UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
(Mark one)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2021January 31, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934--
For the transition period from ________________ to __________________
Commission File Number: 0-14443
____________________
INTERNATIONAL balerBALER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 13-2842053 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5400 Rio Grande Avenue, Jacksonville, Florida32254 | |
| (Address of principal executive offices) | |
(904) 358-3812
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, $.01 par value per share | IBAL | Pink Sheets |
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 every Interactive Data File required to be submitted 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 such files).
YES ☐ ☒ NO ☒☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
| Large accelerated filer ☐ | Accelerated filer |
| Non-accelerated filer | Smaller reporting company ☒ |
| Emerging growth company |
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 Exchange Act).
YES ☐ NO ☒
As of June 11, 2021,March 14, 2022, there were shares of common stock of the registrant outstanding.
| 1 |
INTERNATIONAL BALER CORPORATION
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | |
| ITEM 1. FINANCIAL STATEMENTS | |
| Condensed Balance Sheets as of | 3 |
| Condensed Statements of Income for the three months ended January 31, 2022 and | 4 |
| Condensed Statements of Stockholders’ Equity for the | 5 |
| Condensed Statements of Cash Flows for the | 6 |
| Notes to Condensed Financial Statements (unaudited) | 7 |
| ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 |
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
| ITEM 4. CONTROLS AND PROCEDURES | 14 |
| PART II. OTHER INFORMATION | |
| ITEM 1. LEGAL PROCEEDINGS | 15 |
| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 15 |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 15 |
| ITEM 4. MINE SAFETY DISCLOSURES | 15 |
| ITEM 5. OTHER INFORMATION | 15 |
| ITEM 6. EXHIBITS | |
| SIGNATURES |
| 2 |
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| April 30, 2021 | October 31, 2020 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,090,786 | $ | 2,626,221 | ||||
| Certificate of deposit | 1,012,073 | 1,011,824 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $6,000 at January 31, 2021 and $6,000 at October 31, 2020 | 1,258,063 | 788,234 | ||||||
| Inventories | 4,482,963 | 4,254,880 | ||||||
| Prepaid expense and other current assets | 249,619 | 92,195 | ||||||
| Income taxes receivable | 368,815 | 332,815 | ||||||
| Total current assets | 9,462,319 | 9,106,169 | ||||||
| Property, plant and equipment, at cost: | 4,501,217 | 4,440,561 | ||||||
| Less: accumulated depreciation | 3,274,064 | 3,161,864 | ||||||
| Net property, plant and equipment | 1,227,153 | 1,278,697 | ||||||
| Other assets | ||||||||
| Deferred income taxes | 77,890 | 77,890 | ||||||
| Total other assets | 77,890 | 77,890 | ||||||
| TOTAL ASSETS | $ | 10,767,362 | $ | 10,462,756 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 555,592 | $ | 480,278 | ||||
| Accrued liabilities | 327,235 | 377,898 | ||||||
| Customer deposits | 947,853 | 526,725 | ||||||
| Total current liabilities | 1,830,680 | 1,384,901 | ||||||
| Long term debt | — | 626,466 | ||||||
| Total liabilities | 1,830,680 | 2,011,367 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| 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 | 64,299 | 64,299 | ||||||
| Additional paid-in capital | 6,419,687 | 6,419,687 | ||||||
| Retained earnings | 3,134,106 | 2,648,813 | ||||||
| 9,618,092 | 9,132,799 | |||||||
| Less:Treasury stock, 1,245,980 shares, at cost | (681,410 | ) | (681,410 | ) | ||||
| Total stockholders' equity | 8,936,682 | 8,451,389 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,767,362 | $ | 10,462,756 | ||||
| See accompanying notes to condensed financial statements. | ||||||||
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| January 31, 2022 | October 31, 2021 | |||||||
| UNAUDITED | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,066,826 | $ | 1,742,336 | ||||
| Certificate of deposit | 1,013,335 | 1,012,960 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $11,844 at January 31, 2022 and at October 31, 2021 | 736,468 | 870,571 | ||||||
| Inventories | 4,976,244 | 4,708,263 | ||||||
| Prepaid expense and other current assets | 122,182 | 131,333 | ||||||
| Income taxes receivable | 434,019 | 434,019 | ||||||
