UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10/A
(amendment no. 6 )
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act Of 1934
Conforce International, Inc.
(Name of Registrant as specified in its charter)
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Delaware
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68-6077093
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or jurisdiction)
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Identification Number)
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51A Caldari Road
2nd Floor
Concord, Ontario L4K 4G3
Canada
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(416) 234-0266
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
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Title of each class
to be so registered
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Name of each exchange on which
each class is to be registered
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Common stock, par value $0.0001
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Over-the-Counter/Pink Sheets
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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 the definitions of “large accelerated filer,” accelerated filer,” and “smaller reporting company” in Rule 12-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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x
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EXPLANATORY NOTE
Conforce International, Inc. is filing this General Form for the Registration of Securities on Form 10 to register its common stock, par value $0.0001, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
On April 9, 2009, Conforce International, Inc.’s registration statement was automatically declared effective and Conforce International, Inc. is now subject to the requirements of Regulation 13A under the Exchange Act, which will require the Company to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K, and it will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g).
Unless otherwise noted, references in this registration statement to “Conforce International, Inc.,” “Conforce,” “CFRI,” the “Company,” “we,” “our” or “us” means Conforce International, Inc. Our principal place of business is located at 51A
Caldari Road, 2nd Floor, Concord, Ontario L4K 4G3 Canada. Our telephone number is (416) 234-0266.
ITEM 1. BUSINESS.
BUSINESS DEVELOPMENT
Conforce International, Inc. is a Delaware corporation headquartered in Concord, Ontario, Canada. Management of Conforce has been in the shipping container business repairing, selling or storing containers for over 25 years. The Company operates a Container Terminal through Conforce 1 Container Terminals, Inc. (“Conforce
1”). Conforce 1 provides complete handling and storage of marine shipping containers to its client base of International shipping lines. The container depot has a capacity of over 5,000 containers. Its fully integrated software system allows shipping line customers on-line access 24/7 to create bookings, view container inventory and status, and to print standard and customizable reports. Full service features include empty and loaded container lift on-off services, short and long term
storage for empty and loaded containers, on-site container-reefer vendors for container repair services, 460V plugs for continued container temperature control while stationed at the terminal, on-site fuelling and steam cleaning, and container modifications to client specifications. The Container Terminal is the Company’s primary source of revenue. The Company generates revenues as a result of charges assessed to shipping lines for the lifting and handling of their empty containers while stored at
the Container Terminal until their next use. The Container Terminal also charges for related services such as the abovementioned fueling and power stations for temperature controlled containers.
In addition to the business of the container terminal as described above, the Company has been engaged in the research and development of a polymer based composite shipping container flooring product, EKO-FLOR.
EKO-FLOR xcs, the first version of the product, was officially introduced to the container industry on December 5, 2006 at the 31st annual Intermodal Conference in Hamburg, Germany, the world’s leading shipping container event. Based on the initial reception to the composite, the Company learned that the industry was
interested in a composite alternative, however, the product needed to weigh less than the current wood standard. Based on this feedback, Conforce continued to refine its product and as a result, it was able to introduce a lighter, less expensive version, EKO-FLOR cs-2, in December 2007 at the Intermodal Show in Amsterdam, Netherlands. Following the 2007 Intermodal show, the Company received feedback as it related to the slip-resistance of its surface coating. Customers indicated that a coating was required but
needed to maintain an adequate amount of grit for slip-resistance, while not damaging carton boxes placed directly on the surface. Based on this feedback, the Company continued to develop the product until it was able to officially launch EKO-FLOR cs-4 in December 2008. Conforce introduced its latest light-weight version, which contained a topcoat jointly developed by Conforce and Bayer MaterialScience LLC, to customers during a series of meetings held in Hamburg, Germany, the location of the 2008 Intermodal
Conference. These meetings in December 2008, which were held in a designated boardroom at the Hamburg Renaissance, were scheduled with shipping lines and lessors who ranked in the top ten, in terms of volume purchases of new build containers in their respective business segments. The Company met with two shipping lines and with the Chairman of the International Institute of Container Lessors’ flooring workgroup representing its twelve member firms. Of the potential customers
in attendance, only one had previously conducted dry-land testing of the EKO-FLOR product at a production facility in China. Such testing was conducted using standardized strength test methods as fully described on page 6 of this documents under sub-heading EKO-FLOR cs-4. The companies in attendance were solicited based on their on-going interest in the product and their willingness during 2007 and 2008 to provide feedback to Conforce so that the Company could make improvements to the product in the
areas of weight and surface coatings. These companies were able to provide such feedback based on the their willingness to test a suitable alternative to apitong plywood if such a product could be cost competitive, weight neutral or preferably lighter, and could meet the standardized strength tests as applied to apitong plywood. During and following the meetings, orders were placed for ocean-going trials of EKO-FLOR cs-4. (The difference in the product versions described above is more fully
explained in the Principal Products section of this document).
As a result, EKO-FLOR cs-4 will be evaluated through ocean-going tests conducted by shipping lines and container lessors. The Company expects that approximately six hundred (600) EKO-FLOR cs-4 equipped containers will be in circulation on or about October - December 2009 for final testing.
The Company originally expected to have its product in circulation for testing between May and July 2009; however, final preparation as it relates to production equipment, personnel and processes have caused the trial date to date to be delayed as stated above. At this time, the Company does not expect any further delays.
The Company has also developed EKO-FLOR ms-1, a composite panel designed specifically for use as shelving in United States Military special application marine containers. Consistent with a Letter of Intent received by Conforce in May 2008 from its military sub-contractor, Sea Box Inc., the first order from Sea Box for ms-1was received
in December of 2008. The order consisted of racking for special application containers and will generate revenues in excess of 1 million USD over 12 months until January 2010. Shipments of ms-1 commenced in January 2009. As of July 31, 2009, the Sea Box order has generated revenues for the Company in the amount of approximately $796,000.
In order to help ensure the successful commercialization of EKO-FLOR, on February 2, 2009, the Company signed a definitive agreement with Bayer MaterialScience LLC (“Bayer”) establishing a strategic partnership between Conforce and Bayer. Bayer is one of the world’s leading polymer companies
and is a division of Bayer AG, a recognized leader in health care, nutrition and advanced materials. For Conforce, the agreement provides key support in the areas of advanced material and design analysis, efficient production practices, technical expertise and know-how, and a global material supply chain consistent with the projected requirements of EKO-FLOR. The goal of the Partnership is the successful commercialization of EKO-FLOR through the use of advanced design and material analysis, efficient
production practices through on-going training and support, and the logistical development of a material supply chain. Conforce will produce or have produced on its behalf EKO-FLOR profiles using Bayer Products (polyurethanes, polyurethane coatingsand polyurethane pultrusions). Bayer will receive samples of EKO-FLOR produced by or on behalf of Conforce using Bayer Products for testing, evaluation, determining and making any modifications to Bayer Products which Bayer believes may improve
the physical properties, appearance or processing of EKO-FLOR. Bayer will allocate the know-how, technical expertise and human resources Bayer deems necessary to assist with the setup and production of EKO-FLOR trial orders and the establishment of a production facility in Asia, if/when necessary. Such assistance will include the analysis of current Conforce production processes in order to ensure a seamless transition from local single-line production to scalable multi-line manufacturing
in Asia. Bayer will ensure that Conforce has access to an adequate supply of Bayer products for production of EKO-FLOR and Bayer has provided and will continue to provide economic assistance to Conforce towards the development of EKO-FLOR. The term of this Agreement will be for a period of one (1) year from the date first written above. This Agreement may be extended or terminated by mutual agreement of the parties. Either party may terminate this agreement at any time upon thirty (30)
days’ written notice to the other party with such termination to become effective at the conclusion of such thirty (30) day period. However, all intellectual property rights as explained under the Patents section will survive the termination of such agreement. For Bayer, the agreement provides revenue through resin supply to Conforce. As such, Conforce and Bayer will, at a later date to be mutually agreed upon, enter into, execute and deliver definitive operational agreements which
may include multi-term material supply agreements and joint development agreements. To-date, no such agreements have been signed that will bind the Company at this time.
Conforce and Bayer have collaborated on the design of the special application military container panels, EKO-FLOR xts trailer flooring and cs 4 container flooring. Bayer has contributed its technical expertise in identifying and providing
polyurethane
resins that will maximize strength, while minimizing weight.
The combined collaborative efforts of Bayer and Conforce have been ongoing from July of 2008 through the date of this filing. Bayer’s role in the development of EKO-FLOR has been to optimize the production process, including advice relating to the design of the pultrusion production line and, as previously
stated, advice concerning the optimal polyurethane resin mix. Bayer has provided third-party consultants, at its own expense, to design various components of the pultrusion production line. In addition, it has provided Bayer employees at its own cost to act as consultants and attend the Conforce production and development centre in Ontario for purposes of overseeing the configuration of the pultrusion production line and fabrication of the EKO-FLOR panels. Bayer has provided economic
assistance to Conforce in two ways: (1) Bayer has incurred the cost of certain components used in the pultrusion production line and certain development costs associated with the production of the special application military container panels; and (2), as previously stated, Bayer incurred the cost of certain third-party consultants and provided Bayer employees at its own cost to act as consultants. There are no specific agreements in place pertaining to the provision of any additional economic
assistance by Bayer to Conforce in the future. Although it is likely that Bayer will provide similar economic assistance in the future, it is not possible to predict the precise nature of such assistance at this time. To date, Conforce has paid approximately $220,000 to Bayer in exchange for supplying resins to Conforce. The amount that Bayer will receive from Conforce in the future will depend upon the level of market acceptance of EKO-FLOR.
It is important to note that all revenues reported by Conforce as of December 31, 2008 were generated by the container terminal operations, which was formed in November 2003 with first revenues being recorded in April 2004. Research and development of EKO-FLOR has been primarily funded by cash provided by the terminal operations. During
the period January 1 – March 31, 2009, the Company reported its first revenues from the sale of EKO-FLOR shelving panels to its military contractor, Sea Box.
The results from operations of the Container Terminal division are as follows:
For the 12 month period April 1, 2006 to March 31, 2007, the Company had revenues of $1,567,187 with income from operations of $54,053. For the 12 month period April 1, 2007 to March 31, 2008, the Company had revenues of $2,364,945 with income from operations of $308,548. For the 12 month
period April 1, 2008 to March 31, 2009 the Company had revenues of $1,711,622 with income from operations of $320,761.
The results from operations of the EKO-FLOR division are as follows:
For the 12 month period April 1, 2006 to March 31, 2007, the Company had no revenues and a loss from operations of ($252,143). For the 12 month period April 1, 2007 to March 31, 2008, the Company had no revenues and a loss from operations of ($209,437).
The results of consolidated operations are as follows:
For the 12 month period April 1, 2006 to March 31, 2007, the Company had revenues of $1,567,187 and a loss from operations of ($198,090). For the 12 month period April 1, 2007 to March 31, 2008, the Company had revenues of $2,364,945 with income from operations of $99,111.
CORPORATE DEVELOPMENT
Toronto Reefer Container Services (“TRC”) was formed in 1975 by Mr. Tony Kulas, father of Marino Kulas. It was a Kulas private family business specializing in the service and repair of oceangoing containers. The business was subsequently purchased in 1998 by Mr. Slavko Kulas, the cousin of Mr. Marino
Kulas. Mr. Marino Kulas has been previously employed by TRC. Since the formation of Conforce, TRC has remained an independent entity, an outside vendor, with no financial relationship with Conforce. TRC is in the business of providing repair services for shipping lines through the use of mobile repair units that are called upon by various terminals to perform on-site container repairs. TRC is hired by the shipping lines and is paid directly by same. Terminal operators,
including Conforce, allow TRC to work on their premises as a service to their shipping line customers. As such, Conforce is not paid by TRC and TRC is not paid by Conforce, nor is there any formal written agreement between the parties. It is important to note that shipping lines may use any outside repair vendor they choose and that all such vendors are allowed access to the Conforce terminal to perform repairs without paying a fee to Conforce. This practice is typical in the industry and rarely is
a repair vendor required to pay a fee to a terminal operator.
