Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Jan. 15, 2020 | Apr. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | International Baler Corporation | ||
Entity Central Index Key | 0000781902 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-31 | ||
Is Entity's Reporting Status Current? | Yes | ||
Is Entity Smaller Reporting Company? | true | ||
Is Entity Emerging Growth Company? | false | ||
Is Entity Well Known Seasoned Issuer? | No | ||
Is Entity Voluntary Filer? | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 1,480,492 | ||
Entity Common Stock, Shares Outstanding | 5,183,895 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Is Entity Shell Company? | false |
Balance Sheets
Balance Sheets - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 2,714,764 | $ 4,733,510 |
Certificate of deposit | 1,003,389 | |
Accounts receivable, net of allowance for doubtful accounts of $15,000 at October 31, 2019 and at October 31, 2018 | 644,915 | 556,666 |
Inventories | 4,119,057 | 4,257,085 |
Prepaid expense and other current assets | 77,858 | 166,604 |
Total current assets | 8,559,983 | 9,713,865 |
Property, plant and equipment, at cost | 4,336,733 | 4,092,153 |
Less: accumulated depreciation | 3,026,513 | 2,821,448 |
Net property, plant and equipment | 1,310,220 | 1,270,705 |
Other assets: | ||
Deferred income taxes | 161,122 | 61,494 |
Total other assets | 161,122 | 61,494 |
TOTAL ASSETS | 10,031,325 | 11,046,064 |
Current liabilities: | ||
Accounts payable | 329,618 | 581,651 |
Accrued liabilities | 185,334 | 386,416 |
Customer deposits | 656,569 | 894,579 |
Total current liabilities | 1,171,521 | 1,862,646 |
Total liabilities | 1,171,521 | 1,862,646 |
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 | 3,057,228 | 3,380,842 |
Total stockholders' equity before treasury stock | 9,541,214 | 9,864,828 |
Less: Treasury stock, 1,245,980 shares, at cost | (681,410) | (681,410) |
Total stockholders' equity | 8,859,804 | 9,183,418 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 10,031,325 | $ 11,046,064 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
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 | $ .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
Statements of Income - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Net sales: | ||
Equipment | $ 6,612,826 | $ 8,081,671 |
Parts and service | 2,913,749 | 3,032,311 |
Total net sales | 9,526,575 | 11,113,982 |
Cost of sales | 8,830,035 | 9,552,308 |
Gross profit | 696,540 | 1,561,674 |
Operating expense: | ||
Selling expense | 550,614 | 470,084 |
Administrative expense | 856,221 | 683,886 |
Total operating expense | 1,406,835 | 1,153,970 |
Operating (loss) income | (710,295) | 407,704 |
Other income: | ||
Interest income | 9,712 | 6,105 |
Other income | 175,841 | |
Total other income | 185,553 | 6,105 |
(Loss) income before income taxes | (524,742) | 413,809 |
Income tax provision | (201,128) | 103,580 |
Net (loss) income | $ (323,614) | $ 310,229 |
Income per share, basic and diluted | $ (0.06) | $ 0.06 |
Weighted average number of shares outstanding | 5,183,895 | 5,183,895 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - 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 | 310,229 | 310,229 | |||
End Balance, Shares at Oct. 31, 2018 | 6,429,875 | 1,245,980 | |||
End Balance, Value at Oct. 31, 2018 | $ 64,299 | 6,419,687 | 3,380,842 | $ (681,410) | 9,183,418 |
Net Income | (323,614) | (323,614) | |||
End Balance, Shares at Oct. 31, 2019 | 6,429,875 | 1,245,980 | |||
End Balance, Value at Oct. 31, 2019 | $ 64,299 | $ 6,419,687 | $ 3,057,228 | $ (681,410) | $ 8,859,804 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Cash flow from operating activities: | ||
Net income | $ (323,614) | $ 310,229 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 205,065 | 183,630 |
Deferred income taxes | (99,628) | (24,146) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (88,249) | 353,118 |
Inventories | 138,028 | 172,563 |
Prepaid expenses and other assets | 88,746 | (60,669) |
Income taxes receivable | 126,886 | |
Accounts payable | (252,033) | (183,368) |
Accrued liabilities | (201,082) | 31,400 |
Customer deposits | (238,010) | (586,257) |
Net cash (used in) provided by operating activities | (770,777) | 323,386 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (244,580) | (131,643) |
Acquisition of certificate of deposit | (1,003,389) | |
Net cash used in investing activities | (1,247,969) | (131,643) |
Net (decrease) increase in cash and cash equivalents | (2,018,746) | 191,743 |
Cash and cash equivalents at beginning of year | 4,733,510 | 4,541,767 |
Cash and cash equivalents at end of year | 2,714,764 | 4,733,510 |
Cash paid during year for: | ||
Income taxes | $ 145,000 |
Nature of Business
Nature of Business | 12 Months Ended |
