UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2015

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission File Number: 333-199205

 

ORBIS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada

(State or other jurisdiction of

incorporation or organization)

 

100 Peffer Law Circle
Brampton, Ontario
Canada		L6Y 0L6
(Address of principal executive offices)		(Zip Code)

 

(647) 308-5963

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

 

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 definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)

 

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

 

As of August 19, 2015, there were 83,200,000 shares of the registrant’s common stock issued and outstanding.

 

 

 

ORBIS CORPORATION

 

INDEX

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	F-1
	Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014	F-1
	Consolidated Statements of Operations and Other Comprehensive Income (Loss) for the Three Months and Six Months Ended June 30, 2015 and 2014 (Unaudited)	F-2
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (Unaudited)	F-3
	Condensed Notes to Consolidated Financial Statements (Unaudited)	F-4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 4.	Mine Safety Disclosures	10
Item 5.	Other Information	10
Item 6.	Exhibits	11
Signatures		12

 

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this quarterly report on Form 10-Q. Additionally, statements concerning future matters are forward-looking statements.

 

Although forward-looking statements in this quarterly report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended December 31, 2014, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report on Form 10-Q and in other reports that we file with the Securities and Exchange Commission (the “SEC”). You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report on Form 10-Q.

 

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with, or furnish to, the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this quarterly report on Form 10-Q, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ORBIS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

		June 30, 2015				December 31, 2014
		(Unaudited)
ASSETS
Current Assets:
Cash		$	55,046			$	20,052
Accounts receivable, net			87,077				37,325
Due from factor			1,664				3,353
Total Current Assets			143,787				60,730
Total Assets		$	143,787			$	60,730
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable		$	24,152			$	-
Accrued expenses			20,361				44,568
Accrued interest payable			4,131				1,709
Due to sub-contractors			45,703				17,962
Loan payable to factor			77,768				33,592
Advances from officer			25,702				-
Compensation payable to officer			4,605				-
Sales tax payable			70,834				45,789
Convertible notes payable			48,833				48,833
Total Current Liabilities			322,089				192,453
Total Liabilities			322,089				192,453
Stockholder’s Deficit:
Common stock $0.0001 par value; 500,000,000 shares authorized; 81,000,000 shares and 75,000,000 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively			8,100				7,500
Additional paid in capital			52,260				(7,140	)
Accumulated deficit			(248,199	)			(139,427	)
Accumulated other comprehensive income			9,537				7,344
Total Stockholder’s Deficit			(178,302	)			(131,723	)
Total Liabilities and Stockholder’s Deficit		$	143,787			$	60,730

 

See accompanying condensed notes to the unaudited consolidated financial statements.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

		For The Three Months Ended June 30,								For The Six Months Ended June 30,
		2015				2014				2015				2014
Revenue		$	116,883			$	62,239			$	216,700			$	106,252
Cost of revenue			115,094				35,312				190,057				67,707
Gross Profit			1,789				26,927				26,643				38,545
Operating Expenses:
Officer’s compensation			9,059				11,835				27,407				19,796
Professional fees			21,909				36,918				62,966				36,918
General and administrative			24,733				4,510				34,585				5,200
Total Operating Expenses			55,701				53,263				124,958				61,914
Loss from Operations			(53,912	)			(26,337	)			(98,315	)			(23,369	)
Other Income (Expenses):
Factoring fees			(3,424	)			(2,070	)			(8,035	)			(2,772	)
Interest expense			(1,218	)			-				(2,422	)			-
Total Other Income (Expenses)			(4,642	)			(2,070	)			(10,457	)			(2,772	)
Net Loss		$	(58,554	)		$	(28,405	)		$	(108,772	)		$	(26,141	)
Other Comprehensive Income (Loss):
Net loss			(58,554	)			(28,406	)			(108,772	)			(26,141	)
Unrealized foreign currency translation gain (loss)			(2,971	)			(60	)			2,193				179
Total Other Comprehensive Income (Loss)		$	(61,525	)		$	(28,466	)		$	(106,579	)		$	(25,962	)
Net Loss Per Common Share - Basic and Diluted		$	-			$	-			$	-			$	-
Weighted Average Shares Outstanding - Basic and Diluted			76,626,374				75,000,000				75,817,680				75,000,000

