| 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 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 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. The Company has not sold or leased equipment on any extended
contract basis and has no plans to do so. Revenues
from product sales are recognized when ownership is transferred to the customer, which includes not only the passage of title,
but also the transfer of the risk of loss related to the product. At this point, the sales price is fixed and determinable, and
we are reasonably assured of the collectibility of the accounts receivable. The majority of our sales are shipped FOB shipping
point and revenue is therefore recognized when the goods are shipped to the customer. For sales that are shipped FOB destination
point, we do not recognize the revenue until the goods are received by the customer. Shipping and handling charges billed to our
customers are included in net revenue and the related costs are included in cost of goods sold. Revenues are reported on a net
sales basis, which is computed by deducting product returns, discounts and estimated returns and allowances. Sales tax collected
from customers and remitted to various government agencies are presented on a net basis (excluded from revenues) in the statements
of income. (h) 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:
2018 2017
Beginning balance $ 70,000 $ 65,000
Warranty service provided (102,359 ) (236,314 )
New product warranties 80,817 235,708
Changes to pre-existing
warranty accruals 31,542 5,606
Ending balance $ 80,000 $ 70,000 (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, 2018 and 2017, 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 Recently
Adopted Accounting Pronouncements : In
July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, Simplifying
the Measurement of Inventory 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) Recently
Issued Accounting Pronouncements Not Yet Adopted: In
May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases, |
