U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ________

Commission File Number: 0-19945

NoFire Technologies, Inc.

(Name of small business issuer in its charter)


      Delaware                          22-3218682
      --------                          ----------
(State or other jurisdiction of      (I.R.S. Employer
 incorporation or organization)      Identification No.)

21 Industrial Avenue, Upper Saddle River, New Jersey 07458
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (201) 818-1616

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-B 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-KSB or any
amendment to this Form 10-KSB. [X]


Issuer's revenues for its fiscal year ended August 31, 2006 $363,720


Aggregate market value of the voting stock held by     $1,693,566
non-affiliates as of November 9, 2006


Number of shares of common stock outstanding as of
November 9, 2006                                       36,583,944


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 redundancy. The NoFire liquid formulas are
covered by three United States Patents and corresponding patents and patent
applications in over 30 foreign countries. The United States Patents are:

No. 4,879,320 - Intumescent Fire-Retardant Coating Material, issued
November 7, 1989  No. 4,965,296 - Intumescent Fire-Retardant and Electrically-
Conductive Coating Material, issued October 23, 1990; and 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.

During fiscal 1999 the Company purchased from a non-affiliate the following
United States Patent for $7,980:

No. 4,956,218 - Fire Protection Blanket, issued September 11, 1990.

The Company has submitted two additional patent applications to the United
States Patent 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 may 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 may 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 Company s three largest customers during the most recent fiscal year
represented 47.3%, 7.1% and 5.2% of total sales respectively. Sales to those
customers are expected to be an important part of future revenues, and
relations with them are good.

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,
SBarrier (structural steel fire protection), NoFire LP (lower price high
performance), 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 Organizations, 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 and city approvals from such as 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. The
Company's direct costs for research and development (which has been conducted
primarily by its chief executive officer and chief technical officer, Dr.
Gottfried, as a part of his overall duties) have not been material and have not
been segregated for accounting purposes.

EMPLOYEES

As of   December 15, 2006, the Company had seven employees, six 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
lease expiring August 31, 2008. Monthly rent payments for the year ending
August 31, 2005 was approximately $11,278.  Monthly rent payments for the year
ended August 31, 2006 is approximately $11,960.

Item 3. LEGAL PROCEEDINGS

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.


                     2005-2006             2004-2005
Quarter Ended      High      Low         High      Low
-------------      ----      ---         ----      ---
November 30      $0.15    $0.11          $0.31     $0.11
February 28      $0.15    $0.09          $0.29     $0.16
May 31           $0.25    $0.22          $0.34     $0.20
August 31        $0.20    $0.14          $0.23     $0.21




(b) HOLDERS As of August 31, 2006 there were approximately 261 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 our
securities without registration under the Securities Act 0f 1933 as amended
during the two years ended August 31, 2005 and August 31, 2006. 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     Notes
 9/04       common     71,428     0.14
 9/04       common    214,428     0.14
 9/04       common    659,003     0.14  (1)
 9/04       common  9,323,444     0.14  (1)
 9/04       common     14,286     0.14  (3)
 9/04       common     12,500     0.23  (4)
12/04       common  2,271,941     0.14  (1)
 1/05       common    121,429     0.14  (1)
 2/05       common     50,000     0.20  (2)
 2/05       common     65,000     0.28  (3)
 3/05       common    214,286     0.14
 5/05       common     30,000     0.30  (2)
 8/05       common     15,000     0.22  (4)
 1/06       common    200,000     0.10
 2/06       common     50,000     0.10
 3/06       common    100,000     0.10
 8/06       common    650,000     0.10


(1) Issued in conjunction with a conversion of 8% Convertible Bonds
(2) Issued in conjunction with conversion of debt
(3) Issued as fees
(4) Issued for services rendered

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 Office.

Item 1 - Business of the Company. Marketing efforts to develop new
applications and establish new customers were continued in fiscal 2006. The
efforts undertaken by the Company in application development, product
approvals and marketing initiatives should assist it in creating greater sales
in fiscal 2007 and beyond.

The greatest obstacles encountered in obtaining major sales contracts are the
multitude of tests and approvals required, competition against well
established and better-capitalized companies, cost, and the slow process of
specifying a new product in highly regulated applications. 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 Company s 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 advanced to the Company $56,926.

The Company is accruing interest on the advance at the rate of 15% per annum.

During the fiscal year eleven accredited investors purchased 1,000,000 shares
of the Companys common stock for  $100,000.00. In addition they received
928,571 five-year warrants exercisable at prices ranging from $0.10 to $0.15
per share. The warrants vested immediately.

In September 2005 an accredited individual loaned the Company $100,000 at 15%
interest. The note was due in one year and is collateralized by 2,000,000
shares of the Companys common stock to be held in escrow. An officer of the
Company also guaranteed the debt. In October of 2006 the Company paid $40,000
of principal and interest to October 25, 2006 on the entire amount. (see
subsequent events)

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 October 2005 the Company borrowed from two individuals $46,135.
These loans bore no interest and have no specific due date.

During December 2005 the Company borrowed from two individuals $10,000.
These loans bore no interest and have no specific due date.

During February 2006 the Company borrowed from three individuals
$30,000. These loans will be paid back from the sale of the first 750
gallons of A-18 in the amount of $36,000 and have no specific due date.

In March 2006 the Company borrowed, from an individual, $29,000 at an interest
rate of 2% per month. In conjunction with the transaction the Company issued
five-year warrants to purchase 20,000 shares of the Company s common stock at
an exercise price of $.10 per share. In April $9,000 was repaid and an
additional $10,000 was repaid in June 2006. In October 2006 the balance of
the loan was repaid with interest. (see subsequent events)

In April 2006 the Company borrowed $25,000 from a director of the Company. The
Note carries an interest rate of $500 per month and is due July 21, 2006. In
conjunction with the transaction the Company issued five-year warrants to
purchase 50,000 shares of the Company s common stock at an exercise price of
$.20 per share.

During July 2006 the Company borrowed $5,000 from a company who makes loans on
future credit card sales. The loan is being repaid at the rate of 25% on each
credit card sale.

In August 2006 the Company sold a 10% Convertible Debenture for $165,000.
The debenture is due in February 2007 and is convertible into the Company s
common stock at the rate of $0.10 per share. There was no beneficial
conversion feature to value for the conversion terms as the stock price
exceeded the conversion price on the debt issue date.

In conjunction with the above the Company issued 2,000,000 five-year
warrants convertible into the Company s common stock at the rate of $0.10
per share. The warrants vested immediately. These warrants were valued at
$87,010 and are being amortized over the term of the debt.

The chairman of the board has pledged his stock holdings in the Company and
the Company has pledged all of its assets to secure the above Debenture.(See
Note 7)

During the year, the officers deferred an additional $509,373 of their
salaries

Also in fiscal 2006, $35,856 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 Company's cash requirements in
the future.

RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED AUGUST 31, 2006 AND 2005

Sales of $363,720 represented an decrease of $180,081 or 33% from the
$543,801 in the prior year.

The net loss of $(1,753,775) for fiscal year 2006 was $18,840 more than the net
loss of $1,734,935 in the prior year.

General and administrative expenses and research and development costs of
$1,171,580 in fiscal year 2006 was $210,968 or 14.5% less than the prior year.

The main components of the changes are as follows:


                               8/31/2006       8/31/2005    Difference


Material                      $  196,845          217,604      (20,759)
Testing                           60,398           52,359        8,039
Mfg O/H                           49,283           45,452        3,831
Rent                             143,526          135,332        8,194
Repricing warrants                20,178           55,015      (34,837)
Professional Fees                103,233          124,463      (21,230)
Insurance                         46,144           84,126      (37,982)
NJ Tax Refund                     35,783           42,150       (6,367)
Interest Expense                 726,698          739,631      (12,933)
Bad Debt Expense                    0             108,588     (108,588)
Commissions                       21,844           68,376      (46,532)
Amortization and Depreciation      1,578            6,735       (5,157)
Penalties                         25,823           10,612       15,211


During the fiscal years 2005 and 2006, the Company realized approximately
$49,928 and $35,783 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 our 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 us
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 our 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. We believe that
our critical accounting policies are limited to those described below. For a
detailed discussion on the application of these and other accounting policies
see our note 1 to our financial statements.

Accounting for Income Taxes

As part of the process of preparing the Companys financial statements the
Company is required to estimate our income taxes. Management judgment is
required in determining our provision of our deferred tax asset. We recorded a
valuation for the full deferred tax asset from our 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 we adjust these estimates in future periods we may need to adjust such to
going Concern.

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, 2006 and 2005. The
Company lacks sufficient capital to pay its debts timely. Those conditions
raise substantial doubt about the abilities 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

We have adopted Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation"("SFAS 123"), effective
September 1, 2005. As provided for by SFAS 123, we have also elected to
account for our stock-based compensation programs according to the provisions
of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees"("APB 25")." Accordingly, compensation expense has been recognized
based on the intrinsic value of stock issued or warrants granted to employees
and directors for services rendered prior to September 2005.
Item 7. FINANCIAL STATEMENTS

The Company's annual financial statements for the fiscal years ended
August 31,2006 and August 31, 2005, together with the report thereon by the
Company's independent auditors, are set forth herein commencing on page F-1 of
this Form 10-KSB and are incorporated herein by reference.


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

During the fiscal years August 31 2006 and August 31, 2005  there were no
disagreements on any matter of accounting principles or practices, 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. CONTROLS AND PROCEDURES

Our management, including the Chief Executive Officer and Chief Financial
Officer, has conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15
under the Securities Exchange Act of 1934, as amended  (the "1934 Act"), as of
the end of the period covered by this Annual Report on Form 10-KSB. Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in
ensuring that information required to be disclosed by us in the reports we
file or submit under the 1934 Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.

There have been no changes in internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting during the period covered by this
report.

PART 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              60        Director, Chief
                                        Executive Officer,
                                        Chief Technical
                                        Officer and
                                        Assistant Treasurer

Sam Oolie                     70        Director, Chairman
                                        of the Board, Chief
                                        Operating Officer,
                                        Chief Financial Officer
                                        and Treasurer

Bernard J. Koster             73        Director

Gerald H. Litwin              64        Director

Alphonso Margino              68        Secretary





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, 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. Mr. Oolie also serves as a Director of
Comverse Technology, Inc., a manufacturer of voice storage and forwarding
systems and message management computer services, since May 1985.

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., formerly Gerald H.
Litwin, P.A.

Gerald H. Litwin
Mr. Litwin has served as a Director of the Company since August 16, 1995.
During the past five 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.

Alphonso Margino
On June 15, 1992 Mr. Margino was appointed to the board and named to the
offices of Vice President and Secretary. He served on the board until November
24, 1998. Previous to June 15, 1992, he was associated with the Company in
marketing capacities.

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. Except as
discussed in Notes 2 and 3 to such table, the Company had no Option/SAR
Grants, Aggregated Option/SAR Exercises or Fiscal Year End Option/SAR's for
the years ended August 31, 2006, 2005, and 2004, 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, 2006, 2005, and 2004


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

Samuel Gottfried
Chief Executive Officer   2006       None    $221,184
from January 1, 2003      2005     $ 29,180  $188,779     (4)(5)
and Chief Technical       2004     $ 49,217  $144,837     (4)(5)
Officer And Assistant
Treasurer from August 1



Sam Oolie                 2006        None   $221,184
Chairman of the Board,    2005     $  8,616  $210,187
Chief Operating Officer   2004     $ 44,591  $145,433    (4)(5)
And Chief Executive Officer
until July 26, 1999, and
Chief Financial Officer
Since January 2, 2003


William A. Retz           2006        None   None
Chief Executive Officer   2005        None   None
from September 1, 2000    2004        None   None         (2)     $25,000
until January 2, 2003


Alfonso Margino           2006      $ 3,750   $74,145
Vice President            2005      $15,000   $61,660
And Secretary since       2004      $24,087   $58,708     (4)
June 15, 1998





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

Note (2) Consulting agreement as discussed below.

Note (3) On September 5, 2000 the Company s Executive Committee
authorized the issuance of a five-year warrant to Dr. Gottfried for 278,000
shares at an exercise price of $0.50 per share. This warrant became fully
vested on September 5, 2001. On November 5, 2001, a five- year warrant was
issued to Radm Retz for 100,000 shares at an exercise price of $0.35 per
share with immediate vesting. On November 5, 2001, expiring warrants were
replaced with new five-year warrants at an exercise price of $0.35 per share
to the following officers: Mr. Oolie, 300,000; Dr. Gottfried, 160,000; and
Mr. Margino, 100,000. The replacement options were immediately vested. On
July 22, 2003, seven-year warrants were issued at an exercise price of $0.30
per share to the following officers: Mr. Oolie, 725,000; Dr. Gottfried 500,000;
and Mr. Margino, 250,000. In conjunction with a debt conversion agreement all
of the above warrants have been cancelled as of August 30, 2004 (see note 4
below).

Note (4) On August 30, 2004 the Company entered into conversion of debt
agreement whereby officers and directors of the Company agreed to convert
certain debt into an 8% convertible debenture. The debenture allows for a
conversion at the rate of $0.14 per share of common stock.

In addition warrants were issued at the rate of 3 times the number of shares.

On August 30, 2004 the officers and directors returned 8,305,460 previously
issued warrants as part of the transaction.

