UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-K








(Mark One)





x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March 31, 2010


Or





o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to ______________





Commission file number 001-34203





Conforce International, Inc.(Exact name of registrant as specified in its charter)





Delaware

68-6077093(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)





51A Caldari Road


2nd Floor


Concord, Ontario L4K 4G3


Canada


(Address of principal executive offices) (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:





Title of each class

to be so registered

Name of each exchange on which

each class is to be registeredCommon stock, par value $0.0001

Over-the-Counter/Pink Sheets








Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yeso Noþ





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yeso Noþ





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.





Large accelerated filero
Accelerated filer                   oNon-accelerated filer  o

(Do not check if smaller reporting company)
Smaller reporting companyþ





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Noþ





As of March 31, 2010, there were 120,001,000 shares of our common stock issued and outstanding with a market value of $0.20 per share as at June 19, 2010








DOCUMENTS INCORPORATED BY REFERENCE


None.










TABLE OF CONTENTS





ITEM 1.  BUSINESS.
3ITEM 1B. UNRESOLVED STAFF COMMENTS.
10ITEM 2.  PROPERTIES.
10ITEM 3.   LEGAL PROCEEDINGS.
10ITEM 4.  (REMOVED AND RESERVED)ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
11ITEM 6.  SELECTED FINANCIAL DATA
11ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
11ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
17ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
17ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
17ITEM 9A(T).  CONTROLS AND PROCEDURES.
17ITEM 9B.  OTHER INFORMATION.
18ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
19ITEM 11.  EXECUTIVE COMPENSATION.
21ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
22ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
22ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES.
22ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
23











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 10K report 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 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 and highway trailer 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. The meetings were scheduled with shipping lines and container 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).





In 2009, the Company introduced its composite panels to the North American highway trailer industry. As a result, the Company entered into discussions with eight of the largest trailer manufacturers in North America. By September 2009, trial orders for internal platform testing were placed by these manufacturers.





Throughout 2009, the Company established its production and development centre in order to optimize and produce the panels required for trials. EKO-FLOR panels for trailer trials were delivered in January 2010, while container panels were delivered between March and June 2010.





The Company has received positive expressions of interest from its trailer and container customers and in March 2010, its product was TTMA RP37 certified for use in highway trailers. The Company’s product was featured at the mid-America Trucking Show in Louisville Kentucky in March 2010 and based on industry feedback from the show, the Company intends to establish a manufacturing facility in Indiana with production planned for fourth quarter of calendar 2010.


3


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 container and, the first order from Sea Box for ms-1was received in December of 2008. The order consisted of racking for special application containers and generated $346,211 in revenues for fiscal 2009 and $920,937 in fiscal 2010.





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. 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.  Conforce and Bayer will, at a later date to be mutually agreed upon, enter into, execute and deliver definitive operational agreements which may include multi-term material supply agreements and joint development agreements. To-date, no such agreements have been signed that will bind the Company at this time.





Conforce and Bayer have collaborated on the design of the special application military container panels, EKO-FLOR xts trailer flooring and cs 4 container flooring.  Bayer has contributed its technical expertise in identifying and providing polyurethane resins that will maximize strength, while minimizing weight.   The combined collaborative efforts of Bayer and Conforce have been ongoing from July of 2008 through the date of this filing.  Bayer’s role in the development of EKO-FLOR has been to optimize the production process, including advice relating to the design of the pultrusion production line and, as previously stated, advice concerning the optimal polyurethane resin mix.  Bayer has provided third-party consultants, at its own expense, to design various components of the pultrusion production line.  In addition, it has provided Bayer employees at its own cost to act as consultants and attend the Conforce production and development centre in Ontario for purposes of overseeing the configuration of the pultrusion production line and fabrication of the EKO-FLOR panels.  Bayer has provided economic assistance to Conforce in two ways:  (1) Bayer has incurred the cost of certain components used in the pultrusion production line and certain development costs associated with the production of the special application military container panels; and (2), as previously stated, Bayer incurred the cost of certain third-party consultants and provided Bayer employees at its own cost to act as consultants.  There are no specific agreements in place pertaining to the provision of any additional economic assistance by Bayer to Conforce in the future.  Although it is likely that Bayer will provide similar economic assistance in the future, it is not possible to predict the precise nature of such assistance at this time.





It is important to note that all revenues up to 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.




4


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.





2.        Conforce Container Corporation is dedicated to the production, development and commercialization of the new ISO1496 and TTMA RP37 certified container and trailer flooring system, EKO-FLOR.





EKO-FLOR is a composite flooring system designed to replace plywood flooring in shipping containers and highway trailers.





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 EKO-FLOR cs-4 panels used for ocean-going trials are 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.  Production of the ms-1 panels was sub-contracted to a facility in Quebec, Canada.





EKO-FLOR xts is a variation of the the cs-4 substrate developed for the highway trailer industry. The product’s performance characteristics are identical to those of the container industry panel, however, the trailer profile consists of minor structural changes and will be available in both 12 and 24 inch panel configurations. The product has been independently certified using standardized testing procedures as established by the Truck and Trailer Manufacturer’s Association to a load of 24,000 lbs with a rating of 31,920 lbs.





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.  While the container terminal is expected to provide revenues and moderate earnings, the management focus is on the EKO-FLOR manufacturing initiatives.




EKO-FLOR Division
 
 The primary strengths for the EKO-FLOR division is its intellectual property in the form of the pending patents on its products and its manufacturing and industry know-how with respect to container and transportation flooring business.  Conforce has a strong relationship with its project partner Bayer MaterialSciences and continues to expand and build relationships with potential customers of its EKO-FLOR products.


5





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 that 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 and gross margin in the terminal operations division will decrease in fiscal 2011.





In addition to unsolicited rate reductions by terminal operators to gain market share, 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 in the Competitors section of this document, Conforce is the furthest from the major railways. More specifically, the Conforce terminal is located approximately 50 kilometers from CN whereas a competitor terminal  is approximately 8 kilometers from CN and 3 kilometers from CP.





EKO-FLOR Division





One of the principal challenges faced by EKO-FLOR was the upfront premium container manufacturers faced in comparison to the current product. 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 current premium represents an increase of approximately 15% or $290 to the total price of a 20 foot equivalent container.   The Container manufactures are expected to re-coup this premium with reduced life-time cost of operation for the containers.





Another challenge the Company will face will be the establishment of a manufacturing facility in the United States and China. For China, the Company will need to rely on strategic partnerships with entities having expertise as it relates to business and production practices in China. In the United States, the business and production practices are more familiar and will be less of a challenge.





The Company may also face potential delays in terms of first orders, or if this is not the case, the Company may face delays in fulfilling those orders. While the interest in the industry has been extremely positive, customers currently using wood products may still be inclined to use existing known materials.  For those customers that do place orders, there will be a requirement to manage expectations on delivery.  Large continuous volumes of EKO-FLOR have not been manufactured and there will likely be some challenges in fulfilling the first orders.


6




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.


Expansion for Conforce is expected to come primarily from sales of EKO-FLOR cs-4 and xts in 2011 and beyond where the Company believes that notwithstanding the recent global economic slowdown, significant growth potential exists with the introduction of composite flooring to the transportation industry. Should the container industry in 2011 collectively produce one half of its 2007 new build volume of 3.9 million twenty foot equivalent containers (TEU), the Company would still experience significant growth assuming it is able to secure and produce projected orders of approximately 60,000 TEU or approximately 3% of total new build volume.





In advance of production orders for cs-4, the Company projects that it will receive orders for xts trailer panels in second quarter of fiscal 2011 for production commencing in the third quarter of fiscal 2011. Notwithstanding management’s projections and expectations, there are no assurances that these orders will be received.





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 45,000 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 million to $10 million. 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.





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 August 2010.   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 $6.75 million to $7.50 million.


The Company intends to develop flooring for the Cruise Line industry and has had preliminary discussions with Carnival Cruise Lines and other cruise lines and ship manufacturers. 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 September 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 xts 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.