 

See accompanying condensed notes to the unaudited consolidated financial statements.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the six months ended June 30,
		2015				2014
Cash Flows From Operating Activities:
Net loss		$	(108,772	)		$	(26,141	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in assets and liabilities:
Accounts receivable			(50,525	)			(11,744	)
Accounts payable and accrued expenses			1,051				12,588
Accrued interest payable			2,422				-
Due to officer			27,476				-
Due to subcontractors			31,674				(3,485	)
Sales tax payable			27,777				5,276
Net Cash Used In Operating Activities			(68,897	)			(23,506	)
Cash Flows From Financing Activities:
Loan proceeds from (repayments to) factor, net			46,215				8,475
Cash proceeds from sale of stock			60,000				-
Loan proceeds from officer			-				24,985
Net Cash Provided by Financing Activities			106,215				33,460
Effect of Exchange Rate Changes on Cash			(2,324	)			294
Net Increase in Cash			34,994				10,248
Cash, Beginning of Period			20,052				8,393
Cash, End of Period		$	55,046			$	18,641
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-

 

See accompanying condensed notes to the unaudited consolidated financial statements.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN

 

Nature of Operations

 

Orbis Corporation was incorporated in January 2014 to reorganize Ceberus Distribution & Courier Services, Inc. which was incorporated under the laws of the Province of Ontario on June 5, 2009. The consolidated entity is referred to as “the Company”. The Company provides distribution and courier services primarily for the medical field and currently operate only in Canada.

 

The reorganization, which occurred in July 2014, is retroactively reflected in the accompanying consolidated financial statements and footnotes for all periods presented.

 

Basis of Presentation

 

The accompanying interim consolidated financial statements are unaudited, but in the opinion of management of the Company, contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at June 30, 2015, and the results of operations and cash flows for the three months and six months periods ended June 30, 2015. The balance sheet as of December 31, 2014 is derived from the Company’s audited consolidated financial statements.

 

Certain information and footnote disclosures normally included in consolidated financial statements that have been prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these interim consolidated financial statements are adequate to make the information presented therein not misleading. For further information, refer to the consolidated financial statements and the notes thereto contained in the Company’s 2014 Annual Report filed with the Securities and Exchange Commission on Form 10-K on April 9, 2015.

 

Going Concern

 

As reflected in the accompanying consolidated financial statements, the Company had a net loss of $108,772 for the six months ended June 30, 2015 and cash used in operating activities of $68,897 for the six months ended June 30, 2015. The Company had a working capital deficit of $178,302, accumulated deficit of $248,199 and stockholders’ deficit of $178,302 as of June 30, 2015. These matters raise a substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and raise capital. Ultimately, the continuation of the Company as a going concern is dependent upon the ability of the Company to generate sufficient revenue and to attain profitable operations. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Orbis Corporation and its wholly-owned subsidiaries, Ceberus Distribution & Courier Services, Inc. located in Canada, and Orbis Logistics Limited, a recently formed inactive subsidiary located in the United Kingdom. All intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the accompanying consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets and estimates of sales taxes payable. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

Significant Customers and Concentration of Credit Risk

 

During the three months and six months ended June 30, 2015 and 2014, one customer accounted for 100% of total sales. At June 30, 2015 and December 31, 2014, the same one customer accounted for 100% of accounts receivable.

 

Geographic Concentration of Business

 

During the three months and six months periods ended June 30, 2015 and 2014, the Company provided point-to-point delivery service of medical specimens to and from hospitals, medical laboratories and medical centers across the Greater Toronto Area and surrounding areas including York Region, Durham Region and Peel Region.

