10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: April 30, 2015

or

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

International Baler Corporation
(Exact name of registrant as specified in its charter)
Delaware	0-14443	13-2842053
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
5400 Rio Grande Avenue, Jacksonville, FL		32254
(Address of Principal Executive Officer)		(Zip Code)
904-358-3812
(Registrant’s telephone number, including area code)
	N/A
(Former name or former address and former fiscal year, if changed since last report)

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  ☒     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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☐     No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  ☐ Accelerated filer  ☐ Non-accelerated filer  ☐ Smaller reporting company  ☒

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

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ☐     No  ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,183,895 shares of common stock at May 31, 2015.

INTERNATIONAL BALER CORPORATION
TABLE OF CONTENTS
			PAGE
PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		Balance Sheets as of April 30, 2015, (unaudited) and October 31, 2014	2
		Statements of Income for the three months and six months ended April 30, 2015 and 2014 (unaudited)	3
		Statements of Changes in Stockholders’ Equity for the six months ended April 30, 2015 (unaudited)	4
		Statements of Cash Flows for the six months ended April 30, 2015 and 2014 (unaudited)	5
		Notes to Financial Statements (unaudited)	6
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		10
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		11
	ITEM 4. CONTROLS AND PROCEDURES		12
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS		12
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		13
	ITEM 5. OTHER INFORMATION		13
	ITEM 6. EXHIBITS		14
SIGNATURES			15

1

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS:

INTERNATIONAL BALER CORPORATION
BALANCE SHEETS
		April 30, 2015			October 31, 2014
ASSETS		Unaudited
Current assets:
Cash and cash equivalents	$	597,969		$	2,803,698
Certificates of deposit		459,012			—
Accounts receivable, net of allowance for doubtful accounts
of $24,412 at January 31, 2015 and $29,412 at October 31, 2014		836,711			3,732,637
Inventories		6,908,627			4,788,881
Prepaid expense and other current assets		49,721			183,725
Deferred income taxes		217,676			217,676
Total current assets		9,069,716			11,726,617
Property, plant and equipment, at cost:		3,285,232			3,243,153
Less: accumulated depreciation		2,193,140			2,115,740
Net property, plant and equipment		1,092,092			1,127,413
Other assets:
Other assets		503,772			1,256
Total other assets		503,772			1,256
TOTAL ASSETS	$	10,665,580		$	12,855,286
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving promissory note	$	—		$	644,345
Notes payable-current portion		10,034			9,879
Accounts payable		660,361			923,391
Accrued liabilities		329,231			1,512,985
Customer deposits		1,541,207			1,667,932
Total current liabilities		2,540,833			4,758,532
Deferred income taxes		171,480			171,480
Notes payable-long term		23,997			28,223
Total liabilities		2,736,310			4,958,235
Commitments and contingencies (Note 8)
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 shares
issued at April 30, 2015 and October 31, 2014		64,299			64,299
Additional paid-in capital		6,419,687			6,419,687
Retained earnings		2,126,694			2,094,475
		8,610,680			8,578,461
Less:  Treasury stock, 1,245,980 shares
at April 30, 2015 and October 31, 2014, at cost		(681,410	)		(681,410	)
Total stockholders' equity		7,929,270			7,897,051
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,665,580		$	12,855,286
See accompanying notes to financial statements.

2

INTERNATIONAL BALER CORPORATION
STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 2015 AND 2014
UNAUDITED
	Three Months						Six Months
		2015			2014			2015			2014
Net sales:
Equipment	$	3,161,797		$	2,194,768		$	5,772,229		$	5,498,422
Parts and service		500,877			589,789			1,075,126			1,233,702
Total net sales		3,662,674			2,784,557			6,847,355			6,732,124
Cost of sales		3,055,963			2,386,342			5,780,882			5,508,390
Gross profit		606,711			398,215			1,066,473			1,223,734
Operating expense:
Selling expense		241,427			245,027			453,098			510,058
Administrative expense		288,160			292,255			563,621			561,763
Total operating expense		529,587			537,282			1,016,719			1,071,821
Operating income (loss)		77,124			(139,067	)		49,754			151,913
Other income (expense):
Interest income		857			4,900			1,748			4,900
Interest expense		(220	)		(7,220	)		(2,283	)		(17,687	)
Total other income  (expense)		637			(2,320	)		(535	)		(12,787	)
Income (loss) before income taxes		77,761			(141,387	)		49,219			139,126
Income tax provision (benefit)		27,000			(49,000	)		17,000			51,000
Net income (loss)	$	50,761		$	(92,387	)	$	32,219		$	88,126
Income (loss) per share, basic and diluted	$	0.01		$	(0.02	)	$	0.01		$	0.02
Weighted average number of shares outstanding		5,183,895			5,183,895			5,183,895			5,183,895
See accompanying notes to financial statements.