Oct. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business: | (1) Nature of Business International Baler Corporation (the “Company”) is a manufacturer of baling equipment which utilizes technical, hydraulic and electrical mechanisms to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models to meet specific customer requirements. The Company’s customers include recycling facilities, paper mills, textile mills, and the companies which generate the materials for baling and recycling. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. (b) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. (c) Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (d) Inventories Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. (e) Property, Plant, and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the amounts rely upon the determination of the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. (g) Revenue Recognition The Company adopted ASC 606 on November 1, 2018. 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 of days of the delivery of the equipment. Warranty revenue is recognized over the contract period. 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 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. (h) Disaggregation of Revenue Disaggregated revenue is by primary geographic market is as follows: Revenue by Geographic Area Twelve Months Ended October 31, 2019 United States $ 8,199,936 International 1,326,639 Total $ 9,526,575 (i) Contract Assets and Liabilities When the Company has delivered the baler, parts or service and has earned the right to bill a customer, accounts receivable is recorded as an unconditional right to payment exists. Contract liabilities arise when payment is received before the Company transfers products to a customer and are reported as Customer Deposits on the accompanying balance sheet. 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. Contract Costs The Company expenses incremental costs of obtaining or fulfilling a contract. (j) Warranties and Service The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida, facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and type of balers currently under warranty, and known warranty issues. Following is a tabular reconciliation of the changes in the warranty accrual: 2019 2018 Beginning balance $ 80,000 $ 70,000 Warranty service provided (152,977 ) (102,359 ) New product warranties 132,257 80,817 Changes to pre-existing warranty accruals 720 31,542 Ending balance $ 60,000 $ 80,000 (k) Earnings Per Share Basic earnings per share are calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share include the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2019 and 2018, respectively. (l) Business Reporting Segments The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. (m) 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. (n) 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) In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 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 guidance. This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard effective November 1, 2018 using 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 of 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 February 2016, the FASB issued ASU No. 2016-02, Leases, |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Oct. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (3) Related Party Transactions The Estate of Leland E. Boren is a shareholder of the Company and is the owner of Avis Industrial Corporation (Avis). The Estate of Mr. Boren controls over 80% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company, a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc., also a competitor of the Company. On July 31, 2014 Harris acquired the assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate independent of each other. The Company had no purchases from these companies in the fiscal years ended October 31, 2019 and 2018. The Company had no sales to The American Baler Company in the fiscal years ended October 31, 2019 and 2018. The Company sold five closed door horizontal balers and one conveyor to Harris Waste Management for $295,032 in fiscal 2018 and two closed door horizontal balers for $122,950 in the fiscal year ended October 31, 2019. |
Inventories
Inventories | 12 Months Ended |
Oct. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | (4) Inventories Inventories consisted of the following: 2019 2018 Raw materials $ 2,035,612 $ 1,901,707 Work in process 1,239,961 2,166,663 Finished goods 843,584 188,715 $ 4,119,057 $ 4,257,085 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 12 Months Ended |
Oct. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant, and Equipment | (5) Property, Plant, and Equipment The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization: 2019 2018 Land $ 82,304 $ 82,304 Building and improvements 1,320,710 1,300,282 Machinery and equipment 2,570,981 2,528,540 Vehicles 326,499 174,764 Construction In progress 36,239 6,263 4,336,733 4,092,153 Less accumulated depreciation 3,026,513 2,821,448 $ 1,310,220 $ 1,270,705 Depreciation expense was $205,065 and $183,630 during the years ended October 31, 2019 and 2018, respectively. |
Debt
Debt | 12 Months Ended |
Oct. 31, 2019 | |