DISTRIBUTION METHODS





The Company intends to sell its products directly to International shipping lines and trailer manufacturers for use in newly manufactured containers and trailers through, either its internal sales staff, broker/selling agents , 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.




7


INDUSTRY OVERVIEW





According to Containerisation International Magazine, there were 3.9 million new containers manufactured in 2007 (1).





Containers are currently equipped with floors made from tropical hardwoods, the most common being Apitong. The container industry is aggressively seeking a viable alternative to hardwood. (2)





Regarding the current state of the shipping container industry as a result of the recent global economic downturn, it is important to note that new build volume in 2008 was projected to be 3.85 million 20 foot equivalent containers as of third quarter 2008; however, due to a slowdown in the fourth quarter, actual 2008 annual production was approximately 2.75 million twenty foot equivalent containers. Volume for the production of new containers is projected to be down significantly in 2009 and is currently projected to be approximately 1 million twenty foot equivalent containers. (3)





Shipping rates are also expected to decrease, which could put additional pressure on shipping lines as revenues and earnings decrease. According to Drewry Supply Chain Advisors division director Philip Damas, “Demand is no longer sufficient to absorb new vessel capacity. As a result of anemic growth and over-capacity, container freight rates have fallen on several key routes, with the notable exception of the transpacific, where carriers have withdrawn substantial capacity. Shippers should expect container rates to decline by about 15 percent during the current down-cycle, although any reductions will also depend on the level of fuel surcharges.” (4)





According to a report published on December 8, 2008 by Deutsche Bank Research (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 article titled “Reach for the Sky,” dated February, 2008. Available to subscribers only.


(2) Source: World Cargo News article titled “Floors – the container’s Achilles Heel,” dated January, 2007. Available to subscribers only; however, excerpts are available online at no charge.


(3) Source: Containerisation International Magazine article dated May, 2009. Available to subscribers only.


(4) Source: Logistics Management article titled “Ocean shipping/global transportation: Economic slowdown is weighing on ocean carriers,” dated November 19, 2008. Available to the public for a nominal fee; however, excerpts are available online at no charge.


(5) Source: Deutsche Bank Research article titled “Prospects for container shipping industry,” dated December 8, 2008. 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 produced trial panels for  three shipping lines, eight trailer manufacturers and one transport company. The Company expects that trailer evaluations will be completed by June 2010 while ocean-going trials will be completed during calendar fourth quarter 2010.





The Company has developed EKO-FLOR ms-1, a composite shelving system designed for use in special application military containers. The Company 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 generated annual revenues for Conforce in excess of $1 million. At this time, the Company has not received a follow-up order from its military sub-contractor, however, it expects that if the US Military orders additional special application containers, that it will again be the recipient of the contract from its military sub-contractor, Sea Box.




8





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 and trailer flooring markets that are currently dominated by the use of hardwood such as apitong and laminated oak. The Company is unaware of any other hardwood on the market that meets the strength requirements of ocean-going containers and highway trailers.  The customers being targeted are international shipping lines utilizing ocean-going containers and trailer manufacturers producing trailers for both the North American and international markets.





Singamas, a container manufacturer, has developed a variation of a composite floor that it is currently being tested 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 with the United States Patent and Trademark Office. The Company is currently preparing similar patent applications for filing, in Canada, China, Germany and Denmark.





Pursuant to the Letter of Agreement in Connection with the Strategic Partnership Between Conforce International, Inc. and Bayer MaterialScience LLC, Conforce will retain all of its rights, including patent rights, to EKO-FLOR and to any developments made solely by Conforce during the course of the strategic partnership. Moreover, Bayer will retain all of its rights, including patent rights, to the materials, compositions and formulations developed and/or supplied hereunder and to any other developments made solely by it during the strategic partnership.





In the near future, Conforce and Bayer intend to enter into a definitive agreement pertaining to the intellectual property rights relating to products that are jointly developed.  Pursuant to this agreement, Conforce and Bayer will equally share the ownership of all inventions created by both parties.  Furthermore, all costs related to the procurement of patent protection and any royalties or other forms of revenue derived therefrom, will be shared equally between the two parties.





Trademarks


The Company’s trademark agent has submitted EKO-FLOR trademark applications in the USA, Canada, China and with the European member states.





Licenses, Royalties and Supply Agreements
 In 2005, the Company entered into an Extrusion Supply Agreement with Royal Group Technologies. However, since the execution of the aforementioned agreement, the Company has elected to use pultrusion technology as opposed to extrusion technology. Although the agreement has not been formally terminated, the Company has no plans to produce its EKO-FLOR product using extrusion technology. A termination fee was not paid by Conforce and the agreement will expire under its natural terms and conditions in December 2010. In 2008, the Company entered into a licensing agreement regarding the use of various patented technologies pertaining to equipment and processes being relied upon in connection with the manufacturing of EKO-FLOR. However, the Company has since altered its equipment and production processes and as such, will no longer rely on the technologies provided for in the aforementioned license agreement. A termination fee was not paid by Conforce and the agreement will expire under its natural terms and conditions in May 2015.


9





EMPLOYEES





Conforce employs 14 fulltime employees.  Six 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 10K.





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.  UNRESOLVED 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.


10


PART II





ITEM 5.  MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER 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.





March 31, 2010

Low price


High priceYear ended

$
0.05


$
0.32Quarter ended

$
0.10


$
0.32





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.


11





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 (“CCC”), 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 has informed shipping lines, leasing companies and trailer manufacturers of its product, EKO-FLOR, and the Company is optimistic about its prospects due to the fact that it has been, and continues to be tested by various trailer manufacturers and shipping lines and has received independent certification as set forth in the Truck and Trailer Manufacturers Association guidelines.





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 2011 while gross margin will be reduced by approximately 5%.


12


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.





PLAN OF OPERATIONS





In fiscal 2011, the Company’s primary focus will be on the commercialization of EKO-FLOR. As a result of projected orders of cs-4 and xts panels, the reliance on revenues from the container terminal will decrease. Accordingly, the Company intends to pursue opportunities as they relate to the aforementioned EKO-FLOR products (as more fully 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.  Furthermore, should volume commitments for its EKO-FLOR products be secured, the Company will consider its options as they relate to the divestiture of the container operations. Management believes that the terminal operations, although once relevant, may detract from the Company’s focus on its projected EKO-FLOR manufacturing initiatives.





Expansion for Conforce is expected to come primarily from sales of EKO-FLOR cs-4 and xts in fiscal 2011 and 2012, where the Company believes that notwithstanding the recent global economic slowdown, significant growth potential exists with the introduction of composite flooring to the transportation industry. Should the container industry in 2011 collectively produce one half of its 2007 new build volume of 3.9 million twenty foot equivalent containers (TEU), the Company would still experience significant growth assuming it is able to secure projected orders of approximately 45,000 TEU or approximately 2.2% of total new build volume. In advance of production orders for cs-4, the Company projects that it will receive orders for xts trailer panels in second quarter of calendar 2010 for production commencing in or around November 2010. Notwithstanding management’s projections and expectations, there are no assurances that these orders will be received.





EKO-FLOR cs-4:    The Company expects that trials with two major shipping lines will be completed in or around October 2010. Once trials are completed and depending on the outcome of such trials, the Company intends to secure EKO-FLOR cs-4 orders for production commencing in or around August 2011. Provided that a combination of volume commitments, letters of intent, supply agreements or other similar written expressions of interest are secured and that such commitments are in-line with Conforce expectations of approximately 45,000 TEU for year one production, then the Company will begin the process of formalizing the details of a financial offering to adequately capitalize the establishment of a company owned facility in Asia. The Company projects that the amount required will be between $8 and $10 million dollars.  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.  At such time as the Company receives volume indications and commitments as described above, then various funding options such as private placements, public offerings, debt financings, or a combination thereof, will be considered. 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:  EKO-FLOR ms-1 is a variation of the cs-4 container flooring panel designed for use as load bearing shelving panels in special application military containers.   Although the initial one-year term of the contract in connection with the sale of ms-1 to the Company’s US military sub-contractor ended in January 2010, Conforce expects that should the US Military require additional product, the Company would receive ms-1 orders under similar terms and conditions as stated in the original agreement between Conforce and its military sub-contractor.





