10-K

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

_________________

FORM 10-K

_________________

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

For the fiscal year ended: October 31, 2018

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, Florida 32254
(Address of Principal Executive Offices) (Zip Code)

904-358-3812
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class
Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value per share

Title of each class
Name of each exchange on which registered

_________________

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

Yes ☐  No ☒

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

Yes ☐  No ☒

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 (§229.405 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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 ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. (April 30, 2018 closing price $2.01) : $1,993,711

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 Section 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 REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date (January 15, 2019): 5,183,895

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Table of Contents
	Page
Part I
Item 1. Business	3
Item 2. Properties	6
Item 3. Legal Proceedings	6
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation	8
Item 8. Financial Statements and Supplementary Data	10
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	10
Item 9A. Controls and Procedures	10
Item 9B. Other Information	12
Part III
Item 10. Director and Executive Officers and Corporate Governance	13
Item 11. Executive Compensation	16
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19
Item 13. Certain Relationships and Related Transactions, and Director Independence	20
Item 14. Principal Accountant Fees and Service	21
Part IV
Item 15. Exhibits, Financial Statements and Schedules	22
Signatures	23

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PART I

ITEM 1. BUSINESS

International Baler Corp. was incorporated on September 10, 1975, in the State of Delaware under the name B.W. Energy Systems, Inc. Its name was changed to Waste Technology Corp. in August 1983. In March 2009, Waste Technology Corporation’s wholly-owned subsidiary, International Baler Corporation (IBC), was merged into Waste Technology Corporation and the Company changed its name to International Baler Corporation. International Baler Corporation maintains its executive offices and manufacturing facilities at 5400 Rio Grande Avenue, Jacksonville, Florida 32254. The Company’s telephone number is (904) 358-3812. The Company's fiscal year end is October 31.

General

The Company is a manufacturer of baling equipment which is fabricated from steel and utilizes hydraulic and electrical components 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 to meet specific customer requirements.

Products

Balers utilize mechanical, hydraulic, and electrical mechanisms to compress a variety of materials into bales for easier and lower cost handling, shipping, disposal, storage, and/or bulk sales for recycling. The Company offers a wide variety of balers, certain types that are standardized and others that are designed to specific customer requirements. The Company's products include (i) general purpose horizontal and vertical balers, (ii) specialty balers, such as those used for textile materials, used clothing, aluminum cans, 55-gallon drums and synthetic rubber; and (iii) accessory equipment such as conveyors, fluffers, bale tying machines, and plastic bottle piercers (machines which puncture plastic bottles before compaction for greater density).The Company also provides service and repair work to general purpose and specialty balers.

General Purpose Balers

These balers are designed for general purpose compaction of waste materials. They are manufactured in either vertical or horizontal loading models, depending on available floor space and desired capacity. Typical materials that are handled by this equipment include paper, corrugated boxes, and miscellaneous solid waste materials. These balers range in bale weight capacity from approximately 300 to 3,000 pounds and range in price from approximately $5,000 to $600,000. General purpose baler sales constituted approximately 61% and 58% of net sales for the fiscal years ended October 31, 2018 and 2017, respectively.

Specialty Balers

Specialty balers are designed for specific applications which require modifications of the general baler configuration. The rubber baler is designed to apply pressure in such a way as to compress the synthetic rubber into a self-contained bale that does not require tying. The scrap metal baler is designed to form a bale, referred to as a scrap metal "briquette" of specified size and weight. The drum crusher baler is capable of collapsing a standard 55-gallon drum into a "pancake" approximately four (4) to eight (8) inches high, which also serves to contain any remaining contents. The textile baler is capable of compressing and baling loose fibers, which do not ordinarily adhere to each other under pressure. In addition, a double chamber baler has been designed for use by the clothing and textile industries.

Specialty balers range in price from approximately $5,000 to $550,000, and are less exposed to competitive pressures than are general purpose balers. Specialty baler sales constituted approximately 7% and 15% of net sales for the fiscal years ended October 31, 2018 and 2017, respectively.

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Accessory Equipment

The Company manufactures and markets a number of accessory equipment items in order to market a complete waste handling system. This equipment includes conveyors, which carry waste from floor level to the top of large horizontal balers; extended hoppers on such balers; rufflers, which break up material to improve bale compaction; electronic start/stop controls and hydraulic oil coolers and cleaners. For 2018 and 2017, accessory equipment did not represent a significant percentage of net sales.

Warranties and Service

IBC typically warranties its products for one year from the date of sale as to materials, three (3) years for structural damage, and six months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at IBC's Jacksonville, Florida, facility, and by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. Repair services and spare parts sales represented approximately  27% and 25% of the Company’s net sales for fiscal 2018 and 2017, respectively.

Manufacturing

The Company manufactures its products in its facility in Jacksonville, Florida, where it maintains a fully equipped and staffed manufacturing plant. IBC purchases raw materials, such as steel sheets and beams and components such as hydraulic pumps, valves and cylinders, and certain controls and other electric equipment which are used in the fabrication of the balers. The Company has no long-term supply agreements, and has not experienced unusual delays in obtaining raw materials or components.

The raw materials required by IBC to manufacture the balers, principally steel, motors, and hydraulic systems, are readily available from a number of sources and IBC is not dependent on any particular source. IBC is not dependent on any significant patents, trademarks, licenses, or franchises in connection with its manufacture of balers.

While IBC maintains an inventory of raw materials, most of it is intended for specific orders and inventory turnover is relatively rapid. Approximately 60% of its inventory turns over in 45 to 90 days and the remaining balance, consisting of customized equipment, turns over in 3 to 6 months. IBC's business is not seasonal.

Sales and Marketing

IBC sells its products throughout the United States and to some extent in Europe, the Far East, and South America to manufacturers of synthetic rubber and polymers, plastic recycling facilities, power generating facilities, textile mills, paper mills, cotton gins, supermarkets and other retail outlets, paper recycling facilities, and municipalities.

IBC has a sales force of three (3) employees who rely upon responses to advertising, personal visits, attendance at trade shows, referrals from existing customers and telephone calls to dealers and/or end users. Approximately 45% of sales are made through manufacturer's representatives and dealers. Sales made through the Company’s dealers are generally discounted and sales are recorded net of the discount amount. Occasionally sales are made with a commission payment, selling expense, through a representative who is not a dealer.

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The Company's general purpose balers are sold throughout the United States to such end users as waste producing retailers, manufacturing and fabricating plants, bulk material producers, and solid waste recycling facilities. Specialty balers are sold worldwide, including Europe, the Far East, and South America to manufacturers of rubber and polymers, plastic recycling facilities, paper recycling facilities, textile mills and power generating facilities. During fiscal 2018, foreign sales amounted to $687,407 or approximately 6% of the Company’s net sales while in fiscal 2017, foreign sales amounted to $2,077,036, approximately 19% of the Company’s net sales. In fiscal 2018 and 2017, the Company had no significant sales to any one foreign country.

During fiscal 2018 and fiscal 2017, IBC had sales to more than 300 customers. In fiscal 2018, three customers accounted for 11.8%, 11.2% and 9.0% of total net sales, respectively, while in fiscal 2017, three customers accounted for 17.9%, 11.4% and 8.0% of net sales, respectively.

The Company builds only a small quantity of balers for its inventory and generally builds based on firm sales orders. The Company's open sales orders at October 31, 2018 were $2,300,000 and at October 31, 2017 were $3,450,000. The Company generally delivers its orders within four (4) months of the date booked.

Competition

The potential market for the Company's balers is nationwide and overseas, but the majority of the Company’s general purpose baler sales are in the United States. The Company competes in these markets with approximately 20 companies, none of which are believed to be dominant, but some of which may have significantly greater sales and financial resources than the Company. The Company is able to compete with these companies due to its reputation in the market place, its ability to service the balers it manufactures and sells, as well as its ability to custom design balers to a customer's particular needs. The Company experiences intense competition with respect to its lower priced or general purpose balers, based upon price, including freight, and based on performance. The Company experiences less competition with respect to its specialized baler equipment, such as synthetic rubber, scrap metal, and textile balers.

Regulation

Machinery, such as the Company's balers, is subject to both federal and state regulation relating to safe design and operation. The Company complies with design requirements and its balers include interlocks to prevent operation while the loading door is open, and also includes required printed safety warnings.

Research and Development

The Company has the broadest line of products in the baler industry and continues to provide its customers with new products and product improvements. The Company invests a minimal amount on general research and development of new products.

Compliance with Environmental Laws

The Company generally believes that it has complied with and is in compliance, with all federal, state, and local environmental laws.

Employees

As of October 31, 2018, the Company employed 57 full-time employees as follows: 4 in management and supervision: 9 in sales and service; 34 in manufacturing; 6 in engineering; and, 4 in administration.

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Available Information

The Company is a reporting company, as that term is defined under the Securities Acts, and therefore, files reports, including, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K and other information with the Securities and Exchange Commission (the “Commission”). In addition, the Company will provide, without charge to its stockholders, upon written or oral request by such stockholder, a copy of any information referred to herein that is incorporated by reference except exhibits to such information that are incorporated by reference unless the exhibits are themselves specifically incorporated by reference. All such requests should be directed to William E. Nielsen, at International Baler Corp., 5400 Rio Grande Avenue, Jacksonville, Florida 32254, telephone number (904) 358-3812.

The Company is an electronic filer. The Commission maintains a web site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission, including all of the Company’s filings with the Commission. The address of such site is (http://www.sec.gov).

The Company’s website is located at http://www.intl-baler.com. Under the “Corporate Information” section of the website, you may access, free of charge, the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 filings (Form 3, 4 and 5) and any amendments to those reports as reasonably practicable after the Company electronically files such reports with the SEC. The information contained on the Company’s website is not part of this Report or any other report filed with the SEC.

ITEM 2. PROPERTIES

IBC is the owner of the buildings and property located at 5400 Rio Grande Avenue, Jacksonville, Florida. The building contains approximately 62,000 square feet and is situated on eight (8) acres. IBC manufactures all of the Company's products at this location. The property has no mortgage. However, the Company’s primary lender, First Merchants Bank of Muncie, Indiana, has a security interest in the property as part of the collateral for the line of credit which it provides to the Company. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 3. LEGAL PROCEEDINGS

To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company which would have a result materially adverse to the Company. To the knowledge of management, no director, executive officer or affiliate of the Company or owner of record or beneficially owned interest of more than 5% of the Company’s common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

Total legal fees expensed in fiscal 2018 and 2017 were $2,545 and $6,034, respectively.

