UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM
(Mark one)
For
the quarterly period ended
or
For the transition period from ________________ to __________________
Commission
File Number:
____________________
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(g) of the Act:
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| Pink Sheets |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer |
Smaller reporting company | |
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
☐
As of March 14, 2022, there were shares of common stock of the registrant outstanding.
| 1 |
INTERNATIONAL BALER CORPORATION
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | |
| ITEM 1. FINANCIAL STATEMENTS | |
| Condensed Balance Sheets as of January 31, 2022, (unaudited) and October 31, 2021 | 3 |
| Condensed Statements of Income for the three months ended January 31, 2022 and 2021 (unaudited) | 4 |
| Condensed Statements of Stockholders’ Equity for the three months ended January 31, 2022 and 2021 (unaudited) | 5 |
| Condensed Statements of Cash Flows for the three months ended January 31, 2022 and 2021 (unaudited) | 6 |
| Notes to Condensed Financial Statements (unaudited) | 7 |
| ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 |
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
| ITEM 4. CONTROLS AND PROCEDURES | 14 |
| PART II. OTHER INFORMATION | |
| ITEM 1. LEGAL PROCEEDINGS | 15 |
| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 15 |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 15 |
| ITEM 4. MINE SAFETY DISCLOSURES | 15 |
| ITEM 5. OTHER INFORMATION | 15 |
| ITEM 6. EXHIBITS | 16 |
| SIGNATURES | 17 |
| 2 |
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED BALANCE SHEETS | ||||||||
| January 31, 2022 | October 31, 2021 | |||||||
| UNAUDITED | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Certificate of deposit | ||||||||
| Accounts
receivable, net of allowance for doubtful accounts of $ | ||||||||
| Inventories | ||||||||
| Prepaid expense and other current assets | ||||||||
| Income taxes receivable | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, at cost: | ||||||||
| Less: accumulated depreciation | ||||||||
| Net property, plant and equipment | ||||||||
| Other assets | ||||||||
| Deferred income taxes | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accrued sales returns | ||||||||
| Customer deposits | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, par value $, shares authorized, issued | ||||||||
| Common stock, par value $, shares authorized; shares issued | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| 8,900,837 | 9,001,985 | |||||||
| Less:Treasury stock, shares, at cost | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
| See accompanying notes to condensed financial statements. | ||||||||
| 3 |
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED STATEMENTS OF INCOME | ||||||||
| FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021 | ||||||||
| UNAUDITED | ||||||||
| 2022 | 2021 | |||||||
| Net sales: | ||||||||
| Equipment | $ | $ | ||||||
| Parts and service | ||||||||
| Total net sales | ||||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Operating expense: | ||||||||
| Selling expense | ||||||||
| Administrative expense | ||||||||
| Total operating expense | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income: | ||||||||
| Interest income | ||||||||
| Other income | ||||||||
| Total other income | ||||||||
| (Loss) income before income taxes | ( | ) | ||||||
| Income tax benefit | ( | ) | ( | ) | ||||
| Net (loss) income | $ | ( | ) | $ | ||||
| (Loss) income per share, basic and diluted | $ | ( | ) | $ | ||||
| Weighted average number of shares outstanding | ||||||||
| See accompanying notes to condensed financial statements. | ||||||||
| 4 |
| INTERNATIONAL BALER CORPORATION | ||||||||||||||||||||||||||||
| CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| FOR THE 3 MONTHS ENDED JANUARY 31, 2022 AND 2021 | ||||||||||||||||||||||||||||
| UNAUDITED | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | ||||||||||||||||||||||
| Balance - October 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance - January 31, 2022 | ( | ) | ||||||||||||||||||||||||||
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Shares | Amount | Total | ||||||||||||||||||||||
| Balance - October 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Balance - January 31, 2021 | ( | ) | ||||||||||||||||||||||||||
| See accompanying notes to condensed financial statements. | ||||||||||||||||||||||||||||
| 5 |
| INTERNATIONAL BALER CORPORATION | ||||||||
| CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
| FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021 | ||||||||
| UNAUDITED | ||||||||
| 2022 | 2021 | |||||||
| Cash flow from operating activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other assets | ||||||||
| Income taxes receivable | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ( | ) | ||||
| Customer deposits | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Interest earned on certificates of deposit | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| See accompanying notes to condensed financial statements. | ||||||||
| 6 |
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. Nature of Business:
International Baler Corporation (the “Company”) is a manufacturer of baling equipment which is designed to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers, and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models, and conveyors to meet specific customer requirements.
