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

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FORM 10-Q

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

For the quarterly period ended: July 31, 2018April 30, 2019

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)

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5400 Rio Grande Avenue, Jacksonville, FL 32254

(Address of Principal Executive Offices) (Zip Code)

904-358-3812

(Registrant’s telephone number, including area code)

N/A
(Former name or former address and former fiscal year, if changed since last report)

_________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒  No ☐  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

Yes ☐  No ☒

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ☒☐  No ��☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,183,895 shares of common stock at AugustMay 31, 2018.

2019.

INTERNATIONAL BALER CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. Nature of Business:

International Baler Corporation (the “Company”) is a manufacturer of baling equipment which is designed to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models, and conveyors to meet specific customer requirements.

The Company’s customers include recycling facilities, distribution centers, textile mills, and companies which generate the materials for baling and recycling. The Company sells its products worldwide with annual sales outside the United States typically ranging from 10% to 35%.

2. Basis2.Basis of Presentation:

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information in footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the nine-monthsix-month period ended July 31, 2018April 30, 2019 are not necessarily indicative of the results that may be expected for the year ending October 31, 2018.2019. The accompanying balance sheet as of October 31, 20172018 was derived from the audited financial statements as of October 31, 2017.2018.

These unaudited condensed financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended October 31, 2018.

3. Summary of Significant Accounting Policies:

(a) Accounts Receivable & Allowance for Doubtful Accounts:

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(b) Inventories:

Prior to the 2018 fiscal year, the Company reported inventories at the lower of cost or market. Effective November 1, 2017, the Company began stating inventories prospectivelyInventories are stated at the lower of cost and net realizable value in accordance with Accounting Standards Update 2015-11Simplifying the Measurement of Inventory.Generally, under the prior method, market was replacement cost, while net realizable value is based on the selling price of the inventory. This change had no significant effect on earnings.value. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.

(c) Revenue Recognition:

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

(d) Warranties and Service:

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

Following is a tabular reconciliation of the changes in the warranty accrual for the nine-monthsix-month period ended July 31:April 30:

(e)(d) 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.

(f)(e) Recent Accounting Pronouncements:

Recently Adopted Accounting Pronouncements:

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 the Company made the disclosures required by ASU 2018-05 in Note 8 - Income Taxes.

In May 2014, the FASB issued ASU No. 2014-09 “Revenueestablishing Accounting Standards Codification (“ASC”) Topic 606,Revenue from Contracts with Customers (Topic 606)”(“ASC 606”). This guidanceASC 606 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidanceguidance. This standard requires an entity to recognize revenue that depictsto depict the transfer of promised goods or services to customers in an amount that reflects the considerationsconsideration to which the companyentity expects to be entitled in exchange for those goods or services.services and also requires certain additional disclosures. The Company adopted this standard effective November 1, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASC 606 the Company concluded that ASC 606 did not have a material impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers therefore the Company did not record a cumulative transition adjustment.

Recently Issued Accounting Pronouncements Not Yet Adopted:

In August 2015,February 2016, the FASB issued ASU 2015-14, “Revenue from ContractsNo. 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 Customers (Topic 606): Deferralthe exception of the Effective Date”.short-term leases. Early application is permitted. The amendments inguidance must be adopted using a modified retrospective transition method. ASU 2015-14 defer the2016-02 is effective date of ASU 2014-09 for all entities by one year. Public entities should apply the guidance in ASU 2014-09 tofinancial statements issued for annual reporting periods beginning after December 15, 2017, including2018, and interim reporting 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 reporting period.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 doeshas not believe this will haveyet selected a significant impacttransition method.

4. Revenue from Contracts with Customers:

a) Overview

The Company adopted ASC 606 on November 1. 2018. The Company recognizes revenues from the financial statements, assale of finished products upon shipment and the transfer of control to the customer. The other elements may include installation and, generally, contracts contain one distinct performance obligationa one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and specifically stateis recognized when the performance obligationlabor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of equipment in exchange forthe equipment. Warranty revenue, if sold separately, is valued based on estimated service person hours to complete a stated consideration. Contractsservice and generally is recognized over the contract period.

All other product sales with customer specific acceptance provisions are not long term and balers are manufactured for individual orders and revenue recognized at a point in time upon customer acceptance and the delivery of shipment.the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms.

Generally, pricing is fixed and the majority of the Company’s contracts have short duration and a single performance obligation to deliver a configured to order baler and related equipment to the customer. The Company has elected to expense shipping and handling costs as incurred.

4.b) Disaggregation of Revenue

Disaggregated revenue is by primary geographic market is as follows:

c) Contract Balances

Contract balances include accounts receivable and contract liabilities. Contract liabilities are reported as Customer Deposits on the accompanying Balance Sheets and consist of advances or deposits from customers before revenue is recognized. The change in contract liabilities is due to the timing of customer deposits for baler orders offset by customer deposits recognized as revenue during the period.

