UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended March 31,
2009
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Or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ____________ to
______________
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Commission
file number 001-34203
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Conforce
International, Inc.
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(Exact
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
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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51A
Caldari Road
2nd
Floor
Concord,
Ontario L4K 4G3
Canada
(Address
of principal executive offices) (Zip Code)
(416)
234-0266
(Registrant’s
telephone number, including area code)
Securities
registered under Section 12(b) of the Act: None
Securities
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 if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
o
No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes
o
No
þ
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
þ
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
(Do
not check if smaller reporting company)
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Smaller
reporting company
þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes
o
No
þ
As of
March 31, 2009, there were 120,001,000 shares of our common stock issued and
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE OF
CONTENTS
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PART
I
ITEM
1.
BUSINESS
.
BUSINESS
DEVELOPMENT
Conforce
International, Inc. is a Delaware corporation headquartered in Concord, Ontario,
Canada. 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.
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. Based on industry feedback related to the surface
coating, 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 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. 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 internal methods consistent with random tests conducted on new
build containers equipped with wood floors. 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. 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 has been 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.
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 coatings and
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 certain alterations to the design of the special
application military container panels, EKO-FLOR xts trailer flooring and cs 4
container flooring. The Company is responsible for the creation of
the original design of each of these products. 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. Bayer does not provide any other form of economic
assistance to the Company, nor are 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. Conforce does not
intend to pay any fees or expenses in consideration for any future collaborative
efforts provided by Bayer. 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 Company’s two operating divisions are as
follows:
For the
12 month period April 1, 2008 to March 31, 2009, the Company’s Terminal division
had revenues of $1,711,662 with income from operations of
$283,932.
For the
12 month period April 1, 2008 to March 31, 2009, the Company’s EKO-FLOR division
had revenues of $309,727 with a loss from operations of
($288,755).
The
results of consolidated operations are as follows:
For the
12 month period April 1, 2008 to March 31, 2009 the Company had revenues of
$2,021,389 with income from operations of $27,673.
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 AG. The product
meets specified requirements 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 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.
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 much, if any, growth in terminal
revenues. However, the Company’s EKO-FLOR container flooring system,
which is in the development stage, continues to exhibit significant 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. 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.
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.
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).”
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
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.
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
5
, 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.”
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 calendar fourth quarter 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
three similar container depots within a 50 km radius to the Conforce facility.
Each of these depots provide similar services as does Conforce, 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 Conforce’s.
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
tropical hardwood. The Company is unaware of any other hardwood, except tropical
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.
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.
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.
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 in the name of Conforce International, Inc. 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.
Currently, the special application military panels, EKO-FLOR xts trailer
flooring and cs 4 container flooring are the only products that have been
developed by Conforce. The Company owns all intellectual property rights
pertaining to each of these products.
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. To date, no products have been
jointly created by Conforce and Bayer.
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.
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
1B. UNRESO
LV
ED STAFF COMMENTS.
Not
applicable as Conforce is a smaller reporting company.
ITEM
2. PROPERTIES.
The
Company’s headquarters are located at 51A Caldari Road, 2nd Floor, Concord,
Ontario L4K 4G3, Canada. The annual lease cost of 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
3. 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
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART
II
ITEM
5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STO
CKH
OLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
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
|
|
|
March
31, 2009
|
|
$
|
0.13
|
|
|
$
|
0.13
|
|
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.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
None.
UNREGISTERED
SALE OF SECURITIES
None.
ISSUER
PURCHASES OF EQUITY SECURITIES
None.
ITEM
6. SELECTED
FINANCIAL
DATA.
Not
applicable as Conforce is a smaller reporting company.
ITEM
7. 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.
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.
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.
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.
For the
12 month period April 1, 2008 to March 31, 2009, the Company's Container
Terminal business segment had revenues of $1,711,662
with operating income of $283,932. For the same period, the Company's
EKO-FLOR business segment had revenues of $309,727 with expenses of
$277,761 relating to the research and development of EKO-FLOR, as well as direct
cost of sales of $187,834 and administrative expenses of $132,887, for an
operating loss of ($288,755).
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, significant growth potential
exists due to the desperate need for composite flooring within the industry.
Should the container industry in 2010 collectively produce one half of its 2007
new build volume of 3.9 million twenty foot equivalent containers, the Company
would still experience significant growth assuming we are able to meet
expectations of orders totaling approximately 60,000 units or approximately 2%
of total new build volume.
EKO-FLOR cs-4:
Trial product
will be shipped to customers in or around 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.