 

Fair Value of Financial Instruments and Fair Value Measurements

 

We measure our financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for loans payable also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same.

 

We follow accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

Accounts Receivable and Factoring

 

Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the accounts, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances.

 

The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability “Loan payable to factor” on our consolidated balance sheet.

 

Revenue Recognition

 

The Company recognizes revenue upon delivery of shipments for our distribution and courier services business. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery services have been rendered, the price is fixed or determinable and collectability is reasonably assured. The Company’s specific revenue recognition policies are as follows:

 

The Company recognizes revenue from the weekly billing it performs based on the number of hours driven on various routes and evidenced by the customer authorization and acceptance of completed routes and any special runs authorized by the customer.

 

Cost of Revenue

 

Cost of revenue includes subcontractor expenses which are amounts paid or due to courier drivers and the costs of fuel and vehicle maintenance.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

Income Taxes

 

The Company’s operating subsidiary is governed by Canadian income tax laws, which are administered by the Canada Revenue Agency, and the parent holding company is governed by U.S. tax laws.

 

The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

 

The Company adopted provisions of ASC 740, Sections 25 through 60, “Accounting for Uncertainty in Income Taxes.” These sections provide detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of ASC 740 and in subsequent periods. Upon the adoption of ASC 740, the Company had no unrecognized tax benefits. During the three months and six months ended June 30, 2015 and 2014, no adjustments were recognized for uncertain tax benefits. The years 2009 through 2014 are subject to examination by the Canada Revenue Agency.

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per share (EPS) are computed by dividing net earnings (loss) by the weighted average number of common shares outstanding. The dilutive EPS adds the dilutive effect of stock options, warrants and other common stock equivalents. As of June 30, 2015 and December 31, 2014, there were $48,833 of convertible notes principal balance that was convertible into 4,883,300 shares of common stock. The effect of these common stock equivalents is anti-dilutive due to the Company’s net loss.

 

Foreign Currency Translation

 

The accompanying consolidated financial statements are presented in U.S. Dollars (“USD”). The reporting currency of the Company is the USD. The functional currency of the Company’s operating subsidiary is Canadian Dollar (CAD). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the spot exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into USD are included in determining comprehensive income (loss). The foreign currency translation adjustment included in comprehensive income and loss for the three months and six months periods ended June 30, 2015 resulted in a loss of $2,971 and a gain of $2,193, compared to a loss of $60 and a gain of $179 for the comparable periods in 2014.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the results of operations as incurred.

 

As of June 30, 2015 and December 31, 2014, the exchange rates used to translate amounts in Canadian Dollars into USD for the purposes of preparing the financial statements were as follows:

 

		June 30, 2015				December 31, 2014
Exchange rate on balance sheet dates CAD : USD exchange rate			0.8093				0.8599
Average exchange rate for the period CAD : USD exchange rate			0.8104				0.9058

 

Recent Issued Accounting Standards

 

The Company implemented all new accounting standards that are in effect and that may impact the consolidated financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on the consolidated financial position or results of operations.

 

NOTE 3 – ACCOUNTS RECEIVABLE AND FACTORING

 

In March 2013, the Company entered into an agreement with a Factoring company whereby the Company will assign, in the Factor’s sole discretion, selected accounts receivable to the Factor in exchange for initial cash funding (“factor advances”) for 90% of the factored receivable. The minimum 10% reserve held back by the Factor is released, less fees, after collection of the account receivable by the Factor. The Company pays a factor fee of one tenth of a percent (0.10%) daily of the face value of submitted invoices. Since the factoring agreement provides for full recourse against the Company for factored accounts receivable that are not collected by the Factor for any reason, and the collection of such accounts receivable are fully secured by substantially all assets of the Company, the factoring advances at June 30, 2015 and December 31, 2014 which have been treated as secured loans on the accompanying consolidated balance sheets were $77,768 and $33,592, respectively. The total accounts receivable factored for the six months ended June 30, 2015 and 2014 were $216,494 and $106,237, respectively. The factor fees incurred for the three months and six months ended June 30, 2015 and 2014 were $3,424 and $8,035 as compared to factor fees of $2,070 and $2,772 for the same periods in 2014. Total outstanding accounts receivable factored at June 30, 2015 and December 31, 2014 which is included in Accounts Receivable on the accompanying balance sheets were $87,077 and $37,325, respectively. The holdback amount due from the factor related to accounts receivable that the factor has collected as of June 30, 2015 and December 31, 2014 was $1,664 and $3,353, respectively.

