Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Jan. 15, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | International Baler Corporation | |
Entity Central Index Key | 781,902 | |
Document Type | 10-K | |
Document Period End Date | Oct. 31, 2017 | |
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 Public Float | $ 51,838 | |
Entity Common Stock, Shares Outstanding | 5,183,895 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 |
Balance Sheets
Balance Sheets - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 4,541,767 | $ 2,719,337 |
Certificates of deposit | 310,463 | |
Accounts receivable, net of allowance for doubtful accounts of $15,000 at October 31, 2017 and at October 31, 2016 | 909,784 | 881,997 |
Inventories | 4,429,648 | 3,839,115 |
Prepaid expense and other current assets | 105,935 | 155,961 |
Income taxes receivable | 126,886 | 191,303 |
Total current assets | 10,114,020 | 8,098,176 |
Property, plant and equipment, at cost: | 3,960,510 | 3,930,058 |
Less: accumulated depreciation | 2,637,818 | 2,449,231 |
Net property, plant and equipment | 1,322,692 | 1,480,827 |
Other assets: | ||
Other assets | 1,256 | |
Deferred income taxes | 37,348 | 35,719 |
Total other assets | 37,348 | 36,975 |
TOTAL ASSETS | 11,474,060 | 9,615,978 |
Current liabilities: | ||
Accounts payable | 765,019 | 390,108 |
Accrued liabilities | 355,016 | 276,717 |
Customer deposits | 1,480,836 | 149,324 |
Total current liabilities | 2,600,871 | 816,149 |
Total liabilities | 2,600,871 | 816,149 |
Stockholders' equity: | ||
Preferred stock, par value $.0001, 10,000,000 shares authorized, none issued | ||
Common stock, par value $.01, 25,000,000 shares authorized; 6,429,875 shares issued at October 31, 2017 and October 31, 2016 | 64,299 | 64,299 |
Additional paid-in capital | 6,419,687 | 6,419,687 |
Retained earnings | 3,070,613 | 2,997,253 |
Total stockholders' equity before treasury stock | 9,554,599 | 9,481,239 |
Less: Treasury stock, 1,245,980 shares, at cost | (681,410) | (681,410) |
Total stockholders' equity | 8,873,189 | 8,799,829 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 11,474,060 | $ 9,615,978 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Oct. 31, 2017 | Jul. 31, 2016 |
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
Statements of Income - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Net sales: | ||
Equipment | $ 7,856,922 | $ 8,832,362 |
Parts and service | 2,638,019 | 2,818,226 |
Total net sales | 10,494,941 | 11,650,588 |
Cost of sales | 9,241,435 | 10,047,312 |
Gross profit | 1,253,506 | 1,603,276 |
Operating expense: | ||
Selling expense | 448,292 | 721,490 |
Administrative expense | 693,510 | 914,412 |
Total operating expense | 1,141,802 | 1,635,902 |
Operating income (loss) | 111,704 | (32,626) |
Other income (expense): | ||
Interest income | 5,198 | 10,038 |
Interest expense | (514) | |
Total other income (expense) | 5,198 | 9,524 |
Income (loss) before income taxes | 116,902 | (23,102) |
Income tax provision (benefit) | 43,542 | (113,512) |
Net income | $ 73,360 | $ 90,410 |
Income (loss) per share, basic and diluted | $ 0.01 | $ 0.02 |
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 (Deficit) | Treasury Stock | Total |
Beginning Balace, Shares at Oct. 31, 2015 | 6,429,875 | 1,245,980 | |||
Beginning Balance, Value at Oct. 31, 2015 | $ 64,299 | $ 6,419,687 | $ 2,906,843 | $ (681,410) | $ 8,709,419 |
Net loss | 90,410 | 90,410 | |||
End Balance, Shares at Oct. 31, 2016 | 6,429,875 | 1,245,980 | |||
End Balance, Value at Oct. 31, 2016 | $ 64,299 | 6,419,687 | 2,997,253 | $ (681,410) | 8,799,829 |
Net loss | 73,360 | 73,360 | |||
End Balance, Shares at Oct. 31, 2017 | 6,429,875 | 1,245,980 | |||
End Balance, Value at Oct. 31, 2017 | $ 64,299 | $ 6,419,687 | $ 3,070,613 | $ (681,410) | $ 8,873,189 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Cash flow from operating activities: | ||
Net income | $ 73,360 | $ 90,410 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 188,587 | 180,025 |
Deferred income tax | (1,629) | 19,463 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (27,787) | 336,992 |
Inventories | (590,533) | 32,052 |
Prepaid expenses and other assets | 51,282 | (54,351) |
Income taxes receivable | 64,417 | (191,303) |
Accounts payable | 374,911 | (72,892) |
Accrued liabilities | 78,299 | (628,081) |
Customer deposits | 1,331,512 | (803,733) |
Net cash provided by (used in) operating activities | 1,542,419 | (1,091,418) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (30,452) | (478,195) |
Redemptions of certificates of deposit | 310,463 | 652,791 |
Net cash provided by investing activities | 280,011 | 174,596 |
Cash flows from financing activities | ||
Payments on notes payable | (29,060) | |
Net cash used in financing activities | (29,060) | |
Net increase (decrease) in cash and cash equivalents | 1,822,430 | (945,882) |
Cash and cash equivalents at beginning of year | 2,719,337 | 3,665,219 |
Cash and cash equivalents at end of year | 4,541,767 | 2,719,337 |
Supplemental disclosure of cash flow information: | ||
Cash paid during period for Interest | 514 | |
Cash paid during the period for Income taxes | $ 20,000 | $ 392,400 |
Nature of Business
