Delaware
|
13-2842053
|
|
State or other jurisdiction of
|
(IRS Employer Identification No.)
|
|
Incorporation or organization
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
(Do not check if a smaller reporting company)
|
Smaller reporting company x
|
PART I.
|
FINANCIAL INFORMATION
|
3 | |
ITEM 1. | FINANCIAL STATEMENTS | ||
●Condensed Balance Sheets as of July 31, 2011, and October 31, 2010
|
3 | ||
●Condensed Statements of Operations for the three months and nine months ended July 31, 2011 and 2010
|
4 | ||
●Condensed Statements of Changes in Stockholders’ Equity for the period from October 31, 2010 to July 31, 2011
|
5 | ||
●Condensed Statements of Cash Flows for the nine months ended July 31, 2011 and 2010
|
6 | ||
●Notes to Condensed Financial Statements (Unaudited)
|
7 | ||
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
11
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
12
|
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
12
|
|
PART II.
|
OTHER INFORMATION | 13 | |
ITEM 1.
|
LEGAL PROCEEDINGS
|
13 | |
ITEM 5.
|
OTHER INFORMATION
|
13
|
|
ITEM 6.
|
EXHIBITS
|
14
|
|
SIGNATURES
|
15 | ||
CERTIFICATIONS
|
|
16 |
July 31, 2011
|
October 31, 2010
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 2,235,923 | $ | 2,101,204 | ||||
Accounts receivable, net of allowance for doubtful accounts
|
||||||||
of $71,764 in 2011 and 2010
|
1,142,256 | 700,484 | ||||||
Inventories
|
2,394,016 | 1,281,312 | ||||||
Prepaid expense and other current assets
|
134,864 | 72,508 | ||||||
Deferred income taxes
|
105,685 | 435,185 | ||||||
Total current assets
|
6,012,744 | 4,590,693 | ||||||
Property, plant and equipment, at cost:
|
2,627,921 | 2,414,055 | ||||||
Less: accumulated depreciation
|
1,688,074 | 1,622,757 | ||||||
Net property, plant and equipment
|
939,847 | 791,298 | ||||||
Other assets:
|
||||||||
Other assets
|
1,396 | 1,396 | ||||||
Due from former Director
|
6,321 | 16,319 | ||||||
Deferred income taxes
|
165,511 | 165,511 | ||||||
Total other assets
|
173,228 | 183,226 | ||||||
TOTAL ASSETS
|
$ | 7,125,819 | $ | 5,565,217 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 591,675 | $ | 330,459 | ||||
Accrued liabilities
|
335,396 | 278,776 | ||||||
Current portion of deferred compensation
|
67,000 | 67,000 | ||||||
Customer deposits
|
972,299 | 279,424 | ||||||
Total current liabilities
|
1,966,370 | 955,659 | ||||||
Deferred compensation, net of current portion
|
30,845 | 76,213 | ||||||
Total liabilities
|
1,997,215 | 1,031,872 | ||||||
Stockholders' equity:
|
||||||||
Preferred stock, par value $.0001,
|
||||||||
10,000,000 shares authorized, none issued
|
— | — | ||||||
Common stock, par value $.01,
|
||||||||
25,000,000 shares authorized; 6,429,875 and 6,179,875
|
||||||||
shares issued in 2011 and 2010, respectively
|
64,299 | 61,799 | ||||||
Additional paid-in capital
|
6,419,687 | 6,347,187 | ||||||
Accumulated deficit
|
(673,972 | ) | (1,194,231 | ) | ||||
5,810,014 | 5,214,755 | |||||||
Less: Treasury stock, 1,245,980 shares
|
||||||||
in 2011 and 2010, at cost
|
(681,410 | ) | (681,410 | ) | ||||
Total stockholders' equity
|
5,128,604 | 4,533,345 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 7,125,819 | $ | 5,565,217 |
Three Months
|
Nine Months
|
|||||||||||||||
July 31, 2011
|
July 31, 2010
|
July 31, 2011
|
July 31, 2010
|
|||||||||||||
Net Sales:
|