 

Accounts Receivable as of June 30, 2015 and December 31, 2014 are as follows:

 

		June 30, 2015				December 31, 2014
		(Unaudited)
Factored Accounts Receivable		$	87,077			$	37,325
Allowance for doubtful accounts			-				-
Accounts receivable, net		$	87,077			$	37,325

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

NOTE 4 – SALES TAX PAYABLE

 

Harmonized Sales Taxes “HST”

 

HST is a consumption tax in Canada. These taxes are considered “value added” taxes as they are based on net sales and purchases of goods and services. The Company has estimated the HST payable and related interest and penalties payable for the periods ended:

 

		June 30, 2015				December 31, 2014
		(Unaudited)
HST Payables		$	67,702			$	42,461
Penalties and interest payable			3,132				3,328
Total HST payable		$	70,834			$	45,789

 

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

 

On January 15, March 29, April 16, August 13, and September 25, 2014, the following amounts were paid by a third party on behalf of the Company for legal, accounting and auditing services provided to Ceberus: $12,371 (legal), $9,500 (accounting) and $26,962 (auditing). On August 14, 2014 and September 26, 2014, Convertible Promissory Notes (“Notes”) in the amounts of $36,918 and $11,915, respectively, for a total of $48,833, were executed to memorialize the obligations of Orbis to repay the funds. The terms of the Notes are as follows:

 

Principal and Interest

 

Interest shall accrue on the unpaid principal balance and any unpaid late fees or other fees under these Notes at a rate of ten percent (10%) per annum until the full amount of the principal and fees has been paid. The entire unpaid principal balance and all accrued and unpaid interest, if any, under this Note, shall be due and payable on the date that is 180 days from the note date. Accrued interest payable at June 30, 2015 and December 31, 2014 amounted to $4,131 and $1,709, respectively. Interest expense for the three months and six months periods ended June 30, 2015 and 2014 was $1,218 and $2,422, respectively, as compared to interest expense of $0 for the same periods in 2014. On February 12, 2015, the Company defaulted on the $36,918 note and on March 25, 2015 the Company defaulted on the $11,915 note by failing to pay principal and accrued interest on the maturity dates. However, the lender has not provided notices of default and demand of payment to the Company in writing pursuant to the terms of the Convertible Promissory Notes.

 

Payment

 

Unless prepaid or converted in accordance herewith, all principal and accrued interest under these Notes are payable in one lump sum on the maturity dates of the Notes. All payments of interest and principal shall be (i) in lawful money of the United States of America, and (ii) in the form of immediately available funds. All payments shall be applied first to costs of collection, if any, then to accrued and unpaid interest, and thereafter to principal.

 

Lender Optional Conversion to Shares

 

Beginning on the date of issuance of these Notes, lender is entitled to convert all amounts due hereunder into shares of the Company’s Common Stock at the Conversion Price. Conversion rights shall terminate upon acceptance by lender of payment in full of principal, accrued interest and any other amounts due under this Note.

 

 

ORBIS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

 

Calculation

 

The number of shares of the Company’s Common Stock to be issued upon conversion of these Notes shall be determined by dividing (x) the amount of principal and accrued and unpaid interest to be converted by (y) the Conversion Price then in effect.