Nature of Business | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. (b) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. (c) Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (d) Inventories Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. (e) Property, Plant, and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgement occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. (g) Revenue Recognition The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. (h) 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 type of balers currently under warranty, and known warranty issues. Following is a tabular reconciliation of the changes in the warranty accrual: 2017 2016 Beginning balance $ 65,000 $ 70,000 Warranty service provided (236,314 ) (233,117 ) New product warranties 235,708 176,647 Changes to pre-existing warranty accruals 5,606 51,470 Ending balance $ 70,000 $ 65,000 (i) Earnings Per Share Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2017 and 2016, respectively. (j) Business Reporting Segments The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. (k) Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short term certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities. (l) Recent Accounting Pronouncements 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. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not believe this will have a significant impact on the financial statements, as contracts are generally not long term and balers are manufactured for individual orders and revenue recognized at time of shipment. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Oct. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (3) Related Party Transactions Leland E. Boren, a shareholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls over 50% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company, a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc., also a competitor of the Company. On July 31, 2014 Harris acquired the assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from these companies in the years ending October 31, 2017 and 2016. |
Inventories
Inventories | 12 Months Ended |
Oct. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | (4) Inventories Inventories consisted of the following: 2017 2016 Raw materials $ 2,287,901 $ 1,813,545 Work in process 1,966,519 1,291,729 Finished goods 175,228 733,841 $ 4,429,648 $ 3,839,115 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 12 Months Ended |
Oct. 31, 2017 | |
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: 2017 2016 Land $ 82,304 $ 82,304 Building and improvements 1,225,189 1,225,189 Machinery and equipment 2,456,564 2,332,616 Vehicles 150,975 150,975 Construction In progress 45,478 138,974 3,960,510 3,930,058 Less accumulated depreciation 2,637,818 2,449,231 $ 1,322,692 $ 1,480,827 Depreciation expense was $188,587 and $180,025 during the years ended October 31, 2017 and 2016, respectively. |
Debt
Debt | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017. 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. The line of credit had no outstanding balance at October 31, 2017 and at October 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (7) Commitments and Contingencies The Company in the ordinary course of business, is subject to claims made under, 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. The Company had outstanding commitments relating to standby letters of credit for performance and warranty guarantees of approximately $310,000 at October 31, 2016. These letters of credit are collateralized by certificates of deposit which have expiration dates which coincide with the expiration dates of the letters of credit. The Company had no certificates of deposit maturing in one year or more at October 31, 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (8) Income Taxes Income tax provision attributable to income from continuing operations consists of: 2017 2016 Current income tax (benefit) provision: Federal $ 41,245 $ (117,969 ) State 3,926 (15,007 ) 45,171 (132,975 ) Deferred income tax (benefit) provision: Federal (1,491 ) 17,810 State (138 ) 1,654 (1,629 ) 19,464 Income tax (benefit) provision $ 43,542 $ (113,512 ) The differences between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income taxes are as follows: 2017 2016 Expected federal income tax expense at Statutory rate $ 39,747 $ (7,855 ) State income tax expense, net of federal income tax effect 2,441 (52 ) Other – meals and entertainment 1,354 6,988 DPAD adjustments — (112,594 ) Income tax provision $ 43,542 $ 113,512 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, 2017 and 2016, the net deferred tax assets were $37,348 and $35,719, respectively. The Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets of October 31, 2017 and 2016 and no valuation allowance is deemed necessary. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future. During 2016, the Company was eligible for the domestic production activities deduction (DPAD) and subsequently claimed the deduction. The Company also amended the tax returns for 2012 and 2013, resulting in a refund and adjustment to the tax provision of approximately $112,000 for the year ended October 31, 2016. The significant components of the net deferred income taxes at October 31, 2017 and 2016 are as follows: 2016 2016 Deferred tax assets Inventory reserve $ 84,646 $ 70,238 Other reserves and allowances 54,516 111,510 Capitalized inventory costs 76,988 55,523 Total deferred tax assets 216,150 237,271 Deferred tax liabilities Property, plant and equipment 178,802 201,552 Net deferred income taxes $ 37,348 $ 35,719 For the years ended October 31, 2017 and 2016, 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, 2013 through October 31, 2017, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2017. The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into United States tax law on December 22, 2017. The Act makes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%, and changes in business-related exclusions, and deductions and credits. Preliminarily, the Company expects a significant reduction in the effective income tax rate and a reduction of net deferred income tax assets of approximately $10,000 as a result of the income tax rate reduction, with such changes being included in the Company’s financial statements beginning in the three months ending January 31, 2018. |
Employees' Benefit Plan
Employees' Benefit Plan | 12 Months Ended |
Oct. 31, 2017 | |
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, 2017 and 2016. |
Business and Credit Concentrati
Business and Credit Concentrations | 12 Months Ended |
Oct. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Business and Credit Concentrations | (10) Business and Credit Concentrations Export sales were approximately 19% and 8% of net sales for the years ended October 31, 2017 and 2016, 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 2017, three customers accounted for 17.9%, 11.4% and 8.0% of net sales, respectively, while in fiscal 2016, three customers accounted for 18.2%, 14.7% and 4.8% of net sales, respectively. Three customers accounted for 57.8%, 14.3%, and 6.6% respectively, of the Company’s accounts receivable at October 31, 2017 and three customers accounted for 21.1%, 16.3%, and 11.5%, respectively, of the Company accounts receivable at October 31, 2016. The Company had cash deposits in banks of $4,041,767 above the FDIC insured limit of $250,000 per bank at October 31, 2017. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | (a) Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. |
Cash and Cash Equivalents | (b) Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | (c) Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | (d) Inventories Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. |
Property, Plant, and Equipment | (e) Property, Plant, and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. |
Income Taxes | (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgement occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. |
Revenue Recognition | (g) Revenue Recognition The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. |
Warranties and Service | (h) Warranties and Service The Company typically warrants its products for one (1) year from the date of sale as to materials 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: 2017 2016 Beginning balance $ 65,000 $ 70,000 Warranty service provided (236,314 ) (233,117 ) New product warranties 235,708 176,647 Changes to pre-existing warranty accruals 5,606 51,470 Ending balance $ 70,000 $ 65,000 |
Earnings Per Share | (i) Earnings Per Share Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2017 and 2016, respectively. |
Business Reporting Segments | (j) Business Reporting Segments The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. |
Fair Value of Financial Instruments | (k) Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short term certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities. |
Recent Accounting Pronouncements | (l) Recent Accounting Pronouncements 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. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not believe this will have a significant impact on the financial statements, as contracts are generally not long term and balers are manufactured for individual orders and revenue recognized at time of shipment. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Warranty Accrual | Following is a tabular reconciliation of the changes in the warranty accrual: 2017 2016 Beginning balance $ 65,000 $ 70,000 Warranty service provided (236,314 ) (233,117 ) New product warranties 235,708 176,647 Changes to pre-existing warranty accruals 5,606 51,470 Ending balance $ 70,000 $ 65,000 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: 2017 2016 Raw materials $ 2,287,901 $ 1,813,545 Work in process 1,966,519 1,291,729 Finished goods 175,228 733,841 $ 4,429,648 $ 3,839,115 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization: 2017 2016 Land $ 82,304 $ 82,304 Building and improvements 1,225,189 1,225,189 Machinery and equipment 2,456,564 2,332,616 Vehicles 150,975 150,975 Construction In progress 45,478 138,974 3,960,510 3,930,058 Less accumulated depreciation 2,637,818 2,449,231 $ 1,322,692 $ 1,480,827 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Benefit | 2017 2016 Current income tax (benefit) provision: Federal $ 41,245 $ (117,969 ) State 3,926 (15,007 ) 45,171 (132,975 ) Deferred income tax (benefit) provision: Federal (1,491 ) 17,810 State (138 ) 1,654 (1,629 ) 19,464 Income tax (benefit) provision $ 43,542 $ (113,512 ) |
