Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2018 | May 31, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | International Baler Corporation | |
Entity Central Index Key | 781,902 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 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 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,183,895 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Apr. 30, 2018 | Oct. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 4,394,283 | $ 4,541,767 |
Accounts receivable, net of allowance for doubtful accounts of $15,000 at April 30, 2018 and at October 31, 2017 | 598,710 | 909,784 |
Inventories | 3,678,123 | 4,429,648 |
Prepaid expense and other current assets | 279,059 | 105,935 |
Income taxes receivable | 126,886 | |
Total current assets | 8,950,175 | 10,114,020 |
Property, plant and equipment, at cost: | 4,043,954 | 3,960,510 |
Less: accumulated depreciation | 2,734,818 | 2,637,818 |
Net property, plant and equipment | 1,309,136 | 1,322,692 |
Other assets: | ||
Deferred income taxes | 26,975 | 37,348 |
Total other assets | 26,975 | 37,348 |
TOTAL ASSETS | 10,286,286 | 11,474,060 |
Current liabilities: | ||
Accounts payable | 535,525 | 765,019 |
Accrued liabilities | 249,986 | 355,016 |
Customer deposits | 481,369 | 1,480,836 |
Total current liabilities | 1,266,880 | 2,600,871 |
Total liabilities | 1,266,880 | 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 April 30, 2018 and October 31, 2017 | 64,299 | 64,299 |
Additional paid-in capital | 6,419,687 | 6,419,687 |
Retained earnings | 3,216,830 | 3,070,613 |
Total stockholders' equity before treasury stock | 9,700,816 | 9,554,599 |
Less: Treasury stock, 1,245,980 shares, at cost | (681,410) | (681,410) |
Total stockholders' equity | 9,019,406 | 8,873,189 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 10,286,286 | $ 11,474,060 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Apr. 30, 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 |
Statements of Income (Unaudited
Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Apr. 30, 2017 | |
Net sales: | ||||
Equipment | $ 1,176,241 | $ 2,009,054 | $ 4,434,151 | $ 3,668,367 |
Parts and service | 786,391 | 656,667 | 1,539,117 | 1,235,147 |
Total net sales | 1,962,632 | 2,665,721 | 5,973,268 | 4,903,514 |
Cost of sales | 1,758,354 | 2,316,808 | 5,200,227 | 4,325,303 |
Gross profit | 204,278 | 348,913 | 773,041 | 578,211 |
Operating expense: | ||||
Selling expense | 115,866 | 113,756 | 215,534 | 222,958 |
Administrative expense | 157,956 | 162,982 | 322,335 | 344,798 |
Total operating expense | 273,822 | 276,738 | 537,869 | 567,756 |
Operating income (loss) | (69,544) | 72,175 | 235,172 | 10,455 |
Other income (expense): | ||||
Interest income | 1,072 | 1,444 | 4,045 | 2,751 |
Interest expense | ||||
Total other income | 1,072 | 1,444 | 4,045 | 2,751 |
Income (loss) before income taxes | (68,472) | 73,619 | 239,217 | 13,206 |
Income tax provision (benefit) | (16,000) | 25,500 | 93,000 | 4,500 |
Net income (loss) | $ (52,472) | $ 48,119 | $ 146,217 | $ 8,706 |
Income (loss) per share, basic and diluted | $ (0.01) | $ 0.01 | $ 0.03 | $ 0 |
Weighted average number of shares outstanding | 5,183,895 | 5,183,895 | 5,183,895 | 5,183,895 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Unaudited) - 6 months ended Apr. 30, 2018 - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total |
Beginning Balace, Shares at Oct. 31, 2017 | 6,429,875 | 1,245,980 | |||
Beginning Balance, Value at Oct. 31, 2017 | $ 64,299 | $ 6,419,687 | $ 3,070,613 | $ (681,410) | $ 8,873,189 |
Net Income | 146,217 | 146,217 | |||
End Balance, Shares at Apr. 30, 2018 | 6,429,875 | 1,245,980 | |||
End Balance, Value at Apr. 30, 2018 | $ 64,299 | $ 6,419,687 | $ 3,216,830 | $ (681,410) | $ 9,019,406 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Cash flow from operating activities: | ||
Net income (loss) | $ 146,217 | $ 8,706 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 97,000 | 99,000 |
Deferred income taxes | 10,373 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 311,074 | 127,337 |
Inventories | 751,525 | 92,876 |
Prepaid expenses and other assets | (173,124) | (60,675) |
Income taxes receivable | 126,886 | 47,583 |
Accounts payable | (229,494) | 99,897 |
Accrued liabilities | (105,030) | (25,853) |
Customer deposits | (999,467) | 900,053 |
Net cash (used in) provided by operating activities | (64,040) | 1,288,924 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (83,444) | (16,780) |
Redemptions of (interest earned on) certificates of deposit | (1,172) | |