On December 1, 2017 the Company was served with a complaint related to an injury to an employee working at Integrated Coating and Seed Technology Inc.,(INCOTEC). The employee was operating a baler manufactured by the Company in 1994. The injury occurred on December 15, 2015. The plaintiff is Star Insurance Company. The Company’s insurer has retained an attorney and has begun the discovery process. The Company believes its exposure is a range of $0 to $25,000, the amount of the Company’s deductible on its insurance policy. Accordingly, the Company accrued $25,000 during the six months ended April 30, 2018.

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In December 2018 the Company discovered an employee theft of Company inventory. At the current time the Company has not fully determined the extent of the theft. Our estimate is that the value of the stolen items was between $100,000 and $200,000. The Company carries Crime Insurance which has an upper limit of $1,000,000 and a deductible of $25,000.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 

The Company's stock is presently traded on the OTC Electronic Bulletin Board of NASDAQ under the symbol IBAL. As of October 31, 2018, the number of shareholders of record of the Company's Common Stock was approximately 400, and management believes that there are approximately 500 beneficial owners of the Company’s common stock.

The range of high and low bid quotations for the Company's common stock during the fiscal years ended October 31, 2018 and 2017, are set forth below.

Fiscal Year Ended
October 31, 2018	High		Low
First Quarter	$	2.09	$	2.00
Second Quarter		2.10		2.00
Third Quarter		2.10		2.00
Fourth Quarter		2.10		1.75
Fiscal Year Ended
October 31, 2017		High		Low
First Quarter	$	2.17	$	2.04
Second Quarter		2.14		1.80
Third Quarter		2.05		1.85
Fourth Quarter		2.08		1.86

The Company has paid no dividends since its inception. Other than the requirement of the Delaware Corporation law that dividends be paid out of capital surplus only and that the declaration and payment of a dividend not render the Company insolvent, there are no restrictions on the Company's present or future ability to pay dividends.

The payment by the Company of dividends, if any, in the future, rests within the discretion of its Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements, its financial condition and other relevant factors.

Recent Sales of Unregistered Securities

During the past two years ended October 31, 2018, the Company has not sold any unregistered securities.

Purchases of Equity Securities

During the fiscal year ended October 31, 2018, neither the Company, nor anyone on its behalf, repurchased any of the Company securities.

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Securities authorized for issuance under equity compensation plans

None.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This “Management’s Discussion and Analysis” contains 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 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.

Results of Operations

For the fiscal year ending October 31, 2018, net sales were $11,113,982 compared to $10,494,941 in fiscal 2017, an increase of 5.9%. The increase in net sales was the result of higher shipments of auto-tie balers, twenty in fiscal 2018 versus eleven in fiscal 2017. These higher net sales were partially offset by lower two-ram baler sales, six in fiscal 2018 versus nine in fiscal 2017.

Gross profit was $1,561,674 in fiscal 2018 compared to $1,253,506 in the prior fiscal year due to higher shipments. The Company had net income of $310,229 in fiscal 2018 compared to net income of $73,360 in fiscal 2017.

The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. As a result,  the Company recorded a reduction of net deferred income tax assets of approximately $10,000 during the first quarter of our fiscal year ending October 31, 2018.

Liquidity and Capital Resources

The Company’s net working capital at October 31, 2018 was $7,851,219 as compared to $7,513,027 at October 31, 2017.

Average Days Sales Outstanding (DSO) in fiscal 2018 was 20.6 days as compared to 28.8 days in fiscal 2017. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by twelve, and dividing that result by the average day’s sales for the period (period sales ÷ 365).

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed on May 15, 2018. The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2019. The line of credit had no outstanding balance at October 31, 2018 and at October 31, 2017.

In fiscal 2018 the Company made additions of $131,643 to its buildings and manufacturing equipment, compared to additions of $30,452 in fiscal 2017. There are no unusual or infrequent events or transactions or significant economic changes which materially affect the amount of reported income. The Company believes that its cash, line of credit, and results of operations are sufficient to fund future operations.

The Company is unaware of any events or uncertainties which are reasonably likely to have a material impact on the Company’s short-term or long-term liquidity or the net sales, or net income. The Company has no known or anticipated significant elements of income or loss that do not arise from the Company’s operations.

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Off Balance Sheet Arrangements

The Company has no off balance sheet arrangements.

Inflation

The costs of the Company are subject to the general inflationary trends existing in the general economy. The Company believes that expected pricing for its equipment will be able to include sufficient increases to offset any increase in costs due to inflation.

Critical Accounting Policies and Estimates

This discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures of contingent assets and liabilities. We evaluate our estimates on an ongoing basis and we base our estimates on historical experience and various other assumptions we deem reasonable to the situation. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Changes in our estimates could materially impact our results of operations and financial condition in any particular period.

We consider our critical accounting policies and estimates to be as follows based on the high degree of judgment or complexity in their application:

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. Baler revenues are based on established prices by type and model. 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. Standard service fee prices are established depending on baler classification and estimated time. The timing of shipments and installation services have an impact on the recording of revenue in a period.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses on trade receivables resulting from the inability to collect outstanding accounts due from its customers. The allowances include specific amounts for disputed, troubled and aged accounts using current knowledge of particular customer credit worthiness and general allowances based on historical collection experience, current economic trends, credit worthiness of customers and changes in customer payment terms.

Management believes the estimates used in determining the allowance for doubtful accounts are critical accounting estimates because changes in credit worthiness and economic conditions, including bankruptcies, could have a material impact on operating results.

The Company reviews its allowance for doubtful accounts monthly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

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Inventory Allowance

The Company analyzes inventory for excess or slow moving inventory. The Company reviews inventory for obsolescence on a regular basis. The allowance is estimated based on factors such as historical trends, current market conditions and management’s assessment of when the inventory would likely be sold and the quantities and prices at which the inventory would likely be sold in the normal course of business. Changes in product specifications, customer product preferences or the loss of a customer could result in unanticipated impairment in net realizable value that may have a material impact on cost of goods sold, gross margin and net income. Obsolete or damaged inventory is disposed of or written down to net realizable value on a quarterly basis.

Additional adjustments, if necessary, are made based on management’s specific review of inventory on-hand. Management believes the estimates used in determining the allowance for excess and slow moving inventory are critical accounting estimates as changes in the estimates could have a material impact on net income and the estimates involve a high degree of judgment.

Warranty Allowance

The Company warranties its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, and six (6) months as to labor, and offers a service plan for other required repairs and maintenance. The Company maintains an accrued liability for expected warranty claims. The warranty allowance considers warranty costs and requires management estimates of baler performance based on the quantity and type of balers currently under warranty and known potential warranty issues for these balers. Changes in the warranty estimate could impact operating results.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. There were no valuation allowances on the deferred tax assets at October 31, 2018 and 2017 as management believes it will fully utilize them. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. There were no accruals for uncertain tax positions at October 31, 2018 or 2017.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data commence on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure 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 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 the Company’s 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 necessarily is 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 management, including its CEO and CFO, 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 CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective due to the incident of employee theft reported in this 10-K, Part I Item 3.

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Management considers the cause of this theft event a material weakness in its controls and procedures. In order to remediate this material weakness and further strengthen the controls surrounding inventory loss due to theft, management has initiated or enhanced the following procedures:

• Segregation of duties  to initiate purchase orders, receive inventory items, and make shipments will be strengthened.

• Purchase orders and inventory receipts will be reviewed and approved by a purchasing manager.

• Shipping records will be timely reviewed to verify that all shipments are being made to approved customers of the Company.

• System access to adjust inventory records will be more strictly controlled.

• Access to the Company’s physical inventory will be strengthened.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness in our internal control over financial reporting was a result of not designing effective controls over purchasing and the access to physical inventory and certain inventory  records. Except for this material weakness, management has concluded that the financial statements in this Annual Report on Form 10-K fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the fiscal years ended October 31, 2018 and 2017.

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.

Internal Control over Financial Reporting

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

The Company’s management is responsible for establishing and maintaining effective internal controls over financial reporting, as such terms is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Internal control over financial reporting is a process designed 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.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

Management, with the participation of the Company’s principal executive and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting as of October 31, 2018. This assessment was performed using the criteria established under the Internal Control-Integrated Framework established by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

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Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error or circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and reporting and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment performed using the criteria established by COSO, management has concluded that there was a material weakness surrounding the control of purchasing and access to certain Company inventory and inventory records and due to this material weakness the Company did not maintain effective internal control over financial reporting as of and for the year ended October 31, 2018. While the material weakness resulted in a loss due to theft, it did not result in any material misstatements to the Company’s financial statements or disclosures for any interim periods during, or for the fiscal year 2018 or 2017. Management has implemented the actions mentioned above to ensure the Company has effective controls and procedures.

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

(b) Changes in Internal Control over Financial Reporting

During the year ended October 31, 2018, except as described above there have not been any changes in the Company’s internal controls that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

On January 10, 2017 Roger Griffin resigned as President, Chief Executive Officer and Director of International Baler Corporation. Mr. Griffin resigned in order to pursue other interests. The Board of Directors named William E. Nielsen, the Company’s Chief Financial Officer, to the position of President and Chief Executive Officer. Mr. Nielsen has been the Company’s Chief Financial Officer since 1994.

On October 1, 2018 the Board of Directors of International Baler Corporation named Victor W. Biazis President and Chief Executive Officer of the Company. Mr. Nielsen remains the Chief Financial Officer of the Company.

On November 23, 2018, Lealand E. Boren, a Director of the Company, passed away. Mr. Boren’s estate is the largest shareholder of the Company.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Officers

The executive officers and directors of the Company are as follows:

Name	Age		Positions Held	Date of Initial Election or Designation
Victor W. Biazis 5400 Rio Grande Avenue Jacksonville, FL 32254		60	President and CHief Executive Officer	10/01/2018
Lael E. Boren 1909 S. Main Street Upland, IN 46989		50	Director	04/15/2011
Leland E. Boren 1909 S. Main Street Upland, IN 46989		95	Director	03/09/2005
Ronald L. McDaniel Western-Cullen-Hayes, Inc. Chairman of the Board 2700 West 36th Place Chicago, IL 60632		79	Director Chairman of the Board	05/16/2006
William E. Nielsen 5400 Rio Grande Ave. Chief Financial Officer 6/14/94 Jacksonville, FL 32254		71	Director Chief Financial Officer	11/20/1997 06/14/1994
John J. Martorana 5148 Hanover Lane Lakeland, FL 33817		68	Director	01/05/2009
Martha R. Songer 1909 S. Main Street Upland, IN 46989		62	Director	01/30/2012

The Board of Directors is divided into three (3) classes of directors ("Class I", "Class II", and "Class III"), with each class having as nearly the same number of directors as practicable. Stockholders elect such class of directors, Class I, Class II, or Class III, as the case may be, to succeed such class directors whose terms are expiring, for a three (3) year term, and such class of directors shall serve until the successors are elected and qualify. Officers of the Company serve at the pleasure of the Board of Directors.