 

Conversion Price; Number of Shares

 

The conversion price shall be computed by dividing the principal sum and any accrued interest outstanding on the Notes by the average volume weighted average price of the Company’s common stock over the seven (7) trading days prior to the Conversion Date and then multiplying the result by 80% (20% discount to market) or $0.01 whichever is greater (the “Conversion Price”), provided, however, that if no market exists, the Conversion Price shall be $0.01 per share.

 

NOTE 6 – STOCKHOLDERS’ EQUITY

 

In January 2014, the Company reorganized by forming a U.S. based parent, incorporated in Nevada. The reorganization resulted in a recapitalization of equity and the presentation of the accompanying consolidated financial statements of a consolidated entity. All share and per share data is retroactively restated for the recapitalization for the periods presented.

 

The Company’s authorized capital at June 30, 2015 consisted of 500,000,000 shares of common stock at a par value of $0.0001 per share.

 

Pursuant to a Stock Subscription Agreement (a) on May 13, 2015, the Company sold 2,000,000 shares of common stock to an accredited investor for a cash consideration of $20,000, and (b) on June 17, 2015, the Company sold 4,000,000 shares of common stock to another accredited investor for a cash consideration of $40,000.

 

As a result of the above stock issuances, the Company has 81,000,000 shares of common stock issued and outstanding as of June 30, 2015.

 

NOTE 7 – SUBSEQUENT EVENTS

 

From July 1, 2015 to August 3, 2015, the Company sold 2,200,000 shares of common stock to three accredited investors pursuant to Stock Subscription Agreements, and received $22,000 in cash considerations.

 

  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This quarterly report Form 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this quarterly report on Form 10-Q. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission (“SEC”) regulations and is not intended to serve as a basis for projections of future events.

 

Overview

 

Prior to July 2014, Ceberus was wholly-owned by Manhor S. Bansal, our President and Chief Executive Officer. On July 18, 2014, Orbis entered into a Capital Contribution Agreement with Mr. Bansal, pursuant to which Mr. Bansal agreed to contribute his 100% membership interest in Ceberus to Orbis in exchange for 75,000,000 shares of Orbis common stock. As a result of the transactions contemplated by the Capital Contribution Agreement, Ceberus became a wholly-owned subsidiary of Orbis.

 

We are a non-asset based specialized provider of urgent point-to-point delivery service of medical specimens to and from hospitals, medical laboratories and medical centers across the Greater Toronto Area and surrounding areas including York Region, Durham Region and Peel Region.

 

As of the date of the filing of this report, we have no operations in the United Kingdom and we have not generated any revenues in the United Kingdom. On August 22, 2014, we formed Orbis Logistics Limited, a wholly-owned subsidiary (“Logistics”), in the United Kingdom. We intend that Logistics will perform non-asset based point-to-point delivery of medical specimens in the United Kingdom, and will commence operations in late 2016. As of the date of the filing of this quarterly report on Form 10-Q, we have not taken any steps, other than formation of the subsidiary, to implement Logistics business.

 

As a non-asset based provider of point-to-point delivery of medical specimen service in Ontario province, Canada, we do not own any equipment and our services are provided through our strategic alliances with independent contractors. Our point-to-point medical specimen delivery service emphasizes safety and all our contractors are certified by the Government of Ontario to handle and transport biomedical materials.

 

