

Section 16(a) of the 1934 Act requires the Company's directors and executive officers and persons who own more than 5% of a registered class of the Company's equity securities to file with the Commission initial reports of ownership and reports of changes in ownership of the Company's Common Stock. Officers, directors and greater than 5% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on a review of copies of Forms 3, 4 and 5 and amendments thereto furnished to the Company during or with respect to its fiscal year ended August 31, 2009 the Company believes that no director or officer of the Company or beneficial owner of more than 5% of the Company's Common Stock failed to file on a timely basis reports required by Section 16(a) of the 1934 Act during such fiscal year.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Litwin is a principal of the law firm of Litwin & Tierman, P.A. which provides certain legal services to the Company. At August 31, 2009, the Company was obligated to that firm in the amount of $398,318. Expenses in fiscal 2009 were $13,162 for legal services, and in fiscal 2008,$37,064 for legal services.

In April 2006 the Company borrowed $25,000 from a director of the Company. The note carries an interest rate of $500 per month . In conjunction with the transaction the Company issued five-year warrants to purchase 50,000 shares of the Companys common stock at an exercise price of$.20 per share.

During the three fiscal years ended 2009, the officers deferred a total of $ 1,315,735 of their salaries. Effective June 2, 2002, interest at the annual rate of 6% was accrued on the salaries deferred. The total interest accrued was $534,388 at August 31, 2009.

Item 13. EXHIBITS

A. THE FOLLOWING FINANCIAL STATEMENTS OF THE COMPANY ARE BEING FILED PURSUANT TO ITEM 7 AS PART OF THIS ANNUAL REPORT ON FORM 10-K

1. FINANCIAL STATEMENTS

Index to Financial Statements F-1

Report of Independent Registered Public Accounting Firm
Sherb & Co., LLP. F-2

Financial Statements:

 Balance Sheets as of August 31, 2009 and 2008 F-3

 Statements of Operations for the years
 ended August 31, 2009 and 2008 F-4

 Statements of Changes in Stockholders' Deficiency
 for the years ended August 31,2009 and 2008 F-5

Statements of Cash Flows for the Years

 Ended August 31, 2009 and 2008 F-6

 Notes to Financial Statements F-7 to F-15

2. EXHIBITS none

2. Certification of Financial Information Exhibits 31.1 31.2

3. Sarbanes-Oxley Act Section 906 Certification Exhibits 32.1 32.2

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed and unbilled for the fiscal years ended August 31, 2009 and 2008 for professional services rendered by the Company s principal accountants for the audits of its annual financial statements and the review of its financial statements included in our quarterly reports on Form 10Q were approximately $30,277 and $36,500, respectively.

AUDIT-RELATED FEES

The aggregate fees billed for the fiscal years ended August 31, 2009 and 2008 for assurance and related services rendered by our principal accountants related to the performance of the audit or review of the Company s financial statements, specifically accounting research was $0 for each year.

TAX AND OTHER FEES

The aggregate fees billed for the fiscal years ended August 2009 and 2008 for tax related or other services rendered by the Company s principal accountants in connection with the preparation of its federal and state income tax returns was $3,000 and $ 3,000, respectively.

APPROVAL OF NON-AUDIT SERVICES AND FEES

We did not have any non-audit services provided by our principal accountants during fiscal 2009 or 2008.

SIGNATURES

In accordance with Section 13 or 15(d) of the 1934 Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NOFIRE TECHNOLOGIES, INC.

Date: January 13, 2010 By: /s/ Sam Gottfried
 ------------------------
 Sam Gottfried,
 Chief Executive Officer



Date: January 13, 2010 By: /s/ Sam Oolie
 ------------------------
 Sam Oolie
 Chief Financial Officer

In accordance with the 1934 Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE DATE

/s/ Samuel Gottfried
---------------------------- January 13, 2010
Samuel Gottfried, Director


/s/ Bernard J. Koster
----------------------------- January 13, 2010
Bernard J. Koster, Director

/s/ Gerald H. Litwin
----------------------------- January 13, 2010
Gerald H. Litwin, Director

/s/ Sam Oolie
----------------------------- January 13, 2010
Sam Oolie, Director

INDEX TO FINANCIAL STATEMENTS

 Page
 ---
Report of Independent Registered Public Accounting Firm
Sherb & Co, LLP F-2