During fiscal 2018 the Board of Directors met one time.

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There are no family relationships between executive officers or directors of the Company except that Lael E. Boren is the son of Leland E. Boren.

Except as noted above, there is no understanding or arrangement between any director or any other persons pursuant to which such individual was or is to be selected as a director or nominee of the Company.

Background of Executive Officers and Directors

The following is a brief account of the experience, during the past five years, of each director and executive officer of the Company:

Victor W. Biazis is the President & CEO. He was appointed on Oct. 1, 2018. He has held various Senior Management and Executive roles in his career. He was with H.B. Fuller from 1981 to 2005, a Global Adhesive Supplier based in St. Paul, MN. From 2000 to 2005, he was a General Manager for the North America Packaging Adhesive Business Unit of H.B. Fuller. He then moved on and served as the President and Regional CEO for Wisdom Adhesives Global Group, based in Elgin, IL, from 2006 to 2011. Most recently, from 2011 to 2018, Mr. Biazis, was President and CEO of Coastal Industrial Products. Mr. Biazis received a Bachelor Degree in Political Science from Southeastern Louisiana University in 1981.

Leland E. Boren is the Chairman, Chief Executive Officer and President of Avis Industrial Corporation located in Upland, Indiana. He is also President and CEO of PHD, Inc., Ft. Wayne, Indiana and has held this position since 2010. From 1945 through 1971, Mr. Boren was employed by The Pierce Company (formerly The Pierce Governor Company) in various capacities. He became President of The Pierce Governor Company in 1958. The Pierce Company merged with Avis Industrial Corporation in 1971 and Mr. Boren became President of Avis at that time.

Ronald L. McDaniel has been president of Western-Cullen-Hayes, Inc. since 1980. He was Vice President and General Manager of Western-Cullen-Hayes from 1975 to 1980. From 1957 to 1975, Mr. McDaniel worked for Western-Cullen-Hayes and Burro Crane, an affiliated company, in various capacities including division controller. Mr. McDaniel has a bachelor’s degree from the University of Dayton and an MBA from the University of Chicago.

William E. Nielsen joined the Company in June 1994 as its Chief Financial Officer. He was elected President and Chief Executive Officer on January 10, 2017. Prior to joining the Company, acted as a financial consultant to Fletcher Barnum Inc., a privately held manufacturing concern, from October 1993 through June 1994. From 1980 through July 1993, he was the Vice President, Administration and Finance at Unison Industries, Inc. Mr. Nielsen received a BBA in Finance and an M.B.A. at Western Illinois University in 1969 and 1970, respectively.

John J. Martorana has been a consultant to several divisions of Wastequip, Inc. since 2007. Mr. Martorana was the President of Wastequip of Florida from 1994 to 2007 after joining that company in 1991 as Vice President. From 1984 to 1991 he was responsible for sales and steel purchasing for Industrial Refuse Sales Inc., a family owned business which was sold to Wastequip, Inc. prior to joining Industrial Refuse Sales Mr. Martorana worked in the steel industry. He received a BS Degree in Education from Butler University in 1972.

Lael E. Boren has served as general manager and president of various organizations including Badger Equipment Company and The Pierce Company. Prior to that, Mr. Boren owned an electronics business in Muncie and Marion, Indiana. He received a Bachelor’s of General Studies from Ball State University in 2014. Mr. Boren is the son of Leland E. Boren, also a director of the company.

Martha R. Songer is Vice President and Assistant to the President at Avis Industrial Corporation in Upland, Indiana and has been in this position since 2012. Prior to that Ms. Songer was Alumni Director at Taylor University also in Upland, Indiana. Ms. Songer received a Bachelor of Science from Taylor University in 1978 and a Master of Science in Management in 2002 from Indiana Wesleyan University.

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Involvement in Certain Legal Proceedings

To the knowledge of the Company’s management, during the past five years, no director, person nominated to become a director or an executive officer of the Company:

(1) Filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;

(2) Was convicted in a criminal proceeding or named subject of pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) Was the subject of any order, judgment, or decree not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his or her involvement in any type of business, securities, or banking activities;

(4) Was found by a court of competent jurisdiction in a civil action by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any Federal or State Securities laws, and the judgment in such civil action of finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated.

Section 16 (a) Beneficial Ownership Reporting Compliance

In fiscal 2018, none of the Company’s officers, directors, and beneficial owners of more than ten percent of the company’s common stock were delinquent in filing one of their Form 3, 4, and 5 reports.

Code of Ethics

The Company has adopted a code of business conduct and ethics for directors, officers (including the Company’s principal executive officer, principal financial officer and controller) and employees, known as the Standards of Business Conduct. The Standards of Business Conduct are available on the Company’s website at http://www.intl-baler.com. The Company intends to disclose any Amendments to its Code of Ethics and any waiver from a provision of the Code of Ethics granted to the Company’s Chief Executive Officer, Chief Financial Officer, or other persons performing similar functions, on the Company’s website within five business days following such amendment or waiver. Stockholders may request a free copy of the Standards of Business Conduct from:

International Baler Corporation

Attention: William E. Nielsen

5400 Rio Grande Avenue

Jacksonville, Florida 32254

(904)358-3812

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Committees

The Company’s Board of Directors consists of six members, two of whom the Board has determined are independent, Ronald McDaniel and John Martorana. The Company has sought and continues to seek appropriate individuals to serve on the Board of Directors who meet the requirements necessary to qualify as independent directors to serve on the Company’s Board of Directors.

Ronald McDaniel and Lael Boren are members of Board’s Audit Committee. Mr. McDaniel serves as the audit committee’s “financial expert” as that term is defined by applicable Securities and Exchange Commission (“SEC”) regulations. Mr. McDaniel’s qualifications for this position are based upon his educational background and work experience as set forth above. The Company’s Audit Committee Charter is posted on the Company’s website.

The Company does not have a standing nominating committee or a nominating committee charter. However, the full Board of Directors performs the functions of a nominating committee. The Board identifies the candidates for Board membership. In identifying candidates, the Board will seek recommendations from existing Board members, executive officers of the Company and all persons who own more than five percent (5%) of the Company’s outstanding stock. The Board has no stated specific minimum qualifications that must be met by a candidate for a position on the Board of Directors. The Board will consider a variety of factors in evaluating the qualifications of a candidate including the candidate’s professional experience, educational background, knowledge of the Company’s business and personal qualities. The Board may, when appropriate, retain an executive search firm and other advisors to assist it in identifying candidates for the Board. In addition, the Board will consider any candidates that may have been recommended by any of the Company’s stockholders who have made those recommendations in accordance with the procedures described below under the heading “Stockholders’ Proposals.” In addition, such stockholder recommendations must be accompanied by (1) such information about each prospective director nominee as would have been required to be included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission had the prospective director nominee been nominated by the Board of Directors and (2) that the prospective director nominee has consented to be named, if nominated, as a nominee and, if elected, to serve as a director.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The objective of the Company’s compensation program is to attract and retain qualified and talented professional individuals to perform the duties of the Company’s executive offices. The Company’s compensation program is designed to fairly reward the Company’s executive officers for their overall performance in the management of the affairs of the Company. The measurement of successful performance has significant elements of subjective judgment in view of the lack of any directly comparable single element or group of elements to which the Company and its performance may be readily compared from time to time.

The elements of compensation of the Company’s compensation programs include salary, health insurance, stock options, and in certain circumstances the award of a cash bonus. As of the present time, the Company compensation plan does not include any defined benefit retirement plan; any social club memberships or dues or any payments for housing, cars, boats, or other property of any kind to any person. The Company has not entered into any employment contracts with its executive officers nor any contracts for compensation to any person in the event of a change in control of the Company. The Company pays no other elements of compensation to its executive officers. The relatively small size of the Company in comparison to other entities presents the Company with additional risks in meeting its objectives of attracting and retaining qualified and talented professional individuals.

The salary component of the compensation is most important and the Company attempts to be competitive with what it believes to be the compensation of other companies of similar size and scope of operations. To date the Company has not engaged the services of a compensation review consultant or service in view of the cost of such services compared to the size and revenues of the Company. The award of a bonus upon review of Company performance provides an additional incentive. The Company determines the amount for each element to pay by reviewing annually the compensation levels of the Company’s executive officers and determining from the performance of the Company during that time since the last review what an appropriate compensation level may be during the upcoming annual period. The Company has no existing formula for determination of the salary, stock options, or bonus elements of compensation.

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Executive Officer Compensation

The following table sets forth a summary of all compensation awarded to, earned by or paid to, the Company's Chief Executive Officer, Chief Financial Officer and each of the Company's executive officers whose compensation exceeded $100,000 per annum for services rendered in all capacities to the Company and its subsidiaries during fiscal years ended October 31, 2018 and 2017:

SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Awards

NAME AND PRINCIPAL POSITION	YEAR		SALARY ($)		BONUS ($)		OTHER ANNUAL COMPENSATION ($)		NUMBER OF OPTIONS		ALL OTHER COMPENSATION		TOTAL COMPENSATION
Victor W. Biazis President & CEO		2018		8,500		0		0		0		0		8,500
William E Nielsen Chief Financial Officer		2018 2017		120,000 120,000		0 0		0 0		0 0		0 0		120,000 120,000

Outstanding Equity Awards at Fiscal Year-End
Option Awards						Stock Awards
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)	Option Expiration Date (f)	Number of Shares or Units of Stock That Have Not Vested (#) (g)	Market Value of Shares or Units of Stock That Have Not Vested (#) (h)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) (j)
None

None of the Company’s other Executive Officers earned compensation in fiscal 2018 and 2017 in excess of $100,000 for services rendered to the Company in any capacity.

Option Grants and Exercises in Last Fiscal Year

No options were granted during fiscal 2018 to the Company's Chief Executive Officer or any of the Company's most highly compensated executive officers whose compensation exceeded $100,000 for fiscal 2018.

Compensation of Directors

The Board of Directors of the Company compensated non-employee directors $500 per month, together with direct out-of-pocket expenses incurred to attend meetings.

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Members of the Board of Directors may also be requested to perform consulting or other professional services for the Company from time to time. The Board of Directors has reserved to itself the right to review all directors' claims for compensation on an ad hoc basis.

Directors who are on the Company’s Audit, Compensation, and Nominating Committees do not receive any consulting, advisory or compensatory fees from the Company. However, such Board members may receive fees from the Company for their services on those committees.