On February 9, 2001, First National Preferred Card Service Inc. (FNPCS) was registered as an Ontario corporation and was originally established to facilitate payment systems for cruise ships operated by certain shipping lines and in particular, Carnival Cruise Lines.
In November of 2003, Conforce 1 Container Terminals Inc. was registered as an Ontario corporation and was formed for the purposes of establishing a container storage and handling terminal. First revenues for the terminal were recorded in April 2004.
On May 18, 2004 “Now Marketing Corp.” was duly formed through the filing of its Certificate of Incorporation with the Delaware Secretary of State by Chairman and Director, Marino Kulas. As was the case with FNPCS, Now Marketing Corp was also originally established for the venture involving payment systems for
cruise ships.
On May 18, 2005, Now Marketing Corp. was renamed to Conforce International, Inc. At the time of the renaming, Now Marketing Corp. had no business operations.
On May 20, 2005, First National Preferred Card Service Inc. was renamed to Conforce Container Corporation. At the time of the renaming, FNPCS had no business operations.
On May 24, 2005, Conforce International, Inc. and Conforce Container Corporation (“CCC”), an Ontario corporation, completed an Acquisition Agreement and Plan of Merger. The purpose of the merger was for international tax planning and expansion. At that time, the Company acquired 50.1% of Conforce 1 Container Terminals Inc.,
which was wholly owned by Marino Kulas.
As of May 24, 2005 and upon execution of the Acquisition Agreement and Plan of Merger in connection with Conforce 1 and CCC, Marino Kulas, President and Chief Executive Officer was the founder and sole owner of Now Marketing Corp. and was the founder and majority shareholder of CCC, which is the company responsible for the development
of EKO-FLOR. Mr. Kulas was also the founder and sole owner of Conforce 1 Container Terminals, Inc., which is the company responsible for the Company’s container terminal operations.
As of the date of this filing, the common stock of Conforce is listed on the Pink Sheets Electronic OTC Market under the trading symbol “CFRI.”
PRINCIPAL PRODUCTS
Conforce is comprised of two separate and distinct operating divisions:
1. Conforce 1 Container Terminals, Inc. (“Conforce 1”) is a full-service container terminal providing storage and handling for ocean-going containers.
Conforce 1 provides complete handling and storage of Marine shipping containers to its client base of International shipping lines. The container depot has a capacity of over 5,000 containers. Its fully integrated software system allows customers on-line access 24/7 to create bookings, view container inventory
and status and to print a number of standard and customizable reports.
The full service features offered include, empty and loaded container lift on-off services, container repairs through TRC, short and long term storage for empty and loaded containers, EDI capability, on-site container-reefer vendors for container repair services, 460V plugs for continued container temperature control while
stationed at the terminal, on-site fueling and steam cleaning services and container modifications to client specifications.
2. Conforce Container Corporation is dedicated to the production, development and commercialization of the new ISO1496 certified container flooring system, EKO-FLOR.
EKO-FLOR is a composite flooring system designed to replace plywood flooring in shipping containers.
EKO-FLOR xcs was the first version of the product developed. It was similar in weight to apitong plywood at 304 kgs per 20 foot container.
EKO-FLOR cs-2 was designed for use in general cargo applications. The product weighed 270kg per 20 ft. container.
EKO-FLOR cs-4 was designed throughout 2008 as a result of evaluations and suggestions by container industry participants. The product contains a new anti-slip top coat surface jointly developed by Conforce and Bayer MaterialScience LLC. The product meets specified requirements, applied to all wood flooring products, in terms of the
weight and forces exerted on the product before failure occurs (“load bearing” or “load bearing properties”). The product was tested by the American Bureau of Shipping using standardized testing procedures for shipping containers. The primary test involved exerting pressure on the floor by rolling a test cart with a weight of 7,260kgs on two 7” wide solid rubber tires. The second major test involved lifting the container 6 - 12” off the ground while carrying 60,960kgs
of cargo (two times its maximum capacity of 30,480kgs per twenty foot container). EKO-FLOR cs-4 will replace xcs and cs-2 and is the version of the product that will be tested by customers in ocean-going trials. The EKO-FLOR cs-4 panels are currently being produced at Conforce’s own development center in Concord, Ontario.
EKO-FLOR ms-1 has been developed as a load bearing shelving system for use in special application United States military containers.
The Company is currently having the ms-1 panels produced at a sub-contracted facility in Quebec, Canada.
Please refer to the Growth Strategies section on page 8 for discussion of anticipated revenues.
PRINCIPAL COMPETITIVE STRENGTHS
Container Terminal Division
Although the terminal offers full service features as described in Item 1 above, such features are offered by most terminals and are not considered a unique competitive strength. The Company was able to enter the terminal business based on its existing relationships with shipping lines through management’s business dealings while
formerly employed by TRC. Therefore, its main competitive strength remains relationship driven as well as its focus on customer service.
The terminal can also accommodate temperature controlled containers, known as reefers, as a result of its investment in a generator valued at approximately $60,000.
EKO-FLOR Division
An oil spill caused by a forklift during loading prior to ocean-going travel will in all likelihood be absorbed in wood flooring during the 20 – 25 days the container sits idly on the vessel. Based on internal testing conducted by Conforce whereby oil was poured onto an apitong wood panel and an EKO-FLOR polymer panel, after
four days of being untouched, the spill was removed using a cotton towel. The EKO-FLOR polymer panel did not absorb the oil, whereas the oil had penetrated the apitong wood panel. The four day test period was selected to demonstrate how quickly oil can be absorbed into wood. The Company also conducted oil testing on EKO-FLOR panels for a period of thirty days, during which oil was not absorbed by the product. The significance of oil absorbed in wood in containers is that the container will
not be suitable for food-grade transport. Shipping lines may choose to repair the floor by either sanding or replacing the damaged wood floor section which results in increased repair costs.
EKO-FLOR weighs 249kg per 20 foot container while the plywood currently found in the majority of containers weighs 304kg per 20 foot container.
It is also important to note that although damage to EKO-FLOR panels is unlikely, certain repairs may be required, as would be the case with wood floors, if the following events were to occur: the container experiences major cargo shifting causing extreme localized contact with the floor; mishandling of the container by crane operators
may cause the frame to bend potentially resulting in lifted or cracked panels; and if the container is placed on the ground and lands on a protruding object this may cause either cracked or loosened panels.
PRINCIPAL CHALLENGES
Container Terminal Division
The principal challenges related to the terminal business are customer retention in a competitive environment and decreasing container traffic as a result of the global economic downturn which has adversely affected storage and transportation services required by international shipping lines. With respect to the latter, the economy
has caused terminal operators to aggressively reduce rates in an attempt to increase traffic. This strategy is advantageous to terminals who may offset the reduced margins with increased revenue from ancillary services such as long-haul transport. For Conforce, reducing its rates cannot be offset and will lead to reduced gross margin. The Company is currently estimating that revenues in the terminal operations division will decrease by approximately 30% in 2009 while gross margin will be reduced by approximately
5%.
In addition to unsolicited rate reductions by terminal operators, shipping lines have also requested rate reductions citing the global economy as the reason. The Company will be forced to temporarily reduce such rates in order to retain the business.
Another challenge faced by the terminal is its geographic location. Being closer to major rail yards such as Canadian National (CN) and Canadian Pacific (CP) railways is an advantage. Of the four competitors described on page 9 of this document, Conforce is the furthest from the major railways. More specifically, the Conforce terminal
is located approximately 50 kilometers from CN whereas the Coyote terminal is approximately 8 kilometers from CN and 3 kilometers from CP.
EKO-FLOR Division
One of the principal challenges faced by EKO-FLOR is the upfront premium. This hurdle was significant when the product was first introduced to the industry in 2006, however, the Company has been able to decrease the product price by over $200 per 20 foot container. The premium represents an increase of approximately 15%
or $290 to the total price of a 20 foot equivalent container.
Another challenge the Company will face will be the establishment of a manufacturing facility in China. To do so, the Company will need to rely on strategic partnerships with entities having expertise as it relates to business and production practices in China. Currently, the Company uses a Canadian sub-contracted
facility for production of its military shelving panel. For the production of cs-4 trial product, the Company will use its own Development Centre in Concord Ontario, where two production lines have been installed.
Based on the current economic downturn, the Company may also face potential delays in terms of first orders, should the outcome of the trials be positive. Customers currently using wood products may be less inclined or motivated to switch to composite flooring, EKO-FLOR, due to the abovementioned premium and the overall
fear of change in an economy where funds are tight. The production of new build containers was approximately 2.75 million twenty foot equivalent units in 2008, new builds for 2009 are expected to be significantly lower at 1 million units 1 and projections for 2010 are uncertain at this time.
1 Containerisation International Magazine, March 2009, Available for subscribers only.
GROWTH STRATEGIES
While Conforce has a well established core business with regard to its container storage terminal, it does not contemplate any growth in its terminal operations division. Between 2005 and 2008, the Company explored the possibility of expanding the division primarily through relocation and acquisition. With respect
to relocation, the Company was seeking land in close proximity to one of the two major railway operators, Canadian National and Canadian Pacific, however, zoning and price per acre were prohibitive. For example, in its current location, Conforce pays rent of approximately $2,100 per acre whereas locations in close proximity to the railways command per acre rates in excess of $4,000.
The Company then explored the possibility of opening a second terminal in Montreal, Quebec in order to service the business of existing shipping line customers such as China Shipping Company and ZIM Containers. As was the case in Toronto, price and zoning proved to be difficult in the areas near major rail yards. Where available, zoning
limited the stacking of containers to three high. By contrast, the current Conforce terminal in Ontario may stack containers up to eight high.
Given the competitive nature of the terminal business and the reduced margins for the foreseeable future, the Company will consider, should the EKO-FLOR division meet its targeted revenue and earnings over the next 12 – 18 months, divesting itself of the terminal operations.
The Company’s EKO-FLOR container flooring system, which is in the development stage, continues to exhibit growth potential, e.g. ocean-going trials planned by international shipping lines. The Company’s success depends to a significant extent on the performance of a number of senior management personnel and other
key employees, including production and research and development personnel. Moreover, the success of Conforce continues to depend to a significant extent on its ability to identify, attract, hire, train and retain qualified professional, technical, production and managerial personnel.
In May of 2008 Conforce received a Letter of Intent (LOI) from a U.S. based Military contractor, Sea Box, Inc., for the purchase of the Company’s newly developed composite product, EKO-FLOR ms-1, designed exclusively for use as load bearing shelving in special application United States Military shipping
containers. The LOI contemplates a renewable multi-year contract whereby Conforce will provide product for a minimum of 10,000 special application containers. In December 2008, the company received its first order (firm commitment) in connection with the LOI for EKO-FLOR ms-1 from its US military contractor, Sea Box, Inc. to provide the product for over 5,000 special application military containers, generating revenues in excess of 1 million USD. The Company is currently having the ms-1 panels
produced at a sub-contracted facility in Quebec, Canada. As previously stated, Conforce will manufacture the cs-4 trial product at its Production and Development Centre in Ontario. The production capacity of the pultrusion production line situated in the Production and Development Centre is currently limited to the production of the cs-4 trial product. Once the trial product has been manufactured in full, the Company may produce the ms-1 product itself at the Production and Development
Centre in Ontario rather than on a sub-contracted basis in Quebec.
The Company has received firm trial orders for approximately 600 twenty foot equivalent units, with a value of approximately 350,000 USD, for its EKO-FLOR cs-4 composite container flooring system from various shipping lines and leasing companies. Receipt of such 350,000 USD is merely for the conducting of the ocean-going trial
(use of EKO-FLOR in the trial) by a shipping line or leasing company. Depending upon the results of such trial, should such shipping line and/or leasing company decide to place a firm commitment/purchase order with Conforce, further revenues will be generated by Conforce as agreed to in such firm commitment/purchase order. The amount of such revenues is unknown by Conforce until receipt of such firm commitment/purchase order. The EKO-FLOR cs-4 panels are currently being produced
at Conforce’s own development center in Concord, Ontario. Currently, shipping lines will purchase approximately 60 – 65% of their fleets annually while the balance will be leased. Therefore, leasing companies represent on average approximately 40% of the annual purchases of new build containers. The trials will consist of placing EKO-FLOR equipped containers loaded with various types of cargo, to be determined at the discretion of the shipping lines, and to have such loaded containers placed
on ocean-going vessels to be transported on routes also to be determined at the sole discretion of the shipping lines. The success of the trials is adjudged not only by the securing of purchase orders but also by what is gained or learned from the feedback provided by the shipping lines. The evaluation criteria applied by the shipping lines is subjective and unknown by Conforce. Accordingly, test participants may elect to not purchase EKO-FLOR for a variety of subjective reasons, which may or
may not be unrelated to the product’s performance. The trial orders are not firm commitments to purchase on-going product and do not guarantee generating revenue beyond the revenue generated by the trial orders themselves.