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 in or around 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 of credit or letters of
credit. Conforce does have a business development loan through a
government sponsored program in the amount of CDN $250,000 ($198,403
USD)-payable over 10 years (due January 2019) bearing a rate of interest of
prime + 3%. The agreement calls for monthly payments of USD $2,303
including principal and interest. The balance outstanding as at March 31, 2009
was $193,430. The portion of this balance currently due at March 31, 2009 was
$2,303 and the long term portion was $193,430. This loan is the same as the
amount stated as long-term debt on the Company’s balance sheet and as described
in Note of the financial Statements contained in this document.
In January 2009, the Company received the amount of $195,733 ($198,403 less
applicable fees and first principal and interest payment). 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 $405,987 as
at March 31, 2009.
Investing
activities for the year ended March 31, 2009 included purchases of equipment
such as a pultrusion line, two dies and ancillary equipment for the Company’s
production and development centre totaling $558,935. Financing for the purchase
of this equipment was provided by shareholder loans, cash receipts from terminal
operations as well as a Small Business Development bank
loan.
The
apparent deficit in working capital for the fiscal year ending March 31, 2009
results from reporting long-term debts, specifically shareholders
loans with no fixed terms of repayment, as current
liabilities.
RESULTS
OF OPERATIONS
YEAR
ENDED MARCH 31, 2009 COMPARED TO THE YEAR ENDED MARCH 31, 2008
The
Company had gross revenues of $2,021,389 with a net loss of ($152,327) for the
year ended March 31, 2009, compared to sales of $2,364,945 with a net loss of
($54,854) for the year ended March 31, 2008, a decrease in sales from the prior
period of $343,556. The decease in sales was due primarily to the downturn in
the global economy and consequent decreased demand for transportation services
and container operations. Revenues for the Terminal division for the year ended
March 31, 2009 decreased by 27.6% however overall consolidated revenues for the
Company decreased by 14.6% as a result of the revenues generated by the EKO-FLOR
division.
During
the year ended March 31, 2008, the only revenue generating operation of the
Company was the Container Terminal, however, during the year ended March 31,
2009, the Company reported its first revenues from the sale of EKO-FLOR ms-1
military panels in January 2009. Revenues of EKO-FLOR ms-1 for the period
January 1, 2009 to March 31, 2009 were $309,727 with an operating loss of
($293,088).
The
results from operations of the Container Terminal division are as
follows:
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 $1,711,662
with income from operations of $315,118.
The
results from operations of the EKO-FLOR division are as
follows:
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). For the 12 month period April 1, 2008 to
March 31, 2009 the Company had revenues of $309,727 with a loss from operations
of ($287,445).
The
results of consolidated operations are as follows:
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. For the 12 month
period April 1, 2008 to March 31, 2009 the Company had revenues of $2,021,389
with income from operations of $27,673.
The
Company had cost of goods sold relating to direct production costs of $1,019,766
for the year ended March 31, 2009, compared to cost of goods sold relating to
direct production costs of $1,293,100 for the year ended March 31, 2008, which
represents a decrease in the cost of goods sold from the prior period of
$273,334 The decrease in cost of goods sold was attributable primarily to a
decrease in transportation costs.
Cost of goods sold as a percentage of sales was 52.4% for the year
ended March 31, 2009, compared to 54.7% for the year ended March 31, 2008, which
amounts to a reduction in the cost of goods sold as a percent of sales of 2.3%
from the prior year. This reduction came primarily from savings in
transportation costs.
The
Company had gross profit of $1,001,623 for the year ended March 31, 2009,
compared to gross profit of $1,071,845 for the year ended March 31, 2008, a
decrease in gross profit of $70,222 or 6.55% over the prior period. The decrease
was due primarily to a decrease in volume.
The
Company had combined administrative ($668,770), research and development
($277,761) and depreciation ($64,248) expenses of $1,010,779 for the year ended
March 31, 2009, compared to combined administrative ($725,891), research and
development ($209,437) and depreciation ($30,121) expenses of $965,449 for the
year ended March 31, 2008, an increase in expenses of $45,330 or 4.7% from the
prior period. Selling and marketing expenses are reported separately and
not included in administrative expenses and the decrease in administrative
expenses was due primarily to a decrease in salaries and wages as a result of
the decrease in terminal traffic necessitating the need for a reduction in
employees and decreased hours of operation. Combined administrative expenses
increased as a result of increases in research and development
expenditures.
The
Company’s research and development costs include the creation of architectural
drawings as they relate to panel specifications, the creation of dies, the
manufacturing of test panels, the creation of specific panel testing equipment,
costs relating to independent certification testing, consulting costs associated
with utilizing process experts and engineers and costs associated with the setup
of the research and production center. The Company anticipates that research and
development costs will increase in fiscal 2009 as a result of final preparations
for the production of trial product, as well as costs associated with the
development of the highway trailer product.