Director Compensation for Fiscal 2018
Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Ronald L. McDaniel		6,000		0		0		0		0		0		6,000
Lael E. Boren		6,000		0		0		0		0		0		6,000
Leland Boren		6,000		0		0		0		0		0		6,000
John J. Martorana		6,000		0		0		0		0		0		6,000
Martha R. Songer		6,000		0		0		0		0		0		6,000

Employment Contracts

The Company does not have employment contracts with the Chief Executive Officer or any other member of management.

Compensation Committee Interlocks and Insider Participation

There are no interlocking relationships between any member of the Company's Compensation Committee and any member of the compensation committee of any other company, nor has any such interlocking relationship existed in the past. No member of the Compensation Committee is or was formerly an officer or an employee of the Company.

Compensation Committee Report

The Compensation Committee reviews with management the Compensation Discussion & Analysis section of the Company’s 2018 Form 10-K, Item 11, and Proxy Statement. Based on its review and discussions with management the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement for 2018 and in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2018.

The Compensation Committee

Ronald L. McDaniel

John J. Martorana

Lael E. Boren

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information with respect to the ownership of the Company's Common Stock as of December 31, 2018 by (i) those persons known by the Company to be the beneficial owners of more than 5% of the total number of outstanding shares of Common Stock, (ii) each director and executive officer, and (iii) all officers and directors as a group as of December 31, 2018 with these computations based on 5,183,895 shares of common stock being outstanding at that time.

NAME AND ADDRESS OF BENEFICIAL	TITLE HELD	AMOUNT OF BENEFICIAL OWNERSHIP1		APPROXIMATE PERCENT OF CLASS
Victor W. Biazis 5400 Rio Grande Avenue Jacksonville, Florida 32254	President and CHief Executive Officer		None		0
Leland E. Boren Estate 1909 S. Main Street Upland, IN 46989	Director		4,205,1582		81.1	%
John Martorana 5148 Hanover Lane Lakeland, FL 33817	Director		20,000		0.4	%
Ronald L. McDaniel Western-Cullen-Hayes, Inc. 2700 W. 36th Place Chicago, IL 60632	Director		None		0
William E. Nielsen 5400 Rio Grande Avenue Jacksonville, FL 32254	Director Chief Financial Officer		None		0
Lael E. Boren 1909 S Main Street Upland, IN 46989	Director		2,000		0.0	%
Martha R. Songer 1909 S. Main Street Upland, IN 46989	Director		2,000		0.0	%
International Baler Corporation Profit Sharing Trust 5400 Rio Grande Avenue Jacksonville, FL 32254	Stockholder		118,3623		2.3	%
All Officers and Directors as a Group (4 persons)			4,347,5204		83.9	%

¹ Unless otherwise stated, all shares of common stock are directly held with sole voting power and dispositive power.

² Consists of 2,633,896 shares held by the Estate of Leland E. Boren and 1,571,262 shares owned by Avis Industrial Corporation.

³ Employees’ Profit Sharing Trust of which William Nielsen is Trustee.

⁴ Consists of 4,229,158 shares held directly and 118,362 shares held by International Baler Corporation Employee Profit Sharing Trust.

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Changes In Control

To the knowledge of the Company’s management, there are no present arrangements or pledges of the Company’s securities which may result in a change in control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Management and Others

Leland E. Boren, shareholder 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 Company, a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc. (Harris), also a competitor of the Company. On July 31, 2014 Harris acquired the assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate completely independent of each other. The Company had no purchases from these companies in the fiscal years ended October 31, 2018 and 2017.The Company had no sales to The American Baler Company in fiscal years ended October 31, 2018 and 2017.The Company sold five closed door horizontal balers and one conveyor to Harris Waste Management for $295,032 in fiscal 2018 and had no sales to Harris Waste Management in the fiscal year ended October 31, 2017.

Indebtedness of Management

No officer, director or security holder known to the Company to own of record or beneficially more than 5% of the Company's common stock or any member of the immediate family of any of the foregoing persons is indebted to the Company.

Parent of the Issuer

The Company has no parent.

Independence of Directors

Rule 4350 (c) (1) of The Nasdaq Stock Market rules requires that a majority of the members of the Company’s Board of Directors be independent in that they are not officers or employees of the Company and are free of any relationship that would interfere with the exercise of their independent judgment.

The Board of Directors has determined that three of the Company’s seven Directors, Ronald L. McDaniel, and John Martorana are independent as defined by the listing standards of the Nasdaq Stock Market Rules, Section 10A(m)(3) of the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission.

However, Rule 4350(c) (5) provides an exemption from the requirement that a majority of the Company’s Directors be independent if the Company is considered a “controlled company”. A controlled company is defined as a company of which more than 50% of the voting power is held by an individual, a group, the Company’s independent registered public accounting firm, or another company. As Leland E. Boren, director, owns more than 50% of the Company’s common stock, the Company is considered a “controlled company” under the applicable rules of The Nasdaq Stock Market and as such is exempt from certain of the corporate governance rules of The Nasdaq Stock Market, such as the requirement that the board of directors consist of a majority of independent directors.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents the fees for professional services rendered by The Griggs Group PA (dba Pivot CPAs) for

the audit of the Company’s annual financial statements for the years ended October 31, 2018 and 2017:

Fee Category	2018		2017
Audit Fees	$	59,400	$	58,750
Audit-Related Fees		0		0
Tax Fees		10,000		10,000
All Other Fees		0		0
Total Fees	$	69,400	$	68,750

Audit fees include fees related to the services rendered in connection with the annual audit of the Company’s financial statements, the quarterly reviews of the Company’s quarterly reports on Form 10-Q and the reviews of and other services related to registration statements and other offering memoranda.

Audit-related fees are for assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of the Company’s financial statements.

Tax Fees include (i) tax compliance, (ii) tax advice, (iii) tax planning and (iv) tax reporting.

All Other Fees includes fees for all other services provided by the principal accountants not covered in the other categories.

All of the 2018 services described above were approved by the Audit Committee in accordance with the SEC rule that requires audit committee pre-approval of audit and non-audit services provided by the Company’s independent registered public accounting firm. The Audit Committee has considered whether the provisions of such services, including non-audit services, by Pivot CPAs is compatible with maintaining Pivot CPAs’ independence and has concluded that it is.

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ITEM 15. EXHIBITS

The Following Documents are filed as Part of this Report

1. Financial Statements:
Reports of Independent Registered Public Accounting Firms
Balance Sheets
Statements of Operations
Statements of Stockholders’ Equity
Statements of Cash Flows
Notes to Financial Statements
2. Exhibits
	The following exhibits are filed with, or incorporated by reference into this report.

The following exhibits are filed with, or incorporated by reference into this report.

Exhibit Number	Description
2.1	Agreement of Merger between International Baler Corporation and IBC Merger Corporation dated June 24, 1997 (Incorporated by reference to Exhibit 10.39 to Company’s Current Report on Form 8-K, Date of Report June 27, 1997[“Report on Form 8-K June 27, 1997”]).
2.2	Certificate of Merger of International Baler Corporation into IBC Merger Corporation (Incorporated by reference to Exhibit 10.39.1 to Report on Form 8-K June 27, 1997).
2.3	Certificate of Merger merging Consolidated Baling Machine Company, Inc. and Florida Waste Systems, Inc. Into International Baler Corporation filed July 30, 2004.
3.1	Articles of Incorporation and by-laws of Waste Technology Corp. and amendments (Incorporated by reference to the Company’s Registration Statement on Form S-18 filed in April, 1985, Registration No. 2-97045[the “Statement on Form S-18"])
3.2	Certificate of Incorporation of International Baler Corporation f/k/a National Compactor & Technology Systems, Inc. and all amendments thereto (Incorporated by reference to Exhibit 3.3 to Form 8 Amendment No.1 to the Company’s Annual Report on Form 10-K for the year ended October 31, 1989[“Amendment No. 1 to 1989 Form 10-K”]).
3.3	By-laws of International Baler Corporation (Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to 1989 Form 10-K).
3.4	Certificate of Incorporation of Consolidated Baling Machine Co., Inc. f/k/a Solid Waste Recovery Test Center, Inc. and all amendments thereto (Incorporated by reference to Exhibit 3.5 to Amendment No. 1 to 1989 Form 10-K).
3.5	By-laws of Consolidated Baling Machine Co., Inc. (Incorporated by reference to Exhibit 3.6 to Amendment No. 1 to 1989 Form 10-K).
3.7	Certificate of Amendment to Certificate of Incorporation of Waste Technology Corp. Filed on November 4, 1991(Incorporated by reference to Exhibit 3.1.1 to Company’s Annual Report on Form 10-K for the year ended October 31, 1991[the “1991 Form 10-K”]
3.8	Certificate of Amendment to Certificate of Incorporation of Waste Technology Corp. Filed on November 21 1991(Incorporated by reference to Exhibit 3.1.2 to Company’s 1991 Form 10-K).
3.9	Revised and restated by-laws of Waste Technology Corp. (Incorporated by reference to Exhibit 3.2 to Company’s 1991 Form 10-K).
3.10	Amendment to revised and restated by-laws of Waste Technology Corp. (Incorporated by reference to Exhibit 3.2.1 to Company’s 1991 Form 10-K).
3.11	Certificate of Incorporation of Waste Tech Real Estate Corp. (Incorporated by reference to Exhibit 3.7 to Company’s Annual Report on Form 10-K for year ended October 31, 1990).
4.1	1995 Stock Option Plan (Incorporated by reference to Exhibit 4.1 to Annual Report on Form 10-K for the year ended October 31, 1995).
10.1	Agreement between the Company and International Baler Corp. dated September 8, 1986, relating to acquisition of assets and stock (Incorporated by reference to Exhibit 10.1 to Statement on Form S-18).
10.2	Agreement dated February 3, 1987, between the Company and N. J. Cavagnaro & Sons and Machine Corp., Nicholas J. Cavagnaro Jr., George L. Cavagnaro, and Pauline L. Cavagnaro together with the exhibits annexed thereto for the acquisition of N. J. Cavagnaro & Sons Machine Corp. (Incorporated by reference to Exhibit 10.2 to Company’s Annual Report on Form 10-K for the year ended October 31, 1987 [the “1987 Form 10-K”]).
10.3	Waste Technology Corp. Profit Sharing Plan including Agreement of Trust (Incorporated by reference to Exhibit 10.7 to Report on Form 8-K June 1, 1989).
10.4	Form of Deferred Compensation Agreement for Ted C. Flood (Incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10K for the year ended October 31, 1991).
10.5	Agreement between International Baler Corporation and Ted C. Flood dated as December 29, 1995 (Incorporated by reference to Exhibit 10.38 to the Company’s Annual report on Form 10-KSB for the year ended October 31, 1996 [the “1996 Form 10-KSB”]).
10.6	Promissory Note made by Ted C. Flood to the order of International Baler Corporation dated December 29, 1995 (Incorporated by reference to Exhibit 10.38.1 to the 1996 Form 10-KSB).
10.7	Promissory Note made by Ted C. Flood to the order of Waste Technology Corp. dated April 5, 1996 (Incorporated by reference to Exhibit 10.38.2 to the 1996 Form 10-KSB).
10.8	Promissory Note made by Ted C. Flood to the order of Waste Technology Corp. dated October 5, 1996(Incorporated by reference to Exhibit 10.38.3 to the 1996 Form 10-KSB).
14	Code of Ethics (Incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-KSB for the year ended October 31, 2003).
31*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
32*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Exhibit filed with this Report. 