It is important to note that in the event the outcome of the trials are successful and if the Company receives from its customers written orders for year one volume of approximately 60,000 twenty foot equivalent units, then the Company intends to establish an EKO-FLOR manufacturing facility in China. To do so, 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.
Conforce, along with any company doing business internationally, will be subject to currency fluctuations and fluctuations in the applicable exchange rate. Fluctuations in the exchange rate between the Chinese RMB and the Canadian dollar could adversely affect the Company’s operation results as well as the value of
some Conforce assets and liabilities.
Moreover, some of the Company’s material agreements may be governed by foreign law, e.g. Chinese laws. Accordingly, should Conforce ultimately establish a facility in China, the Company will engage competent Chinese legal counsel to represent the Company and advise them with regards to Chinese licensing registration
or other regulatory requirements and policies prior to styling and producing any material agreements. Additionally, some of the Company’s material agreements may be governed by foreign law, e.g. Canadian laws; however, there exists a strong parallel between Canadian laws and the laws of the United States. Conforce is physically located in Concord, Ontario, but is incorporated in the state of Delaware and subject to the laws of the state of Delaware and the United States. Conforce
has a resident agent in Delaware who is identified and required to accept service of process on behalf of Conforce and its officers. Accordingly, service of process is not made more difficult due to the location of Conforce’s headquarters.
The Company was organized under the laws of the State of Delaware. The Company’s resident agent for service is Harvard Business Services, Inc., located at 16192 Coastal Highway, Lewes, Delaware 19958. Investors located in the United States may effect service of process upon Harvard Business Services, Inc. and commence legal proceedings in a United States Federal Court. Accordingly, it would not be materially more difficult for a U.S. investor to commence a legal proceeding against
the Company notwithstanding the fact that certain material agreements of the Company may be governed by Ontario law, its principal place of business is located in Concord, Ontario and its officers and directors are residents of Ontario.
Currently, all agreements that are material to the business and affairs of the Company are governed by jurisdictions within the United States or Canada. In the future, the Company will ensure that all material agreements governed by jurisdictions outside of the United States or Canada contain appropriate dispute resolution mechanisms pertaining to the submission of all disputes to the Stockholm Chamber of Commerce in Stockholm, Sweden. Any award rendered by this arbitration tribunal
is enforceable in accordance with the “United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).” Therefore, as a practical matter, although no assurances can be given, the legal infrastructure of any particular foreign jurisdiction, while different from its United States counterpart, should not present any risk to a Conforce investor who is a resident of the United States or any significant impediment to the operation of Conforce in any foreign jurisdiction.
The production, in part, of EKO-FLOR products at third-party contracted facilities immediately brings in to question the following: (i) quality control; (ii) timely delivery of finished products; and (iii) quality and pricing of raw materials, etc. Conforce management will conduct thorough and complete due diligence investigations
of any such third-party contractor. Additionally, material contracts will be comprehensive, strictly construed, and rigidly enforced.
The Company intends to enter the North American highway trailer market with a similar flooring product. The North American trailer product, EKO-FLOR xts, is in the final development stage and the Company expects to be able to produce a die specific for the trailer product by November 2009. Prior
to funding the remaining cost of development and dies, the Company will supply existing cs-4 panels to trailer manufacturers for industry certification and
over-the-road trials in or around
September
2009. By using its company owned production facility in Canada the initial estimated cost of entry into the North American highway trailer market is approximately $300,000. Should the outcome of EKO-FLOR trials be successful, the Company’s production and development centre in Concord, Ontario will be unable to satisfy the potential demands of the trailer industry and therefore, the Company is considering the establishment of a manufacturing facility in or around Indiana, which is considered the central
location for the manufacture of highway trailers for the North American market. The total cost to establish such a facility is currently estimated to be 4.75 – 5.50 million USD.
The Company intends to develop flooring for the Cruise Line industry and has had preliminary discussions with Carnival Cruise Lines. The Company expects to produce a prototype panel for use as a replacement to teak wood currently used on cruise ships. The Company does not expect to provide product if at all, to Carnival until
March of 2011. Total cost of entry into the decking market for cruise lines is unknown at this time, however, the Company intends to use net proceeds from the sale of EKO-FLOR cs-4 and ms-1 for the development of the product.
The Company plans to develop and commercialize a residential flooring application that will further contribute to the development of the EKO-FLOR brand and will enable the Company to capitalize on the significant “do-it-yourself” home and cottage renovation market. The product will be designed for use on docks as a
replacement for wooden docks suffering deterioration due to continued exposure to water, sunlight and general weather elements. EKO-FLOR decking would have similar properties as those found in EKO-FLOR cs-4 and ms-1 but would not require the same load bearing strength characteristics. The Company has not developed a sales channel for this product as of yet, however, the Company’s V.P of Product Development is also the technical chairperson for the National Composites Council of Canada. The Company intends
to rely on his expertise and contact base as it relates to the development and commercialization of the outdoor decking product. Prototypes of the product are scheduled for the second quarter of 2010. Total cost of entry is estimated to be approximately 200,000. Net proceeds from the sale of EKO-FLOR cs-4 and ms-1 will be applied to the development of the product.
DISTRIBUTION METHODS
The Company intends to sell its products directly to International shipping lines for use in newly manufactured containers through, either its internal sales staff, broker/selling agents (of which it has 2 in Europe), and military contractors (of which it has one in the USA, Sea Box). As of January 2009, the Company began shipments
of EKO-FLOR ms-1 to its aforementioned military sub-contractor.
INDUSTRY OVERVIEW
According to Containerisation International Magazine, there were 3.9 million new containers manufactured in 2007
1
.
Containers are currently equipped with floors made from tropical hardwoods, the most common being Apitong. The container industry is aggressively seeking a viable alternative to hardwood
2
.
Regarding the current state of the shipping container industry as a result of the recent global economic downturn, it is important to note that new build volume in 2008 was projected to be 3.85 million 20 foot equivalent containers as of third quarter 2008; however, due to a slowdown in the fourth quarter, actual
2008 annual production was approximately 2.75 million twenty foot equivalent containers. Volume for the production of new containers is projected to be down significantly in 2009 and is currently projected to be approximately 1 million twenty foot equivalent containers
3
.
Shipping rates are also expected to decrease, which could put additional pressure on shipping lines as revenues and earnings decrease. According to Drewry Supply Chain Advisors division director Philip Damas, “Demand is no longer sufficient to absorb new vessel capacity. As a result of anemic growth and over-capacity, container
freight rates have fallen on several key routes, with the notable exception of the transpacific, where carriers have withdrawn substantial capacity. Shippers should expect container rates to decline by about 15 percent during the current down-cycle, although any reductions will also depend on the level of fuel surcharges
4
.”
According to a report published on December 8, 2008 by Deutsche Bank Research, the long-term prospects for container shipping are favourable. The report states that “Despite the current economic slowdown, container shipping is expected to continue to be a growth sector (+7 to 8% p.a. until 2015).” The report states that
while it expects significant problems for shipping companies in the short-term as a result of over-capacities and declining freight and charter rates, the medium and long-term prospects remain intact. The report concludes although “the crisis is severe, there is no reason [for the industry] to panic
5
.”
1 Source: Containerisation International Magazine, February 2008. Available to subscribers only.
2 Source: World Cargo News article entitled “Floors: the Container’s Achilles Heel,” – January 2007 edition.
3 Source: Containerisation International Magazine, May 2009. Available to subscribers only.
4 Available to the public for a nominal fee; however, excerpts are available online at no charge.
5 Available to the public at no charge.
PRODUCT DEVELOPMENT
The Company has developed a composite container flooring product as an alternative to the wood flooring currently used in the majority of containers in circulation. The Company has received trial orders of the EKO-FLOR cs-4 totaling approximately 600 - 20ft equivalent containers. The Company expects that
ocean-going trials will be completed during the fourth calendar quarter of 2009.
The Company has developed EKO-FLOR ms-1, a composite shelving system designed for use in special application military containers. The Company recently received an order from its US military contractor to equip over 5,000 special application US military containers with EKO-FLOR ms-1. The first order will generate annual revenues
for Conforce in excess of 1 million USD.
COMPETITION
In terms of competition for the Conforce 1 Terminal Division, the Company has identified four similar container depots within a 50 km radius to the Conforce facility. Each of these depots provides similar services as does Conforce and each competes for the business of the international shipping lines.
The first competitor is ACS (Alrange Container Services) which has 2 smaller locations, one in Toronto, Ontario and another in Mississauga, Ontario (both depots are approximately 15 km. from the Conforce 1 depot) that when combined have a slightly larger total capacity than Conforce.
The second competitor is Musket Transport whose main depot is located in Mississauga, Ontario, approximately 2 km. from the Conforce 1 depot and their container capacity is comparable to Conforce’s, but Musket Transport also has other locations, which house trailers and reefers (the capacity of those locations is unknown).
The third competitor is P&W Transport whose depot is located in Oakville, Ontario, approximately 5 km. from the Conforce 1 depot and its capacity is slightly smaller than the Conforce terminal.
The fourth competitor is Coyote Terminals whose depot is located in Mississauga, Ontario approximately 42 km from the Conforce terminal. Coyote is a Canadian National Railway sub-contracted facility and has an approximate capacity of 10,000 containers.
In terms of competition for the EKO-FLOR Division, the Company is competing for a share of the container flooring market that is currently dominated by the use of apitong hardwood. The Company is unaware of any other hardwood, except apitong hardwood, on the market that meets the strength requirements of ocean-going containers and
the customers we are targeting are international shipping lines utilizing ocean-going containers. Therefore, it is the Company’s opinion that apitong hardwood, as the current standard, remains the primary competitor to Conforce. Accordingly, Conforce is competing for the same customers who currently utilize wood products for their containers.
Singamas, a container manufacturer, has developed a variation of a composite floor that they are currently testing although the base composition is currently unknown to Conforce.
BASF has developed a prototype polymer/bamboo mix composite flooring product; however, the Company is unaware of any industry trials currently in place or scheduled.
Over the last five years, the container industry has introduced into circulation Bamboo flooring. The characteristics of Bamboo are similar in nature to those of Apitong wood in that it is an absorbent material. With a weight of 340 kgs per TEU for Bamboo and 249 kgs per TEU for EKO-FLOR, Bamboo is over 36% heavier than EKO-FLOR.
This has a significant impact on the amount of cargo transported on ocean-going vessels and/or the bunker fuel required for the same.
Havco produces a composite coated wood product for the highway trailer industry. The coating is approximately 1mm thick while the remainder of the panel, approximately 27mm, is wood. This differs from EKO-FLOR panels for both containers and highway trailers as the EKO-FLOR composite flooring system is 100% wood-free.
In general, Conforce is also competing with those businesses who currently handle containers that are either currently or may in the future produce their own container flooring products.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, ROYALTY AGREEMENTS
Patents
As it relates to EKO-FLOR composite panels for containers and highway trailers, the Company’s trademark agent, Blakes Cassels & Graydon of Toronto, Ontario, has filed a provisional patent with the United States Patent and Trademark Office. The Company is currently preparing similar patent applications for filing,
in Canada, China, Germany and Denmark.
Pursuant to the Letter of Agreement in Connection with the Strategic Partnership Between Conforce International, Inc. and Bayer MaterialScience LLC, Conforce will retain all of its rights, including patent rights, to EKO-FLOR and to any developments made solely by Conforce during the course of the strategic partnership. Moreover, Bayer
will retain all of its rights, including patent rights, to the materials, compositions and formulations developed and/or supplied hereunder and to any other developments made solely by it during the strategic partnership.