Income tax provide by federal statutory rate | 2017 2016 Expected federal income tax expense at Statutory rate $ 39,747 $ (7,855 ) State income tax expense, net of federal income tax effect 2,441 (52 ) Other – meals and entertainment 1,354 6,988 DPAD adjustments — (112,594 ) Income tax provision $ 43,542 $ 113,512 |
Net Deferred Income Taxes | 2017 2016 Deferred tax assets Inventory reserve $ 84,646 $ 70,238 Other reserves and allowances 54,516 111,510 Capitalized inventory costs 76,988 55,523 Total deferred tax assets 216,150 237,271 Deferred tax liabilities Property, plant and equipment 178,802 201,552 Net deferred income taxes $ 37,348 $ 35,719 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Warranty Accrual (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract] | ||
Beginning balance | $ 65,000 | $ 70,000 |
Warranty service provided | (236,314) | (233,117) |
New product warranties | 235,708 | 176,647 |
Changes to pre-existing warranty accruals | 5,606 | 51,470 |
Ending balance | $ 70,000 | $ 65,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Oct. 31, 2016 |
Leland E. Boren | |
Ownership of Avis | 50.00% |
Avis Industrial Corp. | |
Ownership of The American Baler | 100.00% |
Inventories - Inventories (Deta
Inventories - Inventories (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,287,901 | $ 1,813,545 |
Work in process | 1,966,519 | 1,291,729 |
Finished goods | 175,228 | 733,841 |
Inventories | $ 4,429,648 | $ 3,839,115 |
Property, Plant, and Equipmen25
Property, Plant, and Equipment (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 82,304 | $ 82,304 |
Building and Improvements | 1,225,189 | 1,225,189 |
Machinery and Equipment | 2,456,564 | 2,332,616 |
Vehicles | 150,975 | 150,975 |
Construction In Progress | 45,478 | 138,974 |
Property, plant and equipment, at cost: | 3,960,510 | 3,930,058 |
Less: accumulated depreciation | 2,637,818 | 2,449,231 |
Net property, plant and equipment | $ 1,322,692 | $ 1,480,827 |
Property, Plant, and Equipmen26
Property, Plant, and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $ 188,587 | $ 180,025 |
Debt (Details Narrative)
Debt (Details Narrative) | 12 Months Ended |
Oct. 31, 2017USD ($) | |
Debt Disclosure [Abstract] | |
Line of Credit Agreement | $ 1,650,000 |
Interest Rate Terms | The line of credit allow is the Company to borrow at an interest rate equal to the Wall Street Journal prime rate minus 0.95%, adjusting daily. |
Commitment and Contingencies (D
Commitment and Contingencies (Details Narrative) | Oct. 31, 2016USD ($) |
Loss Contingency, Information about Litigation Matters [Abstract] | |
Letters of credit for performance and warranty guarantees | $ 310,000 |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Current income tax provision: | ||
Federal | $ 41,245 | $ (117,969) |
State | 3,926 | (15,007) |
Current income tax provision | 45,171 | (132,975) |
Deferred income tax provision: | ||
Federal | (1,491) | 17,810 |
State | (138) | 1,654 |
Deferred income tax provision | (1,629) | 19,464 |
Income tax (benefit) provision | $ 43,542 | $ (113,512) |
Income Taxes - Income tax provi
Income Taxes - Income tax provide by federal statutory rate (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax expense Statutory rate | $ 39,747 | $ (7,855) |
State income tax expense, net federal income tax effect | 2,441 | (52) |
Other - meals and entertainment | 1,354 | 6,988 |
DPAD adjustments | (112,594) | |
Income tax provision | $ 43,542 | $ 113,512 |
Income Taxes - Net Deferred Inc
Income Taxes - Net Deferred Income Taxes (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Deferred tax assets | ||
Inventory Reserve | $ 84,646 | $ 70,238 |
Other Reserves and allowences | 54,516 | 111,510 |
Capitalized inventory costs | 76,988 | 55,523 |
Total deferred tax assets | 216,150 | 237,271 |
Deferred tax liabilities | ||
Property, plant, and equipment | 178,802 | 201,552 |
Net deferred income taxes | $ 37,348 | $ 35,719 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2016 | |
Components of Deferred Tax Assets [Abstract] | |||
Federal Statutory Rate | 21.00% | 34.00% | |
Net deferred tax assets | $ 37,348 | $ 35,719 | |
Refund and adjustment to the tax provision | $ 112,000 | ||
Reduction of net deferred income tax assets | $ 10,000 |
Business and Credit Concentra33
Business and Credit Concentrations (Details Narrative) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 |
Concentration Risk [Line Items] | |||
Export sales | 19.00% | 8.00% | |
Cash deposits | $ 4,041,767 | ||
FDIC Insured Limit | $ 250,000 | ||
Singapore | |||
Concentration Risk [Line Items] | |||
Export sales | 24.40% | ||
Customer 1 | |||
Concentration Risk [Line Items] | |||
Export sales | 17.90% | 18.20% | |
Accounts Receivable | 57.80% | 21.10% | |
Customer 2 | |||
Concentration Risk [Line Items] | |||
Export sales | 11.40% | 14.70% | |
Accounts Receivable | 14.30% | 16.30% | |
Customer 3 | |||
Concentration Risk [Line Items] | |||
Export sales | 8.00% | 4.80% | |
Accounts Receivable | 6.60% | 11.50% |