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: July 31, 2016

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	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

5400 Rio Grande Avenue, Jacksonville, FL 32254

(Address of Principal Executive Offices) (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 August 31, 2015

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INTERNATIONAL BALER CORPORATION

TABLE OF CONTENTS

	PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS	1
Balance Sheets ad of July 31, 2016, (unaudited) and October 31, 2015	1
Statements of Income for the three months ended July 31, 2016 and 2015 (unaudited)	2
Statement of Changes in Stockholders’ Equity for the three months and nine ended July 31, 2016 (unaudited)	3
Statement of Cash Flows for the nine months ended July 31, 2016 and 2015 (unaudited)	4
Notes to Financial Statements (unaudited)	5
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	10
ITEM. 4 CONTROLS AND PROCEDURES	10
PART II. OTHER INFORMATION	11
ITEM 1. LEGAL PROCEEDINGS	11
ITEM 5. OTHER INFORMATION	11
ITEM 6. EXHIBITS	12
SIGNATURES	13

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INTERNATIONAL BALER CORPORATION
BALANCE SHEETS
		July 31, 2016			October 31, 2015
		Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	2,565,267		$	3,665,219
Certificates of deposit		195,621			654,753
Accounts receivable, net of allowance for doubtful accounts of $15,000 at July 31, 2016 and at October 31, 2015		1,045,642			1,218,989
Inventories		3,917,763			3,871,167
Prepaid expense and other current assets		261,369			101,610
Deferred income taxes		246,186			246,186
Total current assets		8,231,848			9,757,924
Property, plant and equipment, at cost:		3,929,589			3,451,863
Less: accumulated depreciation		2,402,706			2,269,206
Net property, plant and equipment		1,526,883			1,182,657
Other assets		311,135			309,757
TOTAL ASSETS	$	10,069,866		$	11,250,338
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable-current portion	$	—		$	10,223
Accounts payable		453,752			463,000
Accrued liabilities		284,872			904,798
Customer deposits		398,002			953,057
Total current liabilities		1,136,626			2,331,078
Deferred income taxes		191,004			191,004
Notes payable-long term		—			18,837
Total liabilities		1,327,630			2,540,919
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 July 31, 2016 and October 31, 2015		64,299			64,299
Additional paid-in capital		6,419,687			6,419,687
Retained earnings		2,939,660			2,906,843
		9,423,646			9,390,829
Less:  Treasury stock, 1,245,980 shares  at July 31, 2016 and October 31, 2015, at cost		(681,410	)		(681,410	)
Total stockholders' equity		8,742,236			8,709,419
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,069,866		$	11,250,338
See accompanying notes to financial statements.

1

INTERNATIONAL BALER CORPORATION
STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2016 AND 2015
UNAUDITED
	Three Months					Nine Months
		2016		2015			2016			2015
Net sales:
Equipment	$	2,596,687	$	3,042,642		$	7,424,739		$	8,814,871
Parts and service		721,159		610,266			2,126,505			1,685,392
Total net sales		3,317,846		3,652,908			9,551,244			10,500,263
Cost of sales		2,841,478		3,151,502			8,172,274			8,932,384
Gross profit		476,368		501,406			1,378,970			1,567,879
Operating expense:
Selling expense		186,586		198,485			615,058			651,583
Administrative expense		260,531		302,805			721,453			866,426
Total operating expense		447,117		501,290			1,336,511			1,518,009
Operating income		29,251		116			42,459			49,870
Other income (expense):
Interest income		2,166		940			8,872			2,688
Interest expense		—		(409	)		(514	)		(2,692	)
Total other income  (expense)		2,166		531			8,358			(4	)
Income before income taxes		31,417		647			50,817			49,866
Income tax provision (benefit)		11,000		(1,000	)		18,000			16,000
Net income	$	20,417	$	1,647		$	32,817		$	33,866
Income (loss) per share, basic and diluted	$	0.00	$	0.00		$	0.01		$	0.01
Weighted average number of shares outstanding		5,183,895		5,183,895			5,183,895			5,183,895
See accompanying notes to financial statements.

2

INTERNATIONAL BALER CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 2016
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 November 1, 2015	6,429,875	$	64,299	$	6,419,687	$	2,906,843	1,245,980	$	(681,410	)	$	8,709,419
Net Income	—		—		—		32,817	—		—			32,817
Balance at July 31, 2016	6,429,875	$	64,299	$	6,419,687	$	2,939,660	1,245,980	$	(681,410	)	$	8,742,236
See accompanying notes to financial statements.

