UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
 
Commission file number:   001-34203
 
CONFORCE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
68-6077093
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
51A Caldari Road
2nd Floor
Concord, Ontario L4K 4G3
Canada
 (Address of principal executive offices)
 
           (416) 234-0266 
 (Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o
 
Indicate by check mark whether the registrant is a large accelerated filer,, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  o  No x

As of June 30, 2009, 120,001,000 shares of the Company’s common stock, $0.0001 par value, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
None.

 
 
 


TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION. 
 
ITEM 1.  FINANCIAL STATEMENTS. 
3
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 
12
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 
  14
ITEM 4.  CONTROLS AND PROCEDURES. 
14
   
PART II – OTHER INFORMATION. 
 
ITEM 1.   LEGAL PROCEEDINGS. 
15
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 
  15
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES. 
 15
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 
 15
ITEM 5.  OTHER INFORMATION. 
15
ITEM 6.  EXHIBITS.
15



 
2
 


PART I – FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS.
 
 
Conforce International, Inc.
           
Balance Sheets
           
For the periods ending June 30, 2009 and 2008
           
   
2009
   
2008
 
ASSETS
           
Current Assets
           
Cash
  $ (17,225 )   $ -  
Accounts receivable
    176,881       469,818  
Other receivables
    65,142       144,930  
Total Current Assets
    224,798       614,748  
                 
Fixed Assets
               
Office equipment
    20,947       16,479  
Vehicles
    19,384       14,480  
Equipment
    638,892       56,753  
Leasehold improvements
    23,973       15,591  
      703,195       103,303  
Less: Accumulated depreciation
    (149,429 )        
      553,766       103,303  
                 
Other Assets
               
Deposits
    76,624       22,692  
      76,624       22,692  
                 
Total Assets   $ 855,189     $ 549,829  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Current Liabilities
               
Accounts payable
  $ 87,557     $ 57,158  
Bank indebtedness
    207,470       -  
Accrued liabilities
    -       41,558  
Accrued wages
    -       -  
Corporation taxes
    -       26,218  
Shareholder's loans
    729,529       328,889  
Total Current Liabilities
    1,024,557       453,823  
                 
                 
Shareholders' Equity
               
Preferred stock
    -       -  
Common stock
    9,157       549  
Retained earnings
    (178,525 )     190,914  
Adjustment for shareholder position
    -       (95,457 )
      (169,368 )     96,006  
                 
  Total Liabilities and Shareholders' Equity   $ 855,189     $ 549,829  
     
 
See accompanying notes to financial statements.
 
 
3
 
 
Conforce International, Inc.
 
Statements of Income
 
For the Periods ending June 30, 2009 and 2008
 
   
2009
   
2008
 
             
REVENUES
           
Revenues
  $ 446,786     $ 712,306  
                 
DIRECT COST OF REVENUES
               
Equipment rental
    18,490       27,880  
Fuel
    5,614       17,991  
Repairs & maintenance
    7,448       11,613  
Transportation
    119,155       339,145  
Rent
    46,965       57,043  
Subcontractors
    175,661       7,867  
      373,333       461,539  
GROSS PROFIT
    73,453       250,767  
                 
EXPENSES
               
Administrative (including stock compensation expense)
    10,755       224,315  
Flooring System expenses; Research & development
    135,198       41,016  
Depreciation
    -       9,933  
      145,953       275,264  
OTHER INCOME AND EXPENSE
               
(Gain)/loss on currency conversion
    (54,986 )     -  
                 
INCOME FROM OPERATIONS
    (127,486 )     (24,497 )
                 
TAX PROVISIONS
    -       -  
NET INCOME/(LOSS) BEFORE MINORITY INTEREST
    (127,486 )     (24,497 )
LESS MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
    63,615       12,273  
NET INCOME
  $ (63,870 )   $ (12,224 )
                 
NET LOSS PER SHARE
               
Average shares outstanding
    120,001,000       120,001,000  
Loss per share
  $ (0.00 )   $ (0.00 )
 
 
See accompanying notes to financial statements.
 