EKO-FLOR xts:  Based on customer evaluations of EKO-FLOR xts, a modified variation of the cs-4 container panel, the Company expects to receive, in the near term, a combination of volume commitments, letters of intent, supply agreements or other similar written expressions of interest. As such, the Company is reviewing its options as they relate to the establishment of a manufacturing facility in the United States. The Company projects that the amount required will be between $7 and $8 million dollars. 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.  As per the process described in the cs-4 section above, the Company, at such time as it receives volume indications and commitments as described above, will consider various funding options such as private placements, public offerings, debt financings, or a combination thereof. However, there are no guarantees that the Company will be able to obtain such funding under reasonable terms, if at all.


The Company intends to apply for dual listing on the OTC Bulletin Board and the OTC Quotation Board at such time as its 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.


13




LIQUIDITY AND CAPITAL RESOURCES





The Company intends to raise, either through a Public Offering of its securities, a Private Placement, the use of Debt financing instruments, or combination thereof, the capital required for the establishment and operation of multi-line EKO-FLOR manufacturing facilities in both Asia and the United States, which combined, are currently estimated to be approximately $18 million.  The company will make the decision in terms of the establishment of these production facilities at such time as volume commitments, letters of intent, supply agreements or other similar written expressions of interest are secured with shipping lines, leasing companies, trailer owners / operators, and container and trailer manufacturers.





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





The Company does not have any agreements in place to finance its operations for the next 12 months, although it is attempting to secure funds, in the amount of approximately $500,000, by way of non-interest bearing, non-callable loans from certain minority founding shareholders. It is anticipated that these shareholders will attempt to raise capital for the aforementioned related party loans through the sale of a portion of their Conforce common stock holdings by way of private transactions with accredited investors.  Proceeds from the sale will be loaned to Conforce, in whole or in part, net of applicable taxes and fees if applicable, at the sole discretion of such minority founding shareholders. Proceeds from these transactions will be used to fund any and all costs associated with the sale, production and development of EKO-FLOR products.


RESULTS OF OPERATIONS





YEAR ENDED MARCH 31, 2010 COMPARED WITH THE YEAR ENDED MARCH 31, 2009





Revenues for the year ended March 31, 2010 were $2,000,424 compared with $1,899,751 for the year ended March 31, 2009.  The increase in revenue is directly attributable to revenue generated by sales of EKO-FLOR military racking, off set with a decline in the service revenue from the container division.





Revenue for the container terminal division consists primarily of handling charges based on movement of containers arriving and departing from the terminal. In addition, revenues are also derived from the facilitation of transportation to and from the terminal on behalf of the customer.  Revenues for the container division for the year ended March 31, 2010 were $1,079,487 compared with $1,553,540 for the year ended March 31, 2009.  This 31% decline in revenue is attributable to the reduction in container storage required as a result of the significant decline in the number of global shipments in 2009.  This global economic decline also intensified local competition which lead to customers shifting terminals to take advantage of unusually low price offerings.





Revenues from the EKO-FLOR division for the year ended March 31, 2010 were $920,937 compared with $346,211 for the year ended March 31, 2009.  The $547,726 increase in the composite product revenues is attributable to the completion of the composite racking contract which commenced in January 2009.  This one year contract accounted for 100% of the composite product revenues during both years with the majority of the contract being delivered in fiscal 2010.


14





Cost of revenue for the year ended March 31, 2010 were $1,391,798 compared with $1,197,954 for the year ended March 31, 2009.  This 16% increase is primarily attributable to the very low margins experienced with the EKO-FLOR racking as a result of the Company’s use of a sub-contracted manufacturing facility for the production of the panels.





Cost of revenue for the container division consists of property and equipment rental, fuel, repairs and maintenance, transportation costs for moving containers and subcontracted services.   For the year ended March 31, 2010 costs of services were $503,345 or 47% of revenues for the container business, compared with $813,224 or 52% for the year ended March 31, 2009.  In  proportion to revenue,  costs of services is reasonably consistent, however, there has been a shift in concentration between the container handling revenue which has higher margins compared with transportation services revenue which has a lower margin.   This shift has off-set the discounting of per unit handling service charges in response to increased competition.





Cost of product for the EKO FLOR division consists of materials and subcontracted services for the manufacture and shipping in order to fulfill the ms-1 purchase order.  For the year ended March 31, 2010 the cost of product was $888,453 or 96% of composite product revenue, compared with $384,730 or 111% for the year end March 31, 2009.  The increased cost is clearly attributable to the increased revenue, however, the improved gross margins is primarily attributable to lower shipping costs to the customer.  The manufacturing costs were outsourced to a single supplier.





Gross profit for the year ended March 31, 2010 was $608,626 compared with $701,797 for the year ended March 31, 2009.   This change in gross profit and gross margin is attributable to the comments noted above.





General and administrative expenses consist of salaries and wages, professional fees and consultants, office supplies, travel and utilities, For the year ended March 31, 2010, general and administrations expenses were $898,171 compared with $820,805 for the year ended March 31, 2009.  The increased general and administration costs are primarily attributable to increased business activity such as salaries and labor in the EKO-FLOR division along with increased accounting and consultant costs associated with the financial reporting.  These costs were off-set by some reduced labor costs in the container terminal division, in response to the decreased volume.





Research and development consists of materials and contracted services associated with the development and testing of the EKO-FLOR product.  For the year ended March 31, 2010, research and development was $57,403 compared with $44,094 for the year ended March 31, 2009.  This increase of $13,309 is consistent with the ongoing development of the composite products and preparation of sample products for customer and independent testing.





Interest on term loan is the interest charged on the CAD $250,000 Small Business Loan financed under the Canada Small Business Financing Act that was closed in January 2009.  For the year ended March 31, 2010, the interest on the term loan was $11,463 compared with $2,165 for the year ended March 31, 2009.  The increase is a direct result of the 12 months interest charge at prime + 3% during 2010, compared with 2 months interest during 2009.





Stock based compensation is the charge applicable to employees and consultants who are compensated by the granting of common shares of the Company rather than cash.  The common shares issued to employees and consultants have been provided by a founding shareholder and are not new common shares issued from treasury.  For the year ended March 31, 2010 the stock based compensation was $132,125 compared with $4,333 for the year ended March 31, 2009.  The increase in the stock based compensation results from the hiring of a Vice-President Business Development effective April 1, 2009 with the first six months compensation being paid entirely with the issuance of common shares provided by the founding shareholder.  Under this arrangement, 400,000 common shares were issued with a fair value of $57,988 based on the trading value of the shares at the date of grant.  In addition, the contract for the Vice-President of Product Development was extended and included the issuance of 400,000 common shares conditional upon the successful certification of EKO-FLOR for commercialization.  The testing for this certification was achieved in January and consequently the 400,000 common shares were issued and $60,524 was expensed as the fair value of these common shares at the date of certification. This grant was in addition to the expense of $5,418 in stock based compensation from the October 31, 2009 extension of the employment agreement.


15


Finally, 85,310 common shares were issued to a service provider in settlement of outstanding invoices.  The fair value of this issuance was $8,195, being the amount of the outstanding invoices settled.





Amortization of plant and equipment is the charge applicable for use of capital assets using a declining balance method of between 20% and 30%.  For the year ended March 31, 2010 amortization of plant and equipment was $126,879 compared with $147,165 for the year ended March 31, 2009.  The $20,286 decrease in the amortization charge is a result of the declining net book value of the plant and equipment, primarily production equipment for the manufacture of the EKO-FLOR composite product.





Foreign exchange expense results for the realized and unrealized exchange gain or loss from holding monetary items denominated in a currency other than the Canadian dollar functional currency or as a result of converting the non-Canadian currency into Canadian dollars.  For the year ended March 31, 2010, the foreign exchange expense was $14,273 compared with a gain of $917 for the year ended March 31, 2009.  This expense arose from carrying U.S. dollar monetary assets and liabilities during the year.  The Company does not have any hedging instruments in place to manage its currency risk other than offsetting receivables with payables whenever possible.





