CFRI Conforce International Inc (GM)

Conforce International, Inc. (“Conforce” or “Company”) (OTCBB: CFRI), developers of EKO-FLOR™, a composite flooring system for the transportation industry, announced today financial results for its second quarter ended September 30, 2011.

Marino Kulas, CEO of Conforce, stated that: “The results reflect our efforts to enhance the manufacturing process in order to provide for consistent, superior quality production at increased line speeds. In addition to technological advancements, we remained focused on key account acquisition in both the trailer and container divisions. To spearhead these initiatives, we hired two employees; both considered industry leaders in their respective fields of advanced pultrusion technologies and product commercialization. We continue to work towards expanding the capacity of our Peru facility, which at full utilization will be able to produce flooring for approximately 70,000 full sized 53’ highway trailers. We also were pleased to receive the Cradle to Cradle℠ (“C2C”) Silver Certification from the Environmental Protection and Encouragement Agency (EPEA) Internationale Umweltforschung GmbH in August. This certification validates the Company’s long-standing belief that innovation can bridge the gap between economics and the environment.”

The Company is focused solely on the commercialization of its EKO-FLOR product line. With the build-out of the production facility during the first half of fiscal 2012 and continued positive feedback from potential customers, the Company believes that significant growth potential exists with the introduction of composite flooring to the transportation industry.

Fiscal Year 2012 Second Quarter Financial Review

• Revenue for the three month period ended September 30, 2011 was $54,801, compared to $55,719 for the prior year period.
• General and administrative expenses for the three months ended September 30, 2011 were $339,694, and includes salaries and wages, professional fees and consultants, office supplies, travel and utilities, compared to $161,022 for the second quarter in fiscal 2010. The increase is attributable to the additional expense incurred in the expansion of the Peru facility.
• Research and development for the second quarter was $675,734 compared with $6,629 for the same period in the prior year. The increase is primarily due to the ongoing development of materials and equipment used in the production process and the training of new employees.
• The Company reported net losses for the second quarter of $995,152, or $0.01 per diluted share based on 160.1 million weighted average diluted shares.
• Amortization of property, plant and equipment for the period ended September 30, 2011 was $63,956 compared to $25,838 for the same period in the previous year. The increase is due to the purchase of additional equipment for the facility. The amortization expense is expected to increase further as additional lines are put into operations.

Cash Flow and Balance Sheet Highlights

• The Company has approximately $3.6 million of available cash for the purposes of ramping up production in the Peru facility and the ongoing business development cost associated with its commercialization strategy. The Company’s net cash outflow from operations for the six month period ended September 30, 2011 was $1.8 million. The Company considers itself to have sufficient funding to continue operations beyond the next 12 months.
• As of September 30, 2011, the Company had cash and cash equivalents of $3.6 million; working capital of $4.0 million; and shareholder’s equity of $5.0 million.
• During the six months ended September 30, 2011, the Company received $500,000 in incentive financing for the selection of Peru, Indiana as the location of its manufacturing facility. This incentive payment is in the form of a forgivable loan.

Conference Call Information

The Company will discuss these results and provide an update on operations in a conference call at 11:00 a.m. EST on December 7, 2011.

Participant Dial-In Numbers: (In the United States): (877) 407-8031 (International): (201) 689-8031

Webcast:

The call will also be simultaneously broadcast over the Internet. To listen to the live webcast, please go to and click on the conference call link, http://www.investorcalendar.com/IC/CEPage.asp?ID=166638. For those unable to listen to the live webcast, a replay will be available shortly after the call.

About Conforce International

Since its inception in 2004, Conforce has dedicated its research and development efforts to an innovative composite flooring system known as EKO-FLOR™. EKO-FLOR™ has been engineered to replace the outmoded hardwood flooring currently employed by the transportation industry. EKO-FLOR™ is significantly lighter, stronger and more durable than wood. The product possesses superior, environmentally friendly, performance characteristics including complete resistance to stains, odors, absorption of oil or liquid chemicals, microbial and insect attack. EKO-FLOR™ has successfully completed several customer trials with leading highway trailer manufacturers and is currently in trials with the largest shipping lines in the world. For more information, please visit www.conforceintl.com.

Safe Harbor Act Disclaimer

Forward-looking statements in this release are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Certain statements in this press release may contain words such as “anticipates”, “believes”, “could”, “estimates”, "expects", "intends", “may”, “projects”, “plans”, “targets” and other similar language and are considered forward-looking statements. These statements are based on management’s current expectations, estimates, forecasts and projections about the success of its newly developed container and trailer flooring products, as well as certain other composite based flooring products in various stages of development. These forward-looking statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and therefore the actual results may be materially different from those discussed.