The
Company’s customers include recycling facilities, distribution centers, textile mills, and companies that generate the materials
for baling and recycling. The Company sells its products worldwide with annual sales outside the United States typically ranging from
2. Basis of Presentation:
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information in footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the three-month period ended January 31, 2022 are not necessarily indicative of the results that may be expected for the year ending October 31, 2022. The accompanying balance sheet as of October 31, 2021 was derived from the audited financial statements as of October 31, 2021.
These unaudited condensed financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended October 31, 2021.
The Company is closely monitoring ongoing developments in connection with the COVID-19 global pandemic, which has had an adverse impact on sales as many customers are holding off purchasing new equipment.
As of the date of this report, the COVID-19 pandemic has not materially adversely impacted our capital and financial resources. Due to the economic uncertainty that has resulted from the pandemic, and the potential impact of such to our stakeholders, we are unable to predict with certainty any potential impacts to our business. Additionally, because we are unable to determine the ultimate severity or duration of the outbreak or its long-term effects on, among other things, the global, national or local economies, the capital and credit markets, our workforce, our customers or our suppliers, at this time we are unable to predict the adverse extent that the COVID-19 crisis will have on our business, financial condition, liquidity and results of operations.
3. Summary of Significant Accounting Policies:
(a) Accounts Receivable & Allowance for Doubtful Accounts:
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer creditworthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
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(b) Inventories:
Inventories are stated at the lower of cost and net realizable value. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.
(c) Warranties and Service:
The Company typically warrants its products for one (1) year from the date of sale as to materials, three (3) years for structural damage and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers currently under warranty, and known warranty issues.
Following is a tabular reconciliation of the changes in the warranty accrual for the three-month period ended January 31:
| 2022 | 2021 | |||||||
| Beginning balance | $ | $ | ||||||
| Warranty service provided | ( | ) | ( | ) | ||||
| New product warranties | ||||||||
| Changes to pre-existing warranty accruals | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
(d) 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.
(e) Advertising Expenses:
Advertising
costs are expensed as incurred. Advertising expense was $
(f) Recent Accounting Pronouncements:
Recently Adopted Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs and any not listed below were assessed and determined to be applicable or are expected to have a minimal impact on the Company’s condensed financial statements.
Accounting Pronouncements Not Yet Adopted
In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic326), Derivative and Hedging (Topic 815), and Leases (Topic 841). The new guidance will be effective November 1, 2023. While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to have a material effect on its financial statements.
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4. Revenue from Contracts with Customers:
(a) Overview
The Company recognizes revenues from the sale of finished products upon shipment and the transfer of control to the customer. The other elements may include installation and, generally, a one-year warranty. Equipment installation revenue is valued based on estimated service person hours to complete installation and is recognized when the labor has been completed and the equipment has been accepted by the customer, which is generally within a couple days of the delivery of the equipment. Warranty revenue, if sold separately, is valued based on estimated service person hours to complete a service and generally is recognized over the contract period. Revenue from service plans is recognized over time based on the term of the service agreement.
All other product sales with customer specific acceptance provisions are recognized at a point in time upon customer acceptance and the delivery of the parts or service. Revenues related to spare part sales are recognized upon shipment or delivery based on the trade terms.
Generally, pricing is fixed with payment terms of thirty days after shipment. The majority of the Company’s contracts have a short duration and a single performance obligation to deliver a configured to order baler and related equipment to the customer. The Company has elected to expense shipping and handling costs as incurred.