Interest on related party loans is the imputed interest calculated on shareholder loans to the Company that do not have any specific terms of repayment or interest rate.  Given the longer term nature of these loans a fair value discount calculation has been recorded on the loans with the amount charged to contributed surplus.  The discount rate is calculated at the time of the advance from the related parties and ranges between 6.25% and 10% and based on an assumed repayment date of March 31, 2012.  For the year ended March 31, 2010 the interest on related party loans was $51,695 compared with $30,010 for the year ended March 31, 2009.  This $21,685 increase in the imputed interest is attributable to the increased borrowings the Company received during 2010.  As at March 31, 2009, the Company had borrowed $567,633 from related parties. During 2010, the Company borrowed an additional $634,032.





Income tax expense is the combined Federal and Provincial income tax attributable to individual subsidiary companies after adjusting for non-tax related items.  For the year ended March 31, 2010 the income tax expense was $40,811 compared with $12,690 for the year ended March 31, 2009.  Under Canadian tax rules individual subsidiary companies are unable to consolidate for tax purposes.  Consequently, the container terminal division, which is a separate 51% owned subsidiary has profitable operations and consequently taxes payable.  During the year it was noted that there was an under accrual of income tax expense related to prior years, specifically 2006 and 2007.  Consequently a prior period adjustment has been made to correct this under accrual of expense.





The noncontrolling interest is the proportion of net earnings for less than fully owned subsidiaries.  For the year ended March 31, 2010 noncontrolling interest was $58,824 compared with $7,579 for the year ended March 31, 2009.  The noncontrolling interest relates to the container terminal operations.  For the year ended March 31, 2010, the net income of the container terminal division , before noncontrolling interest was $2,868 compared with a net income of $25,752 for the year ended March 31, 2009.





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 $396,004 at March 31, 2010 compared to $400,016 at March 31, 2009, a decrease of $10,152.  In addition there is $263,164 in income taxes payable at March 31, 2010 compared with $121,103 at March 31, 2009.  This increase in accounts payable is attributable to anticipated penalties and taxes.





The term loan payable is $220,817 as at March 31, 2010 compared with $195,713 as at March 31, 2009.  This increase in the term loan reflects the exchange rate used to convert the functional Canadian currency to the U.S. dollar reporting currency.  At March 31, 2009 the exchange rate was $0.7935 compared with $0.9844 (USD per $1 CAD) as at March 31, 2010.


16





The Company had related party loans payable to Marino Kulas, CEO, of $654,981 and a related party loan of $546,684 for a total of $1,201,665 as at March 31, 2010 compared with related party loans payable to the CEO of $527,957 and a related party loan of $39,676 for a total of $567,633 as at March 31, 2009.





The amounts due to shareholder and amounts due to related party are unsecured, non-interest bearing with no specific terms of repayment.  The amounts due to related parties arise from cash advances the shareholder and other related parties made to the Company for the purchase of machinery and equipment, primarily relating to the development of the composite flooring product and to fund ongoing operating activities.





The loans have been advanced at different increments depending on the needs of the Company and repayment is not expected to occur until 2012.  Given the long term nature of these loans, each time an amount is advanced by the shareholder or related party, a fair value calculation has been recorded with the discount on the loan being charged to contributed surplus.   The discount to fair value assumes repayment will be made on March 31, 2012 with imputed interest charged at rates between 6.5% and 10%.   Imputed interest was $51,695 (2009: $30,010)





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not applicable as Conforce is a smaller reporting company.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY 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 DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





In August 2009, the Company was notified that Pollard-Kelly Auditing Services, Inc. were permanently closing its offices and in effect resigning as the Company’s auditors effective immediately.  The Company has subsequently appointed BDO Canada LLP, as its independent auditors.  The Company has not 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 (T).  CONTROLS AND PROCEDURES.





(a) Evaluation of Disclosure Controls and Procedures





As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this Annual report, management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2010. Our principal executive officer and principal financial officer have concluded, based on their evaluation, that as of the end of the period covered by this report, our disclosure controls and procedures were not effective as a result of the material weakness in internal control discussed below.





(b) Management’s Report on Internal Control over Financial Reporting





Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It includes those policies and procedures that:





1.
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;


2.
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of the company; and
 3.
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or deposition of a company’s assets that could have a material effect on its financial statements.


17


Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





The Company’s management has used the criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of the Company’s internal control over financial reporting. Management has selected the COSO framework for its evaluation as it is a control framework recognized by the SEC and the Public Company Accounting Oversight Board, that is free from bias, permits reasonably consistent qualitative and quantitative measurement of the Company’s internal controls, is sufficiently complete so that relevant controls are not omitted, and is relevant to an evaluation of internal controls over financial reporting.





Management of the Company conducted an evaluation of the effectiveness, as of March 31, 2010, of the Company’s internal control over financial reporting based on the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on its evaluation under the COSO Framework, management has concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2010 due to the material weakness noted below.





Identification of a Material Weakness





Management has identified a lack of accounting knowledge within the Company and it’s previously contracted accounting service providers resulting in a number of errors in previously reported financial statements that have subsequently been corrected and the preparation and maintenance of timely and accurate accounts.  Consequently, numerous corrections to the accounting records are required in the preparation of the quarterly and annual financial statements.  Specific areas of concern that were noted include the incorrect recording of transactions, a lack of timely reconciliations and an absence of supporting schedules.





This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report on Form 10-K.





c) Changes in Internal Control Over Financial Reporting





The significant change in our internal controls over financial reporting for the year ended March 31, 2010 is the engagement of the services of a chartered accountant to assist in the preparation of the quarterly and annual financial reporting information.  The Company will be looking to further strengthen the finance and accounting group with a CFO and qualified support staff.





ITEM 9B.  OTHER INFORMATION.





None.


18




PART III
 
 ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS 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
TitleMarino Kulas
44
President & CEO, DirectorMario Verrilli
44
Acting Chief Financial OfficerJoseph DeRose
54
VP of Product DevelopmentKathryn Saliani
56
Director of Business Operations, DirectorSlavko Kulas

Perry Pearlman
49

46
Director of Terminal Operations

Vice President, Business Development





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.





19




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.


Perry Pearlman, Vice President, Business Development. Mr. Pearlman has served in the highway truck and trailer industry for over 20 years. Most recently, Mr. Pearlman worked with industry leader General Electric (GE) where he held the senior position of Canadian General Manager, Trailer Fleet Services. Mr. Pearlman was responsible for the creation and execution of the company’s strategic approach to the remarketing of its highway trailer fleet. Throughout his 14 year career with GE, Mr. Pearlman held various positions including Risk Manager, Transportation Portfolio; Regional Sales Manager for Western Canada; Canadian Product Sales Specialist for GE’s Transport International Poole (TIP) division; and, Product Sales Manager responsible for all aspects of the companies Canadian activities in connection with the Remarketing, Maintenance and Asset Tracking of highway trailers.


20





ITEM 11.  EXECUTIVE COMPENSATION.