Financial Statements
 Balance sheets at August 31, 2009 and 2008 F-3

 Statements of operations for the years ended
 August 31, 2009 and 2008 F-4

 Statements of changes in stockholders' deficiency F-5
 for years ended August 31, 2009 and 2008


 Statements of cash flows for the years ended
 August 31, 2009 and 2008 F-6

 Notes to financial statements F-7 to F-15

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and Directors
NoFire Technologies, Inc.
Upper Saddle River, New Jersey

We have audited the accompanying balance sheets of NoFire Technologies, Inc. as of August 31, 2009 and 2008, and the related statements of operations, stockholders deficiency and cash flows for each of the years ended August 31, 2009 and 2008.These financial statements are the responsibility of the Company s management.Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NoFire Technologies, Inc. as of August 31,2009 and 2008, and the results of its operations and its cash flows for each of the years ended August 31, 2009 and 2008, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations, including a net loss of approximately $1.6 million and $1.7 million for each of the years ended August 31, 2009 and 2008, and has a substantial working capital deficiency as of August 31, 2009. These factors raise substantial doubt concerning the Company s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sherb & Co., LLP
Certified Public Accountants


 New York, New York
 December 28, 2009

NOFIRE TECHNOLOGIES, INC
BALANCE SHEETS

ASSETS

CURRENT ASSETS:

 August 31,2009 August 31,2008
 -------------- --------------
Cash $ 6,089 $ 2,334
Accounts receivable trade, net 89,498 83,451
Inventories 90,563 203,068
Prepaid expenses and other current assets 4,848 22,419
 ----------- -----------
 Total Current Assets 190,998 311,272

OTHER ASSETS:

Security deposits 37,240 37,065
 --------- ----------
 $228,238 $ 348,337
 ========== ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:

 Settled liabilities $ 378,031 $ 378,031
 Accounts payable and accrued expenses 2,170,975 1,610,733
 Loans and advances payable to stockholders 189,148 247,874
 Deferred salaries 2,915,870 2,449,900
 Loans payable 452,890 408,583
 Convertible debenture 8%, (net) 519,096 595,928
 ---------- -------------
 Total Current Liabilities 6,626,010 5,691,049



LONG TERM LIABILITIES:Deferred Revenue-licenses 11,242 12,550

STOCKHOLDERS' DEFICIENCY:

Common stock $.01 par value:
Authorized -150,000,000 shares
 issued, and outstanding-40,635,715
 And 40,273,465 respectively 406,360 402,735
Capital in excess of par value 19,293,602 18,778,157
Stock subscriptions receivable (13,250) (13,250)
Accumulated Deficit (26,095,778) (24,522,904)
 ---------- ------------
 Total Stockholders' Deficiency (6,409,014) (5,355,262)
 ---------- ------------
 $ 228,238 $ 348,337
 ========= ==========

See accompanying notes to financial statements

NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS

 Year Ended August 31,
 2009 2008
 ---------- ----------
Sales:
Sales of product $ 877,019 610,932
Royalty revenue 111,537
 ------------------------
NET SALES 877,019 722,469
 ---------- ----------
COSTS AND EXPENSES:
 Cost of sales 483,093 297,245
 Research and development costs 48,326 66,757
 General and administrative
 (includes equity based
 compensation of $44,250
 and $194,353, respectively) 1,290,014 1,371,789
 ---------- ----------
 1,821,433 1,735,791
 --------- ----------
LOSS FROM OPERATIONS ( 944,414) (1,013,322)
 ---------- ----------
OTHER EXPENSES (INCOME):
 Interest expense (includes equity
 based portion $271,033 and
 $ 419,016, respectively) 647,401 755,930
 Other income (18) (6,920)
 -------- --------
 647,383 749,010
LOSS BEFORE INCOME TAXES (1,591,797) (1,762,332)
INCOME TAX BENEFIT 18,923 20,788
 ---------- --------
NET LOSS $ (1,572,874) $(1,741,544)
 ========== =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC AND DILUTED 40,425,388 39,885,615
 ========== ==========
BASIC AND DILUTED LOSS
 PER COMMON SHARE: $ (.04) $ (.04)
 ========== ==========