 
4
 
 
Conforce International, Inc.
Statements of Cash Flows
For the years ending March 31, 2009 and 2008
             
   
2009
   
2008
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net Income/(loss) for the period
  $ (63,870 )   $ 190,914  
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
               
Minority interest in consolidated subsidary
    (63,615 )        
Depreciation
    -       93,010  
Changes in Current assets and liabilities:
               
(Increase) decrease in Accounts receivable
    292,937       (264,340 )
(Increase) decrease in Other receivables
    79,788       (851 )
(Decrease) Increase in Accounts payable
    30,399       24,828  
(Decrease) Increase in Accrued liabilities
    (41,558 )     3,818  
(Decrease) Increase in Accrued wages
    -       7,179  
NET CASH (USED) BY OPERATING ACTIVITIES
    234,080       54,558  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of Fixed assets
    (599,892 )     (39,972 )
Purchase of Deposits
    -       -  
NET CASH (USED) BY INVESTING ACTIVITIES
    (599,892 )     (39,972 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
NET CASH PROVIDED BY FINANCING ACTIVITIES
    -       -  
                 
EFFECT OF EXCHANGE RATE ON CASH
    47,149       37,475  
NET INCREASE IN CASH
    (318,663 )     52,061  
CASH AT BEGINNING OF PERIOD
    34,801       74,832  
CASH AT END OF PERIOD
  $ (283,862 )   $ 126,893  
 
 
See accompanying notes to financial statements.
 
 
5
 
 
Conforce International, Inc.
 
Statement of Shareholders' Equity
 
For the Periods Ending June 30, 2009 and 2008
 
                           
Additional
             
   
Preferred Stock
   
Common Stock
   
Contributed
   
Retained
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Earnings
   
Total
 
Balances at  June 30, 2007
    -     $ -       120,001,000     $ 549     $ -     $ 23,279       23,828  
Stock contributed for
                                                       
employment agreement
    -       -       -       -       27,300       -       27,300  
Net income/(loss) for the period
    -       -       -       -       -       95,457       95,457  
Balances at June 30. 2008
    -       -       120,001,000       9,157       27,300       (101,361 )     146,585  
Stock contributed for
                                                       
employment agreement
    -       -       -       -       62,600       -       62,600  
Net Income for the year
    -       -       -       -       -       (54,854 )     (54,854 )
Balances at June 30, 2009
    -     $ -       120,001,000     $ 9,157     $ 89,900     $ (156,215 )   $ 154,331  
 
 
See accompanying notes to financial statements.
 
 
6
 
 
Conforce International, Inc.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
June 30, 2009
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History
 
The Company was incorporated on May 18, 2004 in the state of Delaware as Now Marketing Corp.

On May 25, 2005, the Company acquired Conforce Container Corporation in exchange for 120,000,000 shares of the Company’s Common Stock, making Conforce Container Corporation a wholly owned subsidiary.  Immediately prior to the acquisition, the Company had 1,000 shares of common stock issued and outstanding.  The acquisition was accounted for as a recapitalization of Conforce Container Corporation, as the shareholders of Conforce Container Corporation controlled the Company after the acquisition was completed.  Conforce Container Corporation was treated as the acquiring entity for accounting purposes.  There were no adjustments to the carrying value of the assets or liabilities of acquired company or to the assets and liabilities of the acquiring company.  On May 20, 2005 Conforce Container Corporation was renamed from First National Preferred Card Service, Inc., which was incorporated under the laws of Ontario on February 9, 2001.  Conforce Container Corporation’s Balance Sheet on the date of acquisition was as follows;
 
   
In Canadian
 
   
Dollars
 
Assets
 
$
-0-
 
         
Liabilities
       
  Shareholder loans
 
$
18,560
 
Equity
   
(18,560
)
   
$
-0-
 
 
The Company was renamed from Now Marketing Corp to Conforce International, Inc. at this time.