||||||||||||||||
Equipment
|
$ | 2,699,995 | $ | 1,599,815 | $ | 6,551,045 | $ | 4,661,541 | ||||||||
Parts and Service
|
405,113 | 335,857 | 1,235,781 | 921,811 | ||||||||||||
Total Net Sales
|
3,105,108 | 1,935,672 | 7,786,826 | 5,583,352 | ||||||||||||
Cost of Sales
|
2,377,455 | 1,526,568 | 6,037,624 | 4,467,834 | ||||||||||||
Gross Profit
|
727,653 | 409,104 | 1,749,202 | 1,115,518 | ||||||||||||
Operating Expense:
|
||||||||||||||||
Selling Expense
|
130,995 | 73,143 | 357,400 | 307,128 | ||||||||||||
Administrative Expense
|
203,938 | 178,160 | 548,460 | 523,663 | ||||||||||||
Total Operating Expense
|
334,933 | 251,303 | 905,860 | 830,791 | ||||||||||||
Operating Income
|
392,720 | 157,801 | 843,342 | 284,727 | ||||||||||||
Other Income (Expense):
|
||||||||||||||||
Interest Income
|
2,021 | 2,284 | 6,417 | 7,795 | ||||||||||||
Interest Expense
|
— | — | — | (3,160 | ) | |||||||||||
Other Income
|
— | — | 64 | |||||||||||||
Other Expense
|
— | (25,000 | ) | — | (25,000 | ) | ||||||||||
Total Other Income
|
2,021 | (22,716 | ) | 6,417 | (20,301 | ) | ||||||||||
Income Before Income Taxes
|
394,741 | 135,085 | 849,759 | 264,426 | ||||||||||||
Income Tax Provision
|
154,000 | 53,500 | 329,500 | 103,150 | ||||||||||||
Net Income
|
$ | 240,741 | $ | 81,585 | $ | 520,259 | $ | 161,276 | ||||||||
Basic Income per share
|
$ | 0.05 | $ | 0.02 | $ | 0.10 | $ | 0.03 | ||||||||
Diluted Income per share
|
0.05 | 0.02 | 0.10 | 0.03 | ||||||||||||
Weighted average number
of shares outstanding - Basic
|
5,183,895 | 4,933,895 | 5,041,038 | 4,933,895 | ||||||||||||
- Diluted
|
5,183,895 | 5,056,776 | 5,115,867 | 5,038,264 |
Common Stock
|
Treasury Stock
|
|||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
NUMBER
|
|
|
||||||||||||||||||||||||||
OF SHARES
|
PAR
|
ADDITIONAL
PAID-IN |
ACCUMULATED
|
NUMBER
OF |
TOTAL
STOCKHOLDERS' |
|||||||||||||||||||||||
ISSUED
|
VALUE
|
CAPITAL
|
DEFICIT
|
SHARES
|
COST
|
EQUITY
|
||||||||||||||||||||||
Balance at October 31, 2010
|
6,179,875 | $ | 61,799 | $ | 6,347,187 | $ | (1,194,231 | ) | 1,245,980 | $ | (681,410 | ) | $ | 4,533,345 | ||||||||||||||
Issuance of 250,000
|
||||||||||||||||||||||||||||
shares of Common Stock
|
250,000 | 2,500 | 72,500 | -0- | -0- | -0- | 75,000 | |||||||||||||||||||||
Net Income
|
-0- | -0- | -0- | 520,259 | -0- | -0- | 520,259 | |||||||||||||||||||||
Balance at July 31, 2011
|
6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | (673,972 | ) | 1,245,980 | $ | (681,410 | ) | $ | 5,128,604 |
July 31, 2011
|
July 31, 2010
|
|||||||
Cash flow from operating activities:
|
||||||||
Net income
|
$ | 520,259 | $ | 161,276 | ||||
Adjustments to reconcile net income to net cash provided by (used in)
|
||||||||
operating activities:
|
||||||||
Depreciation and amortization
|
65,317 | 78,260 | ||||||
Provision for doubtful accounts, net of recoveries
|
— | (7,106 | ) | |||||
Deferred income taxes
|
329,500 | 103,150 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(441,772 | ) | (844,705 | ) | ||||
Inventories
|
(1,112,704 | ) | (123,789 | ) | ||||
Prepaid expenses and other current assets
|
(62,356 | ) | (18,284 | ) | ||||
Accounts payable
|
261,216 | (33,270 | ) | |||||
Accrued liabilities and deferred compensation
|
11,252 | 58,109 | ||||||
Customer deposits
|
692,875 | (21,188 | ) | |||||
Net cash provided by (used in) operating activities
|