In the near future, Conforce and Bayer intend to enter into a definitive agreement pertaining to the intellectual property rights relating to products that are jointly developed. Pursuant to this agreement, Conforce and Bayer will equally share the ownership of all inventions created by both parties. Furthermore,
all costs related to the procurement of patent protection and any royalties or other forms of revenue derived therefrom, will be shared equally between the two parties.
Trademarks
The Company’s trademark agent has submitted EKO-FLOR trademark applications in the USA, Canada, China and with the European member states.
Licenses, Royalties and Supply Agreements
In 2005, the Company entered into an Extrusion Supply Agreement with Royal Group Technologies. However, since the execution of the aforementioned agreement, the Company has elected to use pultrusion technology as opposed to extrusion technology. Although the agreement has not been formally terminated,
the Company has no plans to produce its EKO-FLOR product using extrusion technology. A termination fee was not paid by Conforce and the agreement will expire under its natural terms and conditions in December 2010. In 2008, the Company entered into a licensing agreement regarding the use of various patented technologies pertaining to equipment and processes being relied upon in connection with the manufacturing of EKO-FLOR. However, the Company has since altered its equipment and production processes and as such,
will no longer rely on the technologies provided for in the aforementioned license agreement.
A termination fee was not paid by Conforce and the agreement will expire under its natural terms and conditions in May 2015.
EMPLOYEES
Conforce employs 12 fulltime employees. Four employees are primarily dedicated to the EKO-FLOR division, while eight employees work primarily within the container terminal division.
REGULATORY MANDATES
No industry specific governmental approvals are needed for the operation of the Company’s businesses.
REPORTS TO SECURITY HOLDERS
The Company will make available free of charge any of its filings as soon as reasonably practicable after it has electronically filed these materials with, or otherwise furnished them to, the Securities and Exchange Commission (“SEC”). The Company is not including information contained on its website as part
of, or incorporating it by reference into, this Form 10.
On April 9, 2009, Conforce International, Inc.’s registration statement was automatically declared effective and Conforce International, Inc. is now subject to the requirements of Regulation 13A under the Exchange Act, which will require the Company to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K, and it will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g).
The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxies and information statements and other information regarding issuers that file electronically with the SEC.
ITEM 2. FINANCIAL INFORMATION.
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.
Conforce is subject to the SEC’s “penny stock” rules. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. As long as the Company’s common stock is subject to the penny stock rules, the holders of such common stock may find it more difficult to sell their
securities.
OVERVIEW
The Company operates in two reportable business segments; Container Terminal, and EKO-FLOR. The Container Terminal operations are organized as Conforce 1 Container Terminals, Inc., which is a 50.1% owned subsidiary of the Company. The remaining 49.9% is owned by Marino Kulas, Conforce International, Inc President & CEO. The
Conforce 1 subsidiary is responsible for all container terminal operations. EKO-FLOR is organized as Conforce Container Corporation, a 100% owned subsidiary of the Company. The CCC subsidiary is responsible for the development, manufacturing and marketing of the Company’s EKO-FLOR products. Operations for CCC during the reportable periods to date have been limited to research and development as the product is in the testing stages. Its EKO-FLOR products have evolved systematically with various
refinements, as previously noted, based on industry standards and various feedback received. Accordingly, though in the development stage and having generated no revenue to date, Conforce is informing shipping lines and leasing companies of its product, EKO-FLOR, and optimism extends from the fact that it is being tested in various ocean-going trials and receipt of the Sea Box, Inc. purchase order.
Since the formation of Conforce, Toronto Reefer Container Services (TRC) has remained an independent service provider of container repairs for shipping lines. TRC is in the business of providing repair services for shipping lines through the use of mobile repair units that are called upon by various terminals to perform
on-site container repairs. TRC is hired by the shipping lines and is paid directly by same. Terminal operators allow TRC to work on their premises as a service to their shipping line customers. As such, Conforce has no financial relationship with TRC. Conforce is not compensated by TRC and TRC is not compensated by Conforce, nor is there any formal written or verbal agreement between the parties. None of the Conforce direct costs or revenues reported are a result of any business
transaction with TRC or the shipping lines as a result of services performed for shipping lines by TRC.
An advisory agreement between Worldwide Associates, Inc. (“Advisor”) and Conforce is in place and as such, Advisor has and continues to provide the Company with advisory services as it relates to general business items such as sales, marketing, financing, infrastructure enhancements and public company
management. Alexander P. Haig, Managing Director of Advisor has attended customer meetings with executives from Conforce, including various meetings held in Hamburg, Germany in December 2008. Pursuant to the agreement, Advisor is to provide Conforce consultation services and advice regarding general corporate strategy, new business development, potential acquisitions or partnerships and financial strategies. The term of the agreement is in effect until April 2, 2010 and is renewable upon
mutual agreement by the parties for addition one-year periods. The agreement may be terminated by either party upon 90 days written notice to the other party. Conforce agrees to compensate Advisor for its services by distributing to Advisor one percent (1%) of all gross revenues derived from transactions in which Advisor’s involvement or introduction results in the sale of services or products of Conforce, including EKO-FLOR. Conforce will reimburse Advisor for any extraordinary expenses
and Advisor agrees not to disclose any confidential or proprietary information owned by, or received by or on behalf of Conforce. To date, no fees have been paid by Conforce to Advisor under this agreement.
Regarding the revenues generated by the terminal operations, the Company reports revenues as a result of lifting and handling containers that are stored in the Company's container depot. Storage charges typically do not apply as the Company performs these services for only empty containers. In the event that a container
loaded with goods is stored at the terminal, then a nominal daily storage rate is charged. These handling and lifting services are performed by the Company and are not sub-contracted to any third parties. Regarding the revenues generated by transportation services in the operations of the Container Terminal division, the Company provides sub-contracted transportation services for containers arriving or departing to and from Canadian rail yards. Such sub-contracted services are arranged
by the Company at the request of its shipping line customers and are facilitated through the use of local transportation companies. The Company charges a surcharge for arranging such shipments and is paid directly by the shipping lines. In turn, the Company pays the sub-contracted transportation companies.
For the 12 month period April 1, 2006 to March 31, 2007, the Company's Container Terminal business segment had revenues of $1,567,187 with an operating income of $54,053. For the same period, the Company's EKO-FLOR business segment had no revenues with expenses of $252,143 for an operating loss of
($252,143). For the 12 month period April 1, 2007 to March 31, 2008, the Company's Container Terminal business segment had revenues of $2,364,945 with an operating income of $308,548. For the same period, the Company's EKO-FLOR business segment had no revenues with expenses of $209,437 for an operating loss of ($209,437). For the 9 month period April 1, 2008 to December 31, 2008, the Company's Container Terminal business segment had revenues of $1,575,188 with an operating
income of $63,939. For the same period, the Company's EKO-FLOR business segment had no revenues with expenses of $86,631 relating to the research and development of EKO-FLOR as well as the purchase of fixed assets, for an operating loss of ($86,631).
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. 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, growth potential exists due to the need for a flooring alternative to tropical hardwood, more specifically apitong.
EKO-FLOR cs-4:
Trial product will be shipped to customers in or around October 2009. Trial completion times may range from 60 – 120 days depending on sea routes and frequency selected by trial
customers,
in their sole discretion. Conforce estimates that most trials will be completed in the fourth quarter of calendar 2009. The EKO-FLOR cs-4 panels are currently being produced at Conforce’s own
development center in Concord, Ontario.
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 version of its cs-4 container panel in order to commence actual over-the-road
testing by industry participants. The Company expects that over-the-road EKO-FLOR xts testing will commence in or around September 2009.
Provided that the aforementioned trials are successfully completed and that the outcome is positive, the Company expects that it will secure EKO-FLOR cs-4 and EKO-FLOR xts orders for 2010. It is the belief of management that Conforce will receive such orders, however, there is no assurance that it will
secure these orders or generate any sales revenue at all. Provided that EKO-FLOR cs-4 volume commitments are secured and that such commitments are in-line with Conforce expectations of 60,000 - 80,000 TEU for calendar 2010, then the Company will begin the process of formalizing the details of a financial offering intended to 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 arrangement in place, nor are there any preliminary or final term sheets or agreements in support of such financing. If and when it receives such written orders, the Company will explore various financing alternatives including private placements, public offerings and debt financings. The final details pertaining to such financing will depend upon prevailing market and economic conditions. 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, as a result of the Sea Box, Inc. purchase order, 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 producing the ms-1 panels at a sub-contracted facility in Quebec, Canada. It is the belief of management that Conforce will receive these orders, however, there is no assurance that it will secure such orders or generate any sales revenue at all.
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.
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 2008 COMPARED TO THE YEAR ENDED MARCH 31, 2007
The Company had gross revenues of $2,364,945 with a net loss of ($54,854) for the year ended March 31, 2008, compared to sales of $1,567,187 with a net loss of ($225,062) for the year ended March 31, 2007, an increase in sales from the prior period of $797,758 or 50.9%. The increase in sales was due primarily to an increase in revenues
generated by existing customers though increased handling charges at the terminal, as well as an increase in sub-contracted transportation services for transport of containers to and from rail terminals to the Conforce container depot. The Company’s EKO-FLOR product generated no revenues during the period.
The Company had cost of goods sold relating to direct production costs of $1,293,100 for the year ended March 31, 2008, compared to cost of goods sold relating to direct production costs of $893,908 for the year ended March 31, 2007, which represents an increase in the cost of goods sold from the prior period of $399,192 or 44.7%.
The increase in cost of goods sold was attributable primarily to the increase in sales for the year ended March 31, 2008, compared to the prior year. The increase was also attributed to an annual increase in terminal rent in the amount of $42,167 as well as the inclusion of head office and mobile terminal office rents to direct cost of goods sold, increasing same by approximately $52,000 per annum.
Cost of goods sold as a percentage of sales was 54.7% for the year ended March 31, 2008, compared to 57.0% for the year ended March 31, 2007, which amounts to a reduction in the cost of goods sold as a percent of sales of 2.3% from the prior year. The reductions came primarily from savings in equipment rental and subcontractor
expenses.
The Company had gross profit of $1,071,845 for the year ended March 31, 2008, compared to gross profit of $673,279 for the year ended March 31, 2007, an increase in gross profit of $398,566 or 59.1% over the prior period. The increase was due primarily to the increase in volume.
The Company had combined administrative ($725,891), research and development ($209,437) and depreciation ($30,121) expenses of $965,449 for the year ended March 31, 2008, compared to combined administrative ($597,713), research and development ($252,143) and depreciation ($20,955) expenses of $870,811 for the year ended March 31, 2007,
an increase in expenses of $93,638 or 11.00% from the prior period. The increase in administrative expenses was due to primarily to an increase salaries and wages as a result of the increase in terminal traffic necessitating the need for additional employees and increased hours of operation.
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 Company had income from operations of $99,111 for the year ended March 31, 2008, compared to a loss from operations of ($198,090) for the year ended March 31, 2007. The increase in profits was primarily due to the increase in sales and a reduction in spending for the Flooring Systems’ Research and development expenses
by $42,706.
The Company reported a net loss of ($54,854) for the year ending March 31, 2008 compared to a net loss of ($225,062) for the year ending March 31, 2007.
PERIOD ENDED DECEMBER 31, 2008 COMPARED TO THE PERIOD ENDED DECEMBER 31, 2007
The Company had sales of $1,575,118 for the nine month period ended December 31, 2008, compared to sales of $1,586,689 for the nine month period ended December 31, 2007, a decrease in sales from the prior period of $11,571 or 0.007%.
The Company had cost of goods sold of $893,329 for the nine month period ended December 31, 2008, compared to cost of goods sold of $952,436 for the nine month period ended December 31, 2007, which represents a decrease in the cost of goods sold from the prior period of $59,107 or 6.2%.
Cost of goods sold as a percentage of sales was 56.7% for the nine month period ended December 31, 2008, compared to 60.0% for the nine month period ended December 31, 2007, which amounts to a reduction in the cost of goods sold as a percent of sales of 3.3% from the prior year.