March 31, 2010 SUMMARY COMPENSATION




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
2010
45,161
48,849
-
-
-
-
-
94,0102009
86,500
-
-
-
-
-
-
86,500Joseph DeRose

VP of Product Development
2010
21,000
-
60,524
-
-
-
-
81,5242009
45,800
-
9,751
-
-
-
-
55,551Kathryn Saliani

Director of Business Op.
2010
6,096
-
-
-
-
-
-
6,0962009
44,500
-
-
-
-
-
-
44,500Slavko Kulas

Director of Terminal Op.
2010
43,960
-
-
-
-
-
-
43,9602009
24,500
-
-
-
-
-
-
24,500Perry Pearlman

VP of Business

Development
2010
15,000
-
57,988
-
-
-
-
72,9882009
-
-
-
-
-
-
-
-


21




ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL 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 ClassMarino Kulas

40 Bellini Avenue

Brampton, Ontario L6T 3Z8
Common Stock
60,541,000
50.45%Elio Guglietti

28 Anthia Drive

North York, Ontario M9L 1K5
Common Stock
11,700,000
9.7500%Michael Moyal

10520 Yonge St., Suite 298

Richmond Hill, Ontario L4C 3C7
Common Stock
9,017,502
7.51%Slavko Kulas

8870 Martingrove Road

Woodbridge, Ontario L4H 1C2
Common Stock
4,800,000(2)
3.99%Joseph DeRose

60 Crofters Road

Woodbridge, Ontario L4L 7C7
Common Stock
353,333
0.294%Kathryn Saliani

156 Beech Street

Brampton, Ontario L6V 1V6
Common Stock
50,000
0.0417%Perry Pearlman

134 Beverly Glen Blvd.

Thornhill, Ontario L6J 7T6
Common Stock
400,000
0.333%Total
Common Stock
86,861,835
72.38%Directors and Executive Officers
Common Stock
61,344,333
51.12%





(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 transfer of 5,000,000 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.





For the 12 month period ended March 31, 2010, Conforce had a balance of loans outstanding from its founder and CEO and shareholder, Marino Kulas in the amount of $654,981 and related party loans in the amount of $546,684 for a total of $1,201,665.  No interest is payable under these loans, however, they bear an imputed interest rate of between 6.5% and 10%  These loans have no fixed terms of repayment.  By comparison, for the 12 month period ended March 31, 2009, Conforce had a balance of loans outstanding from Marino Kulas on the same terms in the amount of $527,957 and related party loans in the amount of $39,676 for a total of $567,633.





ITEM 14.  PRINCIPAL ACCOUNT ING FEES AND SERVICES.





The audit fees for the fiscal year end March 31, 2010 were $50,260.  During such period, the Company did not incur any other audit-related fees, tax fees or other fees.  The audit fees for the fiscal year end March 31, 2009 were $82,500.


22


PART IV





ITEM 15.  E XHIBITS, FINANCIAL STATEMENT SCHEDULES.





ExhibitNo.
Description23.1
Auditor Certification31.1
Certification pursuant to section 302 of the Sarbanes - Oxley Act of 2002.31.2
Certification pursuant to section 302 of the Sarbanes - Oxley Act of 2002.32.1
Certification of Officer pursuant to section 906 of the Sarbanes - Oxley Act of 2002.32.2
Certification of Officer pursuant to section 906 of the Sarbanes - Oxley Act of 2002.








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.July 12 , 2010
By:
/s/ Marino KulasMarino KulasPresident & CEO




23
  Tel:  905 946 1066

Fax:  905 946 9524

www.bdo.ca
BDO Canada LLP

60 Columbia Way, Suite 300

Markham ON  L3R 0C9  Canada
  
  Auditors' Report
 
 
 To the Shareholders of
 Conforce International Inc.
 
 We have audited the consolidated balance sheets of Conforce International Inc. as at March 31, 2010 and 2009 and the consolidated statements of operations, shareholders’ equity (deficiency) and cash flows for the years then ended.  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 conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also 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 Conforce International Inc. as of March 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended in conformity with United States generally accepted accounting principles.
 
 The accompanying consolidated financial statements have been prepared assuming that Conforce International Inc. will continue as a going concern. As more fully described in Note 2, the Company has incurred recurring losses and its ability to continue as a going concern will depend on its ability to generate positive cash flows from operations or secure additional financing. There can be no assurance that the Company’s activities will be successful or sufficient and these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The 2010 and 2009 financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
 
 As discussed in Note 5 to the consolidated financial statements, the 2009 consolidated financial statements have been restated to correct a misstatement.
  
 Chartered Accountants, Licensed Public Accountants
 Markham, Ontario
 July 8, 2010
 
 
 
 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.


24
 Conforce International Inc.
 CONSOLIDATED BALANCE SHEETS
 As at March 31, 2010 and 2009


20092010


(restated)

(note 5)AssetsCurrent AssetsCash

$
143,138


$
72,232Accounts receivable (note 6)


418,681



397,560Inventory


108,688



64,276Prepaid expenses


16,736



-687,243



534,068Plant and equipment (note 7)


527,422



517,338Intangible assets (note 8)


20,628



20,785Other assets


14,161



16,176$
1,249,454


$
1,088,367LiabilitiesCurrent LiabilitiesAccounts payable and accrued liabilities

$
396,004


$
400,016Income taxes payable


263,164



121,103Shareholder loan payable (note 10)


6,165



-Current portion of term loan (note 9)


23,247



17,785688,580



538,904Deferred rent


36,260



42,334Term loan (note 9)


197,570



177,928Related party loans payable (note 10)


1,043,094



445,5081,965,504



1,204,674Shareholders’ deficiencyShare capital (note 11)


9,157



9,157Contributed surplus


531,825



340,684Accumulated other comprehensive (loss) income


(110,308
)


9,497Accumulated deficit


(1,407,113
)


(677,210
)(976,439
)


(317,872
)Noncontrolling interest


260,389



201,565Total shareholders’ deficiency


(716,050
)


(116,307
)$
1,249,454


$
1,088,367Going concern (note 2)

Commitments (note 12)The accompanying notes are an integral part of these consolidated financial statements.


25
 Conforce International Inc.
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 For the years ended March 31, 2010 and 2009


2010


2009

(restated)

(note 5)Container service revenue

$
1,079,487


$
1,553,540Composite product revenue


920,937



346,2112,000,424



1,899,751Cost of services


503,345



813,224Cost of product revenue


888,453



384,7301,391,798



1,197,954Gross profit


608,626



701,797ExpensesGeneral and administrative


898,171



820,805Research and development


57,403



44,094Stock based compensation (note 11)


132,125



4,333Amortization of plant and equipment


126,879



147,165Amortization of intangible assets


4,813



5,8101,219,391



1,022,207Loss before non-operating items


(610,765
)


(320,410
)Interest on related party loans payable (note 10)


51,695



30,010Interest on term loan


11,463



2,165Interest and bank charges


896



1,017Foreign exchange expense (income)


14,273



(917
)78,327



32,275Loss before income tax


(689,092
)


(352,685
)Income tax expense (note 13)


40,811



12,690Loss


(729,903
)


(365,375
)Noncontrolling interest


58,824



(7,579
)Net loss attributable to Conforce International Inc.


(788,727
)


(357,796
)Other comprehensive (loss) income:Translation adjustment on foreign exchange


(119,805
)


5,555Total comprehensive loss

$
(908,532
)

$
(352,241
)Loss per share - basic and diluted

$
(0.01
)

$
(0.00
)Weighted average number of shares outstanding


120,001,000



120,001,000





The accompanying notes are an integral part of these consolidated financial statements.


26
 Conforce International Inc.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended March 31, 2010 and 2009


2010


2009

(restated)

(note 5)Operating activitiesNet loss attributable to Conforce International Inc.

$
(788,727
)

$
(357,796
)Items not affecting cashAmortization of plant and equipment


126,879



147,165Amortization of intangible assets


4,813



5,810Imputed interest on related party loans payable


51,695



30,010Increase (decrease) in deferred rent


(15,222
)


13,374Stock based compensation


132,125



4,333Noncontrolling interest


58,824



(7,579
)(429,613
)


(164,683
)Changes in non-cash working capital (note 16)


39,089



370,210Net  cash provided by (used in ) operating activities


(390,524
)


205,527Investing ActivitiesPurchase of plant and equipment


(20,097
)


(623,595
)Investment in intangible assets


-



(29,043
)Decrease (increase) in other assets


5,529



(14,297
)Net cash used in investing activities


(14,568
)


(666,935
)Financing ActivitiesProceeds from term loan bank indebtedness


-



221,749Repayment of term loan


(20,582
)


(2,984
)Short term advances from related parties


5,771



-Advances from related parties


511,816



246,307Repayment of related party loans payable


(46,083
)


-Cash provided by financing activities


450,922



465,072Effect of foreign exchange on cash


25,076



(16,084
)Increase (decrease) in cash during the period


70,906



(12,420
)Cash, beginning of period


72,232



84,652Cash, end of period

$
143,138


$
72,232Supplemental cash flow informationCash paid for interest

$
11,463


$
2,165





The accompanying notes are an integral part of these consolidated financial statements.