The
further Company anticipates that ongoing research and development costs will
stabilize in fiscal 2010 and be maintained at a rate proportional to
sales.
For the
fiscal year end March 31, 2009, the Company reported selling and marketing
expenses of $16,790. For the fiscal year ended March 31, 2008, the Company
reported selling and marketing expenses of $2,093. Selling and marketing
expenses are included within the Administrative expense line item on the
Company’s Statement of Income as contained herein.
The
adjustment for Minority Interest in consolidated subsidiaries was $180,000 for
the 12 month period ended March 31, 2009 compared with $153,965 for the period
ended March 31, 2008. This adjustment accurately portrays the 49.9% minority
interest in Conforce 1 Container Terminals, Inc.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company has not entered into any off-balance sheet arrangements that have or are
reasonably likely to have a current or future affect on its financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources and would be considered
material to investors.
LIABILITIES
The
Company had Accounts payable of $122,178 at March 31, 2009 compared to
$66,322 at March 31, 2008, an increase of $55,856. Such increase is
attributable to a decrease in the Company’s working capital primarily as the
result of Fixed Asset purchases and the continued funding of EKO-FLOR product
development.
The
Company had no Accrued liabilities at March 31, 2009 compared to
$24,949 at March 31, 2008, a decrease of $24,949.
The
Company had Accrued wages of $13,228 at March
31, 2009 compared to $24,055 at March 31, 2008, a decrease of
$9,114. The decrease is primarily due to a decrease in the salary
paid to the CEO.
The
Company had Shareholder’s loans from Marino Kulas, CEO and shareholder, of
$405,987 at March 31, 2009 compared to $324,850
at March 31, 2008. The Shareholder loans are interest free with no
fixed terms of repayment. Between March 31, 2008 and March 31, 2009,
there was an increase in borrowing of $133,711. 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.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DIS
CL
OSURES ABOUT
MARKET RISK.
Not
applicable as Conforce is a smaller reporting company.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEME
NT
ARY
DATA.
The
financial statements required by Item 8 are submitted in a separate section of
this Form and are incorporated herein by this reference.
ITEM
9. CHANGES IN AND DIS
AG
REEMENTS WITH ACCOUNTANTS ON
ACCOUNTING 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
9A. CONTROLS AND PROCEDURES.
This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the
Company’s registered public accounting firm due to a transition period
established by the rules of the Securities and Exchange Commission for newly
public companies. As a result of Management’s commitment to developing adequate
controls and procedures, Management has appointed TAB Services Inc. as new
independent internal financial controller.It is also Management’s intention to
appoint BDO Dunwoody, an international accounting services firm, as independent
auditors to Conforce. As such, the Company and its Chief Executive Officer are
confident that adequate and effective internal controls for disclosure are in
place.
ITEM
9A(T). CONTROLS AND PROCEDURES.
This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the
Company’s registered public accounting firm due to a transition period
established by the rules of the Securities and Exchange Commission for newly
public companies.
ITEM
9B. OTHER INFORMATION.
Not
applicable.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE O
FFI
CERS AND CORPORATE
GOVERNANCE.
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
|
|
Mario
Verrilli
|
43
|
Acting
Chief Financial Officer
|
|
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.
Mario Verrilli
,
Acting Chief Financial
Officer.
Prior to joining Conforce, Mr. Mario Verrilli
held the position of Senior Vice President, Global
Operations for Omega Direct Response Inc., a leading provider of outsourced call
centre services. Prior to Omega, Mr. Verrilli served as Director of Sales,
Consumer Markets for Primus Canada where he was responsible for the creation and
ownership of acquisition channels along with their respective P&L and
operating budgets. Before joining Primus, he worked with AT&T Canada, where
he held the position of International Settlement Analyst responsible for the
settlement of financial transactions, revenue reporting and the creation of
revenue distribution models. Mr. Verrilli started his career as a Revenue
Analyst for Cadillac Fairview, a commercial developer and management company,
where he was responsible for the accounting of revenue and expenses for a
portfolio of shopping centres across Canada.
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.
ITEM
11. EXECUTIVE
CO
MPENSATION.
December
31, 2008 SUMMARY COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Marino
Kulas
President
& CEO, Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
91,000
|
|
|
|
|
|
|
91,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
DeRose
VP
of Product Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
45,500
|
|
|
|
|
|
|
45,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathryn
Saliani
Director
of Business Op., Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
50,000
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slavko
Kulas
Director
of Terminal Op.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
52,000
|
|
|
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
ITEM
12. SECURITY OWNERSHIP OF CERTAIN
BE
NEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
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.