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SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTERNATIONAL BALER CORPORATION
	(Registrant)
By:	/s/ Victor W. Biazis
	Victor W. Biazis
	Chief Executive Officer
Dated:	January 28, 2019

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in their capacities and on the dates indicated.

Signature	Title	Date
/s/ Ronald L. McDaniel	Director	January 28, 2019
Ronald L. McDaniel	Chairman of the Board
/s/ Lael Boren	Director	January 28, 2019
Lael E. Boren
/s/ William E. Nielsen	Director	January 28, 2019
William E. Nielsen	Chief Financial Officer
/s/ John J. Martorana	Director	January 28, 2019
John J. Martorana
/s/ Martha R. Songer	Director	January 28, 2019
Martha R. Songer

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INTERNATIONAL BALER CORPORATION

FINANCIAL STATEMENTS

OCTOBER 31, 2018 AND 2017

(With Report of Independent Registered Public Accounting Firm Thereon)

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

International Baler Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of International Baler Corporation (the “Company”) as of October 31, 2018 and 2017 and the related statements of income, stockholders’ equity, and cash flows for the years then ended and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2018 and 2017 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Pivot CPAs

We have served as the Company's auditor since 2011

Ponte Vedra Beach, Florida

January 28, 2019

F-2

INTERNATIONAL BALER CORPORATION
BALANCE SHEETS
		October 31, 2018			October 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	4,733,510		$	4,541,767
Accounts receivable, net of allowance for doubtful accounts of $15,000 at October 31, 2018 and at October 31, 2017		556,666			909,784
Inventories		4,257,085			4,429,648
Prepaid expense and other current assets		166,604			105,935
Income taxes receivable		—			126,886
Total current assets		9,713,865			10,114,020
Property, plant and equipment, at cost:		4,092,153			3,960,510
Less: accumulated depreciation		2,821,448			2,637,818
Net property, plant and equipment		1,270,705			1,322,692
Other assets
Deferred income taxes		61,494			37,348
Total other assets		61,494			37,348
TOTAL ASSETS	$	11,046,064		$	11,474,060
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	581,651		$	765,019
Accrued liabilities		386,416			355,016
Customer deposits		894,579			1,480,836
Total current liabilities		1,862,646			2,600,871
Total liabilities		1,862,646			2,600,871
Commitments and contingencies (Note 7)
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 October 31, 2018 and October 31, 2017		64,299			64,299
Additional paid-in capital		6,419,687			6,419,687
Retained earnings		3,380,842			3,070,613
		9,864,828			9,554,599
Less:Treasury stock, 1,245,980 shares, at cost		(681,410	)		(681,410	)
Total stockholders' equity		9,183,418			8,873,189
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	11,046,064		$	11,474,060
See accompanying notes to financial statements.

3

INTERNATIONAL BALER CORPORATION
STATEMENTS OF INCOME
YEARS ENDED OCTOBER 31, 2018 AND 2017
		2018		2017
Net sales:
Equipment	$	8,081,671	$	7,856,922
Parts and service		3,032,311		2,638,019
Total net sales		11,113,982		10,494,941
Cost of sales		9,552,308		9,241,435
Gross profit		1,561,674		1,253,506
Operating expense:
Selling expense		470,084		448,292
Administrative expense		683,886		693,510
Total operating expense		1,153,970		1,141,802
Operating income		407,704		111,704
Other income:
Interest income		6,105		5,198
Total other income		6,105		5,198
Income before income taxes		413,809		116,902
Income tax provision		103,580		43,542
Net income	$	310,229	$	73,360
Income per share, basic and diluted	$	0.06	$	0.01
Weighted average number of shares outstanding		5,183,895		5,183,895
See accompanying notes to financial statements.

4

INTERNATIONAL BALER CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED OCTOBER 31, 2018 AND 2017
	Common Stock							Treasury Stock
	NUMBER OF SHARES ISSUED		PAR VALUE		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS (DEFICIT)	NUMBER OF SHARES		COST			TOTAL STOCKHOLDERS’ EQUITY
Balance at November 1, 2016	6,429,875	$	64,299	$	6,419,687	$	2,997,253	1,245,980	$	(681,410	)	$	8,799,829
Net Income	—		—		—		73,360	—		—			73,360
Balance at October 31, 2017	6,429,875		64,299		6,419,687		3,070,613	1,245,980		(681,410	)		8,873,189
Net Income	—		—		—		310,229	—		—			310,229
Balance at October 31, 2018	6,429,875	$	64,299	$	6,419,687	$	3,380,842	1,245,980	$	(681,410	)	$	9,183,418
See accompanying notes to financial statements.

5

INTERNATIONAL BALER CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 2018 AND 2017
		2018		2017
Cash flow from operating activities:
Net income	$	310,229	$	73,360
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		183,630		188,587
Deferred income tax		(24,146)		(1,629)
Changes in operating assets and liabilities:
Accounts receivable		353,118		(27,787)
Inventories		172,563		(590,533)
Prepaid expenses and other assets		(60,669)		51,282
Income taxes receivable		126,886		64,417
Accounts payable		(183,368)		374,911
Accrued liabilities		31,400		78,299
Customer deposits		(586,257)		1,331,512
Net cash provided by operating activities		323,386		1,542,419
Cash flows from investing activities:
Purchases of property and equipment		(131,643)		(30,452)
Redemptions of certificates of deposit		-		310,463
Net cash (used in) provided by investing activities		(131,643)		280,011
Net increase in cash and cash equivalents		191,743		1,822,430
Cash and cash equivalents at beginning of year		4,541,767		2,719,337
Cash and cash equivalents at end of year	$	4,733,510	$	4,541,767
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest	$	-	$	-
Income taxes		145,000		20,000
See accompanying notes to financial statements.

6

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(1) Nature of Business

International Baler Corporation (the “Company”) is a manufacturer of baling equipment which utilizes technical, hydraulic and electrical mechanisms 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 to meet specific customer requirements.

The Company’s customers include recycling facilities, paper mills, textile mills, and the companies which generate the materials for baling and recycling.

(2) Summary of Significant Accounting Policies

(a) Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates.

(b) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

(c) Accounts Receivable and 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. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(d) 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.

7

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(e) Property, Plant, and Equipment

Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.

(f) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the amounts rely upon the determination of the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses.

(g) 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. The Company has not sold or leased equipment on any extended contract basis and has no plans to do so.

Revenues from product sales are recognized when ownership is transferred to the customer, which includes not only the passage of title, but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and we are reasonably assured of the collectibility of the accounts receivable. The majority of our sales are shipped FOB shipping point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on a net sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. Sales tax collected from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the statements of income.

8

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(h) Warranties and Service

The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, 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 type of balers currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual:

	2018			2017
Beginning balance	$	70,000		$	65,000
Warranty service provided		(102,359	)		(236,314	)
New product warranties		80,817			235,708
Changes to pre-existing warranty accruals		31,542			5,606
Ending balance	$	80,000		$	70,000

(i) Earnings Per Share

Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2018 and 2017, respectively. 

(j) Business Reporting Segments

The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business.

(k) Fair Value of Financial Instruments

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

9

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(l) Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements :

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying the Measurement of Inventory, ("ASU 2015-11").  This guidance requires an entity to measure inventory at the lower of cost and net realizable value. Previously, we measured inventory at the lower of cost or market. ASU 2015-11 replaces market with net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.   ASU 2015-11 requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years. ASU 2015-11 was adopted in our fiscal year beginning November 1, 2017. The adoption of this standard did not have a material impact on our financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendment to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), ("ASU-2015-05"). ASU 2018-05 amends certain Securities and Exchange Commission (“SEC”) guidance under Topic 740 related to the Tax Cuts and Jobs Act of 2017. It also adds guidance to the FASB Accounting Standards Codification that answers questions regarding how certain income tax effects from the Tax Cuts and Jobs Act of 2017 should be applied to companies’ financial statements. The guidance lists which financial statement disclosures are required under a measurement period approach. ASU 2018-05 was effective immediately and we have made the disclosures required by ASU 2018-05 in Note 8 —Income Taxes.

Recently Issued Accounting Pronouncements Not Yet Adopted:

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). This new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, for public business entities and permits the use of either the retrospective or cumulative effect transition method. Early application is permitted only for annual reporting periods beginning after December 15, 2016. ASU 2014-09 will therefore be effective in our fiscal year beginning November 1, 2018. We have evaluated the new standard against our existing accounting policies and practices, including reviewing standard purchase orders, invoices, shipping terms, and reviewing contracts with customers. We expect that revenue for our primary revenue streams will be recognized at the point in time which is similar to how it is currently. We have not identified any information that would indicate that the new guidance will have a material impact on our financial statements. While we are substantially complete with the process of evaluating the impacts that will result from the new guidance, our assessment will be finalized during our first quarter of fiscal year 2019. We expect to have enhanced disclosures related to disaggregation of revenue sources and accounting policies beginning fiscal year 2019. Additionally, we will have changes to our balance sheets that may include presentation of allowances for sales incentive programs, discounts, markdowns, chargebacks, and returns as accrued liabilities rather than as a reduction to accounts receivable, and the presentation of estimated cost of inventory associated with the allowance for sales returns within other current assets rather than as a component of inventory. We will adopt the new standard in the first quarter of 2019 using the modified retrospective transition method.

In February 2016, the FASB issued ASU No. 2016-02, Leases, ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. All leases will be required to be recorded on the balance sheet with the exception of short-term leases. Early application is permitted. The guidance must be adopted using a modified retrospective transition method.  ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. ASU 2016-02 will therefore be effective in our fiscal year beginning November 1, 2019. We are evaluating the effect that ASU 2016-02 will have on our financial statements and related disclosures, however, we do not expect it to be material as we are not party to a significant number of leases. The Company has not yet selected a transition method.