27
 Conforce International Inc.
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY)
 For the years ended March 31, 2010 and 2009


Common Stock


Contributed


Accumulated


Accumulated

Other

Comprehensive


NoncontrollingShares


Amount


Surplus


Deficit


Income


interest


TotalBalance as at March 31, 2008


120,001,000



9,157



283,259



(291,586
)


5,114



232,792



238,736Prior period adjustments(note 5 )






-



-



(20,249
)


(1,172
)


(23,648
)


(45,069
)120,001,000



9,157



283,259



(311,835
)


3,942



209,144



193,667Stock based compensation






-



4,333



-



-



-



4,333Contributed capital for imputed interest










53,092



-



-



-



53,092Net loss






-



-



(365,375
)


-



-



(365,375
)Noncontrolling interest – restated (note 5)






-



-



-



-



(7,579
)


(7,579
)Translation adjustment – restated (note 5)






-



-



-



5,555



-



5,555Balance as at March 31, 2009


120,001,000



9,157



340,684



(677,210
)


9,497



201,565



(116,307
)Stock based compensation






-



132,125



-



-



-



132,125Contributed capital for imputed interest






-



59,016



-



-



-



59,016Net loss






-



-



(729,903
)


-



-



(729,903
)Noncontrolling interest






-



-



-



-



58,824



58,824Translation adjustment






-



-



-



(119,805
)


-



(119,805
)Balance as at March 31, 2010


120,001,000


$
9,157


$
531,825


$
(1,407,113
)

$
(110,308
)

$
260,389


$
(716,050
)







The accompanying notes are an integral part of these consolidated financial statements.


28
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


1.
DESCRIPTION OF BUSINESS





The Company has two operations, the first is providing handling, storage and transportation of overseas containers for international shipping lines as well as domestic retailers through its 50.1% owned subsidiary Conforce 1 Container Terminals Inc.  The second, is the development, testing and sale of a polymer based composite shipping container flooring product trademarked under the name EKO-FLOR through its 100% owned subsidiary Conforce Containers Corporation.  The composite flooring product has been designed to provide an environmentally friendly product to increase container versatility while reducing shipping costs.





The Company was incorporated on May 18, 2004 in the state of Delaware as Now Marketing Corp. and was renamed on May 25, 2005 to Conforce International Inc.





2.
GOING CONCERN





These consolidated financial statements have been prepared on the basis of United States generally accepted accounting principles ("GAAP") applicable to a 'going concern', which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. For the year ended March 31, 2010 the Company had net cash outflows from operations of $390,524 and will require additional funding which, if not raised, may result in the curtailment of activities. The Company has incurred a net loss of $788,727 for the year ended March 31, 2010 and has an accumulated deficit of $1,407,113 as at March 31, 2010. The Company's ability to continue as a going concern depends on its ability to generate positive cash flow from operations or secure additional debt or equity financing.





Management regularly reviews and considers the current and forecast activities of the Company in order to satisfy itself as to the viability of operations. These ongoing reviews include consideration of current orders and future business opportunities, current development and production activities, customer and supplier exposure and forecast cash requirements and balances. Based on these evaluations management believes that the Company will be able to secure additional financing in order to continue as a going concern for the next twelve months.





There can be no assurances that the Company's activities will be successful or sufficient and as a result there is doubt regarding the "going concern" assumption and, accordingly, the use of accounting principles applicable to a going concern. These consolidated financial statements do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate. If the "going concern" assumption were not appropriate for these consolidated financial statements, then adjustments to the carrying values of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications, which could be material, would be necessary.





3.
BASIS OF PREPARATION




The accompanying consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP.  All amounts are reported in U.S. dollars unless otherwise stated.





Principles of Consolidation


The Consolidated financial statements include the accounts of the Company and its wholly and partially owned subsidiaries.  All intercompany transactions and balances have been eliminated on consolidation.





Use of Estimates


The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.





Significant estimates made by management of the Company include, an estimate of applicable interest rate for related party loans payable, uncollectible accounts receivable, and valuation allowances for deferred income tax assets.


29
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


Cash


Cash consists of cash on deposit and is designated as held-for-trading and carried at fair value. Changes in fair value are recorded in earnings.





Trade Accounts Receivable


The majority of the Company’s accounts receivable are due from large well established businesses. Credit is extended based on evaluation of a customer’s financial condition and accounts receivable are typically due within 30 days and are stated at amounts due from customers net of any allowances for doubtful accounts. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes-off accounts receivable when they become uncollectable, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Interest is not accrued on past due receivables.  As at March 31, 2010 and 2009, no accounts receivable were considered at risk and the allowance for doubtful accounts was consequently nil.





Inventories


Raw materials, work-in-progress and finished goods are valued at the lower of cost, determined on a first-in first-out basis, and replacement value.





Plant and Equipment


Plant and equipment are recorded at cost less accumulated amortization and are amortized from the date of acquisition or, in respect of internally constructed assets, from the time an asset is substantially completed and ready for use.  Amortization is computed using the declining balance method as follows:





Office equipment

20% per annum declining basisVehicles

30% per annum declining basisMachinery and equipment

20% per annum declining basis





Leasehold improvements are amortized on a straight-line basis over the term of the lease.




The Company reviews the recoverability of the carrying amount of plant and equipment when events or circumstances indicate that the carrying amounts may not be recoverable. This evaluation is based on projections of future undiscounted net cash flows. The total of these projected net cash flows is referred to as the “net recoverable amount.” If the net recoverable amount is less than the carrying value, the asset is written down to fair value.





Intangible assets with finite useful lives


The Company’s intangible assets consist of intellectual property and are considered to have a finite useful life. As a result the intangible assets are amortized on a 20% per annum declining basis.





Management reviews the amortization method and useful life estimate annually. The carrying amount of intangible assets are reviewed when events or circumstances indicate that the carrying amount may not be recoverable. This evaluation is based on projections of future undiscounted net cash flows. The total of these projected net cash flows is referred to as the “net recoverable amount.” If the net recoverable amount is less than carrying value, the asset is written down to fair value.





Revenue Recognition


Service revenues are recognized when there is persuasive evidence of an arrangement, services rendered, the amount is fixed or determinable, and collection is reasonably assured.  Revenue is recorded net of any applicable sales and value added taxes and customer discounts.





Product revenues are recognized when there is persuasive evidence of an arrangement, goods have been delivered, the amount is fixed or determinable, and collection is reasonably assured.  Revenue is recorded net of any applicable sales and value added taxes and customer discounts.


30
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


Research and Product Development Costs


Research costs and costs incurred in applying for patents and licenses are expensed as incurred. Product development costs are expensed as incurred until the product or process is clearly defined and the associated costs can be identified, technical feasibility is reached, there is an intention to produce or market the product, the future market is clearly defined and adequate resources exist or are expected to be available to complete the project. To date, no product development costs have been capitalized.





Stock-Based Compensation


The Company has agreements in place with certain senior management to compensate them through the direct issuance of common shares.  For the year ended March 31, 2010, 846,667 common shares have been issued or accrued by the current shareholders to management in satisfaction of these agreements.  These stock based payments have been expensed by the Company over the period in which service has been rendered.





Income Taxes


Income taxes are recorded using the liability method.  Deferred income tax amounts arise due to temporary differences between the accounting and income tax basis of the Company’s assets and liabilities and the unused tax losses of the Company. Deferred income tax assets and liabilities are measured using substantively enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates and laws is recognized in the period that includes the date of substantive enactment. Deferred income tax assets are recognized to the extent that realization of such benefits is considered to be more likely than not.





Foreign Currency Translation


Transactions denominated in currencies other than the Canadian functional currency are translated into Canadian dollars at the average rate of exchange for the period.