| Total current assets | 9,349,074 | 8,899,482 | ||||||
| Property, plant and equipment, at cost: | 4,753,873 | 4,719,850 | ||||||
| Less: accumulated depreciation | 3,443,032 | 3,386,332 | ||||||
| Net property, plant and equipment | 1,310,841 | 1,333,518 | ||||||
| Other assets | ||||||||
| Deferred income taxes | 162,010 | 133,010 | ||||||
| Total other assets | 162,010 | 133,010 | ||||||
| TOTAL ASSETS | $ | 10,821,925 | $ | 10,366,010 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 433,331 | $ | 421,293 | ||||
| Accrued liabilities | 349,122 | 384,322 | ||||||
| Accrued sales returns | 490,000 | 490,000 | ||||||
| Customer deposits | 1,330,045 | 749,820 | ||||||
| Total current liabilities | 2,602,498 | 2,045,435 | ||||||
| Total liabilities | 2,602,498 | 2,045,435 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, par value $, shares authorized, issued | — | — | ||||||
| Common stock, par value $, shares authorized; shares issued | 64,299 | 64,299 | ||||||
| Additional paid-in capital | 6,419,687 | 6,419,687 | ||||||
| Retained earnings | 2,416,851 | 2,517,999 | ||||||
| 8,900,837 | 9,001,985 | |||||||
| Less:Treasury stock, shares, at cost | (681,410 | ) | (681,410 | ) | ||||
| Total stockholders' equity | 8,219,427 | 8,320,575 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,821,925 | $ | 10,366,010 | ||||
| See accompanying notes to condensed financial statements. | ||||||||
| 3 |
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED STATEMENTS OF INCOME | ||||||||
| FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021 | ||||||||
| UNAUDITED | ||||||||
| 2022 | 2021 | |||||||
| Net sales: | ||||||||
| Equipment | $ | 1,217,081 | $ | 1,564,221 | ||||
| Parts and service | 822,524 | 785,684 | ||||||
| Total net sales | 2,039,605 | 2,349,905 | ||||||
| Cost of sales | 1,781,287 | 2,150,188 | ||||||
| Gross profit | 258,318 | 199,717 | ||||||
| Operating expense: | ||||||||
| Selling expense | 110,927 | 135,916 | ||||||
| Administrative expense | 278,501 | 237,819 | ||||||
| Total operating expense | 389,428 | 373,735 | ||||||
| Operating loss | (131,110 | ) | (174,018 | ) | ||||
| Other income: | ||||||||
| Interest income | 962 | 891 | ||||||
| Other income | — | 626,466 | ||||||
| Total other income | 962 | 627,357 | ||||||
| (Loss) income before income taxes | (130,148 | ) | 453,339 | |||||
| Income tax benefit | (29,000 | ) | (36,000 | ) | ||||
| Net (loss) income | $ | (101,148 | ) | $ | 489,339 | |||
| (Loss) income per share, basic and diluted | $ | (0.02 | ) | $ | 0.09 | |||
| Weighted average number of shares outstanding | 5,183,895 | 5,183,895 | ||||||
| See accompanying notes to condensed financial statements. | ||||||||
| INTERNATIONAL BALER CORPORATION | ||||||||||||||||
| CONDENSED STATEMENTS OF INCOME | ||||||||||||||||
| FOR THE THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 2021 AND 2020 | ||||||||||||||||
| UNAUDITED | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net sales: | ||||||||||||||||
| Equipment | $ | 1,651,023 | $ | 1,267,141 | $ | 3,215,244 | $ | 2,710,122 | ||||||||
| Parts and service | 986,987 | 747,802 | 1,772,671 | 1,315,082 | ||||||||||||
| Total net sales | 2,638,010 | 2,014,943 | 4,987,915 | 4,025,204 | ||||||||||||
| Cost of sales | 2,226,471 | 1,762,775 | 4,376,659 | 3,695,569 | ||||||||||||
| Gross profit | 411,539 | 252,168 | 611,256 | 329,635 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Selling expense | 145,763 | 119,404 | 281,679 | 252,977 | ||||||||||||
| Administrative expense | 270,722 | 221,698 | 508,541 | 413,923 | ||||||||||||
| Total operating expense | 416,485 | 341,102 | 790,220 | 666,900 | ||||||||||||
| Operating loss | (4,946 | ) | (88,934 | ) | (178,964 | ) | (337,265 | ) | ||||||||
| Other income: | ||||||||||||||||
| Interest income | 900 | 5,344 | 1,791 | 11,194 | ||||||||||||
| Gain on extinguishment of debt | — | — | 626,466 | — | ||||||||||||
| Total other income | 900 | 5,344 | 628,257 | 11,194 | ||||||||||||
| Income (loss) before income taxes | (4,046 | ) | (83,590 | ) | 449,293 | (326,071 | ) | |||||||||
| Income tax benefit | — | (20,000 | ) | (36,000 | ) | (78,000 | ) | |||||||||
| Net income (loss) | $ | (4,046 | ) | $ | (63,590 | ) | $ | 485,293 | $ | (248,071 | ) | |||||
| Income (loss) per share, basic and diluted | $ | 0.00 | $ | (0.01 | ) | $ | 0.09 | $ | (0.05 | ) | ||||||
| Weighted average number of shares outstanding | 5,183,895 | 5,183,895 | 5,183,895 | 5,183,895 | ||||||||||||
| See accompanying notes to condensed financial statements. | ||||||||||||||||
| 4 |