See accompanying notes to financial statements

NOFIRE TECHNOLOGIES, INC.
STATMENTS OF CHANGES IN STOCKHOLDERS DEFICIENCY

 Common Stock Capital
 Number of in Excess Accumulated Stock Subscriptions Total
 Shares Amount of Par Value (Deficit) Receivable Stockholders
 Deficit


Balance as of August 31,2007 39,382,932 $ 393,830 $17,877,058 $(22,781,360) $(4,510,472)

Equities issued with debt/beneficial
Conversion rights 30,000 300 418,716 419,016
Sale of stock 519,348 5,193 223,066 228,259
Stock subscription 50,000 500 12,750 (13,250) -
Exercise of warrants 291,185 2,912 52,213 55,125
Equities issued for services - - 194,353 194,353
Net loss (1,741,544) (1,741,544)
 ----------- --------- ----------- ------------- ----------- -----------
Balance as of August 31, 2008 40,273,465 402,735 18,778,156 (24,522,904) (13,250) (5,355,263)

Conversion of debt 250,000 2,500 22,500 25,000
Equity issued for services 112,250 1,125 47,458 48,634
Equity issued with debt/beneficial
conversion rights 445,488 445,488
Net loss (1,572,874) (1,572,874)
 ---------- -------- ---------- ------------- --------- -----------
Balance as of August 31,2009 40,635,715 $ 406,360 $ 19,293,602 $ (26,095,778) $(13,250) $(6,409,014)
 ========== =========== =========== ============ ========= ============

See accompanying notes to financial statements

NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS

 Year Ended August 31,
 2009 2008
 ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss $ (1,572,874 )$(1,741,544)
 Adjustments to reconcile net loss
 to net cash flows from
 operating activities:
 Equities issued and amortization thereof
 as interest and beneficial conversion
 features on current and past due loans
 payable 271,033 419,016
 Equities issued for consulting services 45,208 194,353
 Accounts receivable - trade (6,047) 217,835
 Inventories 112,505 (105,284)
 Prepaid expenses and other current 20,946 72,423
 Accounts payable and accrued
 expenses 560,242 247,504
 Deferred revenue (1,308) 12,550
 Deferred salaries 490,970 369,397
 ---------- ----------
 Net cash flows used in
 operating activities (79,325) (313,750)
 ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
 Security deposits (175) -
 ----------- -----------
NET CASH FLOWS USED BY INVESTING ACTIVITIES (175) -
 ------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common
 stock and exercise of warrants,
 net of related expenses - 283,384
 Payments on short term loans - (165,000)
 Net proceeds from short-term loans 44,307 117,848
 Loans and advances received (paid) from
 stockholders (58,726) 48,436
 Proceeds from issuance of convertible
 Debentures 97,674
 ---------- ----------
 Net cash flows from
 financing activities 83,255 284,668
 ---------- ----------
NET INCREASE (DECREASE) IN CASH 3,755 (29,082)
CASH AT BEGINNING OF YEAR 2,334 31,416
 ---------- ----------
CASH AT END OF YEAR $ 6,089 $ 2,334
 ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
 Interest paid $ 72,303 $ 127,824
 ========== ==========
 Income taxes paid (benefit) $ (18,923) $( 20,788)
 ========== ==========
 Equity issued in exchange
 for services $ 48,635 $ 194,353
 ========== ==========
 Equities issued for debt fees an interest $445,488 $419,016
 ========== ===========
 Conversion of debt to equity $ 25,000 -
 ========= ===========

See accompanying notes to financial statements

NOFIRE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF THE BUSINESS

Nature of the Business - The Company manufactures and markets intumescent fire retardant products throughout the world. The Company was organized under the laws of the State od Delaware on July 13, 1987

Going Concern- 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 has reported substantial losses since inception. The Company's viability as a going concern is dependent upon its ability to achieve profitable operations through increased sales, obtaining additional financing or receiving additional capital. This raises substantial doubt about the Company s ability to continue as a going concern. On August 11, 1995, the Company emerged from Chapter 11 of the United States Bankruptcy Code pursuant to a plan of reorganization (the Plan). As of August 11, 1995, in accordance with accounting guidance for Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7), the Company adopted fresh start reporting and implemented the effects of such adoption in its balance sheet as of August 31, 1995.
As discussed in Note 3, the Company has a liability for settled claims payable to creditors and has incurred accrued expenses in connection with its reorganization. Certain settled claims due on September 27, 1996 through 1999 remain unpaid. Without additional financing/capital or the achievement of profitable operations, funds for repayment of these obligations would not be available.