3

INTERNATIONAL BALER CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED APRIL 30, 2015
UNAUDITED
	Common Stock								Treasury Stock
		NUMBER OF SHARES ISSUED		PAR VALUE		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		NUMBER OF SHARES		COST			TOTAL STOCKHOLDERS’ EQUITY
Balance at October 31, 2014		6,429,875	$	64,299	$	6,419,687	$	2,094,475		1,245,980	$	(681,410	)	$	7,897,051
Net Income		—		—		—		32,219		—		—			32,219
Balance at April 30, 2015		6,429,875	$	64,299	$	6,419,687	$	2,126,694		1,245,980	$	(681,410	)	$	7,929,270
See accompanying notes to financial statements.

4

INTERNATIONAL BALER CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2015 AND 2014
UNAUDITED
		2015			2014
Cash flow from operating activities:
Net income	$	32,219		$	88,126
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization		77,400			72,000
Provision for doubtful accounts		(5,000	)		—
Changes in operating assets and liabilities:
Certificates of deposits		(961,528	)		—
Accounts receivable		2,900,926			(222,209	)
Inventories		(2,119,746	)		(1,049,185	)
Prepaid expenses and other assets		134,004			26,176
Accounts payable		(263,030	)		(68,312	)
Accrued liabilities and deferred taxes		(1,183,754	)		(513,633	)
Customer deposits		(126,725	)		1,723,932
Net cash (used in) provided by operating activities		(1,515,234	)		56,895
Cash flows from investing activities:
Purchase of property and equipment		(42,079	)		(76,838	)
Net cash used in investing activities		(42,079	)		(76,838	)
Cash flows from financing activities:
Payments on notes payable		(4,071	)		—
Payments on revolving prommissory note		(644,345	)		(403,629	)
Net cash used in financing activities		(648,416	)		(403,629	)
Net decrease in cash and cash equivalents		(2,205,729	)		(423,572	)
Cash and cash equivalents at beginning of period		2,803,698			1,877,256
Cash and cash equivalents at end of period	$	597,969		$	1,453,684
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest	$	2,283		$	17,687
Income taxes		2,454			322,713
See accompanying notes to financial statements.

5

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. 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 annual sales outside the United States typically ranging from 10% to 35%.

 2. Basis of Presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America 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 six-month period ended April 30, 2015 are not necessarily indicative of the results that may be expected for the year ending October 31, 2015. The accompanying balance sheet as of October 31, 2014 was derived from the audited financial statements as of October 31, 2014.

 3. 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. 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 including the analysis of historical trends, customer credit worthiness and the aging of receivables. 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 include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.

6

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided.

(d) Warranties and Service:

The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. 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 currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30:

		2015			2014
Beginning balance	$	65,000		$	60,000
Warranty service provided		(84,420	)		(80,805	)
New product warranties		72,153			84,000
Changes to pre-existing warranty accruals		12,267			(3,195	)
Ending balance	$	65,000		$	60,000

(e) Fair Value of Financial Instruments:

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the relative short-term nature of these assets and liabilities.

4. Related Party Transactions:

Leland E. Boren, a stockholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls over 50% of the outstanding shares of the Company. Avis owns 100% of The American Baler Co., a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc., also a competitor of the Company. On July 31, 2014 The Harris Waste Management Group, Inc. acquired certain assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from, these companies for the six months ended April 30, 2015 or in fiscal year ended October 31, 2014.