Note (5) In January 2004 the board of directors authorized an increase
in compensation to Dr. Gottfried and Mr. Oolie. The new compensation
beginning 1/1/04 is $213,000  annually for each of them.

In February 2003 the Company entered into a consulting agreement with Admiral
Retz for the period of one year, whereby he was to receive $3,000 per month
from February 1, 2003 to July 31, 2003 and $5,000 per month from August 1, 2003
to January 31, 2004. In conjunction with this agreement the Company
accelerated the vesting of warrants to purchase 100,000 shares of the
Company s common stock at $0.5625 per share. Accordingly, $25,000 has been
charged to consulting expense for the period


Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of November 9, 2006 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                        18,384,127                 37.3%
NoFire Technologies, Inc.
21 Industrial Avenue
Upper Saddle River, NJ  07458

Samuel Gottfried                 15,700,123                 33.1%
NoFire Technologies, Inc.
21 Industrial Avenue
Upper Saddle River, NJ  07458

Alphonso Margino                  8,656,568                 20.3%
NoFire Technologies, Inc.
21 Industrial Avenue
Upper Saddle River, NJ  07458

Bernard J. Koster                 1,226,652                  3.2%
7 Old Smith Road
Tenafly, NJ  07670

Gerald H. Litwin                  7,471,600                 17.7%
Two University Plaza
Hackensack, NJ  07601

Lavin Holdings, LLC               7,515,388                 20.5%
483 Winthrop Road
Teaneck, NJ 07666

Carole Salkind                    6,340,435                 15.5%
18911 Collins Ave
Sunny Isles Beach Fl. 33160

John Cavanna                      4,045,287                 10.3%
2337 Lemoine Ave
Fort Lee NJ 07024




All officers and directors      51,439,070                  70.6%
as a group (five persons)





Note (1) As of November 9, 2006, there were 36,583,944 shares of Common
Stock issued and outstanding. Percentage of class for all officers and
directors as a group are computed on 72,891,398 shares. Percentage of class for
Lavin Holdings LLC, Carole Salkind and John Cavanna is computed on outstanding
common stock in the amount of 36,583,944.


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, 2005 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
Exchange Act during such fiscal year.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As a result of loans made to fund the Company's operations during its
trusteeship under a Chapter 11 bankruptcy that ended on August 11, 1995 plus
accrued interest to that date, there were balances due at September 1, 1996
of $171,137 to Mr. Oolie, and $10,918 to Mr. Koster.  Mr. Koster and Mr. Oolie
converted their claims into a convertible debenture on August 30, 2004
(see below).

On August 30, 2004 the Company entered into conversion of debt agreement
whereby officers and directors, consultants of the Company agreed to convert
certain debt into an 8% convertible debenture. The debenture allows for a
conversion at the rate of $0.14 per share of common stock. Additional interest
on such debt was converted at the same rate in November and December 2004.

In addition warrants were issued at the rate of 3 times the number of shares.
The total amount of shares and warrants issued for the $1,614,434 of debt
converted was 11,716,512 shares of common stock and 35,614,434 warrants as
shown in the schedule below.


A schedule of the conversion is shown below:

Name                  Debt Converted        Shares        Warrants
---------              ---------------    ------------  -------------
Sam Oolie            $ 540,422            3,923,531     11,770,596
Samuel Gottfried       499,314            3,625,030     10,875,093
Alfonso Margino        275,726            2,008,642      6,025,026
Gerald Litwin          258,681            1,867,900      5,603,700
Bernard Koster          15,292              110,713        332,139
Mitchell Goldstone      25,000              180,998        542,994




All of the above was converted during the fiscal year 2005.

On November 5, 2001, five-year warrants were granted to replace expiring
warrants to the following officers and directors: Mr. Oolie, 300,000 shares,
Dr. Gottfried 160,000 shares, Mr. Margino 100,000 shares, Mr. Litwin 100,000
shares and Mr. Koster 25,000 shares. The replacement warrants have an exercise
price of $0.30 per share and are fully vested. On December 11, 2001, warrants
were granted to Mr. Koster and Mr. Litwin entitling them each to purchase
20,000 shares of the Company s Common Stock at a price of $0.40 per share.
On July 22, 2003 seven-year warrants were granted to the following officers
and directors: Mr. Oolie 725,000 Dr. Gottfried 500,000 Mr. Margino 250,000
and Mr. Koster 25,000. The warrants have an exercise price of $0.30 per
share. On August 30, 2004 all of the above warrants were cancelled as part
of the convertible debentures issued
(see above)

Mr. Litwin is a principal of the law firm of Litwin & Tierman, P.A.  and
provides certain legal services to the Company. At August 31, 2006, the
Company was obligated to that firm in the amount of $319,449. Expenses in
fiscal 2005 were $33,980 for legal services, and in fiscal 2006, $ 18,227 in
fees. In addition, Litwin & Holsinger (a predecessor to Litwin and Tierman)
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.
In August 2005 the balance of the bankruptcy debt was converted to an 8%
convertible debenture. In July 2003, the Company issued warrants to Mr. Litwin
to purchase a total of 700,000 shares of the Company s common stock for $0.30
per share, expiring in seven years, in settlement of interest owed to Litwin &
Tierman. The warrants vested immediately. In August 2004, as part of the
issuance of the convertible debenture, these warrants were cancelled.

During three fiscal years ended 2006, the officers deferred a total of
$1,326,117 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 $170,163 at August 30, 2006.

On November 14, 2005, in conjunction with loans made to the Company, Mr. Oolie
was issued 1,000,000 ten year warrants. These warrants were issued at $.20 and
vested immediately.


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-KSB

1. FINANCIAL STATEMENTS


Index to Financial Statements                             F-1

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

Financial Statements:

  Balance Sheet as of August 31, 2006                     F-3

  Statements of Operations for the years
         ended August 31, 2006 and 2005                   F-4

 Statements of Changes in Stockholders' Equity
    (Deficiency) for the years ended August 31,2006
     and 2005                                             F-5





Statements of Cash Flows for the Years

      Ended August 31, 2006 and 2005                  F-6

      Notes to Financial Statements                   F-8 to F-22

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,
2006 and 2005 for professional services rendered by our principal accountants
for the audits of our annual financial statements  and the review of our
financial statements included in our quarterly reports on Form 10QSB were
approximately $17,500 and $18,000, respectively.

AUDIT-RELATED FEES

The aggregate fees billed for the fiscal years ended August 31, 2006 and 2005
for assurance and related services rendered by our principal accountants
related to the performance of the audit or review of our financial statements,
specifically accounting research, were $ 0 for each year.