ITEM
13. CERTAIN RELATIONSHI
PS
AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE.
Conforce
currently has outstanding shareholder loans that are interest free with no fixed
terms of repayment and it is possible that additional shareholder loans will be
received in the future.
ITEM
14. PRINCIPAL ACCOUNT
ING
FEES AND
SERVICES.
The audit
fees for the fiscal year end March 31, 2009 were $25,000. There are
no other audit-related fees, tax fees or other fees to disclose at such
time.
PART
IV
ITEM
15. E
XHIBIT
S, FINANCIAL STATEMENT
SCHEDULES.
|
Exhibit
|
|
|
No.
|
Description
|
|
2.0
|
Acquisition
Agreement and Plan of Merger dated May 24, 2005 (1)
|
|
3.1
|
Certificate
of Incorporation for Conforce International, Inc.
(1)
|
|
3.1.1
|
Certificate
of Incorporation for Conforce Container Corporation (1)
|
|
3.1.2
|
Certificate
of Incorporation for Conforce 1 Container Terminals, Inc.
(1)
|
|
3.2
|
Bylaws
(1)
|
|
10.1
|
Canada
Small Business Financial Loan dated November 26, 2008
|
|
10.2
|
Sea
Box, Inc. Purchase Order dated November 25, 2009 (2)
|
|
10.3
|
Letter
of Agreement in Connection with the Strategic Partnership Between Conforce
International, Inc. and Bayer MaterialScience, LLC. dated February 2,
2009 (2)
|
|
10.4
|
Advisory
Agreement between WorldWide Associates, Inc. and Conforce International,
Inc. dated April 2, 2007 (2)
|
|
10.5
|
Employment
Renewal Proposal for Joseph DeRose dated October 31,
2008.
|
|
10.6
|
Employment
Proposal for Joseph DeRose dated October 27,
2006.
|
|
10.7
|
Employment
Renewal Proposal for Joseph DeRose dated October 31,
2007.
|
|
23.1
|
Auditor
Certification (3)
|
|
31.1
|
|
|
|
|
|
32.1
|
|
|
|
|
(1)
Denotes
previously filed exhibits: filed on February 9, 2009 with Conforce
International, Inc.’s 10-12G Registration Statement.
(2)
Denotes
previously filed exhibits: filed on June 29, 2009 with Conforce International,
Inc.’s 10-12G/A Registration Statement.
(3)
Denotes previously filed exhibits: filed on July 29, 2009 with Conforce
International, Inc.’s 10-K.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
|
|
Conforce
International, Inc.
|
|
|
|
|
|
|
|
October
22, 2009
|
By:
|
/s/ Marino
Kulas
|
|
|
|
|
Marino
Kulas
|
|
|
|
|
President
& CEO
|
|
|
|
|
|
|
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, 2009 and 2008, and the related statements of income,
stockholders’ equity, and cash flows for each of the two years in the period
ended March 31, 2009. 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, 2009 and
2008, and the results of its operations and it cash flows for each of the two
years in the period ended March 31, 2009, in conformity with U.S. generally
accepted accounting standards.
Pollard-Kelley
Auditing Services, Inc.
/S/
Pollard-Kelley Auditing Services, Inc.
Independence,
Ohio
July 14,
2009
|
Conforce
International, Inc.
|
|
|
|
|
|
|
|
Balance
Sheet
|
|
|
|
|
|
|
|
March
31, 2009 and 2008
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
49,353
|
|
|
$
|
34,801
|
|
|
Accounts
receivable
|
|
|
266,751
|
|
|
|
457,012
|
|
|
Other
receivables
|
|
|
28,915
|
|
|
|
37,172
|
|
|
Total
Current Assets
|
|
|
345,019
|
|
|
|
528,985
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Assets
|
|
|
|
|
|
|
|
|
|
Office
equipment
|
|
|
23,829
|
|
|
|
23,829
|
|
|
Vehicles
|
|
|
20,529
|
|
|
|
20,345
|
|
|
Equipment
|
|
|
660,639
|
|
|
|
101,888
|
|
|
Leasehold
improvements
|
|
|
25,028
|
|
|
|
25,028
|
|
|
|
|
|
730,025
|
|
|
|
171,090
|
|
|
Less:
Accumulated depreciation
|
|
|
(139,185
|
)
|
|
|
(75,027
|
)
|
|
|
|
|
590,840
|
|
|
|
96,063
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
32,922
|
|
|
|
14,779
|
|
|
|
|
|
32,922
|
|
|
|
14,779
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
968,781
|
|
|
$
|
639,827
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
122,176
|
|
|
$
|
66,322
|
|
|
Accrued
liabilities
|
|
|
-
|
|
|
|
24,949
|
|
|
Accrued
wages
|
|
|
13,228
|
|
|
|
24,055
|
|
|
Current
portion long term debt
|
|
|
2,303
|
|
|
|
-
|
|
|
Shareholder's
loans
|
|
|
405,987
|
|
|
|
324,850
|
|
|
Total
Current Liabilities
|
|
|
543,694
|
|
|
|
440,176
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest in consolidated
subsidiaries
|
|
|
460,525
|
|
|
|
280,525
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
Term Debt
|
|
|
193,430
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock
|
|
|
9,157
|
|
|
|
9,157
|
|
|
Additional
contributed capital
|
|
|
94,233
|
|
|
|
89,900
|
|
|
Retained
earnings
|
|
|
(332,258
|
)
|
|
|
(179,931
|
)
|
|
|
|
|
228,868
|
|
|
|
199,651
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
|
$
|
968,781
|
|
|
$
|
639,827
|
|
|
See
accompanying notes to financial statements.