The Company does not record contract assets because the construction of a configured to order baler does not create an asset with an alternative use to the Company. The Company expenses incremental costs of obtaining or fulfilling a contract.

5. Related Party Transactions:

The Estate of Leland E. Boren is a stockholder and director of the Company and is the owner of Avis Industrial Corporation (Avis). Mr. BorenThe Estate controls over 80% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company, anda competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc. (Harris), both competitorsalso 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 Companycompany had no purchases from these companies in the first ninesix months of fiscal 2018 or2019 and in the fiscal year endedending October 31, 2017.2018. The Company had no sales to The American Baler Company in the first ninesix months of fiscal 2018 or2019 and in the fiscal year ended October 31, 2017.2018. The Company sold fourfive closed door horizontal balers and one conveyor to Harris Waste Management for $238,377$295,032 in the first nine months of fiscal 2018 and had no sales to Harris Waste Management in the six months of fiscal year ended October 31, 2017.2019.

5.6. Inventories:

Inventories consisted of the following:

6.

7. 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, 2018.2019. 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, 2019.2020. The line of credit had no outstanding balance at July 31, 2018April 30, 2019 and at October 31, 2017.2018.

7.8. Income Taxes:

Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. Factors considered included, historical results of operations, volatility of the economic conditions and projected earnings based on current operations. Based on this evidence, it is more likely than not that the deferred tax assets would be realized. Accordingly, there is no valuation allowance as of July 31, 2018April 30, 2019 and at October 31, 2017.2018. However, if it is determined that all or part of the deferred tax assets will not be used in the future, an adjustment to the deferred tax assets would be charged against net income in the period such determination is made. As of July 31, 2018April 30, 2019 and October 31, 2017,2018, net deferred tax assets were $26,975 and $37,348, respectively.$61,494.

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

The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act mademakes 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 of the income tax rate reduction, the Company reducedrecorded a reduction of net deferred income tax assets byof approximately $10,000 during the first quarter of the fiscal year ending JanuaryOctober 31, 2018.

8.9. Commitments and Contingencies:

The Company, in the ordinary course of business, is subject to claims made, and from time to time is named as a defendant in legal proceedings relating to the sales of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

On 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 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.

In December 2018 the Company discovered an employee theft of Company property. At the date of this report the Company has researched what items were stolen and our estimate is that the value of the stolen items was approximately $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. In May 2019 the Company’s insurer approved the claim and agreed to reimburse the Company $175,841.

ITEM 2. MANAGEMENT’S2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” and “our,” refer to International Baler Corporation.

Forward Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding  industry prospects or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, but not limited to, changes in general economic conditions, changing competition and our ability to market and sell our commercial and industrial balers. These risks and uncertainties, as well as other risks and uncertainties, could cause our actual results to differ significantly from management’s expectations. The forward-looking statements included in this Quarterly Report on Form 10-Q reflect the beliefs of our management on the date of this Quarterly Report. We undertake no obligation to update publicly any forward-looking statements for any reason.

General

The following discussion should be read together with our unaudited condensed financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements”. For further information, refer to the Company’s Annual Report on Form 10-K for the year ended October 31, 2017,2018, and the Management Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q.

Results of Operations: Three Month Comparison

In the thirdsecond quarter ended July 31, 2018,April 30, 2019, the Company had net sales of $2,021,957$2,914,551 compared to net sales of $3,111,959$1,962,632 in the thirdsecond quarter of fiscal 2017.2018. The lowerincrease in net sales was primarily the result of lower equipmenthigher shipments of two-ram balers in the thirdsecond quarter of fiscal 2019, four in 2019 ($1,182,635), compared to two in the second quarter of fiscal 2018 fifteen balers and conveyors in fiscal 2018 versus twenty-three in fiscal 2017. The lower shipments were the result of market conditions including lower prices for recycled materials.($324,906).

The Company had a net income of $4,939$1,865, in the thirdsecond quarter of fiscal 2018,2019, compared to a net incomeloss of $81,134$52,472 in the thirdsecond quarter of fiscal 2017.2018. The lowerhigher net income was the result of the lower shipments of balershigher sales and conveyors in the quarter.gross profit offset by higher selling and administrative expenses.

Results of Operations: NineSix Month Comparison

The Company had net sales of $7,995,225$5,383,807 in the first ninesix months of fiscal 2018,2019, compared to net sales of $8,015,473$5,973,268 in the same period of 2017.2019. The Company shipped fifty-sixlower net sales was the result of lower sales of auto-tie balers, and conveyors at an average price of approximately $104,000two in fiscal 2019 versus twelve in the first ninesix months of fiscal 2018 compared to seventy-four2019. This was partially offset by higher sales of two-ram balers and conveyors at an average pricein the first six months of approximately $80,0002019, six, versus two in fiscal 2017. The market for balers has been trending toward larger equipment for several years and the Company expects this trend to continue.first six months of 2018.