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, 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, 2020. The line of credit had no outstanding balance at October 31, 2019 and at October 31, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (7) Commitments and Contingencies The Company in the ordinary course of business is subject to claims and from time to time is named as a defendant in legal proceedings relating to the operations of its business, including the sale of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. On December 1, 2017 the Company was served with a complaint related to an injury to an employee working at Integrated Coating and Seed Technology Inc., (INCOTEC). The employee was operating a baler manufactured by the Company in 1994. The injury occurred on December 4, 2015. The plaintiff is Star Insurance Company. The Company’s insurer has retained an attorney and has begun the discovery process. The Company believes its exposure is $25,000, the amount of the Company’s deductible on its insurance policy. Accordingly, the Company accrued $25,000 during the fiscal year ended October 31, 2018. In December 2018 the Company discovered an employee theft of Company property. 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 were 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. I n May 2019 the Company’s insurer approved the crime insurance claim and agreed to reimburse the Company $175,841. Insurance proceeds were received in May of 2019 and were recorded as other income in the accompanying condensed statements of income. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (8) Income Taxes Income tax provision attributable to income from continuing operations consists of: 2019 2018 Current income tax (benefit) provision: Federal $ (100,898 ) $ 112,510 State (601 ) 15,217 (101,499 ) 127,727 Deferred income tax (benefit) provision: Federal (86,610 ) (21,270 ) State (13,019 ) (2,877 ) (99,629 ) (24,147 ) Income tax (benefit) provision $ (201,128 ) $ 103,580 The differences between income taxes as provided at the federal statutory tax rate of 34% and 21% and the Company’s actual income taxes are as follows: 2019 2018 Expected federal income tax expense at Statutory rate (110,196 ) $ 96,582 State income tax expense, net of federal income tax effect (12,306 ) 9,981 Non-deductible items and perm. differences 3,292 9,511 Credits utilized and other adjustments (81,918 ) (12,494 ) Income tax provision $ (201,128 ) $ 103,580 Tax assets include federal net operating loss carryforwards (NOLs) of approximately $712,000 at October 31, 2019. These NOLs can be carried forward and utilized indefinitely. Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. As of October 31, 2019 and 2018, the net deferred tax assets were $161,122 and $61,494 respectively. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future and the Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize these deferred tax assets and no valuation allowance is deemed necessary. The significant components of the net deferred income taxes at October 31, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets Inventory reserve $ 38,639 $ 69,081 Other reserves and allowances 36,904 65,534 Capitalized inventory costs 52,817 49,777 NOL Carryforward 166,879 — Total deferred tax assets 295,239 184,392 Deferred tax liabilities Property, plant and equipment 134,117 122,898 Net deferred income taxes $ 161,122 $ 61,494 For the years ended October 31, 2019 and 2018, the Company did not have any unrecognized tax benefits or obligations as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax years ended October 31, 2015 through October 31, 2019, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2019. The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. As a result, the Company recorded a reduction of net deferred income tax assets of approximately $10,000 during the first quarter of our fiscal year ending October 31, 2018. |
Employees' Benefit Plan
Employees' Benefit Plan | 12 Months Ended |
Oct. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employees' Benefit Plan | (9) Employee Benefit Plan The Company has a defined contribution plan and profit sharing program for its employees. The Company made no contributions to the plan during the years ended October 31, 2019 and 2018. |
Business and Credit Concentrati
Business and Credit Concentrations | 12 Months Ended |
Oct. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Business and Credit Concentrations | (10) Business and Credit Concentrations Export sales were approximately 14% and 6% of net sales for the years ended October 31, 2019 and 2018, respectively. The principal international markets served by the Company, include Canada, China, Mexico, United Kingdom, India, Korea, Japan, Russia, Saudi Arabia, Singapore, and Brazil. In fiscal 2019, three customers accounted for 17.8%, 6.5% and 4.7% of net sales, respectively, while in fiscal 2018, three customers accounted for 11.8%, 11.2% and 9.0% of net sales, respectively. Three customers accounted for 24.8%, 14.3%, and 13.3% respectively, of the Company’s accounts receivable at October 31, 2019 and three customers accounted for 30.0%, 15.6%, and 7.5%, respectively, of the Company accounts receivable at October 31, 2018. The Company had cash deposits in banks of $3,411,825 and $4,239,625 above the FDIC insured limit of $250,000 per bank at October 31, 2019 and October 31, 2018 respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | (a) Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. |