The Company had gross profit of $681,789 for the nine month period ended December 31, 2008, compared to gross profit of $634,253 for the nine month period ended December 31, 2007, an increase in gross profit of $47,536 or 7.5% over the prior period. The increase in gross profit was due to an increase in terminal
operation revenues and a reduction in lower margin transportation service revenues.
The Company had combined administrative ($585,536), research and development ($86,631) and depreciation ($32,314) expenses of $704,481 for the nine month period ended December 31, 2008, compared to combined administrative ($580,608), research and development ($124,304) and depreciation ($25,863) expenses
of $730,775 for the nine month period ended December 31, 2007, a decrease in total operating expenses of $26,294 or 0.036% from the prior period. This decrease was primarily due to a decrease in research and development expenses.
The Company had a loss from operations of ($22,692) for the nine month period ended December 31, 2008, compared to a loss from operations of ($96,522) for the nine month period ended December 31, 2007.
The adjustment for Minority Interest in consolidated subsidiaries was $31,906 for the period ended December 31, 2008 compared to $13,863 for the period ended December 31, 2007. This adjustment accurately portrays the 49.9% minority interest in Conforce 1 Container Terminals, Inc. Such significant increases are
a direct result of increased sales volumes.
The net loss for the year was ($54,598) for the nine month period ended December 31, 2008 compared to net loss of ($110,385) for the nine month period ended December 31, 2007.
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 December 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 CDN (USD 195,733) payable over 10 years (due January 2019). Conforce received the full business
loan in the amount of 250,000 CDN (USD 195,733). 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. Conforce is attempting to secure additional funding 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
loans will be made to the Company from the proceeds of private transactions with accredited investors involving the sale of Conforce common stock. To date, the shareholder loans have been oral. At present, the Company intends to enter into additional oral agreements pertaining to future shareholder loans. 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 additional capital for purposes of establishing an EKO-FLOR manufacturing facility in China. Such capital requirement is currently estimated to be 8 – 10 million USD. The Company had received loans, pursuant to oral agreements, from Marino Kulas, CEO and shareholder, equal to $450,114 at December 31, 2008.
LIABILITIES
The Company had Accounts payable of $147,120 at December 31, 2008 compared to March 31, 2008, an increase of $66,322. 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 Accrued liabilities of $9,792 at December 31, 2008 compared to $24,949 at March 31, 2008, a decrease of $15,157. The decrease is due primarily to a decrease in the tax accrual.
The Company had Accrued wages of $7,101 at December 31, 2008 compared to $24,055 at March 31, 2008, a decrease of $16,954. The decrease is primarily due to a decrease in the accrual for personal time.
The Company had Shareholder’s loans from Marino Kulas, CEO and shareholder of $450,114 at December 31, 2008 compared to $324,850 at March 31, 2008. The Shareholder loans are interest free with no fixed terms of repayment. There was an increase of $125,264 at March 31, 2008,
in borrowing during the nine month period ending December 31, 2008. There were no payments made on this loan during the period. The increase was needed to fund the working capital requirements and the continued funding of the EKO-FLOR product development.
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.
ITEM 3. PROPERTIES
.
The Company’s headquarters are located at 51A Caldari Road, 2nd Floor, Concord, Ontario L4K 4G3, Canada. The annual lease cost for these premises is $51,017. The Company has a container terminal located at 584 Hazelhurst Road, Mississauga, Ontario, Canada. The annual lease cost of these
premises is $195,300. The Company has a 13,400 sq.ft production and development centre located at 111 Romina Drive in Concord, Ontario. The annual lease cost of these premises is $159,600.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table lists stock ownership of the Company’s Common Stock. The information includes beneficial ownership by (i) holders of more than 5% of Common Stock, (ii) each of the four directors and executive officers and (iii) all directors and executive officers as a group. Each person named in the table has sole voting
and investment power with respect to all shares of the Company’s Common Stock beneficially owned by them.
|
Name and Address of Owner
|
Title of Class
|
Number
of Shares
Owned (1)
|
Percentage
of Class
|
|
Marino Kulas
40 Bellini Avenue
Brampton, Ontario L6T 3Z8
|
Common Stock
|
61,001,000
|
50.834%
|
|
Elio Guglietti
28 Anthia Drive
North York, Ontario M9L 1K5
|
Common Stock
|
11,400,000
|
9.500%
|
|
Michael Moyal
10520 Yonge St., Suite 298
Richmond Hill, Ontario L4C 3C7
|
Common Stock
|
9,070,000
|
7.558%
|
|
Slavko Kulas
8870 Martingrove Road
Woodbridge, Ontario L4H 1C2
|
Common Stock
|
5,000,000
|
4.167%
|
|
Joseph DeRose
60 Crofters Road
Woodbridge, Ontario L4L 7C7
|
Common Stock
|
420,000
|
0.350%
|
|
Kathryn Saliani
156 Beech Street
Brampton, Ontario L6V 1V6
|
Common Stock
|
50,000
|
0.0417%
|
|
Total
|
Common Stock
|
86,941,000
|
72.450%
|
|
Directors and Executive Officers
|
Common Stock
|
66,471,000
|
55.392%
|
(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.
(2)
Marino Kulas recognized that Slavko Kulas’ extensive contacts and over 19 years experience in the container industry made him an indispensible member of the Company’s management team and determined that it would be in
the best interests of the Company and, by extension all Conforce shareholders, to complete the above-described transfer of shares to provide Slavko Kulas with additional incentive to achieve success in the commercialization of EKO-FLOR.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
None.
CHANGES IN CONTROL
None.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
Set forth below is information regarding the Company’s current directors and executive officers. Marino Kulas and Slavko Kulas are first cousins. The directors are elected annually by stockholders. The executive officers serve at the pleasure of the Board of Directors.
|
Name
|
Age
|
Title
|
|
Marino Kulas
|
43
|
President & CEO, Director
|
|
Joseph DeRose
|
53
|
VP of Product Development
|
|
Kathryn Saliani
|
55
|
Director of Business Operations, Director
|
|
Slavko Kulas
|
48
|
Director of Terminal Operations
|
Marino Kulas
, President & CEO of Conforce International, Inc., has been in the container industry for over 25 years. In 2001, Mr. Kulas commenced research and development of EKO-FLOR as an alternative to the wood flooring currently used in shipping containers. In
2003 he started the business of Conforce 1 Container Terminals Inc. and in 2005, he started Conforce Container Corporation, the company responsible for the development of EKO-FLOR. He oversees all aspects of the day-to-day operations of the business, while maintaining his primary focus on the Company’s growth and direction through new product development and the commercialization of EKO-FLOR through account acquisition.
Joseph DeRose
, Vice President of Product Development, is a chemical engineer and has dedicated his career to the testing, development and technical support of plastic materials, composite materials and polymer additives. Prior to his appointment with Conforce in 2006,
Mr. DeRose worked with industry leader Ciba Specialty Chemicals (f/n/a Ciba-Geigy) for over 19 years (1981 through 2000), where he held the position of Industry Manager of the Polymer Additives Division. Following, through 2005, Mr. DeRose also held material testing and analysis positions with the Ontario Research Foundation and Cambridge Materials Testing. Most recently, Mr. DeRose provided consultation and project coordination for manufacturers of plastic and composite materials seeking
building code recognition in both Canada and the United States. Mr. DeRose is a member of The Society of Plastics Engineers and serves on the Board of Directors of the Ontario Section. He is also a member of the Canadian Plastics Industry Association and serves as Technical Chair for the Canadian Natural Composites Council. For Conforce, Mr. DeRose is responsible for the research, development, testing and analysis of all new Conforce composite products currently in various stages
of development.
Kathryn Saliani
, Director of Business Operations. Prior to joining Conforce, Ms. Saliani worked as an underwriter with a leading Mortgage origination firm in Canada for 3 years (2003 through 2006). During 1988 through 2003, Kathryn performed as a sole proprietor,
providing administrative and bookkeeping functions for various small companies. Prior to holding that position, Ms. Saliani worked for Scotia Bank for 5 years (1982 through 1987) where she was responsible for conducting branch audits in order to ensure compliance with loan policy and procedure. Ms. Saliani also spent 12 years (1970 through 1982) with the Workman Safety Insurance Board of Canada (WSIB) where she worked as Senior Counselor to the office of the Chairman. Her responsibilities
included dispute resolution and to act as direct liaison between member claimants and the WSIB. For Conforce, Ms. Saliani oversees Investor Relations as well as all administrative functions of the Container Terminal operations.
Slavko Kulas
, Director of Terminal Operations. Mr. Slavko Kulas has been involved in the container industry for over 19 years. In 1989, he joined Toronto Reefer Container (TRC), a Kulas private family business specializing in the service and repair of ocean-going
containers. Mr. Kulas’ responsibilities initially included the repair of all container components until he was promoted to Manager of the company’s mobile fleet of service trucks and personnel. In 1998, Mr. Kulas purchased TRC. In 2003, he joined Conforce 1 Container Terminals where he served as Terminal Manager until 2008 at which time he became Director of Terminal Operations. For Conforce International, Inc., Mr. Kulas is responsible for the day-to-day
operations of the Container Terminal and is a key member of the EKO-FLOR product development team.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company does not have an audit committee or a compensation committee.
ITEM 6. EXECUTIVE COMPENSATION
December 31, 2008 and 2007 SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
|
Total
|
|
|
Name and Principal Position
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
($)
|
($)
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marino Kulas
|
2007
|
|
|
91,000
|
|
|
|
|
|
|
|
|
|
|
|
91,000
|
|
|
President & CEO, Director
|
2008
|
|
|
91,000
|
|
|
|
|
|
|
|
|
|
|
|
91,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph DeRose
|
2007
|
|
|
45,500
|
|
|
|
|
267,000
|
|
|
|
|
|
|
|
45,500
|
|
|
VP of Product Development
|
2008
|
|
|
45,500
|
|
|
|
|
|
|
|
|
|
|
|
|
45,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathryn Saliani
|
2007
|
|
|
50,000
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
50,000
|
|
|
Director of Business Op., Director
|
2008
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slavko Kulas
|
2007
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
|
52,000
|
|
|
Director of Terminal Op.
|
2008
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
|
52,000
|
|
NON-EMPLOYEE DIRECTOR COMPENSATION
None.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
.
For the 12 month period ended March 31, 2008, Conforce had a balance of loans outstanding from its founder and CEO, Marino Kulas in the amount of $324,850. No interest is payable under these loans, however, they bear an imputed interest rate of 1.50%. These loans have no fixed terms of repayment. By
comparison, for the 12 month period ended March 31, 2007, Conforce had a balance of loans outstanding from Marino Kulas on the same terms in the amount of $287,375.
ITEM 8. 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 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Conforce is a publicly traded company on the Pink Sheets under the trading symbol “CFRI.” The Company intends to apply for listing on the OTC Bulletin Board at such time as it’s Forms 10 and 211 have been approved by the appropriate regulatory agencies; however, there is no guarantee that the Company’s
application for listing will be accepted.
The Company’s common stock has traded on the Pink Sheets of the National Quotation Bureau under the symbol CFRI since September 15, 2005. The following table sets forth the high and low sale prices for the Company’s common stock for the periods indicated. The prices below reflect inter-dealer quotations, without retail
mark-up, mark-down or commissions and may not represent actual transactions.
|
Quarter ended
|
|
Low price
|
|
|
High price
|
|
|
June 30, 2009
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
March 31, 2009
|
|
$
|
0.13
|
|
|
$
|
0.13
|
|
|
December 31, 2008
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
September 30, 2008
|
|
$
|
0.12
|
|
|
$
|
0.19
|
|
|
June 30, 2008
|
|
$
|
0.16
|
|
|
$
|
0.28
|
|
|
March 31, 2008
|
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
December 31, 2007
|
|
$
|
0.215
|
|
|
$
|
0.24
|
|
|
September 28, 2007
|
|
$
|
0.20
|
|
|
$
|
0.23
|
|
|
June 29, 2007
|
|
$
|
0.305
|
|
|
$
|
0.35
|
|
|
March 30, 2007
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
HOLDERS OF RECORD
The Company has 34 registered shareholders of record.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its common stock and it does not anticipate paying any cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay
cash dividends will be at the discretion of the Board of Directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Board of Directors deems relevant.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.