7

5. Inventories:

Inventories consisted of the following:

		April 30, 2015		October 31, 2014
Raw materials	$	2,055,517	$	1,715,772
Work in process		4,451,378		2,584,378
Finished goods		401,732		488,731
	$	6,908,627	$	4,788,881

6. Debt:

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana that was entered into on January 7, 2013. The line of credit allows the Company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.39%. The line of credit is secured by all assets of the Company and has a term of two years. The credit agreement had been modified to extend the termination date to March 15, 2015. On February 26, 2015 the credit agreement was renewed with a termination date of May 15, 2017. The line of credit had no outstanding balance at April 30, 2015 and a balance of $644,345 at October 31, 2014.

In July 2014 the Company financed a service truck by entering into a loan agreement with Ford Credit for $41,254. The note has a term of forty-eight months at an interest rate of 3.8%. Principal payments for fiscal years ending October 31, are scheduled as follows:

2015	$	5,808
2016		10,255
2017		10,646
2018		7,322
Total	$	34,031

7. Income Taxes:

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, there is no valuation allowance as of April 30, 2015 and at October 31, 2014. 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 April 30, 2015 and October 31, 2014, net deferred tax assets were $46,196.

8. 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 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. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was fatally injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff demanded $2,500,000 to settle this claim. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. In July 2014, the Company filed a Motion for Summary Judgment to have the complaint dismissed. On December 1, 2014, the Company and its insurance company agreed to settle this claim for $150,000. The Company was responsible for $75,000, one-half of the total settlement amount. During the fourth quarter of fiscal 2014, the Company accrued an additional $50,000 for a total accrued liability of $75,000 related to this settlement. This settlement amount was paid in the first quarter of fiscal 2015, and the case has been closed.

8

On December 26, 2013 the Company was served with a civil action filed by Georgetown Paper Stock of Rockville, Inc. for breach of warranties. In November 2014, a jury returned a verdict in favor of the Plaintiff, Georgetown Paper Stock of Rockville, Inc. in the amount of $368,248. The Company was responsible for $277,968 of this amount and its dealer, BE Equipment, Inc., was responsible for $90,280. The baler involved in this claim will be returned to the Company. The Company recorded an accrued liability of $285,000 and an asset in transit of $85,000 resulting in net expense of $200,000 in the fourth quarter of fiscal 2014. The payments were made in the first quarter of fiscal 2015. The baler was returned in the second quarter of fiscal 2015.

In November 2014, the Company agreed to a Consent Order with the Florida Department of Environmental Protection to remove solid waste sand blasting material from its property. The Company recorded an accrued liability of $291,000 as of October 31, 2014, for the cost of the removal of this material. The removal of the sand blasting material was completed in January 2015.

At April 30, 2015, the Company had outstanding commitments relating to standby letters of credit for performance and warranty guarantees of approximately $1,000,000. These letters of credit are collateralized by certificates of deposit which have expiration dates which coincide with the expiration dates of the letters of credit. Certificates of deposit that mature in one year or more are included in other assets in the accompanying balance sheet.

9

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with our unaudited financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements”. For further information, refer to the Company’s Annual Report on Form 10-K for the year ended October 31, 2014, and the Management Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q.

Results of Operations: Three Month Comparison

In the second quarter ended April 30, 2015, the Company had net sales of $3,662,674 compared to net sales of $2,784,557 in the second quarter of fiscal 2014, an increase of 31.5%. The increase in net sales was the result of higher shipments of horizontal closed door balers and auto-tie balers due to general market conditions.

The Company had net income of $50,761 in the second quarter of fiscal 2015, compared to a net loss of $92,387 in the second quarter of 2014. The higher net income was the result of the higher shipments in the second quarter of 2015.

Results of Operations: Six month Comparison

The Company had net sales of $6,847,355 in the first six months of fiscal 2015, compared to net sales of $6,732,124 in the same period of 2014, an increase of 1.7%. The Company had no shipments of synthetic rubber balers in the first half of fiscal 2015, compared to four rubber balers in the first half of fiscal 2014. The Company shipped seventy-four balers and conveyors at an average price of $78,003 in fiscal 2015 versus shipments of forty-eight balers and conveyors at an average price of $91,228 in 2014.

10

The Company had net income of $32,219 in the first six months of fiscal 2015 compared to net income of $88,126 in the prior year. The lower income in 2015 was the result of four rubber balers shipped in 2014 versus none in the current period, offset by the higher unit sales of balers and conveyors in 2015.