10

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(3) Related Party Transactions

Leland E. Boren, a shareholder 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 Company, 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 Harris acquired the 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 purchases from these companies in the fiscal years ended October 31,2018 and 2017. The Company had no sales to The American Baler Company in the fiscal years ended October 31, 2018 and 2017. The Company sold five closed door horizontal balers and one conveyor to Harris Waste Management for $295,032 in fiscal 2018 and had no sales to Harris Waste Management in the fiscal year ended October 31, 2017.

(4) Inventories

Inventories consisted of the following:	2018		2017
Raw materials	$	1,901,707	$	2,287,901
Work in process		2,166,663		1,966,519
Finished goods		188,715		175,228
	$	4,257,085	$	4,429,648

(5) Property, Plant, and Equipment

The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization:

	2018		2017
Land	$	82,304	$	82,304
Building and improvements		1,300,282		1,225,189
Machinery and equipment		2,528,540		2,456,564
Vehicles		174,764		150,975
Construction In progress		6,263		45,478
		4,092,153		3,930,058
Less accumulated depreciation		2,821,448		2,637,818
	$	1,270,705	$	1,322,692

Depreciation expense was $183,630 and $188,587 during the years ended October 31, 2018 and 2017, respectively.

(6) Debt

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed on May 15, 2018. The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2019. The line of credit had no outstanding balance at October 31, 2018 and at October 31, 2017.

11

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(7) Commitments and Contingencies

The Company in the ordinary course of business, is subject to claims and from time to time is named as a defendant in legal proceedings relating to the operations of its business, including the sale 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 December 1, 2017 the Company was served with a complaint related to an injury to an employee working at Integrated Coating and Seed Technology Inc.,(INCOTEC). The employee was operating a baler manufactured by the Company in 1994. The injury occurred on December 4, 2015. The plaintiff is Star Insurance Company. The Company’s insurer has retained an attorney and has begun the discovery process. The Company believes its exposure is $25,000, the amount of the Company’s deductible on its insurance policy. Accordingly, the Company accrued $25,000 during the six months ended April 30, 2018.

In December 2018 the Company discovered an employee theft of Company property. At the date of this report the Company has not fully determined the extent of the theft. Our estimate is that the value of the stolen items was between $100,000 and $200,000. Since the Company conducts a physical inventory at the end of each fiscal year, any losses incurred for the fiscal year ended October 31, 2018 would have been reflected in the operating results of the Company for that fiscal year. The Company carries Crime Insurance which has an upper limit of $1,000,000 and a deductible of $25,000.

12

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

(8) Income Taxes

Income tax provision attributable to income from continuing operations consists of:

	2018			2017
Current income tax (benefit) provision:
Federal	$	112,510		$	41,245
State		15,217			3,926
		127,727			45,171
Deferred income tax (benefit) provision:
Federal		(21,270	)		(1,491	)
State		(2,877	)		(138	)
		(24,147	)		(1,629	)
Income tax (benefit) provision	$	103,580		$	43,542

The differences between income taxes as provided at the federal statutory tax rate of 34% and 21% and the Company’s actual income taxes are as follows:

	2018			2017
Expected federal income tax expense at Statutory rate	$	96,582		$	39,747
State income tax expense, net of federa income tax effect		9,981			2,441
Non-deductible items and perm. differences		9,511			1,354
DPAD adjustments/R&D credit		(12,494	)		—
Income tax provision	$	103,580		$	43,542

Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. As of October 31, 2018 and 2017, the net deferred tax assets were $61,494 and $37,348 respectively. The Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets of October 31, 2018 and 2017 and no valuation allowance is deemed necessary. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future.

13

INTERNATIONAL BALER CORPORATION

Notes to Financial Statements

October 31, 2018 and 2017

The significant components of the net deferred income taxes at October 31, 2018 and 2017 are as follows:

	2018		2017
Deferred tax assets
Inventory reserve	$	69,081	$	84,646
Other reserves and allowances		65,538		54,516
Capitalized inventory costs		49,777		76,988
Total deferred tax assets		184,396		216,150
Deferred tax liabilities
Property, plant and equipment		122,898		178,802
Net deferred income taxes	$	61,494	$	37,348

For the years ended October 31, 2018 and 2017, the Company did not have any unrecognized tax benefits or obligations as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax years ended October 31, 2014 through October 31, 2018, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2018.

The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. As a result, the Company recorded a reduction of net deferred income tax assets of approximately $10,000 during the first quarter of our fiscal year ending October 31, 2018.

(9) Employee Benefit Plan

The Company has a defined contribution plan and profit sharing program for its employees. The Company made no contributions to the plan during the years ended October 31, 2018 and 2017.

(10) Business and Credit Concentrations

Export sales were approximately 6% and 19% of net sales for the years ended October 31, 2018 and 2017, respectively. The principal international markets served by the Company, include Canada, China, Mexico, United Kingdom, India, Korea, Japan, Russia, Saudi Arabia, Singapore, and Brazil. In fiscal 2018, three customers accounted for 11.8%, 11.2% and 9.0% of net sales, respectively, while in fiscal 2017, three customers accounted for 17.9%, 11.4% and 8.0% of net sales, respectively. Three customers accounted for 30.0%, 15.6%, and 7.5% respectively, of the Company’s accounts receivable at October 31, 2018 and three customers accounted for 57.8%, 14.3%, and 6.6%, respectively, of the Company accounts receivable at October 31, 2017.

The Company had cash deposits in banks of $4,239,625 above the FDIC insured limit of $250,000 per bank at October 31, 2018.

14

EX-31.1

Exhibit 31.1

I, Victor W. Biazis, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended October 31, 2018 of International Baler Corporation;

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 certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(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: January 28, 2019	/s/ Victor W. Biazis
	Victor W. Biazis
	Chief Executive Officer

25

EX-31.2

Exhibit 31.2

I, William E. Nielsen, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended October 31, 2018 of International Baler Corporation;

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 certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(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: January 28, 2019	/s/ William E. Nielsen
	William E. Nielsen
	Chief Financial Officer

25

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 annual report of International Baler Corporation on Form 10-K for the year ended October 31, 2018 (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 Corp. and its subsidiary during the period covered by this Report.

Dated: January 28, 2019	/s/ Victor W. Biazis
	Victor W. Biazis
	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 annual report of International Baler Corporation on Form 10-K for the year ended October 31, 2018 (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 Corp. and its subsidiary during the period covered by this Report.

Dated: January 28, 2019	/s/ William E. Nielsen
	William E. Nielsen
	Chief Financial Officer

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Document and Entity Information - USD ($)	12 Months Ended
	Oct. 31, 2018	Jan. 15, 2019	Apr. 30, 2018
Document And Entity Information
Entity Registrant Name	International Baler Corporation
Entity Central Index Key	0000781902
Document Type	10-K
Document Period End Date	Oct. 31, 2018
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
Is Entity Smaller Reporting Company?	true
Is Entity Emerging Growth Company?	false
Is Entity Shell Company?	false
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 1,993,711
Entity Common Stock, Shares Outstanding		5,183,895
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018

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Balance Sheets - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Current assets:
Cash and cash equivalents	$ 4,733,510	$ 4,541,767
Accounts receivable, net of allowance for doubtful accounts of $15,000 at October 31, 2018 and at October 31, 2017	556,666	909,784
Inventories	4,257,085	4,429,648
Prepaid expense and other current assets	166,604	105,935
Income taxes receivable		126,886
Total current assets	9,713,865	10,114,020
Property, plant and equipment, at cost:	4,092,153	3,960,510
Less: accumulated depreciation	2,821,448	2,637,818
Net property, plant and equipment	1,270,705	1,322,692
Other assets:
Deferred income taxes	61,494	37,348
Total other assets	61,494	37,348
TOTAL ASSETS	11,046,064	11,474,060
Current liabilities:
Accounts payable	581,651	765,019
Accrued liabilities	386,416	355,016
Customer deposits	894,579	1,480,836
Total current liabilities	1,862,646	2,600,871
Total liabilities	1,862,646	2,600,871
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 October 31, 2018 and October 31, 2017	64,299	64,299
Additional paid-in capital	6,419,687	6,419,687
Retained earnings	3,380,842	3,070,613
Total stockholders' equity before treasury stock	9,864,828	9,554,599
Less: Treasury stock, 1,245,980 shares, at cost	(681,410)	(681,410)
Total stockholders' equity	9,183,418	8,873,189
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 11,046,064	$ 11,474,060

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Balance Sheets (Parenthetical) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
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 ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Net sales:
Equipment	$ 8,081,671	$ 7,856,922
Parts and service	3,032,311	2,638,019
Total net sales	11,113,982	10,494,941
Cost of sales	9,552,308	9,241,435
Gross profit	1,561,674	1,253,506
Operating expense:
Selling expense	470,084	448,292
Administrative expense	683,886	693,510
Total operating expense	1,153,970	1,141,802
Operating income	407,704	111,704
Other income:
Interest income	6,105	5,198
Total other income	6,105	5,198
Income before income taxes	413,809	116,902
Income tax provision	103,580	43,542
Net income	$ 310,229	$ 73,360
Income per share, basic and diluted	$ 0.06	$ 0.01
Weighted average number of shares outstanding	5,183,895	5,183,895

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Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings (Deficit)	Treasury Stock	Total
Beginning Balace, Shares at Oct. 31, 2016	6,429,875			1,245,980
Beginning Balance, Value at Oct. 31, 2016	$ 64,299	$ 6,419,687	$ 2,997,253	$ (681,410)	$ 8,799,829
Net Income			73,360		73,360
End Balance, Shares at Oct. 31, 2017	6,429,875			1,245,980
End Balance, Value at Oct. 31, 2017	$ 64,299	6,419,687	3,070,613	$ (681,410)	8,873,189
Net Income			310,229		310,229
End Balance, Shares at Oct. 31, 2018	6,429,875			1,245,980
End Balance, Value at Oct. 31, 2018	$ 64,299	$ 6,419,687	$ 3,380,842	$ (681,410)	$ 9,183,418

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Statements of Cash Flows - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Cash flow from operating activities:
Net income	$ 310,229	$ 73,360
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	183,630	188,587
Deferred income taxes	(24,146)	(1,629)
Changes in operating assets and liabilities:
Accounts receivable	353,118	(27,787)
Inventories	172,563	(590,533)
Prepaid expenses and other assets	(60,669)	51,282
Income taxes receivable	126,886	64,417
Accounts payable	(183,368)	374,911
Accrued liabilities	31,400	78,299
Customer deposits	(586,257)	1,331,512
Net cash provided by operating activities	323,386	1,542,419
Cash flows from investing activities:
Purchase of property and equipment	(131,643)	(30,452)
Redemptions of certificates of deposit		310,463
Net cash (used in) provided by investing activities	(131,643)	280,011
Net increase in cash and cash equivalents	191,743	1,822,430
Cash and cash equivalents at beginning of year	4,541,767	2,719,337
Cash and cash equivalents at end of year	4,733,510	4,541,767
Cash paid during period for:
Interest
Income taxes	$ 145,000	$ 20,000

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Nature of Business

12 Months Ended

Oct. 31, 2018

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 utilizes technical, hydraulic and electrical mechanisms 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 to meet specific customer requirements.