The Company is governed by Delaware Law and the Certificate of Incorporation and Bylaws of the Company. Its authorized capital consists of 250,000,000 shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred stock. The Board of Directors, in their sole discretion, may establish par value, divide
the shares of preferred stock into series, and fix and determine the dividend rate, designations, preferences, privileges and ratify the powers, if any, and determine the restrictions and qualifications of any series of preferred stock as established. No preferred shares are currently designated.
GENERAL - DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
120,001,000 shares of the Company’s common stock are issued and outstanding as of March 30, 2009.
PREFERRED STOCK
The Company may issue up to 5,000,000 shares of preferred stock, par value $0.0001 per share, from time to time in one or more series. No shares of preferred stock are currently issued. The Company’s Board of Directors, without further approval of its stockholders, is authorized to fix the dividend rights
and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series. Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of Conforce common stock and prior series of preferred stock then outstanding.
VOTING RIGHTS
Each outstanding share of common stock is entitled to one (1) vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders.
Holders of Conforce common stock:
(1) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors;
(2) are entitled to share ratably in all our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up;
(3) do not have pre-emptive, subscription or conversion rights or redemption or sinking fund provisions; and
(4) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders.
The holders of shares of Conforce common stock do not have cumulative voting rights, which means that holders of more than fifty percent (50%) of outstanding shares voting for the election of directors can elect all of the Company’s directors if they so choose and, in such event, the holders of the remaining shares will not be
able to elect any of the Company’s directors.
WARRANTS
No warrants are currently outstanding.
STOCK OPTION PLAN
Currently, the Company has not formalized an Employee Stock Option Plan.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of Delaware, The Company can indemnify its directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company’s Certificate of Incorporation
provides that, pursuant to Delaware law, the Company’s directors shall not be liable for monetary damages for breach of the director’s fiduciary duty of care to Conforce and its stockholders. This provision in the Certificate of Incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of nonmonetary relief will remain available under Delaware law. In addition, each director will continue to be subject
to liability for breach of the director’s duty of loyalty to Conforce or its stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. This provision also does not affect a director’s responsibilities under any other law, such as the federal securities
laws or state or federal environmental laws.
The Company’s Bylaws provide for the indemnification of its directors to the fullest extent permitted by the Delaware General Corporation Law. Conforce Bylaws further provide that its Board of Directors has discretion to indemnify its officers and other employees. The Company is required to advance, prior
to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the Bylaws or otherwise. The Company is not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably
and promptly made by its Board of Directors by a majority vote of a quorum of disinterested Board Members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to the Company or its stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable section of Conforce Bylaws.
The Company has been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to its directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than payment of expenses incurred or paid by a Conforce director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by Conforce is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The Company may enter into indemnification agreements with each of its directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection. Such indemnification agreements may require the Company, among other
things, to:
s
indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;
s
advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or
s
obtain directors’ and officers’ insurance.
At present, there is no pending litigation or proceeding involving any Conforce director(s), officer(s) or employee(s) in which indemnification is sought, nor is the Company aware of any threatened litigation that may result in claims for indemnification.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Conforce consolidated financial statements for the fiscal years ended March 31, 2007 and 2008 have been examined to the extent indicated in their report by Pollard-Kelley Auditing Services, Inc. Pollard-Kelley Auditing Services, Inc. did not prepare or participate in the preparation of our unaudited interim financial
statements. The financial statements have been prepared in accordance with generally accepted accounting principles, pursuant to Regulation S-X as promulgated by the SEC, and are included herein in response to Item 13 of this Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACOUNTING AND FINANCIAL DISCLOSURE.
The Company has not had any changes in, nor has it had any disagreements, whether or not resolved, with its accountants on accounting and/ or financial disclosures during its recent fiscal year or any later interim period.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
Pollard-Kelley Auditing Services, Inc
Auditing Services
4500 Rockside Road, Suite 450, Independence, OH 44131
330-864-2265
Report of Independent Registered Public Accounting Firm
Conforce International, Inc. and Subsidiaries
Concord, Ontario Canada
We have audited the accompanying balance sheets of Conforce International, Inc. and Subsidiary, as of March 31, 2008 and 2007, and the related statements of income, stockholders’ equity, and cash flows for each of the two years in the period ended March 31, 2008. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conduct our audits 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 audits provide 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 the Company at March 31, 2008 and 2007, and the results of its operations and it cash flows for each of the two years in the period ended March 31, 2008, in conformity with U.S. generally accepted accounting
standards.
The accompanying financial statements have been restated for the recording of stock compensation issued under employment agreements discussed in Note 3 – Equity – Stock Transactions to the audited financial statements.
Pollard-Kelley Auditing Services, Inc.
/S/ Pollard-Kelley Auditing Services, Inc.
Independence, Ohio
October 8, 2008, except for Note 3 - Equity - Stock Transactions, for which the date is March 30, 2009
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
Balance Sheets
|
|
|
|
|
|
|
|
March 31, 2008 and 2007
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
34,801
|
|
|
$
|
74,832
|
|
|
Accounts receivable
|
|
|
457,012
|
|
|
|
192,672
|
|
|
Other receivables
|
|
|
37,172
|
|
|
|
36,321
|
|
|
Total Current Assets
|
|
|
528,985
|
|
|
|
303,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
|
23,829
|
|
|
|
-
|
|
|
Vehicles
|
|
|
20,345
|
|
|
|
12,029
|
|
|
Equipment
|
|
|
101,888
|
|
|
|
101,888
|
|
|
Leasehold improvements
|
|
|
25,028
|
|
|
|
17,201
|
|
|
|
|
|
171,090
|
|
|
|
131,118
|
|
|
Less: Accumulated depreciation
|
|
|
(75,027
|
)
|
|
|
(44,906
|
)
|
|
|
|
|
96,063
|
|
|
|
86,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
14,779
|
|
|
|
14,779
|
|
|
|
|
|
14,779
|
|
|
|
14,779
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
639,827
|
|
|
$
|
404,816
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
66,322
|
|
|
$
|
41,494
|
|
|
Accrued liabilities
|
|
|
24,949
|
|
|
|
21,131
|
|
|
Accrued wages
|
|
|
24,055
|
|
|
|
16,876
|
|
|
Shareholder's loans
|
|
|
324,850
|
|
|
|
287,375
|
|
|
Total Current Liabilities
|
|
|
440,176
|
|
|
|
366,876
|
|
|
Minority interest in consolidated subsidiaries
|
|
|
280,525
|
|
|
|
126,560
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
Common stock
|
|
|
9,157
|
|
|
|
9,157
|
|
|
Additional contributed capital
|
|
|
89,900
|
|
|
|
27,300
|
|
|
Retained earnings
|
|
|
(179,931
|
)
|
|
|
(125,077
|
)
|
|
|
|
|
(80,874
|
)
|
|
|
(88,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
639,827
|
|
|
$
|
404,816
|
|
|
See accompanying notes to financial statements.
|
|
|
|
|
|
|
|
|
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
Statements of Income
|
|
|
|
|
|
|
|
For the Years Ending March 31, 2008 and 2007
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,364,945
|
|
|
$
|
1,567,187
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT COST OF REVENUES
|
|
|
|
|
|
|
|
|
|
Equipment rental
|
|
|
69,530
|
|
|
|
81,502
|
|
|
Fuel
|
|
|
76,166
|
|
|
|
69,218
|
|
|
Repairs & maintenance
|
|
|
41,125
|
|
|
|
13,407
|
|
|
Transportation
|
|
|
847,916
|
|
|
|
511,977
|
|
|
Rent
|
|
|
228,049
|
|
|
|
133,207
|
|
|
Subcontractors
|
|
|
30,314
|
|
|
|
84,597
|
|
|
|
|
|
1,293,100
|
|
|
|
893,908
|
|
|
GROSS PROFIT
|
|
|
1,071,845
|
|
|
|
673,279
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Administrative (including stock compensation expenses)
|
|
|
725,891
|
|
|
|
597,713
|
|
|
Flooring System expenses;
|
|
|
|
|
|
|
|
|
|
Research & development
|
|
|
209,437
|
|
|
|
252,143
|
|
|
Depreciation
|
|
|
30,121
|
|
|
|
20,955
|
|
|
|
|
|
965,449
|
|
|
|
870,811
|
|
|
OTHER INCOME AND EXPENSE
|
|
|
|
|
|
|
|
|
|
(Gain)/loss on currency conversion
|
|
|
7,285
|
|
|
|
558
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
99,111
|
|
|
|
(198,090
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TAX PROVISIONS
|
|
|
-
|
|
|
|
-
|
|
|
NET INCOME/(LOSS) BEFORE MINORITY INTEREST
|
|
|
99,111
|
|
|
|
(198,090
|
)
|
|
LESS MINORITY INTEREST IN
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED SUBSIDIARIES
|
|
|
(153,965
|
)
|
|
|
(26,972
|
)
|
|
NET INCOME
|
|
$
|
(54,854
|
)
|
|
$
|
(225,062
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ending March 31, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock -----
|
|
|
Common Stock -----
|
|
|
Treasury Stock -----
|
|
|
Contributed
|
|
|
Retained
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Total
|
|
|
Balances April 1, 2006
|
|
|
-
|
|
|
$
|
-
|
|
|
|
120,001,000
|
|
|
$
|
9,157
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
99,985
|
|
|
|
109,142
|
|
|
Stock contributed for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
27,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,300
|
|
|
Stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
(27,300
|
)
|
|
|
27,300
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(225,062
|
)
|
|
|
(225,062
|
)
|
|
Balances at March 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
120,001,000
|
|
|
|
9,157
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,300
|
|
|
|
(125,077
|
)
|
|
|
(88,620
|
)
|
|
Stock contributed for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
62,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62,600
|
|
|
Stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(200,000
|
)
|
|
|
(62,600
|
)
|
|
|
62,600
|
|
|
|
-
|
|
|
|
-
|
|
|
Net Income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(54,854
|
)
|
|
|
(54,854
|
)
|
|
Balances at March 31, 2008
|
|
|
-
|
|
|
$
|
-
|
|
|
|
120,001,000
|
|
|
$
|
9,157
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
89,900
|
|
|
$
|
(179,931
|
)
|
|
$
|
(80,874
|
)
|
See accompanying notes to financial statements.
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
Statements of Cash Flows
|
|
|
|
|
|
|
|
For the Years Ending March 31, 2008 and 2007
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net Income/(loss) for the period
|
|
$
|
(54,854
|
)
|
|
$
|
(225,062
|
)
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
|
|
|
|
|
|
|
|
|
|
Minority interest in consolidated subsidiary
|
|
|
153,965
|
|
|
|
26,972
|
|
|
Depreciation
|
|
|
30,121
|
|
|
|
20,955
|
|
|
Compensation paid by stock
|
|
|
62,600
|
|
|
|
27,300
|
|
|
Changes in Current assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in Accounts receivable
|
|
|
(264,340
|
)
|
|
|
80,899
|
|
|
(Increase) decrease in Other receivables
|
|
|
(851
|
)
|
|
|
4,752
|
|
|
(Decrease) Increase in Accounts payable
|
|
|
24,828
|
|
|
|
(21,924
|
)
|
|
(Decrease) Increase in Accrued liabilities
|
|
|
3,818
|
|
|
|
3,457
|
|
|
(Decrease) Increase in Accrued wages
|
|
|
7,179
|
|
|
|
2,464
|
|
|
NET CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
(37,534
|
)
|
|
|
(80,187
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of Fixed assets
|
|
|
(39,972
|
)
|
|
|
(17,574
|
)
|
|
Purchase of Deposits
|
|
|
-
|
|
|
|
(4,813
|
)
|
|
NET CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
(39,972
|
)
|
|
|
(22,387
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
|
EFFECT OF EXCHANGE RATE ON CASH
|
|
|
37,475
|
|
|
|
2,888
|
|
|
NET INCREASE IN CASH
|
|
|
(40,031
|
)
|
|
|
(99,686
|
)
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
74,832
|
|
|
|
174,521
|
|
|
CASH AT END OF PERIOD
|
|
$
|
34,801
|
|
|
$
|
74,835
|
|
|
|
|
See accompanying notes to financial statements.
|
|
|
|
|
|
|
|
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
RESTATED
These financial statements have been restated to record the stock transactions issued under an employment agreement. See
NOTE – 3 EQUITY
,
Stock Transactions
for further information.