On May 24, 2005, the Company acquired 50.1% of Conforce 1 Container Terminals, Inc., for $100.  Conforce 1 Container Terminals, Inc. was incorporated under the laws of Ontario on November 12, 2003.  The combination was accounted for as a reverse acquisition as the shareholders of Conforce 1 Container Terminals, Inc. controlled the Company after the acquisition was completed.  Conforce 1 Container Terminals, Inc. was treated as the acquiring entity for accounting purposes.  There were no adjustments to the carrying value of the assets or liabilities of acquired company or to the assets and liabilities of the acquiring company.

The Company’s 50.1% owned subsidiary, Conforce 1 Container Terminals, Inc., provides handling, storage and transport of overseas shipping containers for international steamship lines, as well as domestic retailers.  Conforce Container Corporation embarked on the development of a new container flooring system, EKO-FLOR   which has been designed to provide an environmentally friendly product to increase container versatility while reducing shipping costs.

Financial Statement Presentation
The accompanying statements have been prepared from the books and records of the Company and its subsidiaries.  All significant intercompany accounts have been eliminated.  The Company’s 50.1% subsidiary enjoys an October 31, yearend for tax purposes.  The books and records included herein have been adjusted for the three month period ending June 30, 2009 and 2008 respectively.

Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.  There was no cash paid during the periods for interest or taxes.

Property and Equipment
Property and equipment are carried at cost.  Maintenance, repairs and renewals are expensed as incurred.  Depreciation of property and equipment is provided for over their estimated useful lives, which range from three and five years, using the declining balance method.  Leasehold improvements are amortized over the life of the lease.  Depreciation expense was $0 for the period ending June 30, 2009 and $9,933 for the period ending June 30, 2008.

Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

 
7
 
 
Conforce International, Inc.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS June 30, 2009
June 30, 2009
 
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Revenue Recognition

During the period ended June 30, 2008, the only revenue producing operations of the Company were from the Container operations, During the period ending June 30, 2009, however, revenues were produced from both the Container Terminal Operations ($231,679) and EKO-FLOR ($171,745). The operations bill at the end of each month for the services rendered during the month.


NOTE 2 – INCOME TAXES

The Company accounts for income taxes under Generally Accepted Accounting Principals used in the United States of America, which requires the Company to recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of the assets and liabilities using enacted tax rates.  The Company has no significant differences between book and tax accounting.
 
NOTE 3 – LONG – TERM DEBT
 
On December 1, 2008, the Company entered into a borrowing relationship with a Bank to borrow $250,000 at approximately 12% interest for ten years. The agreement calls for monthly payments of $2,303 including principal and interest. The balance outstanding at June 30, 2009 was $207,470 compared to a $0 balance owing as at June 30, 2008.
 
NOTE 4 – EQUITY

Preferred Stock

At June 30, 2009 and 2008, the Company had authorized 5,000,000 shares of Preferred Stock at a par value of $.0001 per share.  There were 0 shares outstanding.  The unissued shares of Preferred stock may be divided into and issued in designated series from time to time by one or more resolutions adopted by the Board of Directors.

Common Stock

At June 30, 2009 and 2008, the Company had authorized 250,000,000 shares of Common Stock at a par value of $.0001 per share (Canadian Dollars).  There were 120,001,000 shares outstanding.

Stock Transactions

On October 26, 2006 the company entered into an employment agreement with its Vice-President, Product development. The agreement was for twelve months, fixed compensation levels and called for an issue of Common stock on the 30th of each month during the life of the agreement. An additional 200,000 shares were to be issued at the end of the agreement, dependent upon continued employment.  The shares were provided by the majority shareholder of the Company.  Shares issued during the year ended March 31, 2008 totaled 200,000 and were valued at $62,600.  Valuation was based on the trading value of the shares on the date the shares were provided and issued which in all cases the on the same day.