In March 2013, we entered into a factoring agreement (the “Factoring Agreement”) with IPS Invoice Payment System Corp., a factoring company (“IPS”), pursuant to which we agreed to assign, in IPS’ sole discretion, selected accounts receivable to IPS in exchange for initial cash funding for 90% of the factored receivable. The minimum 10% reserve held back by IPS will be released, less fees, after collection of the account receivable by IPS. We agreed to pay a factor fee of 0.10% daily of the face value of submitted invoices. Because the Factoring Agreement provides for full recourse against us for factored accounts receivable that are not collected by IPS for any reason, and the collection of such accounts receivable is fully secured by substantially all of our assets, the factoring advances at June 30, 2015 and December 31, 2014, which have been treated as secured loans on our consolidated balance sheets were $77,768 and $33,592, respectively. The total accounts receivable factored for the six months ended June 30, 2015 and 2014 were $216,494 and $106,237, respectively. We incurred factor fees of $3,424 and $8,035 for the three months and six months ended June 30, 2015 and 2014 as compared to factor fees of $2,070 and $2,772 for the same periods in 2014. Total outstanding accounts receivable factored at June 30, 2015 and December 31, 2014 which is included in Accounts Receivable on the accompanying balance sheets were $87,077 and $37,325, respectively. The holdback amount due from the factor related to accounts receivable that the factor has collected as of June 30, 2015 and December 31, 2014 was $1,664 and $3,353, respectively.

 

 

Results of Operations

 

For the three months and six months periods ended June 30, 2015 and June 30, 2014

 

Revenue

 

Revenue for the three months and six months periods ended June 30, 2015 was $116,883 and $216,700, respectively, compared to $62,239 and $106,252 for the same comparable periods in 2014. Revenues increased by $54,644 (88%) for the three months ended June 30, 2015 compared to the comparable three months ended in 2014, and increased by $110,448 (104%) for the six months ended June 30, 2015 compared to the same in 2014, primarily due to an increase in the number of point-to-point deliveries.

 

Cost of Revenue

 

Cost of revenue for the three months and six months periods ended June 30, 2015 was $115,094 and $190,057, respectively, compared to $35,312 and $67,707 for the same periods ended in 2014. Cost of revenues increased by $79,782 (226%) for the three months ended June 30, 2015 compared to the comparable three months ended in 2014, and increased by $122,350 (181%) for the six months ended June 30, 2015 compared to the same period in 2014, primarily due to an increase in the number of point-to-point deliveries, fuel costs and vehicle maintenance.

 

Operating Expenses

 

Total operating expenses for the three months and six months periods ended June 30, 2015 and 2014 were $55,701 and $124,958, respectively, compared to operating expenses of $53,263 and $61,914 for the same comparable periods ended in 2014. Operating expenses for the three months and six months ended June 30, 2015 increased by $2,438 and $63,044 as compared to the same periods ended on June 30, 2014. The increase in operating expenses for the three months ended June 30, 2015 as compared to the same period in 2014, resulted primarily due to decrease in officer’s compensation of $2,776 and professional fees of $15,009, offset by an increase in general and administrative expenses of $20,223. The increase in operating expenses for the six months ended June 30, 2015 as compared to the same period in 2014 was primarily due to an increase in professional and consulting fees of $26,048 for public company reporting requirements, increase in officer’s compensation of $7,611 and general increase in general and administrative expenses of $29,385 primarily due to web design and development expense of $24,332.

 

Other Income (Expenses)

 

Total other expenses for the three months and six months periods ended June 30, 2015 and 2014 were $4,642 and $10,457, respectively, as compared to total other expenses of $2,070 and $2,772, respectively, for the same periods ended in 2014. Other income (expenses) consists of factoring fees and interest expense. Factoring fees increased by $1,354 and $5,263 for the three months and six months periods ended June 30, 2015 as compared to the same periods ended in 2014, primarily as a result of increase in accounts receivable factored in 2015. Interest expense of $1,218 and $2,422 for the three months and six months periods ended June 30, 2015 consisted of interest on the convertible promissory notes executed by us in 2014. No interest expense was recorded for the three months and six months periods ended in 2014 as we did not execute the convertible promissory notes until August 2014.

 

 

Net Loss

 

Net loss for the three months and six months periods ended June 30, 2015 was $58,554 and $108,772, respectively, as compared to a net loss of $28,405 and $26,141, respectively, for the same periods in 2014. The increase in net loss was primarily due to an increase in cost of sales as a result of increase in sub-contractors fees for point-to-point deliveries of specimens, increase in professional and consulting fees related to the audit fees and fees relating to preparation and filing of the Company’s Annual and Quarterly Reports, increase in officer’s compensation, increase in web design and development fees, and increase in factoring fees. The basic and diluted net loss per common share for the three months and six months periods ended June 30, 2015 was $0 and $0, respectively.