The sales order backlog was $8,100,000 at April 30, 2015 and $14,800,000 at April 30, 2014. The backlog in 2015 included thirty-five balers and conveyors at an average price of $231,000 while the backlog in 2014 included forty-six balers and conveyors at an average price of $321,000.

Financial Condition and Liquidity:

Net working capital at April 30, 2015 was $6,528,883 as compared to $6,968,085 at October 31, 2014. The Company currently believes that it will have sufficient cash flow to be able to fund operating activities for the next twelve months.

Average days sales outstanding (DSO) in the first six months of fiscal 2015 were 36.1 days, as compared to 79.0 days in the first three months of fiscal 2014. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by six, and dividing that result by the average day’s sales for the period (period sales ÷ 181).

During the six months ended April 30, 2015 and 2014, the Company made additions to plant and equipment of $42,079 and $76,838, respectively.

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana that was entered into on January 7, 2013. The line of credit allows the Company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.39%. The line of credit is secured by all assets of the Company and has a term of two years. The credit agreement had been modified to extend the termination date to March 15, 2015. On February 26, 2015 the credit agreement was renewed with a termination date of May 15, 2017. The line of credit had no outstanding balance at April 30, 2015 and a balance of $644,345 at October 31, 2014.

In the event that the Company’s line of credit would not be available, the Company would pursue a line of credit from other sources, and take steps to minimize expenditures, such as delaying capital expenditures and reducing overhead costs.

Forward Looking Statements

Certain statements in this Report contain forward-looking statements within the meaning of Section 21B of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company’s present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties including, but not limited to, changes in general economic conditions and changing competition which could cause actual results to differ materially from those indicated.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to changes in interest rates as a result of its financing activities, including its borrowings on the revolving line of credit facility. Based on the current level of borrowings, a change in interest rates is not expected to have a material effect on operations or financial position.

11

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, and under the supervision and with the participation of the management, including the Company’s Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the design and operation of these disclosure controls and procedures. Based on this evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Management, with the participation of the Company’s principal executive and principal financial officers, assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2015. This assessment was performed using the criteria established under the Internal Control-Integrated Framework established by Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

As part of a continuing effort to improve the Company’s business processes management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.

Changes in Internal Control over Financial Reporting

The Company’s management, including CEO and CFO, confirm that there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended April 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was fatally injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff demanded $2,500,000 to settle this claim. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. In July 2014, the Company filed a Motion for Summary Judgment to have the complaint dismissed. On December 1, 2014, the Company and its insurance company agreed to settle this claim for $150,000. The Company was responsible for $75,000, one-half of the total settlement amount. During the fourth quarter of fiscal 2014, the Company accrued an additional $50,000 for a total accrued liability of $75,000 related to this settlement. This settlement amount was paid in the first quarter of fiscal 2015, and the case has been closed.

On December 26, 2013 the Company was served with a civil action filed by Georgetown Paper Stock of Rockville, Inc. for breach of warranties. In November 2014, a jury returned a verdict in favor of the Plaintiff, Georgetown Paper Stock of Rockville, Inc. in the amount of $368,248. The Company was responsible for $277,968 of this amount and its dealer, BE Equipment, Inc., was responsible for $90,280. The baler involved in this claim will be returned to the Company. The Company recorded an accrued liability of $285,000 and an asset in transit of $85,000 resulting in net expense of $200,000 in the fourth quarter of fiscal 2014. The payments were made in the first quarter of fiscal 2015. The baler was returned in the second quarter of fiscal 2015.

12

In November 2014, the Company agreed to a Consent Order with the Florida Department of Environmental Protection to remove solid waste sand blasting material from its property. The Company recorded an accrued liability of $291,000 as of October 31, 2014, for the cost of the removal of this material. The removal of the sand blasting material was completed in January 2015.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

(a) The annual meeting of stockholders of the Company was held on April 20, 2015.

(b) The first item voted on was the election of Directors. Ronald L. McDaniel and D. Roger Griffin were elected as Class II Directors of the Company whose terms will expire in three (3) years at the annual meeting of stockholders to be held in 2018. The results of the voting were as follows: 3,173,643 votes for Ronald L. McDaniel and 5,225 withheld, and 3,155,962 for D. Roger Griffin and 22,906 withheld.