Note 2 SUMMARY OF SIGNIFICENT U.S.ACCOUNTING POLICIES

Estimates and Uncertainties - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.

Inventories - Inventories are stated at the lower of cost (first-in, first-out method) or market.

Equipment - Equipment is recorded at cost and is depreciated primarily using the straight-line method over the estimated useful lives of 5 to 7 years for furniture and fixtures, manufacturing equipment and data processing equipment. Depreciation expense was $ 0 for the years ended August 31, 2009 and 2008, respectively.

Income Taxes - Deferred income taxes arise from temporary differences between financial and tax reporting, principally for deferred compensation, equity based transactions and net operating loss carry forwards.

Risk Concentrations - The following summarizes the risk concentration of the Company as of August 31, 2009:

NOFIRE TECHNOLOGIES, INC

NOTES TO FINANCIAL STATEMENTS

Accounts Receivable - The Company grants unsecured credit to many of its customers with no customers comprising a concentrated risk. Management continually evaluates the credit risk associated with accounts receivable and believes that the risk is limited.

Cash Concentrations - The Company maintains a cash balance with a financial institution, which at some times may exceed federally, insured limits.

Revenue Recognition- Revenue for product sales are recognized when there is evidence of an arrangement, the amount is fixed and determinable, and collectibility is probable. Company s products are shipped. Revenues from royalty sales are recognized once such royalties are deemed earned and collectible.

Cost of Sales - Cost of sales includes the following costs: material costs, freight in, direct labor and packaging costs. Indirect costs of sales include selling, general and administrative costs for the years ended August 31, 2009 and 2008 they are as follows: shipping and receiving labor of $13,292 and $22,135, and shipping costs of $8,301 and $24,938, respectively.

Advertising Costs - The Company expenses costs for trade shows, marketing and promotional activities as incurred. Expenses were approximately $1,767 and $8,659 for the years ended August 31, 2009 and August 31, 2008,respectively

Research and Development Costs- Expenditures relating to the development of new products and processes, including significant improvements to existing products, are expensed as incurred.

Loss per Share - Loss per share is based on the weighted average number of shares outstanding during the periods. The effect of 64,055,001 and 62,591,244 warrants outstanding is not included for fiscal 2009 and 2008, respectively since it would be anti-dilutive.

Equity based compensation -

Effective September 1, 2006, the Company adopted provisions of FASB guidance For recording equity based compensation.

The weighted average fair value of warrants has been estimated on the date of grant using the Black-Scholes warrants pricing model. The Company has granted warrants to purchase common stock to employees in the years ended August 31, 2008, and August 31, 2009 which have been recorded as an expense in the amount of $194,353 and $ 44,250, respectively, as such warrants vested immediately upon issuance.

In accordance with FASB guidance on equity based compensation, the fair value of each warrant 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 year ended August 31,
 2009 2008

Risk free interest rate 2,39 % 3.10 %
Expected life 4.75 yrs 4.75 yrs
Dividend rate 0.00 % 0.0%
Expected volatility 129% 211%

NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS

New accounting pronouncements-
Revenue Recognition -Multiple Deliverable Revenue Arrangements

In October 2009, the FASB issued guidance for Revenue Recognition Multiple Deliverable Revenue Arrangements (Subtopic 605-25 ) ?Subtopic?. This accounting standards update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity?s fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity?s fiscal year. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management believes this Statement will have no impact on the financial statements of the Company once adopted.

All other issued but not yet effective Accounting Pronouncements have been deemed to be not material or relevant to the Company?s Financials

NOTE 3 - INVENTORIES:

Inventories, net of reserves, at August 31, 2009 and 2008 consisted of the following:

 August
 2009 2008

Testing material $ 2,500 $ 5,000
Raw material 12,448 12,431
Finished goods 75,615 185,637
 -------- ------
 $ 90,563 $203,068
 ========== ========

NOTE 4 - SETTLED CLAIMS:

Settled claims consist of claims payable to creditors for which payment has been deferred beyond the Plan's effective date pursuant to the terms and conditions of the Plan, as agreed upon between the Company and its creditors. At August 31, 2009, settled liabilities payable totaled $378,031.