TAX AND OTHER FEES

There aggregate fees billed for the fiscal years ended August 31, 2006 and
2005 for tax related or other services rendered by our principal accountants
in connection with the preparation of our federal and state tax returns was
$-0- and $-0-, respectively.

APPROVAL OF NON-AUDIT SERVICES AND FEES

We did not have any non-audit services provided by our principal accountants
during fiscal 2006 or 2005.


SIGNATURES

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

NOFIRE TECHNOLOGIES, INC.



Date: December 11, 2006                      By: /s/ Sam Gottfried
                                        ------------------------
                                        Sam Gottfried,
                                        Chief Executive Officer



Date: December 11, 2006                      By: /s/ Sam Oolie
                                        ------------------------
                                        Sam Oolie
                                        Chief Financial Officer





In accordance with the Exchange 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
----------------------------                December 11, 2006
Samuel Gottfried, Director


/s/ Bernard J. Koster
-----------------------------               December 11, 2006
Bernard J. Koster, Director


/s/ Gerald H. Litwin
-----------------------------               December 11, 2006
Gerald H. Litwin, Director


/s/ Sam Oolie
-----------------------------               December 11, 2006
Sam Oolie, Director





INDEX TO FINANCIAL STATEMENTS


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

Financial Statements:

     Balance sheet at August 31, 2006                         F-3

     Statements of operations for the years ended
      August 31, 2006 and 2005                                F-4

     Statements of changes in stockholders' equity
      (deficiency) for years ended August 31,2006
       and 2005                                               F-5


     Statements of cash flows for the years ended
      August 31, 2006 and 2005                               F-6

     Notes to financial statements                         F-8 to F-22



F-1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

We have audited the accompanying balance sheet of NoFire
Technologies, Inc. as of August 31, 2006, and the related
statements of operations, stockholders  equity
(deficiency) and cash flows for each of the years then ended
August 31, 2006 and 2005.  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, 2006, and
the results of its operations and its cash flows for each of the
years then ended August 31, 2006 and 2005, 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 $1.7 million for each of the years ended
August 31, 2006 and 2005, and has a substantial working capital
deficiency as of August 31, 2006.  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
    November 16, 2006


F-2


NOFIRE TECHNOLOGIES, INC
BALANCE SHEET
ASSETS
August 31, 2006

CURRENT ASSETS:

   Cash                                            $    18,107
   Accounts Receivable - trade                           4,411
   Inventories                                          67,403
                                                    -----------
      Total Current Assets                              89,921

EQUIPMENT, LESS ACCUMULATED DEPRECIATION
  OF $39,626                                             1,086

OTHER ASSETS:
   Security deposits                                    36,714
                                                      ---------
                                                      $127,721
                                                     ==========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:

   Settled liabilities                             $   378,031
   Accounts payable and accrued expenses             1,152,412
   Loans and advances payable to stockholders          475,538
   Deferred salaries                                 1,875,218
   Loans payable                                       389,415
   Convertible debenture 8% (net of discount)          425,094
   Convertible debenture 10% (net of discount)          89,591
                                                    ----------
      Total Current Liabilities                      4,785,299



STOCKHOLDERS' EQUITY (DEFICIENCY):

Common stock $.01 par value:
Authorized -150,000,000 shares
  issued, to be issued, and outstanding-
  35,806,621                                        358,066
Capital in excess of par value                    13,923,791
Accumulated Deficit                              (18,939,435)
                                                  ----------
   Total Stockholders' Equity (Deficiency)        (4,657,578)
                                                  ----------
                                                $    127,721
                                                   =========

See accompanying notes to financial statements
F-3

NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS


                                    Year Ended August 31,
                                      2006           2005
                                 ----------     ----------
NET SALES                         $ 363,720      $ 543,801
                                 ----------     ----------
COSTS AND EXPENSES:
   Cost of sales                    196,845       217,604
   General and administrative     1,192,223     1,371,358
                                  ----------    ----------
                                  1,389,068     1,588,962
                                 ----------     ----------
LOSS FROM OPERATIONS            ( 1,025,348)   (1,045,161)
                                 ----------     ----------
OTHER EXPENSES (INCOME):
   Interest expense (Equity
   based portion $319,396 and
   $514,007, respectfully)          764,210       739,631
   Interest income                        0            71
                                   --------       --------
                                    764,210       739,702
                                   --------     ----------

LOSS BEFORE INCOME TAXES         (1,789,558)   (1,784,863)
INCOME TAX BENEFIT                   35,783        49,928
                                 ----------     --------
NET LOSS                       $ (1,753,775)  $(1,734,935)
                                 ==========     =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC AND DILUTED    35,052,775    32,198,993
                                 ==========     ==========
BASIC AND DILUTED LOSS
  PER COMMON SHARE:             $    (.05)  $      (.05)
                                 ==========     ==========



See accompanying notes to financial statements

F-4
NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS

STATMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIENCY)

                                            Common Stock
                                      ------------------------
<TABLE>
<CAPTION>

<S>                                    <C>        <C>        <C>         <C>          <C>               <C>
                                    Number of         Capital in Excess Accumulated  Unearned      Total
                                      Shares     Amount   of Par Value  (Deficit)  Compensation    Stockholders
                                                                                                   (Deficit)
                                                                                                    Equity
                                   ----------  ----------   --------  -----------   -----------    ---------

BALANCES, AUGUST 31, 2004           21,744,019   $4,348,804   $6,774,313 $(15,450,726)  $  0  $(4,327,609)

YEAR ENDED AUGUST 31, 2005
Conversion of indebtedness             709,003      141,801    (39,539)                           102,262
Conversion of indebtedness
related party                       11,716,814    2,343,363   (728,929)                         1,614,434
Sale of securities                     544,285      108,857    (28,845)                            80,012
Repriced warrants                          0             0       35,310                            35,310
Equities issued with debt/
beneficial conversion rights            65,000       13,000    515,067                            528,067
Recapitalization adjustment
Change in par value May 23, 2005                 (6,608,033) 6,608,033
Shares, options, warrants issued
for services                            27,500          275     24,859       0          (3,675)    21,459
Net loss                                                                  (1,734,934)          (1,734,934)
                                      -----------   ----------- --------- -------------  -------- ------------
BALANCES, August 31, 2005           34,806,621    $ 348,066 $13,160,269  $(17,185,660) $(3,675) (3,681,000)

YEAR ENDED AUGUST 31, 2006
Issuance of warrants with debt-
Related party                                                    92,875                              92,875
Equities issued with debt/beneficial
Conversion rights                                               510,298                             510,298
Sale of stock                        1,000,000       10,000      90,000                             100,000
Repriced warrants expense                                        20,178                              20,178
Equities issued for service
And amortization                                                 50,171                  3,675       53,846
Net Loss                                                                   (1,753,775)           (1,753,775)
                                    ------------  --------- ----------- ------------- ---------- -----------
BALANCES, August 31, 2006           35,806,621    $ 358,066  $13,923,791  $(18,939,435) $    0 $( 4,657,578)
                                    ==========    =========  ===========  ============== ======= ===========