3

INTERNATIONAL BALER CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015
UNAUDITED
		2016			2015
Cash flow from operating activities:
Net income	$	32,817		$	33,866
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization		133,500			116,100
Provision for doubtful accounts		—			(5,000	)
Changes in operating assets and liabilities:
Accounts receivable		173,347			2,632,511
Inventories		(46,596	)		(1,991,528	)
Prepaid expenses and other assets		(161,137	)		100,086
Accounts payable		(9,248	)		(364,567	)
Accrued liabilities		(619,926	)		(1,215,319	)
Customer deposits		(555,055	)		(400,509	)
Net cash used in operating activities		(1,052,298	)		(1,094,360	)
Cash flows from investing activities:
Purchases of property and equipment		(477,726	)		(85,648	)
Purchases of certificates of deposit		—			(962,441	)
Redemption of certificates of deposit		459,132			—
Net cash used in investing activities		(18,594	)		(1,048,089	)
Cash flows from financing activities
Payments on notes payable		(29,060	)		(7,375	)
Payments on revolving prommisory note		—			(644,345	)
Net cash used in financing activities		(29,060	)		(651,720	)
Net decrease in cash and cash equivalents		(1,099,952	)		(2,794,169	)
Cash and cash equivalents at beginning of period		3,665,219			2,803,698
Cash and cash equivalents at end of period	$	2,565,267		$	9,529
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest	$	461		$	2,692
Income taxes		392,400			69,854
See accompanying notes to financial statements.

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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 nine-month period ended July 31, 2016 are not necessarily indicative of the results that may be expected for the year ending October 31, 2016. The accompanying balance sheet as of October 31, 2015 was derived from the audited financial statements as of October 31, 2015.

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.

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(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 nine-month period ended July 31:

		2016			2015
Beginning balance	$	70,000		$	65,000
Warranty service provided		(183,389	)		(160,851	)
New product warranties		148,495			132,227
Changes to pre-existing warranty accruals		29,894			28,628
Ending balance	$	65,000		$	65,000

(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 nine months ended July 31, 2016 or in fiscal year ended October 31, 2015.

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5. Inventories:

Inventories consisted of the following:

		July 31, 2016		October 31, 2015
Raw materials	$	2,192,879	$	1,688,032
Work in process		1,077,818		1,758,666
Finished goods		647,066		424,469
	$	3,917,763	$	3,871,167

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. 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 July 31, 2016 and at October 31, 2015.

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%. The loan balance of 27,382 was paid off during January 2016.

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 July 31, 2016 and at October 31, 2015. 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, 2016 and October 31, 2015, net deferred tax assets were $55,000.

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.

7

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 was to 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.

The Company had outstanding commitments relating to standby letters of credit for performance and warranty guarantees of approximately $503,000 at July 31, 2016 and $963,000 at October 31, 2015. 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 of $309,879 July 31, 2016 and $308,501 at October 31, 2015 which mature in one year or more are included in other assets in the accompanying balance sheet.

8

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, 2015, 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 third quarter ended July 31, 2016, the Company had net sales of $3,317,846 compared to net sales of $3,652,908 in the third quarter of fiscal 2015, a decrease of 9.2%. The decrease in net sales was the result of significantly lower shipments of balers and conveyors, seventeen in the third quarter of fiscal 2016 verses twenty-four in the third quarter of fiscal 2015. This was partially offset by the shipment of two rubber balers in the third quarter of 2016 and none in the third quarter of 2015.

The company had net income $20,417 in the third quarter of fiscal 2016, compared to net income of $1,647 in the third quarter of fiscal 2015. The higher net income is primarily the result of lower selling and administrative expenses in the third quarter of fiscal 2016 versus the third quarter of fiscal 2015.

Results of Operations: Nine Month Comparison

The Company had net sales of $9,551,244 in the first nine months of fiscal 2016, compared to net sales of $10,500,263 in the same period of 2015, a decrease of 9.0%. The company shipped ninety-eight balers and conveyors at an average price of 90,000 in fiscal 2015 versus shipments of sixty-three balers and conveyors at an average price of $117,000 in 2016 as the market continues to demand larger balers.