For reporting purposes, assets and liabilities are translated into US dollars at the period-end exchange rates, and the results of its operations are translated at the average rate of exchange for the period. The resulting translation adjustments are recorded in accumulated other comprehensive income.





Net Loss Per Share


Net loss per common share is presented in accordance with Accounting Standards Codification (“ASC”) 260,Earnings Per share(“ASC 260”).  Basic loss per common share is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.    Diluted loss per common share is equal to the basic loss per common share as there are no potentially dilutive securities outstanding.





4.
NEW ACCOUNTING STANDARDS




In December 2007, the FASB issued ASC 810, "Non-controlling Interests in Consolidated Financial Statements- an amendment of ARB No. 51", ("ASC 810"). ASC 810 requires (i) that non-controlling (minority) interests be reported as a component of shareholders' equity, (ii) that net income attributable to the parent and to the non-controlling interest be separately identified in the consolidated statement of operations, (iii) that changes in a parent's ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (iv) that any retained non-controlling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value, and (v) that sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. ASC 810 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. The presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. The Company adopted ASC 810 on April 1, 2009.   Consequently, the loss attributed to the noncontrolling interest has been increased by $45,969 to reflect the foreign currency translation adjustment applicable to the noncontrolling interest.




In December 2007, the FASB issued Statement ASC 805 “Business Combinations”. The standard retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. ASC 805 is effective for the Corporation beginning April 1, 2009 and will apply prospectively to business combinations completed on or after that date.


31
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


In April 2008, the FASB issued guidance that amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The guidance is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position.




In April 2009, the FASB issued guidance concerning interim disclosures about fair value of financial instruments requiring publicly traded companies to provide disclosure about the fair value of financial instruments whenever interim summarized financial information is reported. Previously, disclosures about the fair value of financial instruments were only required on an annual basis. Disclosure shall include the method(s) and significant assumptions used to estimate the fair value of financial instruments and shall describe changes in method(s) and significant assumptions, if any, during the period. This guidance was effective for interim and annual periods ending after June 15, 2009, and, as such, the Company has adopted this disclosure. See note 10.


In May 2009, the FASB issued guidance regarding the disclosure of subsequent events. This guidance made no changes to current accounting but added required disclosures regarding the date through which the Company has evaluated subsequent events and whether that evaluation date is the date of financial statement issuance or the date the financial statements were available to be issued. This guidance was effective, and was adopted by the Company, for interim and annual periods ending after June 15, 2009.  This standard originally required the Company to disclose the date through whichsubsequent events have been evaluated. However, on February 24, 2010, the FASB issued ASU No. 2010-09,SubsequentEvents(Topic 855): Amendments to Certain Recognition and Disclosure Requirements, which became effective upon issuance and which removed the requirement for an SEC registrant to disclose the date through whichsubsequent eventshave been evaluated.




In June 2009, the FASB approved the “FASB Accounting Standards Codification” (the “Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered not authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. Adoption by the Company is not expected to lead to any material impact on its consolidated financial position, results of operation or cash flows.





5.
RESTATEMENT OF PREVIOUSLY REPORTED FINANCIAL STATEMENTS





In connection with the application of the ASC 810 “Noncontrolling interests in Consolidated Financial Statements”,the previously reported financial statements have been restated in accordance with this standard to reflect the retroactive presentation of this standard.  The application of this standard allocates a portion of the accumulated other comprehensive income applicable to the noncontrolling interest in subsidiary.





In connection with the preparation of the March 31, 2010 financial statements, it was noted that the income tax expense was understated for the year ended March 31, 2006.  This error impacted the financial statements as summarized below:




32
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


Consolidated Balance Sheet


March 31, 2009As previously

reported


As restatedIncome taxes payable

$
84,601


$
121,103Accumulated other comprehensive income

$
39,049


$
9,497Accumulated deficit

$
(669,816
)

$
(677,210
)Noncontrolling interest

$
201,121


$
201,565






Consolidated Statement of Operations


March 31, 2009As previously

reported


As restatedNoncontrolling interest

$
12,855


$
(7,579
)Net loss attributable to Conforce International Inc.

$
(378,230
)

$
(357,796
)Translation adjustment on foreign exchange

$
33,935


$
5,555Total comprehensive loss

$
(344,295
)

$
(352,241
)





Consolidated Statement of Cash Flows


March 31, 2009As previously

reported


As restatedNet loss attributable to Conforce International Inc.

$
(378,230
)

$
(357,796
)Noncontrolling interest

$
12,855


$
(7,579
)





6.
ACCOUNTS RECEIVABLE





Accounts receivable for the year ended March 31:


2010


2009Trade accounts receivable

$
321,684


$
318,576Goods and services tax receivable


96,997



78,984$
418,681


$
397,560





Within the trade accounts receivable balances for 2010, 89% of the balance is due from 2 customers.  Within the trade receivable balance for 2009, 97% of the balance is due from 4 customers.





7.
PLANT AND EQUIPMENT





As at March 31, 2010 the net book value of the plant and equipment is as follows:


AccumulatedCost


amortization


Net book ValueOffice equipment

$
25,936


$
12,093


$
13,843Vehicles


23,306



17,377



5,929Machinery and equipment


831,999



334,543



497,456Leasehold improvements


27,442



17,248



10,194$
908,683


$
381,261


$
527,422





As at March 31, 2009 the net book value of the plant and equipment is as follows:


AccumulatedCost


amortization


Net book ValueOffice equipment

$
19,328


$
6,958


$
12,370Vehicles


17,886



11,959



5,927Machinery and equipment


655,821



169,421



486,400Leasehold improvements


22,120



9,479



12,641$
715,155


$
197,817


$
517,338




33
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009




8.
INTANGIBLE ASSETS





As at March 31, 2010, the net book value of intangible assets are follows:


AccumulatedCost


amortization


Net book ValueTrade marks

$
32,233


$
11,605


$
20,628




As at March 31, 2009 the net book value of intangible assets are follows:


AccumulatedCost


amortization


Net book ValueTrade marks

$
25,983


$
5,198


$
20,785




9.
TERM LOAN





In November 2008, the company entered into a loan agreement in the amount of CAD $ 250,000 under the Canada Small Business Financing Act for the purchase of machinery and equipment to be used in the manufacturing of the composite flooring.  The loan is secured with a first charge on the equipment purchased and a CAD $62,500 personal guarantee provided by the CEO.





The term of the loan is ten years with interest at a floating rate of prime + 3%.  The minimum blended loan and re- payments for the next 5 years and thereafter, assuming, the floating interest rate remains constant at 5.25% are as follows:




Repayment of the term loan for the twelve month period ended March 31,





2011

$
23,2472012


24,4972013


25,8152014


27,2032015


28,666Thereafter


91,389Total amount payable


220,817Less Current portion


23,247$
197,570




34
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


10.
RELATED PARTY LOAN PAYABLE AND RELATED PARTY TRANSACTIONS





March 31, 2010


March 31, 2009Due to shareholder

$
654,981


$
527,957Due to related party


546,684



39,6761,201,665



567,633Less: discount to fair value


(158,571
)


(122,125
)$
1,043,094


$
445,508





The amounts due to shareholder and amounts due to related party are unsecured, non-interest bearing with no specific terms of repayment.  The amounts due to related parties arise from cash advances the shareholder and other related parties made to the Company for operating capital and the purchase of machinery and equipment, primarily relating to the development of the composite flooring product.





The loans have been advanced at different increments depending on the needs of the Company and repayment is not expected to occur until 2012.  Given the long term nature of these loans, each time an amount is advanced by a related party, a fair value calculation has been recorded with the discount on the loan being charged to contributed surplus.   The discount to fair value assumes repayment will be made on March 31, 2012 with imputed interest charged at rates between 6.25% and 10%.   Imputed interest charged during the year ended March 31, 2010 was $51,695 (2009: $30,010).





During the year a related party paid some operating expenses on behalf of the Company resulting in short term amount payable to the related party.  This amount has no specific terms of repayment or interest and will be paid within the following fiscal year.  The amount outstanding at March 31, 2010 is $6,165 (2009: Nil).