</TABLE>
F-5




See accompanying notes to financial statements























NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS

                                             Year Ended August 31,
                                                2006         2005
                                            ----------     ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                  $ (1,753,775 ) $(1,734,934)
 Adjustments to reconcile net loss
   to net cash flows from
   operating activities:
     Depreciation and amortization                 1,579        6,742
     Amortization of unearned compensation
     and debt discount                            32,713          -
     Equities issued as interest and beneficial
     Conversion features on current and past
     due loan payable                            603,803      528,067
     Warrants issued for consulting services      50,171       21,459
     Repricing of warrants                        20,178       35,310
     Accounts receivable - trade                     902       10,649
     Inventories                                  14,425        4,484
     Prepaid expenses and other current            6,645        6,279
     Accounts payable and accrued
        expenses                                 215,016      127,938
     Deferred salaries                           430,473      448,192
                                             ----------     ----------
 Net cash flows used by
     operating activities                      (377,870)     (545,814)
                                            ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES

     Security deposits                          (10,715)      (1,120)
                                             -----------   -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES:       (10,715)      (1,120)
                                            ------------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from issuance of common
   stock, net of related expenses              100,000        80,013
 Net proceeds from short-term loans            136,855       117,938
 Loans and advances received from
   stockholders                                155,738       314,448
 Proceeds from issuance of
   convertible debentures                          -          14,928
                                            ----------     ----------
            Net cash flows from
             financing activities              392,593       527,327
                                            ----------     ----------
NET INCREASE (DECREASE) IN CASH                  4,008      (19,607)

CASH AT BEGINNING OF YEAR                       14,099       33,706
                                            ----------     ----------
CASH AT END OF YEAR                          $  18,107      $ 14,099
                                            ==========     ==========
F-6








NOFIRE TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                            $    53,484     $  30,000
                                            ==========     ==========
  Income taxes paid (benefit)              $   (35,783)    $( 49,928)
                                            ==========     ==========

Convertible debentures and other
debt converted to equity           $       $    -        $ 1,716,696
                                             ==========     ==========
  Common stock issued in exchange
    for services                            $ 89,846      $   21,459
                                            ==========     ==========




See accompanying notes to financial statements


F-7
NOFIRE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Nature of the Business - The Company manufactures and markets intumescent fire
retardant products  throughout the world.

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 AICPA Statement of Position 90-7 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.

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 $ 1,579 and $1,734 for of the years ended August 31,
2006 and 2005, respectively.
F-8
NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENTS

Intangible Assets - Patents are amortized on a straight-line basis over 5
years. Amortization expense was $5,008 for the year ended August 31, 2005.

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

Risk Concentrations - The following summarizes the risk concentration of the
Company as of August 31, 2006:

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

   Accounts Receivable - The Company grants unsecured credit to many of its
customers with two customers comprising a concentrated risk. Management
continually evaluates the credit risk associated with accounts receivable and
believes that the risk is limited.

Revenue Recognition Revenues are recognized when the Company s products are
shipped.
Cost of Sales - Cost of sales includes the following costs: material costs,
freight in, direct labor and packaging costs. Indirect costs of sale items
included as selling, general and administrative costs for the years ended
August 31, 2006 and 2005 are as follows: shipping and receiving labor of
$8,667 and $8,272, and shipping costs of $8,638 and $5,716 respectively.

Advertising Costs - The Company expenses costs for trade shows, marketing
and promotional activities as incurred. Expenses were approximately $5,698
and $7,563 for the years ended August 31, 2006 and August 31, 2005,
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 54,289,824 warrants
outstanding is not included since it would be anti-dilutive.

Equity based compensation -
We previously accounted for stock-based compensation issued to
our employees under Accounting Principles Board Opinion 25  (APB
25). Accordingly, no compensation costs for stock options issued
to employees, which was measured as the excess, if any, of the
fair value of our common stock at the date of grant over the
exercise price of the options. The pro forma net earnings per
share amounts as if the fair value method had been used are
presented below for the year ended August 31, 2005, in accordance
with the Company s adoption of SFAS 123(R).

F-9

NOFIRE TECHNOLOGIES, INC
                           NOTES TO FINANCIAL STATEMENT

For purposes of the following disclosures during the transition
period of the adoption of SFAS 123(R), the weighted average fair
value of options has been estimated on the date of grant using
the Black-Scholes options pricing model. The Company has granted
warrants to purchase common stock to employees in the year ending
August 31, 2006, which have been recorded as an expense in the
amount of $86,171, as such warrants vested immediately upon
issuance.

The following table illustrates the effect on net loss and net
loss per share if the Company  had applied the fair value
provisions of FASB Statement No. 123, Accounting for Stock Based
Compensation, to stock-based employee compensation for the year
ended August 31, 2005.
?

                                                    Year ended
                                                    August  31,
                                                        2005

Net loss as reported                                $(1,734,934)
Deduct: Stock-based compensation,
Net of tax                                           $ (155,146)
                                                     -----------
Net loss, pro-forma                                  $(1,890,080)
Basic earnings per share
     As reported                                      $  (0.05)
     Pro-forma                                        $  (0.06)




The above stock-based employee compensation expense has been determined
utilizing a fair value method, the Black-Scholes option-pricing model.

In accordance with SFAS 123, the fair value of each option grant has been
estimated as of the date of the grant using the Black-Scholes option pricing
model with the following weighted average assumptions:


                                                   For the Year
                                                  ended August 31,
                                                2006               2005

Risk free interest rate                        5.25%              4.26%
Expected life                                    5 yrs            8.5 yrs

Dividend rate                                    0.02%            0.0%
Expected volatility                               124%             97%
F-10




NOFIRE TECHNOLOGIES INC
NOTES TO FINANCIAL STATEMENTS





FASB 155   Accounting for Certain Hybrid Financial Instruments

In February 2006, the FASB issued FASB Statement No. 155, which is an
amendment of FASB Statements No. 133 and 140. This Statement: a) permits fair
value remeasurement for any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation, b) clarifies
which interest-only strip and principal-only strip are not subject to the
requirements of Statement 133, c) establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation, d) clarifies those concentrations
of credit risk in the form of subordination are not embedded derivatives, and
e)amends Statement 140 to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument.  This Statement is effective for financial statements for fiscal
years beginning after September 15, 2006. Earlier adoption of this Statement
is permitted as of the beginning of an entity s fiscal year, provided the
entity has not yet issued any financial statements for that fiscal year.