On October 31, 2007, the Company entered into a renewal of the employment agreement with it Vice-President, Product Development.  The agreement was for a period of twelve months, fixes compensation level and calls for an issue of Common stock upon completion of the agreement if certain goals are met in connection with the EKO-FLOR products.  None of the performance criteria were met as of June 30, 2008.

On October 31, 2008, the Company renewed its employment agreement with its Vice-President, Product Development.  This renewal is for a period of twelve months, fixes compensation level and calls for an issue of 320,000 shares of Common stock at the end of this period.  There has been no provision for this accrual at June 30, 2009 since the performance criteria had not been met.

 
8
 
Conforce International, Inc.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS June 30, 2009
June 30, 2009
 
NOTE 5 – RELATED PARTIES

At June 30, 2009 and June 30, 2008 the Company owed $544,249 and $328,889 respectively to Marino Kulas, the CEO, member of the Board of Directors and Shareholder under an informal borrowing arrangement.  These loans, made in Canadian Dollars, are without terms of repayment and there were no repayments made under this arrangement during the period ending June 30, 2009 or the period ending June 30, 2008. Interest has been imputed on these notes at 1.5 percent.

The Company also rents three pieces of equipment on a month to month basis from a related party.  Rent expense for these items was $18,490 for the period ending June 30, 2009 compared with $56,573 for the period ended June 30, 2008.  The rental rate paid by the Company to the related party is felt by management to be a competitive rate.

The CEO is the 49.9 % minority shareholder of Conforce 1 Container Terminals, Inc.

The Company had no sales or purchases to or from TRC during the three month period ending June 30, 2009 and 2008.
 
NOTE 6 – COMMITMENTS

The Company leases office space under a five year lease which runs through April 2012.  Monthly lease payments are $2,883.

The Company leases container terminal site space under a lease which originally ran from April 2004 to March 2007. The lease was renewed in April 2007 for an additional five year term to March 2012 with monthly lease payments increasing by $3,514 to $14,641 per month.   In December 2008, the Company entered into a three year lease for its production and development centre site space. The monthly payments are $9,350 and will commence in January 2009 and run until December 2011.

Future lease commitments are as follows: Fiscal 2009 represents the Company’s fourth quarter ending March 31, 2009.

Future commitments:

Fiscal 2010     
 
$
322,488
 
Fiscal 2011    
 
$
322,488
 
Fiscal 2012     
 
$
294,438
 
Fiscal 2013  
 
$
2,883
 
Fiscal 2014     
 
$
0
 
Thereafter     
 
$
0
 
 
 
9
 

Conforce International, Inc.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS June 30, 2009
June 30, 2009

NOTE 7 – MINORITY INTEREST

Minority interest on the consolidated balance sheets represents the portion of the shareholders’ equity at the respective year ends not owned by the shareholders of the Company.
 
   
Minority
 
   
Interest
 
March 31, 2006
 
$
99,588
 
  Minority interest in income of subsidiary
   
26,972
 
March 31, 2007
   
126,560
 
  Minority interest in income of subsidiary
   
153,965
 
March 31, 2008
   
280,525
 
  Minority interest in income of subsidiary
   
180,000
 
March 31, 2009
 
$
406,525
 
 
NOTE 8 – BUSINESS SEGMENTS

The Company operated in three reportable business segments; Container Terminal, EKO-FLOR and Administrative.  The Container Terminal operations are organized as Conforce 1 Container Terminals, Inc., a 50.1% owned subsidiary of the Company.  The subsidiary is responsible for all container terminal operations.  EKO-FLOR is organized as Conforce Container Corporation a 100% owned subsidiary of the Company.  This subsidiary is responsible for the development, manufacturing and marketing of the Company’s EKO-FLOR product.  Operations to date have been research and development.  The Administrative operations are the operations of the parent company Conforce International, Inc.  The operations to date have been minimal since formation.
 