The Company had a net incomeloss of $151,156$16,923 in the first ninesix months of fiscal 20182019, compared to net income of $89,840$146,217. The decrease in the same period of fiscal 2017. The higher net income was the result of slightlylower shipments and higher gross profit margins from higher parts sales and lower selling and administrative expenses. The lower selling expenses were due to lower advertising expenses, conventions and show expense partially offset by higher salary expenses. The lower administrative expenses were the result of lower salary expenses and insurance costs.expense.

The sales order backlog was approximately $3,140,000$1,820,000 at July 31, 2018April 30, 2019 and $3,190,000$1,330,000 at July 31, 2017.April 30, 2018.

Financial Condition and Liquidity:

Net working capital at July 31, 2018April 30, 2019 was $7,723,365$7,724,174 as compared to $7,513,149$7,851,219 at October 31, 2017.2018. The Company currently believes that it will have sufficient cash flow to be able to fund operating activities for the next twelve months.

Average days sales outstanding (DSO) in the first ninesix months of fiscal 20182019 were 22.822.9 days, as compared to 26.423.6 days in the first ninesix months of fiscal 2017.2018. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by three, and dividing that result by the average day’s sales for the period (period sales ÷ 273)181).

During the ninesix months ended July 31,April 30, 2019 and 2018, and 2017, the Company made additions to plant and equipment of $91,813$215,352 and $16,826$83,344 respectively.

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed on May 15, 2018.2019. 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, 2019.2020. The line of credit had no outstanding balance at July 31, 2018April 30, 2019 and at October 31, 2017.2018.

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

Forward Looking Statements

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

ITEM 3. QUANTITATIVE3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

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

As of April 30, 2019, the end of the period covered by this Quarterly Report on Form 10-Q, and under the supervision and with the participation of the management, including the Company’s CEO and CFO, management evaluated the effectiveness of the Company’s 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 effective.

Management, with the participation of the Company’s principal executive and principal financial officers, also assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2019. This assessment was performed using the criteria established under the Internal Control-Integrated Framework established by Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

The Company previously reported a material weakness in certain purchasing and inventory controls in its Annual Report on Form 10-K for the year ending October 31, 2018. During the period ended April 30, 2019, management made certain improvements to purchasing controls, logical access controls to inventory records, and physical access to inventory items. Management believes the control improvements that have been initiated have fully remediated the control weakness previously reported and that and that internal controls over financial reporting were effective as of April 30, 2019.

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

As of the end of the period covered by this report, and under the supervision and with the participation of the management, including the Company’s CEO/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/CFO concluded that the Company’s disclosure controls and procedures were effective.

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

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

Changes in Internal Control over Financial Reporting

The Company’s management, including CEO/CEO and CFO, confirm that there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended April 30, 20182019, other than those related to the material weakness described above, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL1.LEGAL PROCEEDINGS

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 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.

ITEM 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting on April 22, 2019. As of the close of business on March 11, 2019, the record date for the Annual Meeting, there were 5,183,895 shares of Company common stock outstanding and entitled to vote at the Annual Meeting. Each share of Company common stock was entitled to one vote. Stockholders holding an aggregate of 5,029,337 shares of Company common stock entitled to vote at the Annual Meeting, representing 97.017% of the outstanding shares of Company common stock as of the record date, and which constituted a quorum thereof, were present in person or represented by proxy at the Annual Meeting.

At the Annual Meeting, the Company’s stockholders considered four proposals, each of which is described in more detail in the Company’s definitive proxy statement for the Annual Meeting filed with the Securities and Exchange Commission on March 21, 2019.

The final results of such stockholder voting on each proposal brought before the Annual Meeting are set forth below:

Proposal No. 1 -Election of Class III Directors. The three director nominees proposed by the Board were elected to serve as members of the Board until the next annual meeting of stockholders and until their successors are duly elected and qualified by the following final voting results:

Proposal No. 2 -Ratification of Appointment of Independent Registered Public Accounting Firm. The ratification of the appointment of Pivot CPA’S as the Company’s independent registered public accounting firm for the year ending October 31, 2019, was approved by the following final voting results:

Proposal No. 3 -Advisory Vote on Executive Compensation. Our executive compensation was approved, on an advisory basis, by the following final voting results:

Proposal No. 4 - Advisory Vote on Frequency of Executive Compensation.

The frequency of three years for future advisory votes on executive compensation was approved, on an advisory basis, by the following voting results:

In accordance with the results of the advisory vote on Proposal 4 - Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation, the Company’s Board of Directors has determined that the Company will conduct an advisory vote on say-on-pay every three years.

ITEM 5. OTHER INFORMATION

NoneOn 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, Leland E. Boren, a Director of the Company, passed away. Mr. Boren’s Estate is the largest shareholder of the Company.

ITEM 6. EXHIBITS

The following exhibits are submitted herewith:

SIGNATURES

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

Dated: Septem D Dated: September 12, 2018