| INTERNATIONAL BALER CORPORATION | INTERNATIONAL BALER CORPORATION | INTERNATIONAL BALER CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FOR THE SIX MONTHS ENDED APRIL 30, 2021 AND 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FOR THE 3 MONTHS ENDED JANUARY 31, 2022 AND 2021 | FOR THE 3 MONTHS ENDED JANUARY 31, 2022 AND 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UNAUDITED | UNAUDITED | UNAUDITED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - October 31, 2021 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 2,517,999 | 1,245,980 | $ | (681,410 | ) | $ | 8,320,575 | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | (101,148 | ) | — | (101,148 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - January 31, 2022 | 6,429,875 | 64,299 | 6,419,687 | 2,416,851 | 1,245,980 | (681,410 | ) | 8,219,427 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||
| Balance - October 31, 2020 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 2,648,813 | 1,245,980 | $ | (681,410 | ) | $ | 8,451,389 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 2,648,813 | 1,245,980 | $ | (681,410 | ) | $ | 8,451,389 | ||||||||||||||||||||||||||||||
| Net income | 489,339 | 489,339 | — | — | 489,339 | — | 489,339 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - January 31, 2021 | 6,429,875 | 64,299 | 6,419,687 | 3,138,152 | 1,245,980 | (681,410 | ) | 8,940,728 | 6,429,875 | 64,299 | 6,419,687 | 3,138,152 | 1,245,980 | (681,410 | ) | 8,940,728 | ||||||||||||||||||||||||||||||||||||||||
| Net loss | (4,046 | ) | (4,046 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - April 30, 2021 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 3,134,106 | 1,245,980 | $ | (681,410 | ) | $ | 8,936,682 | |||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - October 31, 2019 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 3,057,228 | 1,245,980 | $ | (681,410 | ) | $ | 8,859,804 | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | (184,481 | ) | (184,481 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - January 31, 2020 | 6,429,875 | 64,299 | 6,419,687 | 2,872,747 | 1,245,980 | (681,410 | ) | $ | 8,675,323 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | (63,590 | ) | (63,590 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2020 | 6,429,875 | $ | 64,299 | $ | 6,419,687 | $ | 2,809,157 | 1,245,980 | $ | (681,410 | ) | $ | 8,611,733 | |||||||||||||||||||||||||||||||||||||||||||
| See accompanying notes to condensed financial statements. | See accompanying notes to condensed financial statements. | See accompanying notes to condensed financial statements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 |
| INTERNATIONAL BALER CORPORATION | INTERNATIONAL BALER CORPORATION | INTERNATIONAL BALER CORPORATION | ||||||||||||||
| CONDENSED STATEMENTS OF CASH FLOWS | CONDENSED STATEMENTS OF CASH FLOWS | CONDENSED STATEMENTS OF CASH FLOWS | ||||||||||||||
| FOR THE SIX MONTHS ENDED APRIL 30, 2021 AND 2020 | ||||||||||||||||
| FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021 | FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021 | |||||||||||||||
| UNAUDITED | UNAUDITED | UNAUDITED | ||||||||||||||
| 2022 | 2021 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||
| Cash flow from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 485,293 | $ | (248,071 | ) | |||||||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||
| Net (loss) income | $ | (101,148 | ) | $ | 489,339 | |||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||
| Gain on extinguishment of debt | (626,466 | ) | — | — | (626,466 | ) | ||||||||||
| Depreciation and amortization | 112,200 | 106,800 | 56,700 | 55,800 | ||||||||||||
| Deferred income taxes | (29,000 | ) | — | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (469,829 | ) | (88,299 | ) | 134,103 | 77,799 | ||||||||||
| Inventories | (228,083 | ) | (222,689 | ) | (267,981 | ) | 13,277 | |||||||||
| Prepaid expenses and other assets | (157,424 | ) | (138,783 | ) | 9,151 | 4,164 | ||||||||||
| Income taxes receivable | (36,000 | ) | (75,532 | ) | — | (36,000 | ) | |||||||||
| Accounts payable | 75,314 | 278,320 | 12,038 | (24,148 | ) | |||||||||||
| Accrued liabilities | (50,663 | ) | (48,592 | ) | (35,200 | ) | (107,877 | ) | ||||||||
| Customer deposits | 421,128 | 410,195 | 580,225 | 330,475 | ||||||||||||
| Net cash used in operating activities | (474,530 | ) | (26,651 | ) | ||||||||||||
| Net cash provided by operating activities | 358,888 | 176,363 | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of property and equipment | (60,656 | ) | (76,623 | ) | (34,023 | ) | (35,808 | ) | ||||||||