 
10
 
 
Conforce International, Inc.
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS June 30, 2009
June 30, 2009
 
Business Segments –For the Period Ended June 30, 2009
   
Container
         
   
Terminals
 
EKO-FLOR
     Consolidated
               
Revenues
 
$
275,545
 
$
171,240
 
$
446,786
                   
Direct cost of Sales
   
106,391
   
-0-
   
106,391
                   
Administrative – operations
   
410,282
   
-0-
   
410,282
Research & development
   
-0-
   
276,647
   
276,647
Depreciation
   
-0-
   
-0-
   
-0-
                   
Income (Loss) From
                 
Operations
 
$
(241,127)
 
$
(105,407)
)
$ 
(346,534)

Total Assets, June 30, 2009

Container Terminals
 
$
1,719,116
 
EKO-FLOR
   
136,846
 
Inter-company receivable
   
(925,590
)
Consolidated Total Assets                                           
 
$
930,372
 
 
 
11
 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Safe Harbor Act Disclaimer for Forward-Looking Statements

Certain statements in this document 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 container terminal operations, 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.

PLAN OF OPERATIONS
 
In 2009, the Company’s primary focus will be on the commercialization of EKO-FLOR. With the introduction of EKO-FLOR revenues as a result of ms-1 panel orders, the reliance on the container terminal will decrease. Accordingly, the Company intends to pursue opportunities as they relate to three EKO-FLOR products (as described below). While the container terminal is expected to continue to provide revenues and moderate earnings, if any at all, growth in the terminal operations is not expected.  As a result of the global economic downturn, quarter-over-quarter revenue, as anticipated by management, was lower by 37.27% for the period ended June 30, 2009 to $446,786 as compared with $712,306 for the period ended June 30, 2008.

Expansion for Conforce is expected to come from EKO-FLOR ms-1 in 2009 and cs-4 in 2010, where the Company believes that notwithstanding the current economic slowdown, significant growth potential exists due to the desperate need for composite flooring within the industry. Should the container industry in 2010 collectively produce one half of its 2007 new build volume of 3.9 million twenty foot equivalent containers, the Company would still experience significant growth assuming we are able to meet expectations of orders totaling approximately 60,000 units or approximately 2% of total new build volume.
 
EKO-FLOR cs-4:    Trial product will be shipped to customers in or around August 2009.  Trial completion times may range from 60 – 120 days depending on sea routes and frequency selected by trial customers, at their sole discretion.  Conforce estimates that most trial will be completed in the third quarter of calendar 2009.  The EKO-FLOR cs-4 panels are currently being produced at Conforce’s own development center in Concord, Ontario.

Once the trials are complete and depending on the outcome of such trials, the Company intends to secure EKO-FLOR cs-4 orders for 2010. Provided that volume commitments are secured and that such commitments are in-line with Conforce expectations of 60,000 - 80,000 TEU for fiscal 2010, then the Company will begin the process of formalizing the details of a financial offering that will adequately capitalize the establishment of a company owned facility in Asia. As such, the Company would require financing of 8 – 10 million USD. Currently, there is no such financing in place, nor are there any preliminary or final term sheets or agreements in place in support of such financing.  If and when Conforce receives such written orders, it is at that time that various financing avenues will be considered such as private placements or public offerings.  Depending on market and economic conditions at such time as the capital is required, the Company will consider its options as they relate to the structure of the offering in terms of debt versus equity and public versus private. However, there are no guarantees that the Company will be able to obtain such funding under reasonable terms, if at all.
 
EKO-FLOR ms-1:  In 2010, the Company also expects to receive equivalent orders to those received in 2009 for EKO-FLOR ms-1, a variation of the cs-4 flooring panel designed for use as load bearing shelving panels in special application military containers.  The Company is currently having the ms-1 panels produced at a sub-contracted facility in Quebec, Canada.  

 
12
 
 
EKO-FLOR xts:  In the third quarter of calendar 2009, the Company intends to introduce EKO-FLOR xts to the North American highway trailer industry. The Company will offer a modified variation of its cs-4 container panel in order to commence actual road testing by industry participants. The Company expects to have the modified cs-4 panels placed into highway trailers for road testing in or around September 2009.
 