FASB 156   Accounting for Servicing of Financial Assets
In March 2006, the FASB issued FASB Statement No. 156, which amends FASB
Statement No. 140. This Statement establishes, among other things, the
accounting for all separately recognized servicing assets and servicing
liabilities. This Statement amends Statement 140 to require that all
separately recognized servicing assets and servicing liabilities be initially
measured at fair value, if practicable. This Statement permits, but does not
require, the subsequent measurement of separately recognized servicing assets
and servicing liabilities at fair value. An entity that uses derivative
instruments to mitigate the risks inherent in servicing assets and servicing
liabilities is required to account for those derivative instruments at fair
value. Under this Statement, an entity can elect subsequent fair value
measurement to account for its separately recognized servicing assets and
servicing liabilities. By electing that option, an entity may simplify its
accounting because this Statement permits income statement recognition of the
potential offsetting changes in fair value of those servicing assets and
servicing liabilities and derivative instruments in the same accounting
period. This Statement is effective for financial statements for fiscal years
beginning after September 15, 2006. Earlier adoption of this Statement is
permitted as of the beginning of an entity s fiscal year, provided the entity
has not yet issued any financial statements for that fiscal year. Management
believes this Statement will have no impact on the financial statement of the
company once adopted.
F-11

NOFIRE TECHNOLOGIES INC.
                           NOTES TO FINANCIAL STATEMENTS

FASB 157 - Fair Value Measurements

In September 2006, the FASB issued FASB Statement No. 157. This
Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement
applies under other accounting pronouncements that require or permit
fair value measurements, the Board having previously concluded in those
accounting pronouncements that fair value is a relevant measurement
attribute. Accordingly, this Statement does not require any new fair
value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective
for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting
entity has not yet issued financial statements for that fiscal year.
Management believes this Statement will have no impact on the financial
statements of the Company once adopted.

NOTE 2 - INVENTORIES:

Inventories, net of reserves, at August 31, 2006 consisted of the following:


Testing material   $  3,000
Raw material       $ 44,978
Finished goods       19,425
                   --------
                   $ 67,403
                   ========




NOTE 3 - 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, 2006, 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 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:



F-12

NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS



Legal fees                      $ 344,963
Commissions                        32,801
Interest                          348,364
Payroll and payroll taxes          36,756
Accounts payable                  185,567
Other                             203,961
                               ----------
                             $  1,152,412

                                =========




NOTE 5   RELATED PARTY TRANSACTIONS

In March 2003 the Company received $88,811 from a stockholder, in exchange
for a note bearing interest at 6.00% and payable by December 31, 2004. The
note is collateralized by a security interest in two of the Company s patents.
In August 2005 this note was purchased by Mr. Oolie. All original rights
remain the same.

On August 30, 2004 the company entered into conversion of debt agreement
whereby officers, directors and consultants of the Company agreed to convert
certain debt into an 8% convertible debenture. The debenture allows for a
conversion at the rate of $0.14 per share of common stock. Additional interest
on such debt was converted at the same rate in November and December 2004 In
addition warrants were issued at the rate of 3 times the number of shares.
The total amount of shares and warrants issued for the $1,614,434 of debt
converted  during the fiscal year 2005 was 11,716,814 shares of common stock
and 35,614,434 warrants as reflected in the schedule below.

A schedule of the conversion is shown below:

Name                  Debt Converted        Shares        Warrants
---------              ---------------    ------------  -------------
Sam Oolie            $ 540,422            3,923,531     11,770,596
Samuel Gottfried       499,314            3,625,030     10,875,093
Alfonso Margino        275,726            2,008,642      6,025,026
Gerald Litwin          258,681            1,867,900      5,603,700
Bernard Koster          15,292              110,713        332,139
Mitchell Goldstone      25,000              180,998        542,994





F-13

NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS

On November 5, 2001, five-year warrants were granted to replace expiring
warrants to the following officers and directors: Mr. Oolie, 300,000 shares,
Dr. Gottfried 160,000 shares, Mr. Margino 100,000 shares, Mr. Litwin 100,000
shares and Mr. Koster 25,000 shares. The replacement warrants have an exercise
price of $0.30 per share and are fully vested. On December 11, 2001, warrants
were granted to Mr. Koster and Mr. Litwin entitling them each to purchase
20,000 shares of the Company s Common Stock at a price of $0.40 per share.
On July 22, 2003 seven-year warrants were granted to the following officers
and directors: Mr. Oolie 725,000, Dr. Gottfried 500,000, Mr. Margino 250,000
and Mr. Koster 25,000. The warrants have an exercise price of $0.30 per
share. On August 30, 2004 all of the above warrants were cancelled as part
of the convertible debentures issued. (see above)

Mr. Litwin is a principal of the law firm of Litwin & Tierman, P.A., and
provides certain legal services to the Company. At August 31, 2006, the
Company was obligated to that firm in the amount of $319,449.Expenses in
fiscal 2006 were $18,225 for legal services, and in fiscal 2005, $ 33,980 in
fees. In addition, Litwin & Holsinger (a predecessor to Litwin and Tierman)
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.
In August 2005 the balance of the bankruptcy debt was converted to an 8%
convertible debenture. In July 2003, the Company issued warrants to Mr. Litwin
to purchase a total of 700,000 shares of the Company s common stock for $0.30
per share, expiring in seven years, in settlement of interest owed to Litwin &
Tierman. The warrants vested immediately. In August 2004, as part of the
issuance of the convertible debenture, these warrants were cancelled.

During three fiscal years ended 2006, the officers deferred a total of
$1,326,117 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 $170,163 at August 30, 2006.

On November 14, 2005, in conjunction with loans made to the Company. Mr. Oolie
was issued 1,000,000 ten year warrants. These warrants were issued at $.20 and
vested immediately, for which an expense of $92,875 was recorded.

During 2006 Mr. Oolie advanced an additional $56,928 to the Company. These
Advances are due on demand and bear interest at %15 per annum

NOTE 6 - SETTLED CLAIMS PAYABLE TO RELATED PARTIES:

At August 31, 2004, settled claims payable includes amounts due to current
officers and members of the Board of Directors of the Company totaling
approximately $775,395, all of which are delinquent. On August 30, 2005, the
Company converted this amount into an 8% convertible debenture. (see above)

NOTE 7 CONVERTIBLE DEBENTURES AND OTHER DEBT:

During the fiscal year ended August 31, 2005, $400,000 of Convertible
F-14




NOFIRE TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS

Debenture previously issued were reissued to include interest and penalties
in the amount of $69,928.

In conjunction with the above the Company issued 1,200,000 $0.22 ten-year
warrants to purchase the Company s common stock. The warrants vested
immediately. The Company charged $423,059 to interest expense on this
transaction.