| Interest earned on certificates of deposit | (249 | ) | (6,780 | ) | (375 | ) | (249 | ) | ||||||||
| Net cash used in investing activities | (60,905 | ) | (83,403 | ) | (34,398 | ) | (36,057 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from PPP loan | — | 626,466 | ||||||||||||||
| Net cash provided by financing activities | — | 626,466 | ||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (535,435 | ) | 516,412 | |||||||||||||
| Net increase in cash and cash equivalents | 324,490 | 140,306 | ||||||||||||||
| Cash and cash equivalents at beginning of period | 2,626,221 | 2,714,764 | 1,742,336 | 2,626,221 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 2,090,786 | $ | 3,231,176 | $ | 2,066,826 | $ | 2,766,527 | ||||||||
| See accompanying notes to condensed financial statements. | See accompanying notes to condensed financial statements. | See accompanying notes to condensed financial statements. | ||||||||||||||
| 6 |
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. Nature of Business: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 whichthat generate the materials for baling and recycling. The Company sells its products worldwide with annual sales outside the United States typically ranging from 10%10% to 35%35%.
2. Basis of Presentation: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 three-month period ended April 30, 2021January 31, 2022 are not necessarily indicative of the results that may be expected for the year ending October 31, 2021.2022. The accompanying balance sheet as of October 31, 20202021 was derived from the audited financial statements as of October 31, 2020.2021.
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, 2020.2021.
The Company is closely monitoring ongoing developments in connection with the COVID-19 global pandemic, which has had an adverse impact on sales as many customers are holding off purchasing new equipment.
As of the date of this report, the COVID-19 pandemic has not materially adversely impacted our capital and financial resources. Due to the economic uncertainty that has resulted from the pandemic, and the potential impact of such to our stakeholders, we are unable to predict with certainty any potential impacts to our business. Additionally, because we are unable to determine the ultimate severity or duration of the outbreak or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets, our workforce, our customers or our suppliers, at this time we are unable to predict the adverse extent that the COVID-19 crisis will have on our business, financial condition, liquidity and results of operations.
3. Summary of Significant Accounting Policies:Policies:
(a) Accounts Receivable & Allowance for Doubtful Accounts: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 worthinesscreditworthiness 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.
| 7 |
(b) Inventories:
(b) Inventories:
Inventories are stated at the lower of cost and net realizable 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) Warranties and Service: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 six-monththree-month period ended April 30:January 31:
| Schedule of Warranty Accrual | ||||||||
| 2022 | 2021 | |||||||
| Beginning balance | $ | 40,000 | $ | 40,000 | ||||
| Warranty service provided | (32,806 | ) | (30,764 | ) | ||||
| New product warranties | 24,342 | 31,284 | ||||||
| Changes to pre-existing warranty accruals | 8,464 | (520 | ) | |||||
| Ending balance | $ | 40,000 | $ | 40,000 | ||||
| 2021 | 2020 | |||||||
| Beginning balance | $ | 40,000 | $ | 60,000 | ||||
| Warranty service provided | (50,468 | ) | (71,803 | ) | ||||
| New product warranties | 64,305 | 27,101 | ||||||
| Changes to pre-existing warranty accruals | (13,837 | ) | 34,702 | |||||
| Ending balance | $ | 40,000 | $ | 50,000 | ||||
(d) Fair Value of Financial Instruments: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.
(e) Advertising Expenses:
Advertising costs are expensed as incurred. Advertising expense was $70,981$31,009 and $59,973$31,752 for the six monthsquarters ended April 30,January 31, 2022 and 2021, and 2020, respectively, and are included in selling expense on the accompanying Condensed Statements of Income.
(f) Recent Accounting Pronouncements:Pronouncements:
Recently Adopted Accounting Pronouncements:Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs and any not listed below were assessed and determined to be applicable or are expected to have a minimal impact on the Company’s condensed financial statements.