Cash and Cash Equivalents | (b) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | (c) Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | (d) Inventories Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. |
Property, Plant, and Equipment | (e) Property, Plant, and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. |
Income Taxes | (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the amounts rely upon the determination of the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. |
Revenue Recognition | (g) Revenue Recognition The Company adopted ASC 606 on November 1, 2018. 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 of days of the delivery of the equipment. Warranty revenue is recognized over the contract period. 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 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. |
Disaggregation of Revenue | (h) Disaggregation of Revenue Disaggregated revenue is by primary geographic market is as follows: Revenue by Geographic Area Twelve Months Ended October 31, 2019 United States $ 8,199,936 International 1,326,639 Total $ 9,526,575 |
Contract Assets and Liabilities | (i) Contract Assets and Liabilities When the Company has delivered the baler, parts or service and has earned the right to bill a customer, accounts receivable is recorded as an unconditional right to payment exists. Contract liabilities arise when payment is received before the Company transfers products to a customer and are reported as Customer Deposits on the accompanying balance sheet. 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. Contract Costs The Company expenses incremental costs of obtaining or fulfilling a contract. |
Warranties and Service | (j) Warranties and Service The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage, and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida, facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and type of balers currently under warranty, and known warranty issues. Following is a tabular reconciliation of the changes in the warranty accrual: 2019 2018 Beginning balance $ 80,000 $ 70,000 Warranty service provided (152,977 ) (102,359 ) New product warranties 132,257 80,817 Changes to pre-existing warranty accruals 720 31,542 Ending balance $ 60,000 $ 80,000 |
Earnings Per Share | (k) Earnings Per Share Basic earnings per share are calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share include the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2019 and 2018, respectively. |
Business Reporting Segments | (l) Business Reporting Segments The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. |
Fair Value of Financial Instruments | (m) 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 | (n) 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) In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 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 guidance. This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard effective November 1, 2018 using 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 of 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 February 2016, the FASB issued ASU No. 2016-02, Leases, |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Accounting Policies [Abstract] | |
Disaggregation of Revenue Table | Revenue by Geographic Area Twelve Months Ended October 31, 2019 United States $ 8,199,936 International 1,326,639 Total $ 9,526,575 |
Warranty Accrual | 2019 2018 Beginning balance $ 80,000 $ 70,000 Warranty service provided (152,977 ) (102,359 ) New product warranties 132,257 80,817 Changes to pre-existing warranty accruals 720 31,542 Ending balance $ 60,000 $ 80,000 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated revenue | Equipment Revenue by Geographic Area Six Months Ended 2019 United States $ 3,542,040 International 316,650 Total $ 3,858,690 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: 2019 2018 Raw materials $ 2,035,612 $ 1,901,707 Work in process 1,239,961 2,166,663 Finished goods 843,584 188,715 $ 4,119,057 $ 4,257,085 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | 2019 2018 Land $ 82,304 $ 82,304 Building and improvements 1,320,710 1,300,282 Machinery and equipment 2,570,981 2,528,540 Vehicles 326,499 174,764 Construction In progress 36,239 6,263 4,336,733 4,092,153 Less accumulated depreciation 3,026,513 2,821,448 $ 1,310,220 $ 1,270,705 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Benefit | 2019 2018 Current income tax (benefit) provision: Federal $ (100,898 ) $ 112,510 State (601 ) 15,217 (101,499 ) 127,727 Deferred income tax (benefit) provision: Federal (86,610 ) (21,270 ) State (13,019 ) (2,877 ) (99,629 ) (24,147 ) Income tax (benefit) provision $ (201,128 ) $ 103,580 |
Income tax provide by federal statutory rate | 2019 2018 Expected federal income tax expense at Statutory rate (110,196 ) $ 96,582 State income tax expense, net of federal income tax effect (12,306 ) 9,981 Non-deductible items and perm. differences 3,292 9,511 Credits utilized and other adjustments (81,918 ) (12,494 ) Income tax provision $ (201,128 ) $ 103,580 |