The Company had net income of $32,817 in the first nine months of fiscal 2016 compared to net income of $33,866 in the prior year. Gross profit was $1,378,970 in the first nine months of 2016 compared to $1,567,879 in the prior year. This difference was almost totally offset by lower selling and administrative expenses in the current fiscal year versus the prior fiscal year.

The sales order backlog was $1,500,000 at July 31, 2016 and $8,400,000 at July 31, 2015. The lower sales order backlog is the result of general market conditions.

Financial Condition and Liquidity:

Net working capital at July 31, 2016 was $7,095,222 as compared to $7,426,846 at October 31, 2015. 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 nine months of fiscal 2016 were 22.6 days, as compared to 32.2 days in the first nine months of fiscal 2015. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by nine, and dividing that result by the average day’s sales for the period (period sales ÷ 273).

During the nine months ended July 31, 2016 and 2015, the Company made additions to plant and equipment of $477,726 and $85,648, respectively.

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana. 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. 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 July 31, 2016 and at October 31, 2015.

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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.

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 July 31, 2016. 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.

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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 July 31, 2016 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 was to 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.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

The following exhibits are submitted herewith:

Exhibit No.
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.

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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.

		INTERNATIONAL BALER CORPORATION
Dated: September 9, 2016	By:	/s/ D. Roger Griffin
		D. Roger Griffin
		Chief Executive Officer

Dated: September 9, 2016	By:	/s/ William E. Nielsen
		William E. Nielsen
		Chief Financial Officer

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EX-31.1

Exhibit 31.1

I, D. Roger Griffin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2016 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:

(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.

(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 registrants cerifying 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):

(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.

Dated: September 9, 2016	By:	/s/ D. Roger Griffin
		D. Roger Griffin
		Chief Executive Officer

EX-31.2

Exhibit 31.2

I, William E. Nielsen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2016 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:

(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.

(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 registrants cerifying 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):

(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.

Dated: September 9, 2016	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 July 31, 2016 (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.

Dated: September 9, 2016	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 July 31, 2016 (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.

Dated: September 9, 2016	By:	/s/ William E. Nielsen
		William E. Nielsen
		Chief Financial Officer

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Document and Entity Information - shares	9 Months Ended
	Jul. 31, 2016	Aug. 31, 2016
Document And Entity Information
Entity Registrant Name	International Baler Corporation
Entity Central Index Key	0000781902
Document Type	10-Q
Document Period End Date	Jul. 31, 2016
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?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,183,895
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

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Balance Sheets - USD ($)	Jul. 31, 2016	Oct. 31, 2015
Current assets:
Cash and cash equivalents	$ 2,565,267	$ 3,665,219
Certificates of deposit	195,621	654,753
Accounts receivable, net of allowance for doubtful accounts of $15,000 at July 31, 2016 and at October 31, 2015	1,045,642	1,218,989
Inventories	3,917,763	3,871,167
Prepaid expense and other current assets	261,369	101,610
Deferred income taxes	246,186	246,186
Total current assets	8,231,848	9,757,924
Property, plant and equipment, at cost:	3,929,589	3,451,863
Less: accumulated depreciation	2,402,706	2,269,206
Net property, plant and equipment	1,526,883	1,182,657
Other assets:
Other assets	311,135	309,757
TOTAL ASSETS	10,069,866	11,250,338
Current liabilities:
Notes payable-current portion		10,223
Accounts payable	453,752	463,000
Accrued liabilities	284,872	904,798
Customer deposits	398,002	953,057
Total current liabilities	1,136,626	2,331,078
Deferred income taxes	191,004	191,004
Notes payable-long term		18,837
Total liabilities	1,327,630	2,540,919
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 July 31, 2016 and October 31, 2015	64,299	64,299
Additional paid-in capital	6,419,687	6,419,687
Retained earnings	2,939,660	2,906,843
Total stockholders' equity before treasury stock	9,423,646	9,390,829
Less: Treasury stock, 1,245,980 shares at July 31, 2016 and October 31, 2015, at cost	(681,410)	(681,410)
Total stockholders' equity	8,742,236	8,709,419
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 10,069,866	$ 11,250,338

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Balance Sheets (Parenthetical) - USD ($)	Jul. 31, 2016	Oct. 31, 2015
Current Assets:
Accounts receivable, net of allowance for doubtful accounts	$ 15,000	$ 15,000
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