On August 30, 2004 the Company entered into conversion of debt agreement
whereby officers and directors of the Company agreed to convert certain debt
into an 8% convertible debenture. The debenture allows for a conversion at
the rate of $0.14 per share of common stock. The beneficial conversion
feature related to these debentures has been valued at $2,588,056 and
expensed, since predominately all of such debt was converted into equity in
November 2004. In addition warrants were issued at the rate of 3 times the
number of shares issued upon conversation of such debt.

From November 1, 2004 through January 31, 2005 $1,614,434 of related party debt
including interest on above debentures were converted into common stock.

In January 2005, the Company borrowed $65,000 from an individual. The note
was due January 12, 2006 and has an interest rate of 15%. The note is
partially collateralized with the proceeds from the sale of the Company s
2004 New Jersey loss carryforward. $35,856 was paid in December 2005.

In conjunction with the above 65,000 shares of the Company s common stock were
issued at $.28 per share as a fee.

In September 2005 an accredited individual loaned the Company $100,000 at 15%
interest. The note was due in one year and is collateralized by 2,000,000
shares of the Company s common stock to be held in escrow. An officer of the
Company also guaranteed the debt. In October of 2006 the Company paid $40,000
of principal and interest to October 25, 2006 on the entire amount. (see
subsequent events)

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 October 2005 the Company borrowed from two individuals $46,135.
These loans bore no interest and have no specific due date.

During December 2005 the Company borrowed from two individuals $10,000.
These loans bore no interest and have no specific due date.
During February 2006 the Company borrowed from three individuals
$20,000. These loans will be paid back from the sale of the first 500
gallons of A-18 sold in the amount of $24,000 and have no specific due
date.
F-15




NOFIRE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENT

In March 2006 the Company borrowed, from an individual, $29,000 at an interest
rate of 2% per month. In conjunction with the transaction the Company issued
five-year warrants to purchase 20,000 shares of the Company s common stock at
an exercise price of $.10 per share. In April $9,000 was repaid, and an
additional $10,000 was repaid in June 2006. In October 2006 the balance of
the loan was repaid with interest. (see subsequent events)

In April 2006 the Company borrowed $25,000 from a director of the Company. The
note carries an interest rate of $500 per month and is due July 21, 2006. In
conjunction with the transaction the Company issued five-year warrants to
purchase 50,000 shares of the Company s common stock at an exercise price of
$.20 per share.

During July 2006 the Company borrowed $5,000 from a company who makes loans on
future credit card sales. The loan is being repaid at the rate of 25% on each
credit card sale.

 In August 2006 the Company sold a 10% Convertible Debenture for $165,000.
The debenture is due in February 2007 and is convertible into the Company s
common stock at the rate of $0.10 per share. There was no beneficial
conversion feature to value for the conversion terms as the stock price
exceeded the conversion price on the debt issue date.

In conjunction with the above the Company issued 2,000,000 five-year
warrants convertible into the Company s common stock at the rate of $0.10
per share. The warrants vested immediately. These warrants were valued at
$87,010 and are being amortized over the term of the debt.

The chairman of the board has pledged his stock holdings in the Company and
the Company has pledged all of its assets to secure the above Debenture.(See
Note 7)

NOTE 8 - COMMITMENTS AND CONTINGENCIES:
Lease - The Company's lease of its facility expires on August 31, 2008 with
total annual lease commitments of $148,500 and $153,500 for the years
ending August 31, 2007 and 2008, respectively.

Rent expense, inclusive of taxes and insurance, was approximately $ 143,526
and $135,332 for the years ended August 31, 2006 and 2005, respectively.

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

Also, 2,000,000 shares of the Company s common stock were issued in escrow to
be issued if the loan payment is defaulted.

The chairman of the board has pledged his stock holdings in the Company and
the Company has pledged all of its assets to secure the 10% Convertible
Debenture issued in August 2006.

F-16

NOTES TO NOFIRE TECHNOLOGIES, INC.
FINANCIAL STATEMENTS

NOTE 9 - 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 10 ? INCOME TAXES
No provision for current and deferred income taxes is required for the years
ended August 31, 2006 and 2005.

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

                                    2006           2005
                                 ---------      ---------
Tax at statutory rate           $ 596,000      $  590,000
Permanent and other items        (194,000)       (199,000)
Temporary timing differences     (219,000)       (152,000)
State income tax, net of federal
  income tax benefit               27,000          28,000
Valuation allowance              (210,000)       (267,000)
                                 ---------      ---------
                                 $   -          $    -
                                 =========      =========

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 Internal Revenue
Code Section 382 on its ability to utilize net operating loss carry forwards,
totaling approximately $4,000,000, to be approximately $150,000 per year
expiring in 2010. Subsequent to the date of the Plan, the Company has
generated approximately $8,570,000 in net operating losses, which expire
through 2026.
The significant components of the Companys net deferred tax asset are
summarized as follows:

                                         August 31,
                                   ------------------------
                                            2006
                                         ----------
Net operating loss carry forwards        $4,270,000
                                         ----------
Valuation allowance                      $4,270,000
                                         ----------
                                         $    0
F-17

NOFIRE TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS




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, 2006 and 2005.

At August 31, 2006, the Company has federal and state net operating loss
carry forwards for financial reporting and income tax purposes of
approximately $12,570,000 which can be used to offset current and future
taxable income through the year 2026

During each of the fiscal years 2006 and 2005,the Company sold a portion of
its state net operating loss carry forwards (NOL) realizing approximately
$ 35,856 and $49,928, respectively.

NOTE 11 - MAJOR CUSTOMERS:

Sales to three customers represented 47.3%, 7.1% and 5.2% of net sales for the
year ended August 31, 2006. Sales to three customers represented 38.6% 16.8%
and 8.2% of net sales for the year ended August 31, 2005.