(c) The next item of business was the proposal to ratify the appointment of The GriggsGroup, CPAs, the independent registered public accounting firm of the Company, for the fiscal year ending October 31, 2015. The result of the voting were as follows:

4,838,792	Votes for the resolution
25	votes against, and
4,044	votes abstained.

A majority of the votes cast at the meeting have voted for the resolution, the resolution was duly passed.

No matters were voted on at the meeting.

ITEM 5. OTHER INFORMATON

None.

13

ITEM 6. EXHIBITS

The following exhibits are submitted herewith:

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.

14

SIGNATURES

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

Dated: June 10, 2015		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

15

EX-31.1

Exhibit 31.1

CERTIFICATION

I, D. Roger Griffin, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarter ended April 30, 2015 of International Baler Corp.for the quarter ended April 30, 2015 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 registrant’s other certifying officer(s) 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:
		a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b)	Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, 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;
		c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) 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):
		a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: June 10, 2015	By:	/s/ D. Roger Griffin
		D. Roger Griffin
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, William E. Nielsen, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended April 30, 2015 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 registrant’s other certifying officer(s) 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:
		a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b)	Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, 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;
		c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) 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):
		a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: June 10, 2015	By:	/s/ William E. Nielsen
		William E. Nielsen
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:

I have reviewed the Quarterly Report of International Baler Corp. on Form 10-Q for the quarter ended April 30, 2015 (the “Report”);

To the best of my knowledge, the Report (i) fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and (ii) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of International Baler Corporation during the period covered by this Report.

DATE: June 10, 2015	By:	/s/ D. Roger Griffin
		D. Roger Griffin
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:

I have reviewed the Quarterly Report of International Baler Corp. on Form 10-Q for the quarter ended April 30, 2015 (the “Report”);

To the best of my knowledge, the Report (i) fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and (ii) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of International Baler Corporation during the period covered by this Report.

DATE: June 10, 2015	By:	/s/ William E. Nielsen
		William E. Nielsen
		Chief Financial Officer

XML

Income Taxes (Details Narrative) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Components of Deferred Tax Assets [Abstract]
Net deferred tax assets	$ 46,196	$ 46,196

XML

Summary of Significant Accounting Policies

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

3. 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. 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 including the analysis of historical trends, customer credit worthiness and the aging of receivables. 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 include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided.

(d) Warranties and Service:

The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. 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 currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30:

		2015			2014
Beginning balance	$	65,000		$	60,000
Warranty service provided		(84,420	)		(80,805	)
New product warranties		72,153			84,000
Changes to pre-existing warranty accruals		12,267			(3,195	)
Ending balance	$	65,000		$	60,000

(e) Fair Value of Financial Instruments:

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the relative short-term nature of these assets and liabilities.

XML

Basis of Presentation

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation

2. Basis of Presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America 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 six-month period ended April 30, 2015 are not necessarily indicative of the results that may be expected for the year ending October 31, 2015. The accompanying balance sheet as of October 31, 2014 was derived from the audited financial statements as of October 31, 2014.

XML

Balance Sheets (Unaudited) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Statement of Financial Position [Abstract]
Cash and cash equivalents	$ 597,969	$ 2,803,698
Certificates of deposit	459,012
Accounts receivable, net of allowance for doubtful accounts of $24,412 at January 31, 2015 and $29,412 at October 31, 2014	836,711	3,732,637
Inventories	6,908,627	4,788,881
Prepaid expense and other current assets	49,721	183,725
Deferred income taxes	217,676	217,676
Total current assets	9,069,716	11,726,617
Property, plant and equipment, at cost:	3,285,232	3,243,153
Less: accumulated depreciation	2,193,140	2,115,740
Net property, plant and equipment	1,092,092	1,127,413
Other assets	503,772	1,256
Total other assets	503,772	1,256
TOTAL ASSETS	10,665,580	12,855,286
Revolving promissory note		644,345
Notes payable-current portion	10,034	9,879
Accounts payable	660,361	923,391
Accrued liabilities	329,231	1,512,985
Customer deposits	1,541,207	1,667,932
Total current liabilities	2,540,833	4,758,532
Deferred income taxes	171,480	171,480
Notes payable-long term	23,997	28,223
Total liabilities	2,736,310	4,958,235
Preferred stock, par value $.0001, 10,000,000 shares authorized, none issued
Common stock, par value $.01, 25,000,000 shares authorized; 6,429,975 shares issued at April 30, 2015 and October 31, 2014	64,299	64,299
Additional paid-in capital	6,419,687	6,419,687
Retained earnings	2,126,694	2,094,475
Total stockholders' equity before treasury stock	8,610,680	8,578,461
Less: Treasury stock, 1,245,980 shares atApril 30, 2015 and October 31, 2014, at cost	(681,410)	(681,410)
Total stockholders' equity	7,929,070	7,897,051
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 10,665,580	$ 12,855,286

