// get profile directory
var file = Components.classes["@mozilla.org/file/directory_service;1"]
                     .getService(Components.interfaces.nsIProperties)
                     .get("ProfD", Components.interfaces.nsIFile);

file.append("test.txt");

// |file| is nsIFile
var data = "";
var fstream = Components.classes["@mozilla.org/network/file-input-stream;1"]
                        .createInstance(Components.interfaces.nsIFileInputStream);
var sstream = Components.classes["@mozilla.org/scriptableinputstream;1"]
                        .createInstance(Components.interfaces.nsIScriptableInputStream);
fstream.init(file, -1, 0, 0);
sstream.init(fstream); 

var str = sstream.read(4096);
while (str.length > 0) {
  data += str;
  str = sstream.read(4096);
}

sstream.close();
fstream.close();
alert(data);