In
the first quarter ended in January 31, 2022 deferred revenue of $
(b) Disaggregation of Revenue
Disaggregated revenue is by primary geographic market is as follows:
| Three Months Ended January 31 | ||||||||
| Revenue by Geographic Area | 2022 | 2021 | ||||||
| United States | $ | $ | ||||||
| International | ||||||||
| Total | $ | $ | ||||||
5. Related Party Transactions:
Avis
Industrial Corporation (“Avis”) owns % of the outstanding shares of the Company. Avis owns
6. Inventories:
Inventories consisted of the following:
| January 31, 2022 | October 31, 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished | ||||||||
| $ | $ | |||||||
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7. Debt:
The
Company has a $
On
April 16, 2020 the Company received a $
8. Income Taxes:
Subsequent
to February 25, 2021, the income tax return of the Company will be included in the consolidated income tax return of Avis. The Company
is in the process of filing short-year income tax returns for the period November 1, 2020 through February 24, 2021 and is filing carryback
claims for the same period to recover income taxes paid in prior periods of approximately $
Deferred
tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. The realization
of deferred tax assets, with the exception of certain tax credits and state NOLs, will depend on the ability of Avis to generate taxable
income in the future. Certain tax credits and state NOLs of approximately $
9. Commitments and Contingencies:
The Company, in the ordinary course of business, is subject to claims made, and from time to time is named as a defendant in legal proceedings relating to the sales of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
On
March 22, 2021, the Company was served with a complaint related to an injury to an employee working at a Stericycle facility in North
Little Rock, Arkansas. The employee was working on a baler manufactured by the Company in 2003. The employee suffered an injury to his
left hand on April 10, 2018. The plaintiff is Scott Tinsley, the injured employee. The Company’s insurance policy related to this
complaint has a deductible of $
| 10 |
On July 27, 2021, the Company was served with a complaint related to an injury to an employee working at Mackay Mitchell Envelope Company in Mount Pleasant, Iowa. On August 10, 2019, the employee, Xaisavath Phanthouvong, was working on a baler manufactured by the Company in 2003. The employee suffered a serious injury to his left hand. The Company’s insurance policy related to this complaint has no deductible. On February 21, 2022 the Company was notified that this complaint has been dismissed, without prejudice.
On
December 3, 2021 the Company filed a complaint in Duval County, Florida against California Recyclers, Inc. (“CRI”) alleging
breach of contract on the basis of CRI’s failure to pay the remaining 10% on a baler sold to CRI in January 2021. The Company and
CRI have been in a continuing dispute as to whether the baler was capable of meeting the output specifications as originally quoted by
the Company. Based on the way CRI has continued to operate the baler, the Company has concluded that there is no point in continuing
this relationship. The Company has agreed to refund the amount paid by CRI and take the baler back. The Company has recorded an amount
of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” and “our,” refer to International Baler Corporation.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects, prospective business opportunities or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ material, for a variety of reasons, including, but not limited to, changes in general economic conditions, changing competition and our ability to market and sell our commercial and industrial balers. These risks and uncertainties, as well as other risks and uncertainties, could cause our actual results to differ significantly from management’s expectations. The forward-looking statements included in this Quarterly Report on Form 10-Q reflect the beliefs of our management on the date of this Quarterly Report. We undertake no obligation to update publicly any forward-looking statements for any reason.
General
The following discussion should be read together with our unaudited condensed financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements”. For further information, refer to the Company’s Annual Report on Form 10-K for the year ended October 31, 2021, and the Management Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q.
Results of Operations: Three Month Comparison
Three Months Ended January 31, 2022 (“first quarter of fiscal 2022”) compared to the three months ended January 31, 2021 (“first quarter of fiscal 2021”)
In the first quarter ended January 31, 2022, the Company had net sales of $2,039,605 compared to net sales of $2,349,905 in the first quarter of fiscal 2021, a decrease of 13.2%. The sales by product were as follows:
| January 31, 2022 | January 31, 2021 | |||||||
| General Purpose Balers | $ | 983,644 | $ | 1,500,330 | ||||
| Rubber Balers | 103,865 | — | ||||||
| Specialty Balers | 129,572 | 63,891 | ||||||
| Parts and Service Sales | 822,524 | 785,684 | ||||||
| Total | $ | 2,039,605 | $ | 2,349,905 | ||||
The lower sales in the first quarter of fiscal 2022 were the result of general economic conditions. Parts and service sales were higher in the first quarter of fiscal 2022 by 4.7%.
In the first quarter ended January 31, 2022, gross profit increased to $258,318, 12.7% of net sales compared to $199,719, 8.5% of net sales in the prior-year first quarter. The higher gross profit was the result of the Company increasing prices and reducing operating costs.
The Company had a loss from operations of $133,110 in the first quarter of fiscal 2021 compared to a loss from operations of $174,018 in the first quarter of fiscal 2021.
| 12 |
In the first quarter of fiscal 2021, the Company recorded income of $626,466 from the Paycheck Protection Program (PPP) loan which was forgiven. For the first quarter of fiscal 2021, the Company had pre-tax income of $453,339 compared to a pre-tax loss of $130,148 in the first quarter of fiscal 2022. The Company had an income tax benefit of $29,000 in the first quarter of fiscal 2022 compared to an income tax benefit of $36,000 in the first quarter of fiscal 2021. Income from the forgiven PPP loan is not taxable.