Accounting Pronouncements Not Yet Adopted
In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic326), Derivative and Hedging (Topic 815), and Leases (Topic 841). The new guidance will be effective November 1, 2023. While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to have a material effect on its financial statements.
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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 are required to be recorded on the balance sheet with the exception of short-term leases. This standard was adopted by the Company on November 1, 2019. Prior to adoption, the Company determined that all its lease agreements qualify as short term leases, having a lease term of twelve months or less and no purchase option, and has elected to recognize its lease payments in profit or loss on a straight-line basis over the lease term. Accordingly the Company did not record a transition adjustment.
4. Revenue from Contracts with Customers:Customers:
(a) Overview
a) Overview
The Company recognizes revenues from the sale of finished products upon shipment and the transfer of control to the customer. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue, if sold separately, is valued based on estimated service person hours to complete a service and generally is recognized over the contract period. Revenue from service plans is recognized over time based on the term of the service agreement.
All other product sales with customer specific acceptance provisions are recognized at a point in time upon customer acceptance and the delivery of 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 with payment terms of thirty days after shipment. The majority of the Company’s contracts have a 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.
In the first six monthsquarter ended on April 30, 2021in January 31, 2022 deferred revenue of $382,557$375,014 from the fiscal year ended October 31, 20202021 was recognized.
b)(b) Disaggregation of Revenue
Disaggregated revenue is by primary geographic market is as follows:
| Schedule of Disaggregated revenue | ||||||||
| Three Months Ended January 31 | ||||||||
| Revenue by Geographic Area | 2022 | 2021 | ||||||
| United States | $ | 2,001,849 | $ | 2,297,546 | ||||
| International | 37,756 | 52,359 | ||||||
| Total | $ | 2,039,605 | $ | 2,349,905 | ||||
| Six Months Ended April 30 | ||||||||
| Equipment Revenue by Geographic Area | 2021 | 2020 | ||||||
| United States | $ | 3,198,344 | $ | 2,579,842 | ||||
| International | 16,900 | 130,280 | ||||||
| Total | $ | 3,215,244 | $ | 2,710,122 | ||||
5. Related Party Transactions:Transactions:
Avis Industrial Corporation (Avis) controls over 80%(“Avis”) owns % of the outstanding shares of the Company. Avis owns 100%100% of The American Baler Company, a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc. (Harris)(“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 independentThe Company operates independently and does not transact business with these related entities. Avis owns 100% of each other.Peninsular Cylinder Co., Inc (“Peninsular”), a company that manufactures cylinders. The company had no purchases from these companiesCompany purchased $56,665 in the first halfquarter ended January 31, 2022 and $120 of fiscal 2021 and in the fiscal year ending October 31, 2020. The Company had no sales to The American Baler Companycylinders from Peninsular in the first halfquarter of fiscal 2021 and in the fiscal year ended October 31, 2020. The Company had no sales to Harris Waste Management in the first half of fiscal 2021 or in the fiscal year ended October 31, 2020.2021.
6. Inventories:
6. Inventories:
Inventories consisted of the following:
| Schedule of Inventories | ||||||||
| January 31, 2022 | October 31, 2021 | |||||||
| Raw materials | $ | 2,777,905 | $ | 2,554,083 | ||||
| Work in process | 1,983,775 | 1,714,957 | ||||||
| Finished | 214,564 | 439,223 | ||||||
| $ | 4,976,244 | $ | 4,708,263 | |||||
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| April 30, 2021 | October 31, 2020 | |||||||
| Raw materials | $ | 2,279,746 | $ | 2,155,664 | ||||
| Work in process | 1,813,997 | 1,725,596 | ||||||
| Finished goods | 389,220 | 373,620 | ||||||
| $ | 4,482,963 | $ | 4,254,880 | |||||
7. Debt:Debt:
The Company has a $1,000,000$1,000,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed on May 15, 2021. The line of credit allows the Company to borrow at an interest rate equal to the greater of 3% or Wall Street Journal prime rate minus 0.95%,0.25% per the line of credit agreement, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2022.2022, unless extended or otherwise modified by the parties in writing. The line of credit had no0 outstanding balance at April 30, 2021January 31, 2022 and at October 31, 2020.2021.
On April 16, 2020 the Company received a $626,466$626,466 loan made pursuant to the terms of the Paycheck Protection Program (PPP) authorized by the CARES Act. The loan hashad a two year2 two-year term and accruesaccrued simple interest at a fixed annual rate of 1.00%1.00%. Under the terms of the CARES Act guidelines, a portion of the loan up to 100%100% may be forgiven by the U.S. Small Business Administration (“SBA”) if the amount spent is within the timeframe and under guidelines that have been set for forgiveness. On December 7,9, 2020 the Company was notified by its bank that the SBA has stated that thisthe entire loan was forgiven. The Company reversed this liability during the quarter ended January 31, 2021 and the resulting gain was recognized as other income.