The Company is currently delinquent on its scheduled payments to certain Creditors that were due September 27, 1996 through 1999 in the gross amount of approximately $378,031. The Company does not have funds available for repayment and without additional sales, capital or financing, payments cannot be made.

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:

NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS

 August
 2009 2008
Legal fees $ 417,408 $ 396,089
Commissions 64,183 67,357
Interest 805,895 562,976
Payroll and payroll taxes 143,944 114,222
Accounts payable 479,751 330,164
Other 259,794 139,925
 ---------- ---------
 $ 2,170,975 $1,610,733
 ========= ==========

NOTE 6 RELATED PARTY TRANSACTIONS

Mr. Litwin is a principal of the law firm of Litwin & Tierman, P.A., which provides certain legal services to the Company. At August 31, 2009, the Company was obligated to that firm in the amount of $398,318. Expenses in fiscal 2009 were $13,162 for legal services, and in fiscal 2008, $ 37,064. In addition, Litwin & Holsinger (a predecessor to Litwin and Tierman P.A) filed a claim as an unsecured creditor in the bankruptcy proceedings in the gross amount of $140,403 in respect of pre-petition legal services rendered and has received one distribution in the amount of $15,584 in respect thereof. on the salaries deferred. The total interest accrued was $637,186 at August 31, 2009.

The officers (current and former) deferred a total of $2,915,870 of their salaries. Effective June 2, 2002, interest at the annual rate of 6% was accrued on the salaries deferred.

During 2009 Mr Oolie, CEO, was repaid $58,726 by the Company.

These remaining advances by the CEO are due on demand and bear interest at 15% per annum.

NOTE 7 CONVERTIBLE DEBENTURES AND OTHER DEBT:

In April 2006 the Company borrowed $25,000 from a director of the Company. The note carries an interest rate of $500 per month. 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.

As of December 15, 2009 the above amounts are still unpaid.

During the quarter ended February 29, 2008 the Company borrowed $105,000 from three individuals all due by July 2008. The terms were 2% interest per month.

In conjunction with the above five year warrants were issued to purchase 45,000 shares of the Company?s common stock at $.25 to $.30. These warrants are valued at $12,294 and expensed in fiscal 2008. The warrants vested immediately.

During June 2008 the Company borrowed $10,000 from an individual. The chairman of the board pledged his stock holdings in an unrelated company to secure the debt. The note carries a 2% per month interest charge and was due in December 2009. This note remains unpaid as of the date of filing.

In conjunction with the above, the Company issued 8,000 warrants to purchase the Company?s common stock at $.36 per share. These warrants are valued at $2,819

NOTES TO NOFIRE TECHNOLOGIES, INC.
FINANCIAL STATEMENTS

and expensed in fiscal 2008. The warrants vested immediately.

During July of 2008 the Company borrowed $15,000 from an individual. The chairman of the board has pledged his stock holdings in an unrelated company to secure the debt. The note carries a 2% per month interest charge and is due in September 2008.

During August 2008 the Company borrowed $50,000 from an individual. The terms were 2% interest per month, and was due on May 31, 2009. This note remains unpaid as of the date of filing.

In conjunction with the above five year warrants were issued to purchase 30,000 shares of the Company?s common stock at $0.30 per share. These warrants are valued at $8,927 and expensed in fiscal 2008 The warrants vested immediately.

Also during August 2008 an individual converted $14,000 of his loan into 50,000 shares of the Company?s common stock at $.28 per share.

In December 2008 the Company paid an additional $21,355 of the debt using the proceeds of the sale of the New Jersey net operating loss carry forward for the year 2008 for such payment.

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.

During the quarter ended May 31,2009 the Company borrowed an additional $43,227 from two individuals. The debts are evidenced by short term demand notes

Note 8? Manufacturing Agreement:

In March 2008, the Company entered into a Manufacturing Agreement, with a Singapore based company. This Manufacturing Agreement has several financial components which require payments over a period of time within a year. These payments are for a 10 year license fee of $18,200, consultancy work totaling $57,995 and prepaid material for product development. The license fee will be amortized over the term of the agreement ratably. Once the Singapore company begins manufacturing the Nofire products, the Singapore company will be obligated to pay a 2% royalty on Nofire product sales.