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Statements of Income - USD ($)	3 Months Ended		9 Months Ended
	Jul. 31, 2016	Jul. 31, 2015	Jul. 31, 2016	Jul. 31, 2015
Net sales:
Equipment	$ 2,596,687	$ 3,042,642	$ 7,424,739	$ 8,814,871
Parts and service	721,159	610,266	2,126,505	1,685,392
Total net sales	3,317,846	3,652,908	9,551,244	10,500,263
Cost of sales	2,841,478	3,151,502	8,172,274	8,932,384
Gross profit	476,368	501,406	1,378,970	1,567,879
Operating expense:
Selling expense	186,586	198,485	615,058	651,583
Administrative expense	260,531	302,805	721,453	866,426
Total operating expense	447,117	501,290	1,336,511	1,518,009
Operating income	29,251	116	42,459	49,870
Other income (expense):
Interest income	2,166	940	8,872	2,688
Interest expense		(409)	(514)	(2,692)
Total other income (expense)	2,166	531	8,358	(4)
Income before income taxes	31,417	647	50,817	49,866
Income tax provision (benefit)	11,000	(1,000)	18,000	16,000
Net income	$ 20,417	$ 1,647	$ 32,817	$ 33,866
Income (loss) per share, basic and diluted	$ 0.00	$ 0.00	$ 0.01	$ 0.01
Weighted average number of shares outstanding	5,183,895	5,183,895	5,183,895	5,183,895

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Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Jul. 31, 2016 - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit	Treasury Stock	Total
Beginning Balace, Shares at Oct. 31, 2015	6,429,875			1,245,980
Beginning Balance, Value at Oct. 31, 2015	$ 64,299	$ 6,419,687	$ 2,906,843	$ (681,410)	$ 8,709,419
Net Income			32,817		32,817
End Balance, Shares at Jul. 31, 2016	6,429,875			1,245,980
End Balance, Value at Jul. 31, 2016	$ 64,299	$ 6,419,687	$ 2,939,660	$ (681,410)	$ 8,742,236

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Statements of Cash Flows - USD ($)	9 Months Ended
	Jul. 31, 2016	Jul. 31, 2015
Cash flow from operating activities:
Net income	$ 32,817	$ 33,866
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	133,500	116,100
Provision for doubtful accounts		(5,000)
Changes in operating assets and liabilities:
Accounts receivable	173,347	2,632,511
Inventories	(46,596)	(1,991,528)
Prepaid expenses and other assets	(161,137)	100,086
Accounts payable	(9,248)	(364,567)
Accrued liabilities	(619,926)	(1,215,319)
Customer deposits	(555,055)	(400,509)
Net cash used in operating activities	(1,052,298)	(1,094,360)
Cash flows from investing activities:
Purchase of property and equipment	(477,726)	(85,648)
Purchases of certificates of deposit		(962,441)
Redemptions of certificates of deposit	459,132
Net cash used in investing activities	(18,594)	(1,048,089)
Cash flows from financing activities
Payments on notes payable	(29,060)	(7,375)
Payments on revolving promissory note		(644,345)
Net cash used in financing activities	(29,060)	(651,720)
Net decrease in cash and cash equivalents	(1,099,952)	(2,794,169)
Cash and cash equivalents at beginning of period	3,665,219	2,803,698
Cash and cash equivalents at end of period	2,565,267	9,529
Supplemental disclosure of cash flow information:
Cash paid during period for Interest	461	2,692
Cash paid during the period for Income taxes	$ 392,400	$ 69,854

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Nature of Business

9 Months Ended

Jul. 31, 2016

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%.

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Basis of Presentation

9 Months Ended

Jul. 31, 2016

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 nine-month period ended July 31, 2016 are not necessarily indicative of the results that may be expected for the year ending October 31, 2016. The accompanying balance sheet as of October 31, 2015 was derived from the audited financial statements as of October 31, 2015.

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Summary of Significant Accounting Policies

9 Months Ended

Jul. 31, 2016

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 nine-month period ended July 31:

		2016			2015
Beginning balance	$	70,000		$	65,000
Warranty service provided		(183,389	)		(160,851	)
New product warranties		148,495			132,227
Changes to pre-existing warranty accruals		29,894			28,628
Ending balance	$	65,000		$	65,000

(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.

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Related Party Transactions

9 Months Ended

Jul. 31, 2016

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 nine months ended July 31, 2016 or in fiscal year ended October 31, 2015.