8. Income Taxes:
Subsequent to February 25, 2021, the income tax return of the Company will be included in the accompanying condensed statementsconsolidated income tax return of income.Avis. The Company is in the process of filing short-year income tax returns for the period November 1, 2020 through February 24, 2021 and is filing carryback claims for the same period to recover income taxes paid in prior periods of approximately $102,000. The Company has recorded cumulative federal and state income tax refunds of approximately $434,000 at January 31, 2022 and October 31, 2021.
8. Income Taxes:
TaxDeferred 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 include historical resultsThe realization 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 aswith the exception of April 30, 2021certain tax credits and at October 31, 2020. However, if it is determined that all or partstate NOLs, will depend on the ability of the deferred tax assets will not be used in the future, an adjustmentAvis to the deferred tax assets would be charged against netgenerate taxable income in the period such determination is made. Asfuture. Certain tax credits and state NOLs of April 30, 2021approximately $92,300 were generated by the Company prior to the Avis ownership change and October 31, 2020, netmay be subject to Section 382 limitations, accordingly, the Company has recorded a valuation allowance related to these deferred tax assets were $77,890.assets.
The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses.
9. Commitments and Contingencies: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 settled this claim in March 2020. The Company’s liability on this settlement of the claim was $20,645 which has been paid.
On March 22, 2021, the Company was served with a complaint related to an injury to an employee working at a Stericycle facility in North Little Rock, Arkansas. The employee was working on a baler manufactured by the Company in 2003. The employee suffered an injury to his left hand on April 10, 2018. The plaintiff is Scott Tinsley, the injured employee. The Company’s insurance policy related to this complaint has a deductible of $20,000$20,000 and the Company has recorded an accrued liability for its estimated loss.
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On July 27, 2021, the Company was served with a complaint related to an injury to an employee working at Mackay Mitchell Envelope Company in Mount Pleasant, Iowa. On August 10, 2019, the employee, Xaisavath Phanthouvong, was working on a baler manufactured by the Company in 2003. The employee suffered a serious injury to his left hand. The Company’s insurance policy related to this complaint has no deductible. On February 21, 2022 the Company was notified that this complaint has been dismissed, without prejudice.
On December 3, 2021 the Company filed a complaint in Duval County, Florida against California Recyclers, Inc. (“CRI”) alleging breach of contract on the basis of CRI’s failure to pay the remaining 10% on a baler sold to CRI in January 2021. The Company and CRI have been in a continuing dispute as to whether the baler was capable of meeting the output specifications as originally quoted by the Company. Based on the way CRI has continued to operate the baler, the Company has concluded that there is no point in continuing this relationship. The Company has agreed to refund the amount paid by CRI and take the baler back. The Company has recorded an amount of $490,000 sales returns and set up a reserve for that amount in current liabilities on the Company’s balance sheet. Management estimates that there is a potential additional loss of up to $100,000, but believes that the likelihood of this amount.loss is remote.
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ITEM 2. 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 LookingForward-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, prospective business opportunities 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 materiallymaterial, 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
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, 2020,2021, 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
Three Months Ended April 30, 2021January 31, 2022 (“secondfirst quarter of fiscal 2021”2022”) compared to the three months ended April 30, 2020January 31, 2021 (“secondfirst quarter of fiscal 2020”2021”)
In the secondfirst quarter ended April 30, 2021,January 31, 2022, the Company had net sales of $2,638,010$2,039,605 compared to net sales of $2,014,943$2,349,905 in the second quarter of fiscal 2020, an increase of 30.9%. Equipment sales included twenty-eight balers and conveyers at an average price of $58,965 in the secondfirst quarter of fiscal 2021, whilea decrease of 13.2%. The sales by product were as follows:
| January 31, 2022 | January 31, 2021 | |||||||
| General Purpose Balers | $ | 983,644 | $ | 1,500,330 | ||||
| Rubber Balers | 103,865 | — | ||||||
| Specialty Balers | 129,572 | 63,891 | ||||||
| Parts and Service Sales | 822,524 | 785,684 | ||||||
| Total | $ | 2,039,605 | $ | 2,349,905 | ||||
The lower sales in the samefirst quarter of fiscal 2020,2022 were the Company sold twenty-one balers and conveyers at an average priceresult of $60,340.general economic conditions. Parts and service sales were higher in the currentfirst quarter were, $986,987,of fiscal 2022 by 4.7%.