XML

Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Cash flow from operating activities:
Net income	$ 32,219	$ 88,126
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	77,400	72,000
Provision for doubtful accounts	(5,000)
Changes in operating assets and liabilities:
Certificates of deposits	(961,528)
Accounts receivable	2,900,926	(222,209)
Inventories	(2,119,746)	(1,049,185)
Prepaid expenses and other assets	134,004	26,176
Accounts payable	(263,030)	(68,312)
Accrued liabilities and deferred taxes	(1,183,754)	(513,633)
Customer deposits	(126,725)	1,723,932
Net cash provided by (used in) operating activities	(1,515,234)	56,895
Cash flows from investing activities:
Purchase of property and equipment	(42,079)	(76,838)
Net cash used in investing activities	(42,079)	(76,838)
Cash flows from financing activities
Payments on notes payable	(4,071)
Payments on revolving promissory note	(644,345)	(403,629)
Net cash used in financing activities	(648,416)	(403,629)
Net decrease in cash and cash equivalents	(2,205,729)	(423,572)
Cash and cash equivalents at beginning of period	2,803,698	1,877,256
Cash and cash equivalents at end of period	597,969	1,453,684
Cash paid during period for Interest	2,283	17,687
Cash paid during the period for Income taxes	$ 2,454	$ 322,713

XML

Nature of Business (Details Narrative)	3 Months Ended
	Apr. 30, 2015
Minimum
Worldwide Sales percentage	10.00%
Maximum
Worldwide Sales percentage	35.00%

XML

Debt (Details Narrative) (USD $)

3 Months Ended

Apr. 30, 2015

Oct. 31, 2014

Jul. 31, 2014

Short-term Debt [Line Items]

Line of Credit Outstanding

$ 0

$ 644,345

Line of Credit [Member]

Short-term Debt [Line Items]

Line of Credit Agreement

1,650,000

Interest Rate Terms

LIBOR Rate applicable to each interest period plus 2.39%

Auto Loan Agreement [Member]

Short-term Debt [Line Items]

Line of Credit Agreement

$ 41,254

Interest Rate Terms

term of forty-eight months at an interest rate of 3.8%

XML

Nature of Business

3 Months Ended

Apr. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business:

1. 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 annual sales outside the United States typically ranging from 10% to 35%.

XML

Balance Sheets (Unaudited) (Parenthetical) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Current Assets:
Accounts receivable, net of allowance for doubtful accounts	$ 24,412	$ 29,412
Stockholders' equity:
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, share authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	6,429,875	6,429,875
Treasury stock, shares	1,245,980	1,245,980

XML

Inventories (Tables)

3 Months Ended

Apr. 30, 2015

Inventory Disclosure [Abstract]

Inventories

		April 30, 2015		October 31, 2014
Raw materials	$	2,055,517	$	1,715,772
Work in process		4,451,378		2,584,378
Finished goods		401,732		488,731
	$	6,908,627	$	4,788,881

XML

Document and Entity Information	3 Months Ended
	Apr. 30, 2015	May 31, 2015
Document And Entity Information
Entity Registrant Name	INTERNATIONAL BALER CORPORATION
Entity Central Index Key	0000781902
Document Type	10-Q
Document Period End Date	Apr. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,183,895
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

Debt (Tables)