Net Deferred Income Taxes | 2019 2018 Deferred tax assets Inventory reserve $ 38,639 $ 69,081 Other reserves and allowances 36,904 65,534 Capitalized inventory costs 52,817 49,777 NOL Carryforward 166,879 — Total deferred tax assets 295,239 184,392 Deferred tax liabilities Property, plant and equipment 134,117 122,898 Net deferred income taxes $ 161,122 $ 61,494 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Disaggregated revenue (Details) | 12 Months Ended |
Oct. 31, 2019USD ($) | |
Equipment Revenue by Geographic Area | |
Total | $ 9,526,575 |
United States | |
Equipment Revenue by Geographic Area | |
Total | 8,199,936 |
International | |
Equipment Revenue by Geographic Area | |
Total | $ 1,326,639 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Warranty Accrual (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 80,000 | $ 70,000 |
Warranty service provided | (152,977) | (102,359) |
New product warranties | 132,257 | 80,817 |
Changes to pre-existing warranty accruals | 720 | 31,542 |
Ending balance | $ 60,000 | $ 80,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | ||
Oct. 31, 2019 | Oct. 31, 2018 | Oct. 31, 2016 | |
Sales | $ 9,526,575 | ||
Leland E. Boren | |||
Ownership of Avis | 80.00% | ||
Avis Industrial Corp. | |||
Ownership of The American Baler | 100.00% | ||
Harris Waste Management | |||
Sales | $ 122,950 | $ 295,032 |
Inventories - Inventories (Deta
Inventories - Inventories (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,035,612 | $ 1,901,707 |
Work in process | 1,239,961 | 2,166,663 |
Finished goods | 843,584 | 188,715 |
Inventories | $ 4,119,057 | $ 4,257,085 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 82,304 | $ 82,304 |
Building and Improvements | 1,320,710 | 1,300,282 |
Machinery and Equipment | 2,570,981 | 2,528,540 |
Vehicles | 326,499 | 174,764 |
Construction In Progress | 36,239 | 6,263 |
Property, plant and equipment, at cost: | 4,336,733 | 4,092,153 |
Less: accumulated depreciation | 3,026,513 | 2,821,448 |
Net property, plant and equipment | $ 1,310,220 | $ 1,270,705 |
Property, Plant, and Equipmen_3
Property, Plant, and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $ 205,065 | $ 183,630 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Short-term Debt [Line Items] | ||
Line of Credit Agreement | $ 1,650,000 | |
Interest Rate Terms | <font style="font-size: 10pt">The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2019.</font></p>" id="sjs-B5"><p style="margin: 0; text-align: justify"><font style="font-size: 10pt">The line of credit allows the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2019.</font></p> | |
Outstanding balance | $ 0 | |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Outstanding balance | $ 0 |
Commitment and Contingencies (D
Commitment and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Oct. 31, 2018 | May 31, 2019 | |
Loss Contingency, Information about Litigation Matters [Abstract] | |||
Lawsuit exposure | $ 25,000 | ||
Theft | $ 200,000 | ||
Reimbursement from insurance claim | $ 175,841 |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Current income tax provision: | ||
Federal | $ (100,898) | $ 112,510 |
State | (601) | 15,217 |
Current income tax provision | (101,499) | 127,727 |
Deferred income tax provision: | ||
Federal | (86,610) | (21,270) |
State | (13,019) | (2,877) |
Deferred income tax provision | (99,629) | (24,147) |
Income tax (benefit) provision | $ (201,128) | $ 103,580 |
Income Taxes - Income tax provi
Income Taxes - Income tax provide by federal statutory rate (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax expense Statutory rate | $ (110,196) | $ 96,582 |
State income tax expense, net federal income tax effect | (12,306) | 9,981 |
Other - meals and entertainment | 3,292 | 9,511 |
DPAD adjustments | (81,918) | (12,494) |
Income tax provision | $ (201,128) | $ 103,580 |
Income Taxes - Net Deferred Inc
Income Taxes - Net Deferred Income Taxes (Details) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Deferred tax assets | ||
Inventory Reserve | $ 38,639 | $ 69,081 |
Other Reserves and allowences | 36,904 | 65,534 |
Capitalized inventory costs | 52,817 | 49,777 |
NOL Carryforward | 166,879 | |
Total deferred tax assets | 295,239 | 184,392 |
Deferred tax liabilities | ||
Property, plant, and equipment | 134,117 | 122,898 |
Net deferred income taxes | $ 161,122 | $ 61,494 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2019 | Oct. 31, 2018 | |
Components of Deferred Tax Assets [Abstract] | ||
Tax assets | $ 712,000 | |
Federal Statutory Rate | 21.00% | 21.00% |
Net deferred tax assets | $ 161,122 | $ 61,494 |
Reduction of net deferred income tax assets | $ 10,000 |
Business and Credit Concentra_2
Business and Credit Concentrations (Details Narrative) - USD ($) | Oct. 31, 2019 | Oct. 31, 2018 |
Concentration Risk [Line Items] | ||
Export sales | 14.00% | 6.00% |
Cash deposits | $ 3,411,825 | $ 4,239,625 |
FDIC Insured Limit | $ 250,000 | $ 250,000 |
Customer 1 | ||
Concentration Risk [Line Items] | ||
Export sales | 17.80% | 11.80% |
Accounts Receivable | 24.80% | 30.00% |
Customer 2 | ||
Concentration Risk [Line Items] | ||
Export sales | 6.50% | 11.20% |
Accounts Receivable | 14.30% | 15.60% |
Customer 3 | ||
Concentration Risk [Line Items] | ||
Export sales | 4.70% | 9.00% |
Accounts Receivable | 13.30% | 7.50% |