The Company’s customers include recycling facilities, paper mills, textile mills, and the companies which generate the materials for baling and recycling.

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Summary of Significant Accounting Policies

12 Months Ended

Oct. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

(a) Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates.

(b) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

(c) Accounts Receivable and 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. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(d) 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.

(e) Property, Plant, and Equipment

Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.

(f) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the amounts rely upon the determination of the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses.

(g) 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. The Company has not sold or leased equipment on any extended contract basis and has no plans to do so.

Revenues from product sales are recognized when ownership is transferred to the customer, which includes not only the passage of title, but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and we are reasonably assured of the collectibility of the accounts receivable. The majority of our sales are shipped FOB shipping point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on a net sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. Sales tax collected from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the statements of income.

(h) Warranties and Service

The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, 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 type of balers currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual:

	2018			2017
Beginning balance	$	70,000		$	65,000
Warranty service provided		(102,359	)		(236,314	)
New product warranties		80,817			235,708
Changes to pre-existing warranty accruals		31,542			5,606
Ending balance	$	80,000		$	70,000

(i) Earnings Per Share

Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2018 and 2017, respectively. 

(j) Business Reporting Segments

The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business.

(k) Fair Value of Financial Instruments

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

(l) Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements :

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying the Measurement of Inventory, ("ASU 2015-11").  This guidance requires an entity to measure inventory at the lower of cost and net realizable value. Previously, we measured inventory at the lower of cost or market. ASU 2015-11 replaces market with net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.   ASU 2015-11 requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years. ASU 2015-11 was adopted in our fiscal year beginning November 1, 2017. The adoption of this standard did not have a material impact on our financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendment to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), ("ASU-2015-05"). ASU 2018-05 amends certain Securities and Exchange Commission (“SEC”) guidance under Topic 740 related to the Tax Cuts and Jobs Act of 2017. It also adds guidance to the FASB Accounting Standards Codification that answers questions regarding how certain income tax effects from the Tax Cuts and Jobs Act of 2017 should be applied to companies’ financial statements. The guidance lists which financial statement disclosures are required under a measurement period approach. ASU 2018-05 was effective immediately and we have made the disclosures required by ASU 2018-05 in Note 8 —Income Taxes.

Recently Issued Accounting Pronouncements Not Yet Adopted:

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). This new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, for public business entities and permits the use of either the retrospective or cumulative effect transition method. Early application is permitted only for annual reporting periods beginning after December 15, 2016. ASU 2014-09 will therefore be effective in our fiscal year beginning November 1, 2018. We have evaluated the new standard against our existing accounting policies and practices, including reviewing standard purchase orders, invoices, shipping terms, and reviewing contracts with customers. We expect that revenue for our primary revenue streams will be recognized at the point in time which is similar to how it is currently. We have not identified any information that would indicate that the new guidance will have a material impact on our financial statements. While we are substantially complete with the process of evaluating the impacts that will result from the new guidance, our assessment will be finalized during our first quarter of fiscal year 2019. We expect to have enhanced disclosures related to disaggregation of revenue sources and accounting policies beginning fiscal year 2019. Additionally, we will have changes to our balance sheets that mayl include presentation of allowances for sales incentive programs, discounts, markdowns, chargebacks, and returns as accrued liabilities rather than as a reduction to accounts receivable, and the presentation of estimated cost of inventory associated with the allowance for sales returns within other current assets rather than as a component of inventory. We will adopt the new standard in the first quarter of 2019 using the modified retrospective transition method.

In February 2016, the FASB issued ASU No. 2016-02, Leases, ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. All leases will be required to be recorded on the balance sheet with the exception of short-term leases. Early application is permitted. The guidance must be adopted using a modified retrospective transition method.  ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. ASU 2016-02 will therefore be effective in our fiscal year beginning November 1, 2019. We are evaluating the effect that ASU 2016-02 will have on our financial statements and related disclosures, however, we do not expect it to be material as we are not party to a significant number of leases. The Company has not yet selected a transition method.

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Related Party Transactions

12 Months Ended

Oct. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

(3) Related Party Transactions

Leland E. Boren, a shareholder 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 Company, 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 Harris acquired the 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 purchases from these companies in the fiscal years ended October 31,2018 and 2017. The Company had no sales to The American Baler Company in the fiscal years ended October 31, 2018 and 2017. The Company sold five closed door horizontal balers and one conveyor to Harris Waste Management for $295,032 in fiscal 2018 and had no sales to Harris Waste Management in the fiscal year ended October 31, 2017.

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Inventories

12 Months Ended

Oct. 31, 2018

Inventory Disclosure [Abstract]

Inventories

(4) Inventories

Inventories consisted of the following:	2018		2017
Raw materials	$	1,901,707	$	2,287,901
Work in process		2,166,663		1,966,519
Finished goods		188,715		175,228
	$	4,257,085	$	4,429,648

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Property, Plant, and Equipment

12 Months Ended

Oct. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment

(5) Property, Plant, and Equipment

The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization:

	2018		2017
Land	$	82,304	$	82,304
Building and improvements		1,300,282		1,225,189
Machinery and equipment		2,528,540		2,456,564
Vehicles		174,764		150,975
Construction In progress		6,263		45,478
		4,092,153		3,930,058
Less accumulated depreciation		2,821,448		2,637,818
	$	1,270,705	$	1,322,692

Depreciation expense was $183,630 and $188,587 during the years ended October 31, 2018 and 2017, respectively.

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Debt

12 Months Ended

Oct. 31, 2018

Debt Disclosure [Abstract]

Debt

(6) Debt

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed on May 15, 2018. The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2019. The line of credit had no outstanding balance at October 31, 2018 and at October 31, 2017.

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Income Taxes

12 Months Ended

Oct. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

Income tax provision attributable to income from continuing operations consists of:

	2018			2017
Current income tax (benefit) provision:
Federal	$	112,510		$	41,245
State		15,217			3,926
		127,727			45,171
Deferred income tax (benefit) provision:
Federal		(21,270	)		(1,491	)
State		(2,877	)		(138	)
		(24,147	)		(1,629	)
Income tax (benefit) provision	$	103,580		$	43,542

The differences between income taxes as provided at the federal statutory tax rate of 34% and 21% and the Company’s actual income taxes are as follows:

	2018			2017
Expected federal income tax expense at Statutory rate	$	96,582		$	39,747
State income tax expense, net of federa income tax effect		9,981			2,441
Non-deductible items and perm. differences		9,511			1,354
DPAD adjustments/R&D credit		(12,494	)		—
Income tax provision	$	103,580		$	43,542

Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. As of October 31, 2018 and 2017, the net deferred tax assets were $61,494 and $37,348 respectively. The Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets of October 31, 2018 and 2017 and no valuation allowance is deemed necessary. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future.

The significant components of the net deferred income taxes at October 31, 2018 and 2017 are as follows:

	2018		2017
Deferred tax assets
Inventory reserve	$	69,081	$	84,646
Other reserves and allowances		65,538		54,516
Capitalized inventory costs		49,777		76,988
Total deferred tax assets		184,396		216,150
Deferred tax liabilities
Property, plant and equipment		122,898		178,802
Net deferred income taxes	$	61,494	$	37,348

For the years ended October 31, 2018 and 2017, the Company did not have any unrecognized tax benefits or obligations as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax years ended October 31, 2014 through October 31, 2018, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2018.

The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. As a result, the Company recorded a reduction of net deferred income tax assets of approximately $10,000 during the first quarter of our fiscal year ending October 31, 2018.

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Commitments and Contingencies

12 Months Ended

Oct. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

(7) Commitments and Contingencies

The Company in the ordinary course of business, is subject to claims and from time to time is named as a defendant in legal proceedings relating to the operations of its business, including the sale 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 December 1, 2017 the Company was served with a complaint related to an injury to an employee working at Integrated Coating and Seed Technology Inc.,(INCOTEC). The employee was operating a baler manufactured by the Company in 1994. The injury occurred on December 4, 2015. The plaintiff is Star Insurance Company. The Company’s insurer has retained an attorney and has begun the discovery process. The Company believes its exposure is $25,000, the amount of the Company’s deductible on its insurance policy. Accordingly, the Company accrued $25,000 during the six months ended April 30, 2018.

In December 2018 the Company discovered an employee theft of Company property. At the date of this report the Company has not fully determined the extent of the theft. Our estimate is that the value of the stolen items was between $100,000 and $200,000. Since the Company conducts a physical inventory at the end of each fiscal year, any losses incurred for the fiscal year ended October 31, 2018 would have been reflected in the operating results of the Company for that fiscal year. The Company carries Crime Insurance which has an upper limit of $1,000,000 and a deductible of $25,000.

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Employees' Benefit Plan

12 Months Ended

Oct. 31, 2018

Retirement Benefits [Abstract]

Employees' Benefit Plan

(9) Employee Benefit Plan

The Company has a defined contribution plan and profit sharing program for its employees. The Company made no contributions to the plan during the years ended October 31, 2018 and 2017.

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Business and Credit Concentrations

12 Months Ended

Oct. 31, 2018

Risks and Uncertainties [Abstract]

Business and Credit Concentrations

(10) Business and Credit Concentrations

Export sales were approximately 6% and 19% of net sales for the years ended October 31, 2018 and 2017, respectively. The principal international markets served by the Company, include Canada, China, Mexico, United Kingdom, India, Korea, Japan, Russia, Saudi Arabia, Singapore, and Brazil. In fiscal 2018, three customers accounted for 11.8%, 11.2% and 9.0% of net sales, respectively, while in fiscal 2017, three customers accounted for 17.9%, 11.4% and 8.0% of net sales, respectively. Three customers accounted for 30.0%, 15.6%, and 7.5% respectively, of the Company’s accounts receivable at October 31, 2018 and three customers accounted for 57.8%, 14.3%, and 6.6%, respectively, of the Company accounts receivable at October 31, 2017.

The Company had cash deposits in banks of $4,239,625 above the FDIC insured limit of $250,000 per bank at October 31, 2018.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Oct. 31, 2018

Accounting Policies [Abstract]

Use of Estimates

(a) Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates.