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Inventories

9 Months Ended

Jul. 31, 2016

Inventory Disclosure [Abstract]

Inventories

5. Inventories:

Inventories consisted of the following:

		July 31,2016		October 31, 2015
Raw materials	$	2,192,879	$	1,688,032
Work in process		1,077,818		1,758,666
Finished goods		647,066		424,469
	$	3,917,763	$	3,871,167

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Debt

9 Months Ended

Jul. 31, 2016

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. 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 July 31, 2016 and at October 31, 2015.

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%. The loan balance of 27,382 was paid off during January 2016.

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Income Taxes

9 Months Ended

Jul. 31, 2016

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 July 31, 2016 and at October 31, 2015. 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, 2016 and October 31, 2015, net deferred tax assets were $55,000.

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Commitments and Contingencies

9 Months Ended

Jul. 31, 2016

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 was to 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.

The Company had outstanding commitments relating to standby letters of credit for performance and warranty guarantees of approximately $503,000 at July 31, 2016 and $963,000 at October 31, 2015. 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 of $309,879 July 31, 2016 and $308,501 at October 31, 2015 which mature in one year or more are included in other assets in the accompanying balance sheet.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jul. 31, 2016

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 nine-month period ended July 31:

		2016			2015
Beginning balance	$	70,000		$	65,000
Warranty service provided		(183,389	)		(160,851	)
New product warranties		148,495			132,227
Changes to pre-existing warranty accruals		29,894			28,628
Ending balance	$	65,000		$	65,000

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.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Jul. 31, 2016

Accounting Policies [Abstract]

Warranty Accrual

		2016			2015
Beginning balance	$	70,000		$	65,000
Warranty service provided		(183,389	)		(160,851	)
New product warranties		148,495			132,227
Changes to pre-existing warranty accruals		29,894			28,628
Ending balance	$	65,000		$	65,000

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Inventories (Tables)

9 Months Ended

Jul. 31, 2016

Inventory Disclosure [Abstract]

Inventories

		July 31,2016		October 31, 2015
Raw materials	$	2,192,879	$	1,688,032
Work in process		1,077,818		1,758,666
Finished goods		647,066		424,469
	$	3,917,763	$	3,871,167

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Nature of Business (Details Narrative)	3 Months Ended
	Jul. 31, 2016
Minimum
Annual sales outside the United States	10.00%
Maximum
Annual sales outside the United States	35.00%

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Summary of Significant Accounting Policies - Warranty Accrual (Details) - USD ($)	9 Months Ended
	Jul. 31, 2016	Jul. 31, 2015
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract]
Beginning balance	$ 70,000	$ 65,000
Warranty service provided	(183,389)	(160,851)
New product warranties	148,495	132,227
Changes to pre-existing warranty accruals	29,894	28,628
Ending balance	$ 65,000	$ 65,000

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Related Party Transactions (Details Narrative)	Jul. 31, 2016
Leland E. Boren
Ownership of Avis	50.00%
Avis Industrial Corp.
Ownership of The American Baler	100.00%

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Inventories - Inventories (Details) - USD ($)	Jul. 31, 2016	Oct. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 2,192,879	$ 1,688,032
Work in process	1,077,818	1,758,666
Finished goods	647,066	424,469
Inventories	$ 3,917,763	$ 3,871,167

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Debt (Details Narrative)

21 Months Ended

Jul. 31, 2016

USD ($)

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%

Loan balance paid

$ 27,382

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Income Taxes (Details Narrative) - USD ($)	Jul. 31, 2016	Oct. 31, 2015
Components of Deferred Tax Assets [Abstract]
Net deferred tax assets	$ 55,000	$ 55,000

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Commitment and Contingencies (Details Narrative) - USD ($)	1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Aug. 31, 2010	Jul. 31, 2016	Oct. 31, 2015	Nov. 30, 2014
Loss Contingencies [Line Items]
Claim settlement	$ 150,000
Settlement to be paid by company	$ 75,000
Letters of credit for performance and warranty guarantees				$ 503,000	$ 963,000
Certificates of deposit				$ 309,308	$ 308,501
Estate of a former employee [Member]
Loss Contingencies [Line Items]
Alleged Damages			$ 2,500,000
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
Net settlement paid		200,000
Asset in transit		$ 85,000
Florida Department of Environmental Protection
Loss Contingencies [Line Items]
Accrued settlement liability						$ 291,000