In addition to the above the Company will generate additional sales from the sale of propriety chemicals?to the licensee. These chemicals are necessary in the manufacture of the product.

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

The Company occupies 12,700 square feet of space at 21 Industrial Avenue, Upper Saddle River, New Jersey. The facility includes office space, storage space and an area for the mixing and testing of products and is adequate for the Company's current requirements. The Company rents such space pursuant to a three year lease which expires December 31, 2012.The annual commitment is $153,540.

In conjunction with a $100,000 loan made in September 2005, a lien was placed on two temporary patents as collateral for the loan.

As of December 2009, the balance due was approximately $7,000.
A complaint was filed in the Superior Court of New Jersey, Law Division, Bergen County on May 27, 2008. It is alleged by the plaintiff that the Company entered into a contract with Otis and June Hastings and $250,000 remains due and owing under said contract. The Company maintains that it has fully satisfied the

NOTES TO NOFIRE TECHNOLOGIES, INC.
FINANCIAL STATEMENTS

terms of the contract, including all monetary obligations. On December 10, 2008 a mediation was held but the case was not resolved. On December 18, 2009 a summary judgement was entered against the Company .The Company believes this lawsuit is without merit. The contract should have been voided for reason, and intends to vigorously dispute the claim.

NOTE 10- SOURCES OF SUPPLY:
Several components of the Company s products are available from a small number of suppliers. In the event that these suppliers were to terminate the manufacture or sale of such components for any reason, then the manufacture of the Company s products could be interrupted.

Note 11 ? INCOME TAXES
No provision for current and deferred income taxes is required for the years ended August 31, 2009 and 2008.

The following is a reconciliation of income tax benefits computed at the 34% statutory rate to the provision for income taxes:

 2009 2008
 --------- ---------
Tax at statutory rate $ 535,000 $ 592,000
Permanent and other items (108,000) (209,000)
State income tax, net of federal
 income tax benefit 6,000 7,000
Valuation allowance (433,000) (390,000)
 --------- ---------
 $ - $ -
 ========= =========

As a result of the issuance of common stock pursuant to the Plan, the Company experienced a greater than 50% change of ownership as defined in Internal Revenue Code Section 382 ("Section 382"). Consequently, the Company's ability to utilize net operating losses generated prior to the effective date of the Plan is limited during the carry forward periods.

The Company has determined that the annual limitation under Section 382 on its ability to utilize net operating loss carry forwards, totaling approximately $857,000, to be approximately $150,000 per year expiring through 2010. Subsequent to the date of the Plan, the Company has generated approximately $11,379,000 in net operating losses, which expire through 2029.

The significant components of the Company s net deferred tax asset are summarized as follows:

 August 31,
 ------------------------
 2009 2008
 ---------- ----------
Net operating loss carry forwards $ 3,868,000 $ 4,192,000
Temporary timing difference 1,208,000 976,000
 ---------- ------------
Valuation allowance (5,076,000) (5,168,000)
 ---------- -------------
 $ - $ -
 =========== ============

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The Company has determined, based on the Companys prior history of recurring losses, that a full valuation allowance is appropriate at August 31, 2009 and 2008.

NOFIRE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS

At August 31, 2009, the Company has federal and state net operating loss carry forwards for financial reporting and income tax purposes of approximately $11,379,000, which can be used to offset current and future taxable income through the year 2029.

During each of the fiscal years 2009 and 2008, the Company sold a portion of its state net operating loss carry forwards realizing approximately $18,923 and $20,788, respectively. The Company has not yet sold its net operating loss carry forward for the fiscal year ended August 31, 2009.