Cash and Cash Equivalents

(b) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

(c) Accounts Receivable and 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. In addition, past due balances are reviewed individually for collectibility. 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

(d) 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.

Property, Plant and Equipment

(e) Property, Plant, and Equipment

Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.

Income Taxes

(f) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the amounts rely upon the determination of the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses.

Revenue Recognition

(g) 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. The Company has not sold or leased equipment on any extended contract basis and has no plans to do so.

Revenues from product sales are recognized when ownership is transferred to the customer, which includes not only the passage of title, but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and we are reasonably assured of the collectibility of the accounts receivable. The majority of our sales are shipped FOB shipping point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on a net sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. Sales tax collected from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the statements of income.

Warranties and Service

(h) Warranties and Service

The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, 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 type of balers currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual:

	2018			2017
Beginning balance	$	70,000		$	65,000
Warranty service provided		(102,359	)		(236,314	)
New product warranties		80,817			235,708
Changes to pre-existing warranty accruals		31,542			5,606
Ending balance	$	80,000		$	70,000

Earnings Per Share

(i) Earnings Per Share

Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2018 and 2017, respectively. 

Business Reporting Segments

(j) Business Reporting Segments

The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business.

Fair Value of Financial Instruments

(k) Fair Value of Financial Instruments

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

Recent Accounting Pronouncements

(l) Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements :

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying the Measurement of Inventory, ("ASU 2015-11").  This guidance requires an entity to measure inventory at the lower of cost and net realizable value. Previously, we measured inventory at the lower of cost or market. ASU 2015-11 replaces market with net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.   ASU 2015-11 requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years. ASU 2015-11 was adopted in our fiscal year beginning November 1, 2017. The adoption of this standard did not have a material impact on our financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendment to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SEC Update), ("ASU-2015-05"). ASU 2018-05 amends certain Securities and Exchange Commission (“SEC”) guidance under Topic 740 related to the Tax Cuts and Jobs Act of 2017. It also adds guidance to the FASB Accounting Standards Codification that answers questions regarding how certain income tax effects from the Tax Cuts and Jobs Act of 2017 should be applied to companies’ financial statements. The guidance lists which financial statement disclosures are required under a measurement period approach. ASU 2018-05 was effective immediately and we have made the disclosures required by ASU 2018-05 in Note 8 —Income Taxes.

Recently Issued Accounting Pronouncements Not Yet Adopted:

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). This new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, for public business entities and permits the use of either the retrospective or cumulative effect transition method. Early application is permitted only for annual reporting periods beginning after December 15, 2016. ASU 2014-09 will therefore be effective in our fiscal year beginning November 1, 2018. We have evaluated the new standard against our existing accounting policies and practices, including reviewing standard purchase orders, invoices, shipping terms, and reviewing contracts with customers. We expect that revenue for our primary revenue streams will be recognized at the point in time which is similar to how it is currently. We have not identified any information that would indicate that the new guidance will have a material impact on our financial statements. While we are substantially complete with the process of evaluating the impacts that will result from the new guidance, our assessment will be finalized during our first quarter of fiscal year 2019. We expect to have enhanced disclosures related to disaggregation of revenue sources and accounting policies beginning fiscal year 2019. Additionally, we will have changes to our balance sheets that mayl include presentation of allowances for sales incentive programs, discounts, markdowns, chargebacks, and returns as accrued liabilities rather than as a reduction to accounts receivable, and the presentation of estimated cost of inventory associated with the allowance for sales returns within other current assets rather than as a component of inventory. We will adopt the new standard in the first quarter of 2019 using the modified retrospective transition method.

In February 2016, the FASB issued ASU No. 2016-02, Leases, ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. All leases will be required to be recorded on the balance sheet with the exception of short-term leases. Early application is permitted. The guidance must be adopted using a modified retrospective transition method.  ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. ASU 2016-02 will therefore be effective in our fiscal year beginning November 1, 2019. We are evaluating the effect that ASU 2016-02 will have on our financial statements and related disclosures, however, we do not expect it to be material as we are not party to a significant number of leases. The Company has not yet selected a transition method.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Oct. 31, 2018

Accounting Policies [Abstract]

Warranty Accrual

	2018			2017
Beginning balance	$	70,000		$	65,000
Warranty service provided		(102,359	)		(236,314	)
New product warranties		80,817			235,708
Changes to pre-existing warranty accruals		31,542			5,606
Ending balance	$	80,000		$	70,000

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Inventories (Tables)

12 Months Ended

Oct. 31, 2018

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following:	2018		2017
Raw materials	$	1,901,707	$	2,287,901
Work in process		2,166,663		1,966,519
Finished goods		188,715		175,228
	$	4,257,085	$	4,429,648

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Property, Plant, and Equipment (Tables)

12 Months Ended

Oct. 31, 2018

Property, Plant and Equipment [Abstract]

Property, plant and equipment

	2018		2017
Land	$	82,304	$	82,304
Building and improvements		1,300,282		1,225,189
Machinery and equipment		2,528,540		2,456,564
Vehicles		174,764		150,975
Construction In progress		6,263		45,478
		4,092,153		3,930,058
Less accumulated depreciation		2,821,448		2,637,818
	$	1,270,705	$	1,322,692

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Income Taxes (Tables)

12 Months Ended

Oct. 31, 2018

Income Tax Disclosure [Abstract]

Income Tax Benefit

	2018			2017
Current income tax (benefit) provision:
Federal	$	112,510		$	41,245
State		15,217			3,926
		127,727			45,171
Deferred income tax (benefit) provision:
Federal		(21,270	)		(1,491	)
State		(2,877	)		(138	)
		(24,147	)		(1,629	)
Income tax (benefit) provision	$	103,580		$	43,542

Income tax provide by federal statutory rate

	2018			2017
Expected federal income tax expense at Statutory rate	$	96,582		$	39,747
State income tax expense, net of federa income tax effect		9,981			2,441
Non-deductible items and perm. differences		9,511			1,354
DPAD adjustments/R&D credit		(12,494	)		—
Income tax provision	$	103,580		$	43,542

Net Deferred Income Taxes

	2018		2017
Deferred tax assets
Inventory reserve	$	69,081	$	84,646
Other reserves and allowances		65,538		54,516
Capitalized inventory costs		49,777		76,988
Total deferred tax assets		184,396		216,150
Deferred tax liabilities
Property, plant and equipment		122,898		178,802
Net deferred income taxes	$	61,494	$	37,348

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Summary of Significant Accounting Policies - Warranty Accrual (Details) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract]
Beginning balance	$ 70,000	$ 65,000
Warranty service provided	(102,359)	(236,314)
New product warranties	80,817	235,708
Changes to pre-existing warranty accruals	31,542	5,606
Ending balance	$ 80,000	$ 70,000

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Related Party Transactions (Details Narrative) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2016
Leland E. Boren
Ownership of Avis		80.00%
Avis Industrial Corp.
Ownership of The American Baler		100.00%
Harris Waste Management
Sales	$ 295,032

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Inventories - Inventories (Details) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 1,901,707	$ 2,287,901
Work in process	2,166,663	1,966,519
Finished goods	188,715	175,228
Inventories	$ 4,257,085	$ 4,429,648

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Property, Plant, and Equipment (Details) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Property, Plant and Equipment [Abstract]
Land	$ 82,304	$ 82,304
Building and Improvements	1,300,282	1,225,189
Machinery and Equipment	2,528,540	2,456,564
Vehicles	174,764	150,975
Construction In Progress	6,263	45,478
Property, plant and equipment, at cost:	4,092,153	3,960,510
Less: accumulated depreciation	2,821,448	2,637,818
Net property, plant and equipment	$ 1,270,705	$ 1,322,692

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Property, Plant, and Equipment (Details Narrative) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Property, Plant and Equipment [Abstract]
Depreciation Expense	$ 183,630	$ 188,587

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Debt (Details Narrative) - Line of Credit [Member] - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Short-term Debt [Line Items]
Line of Credit Agreement	$ 1,650,000
Interest Rate Terms	<p style="margin: 0pt; text-align: justify"><font style="font-size: 10pt">The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2018.</font></p>
Outstanding balance	$ 0	$ 0

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Commitment and Contingencies (Details Narrative)	3 Months Ended
	Oct. 31, 2018 USD ($)
Loss Contingencies [Line Items]
Lawsuit exposure	$ 25,000
Minimum
Loss Contingencies [Line Items]
Theft	100,000
Maximum
Loss Contingencies [Line Items]
Theft	$ 200,000

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Income Taxes - Income Tax Benefit (Details) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Current income tax provision:
Federal	$ 112,510	$ 41,245
State	15,217	3,926
Current income tax provision	127,727	45,171
Deferred income tax provision:
Federal	(21,270)	(1,491)
State	(2,877)	(138)
Deferred income tax provision	(24,147)	(1,629)
Income tax (benefit) provision	$ 103,580	$ 43,542

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Income Taxes - Income tax provide by federal statutory rate (Details) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Income Tax Disclosure [Abstract]
Expected federal income tax expense Statutory rate	$ 96,582	$ 39,747
State income tax expense, net federal income tax effect	9,981	2,441
Other - meals and entertainment	9,511	1,354
DPAD adjustments	(12,494)
Income tax provision	$ 103,580	$ 43,542

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Income Taxes - Net Deferred Income Taxes (Details) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Deferred tax assets
Inventory Reserve	$ 69,081	$ 84,646
Other Reserves and allowences	65,538	54,516
Capitalized inventory costs	49,777	76,988
Total deferred tax assets	184,396	216,150
Deferred tax liabilities
Property, plant, and equipment	122,898	178,802
Net deferred income taxes	$ 61,494	$ 37,348

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Income Taxes (Details Narrative) - USD ($)	12 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Components of Deferred Tax Assets [Abstract]
Federal Statutory Rate	21.00%	34.00%
Net deferred tax assets	$ 61,494	$ 37,348
Reduction of net deferred income tax assets	$ 10,000

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Business and Credit Concentrations (Details Narrative) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Concentration Risk [Line Items]
Export sales	6.00%	19.00%
Cash deposits	$ 4,239,625
FDIC Insured Limit	$ 250,000
Customer 1
Concentration Risk [Line Items]
Export sales	11.80%	17.90%
Accounts Receivable	30.00%	57.80%
Customer 2
Concentration Risk [Line Items]
Export sales	11.20%	11.40%
Accounts Receivable	15.60%	14.30%
Customer 3
Concentration Risk [Line Items]
Export sales	9.00%	8.00%
Accounts Receivable	7.50%	6.60%