The Company rents equipment used in the terminal operations on a month-to-month basis from a company owned by a relative of the CEO.  Rent expense for the year ended March 31, 2010 was $77,031 (2009: $66,927).    The rental rate paid by the Company to the related party is felt by management to be at market rates.





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





11.
SHARE CAPITAL





Preferred Shares


At March 31, 2010, the Company had authorized 5,000,000 preferred shares with a par value of $.0001 per share and may be issued in designated series from time to time by one or more resolutions adopted by the Board of Directors.





As at March 31, 2010 and March 31, 2009 no preferred shares were issued and outstanding.





Common Stock


At March 31, 2010 and March 31, 2009, the Company had authorized 250,000,000 shares of Common Stock at a par value of CAD $.0001 per share.





As at March 31, 2010 and March 31, 2009, there were 120,001,000 shares issued and outstanding.





Stock Transactions


On October 31, 2008, the Company extended the VP Product Development’s employment agreement for twelve months to October 31, 2009.  Under this extension, the Company agreed to provide 320,000 common shares at the end of the period provided certain performance criteria is satisfied in connection with the development and commercialization of EKO-FLOR products.  If required, a founding shareholder of Conforce has agreed to provide the common shares in satisfaction of this agreement.   At March 31, 2009, the performance criteria were not satisfied in connection to the development of the EKO-FLOR product and no common shares were transferred to the VP Product Development.    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.  A founding shareholder agreed to provide these additional common shares.   As at March 31, 2009, a total of 33,333 common shares were expensed under this provision with a fair value of $4,333 based on the trading value of shares as at March 31, 2009.  For the year ended March 31, 2010, the remaining 46,667 shares were expensed with a fair value of $5,418.


35
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009





In March 2009, effective April 1, 2009, the Company entered into an employment agreement with its Vice- President Business Development for an initial term of twelve months.  For the first six months of this agreement the VP Business Development would be entitled to 400,000 common stock in lieu of cash compensation.  A founding shareholder of Conforce has agreed to provide the common shares in satisfaction of this agreement.  As at March 31, 2010, the 400,000 common shares have been expensed under this agreement with a fair value of $57,988, based on the trading value at the date of grant, being April 1, 2009.





In November 2009, the Company extended the VP Product Development’s employment agreement to April 30, 2010.  Under the terms of this extension, the Company agreed to provide 400,000 common shares conditional upon the successful certification of the EKO-FLOR for commercialization.  A founding shareholder agreed to provide these common shares.  The certification testing was completed in January 2010, and the 400,000 common shares are considered compensation.  The fair value of these shares is $60,524, based on the trading value at the date the certification was complete.





In January 2010, the Company agreed to issue 85,310 common shares to a service provider in settlement of outstanding invoices in lieu of cash.  A founding shareholder agreed to provide these shares. The fair value of the shares is $8,195, being the outstanding amount of the invoices settled.


12.
COMMITMENTS





The Company leases office space under a five year lease which runs through April 2012.  Monthly lease payments are approximately $3,915.





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 of approximately $15,267 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 approximately $9,407 and will run until December 2011.





Future lease commitments for the fiscal years ending:





2011

$
365,0282012


190,5802013


10,942$
566,550






13.
INCOME TAXES




The provision for income taxes for the years ended March 31 consists of the following:


2010


2009Current income tax

$
40,811


$
12,690Deferred income tax expense (benefit)


-



-Provision for income taxes

$
40,811


$
12,690




36
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009




The reconciliation of income tax expense (benefit) for the years ended March 31 computed combined federal and provincial statutory rate to income tax expense (benefit) is as follows:




2010


2009Income tax benefit at combined statutory tax of 33%

$
(227,401
)


(116,386)Permanent differences, net


27,907



22,306Other


4,736



-Changes in valuation allowance


235,569



81,390Income tax expense

$
40,811


$
12,690




The significant components of the deferred tax accounts recognized for financial reporting purposes are as follows:




2010


2009Net operating loss and other carry forwards

$
272,310


$
31,848Property and equipment amortization


86,409



48,743Intangible asset amortization


2,432



799361,151



81,390Valuation allowance


(361,151
)


(81,390
)Total deferred tax assets

$
-


$
-





As at March 31, 2010 the Company had net operating loss carry forwards of approximately $878,418 for both Federal and Provincial tax purposes, which expire in varying amounts between 2018 and 2020.  The Company’s net deferred tax asset has been offset by a valuation allowance of the same amount. The valuation allowance has been recorded due to the uncertainty of realization of the deferred tax asset.


14.
FINANCIAL INSTRUMENTS





The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable and debt instruments including related party loans payable. The carrying values of financial instruments, other than debt instruments, are representative of their fair values due to their short-term maturities. The carrying values of the Company’s long-term debt instruments excluding related party loans are considered to approximate their fair values because the interest rates of these instruments are variable or comparable to current rates offered to the Company.





Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has determined that there were no assets or liabilities that fall into the “Level 1” category, which values assets at the quoted prices in active markets for identical assets. The Company has determined that there were no assets or liabilities that fall into the “Level 2” category, which values assets and liabilities from observable inputs other than quoted market prices. The Company’s related party loans fall into “Level 3” category, which values assets and liabilities from inputs that are generally less observable from objective sources.  The fair value of the Company’s related party loans have been determined by discounting the loans based on inputs from the Company’s other debt instruments and expensing the imputed interest over a range of periods up to fiscal 2012.  The fair value of the Company’s related party loans totalled $1,043,094 as of March 31, 2010 and $445,508 as of March 31, 2009.


37
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009


15.
BUSINESS SEGMENTS





The Company operated in two reportable business segments; Container Terminal and EKO-FLOR.  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 and an order from one customer.





Business Segments - For the Year ended March 31, 2010:


ContainerTerminals


EKO-FLOR


ConsolidatedRevenues

$
1,079,487


$
920,937


$
2,000,424Costs of services and product revenue


503,345



888,453



1,391,798Interest expense and bank charges


28,463



35,591



64,054Amortization of long lived assets


19,656



112,036



131,692Income tax expense


40,811



-



40,811Other expenses


484,344



617,628



1,101,972Noncontrolling interest


58,824



-



58,824Net loss

$
(55,956
)

$
(732,771
)

$
(788,727
)





Total Assets, March 31, 2010





Container Terminals

$
415,961EKO-FLOR


833,493Consolidated Total Assets

$
1,249,454





For the year ended March 31, 2010, 90% of the Container Terminal revenue is generated from 2 major customers and 100% of the EKO-FLOR composite revenue is generated from a single customer.





Business Segments - For the year ended March 31, 2009:




ContainerTerminals


EKO-FLOR


ConsolidatedRevenues

$
1,553,540


$
346,211


$
1,899,751Costs of services and product revenue


813,224



384,730



1,197,954Interest expense and bank charges


25,304



7,888



33,192Amortization of long lived assets


22,447



130,528



152,975Income tax expense


12,690



-



12,690Other expenses


654,123



214,192



868,315Noncontrolling interest


(7,579
)


-



(7,579
)Net loss

$
33,331


$
(391,127
)

$
(357,796
)





Total Assets, March 31, 2009





Container Terminals

$
353,966EKO-FLOR


734,401Consolidated Total Assets

$
1,088,367





For the year ended March 31, 2009, 95% of the container terminal revenue was generated by three major customers and 100% of the EKO-FLOR revenue was generated by a single customer.




38
 Conforce International Inc.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended March 31, 2010 and 2009




16.
CHANGES IN NON-CASH WORKING CAPITAL




2010


2009Accounts receivable

$
69,996


$
219,708Inventory


(27,101
)


(71,847
)Prepaid expenses


(15,668
)


-Accounts payable and accrued liabilities


(93,859
)


176,808Income taxes payable


105,721



45,541$
39,089


$
370,210




17.
COMPARATIVE STATEMENTS





The comparative figures may be reclassified to conform with the current year’s presentation.


39


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