 

Other Comprehensive Income (Loss)

 

Other comprehensive income (loss) is comprised of unrealized foreign currency translation gain or loss due to foreign currency transactions. The Company recorded an unrealized foreign currency translation loss of $2,971 and a gain of $2,193 for the three months and six months periods ended June 30, 2015 compared to a loss of $60 and a gain of $179 for the same periods ended June 30, 2014.

 

Recently Issued Accounting Pronouncements

 

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

 

Capital Resources and Liquidity

 

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of June 30, 2015, we had cash and cash equivalents of $55,046, an increase of $34,994 from $20,052 as of December 31, 2014. At June 30, 2015, we had current liabilities of $322,089, compared to current assets of $143,787, which resulted in a negative working capital of $178,302. The current liabilities are comprised principally of accounts payable and accrued expenses, due to sub-contractors, loan payable to factor, sales tax payable, advance from an officer, and convertible notes payable. These factors and our ability to meet our debt obligations from current operations, and the need to raise additional capital to accomplish our objectives, raises substantial doubt about our ability to continue as a going concern.

 

We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and expanded geographical areas. We anticipate generating minimal revenues over the next twelve months. Consequently, we are dependent on the proceeds from future debt or equity investments to sustain our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate.

 

 

We presently do not have any significant credit available, bank financing or other external sources of liquidity. Due to our historical operating losses, our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.

 

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing sole stockholder. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to the sole holder of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing sole shareholder. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing.

 

In the past, we have been successful in raising capital, however, no assurance can be given that these sources of financing will continue to be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of our planned service development and marketing efforts, any of which could have a negative impact on our business and operating results.

 

Operating Activities

 

Net cash flows used in operating activities for the six months ended June 30, 2015 was $68,897 which resulted primarily due to our net loss of $108,772, increase in accounts receivable of $50,525, increase in accounts payable and accrued expenses of $1,051, increase in accrued interest payable of $2,422, increase in advances from officer of $27,476, increase in due to sub-contractors of $31,674, and increase in sales tax payable of $27,777.

 

Financing Activities

 

Net cash flows provided by financing activities for the six months ended June 30, 2015 was $106,215 which resulted primarily from the loan received from factor, net of repayments of $46,215, and cash proceeds from sale of common stock of $60,000.

 

We experienced a net decrease of $2,324 as a result of currency exchange rate fluctuations for the six months ended June 30, 2015.

 

As a result of the above activities, we experienced a net increase in cash of $34,994 for the six months ended June 30, 2015. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or from sale of our common shares.

 

As reflected in the accompanying consolidated financial statements for the six months ended June 30, 2015, the Company had a net loss of $108,772, and cash used in operating activities of $68,897. The working capital deficit, accumulated deficit and total stockholder’s deficit as of June 30, 2015 were $178,302, $248,199 and $178,302, respectively. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

 

 

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the accompanying consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets and estimates of sales taxes payable. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

Accounts Receivable and Factoring

 

Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances.

 

The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a secured loan liability “Loan payable to factor” on our consolidated balance sheet.

 

 

Revenue Recognition

 

The Company recognizes revenue upon delivery of shipments for our distribution and courier services business. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

 

The Company recognizes revenue from the weekly billing it performs based on the number of hours driven on various routes and evidenced by the customer authorization and acceptance of completed routes and any special runs authorized by the customer.

 

Cost of Revenue

 

Cost of revenue includes subcontractor expenses which are amounts paid or due to courier drivers and the costs of fuel and vehicle maintenance.