The Company intends to apply for listing on the OTC Bulletin Board at such time as it's Forms 10 and 211 reach the no-comment stage by the appropriate regulatory agencies, however, there is no guarantee that the Company’s application for listing will be accepted.

LIQUIDITY AND CAPITAL RESOURCES

The Company intends to raise, either through an Initial Public Offering of its securities or a Private Placement, the capital required for the establishment and operation of a multi-line EKO-FLOR manufacturing facility in Asia, which is currently estimated to be between USD 8 – 10 million dollars.  The company will make the decision in terms of its production expansion into Asia at such time as the trials of EKO-FLOR cs-4 are completed (currently projected to be completed by August - October of 2009) and if it has received a firm commitment(s) from shipping line(s) and/or leasing companies for the production of EKO-FLOR cs-4.

The Company does not currently have any outstanding lines or letters of credit.  Conforce does have a business development loan through a government sponsored program in the amount of $250,000 payable over 10 years (due January 2019).  The loan was made through the small business development loan program (SBL) and is limited in its use to the purchases of equipment.  Funds from the loan have been used to finance a portion of the production equipment in the Company’s new development and production facility in Concord, Ontario and such equipment has been used as collateral for the loan.  Under the rules governing SBL’s, in the event the Company defaults on the loan, the Company is only responsible for repayment of an amount equal to 25% of the total funds advanced.

The Company does not have any agreements to fund the operations for the next 12 months, although it is attempting to secure funds, in the amount of approximately $500,000, by way of non-interest bearing, non-callable (for 10 years) loans from certain minority founding shareholders. Such shareholders will attempt to access funds for the aforementioned loans through private transactions with accredited investors involving the sale of a portion of their holdings of Conforce common stock. Proceeds from the sale will be loaned to Conforce, in whole or in part, net of applicable taxes and fees if applicable, at the sole discretion of such minority founding shareholders. Proceeds from these transactions will be used to fund any and all costs associated with the production of trial product. It is important to note that should the outcome of trials be favorable, the Company will be required to raise significant capital towards the establishment of an EKO-FLOR manufacturing facility in China. Such capital is currently estimated to be 8 – 10 million USD.

RESULTS OF OPERATIONS
 
INTERIM PERIOD ENDED JUNE 30, 2009 COMPARED TO THE INTERIM PERIOD ENDED JUNE 30, 2008

The Company had gross revenues of $403,424 with a net loss of $164,650 for the period ended June 30, 2009 compared to sales of $712,306 and a net loss of $24,497 for the period ended June 30, 2008, a decrease in sales of $308,882 from the prior period. The decrease was due primarily to the downturn in the global economy and consequent decreased demand for transportation services and container operations.

The Company had cost goods sold relating to direct production costs of $374,434 for the period ended June 30, 2009 compared to cost of goods sold relating to direct production costs of $40,496 for the period ended June 30, 2008, which represents a decrease in the cost of goods sold of $333,938. This decrease in cost of goods was attributable primarily to a decrease in transportation costs.

The Company had gross profit of $28,990 for the year ended June 30, 2009 compared to gross profit of $307,810 for the period ended June 30, 2008, a decrease in gross profit of $278,820. The decrease was due primarily to decrease in volume.

The Company had combined administrative ($10,755), research and development ($135,596) and depreciation ($0.00) expenses of $146,351 for the period ended June 30, 2009 compared to combined administrative ($365,331), research and development ($57,043) and depreciation ($9,933) expenses of $332,307 for the period ended June 30, 2008. 

 
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The Company’s research and development costs include the creation of architectural drawings as they relate to panel specifications, the creation of dies, the manufacturing of test panels, the creation of specific panel testing equipment, costs relating to independent certification testing, consulting costs associated with utilizing process experts and engineers and costs associated with the setup of the research and production center. The Company anticipates that research and development costs will increase in fiscal 2009 as a result of final preparations for the production of trial product, as well as costs associated with the development of the highway trailer product.