3 Months Ended

Apr. 30, 2015

Debt Tables

Debt

2015	$	5,808
2016		10,255
2017		10,646
2018		7,322
Total	$	34,031

XML

Statements of Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Apr. 30, 2015	Apr. 30, 2014
Net sales:
Equipment	$ 3,161,797	$ 2,194,768	$ 5,772,229	$ 5,498,422
Parts and service	500,877	589,789	1,075,126	1,233,702
Total net sales	3,662,674	2,784,557	6,847,355	6,732,124
Cost of sales	3,055,963	2,386,342	5,780,882	5,508,390
Gross profit	606,711	398,215	1,066,473	1,223,734
Operating expense:
Selling expense	241,427	245,027	453,098	510,058
Administrative expense	288,160	292,255	563,621	561,763
Total operating expense	529,587	537,282	1,016,719	1,071,821
Operating income (loss)	77,124	(139,067)	49,754	151,913
Other income (expense):
Interest income	857	4,900	1,748	4,900
Interest expense	(220)	(7,220)	(2,283)	(17,687)
Total other income (expense)	637	(2,320)	(535)	(12,787)
Income (loss) before income taxes	77,761	(141,387)	49,219	139,126
Income tax provision (benefit)	27,000	(49,000)	17,000	51,000
Net income (loss)	$ 50,761	$ (92,387)	$ 32,219	$ 88,126
Income (loss) per share, basic and diluted	$ 0.01	$ (0.02)	$ 0.01	$ 0.02
Weighted average number of shares outstanding	5,183,895	5,183,895	5,183,895	5,183,895

XML

Debt

3 Months Ended

Apr. 30, 2015

Debt Disclosure [Abstract]

Debt

6. Debt:

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana that was entered into on January 7, 2013. The line of credit allows the Company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.39%. The line of credit is secured by all assets of the Company and has a term of two years. The credit agreement had been modified to extend the termination date to March 15, 2015. On February 26, 2015 the credit agreement was renewed with a termination date of May 15, 2017. The line of credit had no outstanding balance at April 30, 2015 and a balance of $644,345 at October 31, 2014.

In July 2014 the Company financed a service truck by entering into a loan agreement with Ford Credit for $41,254. The note has a term of forty-eight months at an interest rate of 3.8%. Principal payments for fiscal years ending October 31, are scheduled as follows:

2015	$	5,808
2016		10,255
2017		10,646
2018		7,322
Total	$	34,031

XML

Inventories

3 Months Ended

Apr. 30, 2015

Inventory Disclosure [Abstract]

Inventories

5. Inventories:

Inventories consisted of the following:

		April 30, 2015		October 31, 2014
Raw materials	$	2,055,517	$	1,715,772
Work in process		4,451,378		2,584,378
Finished goods		401,732		488,731
	$	6,908,627	$	4,788,881

XML

Related Party Transactions (Details Narrative)	Apr. 30, 2015
Leland E. Boren
Ownership	50.00%
Avis Industrial Corporation
Ownership of The American Baler Company	100.00%

XML

Summary of Significant Accounting Policies - Warranty Accrual (Details) (USD $)	6 Months Ended
	Apr. 30, 2015	Apr. 30, 2014
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract]
Beginning balance	$ 65,000	$ 60,000
Warranty service provided	(84,420)	(80,805)
New product warranties	72,153	84,000
Changes to pre-existing warranty accruals	12,267	(3,195)
Ending balance	$ 65,000	$ 60,000

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Accounts Receivable and Allowance for Doubtful Accounts

(a) Accounts Receivable & Allowance for Doubtful Accounts:

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. 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 including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

(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 include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.

Revenue Recognition

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided.

Warranties and Service

(d) Warranties and Service:

The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. 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 currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30:

		2015			2014
Beginning balance	$	65,000		$	60,000
Warranty service provided		(84,420	)		(80,805	)
New product warranties		72,153			84,000
Changes to pre-existing warranty accruals		12,267			(3,195	)
Ending balance	$	65,000		$	60,000

Fair Value of Financial Instruments

(e) Fair Value of Financial Instruments:

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the relative short-term nature of these assets and liabilities.

XML

Income Taxes

3 Months Ended

Apr. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes:

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, there is no valuation allowance as of April 30, 2015 and at October 31, 2014. 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 April 30, 2015 and October 31, 2014, net deferred tax assets were $46,196.

XML

Commitments and Contingencies

3 Months Ended

Apr. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. 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 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. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was fatally injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff demanded $2,500,000 to settle this claim.

A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. In July 2014, the Company filed a Motion for Summary Judgment to have the complaint dismissed. On December 1, 2014, the Company and its insurance company agreed to settle this claim for $150,000. The Company was responsible for $75,000, one-half of the total settlement amount. During the fourth quarter of fiscal 2014, the Company accrued an additional $50,000 for a total accrued liability of $75,000 related to this settlement. This settlement amount was paid in the first quarter of fiscal 2015, and the case has been closed.