263,587 | (647,547 | ) | |||||
Cash flows from investing activities:
|
||||||||
Proceeds from notes receivable from former Director
|
9,998 | 9,417 | ||||||
Purchase of property and equipment
|
(213,866 | ) | — | |||||
Restricted Cash
|
— | 224,100 | ||||||
Net cash (used in) provided by investing activities
|
(203,868 | ) | 233,517 | |||||
Cash flows from financing activities:
|
||||||||
Issuance of common stock
|
75,000 | — | ||||||
Net cash provided by financing activities
|
75,000 | — | ||||||
Net increase (decrease) in cash and cash equivalents
|
134,719 | (414,030 | ) | |||||
Cash and cash equivalents at beginning of period
|
2,101,204 | 1,609,305 | ||||||
Cash and cash equivalents at end of period
|
$ | 2,235,923 | $ | 1,195,275 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during period for:
|
||||||||
Interest
|
$ | — | $ | — | ||||
Income taxes
|
— | — |
1.
|
Nature of Business:
|
2.
|
Basis of Presentation:
|
3.
|
Summary of Significant Accounting Policies:
|
2011 | 2010 | |||||||
Beginning balance
|
$ | 49,859 | $ | 55,059 | ||||
Warranty service provided
|
(112,759 | ) | (55,443 | ) | ||||
Warranties issued
|
98,265 | 46,615 | ||||||
Changes to pre-existing warranty accruals
|
19,494 | 8,828 | ||||||
Ending balance
|
$ | 54,859 | $ | 55,059 |
4.
|
Related Party Transactions:
|
5.
|
Inventories
|
July 31,
2011
|
October 31,
2010
|
|||||||
Raw Materials
|
$ | 896,498 | $ | 694,446 | ||||
Work in process
|
1,074,877 | 377,977 | ||||||
Finished Goods
|
422,641 | 208,889 | ||||||
$ | 2,394,016 | $ | 1,281,312 |
6.
|
Debt
|
7.
|
Income Taxes
|
8.
|
Stock-Based Compensation
|
9.
|
Commitments and Contingencies
|
Exhibit
|
31.1
|
Certification of D. Roger Griffin, Chief Executive Officer, pursuant to Rule 13a–14(a)/15d-14(a).
|
|
31.2
|
Certification of William E. Nielsen, Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).
|
|
32.1
|
Certification of D. Roger Griffin, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of William E. Nielsen, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Dated: September 12, 2011
|
INTERNATIONAL BALER CORPORATION
|
|||
|
By:
|
/s/ D. Roger Griffin | |
D. Roger Griffin | |||
Chief Executive Officer | |||
|
By:
|
/s/ William E. Nielsen | |
William E. Nielsen | |||
Chief Financial Officer | |||
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2011 of International Baler Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrants certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2011 of International Baler Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrants certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
TT:Q_8!#
M>GKVOK5P2QL8]J'F542Z%S'>!#;;?'&4)M,PHG\0;T>0Q1X.1<[^B"!6V35#
M.XWCM#.L!CP9#V&<&U:A2FT(;*=+[H&>%:D:545NX-4`JA<58I)B\1.7`C;]
M85EW&TLLD+ELCZ64RV7-NHXV53=L2Y1Y9ZWZP2"6Q?88>O26Z[!*@TM^'.YR
M@_"^I;L4P_J&[K)9H]_27XI%UL%?7CH^KOG=DB`E'\+0BS M;+;.=9?732V*1KT81J;#FUG";L+PO71PQV+4Y9/
M.*?9#4LZ"V$))08<53=0.*P@:]`D.R33*H(!3N'W*R*/E53%D,T%G;>J1K"@
M8)C7*$Q@P` '3XC8MC@"7=Q3Z6O[-@Y/3Z,S7]&*;4X83%H%NLX
MC9FU>?R$Y)@"I9NFW"#M-^IVOEK0P*C8AZY;\,#4D)L:<,_1-OEC@:]$U3?2
MN2O?:M!(\'SPX=T&FZX<^(0#I!-7O.80("-N<(J[7C4!5^7#/K#\+GR,2=YG
M[MAZ"V820''K"/RH\:JSG!E?&7F=YHBZ*.YMN@@[H^XPO%3VO$X]/<\!Z)H#[`;/?6+Y
M3,1S+Y*Q]5/B<"6'STYP1RE8MQ',1DH4?OXSG"@R#.X]WU>5L^<)8X"XS&4M
MQB'NO%$XA5:QM':\%/)G$F$:%%:WQB+>G`N)N#X3[&EA
&UL550)``/P(VY.\"-N3G5X"P`!!"4.```$