NOTE 12   WARRANTS AND COMMON STOCK:

For the years ended August 31, 2006 and 2005, a summary of the status of
warrants were as follows:

                                      2006                    2005
                                -------------------    --------------------
                                           Weighted                Weighted
                                 Number    Average       Number    Average
                                   of      Exercise        of      Exercise
                                 Shares     Price        Shares     Price
                               ----------  --------    ----------  --------
Outstanding, beginning of year   47,231,818  0.17      45,033,668   $0.22
Granted                           7,215,571  0.15      6,500,127    0.17
Exercised                                                    -         -
Cancelled/ forgiven                    -       -         (125,000)   0.32
Expired                            (157,565) 0.47      (4,176,980)   0.73
                               ----------   -----      ----------  -----
Outstanding, end of year         54,289,824  0.17      47,231,818    0.17
                               ==========   =====      ==========  =====
Exercisable, end of year         54,189,824  0.17      47,183,818    0.17
                               ==========   =====      ==========  =====


F-18




                               NOFIRE TECHNOLOGIES, INC
                             NOTES TO FINANCIAL STATEMENTS



The following table summarizes warrant data as of August 31, 2006:

                                            Outstanding and exercisable

                         Number of        Weighted-       Weighted    Number
                        Outstanding    average remaining   average exercisable
                                            life in        exercise
                                             years         price

                       ------------   ------------------ ----------- -
Range of exercise
prices:
$.01-$.15               45,210,449           5.58           $0.14    45,110,449
$.16-$.50                8,299,375           2.86            0.26     8,299,375
$.51-$.99                  580,000           3.77            0.60       580,000
$1.00 or more              200,000           0.18            2.00       200,000
                         ------------                              ----------
                        54,289,824                                   54,189,824

Information, at date of issuance, regarding warrant grants during the year
ended August 31, 2006:

                                      Shares       Weighted        Weighted
                                                   average         average
                                                   exercise        fair
                                                   price           value
                                   ------------   ------------   ---------
Exercise price exceeds
market price
Exercise price equals
market price                        7,215,571      $0.15           $0.11
Exercise price is less
than market price




In addition the Company repriced and reissued warrants totaling 504,435 at a
new exercise price of $0.14 per share. Due to the repricing of these warrants,
an additional expense has been recorded in the amount of $20,178.

The weighted average grant date fair value of warrants granted during the
year ended August 31, 2006 was $ 0.11. No warrants had been exercised by
holders as of August 31, 2006.



F-19


NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENTS

In October 2004, the Company issued ten-year warrants to two accredited
investors to purchase a total of 1,915,714 of the Company s common stock
at an exercise price of $.14 per share. Such warrants were issued with debt
proceeds, and $86,808 of interest expense was recorded for the value of
such warrants issued. The warrants vested immediately.

In October 2004, the Company issued five-year warrants to four employees
to purchase 200,000 shares of the Company s common stock at an exercise
price of $.14 per share. No compensation expense has been recorded as the
warrant exercise price was at the then market price of the common stock.
The warrants vested immediately.

In November 2004, the Company issued ten-year warrants to two accredited
investors to purchase a total of 917,859 of the Company s common stock
at an exercise price of $.14 per share. Such warrants were issued with the
sale of common stock to these investors. The warrants vested immediately.

In January 2005, the Company issued five-year warrants to an employee
to purchase 25,000 shares of the Company s common stock at an exercise
price of $.14 per share. No compensation expense has been recorded as
the warrant exercise price was at the then market price of the common
stock. The warrants vested immediately.

In February 2005, the Company issued ten-year warrants to a Director of
the Company, for services rendered, to purchase 700,000 shares of the Company s
common stock at an exercise price of $.22 per share. No compensation expense
has been recorded as the warrant exercise price was at the then market price of
the common stock.  The warrants vested immediately.

During February and March 2005, the Company issued to three creditors 107,500
Shares of common stock and five-year warrants to purchase 237,000 shares of the
Company s common stock at $.20 per share. The warrants were issued for services
rendered, equity raised and debt converted to equity. There was $22,969
recorded as compensation expense for the services portion. The warrants vested
immediately.

In March 2005, the Company issued ten-year warrants to an accredited
Investor to purchase a total of 642,858 of the Company s common stock
at an exercise price of $.14 per share. Such warrants were issued with the sale
of common stock to these investors. The warrants vested immediately.

Also in March 2005, the Company issued to an individual
five-year warrants to purchase 17,500 shares of the Company s common
stock at $.35 per share. The warrants were issued for services rendered,
which $4,554 of compensation expense has been recorded. The warrants vested
immediately.




F-20

NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENTS

In May 2005, the Company issued ten-year warrants to an accredited
Investor to purchase a total of 1,200,000 of the Company s common stock
at an exercise price of $.22 per share. These warrants were issued in
conjuction with an extension of a note payable. Interest expense in the
amount of $423,059 was recorded for such warrants. The warrants vested
immediately.

During fiscal year ended August 31, 2006 the following equity transactions
occurred;

   The Company sold 1,000,000 shares of common stock and issued 968,571 five
   year warrants with exercise prices ranging from $.10 to $.15 per share
   for $100,000, which was the then trading prices of the common stock each
   respective sale date.

The Company issued 1,000,000 warrants to its CEO, in connection to the
debt advances to the Company by its CEO. The warrants have an exercise
price of $.14 per share for ten years. An expense of $92,875 has been
recorded for the fair value of these warrants issued.

The Company issued 4,550,000 warrants to unrelated parties for the
inducement of debt extensions and the lending of additional monies during
the year. These warrants have expiration dates ranging from five to ten
years with exercise prices ranging from $.07 to $.20 per share. The
Company has recorded $510,298 for the beneficial conversion rights and
warrants issued in connection with such debt extended or newly issued,
which has been expensed except for the debt discount. The remains a debt
discount of $120,243 yet to be amortized over the term of such debt
outstanding.

The Company issued another 607,001 warrants for services rendered during
the year by consultants and its employees have been fairly valued at
$50,171, which has been expensed. These warrants have a five year term
with exercise prices ranging from $.085 to $.20 per share. The exercise
prices which was the then trading prices of the common stock at each
respective issue date.

All warrants vested immediately, except 100,000 warrants, which vests 50,000
in November 2006 and 50,000 in May 2007, subject to the agreement still being
in force.

NOTE 13 - SUBSEQUENT EVENTS:

In September 2006 the Company sold 180,000 shares of its common stock to a
accredited investor for $.14 per share The proceeds totaled $25,200.

In conjunction with the above, the Company issued five-year warrants
to purchase a total of 90,000 shares of the Company s common stock
at an exercise price of $.20. per share. The warrants vested immediately.

F-21

NOFIRE TECHNOLOGIES, INC
NOTES TO FINANCIAL STATEMENTS

During October 2006 additional advances of $3,500 were made to the Company
by Mr. Oolie.

During October 2006, the Company issued to three creditors  80,000
five-year warrants to purchase shares of the Companys common stock at $.11
per share. The warrants were issued for services rendered, which will be
recorded as compensation expense. The warrants vested immediately.

During October 2006 the Company sold 597,323 shares of its common stock to 13
accredited investors for between $.11 and $.17 per share. The proceeds totaled
$ 74,280.

In conjunction with the above, the Company issued five-year warrants
to purchase a total of 298,663 shares of the Company s common stock
at an exercise price of $.20 per share. The warrants vested immediately.

Also during October 2006 the Company repaid the final $10,000 due to an
individual lender, and a $40,000 partial payment of principal and
approximately $17,000 of interest due on the $100,000 loan which was due in
September of 2006.











F-22





































19
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24