The further Company anticipates that ongoing research and development costs will stabilize in fiscal 2010 and be maintained at a rate proportional to sales.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
The Company has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future affect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

LIABILITIES

The Company had accounts payable of $345,896 at June 30, 2009 compared to $57,158 at June 30, 2008, an increase of $288,738.  Such increase is attributable to a decrease in the Company's working capital primarily as the result of Fixed Asset purchases and the continued funding of EKO-FLOR product development.

The Company had no accrued liabilities as at June 30, 2009 compared to $41,558 at June 30, 2008, a decrease of $41,558.

The Company had no accrued wages at June 30, 2009, as was also the case at June 30, 2008.

The Company had Shareholder's loans with Marino Kulas, CEO and shareholder, of $554,249 at June 30, 2009 compared to $328,889 at June 30, 2008. This increase in shareholder's loans of $225,360 funded the working capital requirements and the continued funding of EKO-FLOR product development. The shareholder's loans are interest free (1.5% interest rate imputed) with no fixed terms of repayment and no payments were made on these loans during this period.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable as Conforce is a smaller reporting company.

ITEM 4.  CONTROLS AND PROCEDURES.

As of the end of the reporting period covered by this report, June 30, 2009, our Chief Executive Officer and Acting Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as defined in Securities Exchange Act of 1934 Rule 13a-15(e).

Based upon that evaluation, management concluded that our disclosure controls and procedures were adequate and effective.

During the most recent fiscal quarter, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a – 15(f) or 15d – 15(f) that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

 
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PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

The Company is not a party to any litigation and, to its knowledge, no action, suit or proceeding has been threatened against the Company. There are no material proceedings to which any director, officer or affiliate of the Company or security holder is a party adverse to the Company or has a material interest adverse to the Company.
 
ITEM 2.  UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5.  OTHER INFORMATION.

None.

ITEM 6.  EXHIBITS.

Exhibit No.
Description
2.0
Acquisition Agreement and Plan of Merger dated May 24, 2005 (1)
3.1
Certificate of Incorporation for Conforce International, Inc.  (1)
3.1.1
Certificate of Incorporation for Conforce Container Corporation (1)
3.1.2
Certificate of Incorporation for Conforce 1 Container Terminals, Inc. (1)
3.2
Bylaws (1)
10.1
Canada Small Business Financial Loan dated November 26, 2008 (2)
10.2
Sea Box, Inc. Purchase Order dated November 25, 2009  (3)
10.3
Letter of Agreement in Connection with the Strategic Partnership Between Conforce International, Inc. and Bayer MaterialScience, LLC. dated February 2, 2009  (3)
10.4
Advisory Agreement between WorldWide Associates, Inc. and Conforce International, Inc. dated April 2, 2007 (3)
10.5
Employment Renewal Proposal for Joseph DeRose dated October 31, 2008 (4)
31.1
Certification pursuant to section 302 of the Sarbanes - Oxley Act of 2002.
31.2
Certification pursuant to section 302 of the Sarbanes - Oxley Act of 2002.
32.1
Certification of Officer pursuant to section 906 of the Sarbanes - Oxley Act of 2002.
32.2
Certification of Officer pursuant to section 906 of the Sarbanes - Oxley Act of 2002.

(1) Denotes previously filed exhibits: filed on February 9, 2009 with Conforce International, Inc.’s 10-12G Registration Statement.
(2) Denotes previously filed exhibits: filed on May 28, 2009 with Conforce International, Inc.’s 10-12G/A Registration Statement.
(3) Denotes previously filed exhibits: filed on June 29, 2009 with Conforce International, Inc.’s 10-12G/A Registration Statement.
(4) Denotes previously filed exhibits: filed on August 19, 2009 with Conforce International, Inc.’s 10-12G/A Registration Statement.

 
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SIGNATURES      

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
Conforce International, Inc.
 
       
August 28, 2009
By:
/s/ Marino Kulas
 
   
Marino Kulas
 
   
President & CEO
 
       

 
 
 
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