M.0$``-U=VW+;.!)]WZK]!XWF6985S\Y,7/%.R7*<4I4G=MG)[+QM420D8X<"
MM`!H6_OU"_`B\8(;:2MLY26VQ>Y&'_1!HP%"R(??7M;QX`DQCBFY&$Y.3H<#
M1$(:8;*Z&'[]6UQ846-2KFCYMAT<'OCAX0^E@<)11^F]
M,U%3*Y]?(!_U;GB;7%@5\\NO]$PV!B8;#2?*?Z6P7KC;92<3I26
&UL550%``/P(VY.
M=7@+``$$)0X```0Y`0``4$L!`AX#%`````@`[EHL/S[`0,1!*```M"8"`!4`
M&````````0```*2!^#L``&EB86PM,C`Q,3`W,S%?;&%B+GAM;%54!0`#\"-N
M3G5X"P`!!"4.```$.0$``%!+`0(>`Q0````(`.Y:+#_?5\*\I18``(]0`0`5
M`!@```````$```"D@8AD``!I8F%L+3(P,3$P-S,Q7W!R92YX;6Q55`4``_`C
M;DYU>`L``00E#@``!#D!``!02P$"'@,4````"`#N6BP_/M>^MR(%``!_)```
M$0`8```````!````I(%\>P``:6)A;"TR,#$Q,#`L``00E#@``!#D!``!02P4&``````8`!@`:`@``Z8``````
`
end
Condensed Balance Sheets (Parenthetical) (USD $)
|
Jul. 31, 2011
|
Oct. 31, 2010
|
---|---|---|
Current Assets: | Â | Â |
Accounts receivable, allowance for doubtful accounts | $ 71,764 | $ 71,764 |
Stockholders' equity: | Â | Â |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common Stock, shares issued (in shares) | 6,429,875 | 6,179,875 |
Treasury stock, shares (in shares) | 1,245,980 | 1,245,980 |
Condensed Statements of Operations Unaudited (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2011
|
Jul. 31, 2010
|
Jul. 31, 2011
|
Jul. 31, 2010
|
|
Net Sales: | Â | Â | Â | Â |
Equipment | $ 2,699,995 | $ 1,599,815 | $ 6,551,045 | $ 4,661,541 |
Parts and Service | 405,113 | 335,857 | 1,235,781 | 921,811 |
Total Net Sales | 3,105,108 | 1,935,672 | 7,786,826 | 5,583,352 |
Cost of Sales | 2,377,455 | 1,526,568 | 6,037,624 | 4,467,834 |
Gross Profit | 727,653 | 409,104 | 1,749,202 | 1,115,518 |
Operating Expense: | Â | Â | Â | Â |
Selling Expense | 130,995 | 73,143 | 357,400 | 307,128 |
Administrative Expense | 203,938 | 178,160 | 548,460 | 523,663 |
Total Operating Expense | 334,933 | 251,303 | 905,860 | 830,791 |
Operating Income | 392,720 | 157,801 | 843,342 | 284,727 |
Other Income (Expense): | Â | Â | Â | Â |
Interest Income | 2,021 | 2,284 | 6,417 | 7,795 |
Interest Expense | 0 | 0 | 0 | (3,160) |
Other Income | Â | 0 | 0 | 64 |
Other Expense | 0 | (25,000) | 0 | (25,000) |
Total Other Income | 2,021 | (22,716) | 6,417 | (20,301) |
Income Before Income Taxes | 394,741 | 135,085 | 849,759 | 264,426 |
Income Tax Provision | 154,000 | 53,500 | 329,500 | 103,150 |
Net Income | $ 240,741 | $ 81,585 | $ 520,259 | $ 161,276 |
Basic Income per share (in dollars per share) | $ 0.05 | $ 0.02 | $ 0.10 | $ 0.03 |
Diluted Income per share (in dollars per share) | $ 0.05 | $ 0.02 | $ 0.10 | $ 0.03 |
Weighted average number of shares outstanding | Â | Â | Â | Â |
- Basic (in shares) | 5,183,895 | 4,933,895 | 5,041,038 | 4,933,895 |
- Diluted (in shares) | 5,183,895 | 5,056,776 | 5,115,867 | 5,038,264 |
Document and Entity Information
|
9 Months Ended | |
---|---|---|
Jul. 31, 2011
|
Aug. 31, 2011
|
|
Document and Entity Information [Abstract] | Â | Â |
Entity Registrant Name | INTERNATIONAL BALER CORP | Â |
Entity Central Index Key | 0000781902 | Â |
Current Fiscal Year End Date | --10-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jul. 31, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q3 | Â |
Amendment Flag | false | Â |
Entity Common Stock Shares Outstanding | Â | 5,183,895 |
Entity Well Known Seasoned Issuer | No | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Debt
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Debt [Abstract] | Â | ||
Debt |