|
|
|
|
|
|
|
Conforce
International, Inc.
|
|
|
|
|
|
|
|
Statement of Income
|
|
|
|
|
|
|
|
For
the Years Ended March 31, 2009 and
2008
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,021,389
|
|
|
$
|
2,364,945
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT
COST OF REVENUES
|
|
|
|
|
|
|
|
|
|
Equipment
rental
|
|
|
103,281
|
|
|
|
69,530
|
|
|
Fuel
|
|
|
68,624
|
|
|
|
76,166
|
|
|
Repairs
& maintenance
|
|
|
37,991
|
|
|
|
41,125
|
|
|
Transportation
|
|
|
538,525
|
|
|
|
847,916
|
|
|
Rent
|
|
|
223,744
|
|
|
|
228,049
|
|
|
Subcontractors
|
|
|
47,601
|
|
|
|
30,314
|
|
|
|
|
|
1,019,766
|
|
|
|
1,293,100
|
|
|
GROSS
PROFIT
|
|
|
1,001,623
|
|
|
|
1,071,845
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Administrative
(including stock compensation
|
|
|
|
|
|
|
expense
in 2008 & 2009 )
|
|
|
668,770
|
|
|
|
725,891
|
|
|
Flooring
System expenses;
|
|
|
|
|
|
|
|
|
|
Research
& development
|
|
|
277,761
|
|
|
|
209,437
|
|
|
Depreciation
|
|
|
64,248
|
|
|
|
30,121
|
|
|
|
|
|
1,010,779
|
|
|
|
965,449
|
|
|
OTHER
INCOME AND EXPENSE
|
|
|
|
|
|
|
|
|
|
(Gain)/loss
on currency conversion
|
|
|
(36,829
|
)
|
|
|
7,285
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
FROM OPERATIONS
|
|
|
27,673
|
|
|
|
99,111
|
|
|
|
|
|
|
|
|
|
|
|
|
TAX
PROVISIONS
|
|
|
-
|
|
|
|
-
|
|
|
NET
INCOME/(LOSS) BEFORE MINORITY
|
|
|
|
|
|
|
INTEREST
|
|
|
27,673
|
|
|
|
99,111
|
|
|
LESS
MINORITY INTEREST IN
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
SUBSIDIARIES
|
|
|
(180,000
|
)
|
|
|
(153,965
|
)
|
|
NET
(LOSS) INCOME
|
|
$
|
(152,327
|
)
|
|
$
|
(54,854
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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 Ended March 31, 2009 and
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
Common
Strock
|
|
|
Contributed
|
|
|
Retained
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Total
|
|
|
Balances
at March 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
120,001,000
|
|
|
|
9,157
|
|
|
|
27,300
|
|
|
|
(125,077
|
)
|
|
|
(88,620
|
)
|
|
Stock
contributed for
employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62,500
|
|
|
|
-
|
|
|
|
62,500
|
|
|
Net
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(54,854
|
)
|
|
|
(54,854
|
)
|
|
Balances
at March 31, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
120,001,000
|
|
|
|
9,157
|
|
|
|
89,900
|
|
|
|
(179,931
|
)
|
|
|
(80,974
|
)
|
|
Stock
contributed for employment agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,333
|
|
|
|
-
|
|
|
|
4,333
|
|
|
Net
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(152,327
|
)
|
|
|
(152,327
|
)
|
|
Balances
at March 31, 2009
|
|
|
-
|
|
|
$
|
-
|
|
|
|
120,001,000
|
|
|
$
|
9,157
|
|
|
$
|
94,233
|
|
|
$
|
(332,258
|
)
|
|
$
|
(228,868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conforce
International, Inc.