In the first quarter ended January 31, 2022, gross profit increased to $258,318, 12.7% of net sales compared to $747,802, an increase$199,719, 8.5% of 32.7%. The highernet sales in the second quarter of Fiscal 2021 were the result of improved market conditions as the COVID-19 pandemic affected the results of the second quarter of fiscal 2020.
Gross profit increased to $411,539 in the second quarter of fiscal 2021, compared to $252,168 in the second quarter of fiscal 2020.prior-year first quarter. The higher gross profit is primarilywas the result of higher baler salesthe Company increasing prices and parts and service sales in the second quarter in fiscal 2021. Parts and service sales have higher gross profit margins than equipment sales gross profit margins.reducing operating costs.
Total operating expense, consisting of selling and administrative expense, increased by 22.1% to $416,485 in the second quarter of fiscal 2021 compared to $341,102 in the second quarter of fiscal 2020. The higher selling and administrative expense were the result of higher advertising expenses, legal expenses, and the reserve for the deductible on the products liability claim ($20,000).
The Company had a pre-tax loss from operations of $4,046$133,110 in the secondfirst quarter of fiscal 2021 compared to a pre-tax loss from operations of $83,590$174,018 in the samefirst quarter of fiscal 2020. The Company did not layoff or furlough any employees as a result of the COVID-19 pandemic.
2021.
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Results of Operations: Six Month Comparison
Six Months Ended April 30, 2021 (“second half of fiscal 2021) compared to the six months ended April 30, 2020 (“second half of fiscal 2020”).
The Company had net sales of $4,987,915 inIn the first six monthsquarter of fiscal 2021, compared to net sales of $4,025,204 in the same period of fiscal 2020. The higher net sales in the first half of fiscal 2021 was the result of improved market conditions, particularly related to the COVID-19 pandemic in the second quarter of fiscal 2020. Equipment sales included forty-eight balers and conveyors in the first half of fiscal 2021 versus equipment sales of thirty-eight balers and conveyors in the same period of 2020. Parts and service sales were $457,589 higher in the first half of fiscal 2021 compared to the first half of fiscal 2020. This increase was due to market conditions.
Gross profit increased to $611,256 in the first six months of fiscal 2021 compared to $329,635 in the first six months of fiscal 2020. The higher gross profit was the result of the higher net sales.
Selling and administrative expenses increased from $666,900 in fiscal 2020 to $790,220 in fiscal 2021, an increase of 18.5%. The largest increases in cost were legal expenses, sales salaries, advertising, and the reserve for the products liability claim.
��
The Company recorded income of $626,466 from the Paycheck Protection Program (PPP) loan which was forgiven inforgiven. For the first quarter of fiscal 2021. In the first half of fiscal 2021, the Company had pre-tax income of $449,293. For$453,339 compared to a pre-tax loss of $130,148 in the first six monthsquarter of fiscal 2021, the2022. The Company had an operating lossincome tax benefit of $178,964$29,000 in the first quarter of fiscal 2022 compared to an operating lossincome tax benefit of $337,265$36,000 in the same period infirst quarter of fiscal 2020.2021. Income from the forgiven PPP loan is not taxable.
The sales order backlog was approximately $2,310,000$3,840,000 at April 30, 2021January 31, 2022 and $3,040,000$2,700,000 at April 30, 2020.January 31, 2021.
Financial Condition and Liquidity:
Net working capital at April 30, 2021January 31, 2022 was $7,631,639$6,746,576 as compared to $7,721,268$6,854,047 at October 31, 2020.2021. 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 sixthree months of fiscal 20212022 were 29.331.8 days, as compared to 39.325.3 days in the first sixthree months of fiscal 2020. Days sales outstanding was negatively impacted in fiscal 2020 as the Company sold a prototype baler for $546,000 without receiving a customer deposit on this equipment.2021. 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 ÷ 181)91.25).
During the sixthree months ended April 30,January 31, 2022 and 2021, and 2020, the Company made additions to property, plant and equipment of $60,656$34,023 and $76,623$35,808 respectively.
The Company has a $1,000,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed for an additional year on May 15, 2021. The line of credit allows the Company to borrow at an interest rate equal to the greater of 3% or Wall Street Journal primePrime rate minus 0.95%,0.25% per line of credit agreement, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2021.2022, unless extended or otherwise modified in writing. The line of credit had no outstanding balance at April 30, 2021January 31, 2022 and at October 31, 2020.2021.