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.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The Company’s 50.1% subsidiary, Conforce 1 Container Terminals, Inc., provides handling, storage and transport of overseas shipping containers for international steamship lines, as well as domestic retailers. All revenues for the two fiscal years reported here were generated by the operations of Conforce 1 Container
Terminals, Inc. Conforce Container Corporation has 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 form 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 twelve month period ending March 31, 2008 and 2007 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 $30,314 and $20,955 for the years ending March 31, 2008 and 2007 respectively.
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.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue Recognition
The only revenue producing operations of the Company during both years is the Container Terminal operation which recognizes revenues when services are rendered. The operation bills 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 Principles 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. The operating loss carry forward from the year ending March 31, 2007 was use to reduce taxable income in the year ending March 31, 2008 to $0.
NOTE 3 – EQUITY
Preferred Stock
At March 31, 2008 and 2007, 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 March 31, 2008 and 2007, the Company had authorized 250,000,000 shares of Common Stock at a par value of $.0001 per share. 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 is for a period of twelve months, fixes compensation level and calls for an issue of Common stock on the 30 th of each month
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 3 – EQUITY – CONTINUED
during the life of the agreement. In addition an additional 200,000 shares are to be issued at the end of the agreement. Shares issues are 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 and shares issued during the year ended March 31, 2007 totaled 50,000 and were valued at $27,300. 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 March 31, 2008.
The recording of these two employment agreements effected a restatement of the March 31, 2008, and 2007 financial statements. The effects of the restatement are shown below;
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
Additional contributed capital
|
|
$
|
0
|
|
|
$
|
89,900
|
|
|
$
|
89,900
|
|
|
Retained earnings
|
|
$
|
(90,031
|
)
|
|
$
|
(89,900
|
)
|
|
$
|
(179,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
$
|
663,291
|
|
|
$
|
62,600
|
|
|
$
|
725,891
|
|
|
Income from operations
|
|
$
|
161,711
|
|
|
$
|
(62,600
|
)
|
|
$
|
99,111
|
|
|
Net Income
|
|
$
|
7,746
|
|
|
$
|
(62,600
|
)
|
|
$
|
(54,854
|
)
|
|
Net Income per share
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income/(Loss) for the period
|
|
$
|
7,746
|
|
|
$
|
(62,600
|
)
|
|
$
|
(54,854
|
)
|
|
Compensation paid by stock
|
|
$
|
0
|
|
|
$
|
62,600
|
|
|
$
|
62,600
|
|
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
Additional contributed capital
|
|
$
|
0
|
|
|
$
|
27,300
|
|
|
$
|
27,300
|
|
|
Retained earnings
|
|
$
|
(97,777
|
)
|
|
$
|
(27,300
|
)
|
|
$
|
(125,077
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
$
|
540,413
|
|
|
$
|
27,300
|
|
|
$
|
597,713
|
|
|
Income from operations
|
|
$
|
(170,790
|
)
|
|
$
|
(27,300
|
)
|
|
$
|
(198,090
|
)
|
|
Net Income
|
|
$
|
(197,732
|
)
|
|
$
|
(27,300
|
)
|
|
$
|
(225,062
|
)
|
|
Net Income per share
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income/(Loss) for the period
|
|
$
|
197,762
|
|
|
$
|
(27,300
|
)
|
|
$
|
(225,062
|
)
|
|
Compensation paid by stock
|
|
$
|
0
|
|
|
$
|
27,300
|
|
|
$
|
27,300
|
|
NOTE 4 – RELATED PARTIES
At March 31, 2008 and 2007 the Company owed $324,850 and $287,375 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 interest or terms of repayment. There were no repayments made under
this arrangement during the years ending March 31, 2008 and 2007 respectively. 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 $13,625 and $0 for the years ending March 31, 2008 and 2007. 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 years ending March 31, 2008 and 2007.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 4 – RELATED PARTIES – CONTINUED
During 2008 and 2007, the CEO of the Company contributed 200,000 and 50,000 shares, of Common stock, respectively to satisfy the stock issue requirements of an employment agreement.
NOTE 5 – 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 site space under a five year lease which runs through November 2008. The lease is renewable for an additional five years. The Company intends to renew the lease at an approximately a 7 to 8 percent increase. Monthly lease payments are $11,127.
Future lease commitments are as follows; the site lease was included through the end of the original term. Future payments under the intended renewal period have not been included since the renewal is not effective and the rental rate is unknown at this time.
Future commitments;
|
Fiscal 2009
|
|
$
|
124,503
|
|
|
Fiscal 2010
|
|
|
34,841
|
|
|
Fiscal 2011
|
|
|
34,841
|
|
|
Fiscal 2012
|
|
|
2,904
|
|
|
Fiscal 2013
|
|
|
-0-
|
|
|
Thereafter
|
|
|
-0-
|
|
NOTE 6 – 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
|
|
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 7 – BUSINESS SEGMENTS
The Company operates in three reportable business segments; Container Terminal, EKO-FLOR and Administrative. The Container Terminal operations are organized as Conforce 1 Container Terminals, Inc. is 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.
Business Segments –For the Year Ended March 31, 2008
|
|
|
Container
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,364,945
|
|
|
$
|
-0-
|
|
|
$
|
2,364,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of Sales
|
|
|
1,293,100
|
|
|
|
-0-
|
|
|
|
1,293,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative – operations
|
|
|
725,891
|
|
|
|
-0-
|
|
|
|
725,891
|
|
|
Research & development
|
|
|
-0-
|
|
|
|
209,437
|
|
|
|
209,437
|
|
|
Depreciation
|
|
|
30,121
|
|
|
|
-0-
|
|
|
|
30,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) From Operations
|
|
$
|
308,548
|
|
|
$
|
(209,437
|
)
|
|
$
|
99,111
|
|
Total Assets, March 31, 2008
|
Container Terminals
|
|
$
|
1,101,407
|
|
|
EKO-FLOR
|
|
|
-0-
|
|
|
Inter-company receivable
|
|
|
(461,580
|
)
|
|
Consolidated Total Assets
|
|
$
|
639,827
|
|
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2008 and 2007
NOTE 7 – BUSINESS SEGMENTS – CONTINUED
Business Segments –For the Year Ended March 31, 2007
|
|
|
Container
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,567,187
|
|
|
$
|
-0-
|
|
|
$
|
1,567,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of Sales
|
|
|
893,908
|
|
|
|
-0-
|
|
|
|
893,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative – operations
|
|
|
597,713
|
|
|
|
-0-
|
|
|
|
597,713
|
|
|
Research & development
|
|
|
-0-
|
|
|
|
252,143
|
|
|
|
252,143
|
|
|
Depreciation
|
|
|
20,955
|
|
|
|
-0-
|
|
|
|
20,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From Operations
|
|
$
|
54,053
|
|
|
$
|
(252,143
|
)
|
|
$
|
(198,090
|
)
|
Total Assets, March 31, 2007
|
Container Terminals
|
|
$
|
656,959
|
|
|
EKO-FLOR
|
|
|
-0-
|
|
|
Inter-company receivable
|
|
|
(252,143
|
)
|
|
Consolidated Total Assets
|
|
$
|
404,816
|
|
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
|
December 31, 2008
RESTATED
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
|
2008
|
|
|
2008
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
34,801
|
|
|
Accounts receivable
|
|
|
200,996
|
|
|
|
457,012
|
|
|
Other receivables
|
|
|
32,569
|
|
|
|
37,172
|
|
|
Total Current Assets
|
|
|
233,565
|
|
|
|
528,985
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
|
23,829
|
|
|
|
23,829
|
|
|
Vehicles
|
|
|
20,345
|
|
|
|
20,345
|
|
|
Equipment
|
|
|
575,188
|
|
|
|
101,888
|
|
|
Leasehold improvements
|
|
|
25,028
|
|
|
|
25,028
|
|
|
|
|
|
644,390
|
|
|
|
171,090
|
|
|
Less: Accumulated depreciation
|
|
|
(107,341
|
)
|
|
|
(75,027
|
)
|
|
|
|
|
537,049
|
|
|
|
96,063
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
23,829
|
|
|
|
14,779
|
|
|
|
|
|
23,829
|
|
|
|
14,779
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
794,443
|
|
|
$
|
639,827
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
$
|
3,357
|
|
|
$
|
-
|
|
|
Accounts payable
|
|
|
147,120
|
|
|
|
66,322
|
|
|
Accrued liabilities
|
|
|
9,792
|
|
|
|
24,949
|
|
|
Accrued wages
|
|
|
7,101
|
|
|
|
24,055
|
|
|
Accrued taxes
|
|
|
-
|
|
|
|
-
|
|
|
Shareholder's loans
|
|
|
450,114
|
|
|
|
324,850
|
|
|
Total Current Liabilities
|
|
|
617,484
|
|
|
|
440,176
|
|
|
Minority interest in consolidated subsidiaries
|
|
|
312,431
|
|
|
|
280,525
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
Common stock
|
|
|
9,157
|
|
|
|
9,157
|
|
|
Additional contributed capital
|
|
|
89,900
|
|
|
|
89,900
|
|
|
Retained earnings
|
|
|
(234,529
|
)
|
|
|
(179,931
|
)
|
|
|
|
|
(135,472
|
)
|
|
|
(80,874
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
794,443
|
|
|
$
|
639,827
|
|
See accompanying notes to financial statements.
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
|
|
|
Statement of Income
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended December 31, 2008 and December 31, 2007
|
|
|
|
|
|
and for the 12 months ending March 31, 2008
RESTATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,575,118
|
|
|
$
|
1,586,689
|
|
|
$
|
2,364,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT COST OF REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rental
|
|
|
81,447
|
|
|
|
82,375
|
|
|
|
69,530
|
|
|
Fuel
|
|
|
53,497
|
|
|
|
48,529
|
|
|
|
76,166
|
|
|
Repairs & maintenance
|
|
|
46,117
|
|
|
|
34,464
|
|
|
|
41,125
|
|
|
Transportation
|
|
|
519,165
|
|
|
|
602,654
|
|
|
|
847,916
|
|
|
Rent
|
|
|
175,582
|
|
|
|
160,649
|
|
|
|
228,049
|
|
|
Subcontractors
|
|
|
17,521
|
|
|
|
23,765
|
|
|
|
30,314
|
|
|
|
|
|
893,329
|
|
|
|
952,436
|
|
|
|
1,293,100
|
|
|
GROSS PROFIT
|
|
|
681,789
|
|
|
|
634,253
|
|
|
|
1,071,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
|
|
|
585,536
|
|
|
|
580,608
|
|
|
|
725,891
|
|
|
Flooring System expenses;
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development
|
|
|
86,631
|
|
|
|
124,304
|
|
|
|
209,437
|
|
|
Depreciation
|
|
|
32,314
|
|
|
|
25,863
|
|
|
|
30,121
|
|
|
|
|
|
704,481
|
|
|
|
730,775
|
|
|
|
965,449
|
|
|
OTHER INCOME AND EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gain)/loss on currency conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
7,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
(22,692
|
)
|
|
|
(96,522
|
)
|
|
|
99,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAX PROVISIONS
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
NET INCOME/(LOSS) BEFORE MINORITY
|
|
|
|
|
|
|
|
|
|
|
INTEREST
|
|
|
(22,692
|
)
|
|
|
(96,522
|
)
|
|
|
99,111
|
|
|
LESS MINORITY INTEREST IN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED SUBSIDIARIES
|
|
|
(31,906
|
)
|
|
|
(13,863
|
)
|
|
|
(153,965
|
)
|
|
NET INCOME (LOSS)
|
|
$
|
(54,598
|
)
|
|
$
|
(110,385
|
)
|
|
$
|
(54,854
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
|
|
|
120,001,000
|
|
|
|
120,001,000
|
|
|
|
120,001,000
|
|
|
Loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
See accompanying notes to financial statements.
|
Conforce International, Inc.