|
|
|
|
|
|
|
|
Statements
of Cash Flow
|
|
|
|
|
|
|
|
For
the Years Ended March 31, 2009 and
2008
|
|
|
|
|
|
|
|
RESTATED
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
Net
Income/(loss) for the period
|
|
$
|
(152,327
|
)
|
|
$
|
(54,854
|
)
|
|
Adjustments
to reconcile net earnings to net
|
|
|
|
|
|
|
|
|
|
cash
provided (used) by operating activities:
|
|
|
|
|
|
|
|
|
|
Minority
interest in consolidated subsidary
|
|
|
180,000
|
|
|
|
153,965
|
|
|
Depreciation
|
|
|
64,248
|
|
|
|
30,121
|
|
|
Compensation
paid by stock
|
|
|
4,333
|
|
|
|
62,600
|
|
|
Changes
in Current assets and liabilities:
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in Accounts receivable
|
|
|
190,261
|
|
|
|
(264,340
|
)
|
|
(Increase)
decrease in Other receivables
|
|
|
8,257
|
|
|
|
(851
|
)
|
|
(Decrease)
Increase in Accounts payable
|
|
|
55,854
|
|
|
|
24,828
|
|
|
(Decrease)
Increase in Accrued liabilities
|
|
|
(24,949
|
)
|
|
|
3,818
|
|
|
(Decrease)
Increase in Accrued wages
|
|
|
(10,827
|
)
|
|
|
7,179
|
|
|
NET
CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
314,850
|
|
|
|
(37,534
|
)
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Purchase
of Fixed assets
|
|
|
(485,924
|
)
|
|
|
(39,972
|
)
|
|
Purchase
of Deposits
|
|
|
(18,143
|
)
|
|
|
-
|
|
|
NET
CASH (USED) BY
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
(504,067
|
)
|
|
|
(39,972
|
)
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds
from Bank loans
|
|
|
195,733
|
|
|
|
-
|
|
|
Loans
by shareholders
|
|
|
81,137
|
|
|
|
-
|
|
|
NET
CASH PROVIDED BY
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
276,870
|
|
|
|
-
|
|
|
EFFECT
OF EXCHANGE RATE ON CASH
|
|
|
(73,101
|
)
|
|
|
37,475
|
|
|
NET
INCREASE IN CASH
|
|
|
14,552
|
|
|
|
(40,031
|
)
|
|
CASH
AT BEGINNING OF PERIOD
|
|
|
34,801
|
|
|
|
74,832
|
|
|
CASH
AT END OF PERIOD
|
|
$
|
49,353
|
|
|
$
|
34,801
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements.
|
|
|
|
|
|
|
|
|
Conforce
International, Inc.
NOTES
TO THE FINANCIAL STATEMENTS March 31, 2009
RESTATED
These
financial statements have been restated in order to reflect a stock transaction
as it pertains to employee compensation issued under an employment
agreement (see
NOTE 4 –
EQUITY - Stock Transactions
for further information). The
effects of the restatement are shown below:
|
Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
Additional
contributed capital
|
|
$
|
89,900
|
|
|
$
|
4,333
|
|
|
$
|
94,233
|
|
|
Retained
earnings
|
|
$
|
(327,925
|
)
|
|
$
|
(4,333
|
)
|
|
$
|
(332,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
|
$
|
664,437
|
|
|
$
|
4,333
|
|
|
$
|
668,770
|
|
|
Income
from operations
|
|
$
|
32,006
|
|
|
$
|
(4,333
|
)
|
|
$
|
27,673
|
|
|
Net
Income
|
|
$
|
(147,994)
|
|
|
$
|
(4,333
|
)
|
|
$
|
(152,327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income/(Loss) for the period
|
|
$
|
(147,994)
|
|
|
$
|
(4,333
|
)
|
|
$
|
(152,327
|
)
|
|
Compensation
paid by stock
|
|
$
|
89,900
|
|
|
$
|
4,333
|
|
|
$
|
94,233
|
|
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
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
Conforce
International, Inc.
NOTES
TO THE FINANCIAL STATEMENTS March 31, 2009
NOTE 1 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
treated
as the acquiring entity for accounting purposes. There were no
adjustments to the carrying value of the assets or liabilities of acquired
company or to the assets and liabilities of the acquiring company.
The
Company’s 50.1% owned subsidiary, Conforce 1 Container Terminals, Inc., provides
handling, storage and transport of overseas shipping containers for
international steamship lines, as well as domestic
retailers. Conforce Container Corporation embarked on the development
of a new container flooring system, EKO-FLOR
which has
been designed to provide an environmentally friendly product to increase
container versatility while reducing shipping costs.