 

Foreign Currency Translation

 

The accompanying consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is the USD. The functional currency of the Company’s operating subsidiary is the Canadian dollar (CAD). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the spot exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the consolidated statements of cash flows may not necessarily agree with the changes in the corresponding balances on the consolidated balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into USD are included in determining comprehensive income (loss).

 

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the consolidated balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the consolidated results of operations as incurred.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management conducted an evaluation, with the participation of our Chief Executive Officer, who is our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer concluded that as a result of the material weakness in our internal control over financial reporting disclosed previously, our disclosure controls and procedures were not effective as of June 30, 2015. We have identified the following material weakness as of June 30, 2015:

 

●	Segregation of duties in the handling of cash, cash receipts and cash disbursements was not formalized.

 

Remediation of Material Weakness in Internal Control

 

We believe the following actions we have taken and are taking will be sufficient to remediate the material weakness described above:

 

●	Management has internally formalized the procedures for segregation of duties and monitoring handling of cash, cash receipts and cash disbursements. We are establishing a formal documented system of internal controls surrounding cash and the implementation of such systems.

 

Management believes the actions described above will remediate the material weakness we have identified and strengthen our internal control over financial reporting. We expect the material weakness will be remediated by December 31, 2015.

 

Changes in Internal Controls over Financial Reporting

 

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that may materially affect us.

 

Item 1A. Risk Factors

 

Not applicable for smaller reporting companies.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Pursuant to a Stock Subscription Agreement (a) on May 13, 2015, the Company sold 2,000,000 shares of common stock to an accredited investor for a cash consideration of $20,000, and (b) on June 17, 2015, the Company sold 4,000,000 shares of common stock to another accredited investor for a cash consideration of $40,000. The shares of common stock issued in this offering were offered and sold without registration under the Securities Act, or state securities laws, in reliance on the exemptions provided by Section 4(a)(2) (previously 4(2)) of the Securities Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws, based on the lack of any general solicitation or advertising in connection with the sale of the securities; the representation of the investor to the Company that it is an accredited investor (as that term is defined in Rule 501 of Regulation D) and that it was purchasing the securities for its own account and without a view to distribute them. The shares were sold at a per share purchase price of $0.01 per share, resulting in $60,000 in aggregate proceeds to the Company.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

 

Item 6. Exhibits

 

Exhibit Number		Description of Exhibit
3.1		Articles of Incorporation of Orbis Corporation (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form S-1 filed with the SEC on October 8, 2014).
3.2		Bylaws of Orbis Corporation (incorporated by reference to Exhibit 3.2 to the Company’s registration statement on Form S-1 filed with the SEC on October 8, 2014).
10.1		Capital Contribution Agreement dated as of July 18, 2014 by and between Manhor S. Bansal and Orbis Corporation (incorporated by reference to Exhibit 10.1 to the Company’s registration statement on Form S-1 filed with the SEC on October 8, 2014).
10.2		Convertible Promissory Note made by Orbis Corporation in favor of Dynamis Capital, Inc. dated as of August 15, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s registration statement on Form S-1 filed with the SEC on October 8, 2014).
10.3		Convertible Promissory Note made by Orbis Corporation in favor of Dynamis Capital, Inc. dated as of September 26, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s registration statement on Form S-1 filed with the SEC on October 8, 2014).
10.4		Form of Subscription Agreement (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the Company’s registration statement on Form S-1 filed with the SEC on December 29, 2014).
10.5		Agreement dated as of March 25, 2013 between Ceberus Distribution & Courier Services Inc. and IPS invoice Payment System Corp. (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Company’s registration statement on Form S-1 filed with the SEC on December 29, 2014).
31.1*		Section 302 Certificate of Chief Executive Officer.
32.1*		Section 906 Certificate of Chief Executive Officer and Principal Financial and Accounting Officer.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	ORBIS CORPORATION
Date: August 19, 2015	By:	/s/ Manhor S. Bansal
		Manhor S. Bansal
		President and Chief Executive Officer (principal executive officer, principal financial officer and principal accounting officer)