|
|
|
|
|
|
|
|
Statement of Cash Flows
|
|
|
|
|
|
|
|
For the Nine Months Ended December 31, 2008, December 31, 2007
RESTATED
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
Net Income/(loss) for the period
|
|
$
|
(54,598
|
)
|
|
$
|
(110,385
|
)
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
|
|
|
|
|
|
|
|
|
|
Minority interest in consolidated subsidiary
|
|
|
31,906
|
|
|
|
13,863
|
|
|
Depreciation
|
|
|
32,314
|
|
|
|
25,863
|
|
|
Compensation paid by stock issues
|
|
|
-
|
|
|
|
62,600
|
|
|
Changes in Current assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in Accounts receivable
|
|
|
256,016
|
|
|
|
(93,656
|
)
|
|
(Increase) decrease in Other receivables
|
|
|
4,603
|
|
|
|
(44,455
|
)
|
|
(Decrease) Increase in Accounts payable
|
|
|
80,798
|
|
|
|
(7,916
|
)
|
|
(Decrease) Increase in Accrued liabilities
|
|
|
(15,157
|
)
|
|
|
7,983
|
|
|
(Decrease) Increase in Accrued wages
|
|
|
(16,954
|
)
|
|
|
(8,644
|
)
|
|
(Decrease) Increase in Accrued taxes
|
|
|
-
|
|
|
|
-
|
|
|
NET CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
318,928
|
|
|
|
(154,747
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Purchase of Fixed assets
|
|
|
(473,300
|
)
|
|
|
(39,972
|
)
|
|
Purchase of Deposits
|
|
|
(9,050
|
)
|
|
|
-
|
|
|
NET CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
(482,350
|
)
|
|
|
(39,972
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Increase in Shareholder loans
|
|
|
125,264
|
|
|
|
-
|
|
|
Increase in Bank overdrafts
|
|
|
3,357
|
|
|
|
157,244
|
|
|
NET CASH PROVIDED BY
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
128,621
|
|
|
|
157,244
|
|
|
EFFECT OF EXCHANGE RATE ON CASH
|
|
|
-
|
|
|
|
37,475
|
|
|
NET INCREASE IN CASH
|
|
|
(34,801
|
)
|
|
|
-
|
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
34,801
|
|
|
|
-
|
|
|
CASH AT END OF PERIOD
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to financial statements.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
OPINION OF MANAGEMENT
These financial statements have been restated to omit $67,200 from current assets and liabilities and to correct the presentation of bank overdrafts in the Statement of Cash Flows. In addition, corresponding reference to the $67,500 has also been omitted from Note 3
.
The
effects of the restatement are shown below:
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Adjustments
|
|
|
As Restated
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
300,765
|
|
|
$
|
67,200
|
|
|
$
|
233,565
|
|
|
Total Assets
|
|
$
|
861,643
|
|
|
$
|
67,200
|
|
|
$
|
794,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
684,684
|
|
|
$
|
67,200
|
|
|
$
|
617,484
|
|
|
Total Liabilities and Equity
|
|
$
|
861,643
|
|
|
$
|
67,200
|
|
|
$
|
794,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No changes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Used by Operations
|
|
$
|
322,285
|
|
|
$
|
3,357
|
|
|
$
|
318,928
|
|
|
Cash Provided by Financing Activities
|
|
$
|
125,264
|
|
|
$
|
3,357
|
|
|
$
|
128,621
|
|
It is the Opinion of the Company’s management that all adjustments that are necessary in order to make the financial statements not misleading have been made.
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 24, 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 as 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.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The Company’s 50.1% subsidiary, Conforce 1 Container Terminals, Inc., provides handling, storage and transport of overseas shipping containers for international steamship lines, as well as domestic retailers. All revenues for the two fiscal years reported here were generated by the operations of Conforce 1 Container
Terminals, Inc. Conforce Container Corporation has 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 form 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 periods ending December 31, 2008, 2007 and March 31, 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 $32,312, 25,863 and 30,121 for the period ending December 31, 2008, 2007 and March 31, 2008 respectively.
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.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue Recognition
The only revenue producing operations of the Company during both years is the Container Terminal operation which recognizes revenues when services are rendered. The operation bills 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 Principles 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. The operating loss carry forward from the periods ending March 31, 2007 was use to reduce taxable income in the periods ending December 31, 2008, 2007 and March 31, 2008 to $0.
NOTE 3 – EQUITY
Preferred Stock
At March 31, 2008 and 2007, 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 March 31, 2008 and 2007, the Company had authorized 250,000,000 shares of Common Stock at a par value of $.0001 per share. There were 120,001,000 shares outstanding.
Stock Transactions
On October 26, 2006, the Company entered into an employment agreement (the “VP Employment Agreement”) with its Vice-President, Product Development. The initial term of the VP Employment Agreement was twelve months. Pursuant to the terms of the VP Employment Agreement a
founding shareholder of Conforce agreed to provide10,000 shares of Common stock per month. In addition, a founding shareholder of Conforce agreed to provide200,000 shares of Common Stock at the end of the employment term (i.e. October 26, 2007) Shares provided under the VP Employment Agreement during the year ended March 31, 2008 totaled 200,000 and were valued at $62,600 and shares provided during the year ended March 31, 2007 totaled 50,000 and were valued at $27,300. These valuations
were based on the trading value of shares of the Common Stock on the date the shares were provided which in all cases occurred on the same day.
On October 31, 2007, the Company entered into an extension of the VP Employment Agreement. Pursuant thereto, the VP Employment Agreement was extended for a period of twelve months, through October 31, 2008. In accordance with this extension, a founding shareholder of the Company agreed to
provide additional compensation in the form of Common stock of Conforceif certain performance criteria were satisfied in connection with the development of the EKO-FLOR products. None of the performance criteria had been met as of March 31, 2008, five months into the agreement or when the agreement expired at October 31, 2008. Consequently, no additional shares of Common Stock were provided under the VP Employment Agreement. The VP Employment Agreement was extended for an additional
twelve months through October 31, 2009.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 4 – RELATED PARTIES
At December 31, 2008 and March 31, 2008 the Company owed $450,114 and $324,850 respectively to Marino Kulas, the CEO, a member of the Board of Directors and majority shareholder under an informal borrowing arrangement. These loans, made in Canadian Dollars, are without interest or terms of repayment. There were
no repayments made under this arrangement during the periods ending December 31, 2008, 2007 and March 31, 2008 respectively. 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 $13,625, $0 and $16,625 for the periods ending December 31, 2008, December 31, 2007 and March 31, 2008 respectively. The rental rate paid by the Company to the related party is felt
by management to be a competitive rate.
The CEO of the Company, Marino Kulas, 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 periods ending December 31, 2008, 2007 and March 31, 2008.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 4 – RELATED PARTIES - CONTINUED
During 2008 the CEO of the Company contributed 200,000 shares, of Common stock, respectively to satisfy the stock issue requirements of an employment agreement.
NOTE 5 – 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 2009
|
|
$
|
80,622
|
|
|
Fiscal 2010
|
|
|
322,488
|
|
|
Fiscal 2011
|
|
|
322,488
|
|
|
Fiscal 2012
|
|
|
294,438
|
|
|
Fiscal 2013
|
|
|
-0-
|
|
|
Thereafter
|
|
|
-0-
|
|
NOTE 6 – 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.
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 7 – 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. is 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.
Business Segments –For the Period Ended December 31, 2008
|
|
|
Container
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,575,188
|
|
|
$
|
-0-
|
|
|
$
|
1,575,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of Sales
|
|
|
893,329
|
|
|
|
-0-
|
|
|
|
893,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative – operations
|
|
|
585,536
|
|
|
|
-0-
|
|
|
|
585,536
|
|
|
Research & development
|
|
|
-0-
|
|
|
|
86,631
|
|
|
|
86,631
|
|
|
Depreciation
|
|
|
32,314
|
|
|
|
-0-
|
|
|
|
32,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) From Operations
|
|
$
|
63,939
|
|
|
$
|
(86,631
|
)
|
|
$
|
(22,692
|
)
|
Total Assets, December 31, 2008
|
Container Terminals
|
|
$
|
1,342,654
|
|
|
EKO-FLOR
|
|
|
-0-
|
|
|
Inter-company receivable
|
|
|
(548,211
|
)
|
|
Consolidated Total Assets
|
|
$
|
794,443
|
|
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 7 – BUSINESS SEGMENTS – CONTINUED
Business Segments –For the Period Ended December 31, 2007
|
|
|
Container
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,586,689
|
|
|
$
|
-0-
|
|
|
$
|
1,586,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of Sales
|
|
|
952,436
|
|
|
|
-0-
|
|
|
|
952,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative – operations
|
|
|
580,608
|
|
|
|
-0-
|
|
|
|
580,608
|
|
|
Research & development
|
|
|
-0-
|
|
|
|
124,304
|
|
|
|
124,304
|
|
|
Depreciation
|
|
|
25,863
|
|
|
|
-0-
|
|
|
|
25,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
|
$
|
27,782
|
|
|
$
|
(124,304
|
)
|
|
$
|
(96,522
|
)
|
Total Assets, December 31, 2007
|
Container Terminals
|
|
$
|
764,131
|
|
|
EKO-FLOR
|
|
|
-0-
|
|
|
Inter-company receivable
|
|
|
(124,304
|
)
|
|
Consolidated Total Assets
|
|
$
|
639,827
|
|
Business Segments –For the Year Ended March 31, 2008
|
|
|
Container
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,364,945
|
|
|
$
|
-0-
|
|
|
$
|
2,364,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of Sales
|
|
|
1,293,100
|
|
|
|
-0-
|
|
|
|
1,293,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative – operations
|
|
|
725,891
|
|
|
|
-0-
|
|
|
|
725,891
|
|
|
Research & development
|
|
|
-0-
|
|
|
|
209,437
|
|
|
|
209,437
|
|
|
Depreciation
|
|
|
30,121
|
|
|
|
-0-
|
|
|
|
30,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) From
Operations
|
|
$
|
308,014
|
|
|
$
|
(209,437
|
)
|
|
$
|
99,111
|
|
Conforce International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 2008, 2007 and March 31, 2008
NOTE 7 – BUSINESS SEGMENTS – CONTINUED
Total Assets, March 31, 2008
|
Container Terminals
|
|
$
|
1,101,407
|
|
|
EKO-FLOR
|
|
|
-0-
|
|
|
Inter-company receivable
|
|
|
(461,580
|
)
|
|
Consolidated Total Assets
|
|
$
|
639,827
|
|
|
Exhibit
|
|
|
No.
|
Description
|
|
2.0
|
Acquisition Agreement and Plan of Merger dated May 24, 2005 *
|
|
3.1
|
Certificate of Incorporation for Conforce International, Inc. *
|
|
3.1.1
|
Certificate of Incorporation for Conforce Container Corporation *
|
|
3.1.2
|
Certificate of Incorporation for Conforce 1 Container Terminals, Inc. *
|
|
3.2
|
Bylaws *
|
|
10.1
|
Canada Small Business Financial Loan dated November 26, 2008*
|
|
10.2
|
Sea Box, Inc. Purchase Order dated November 25, 2009 *
|
|
10.3
|
Letter of Agreement in Connection with the Strategic Partnership Between Conforce International, Inc. and Bayer MaterialScience, LLC. dated February 2, 2009 *
|
|
10.4
|
Advisory Agreement between WorldWide Associates, Inc. and Conforce International, Inc. dated April 2, 2007 *
|
|
10.5
|
Employment Renewal Proposal for Joseph DeRose dated October 31, 2008. *
|
* Denotes previously filed exhibits with Conforce International, Inc.’s Form 10-12G.
SIGNATURES
Pursuant to the requirements of Section 12 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.
|
|
|
|
|
|
|
|
September 22, 2009
|
By:
|
/s/ Marino Kulas
|
|
|
|
|
Marino Kulas
|
|
|
|
|
President & CEO
|
|
|
|
|
|
|
Conforce (GM) (USOTC:CFRI)
Gráfico Histórico do Ativo
De Jan 2025 até Fev 2025
Conforce (GM) (USOTC:CFRI)
Gráfico Histórico do Ativo
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