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.
The Company had cash deposits in banks of $2,969,208$2,705,046 and $3,275,135$2,512,020 above the FDIC insured limit of $250,000 per bank at April 30, 2021January 31, 2022 and October 31, 2020,2021, respectively.
Off-Balance Sheet ArrangementsArrangements:
As of April 30, 2021,January 31, 2022, we have no material off-balance sheet arrangements with unconsolidated entities.
Critical Accounting EstimatesEstimates:
There have been no material changes to the critical accounting policies disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020.2021.
Recent Accounting PronouncementsPronouncements:
See Note 3(f) to our Financial Statements for a discussion of recent accounting pronouncements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates as a result of its financing activities, including its borrowings on the revolving line of credit facility. Based on the current level of borrowings, a change in interest rates is not expected to have a material effect on operations or financial position.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and ProceduresProcedures:
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, 2021,January 31, 2022, the end of the period covered by this Quarterly Report on Form 10-Q, and under the supervision and with the participation of 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.
Changes in Internal Control over Financial ReportingReporting:
As previously disclosedDuring its fiscal year ended October 31, 2021, the Company discovered material weaknesses related to pricing on inventory invoices and purchase orders. Specifically, the unit prices on some inventory invoices were not matched to the unit prices on the related purchase orders and adjusted to the invoice amount if different. The correction of these pricing errors was immaterial to the financial statements of the Company at October 31, 2021, however management considered this pricing error to be a material weakness in Item 4 of our 10-Qits controls and procedures for the fiscal year ended October 31, 2021. In order to remediate this material weakness, management added two additional review steps to adjust inventory pricing to invoiced amounts if different from the purchase order amount.
Except for the foregoing, the Company’s management, including CEO and CFO, confirm that there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended January 31, 2021, management concluded2022, that there was a material weakness in internal controls relatedhave materially affected, or are reasonably likely to management’s failure to obtain Board approval prior to obtaining a PPE loan.
To address the material weakness described above the Company engaged its outside law firm to conduct a training seminar for its management team regarding corporate governance procedures and requirements under Delaware law andmaterially affect, the Company’s charter documents. The law firm prepared a memo which summarizes the Company’s charter documents and Delaware law. In addition, the Company has developed a monitoringinternal control to ensure that the proper corporate governance practices are followed.
over financial reporting.
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The Company believes the actions described above will be sufficient to remediate the identified material weakness and strengthen the internal control over financial reporting.
Except as noted in the preceding paragraphs, there has been no change in internal controls over financial reporting that occurred during the most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 1, 2017In the Company was served with a complaint relatedordinary course of conducting our business, we have in the past and may in the future become involved in various legal actions and other claims. These legal proceedings may be subject to an injury to an employee working at Integrated Coatingmany uncertainties 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 settled this claim in March 2020. The Company’s liability on this settlementthere can be no assurance of the claim was $20,645outcome of any individual proceedings. We do not presently anticipate any material legal proceedings that, if determined adversely to us, would have a material adverse effect on our financial position, results of operations or cash flows. See Note 9, Commitments and Contingencies, to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for information regarding certain legal proceedings in which has been paid.we are involved.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 22, 2021, the Company was served with a complaint related to an injury to an employee working at a Stericycle facility in North Little Rock, Arkansas. The employee was working on a baler manufactured by the company in 2003. The employee suffered an injury to his left hand on April 10, 2018. The plaintiff is Scott Tinsley, the injured employee. The Company’s insurance policy related to this complaint has a deductible of $20,000 and the Company has recorded a reserve for this amount.None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
| 15 |
None
ITEM 6. EXHIBITS
The following exhibits are submitted herewith:
| Certification of Victor W. Biazis, Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).* | |
| 31.2 | Certification of William E. Nielsen, Chief Financial, pursuant to Rule 13a-14(a)/15d-14(a).* |
| 32.1 | Certification of Victor W. Biazis, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
| 32.2 | Certification of William E. Nielsen, Chief Financial Officer, pursuant |
| 101.INS | XBRL Instance Document* |
| 101.SCH | XBRL Taxonomy Extension Schema* |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase* |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase* |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase* |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase* |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101* |
• Filed herewith.
SIGNATURES
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: March 14, 2022
Dated: Septem D Dated: June 11, 2021
INTERNATIONAL BALER CORPORATION
BY: /s/D. Roger Griffin
BY: /s/Victor W. BiazisD. Roger Griffin
Victor W. Biazis
Chief Executive Officer
BY:/s/William E. Nielsen
William E. Nielsen
Chief Financial Officer