Net cash used in investing activities | (83,444) | (17,952) |
Net (decrease) increase in cash and cash equivalents | (147,484) | 1,270,972 |
Cash and cash equivalents at beginning of period | 4,541,767 | 2,719,337 |
Cash and cash equivalents at end of period | 4,394,283 | 3,990,309 |
Cash paid during period for: | ||
Interest | ||
Income taxes | $ 125,000 |
Nature of Business
Nature of Business | 6 Months Ended |
Apr. 30, 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 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%. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 2. Basis of Presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information in footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the six-month period ended April 30, 2018 are not necessarily indicative of the results that may be expected for the year ending October 31, 2018. The accompanying balance sheet as of October 31, 2017 was derived from the audited financial statements as of October 31, 2017. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies: (a) Accounts Receivable & Allowance for Doubtful Accounts: Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (b) Inventories: 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 prospectively at the lower of cost and net realizable value in accordance with Accounting Standards Update 2015-11 Simplifying the Measurement of Inventory. (c) Revenue Recognition: The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. (d) Warranties and Service: The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers currently under warranty, and known warranty issues. Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30: 2018 2017 Beginning balance $ 70,000 $ 65,000 Warranty service provided (60,491 ) (103,829 ) New product warranties 44,342 73,367 Changes to pre-existing warranty accruals 16,149 50,462 Ending balance $ 70,000 $ 85,000 (e) 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) Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidance requires an entity to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the considerations to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company does not believe this will have a significant impact on the financial statements, as generally, contracts contain one distinct performance obligation and specifically state the performance obligation is the delivery of equipment in exchange for a stated consideration. Contracts are not long term and balers are manufactured for individual orders and revenue recognized at time of shipment. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Apr. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 4. Related Party Transactions: Leland E. Boren, a stockholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls over 75% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company and Harris Waste Management Group, Inc., a competitor of the Company. These baler companies operate completely independent of each other. The Company had no equipment sales to, or purchases from, these companies for the six months ended April 30, 2018 or in fiscal year ended October 31, 2017. |
Inventories
Inventories | 6 Months Ended |
Apr. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories: Inventories consisted of the following: April 30, 2018 October 31, 2017 Raw materials $ 2,102,953 $ 2,287,901 Work in process 1,266,070 1,966,519 Finished goods 309,100 175,228 $ 3,678,123 $ 4,429,648 |
Debt
Debt | 6 Months Ended |
Apr. 30, 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 April 30, 2018 and at October 31, 2017. |
Income Taxes
Income Taxes | 6 Months Ended |
Apr. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes: Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. Factors considered included, historical results of operations, volatility of the economic conditions and projected earnings based on current operations. Based on this evidence, it is more likely than not that the deferred tax assets would be realized. Accordingly, there is no valuation allowance as of April 30, 2018 and at October 31, 2017. However, if it is determined that all or part of the deferred tax assets will not be used in the future, an adjustment to the deferred tax assets would be charged against net income in the period such determination is made. As of April 30, 2018 and October 31, 2017, net deferred tax assets were $26,975 and $37,348, respectively. 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 made 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 reduced net deferred income tax assets by approximately $10,000 during the first quarter ending January 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Apr. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies: The Company, in the ordinary course of business, is subject to claims made, and from time to time is named as a defendant in legal proceedings relating to the sales of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. On 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. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Accounts Receivable and Allowance for Doubtful Accounts | (a) Accounts Receivable & Allowance for Doubtful Accounts: Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | (b) Inventories: Prior to 2017, the Company reported inventories at the lower of cost or market. Effective November 1, 2017, the Company began stating inventories prospectively at the lower of cost and net realizable value in accordance with Accounting Standards Update 2015-11 Simplifying the Measurement of Inventory. |
Revenue Recognition | (c) Revenue Recognition: The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. |
Warranties and Service | (d) Warranties and Service: The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers currently under warranty, and known warranty issues. Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30: 2018 2017 Beginning balance $ 70,000 $ 65,000 Warranty service provided (60,491 ) (103,829 ) New product warranties 44,342 73,367 Changes to pre-existing warranty accruals 16,149 50,462 Ending balance $ 70,000 $ 85,000 |
Fair Value of Financial Instruments | (e) Fair Value of Financial Instruments: The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, 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 | (f) Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidance requires an entity to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the considerations to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company does not believe this will have a significant impact on the financial statements, as generally, contracts contain one distinct performance obligation and specifically state the performance obligation is the delivery of equipment in exchange for a stated consideration. Contracts are not long term and balers are manufactured for individual orders and revenue recognized at time of shipment. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Warranty Accrual | Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30: 2018 2017 Beginning balance $ 70,000 $ 65,000 Warranty service provided (60,491 ) (103,829 ) New product warranties 44,342 73,367 Changes to pre-existing warranty accruals 16,149 50,462 Ending balance $ 70,000 $ 85,000 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Apr. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: April 30, 2018 October 31, 2017 Raw materials $ 2,102,953 $ 2,287,901 Work in process 1,266,070 1,966,519 Finished goods 309,100 175,228 $ 3,678,123 $ 4,429,648 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies - Warranty Accrual (Details) - USD ($) | 6 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract] | ||
Beginning balance | $ 70,000 | $ 65,000 |
Warranty service provided | (60,491) | (103,829) |
New product warranties | 44,342 | 73,367 |
Changes to pre-existing warranty accruals | 16,149 | 50,462 |
Ending balance | $ 70,000 | $ 85,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Apr. 30, 2016 |
Leland E. Boren | |
Ownership of Avis | 75.00% |
Avis Industrial Corp. | |
Ownership of The American Baler | 100.00% |
Inventories - Inventories (Deta
Inventories - Inventories (Details) - USD ($) | Apr. 30, 2018 | Oct. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,102,953 | $ 2,287,901 |
Work in process | 1,266,070 | 1,966,519 |
Finished goods | 309,100 | 175,228 |
Inventories | $ 3,678,123 | $ 4,429,648 |
Debt (Details Narrative)
Debt (Details Narrative) - Line of Credit [Member] - USD ($) | 6 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Short-term Debt [Line Items] | ||
Line of Credit Agreement | $ 1,650,000 | |
Interest Rate Terms | 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. | |
Outstanding balance | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 6 Months Ended | |
Apr. 30, 2018 | Oct. 31, 2017 | |
Components of Deferred Tax Assets [Abstract] | ||
Net deferred tax assets | $ 26,975 | $ 37,348 |
Federal Income Tax Rate | 21.00% | |
Reduction in net deferred income tax assets | $ 10,000 |
Commitment and Contingencies (D
Commitment and Contingencies (Details Narrative) | 3 Months Ended |
Apr. 30, 2018USD ($) | |
Loss Contingency, Information about Litigation Matters [Abstract] | |
Lawsuit exposure | $ 25,000 |