NOTE 12 - MAJOR CUSTOMERS:
Sales to six customers represented 13.5%,12.0%, 11.2% 9.4% 9.4 and 8.8% of net Sales for the year ended August 31, 2009. Sales to five customers represented 26% 17.4%9.7% and 6.6% and 4.3% of net sales for the year ended August 31, 2008

NOTE 13 WARRANTS AND COMMON STOCK:

For the years ended August 31, 2009 and 2008, a summary of the status of warrants were as follows:

 2009 2008
 ------------------- --------------------
 Weighted Weighted
 Number Average Number Average
 of Exercise of Exercise
 Shares Price Shares Price
 ---------- -------- ---------- --------
Outstanding, beginning of year 62,591,244 $ 0.16 60,556,794 $ 0.16
Granted 5,773,394 0.09 2,622,674 0.28

Exercised - - (347,500) 0.21
Cancelled/ forgiven - - - -
Expired 4,309,636 0.24 (240,724) 0.25
 ---------- ----- ---------- -----
Outstanding and exercisable,
 end of year 64,055,002 0.15 62,591,244 0.16
 ========== ===== ========== =====
Exercisable, end of year 64,055,002 $ 0.15 62,591,244 $ 0.16
 ============ ===== ========== =====

The following table summarizes warrant data as of August 31, 2009:

 Outstanding and exercisable
 Number of Weighted- Weighted Number
 Outstanding average remaining average exercisable
 life in exercise
 years price
 ------------ ------------------ ----------- -
Range of exercise prices:
$.01-$.15 50,106,283 3.07 0.13 50,106,283
$.16-$.50 13,698,809 2.82 0.23 13,698,809
$.51-$.99 203,113 2.64 0.43 203,113
$1.00 or more 46,797 2.62 1.10 46,797
 ------------ -----------

 64,055,002 64,055,002

NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENT

Information, at date of issuance, regarding warrant grants during the year ended August 31, 2009:

 exercise fair
 shares price value
 ------------ ------------ ---------
Exercise price exceeds
market price - - -
Exercise price equals
market price 5,740,436 $0.15 $0.09


Exercise price is less than
market price 32,958 $0.03 $0.03

The intrinsic value of the outstanding options at August 31,2009 and 2008 was $79,051 based on the August 31,2009 market price of $0.10 and $8,878,070 based On the August 31,2008 market price of $0.30

The weighted average grant date fair value of warrants granted during the year ended August 31, 2009 and 2008 was $0.15 $ 0.23. Warrants had been exercised by holders during the year ended August 31, 2008 in the amount of 347,500 with proceeds of $55,125.

During fiscal year ended August 31, 2008 the following equity transactions occurred:

The Company sold 519,348 shares of common stock and issued 259,674 five year warrants with exercise prices ranging from $0.25 to $0.60 per share for $228,259, which was the then trading prices of the common stock on each respective sale date.

The Company issued 1,658,000 warrants and 30,000 shares of common stock to unrelated parties for the inducement of debt extensions and the lending of additional monies during the year. These warrants have exercise prices ranging from $0.24 to $0.39 per share and expire in five years. The Company recorded $419,016 for the beneficial conversion rights and warrants issued in connection with such debt extended. There is no remaining debt discount unamortized at August 31,2008.

The Company issued another 705,000 warrants for services rendered during the year by consultants and its employees which such warrants and shares have been fairly valued at $194,353, which has been expensed. These warrants have a five-year term with exercise prices ranging from $0.28 to $0.34 per share. The exercise prices were the then trading prices of the common stock at each respective issue date.

All warrants vested immediately.

NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENT

During the year ended August 31,2009 the following equity transactions occurred

A former officer converted $25,000 of accrued salary for 250,000 shares of Common stock. The market value of the common stock on the date of this conversion was $0.10 per share.

There was 112,500 shares of common stock and 32,958 of five year warrants Exercisable at $0.03 and $0.04 a share issued for legal services. The fair value of the equities issued was $4,333 and has been expensed.

The Company issued 561,000 of five year warrants to its employees for services, exercisable at $0.10 a share. The fair value of these warrants issued was $44,300 and has been expensed.

The Company issued another 5,179,436 warrants to unrelated parties for the inducement of debt extensions and the lending of additional monies during the year. These warrants have exercise prices ranging from $0.30 to $0.04 per share and expire in five years. The Company recorded as debt discounts or loan fees valued at $445,488 and some of which has been and other amounts are being expensed over the term of the debt which range from one to two years. The unamortized portion of the debt discount is $174,506 as of August 31, 2009.

NOTE 14 - SUBSEQUENT EVENTS:

The Company has evaluated the subsequent disclosure through January 8 2010 For its adequacy.

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