On December 26, 2013 the Company was served with a civil action filed by Georgetown Paper Stock of Rockville, Inc. for breach of warranties. In November 2014, a jury returned a verdict in favor of the Plaintiff, Georgetown Paper Stock of Rockville, Inc. in the amount of $368,248. The Company was responsible for $277,968 of this amount and its dealer, BE Equipment, Inc., was responsible for $90,280. The baler involved in this claim will be returned to the Company. The Company recorded an accrued liability of $285,000 and an asset in transit of $85,000 resulting in net expense of $200,000 in the fourth quarter of fiscal 2014. The payments were made in the first quarter of fiscal 2015. The baler was returned in the second quarter of fiscal 2015.

In November 2014, the Company agreed to a Consent Order with the Florida Department of Environmental Protection to remove solid waste sand blasting material from its property. The Company recorded an accrued liability of $291,000 as of October 31, 2014, for the cost of the removal of this material. The removal of the sand blasting material was completed in January 2015.

At April 30, 2015, the Company had outstanding commitments relating to standby letters of credit for performance and warranty guarantees of approximately $1,000,000. These letters of credit are collateralized by certificates of deposit which have expiration dates which coincide with the expiration dates of the letters of credit. Certificates of deposit that mature in one year or more are included in other assets in the accompanying balance sheet.

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Apr. 30, 2015

Accounting Policies [Abstract]

Warranty Accrual

		2015			2014
Beginning balance	$	65,000		$	60,000
Warranty service provided		(84,420	)		(80,805	)
New product warranties		72,153			84,000
Changes to pre-existing warranty accruals		12,267			(3,195	)
Ending balance	$	65,000		$	60,000

XML

Debt (Details) (USD $)	Apr. 30, 2015
Debt Details
2015	$ 5,808
2016	10,255
2017	10,646
2018	7,322
Total	$ 34,031

XML

Commitment and Contingencies (Details Narrative) (USD $)	3 Months Ended
	Apr. 30, 2015
Loss Contingencies [Line Items]
Outstanding commitments relating to standby letters of credit	$ 1,000,000
Estate of a former employee [Member]
Loss Contingencies [Line Items]
Alleged Damages	2,500,000
Claim settlement	150,000
Settlement to be paid by company	75,000
Accrued settlement liability	50,000
Georgetown Paper Stock of Rockville, Inc [Member]
Loss Contingencies [Line Items]
Alleged Damages	368,248
Settlement to be paid by company	277,968
Settlement to be paid by third party	90,280
Accrued settlement liability	285,000
Deferred settlement	85,000
Net settlement paid	200,000
Florida Department of Environmental Protection [Member]
Loss Contingencies [Line Items]
Accrued settlement liability	$ 291,000

XML

Shareholders Equity (Unaudited) (USD $)	Common Stock	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit	Treasury Stock	Total
Beginning Balance, Par Value (Cost) at Oct. 31, 2014	$ 64,299	$ 6,419,687	$ 2,094,475	$ (681,410)	$ 7,897,051
Beginning Balance, Shares at Oct. 31, 2014	6,429,875			1,245,980
Net Income			32,219		32,219
Ending Balance, Par Value (Cost) at Apr. 30, 2015	$ 64,299	$ 6,419,687	$ 2,126,694	$ (681,410)	$ 7,929,070
Ending Balance, Shares at Apr. 30, 2015	6,429,875			1,245,980

XML

Related Party Transactions

3 Months Ended

Apr. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

4. Related Party Transactions:

Leland E. Boren, a stockholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls over 50% of the outstanding shares of the Company. Avis owns 100% of The American Baler Co., a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc., also a competitor of the Company. On July 31, 2014 The Harris Waste Management Group, Inc. acquired certain assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from, these companies for the six months ended April 30, 2015 or in fiscal year ended October 31, 2014.

XML

Inventories - Inventories (Details) (USD $)	Apr. 30, 2015	Oct. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 2,055,517	$ 1,715,772
Work in process	4,451,378	2,584,378
Finished goods	401,732	488,731
Inventories	$ 6,908,627	$ 4,788,881