  Conforce International Inc. Unaudited Consolidated Interim Statements of Operations and Comprehensive Loss For the three and six month periods ended September 30, 2011 and September 30, 2010 (US Dollars)                   Three months ended   Six months ended September 30, September 30, September 30, September 30,         2011 2010 2011 2010   Product revenue $ 54,801 $ 55,719 $ 54,801 $ 55,719   Cost of product revenue 48,021 59,295 48,021 59,295         Gross profit (loss)   6,780     (3,576 ) $ 6,780   $ (3,576 )   Expenses General and administrative 339,694 161,022 800,912 363,031 Research and development 675,734 6,629 786,884 11,882 Stock based compensation 17,949 47,279 24,253 90,812 Amortization of property, plant and equipment 63,956 25,838 102,664 48,753 Amortization of intangible assets 858 1,008 1,722 2,027         1,098,191 241,776 1,716,435 516,505         Loss before non-operating items (1,091,411 ) (245,352 ) (1,709,655 ) (520,081 )     Interest on related party loans payable 19,513 15,009 39,070 27,836 Interest on term loan 3,321 2,961 6,445 5,834 Interest and bank charges 355 278 1,389 397 Gain on forgiven loan (25,000 ) - (25,000 ) - Foreign exchange loss (gain) (94,448 ) 1,233 (74,860 ) 2,060         Loss before discontinued operations and non-controlling interest in subsidiary (995,152 ) (264,833 ) (1,656,699 ) (556,208 )   Gain on sale of subsidiary - (150,675 ) - (150,675 ) Net loss from discontinued operations - - - 1,641         Net loss (995,152 ) (114,158 ) (1,656,699 ) (407,174 )   Noncontrolling interest - - - (13,026 )         Net loss attributable to Conforce International Inc. (995,152 ) (114,158 ) (1,656,699 ) (394,148 )   Other Comprehensive income: Translation adjustment on foreign exchange - (20,722 ) - 19,791         Total comprehensive loss $ (995,152 ) $ (134,880 ) $ (1,656,699 ) $ (374,357 )   Loss per share - basic and diluted From continuing operations $ (0.01 ) $ - $ (0.01 ) $ - From discontinued operations $ - $ - $ - $ -     Weighted average number of shares outstanding 160,120,049 120,001,000 160,120,049 120,001,000

 

        Conforce International Inc. Unaudited Consolidated Interim Balance Sheets As at September 30, 2011 and March 31, 2011 (US Dollars)         September 30, 2011     March 31, 2011   Assets Current Assets Cash and cash equivalents $ 3,582,525 $ 6,121,074 Accounts receivable 124,636 611,375 Inventory 684,360 85,284 Prepaid expenses   68,216     -   4,459,737 6,817,733   Property, plant and equipment 2,641,531 1,509,537 Intangible assets 33,399 17,289 Other non-current assets   19,436     60,336   $ 7,154,103   $ 8,404,895     Liabilities Current Liabilities Accounts payable and accrued liabilities $ 448,492 $ 468,322 Current portion of term loan 22,963 24,092 Current portion of forgivable loan   100,000     -   571,455 492,414   Related party loan payable 1,063,767 1,110,754 Term loan 158,540 183,940 Forgivable loan   475,000     -   2,168,762 1,787,108 Shareholders equity (deficiency) Share capital 7,722,816 7,722,816 Contributed surplus 2,353,284 2,329,031 Accumulated other comprehensive income 73,739 73,739 Accumulated deficit   (5,164,498 )   (3,507,799 ) 4,985,341 6,617,787     $ 7,154,103   $ 8,404,895     Common shares issued and outstanding 160,120,049 160,120,049   Conforce International Inc. Unaudited Consolidated Interim Statements of Cash Flow For the six month periods ended September 30, 2011 and 2010 (US Dollars)         2011     2010   Operating activities Net loss $ (1,656,699 ) $ (394,148 ) Items not affecting cash Amortization of plant and equipment 102,664 48,753 Amortization of intangible assets 1,722 2,027 Imputed interest on related party loan payable 39,070 27,836 Forgiven portion of forgiven loan (25,000 ) - Foreign Exchange gain on related party loan payable (101,427 ) - Deferred rent - (4,492 ) Stock based compensation 24,253 90,812 Gain on sale of discontinued operations   -     (150,675 ) (1,615,417 ) (379,887 )   Changes in non-cash working capital (200,383 ) (70,161 )     Net cash used in operating activities   (1,815,800 )   (450,048 )   Net cash provided by discontinued operations   -     46,269     Investing activities Purchase of plant and equipment (1,234,658 ) (33,902 ) Investment in intangible assets (17,832 ) - Decrease (increase) in non-current assets 40,900 (19,393 )     Net cash used in investing activities   (1,211,590 )   (53,295 )     Financing activities Repayment of term loans (11,159 ) (10,989 ) Forgivable loan 500,000 - Advances from related parties - 396,274     Net cash provided by financing activities   488,841     385,285     Effect of foreign exchange on cash   -     (992 )   Decrease in cash and cash equivalents during the period (2,538,549 ) (144,803 )   Cash and cash equivalents, beginning of the period 6,121,074 146,304       Cash and cash equivalents, end of the period $ 3,582,525   $ 1,501     Supplemental cash flow information   Cash paid for interest 6,445 5,834