The Company has a $1,000,000 line of credit agreement with First Guaranty Bank and Trust Company of Jacksonville. The line of credit allows the Company to borrow against the Company’s property, plant and equipment. The line of credit bears interest at the prime rate plus one-half percent with a floor of 5.0%, with a re-affirmation date of February 28, 2012. The line of credit had no outstanding balance at July 31, 2011 and October 31, 2010, and the unused line of credit was $1,000,000 at July 31, 2011. The credit agreement contains covenants that require the Company to provide annual audited financial statements and quarterly internal financial statements to the lender. There are no other covenants or restrictions.
|
Basis of Presentation
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Basis of Presentation [Abstract] | Â | ||
Basis of Presentation |
The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information in footnotes required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the nine-month period ended July 31, 2011 are not necessarily indicative of the results that may be expected for the year ending October 31, 2011. The accompanying balance sheet as of October 31, 2010 was derived from the audited financial statements as of October 31, 2010.
|
Stock-Based Compensation
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Stock-Based Compensation [Abstract] | Â | ||
Stock-Based Compensation |
In June 2002, the Company granted 250,000 nonqualified stock options to purchase shares of the Company’s common stock. These options, which vested immediately, have an exercise price of $0.30 and a term of 10 years. The options or shares purchased thereunder may be registered pursuant to the Securities Act of 1933. The Company has no remaining authorized shares available for grant under existing stock option plans. As all options were fully vested, there was no impact to net income for the nine months ended July 31, 2011 and 2010 related to stock options. The stock options were exercised in April 2011 and 250,000 shares of common stock were issued.
|
Commitments and Contingencies
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Commitments and Contingencies [Abstract] | Â | ||
Commitments and Contingencies |
The Company in the ordinary course of business, is subject to claims made, and from time to time is named as a defendant in legal proceedings relating to the sales of its products. The Company believes that the reserves reflected in its condensed financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled.
On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was injured in a workplace
accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff has demanded $2,500,000 to settle this claim. The Company intends to vigorously defend this case and has contacted its liability insurance carrier to request defense and indemnification of any losses incurred in connection with this lawsuit. The claim is currently in discovery and the outcome is unknown.
|
Income Taxes
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Income Taxes [Abstract] | Â | ||
Income Taxes |
As of July 31, 2011, the Company’s anticipated annual effective tax rate is 39%. The difference between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income tax is primarily the result of state income tax expense and permanent deductible differences.
Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. Factors considered included, historical results of operations, volatility of the economic conditions and projected earnings based on current operations. Based on this evidence, it is more likely than not that the deferred tax assets would be realized. Accordingly, the valuation allowance as of July 31, 2011 and at October 31, 2010 is $0. However, if it is determined that all or part of the deferred tax assets will not be used in the future, an adjustment to the deferred tax assets would be charged against net income in the period such determination is made. As of July 31, 2011 and October 31, 2010, deferred tax assets were $271,196 and $600,696, respectively. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future.
|
Summary of Significant Accounting Policies
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
(a) Accounts Receivable & Allowance for Doubtful Accounts:
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
(b) Inventories:
Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which includes direct materials, direct and indirect labor, and overhead. The Company maintains an allowance for excess or slow moving inventory based on the expectation that this inventory will become obsolete or unusable within a reasonable time period. Company personnel review the potential usage of inventory and inventory components on a regular basis.
(c) Revenue Recognition: The Company recognizes revenue when products are shipped and the customer takes ownership and assumes the risk of loss. Parts sales are approximately 15% of total sales. The Company recognizes revenue from installations and start-ups and repair services in the period in which the service is provided.
(d) Basic and Diluted Income Per Share:
Basic income per share is calculated using the weighted average number of common shares outstanding during each period. Diluted income per share includes the net additional number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss periods as they would be antidilutive. The dilutive impact of options outstanding at July 31, 2011 and July 31, 2010 was 74,829 shares and 104,369 shares, respectively.
(e) Warranties and Service
The Company warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers a service plan for other required repairs and maintenance. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers under warranty, and known warranty issues.
Following is a tabular reconciliation of the changes in the warranty accrual for the nine-month period ended July 31:
(f) Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements.” ASU 2009-13 amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB ASC Topic 605. This consensus provides accounting principles and application guidance on how the arrangement should be separated, and the consideration allocated. This guidance changes how to determine the fair value of undelivered products and services for separate revenue recognition. Allocation of consideration under this pronouncement is based on management’s estimate of the selling price for an undelivered item where there is no other means to determine the fair value of that undelivered item. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early application permitted. The adoption of this standard did not have any impact on the Company’s financial statements.
(g) Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, revolving promissory note, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.
(h) Subsequent Events
The Company evaluated all events or transactions that occurred after July 31, 2011 up through the date the Company issued its financial statements.
|
Related Party Transactions
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Related Party Transactions [Abstract] | Â | ||
Related Party Transactions |
The Company has a note receivable from its former president and director totaling $21,159 and $31,157 at July 31, 2011 and October 31, 2010, respectively. Interest accrues at the rate of 6% per annum.
The Company has an agreement with the former president and director of the Company for deferred compensation payments. The Company will make payments with a present value of $97,845, payable over the next two years. A portion of the payments will be used to repay the outstanding note receivable discussed above.
Leland E. Boren, a shareholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls 51.0% of the outstanding shares of the Company. Avis owns 100% of American Baler Company, a competitor of the Company. These baler companies operate independent of each other.
|
Inventories
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] |
Inventories consisted of the following:
|
Condensed Statements of Stockholders' Equity Unaudited (USD $)
|
Total
|
Common Stock
|
Additional Paid-In Capital
|
Accumulated Deficit
|
Treasury Stock, Cost
|
---|---|---|---|---|---|
Balance at Oct. 31, 2010 | $ 4,533,345 | $ 61,799 | $ 6,347,187 | $ (1,194,231) | $ (681,410) |
Balance (in shares) at Oct. 31, 2010 | Â | 6,179,875 | Â | Â | 1,245,980 |
Issuance of 250,000 shares of Common Stock | 75,000 | 2,500 | 72,500 | 0 | 0 |
Issuance of 250,000 shares of Common Stock (in shares) | Â | 250,000 | Â | Â | 0 |
Net Income | 520,259 | 0 | 0 | 520,259 | 0 |
Balance at Jul. 31, 2011 | $ 5,128,604 | $ 64,299 | $ 6,419,687 | $ (673,972) | $ (681,410) |
Balance (in shares) at Jul. 31, 2011 | Â | 6,429,875 | Â | Â | 1,245,980 |
Nature of Business
|
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2011
|
|||
Nature of Business [Abstract] | Â | ||
Nature of Business |
International Baler Corporation (the Company) is a manufacturer of baling equipment which is designed to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models, and conveyors to meet specific customer requirements.
The Company's customers include recycling facilities, distribution centers, textile mills, and companies which generate the materials for baling and recycling. The Company sells its products worldwide with 10% to 35% of its annual sales outside the United States.
|