Financial Statement
Presentation
The
accompanying statements have been prepared 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, 2009 and
2008 respectively.
Cash and Cash
Equivalents
For
purposes of the statement of cash flows, the Company considers all short-term
debt securities purchased with a maturity of three months or less to be cash
equivalents. There was no cash paid during the periods for interest
or taxes.
Property and
Equipment
Property
and equipment are carried at cost. Maintenance, repairs and renewals
are expensed as incurred. Depreciation of property and equipment is
provided for over their estimated useful lives, which range from three and five
years, using the declining balance method. Leasehold improvements are
amortized over the life of the lease. Depreciation expense was
$64,248 and $30,121 for the years ending March 31, 2009 and 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 THE FINANCIAL STATEMENTS March 31, 2009
NOTE 1 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue
Recognition
The only
revenue producing operations of the Company during the years prior to the fiscal
year reported here were those of 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.
In
January 2009, first revenues were generated in the EKO-FLOR division which
recognizes revenue and invoices for same when goods are
delivered.
NOTE 2 – INCOME
TAXES
The
Company accounts for income taxes under Generally Accepted Accounting Principals
used in the United States of America, which requires the Company to recognize
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company’s financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement carrying
amounts and tax basis of the assets and liabilities using enacted tax
rates. The Company has no significant differences between book and
tax accounting.
NOTE 3 – LONG – TERM
DEBT
On
November 26, 2008, the Company entered into a borrowing relationship with a Bank
to borrow $198,403 (CDN $250,000) utilizing an interest rate of prime plus three
percent for ten years. The agreement calls for monthly payments of USD $2,303
including principal and interest. The balance outstanding as at March 31, 2009
was $193,430. The portion of this balance currently due at March 31, 2009 was
$2,303 and the long term portion was $193,430. This loan is the same as the
amount stated as long-term debt on the Company’s balance sheet and as described
in the Liquidity and Capital Resources section of this
document.
NOTE 4 –
EQUITY
Preferred
Stock
At March
31, 2009 and 2008, the Company had authorized 5,000,000 shares of Preferred
Stock at a par value of $.0001 per share. There were 0 shares
outstanding. The unissued shares of Preferred stock may be divided
into and issued in designated series from time to time by one or more
resolutions adopted by the Board of Directors.
Common
Stock
At March
31, 2009 and 2008, the Company had authorized 250,000,000 shares of Common Stock
at a par value of $.0001 per share (Canadian Dollars). There were
120,001,000 shares outstanding.
Stock
Transactions
On
October 26, 2006, the Company entered into an employment agreement (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 provide 10,000 shares of Common stock
per month for the life of the agreement. In addition, a founding
shareholder of Conforce agreed to provide 200,000 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 Conforce if
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.
On
October 31, 2008, the Company further extended its VP Employment Agreement for
an additional twelve months to Oct 31, 2009. Pursuant to the terms of the
renewed VP Employment Agreement, a founding shareholder of the Company agreed to
provide 320,000 shares of Common stock at the end of the period provided certain
performance criteria is satisfied in connection with the development and
commercialization of Eko-Flor products. There has been no provision
for this accrual at March 31, 2009 since the performance criteria had not been
met. The agreement also provided for the granting of an additional 80,000 shares
of common stock at the end of the renewal period (October 31, 2009) from a
previous agreement for which the performance criteria has been met. The shares
allocated under the agreement as at March 31, 2009 totaled 33,333 and were
valued at $4,333. This valuation was based on the trading value of the shares as
at March 31, 2009.
The
recording of the abovementioned stock compensation effected a restatement of the
March 31, 2009 financial statements. The effects of the restatement
are shown below:
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
Adjustment
|
|
|
As
Revised
|
|
|
Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
Additional
contributed capital
|
|
$
|
89,900
|
|
|
$
|
4,333
|
|
|
$
|
94,233
|
|
|
Retained
earnings
|
|
$
|
(327,925
|
)
|
|
$
|
(4,333
|
)
|
|
$
|
(332,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
|
$
|
664,437
|
|
|
$
|
4,333
|
|
|
$
|
668,770
|
|
|
Income
from operations
|
|
$
|
32,006
|
|
|
$
|
(4,333
|
)
|
|
$
|
27,673
|
|
|
Net
Income
|
|
$
|
(147,994)
|
|
|
$
|
(4,333
|
)
|
|
$
|
(152,327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow Statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income/(Loss) for the period
|
|
$
|
(147,994)
|
|
|
$
|
(4,333
|
)
|
|
$
|
(152,327
|
)
|
|
Compensation
paid by stock
|
|
$
|
89,900
|
|
|
$
|
4,333
|
|
|
$
|
94,233
|
|
Conforce
International, Inc.