The sales order backlog was approximately $3,840,000 at January 31, 2022 and $2,700,000 at January 31, 2021.
Financial Condition and Liquidity:
Net working capital at January 31, 2022 was $6,746,576 as compared to $6,854,047 at October 31, 2021. The Company currently believes that it will have sufficient cash flow to be able to fund operating activities for the next twelve months.
Average days sales outstanding (DSO) in the first three months of fiscal 2022 were 31.8 days, as compared to 25.3 days in the first three months of fiscal 2021. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by three, and dividing that result by the average day’s sales for the period (period sales ÷ 91.25).
During the three months ended January 31, 2022 and 2021, the Company made additions to property, plant and equipment of $34,023 and $35,808 respectively.
The Company has a $1,000,000 line of credit agreement with First Merchants Bank of Muncie, Indiana which was renewed for an additional year on May 15, 2021. The line of credit allows the Company to borrow at an interest rate equal to the greater of 3% or Wall Street Journal Prime rate minus 0.25% per line of credit agreement, adjusting daily. The line of credit is secured by all assets of the Company and expires on May 15, 2022, unless extended or otherwise modified in writing. The line of credit had no outstanding balance at January 31, 2022 and at October 31, 2021.
In the event that the Company’s line of credit would not be available, the Company would pursue a line of credit from other sources, and take steps to minimize expenditures, such as delaying capital expenditures and reducing overhead costs.
The Company had cash deposits in banks of $2,705,046 and $2,512,020 above the FDIC insured limit of $250,000 per bank at January 31, 2022 and October 31, 2021, respectively.
Off-Balance Sheet Arrangements:
As of January 31, 2022, we have no material off-balance sheet arrangements with unconsolidated entities.
Critical Accounting Estimates:
There have been no material changes to the critical accounting policies disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2021.
Recent Accounting Pronouncements:
See Note 3(f) to our Financial Statements for a discussion of recent accounting pronouncements.
| 13 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates as a result of its financing activities, including its borrowings on the revolving
line of credit facility. Based on the current level of borrowings, a change in interest rates is not expected to have a material
effect on operations or financial position.
ITEM 4. CONTROLS AND PROCEDURES
Controls and Procedures:
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures.
As of January 31, 2022, the end of the period covered by this Quarterly Report on Form 10-Q, and under the supervision and with the participation of management, including the Company’s CEO and CFO, management evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation and subject to the foregoing, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting:
During its fiscal year ended October 31, 2021, the Company discovered material weaknesses related to pricing on inventory invoices and purchase orders. Specifically, the unit prices on some inventory invoices were not matched to the unit prices on the related purchase orders and adjusted to the invoice amount if different. The correction of these pricing errors was immaterial to the financial statements of the Company at October 31, 2021, however management considered this pricing error to be a material weakness in its controls and procedures for the fiscal year ended October 31, 2021. In order to remediate this material weakness, management added two additional review steps to adjust inventory pricing to invoiced amounts if different from the purchase order amount.
Except for the foregoing, the Company’s management, including CEO and CFO, confirm that there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended January 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 14 |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of conducting our business, we have in the past and may in the future become involved in various legal actions and other claims. These legal proceedings may be subject to many uncertainties and there can be no assurance of the outcome of any individual proceedings. We do not presently anticipate any material legal proceedings that, if determined adversely to us, would have a material adverse effect on our financial position, results of operations or cash flows. See Note 9, Commitments and Contingencies, to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for information regarding certain legal proceedings in which we are involved.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
| 15 |
ITEM 6. EXHIBITS
The following exhibits are submitted herewith:
| 31.1 | Certification of Victor W. Biazis, Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).* |
| 31.2 | Certification of William E. Nielsen, Chief Financial, pursuant to Rule 13a-14(a)/15d-14(a).* |
| 32.1 | Certification of Victor W. Biazis, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
| 32.2 | Certification of William E. Nielsen, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
| 101.INS | XBRL Instance Document* |
| 101.SCH | XBRL Taxonomy Extension Schema* |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase* |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase* |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase* |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase* |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101* |
• Filed herewith.
| 16 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned there unto duly authorized.
Dated: March 14, 2022
INTERNATIONAL BALER CORPORATION
BY: /s/D. Roger Griffin
D. Roger Griffin
Chief Executive Officer
BY: /s/William E. Nielsen
William E. Nielsen
Chief Financial Officer
| 17 |