NOTES
TO THE FINANCIAL STATEMENTS March 31, 2009
NOTE 5 – RELATED
PARTIES
At March
31, 2009 and 2008 the Company owed $405,987 and
$324,850 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, 2009 and 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 $103,281 for the year
ending March 31, 2009. 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, 2009 and 2008.
NOTE 6
– COMMITMENTS
The
Company leases office space under a five year lease which runs through April
2012. Monthly lease payments are $2,883.
The
Company leases container terminal site space under a lease which originally ran
from April 2004 to March 2007. The lease was renewed in April 2007 for an
additional five year term to March 2012 with monthly lease payments increasing
by $3,514 to $14,641 per month. In December 2008, the Company
entered into a three year lease for its production and development centre site
space. The monthly payments are $9,350 and will commence in January 2009 and run
until December 2011.
Future
lease commitments are as follows: Fiscal 2009 represents the Company’s fourth
quarter ending March 31, 2009.
Future
commitments;
|
Fiscal
2010
|
|
$
|
322,488
|
|
|
Fiscal
2011
|
|
$
|
322,488
|
|
|
Fiscal
2012
|
|
$
|
294,438
|
|
|
Fiscal 2013
|
|
$
|
2,883
|
|
|
Fiscal
2014
|
|
$
|
0
|
|
|
Thereafter
|
|
$
|
0
|
|
Conforce
International, Inc.
NOTES
TO THE FINANCIAL STATEMENTS March 31, 2009
NOTE 7 – MINORITY
INTEREST
Minority
interest on the consolidated balance sheets represents the portion of the
shareholders’ equity at the respective year ends not owned by the shareholders
of the Company.
|
|
|
Minority
|
|
|
|
|
Interest
|
|
|
March 31, 2006
|
|
$
|
99,588
|
|
|
Minority interest in
income of subsidiary
|
|
|
26,972
|
|
|
March 31, 2007
|
|
|
126,560
|
|
|
Minority interest in
income of subsidiary
|
|
|
153,965
|
|
|
March 31, 2008
|
|
|
280,525
|
|
|
Minority interest in
income of subsidiary
|
|
|
180,000
|
|
|
March 31, 2009
|
|
$
|
460,525
|
|
NOTE 8 – BUSINESS
SEGMENTS
The
Company operated in three reportable business segments; Container Terminal,
EKO-FLOR and Administrative. The Container Terminal operations are
organized as Conforce 1 Container Terminals, Inc., a 50.1% owned subsidiary of
the Company. The subsidiary is responsible for all container terminal
operations. EKO-FLOR is organized as Conforce Container Corporation a
100% owned subsidiary of the Company. This subsidiary is responsible
for the development, manufacturing and marketing of the Company’s EKO-FLOR
product. Operations to date have been research and
development. The Administrative operations are the operations of the
parent company Conforce International, Inc. The operations to date
have been minimal since formation.
Business
Segments –For the Year Ended March 31, 2009
|
|
|
Container
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
EKO-FLOR
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,711,662
|
|
|
$
|
309,727
|
|
|
$
|
2,021,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
cost of Sales
|
|
|
831,932
|
|
|
|
187,834
|
|
|
|
1,019,766
|
|
|
Administrative
– operations
|
|
|
531,550
|
|
|
|
137,220
|
|
|
|
668,770
|
|
|
Research
& development
|
|
|
-0-
|
|
|
|
277,761
|
|
|
|
277,761
|
|
|
Depreciation
|
|
|
64,248
|
|
|
|
-0-
|
|
|
|
64,248
|
|
|
(Gain)/Loss
on currency conversion
|
|
|
(31,186
|
)
|
|
|
5,643
|
|
|
|
36,829
|
|
|
Income/(Loss)
From
Operations
|
|
$
|
315,118
|
|
|
$
|
(287,445
|
)
|
|
$
|
27,673
|
|
Conforce
International, Inc.
NOTES
TO THE FINANCIAL STATEMENTS March 31, 2009
Total
Assets, March 31, 2009
|
Container
Terminals
|
|
$
|
1,719,116
|
|
|
EKO-FLOR
|
|
|
136,846
|
|
|
Inter-company receivable
|
|
|
(887,181
|
)
|
|
Consolidated Total Assets
|
|
$
|
968,781
|
|
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
|
|
|
(Gain)/Loss
on currency conversion
|
|
|
7,285
|
|
|
|
-0-
|
|
|
|
7,285
|
|
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
|
|
