Attached files
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EX-31.2 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORP | exh31-2_17138.htm |
EX-31.1 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORP | exh31-1_17138.htm |
EX-32.1 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORP | exh32-1_17138.htm |
EX-31.2 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORP | exh32-2_17138.htm |
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended April 30, 2011
Commission File No. 0-14443
INTERNATIONAL BALER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
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13-2842053
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State or other jurisdiction of
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(IRS Employer Identification No.)
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Incorporation or organization
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5400 Rio Grande Avenue, Jacksonville, FL 32254
(Address of principal executive offices)
(904-358-3812)
(Registrant’s telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,183,895 shares of common stock at May 31, 2011.
INTERNATIONAL BALER CORPORATION
TABLE OF CONTENTS
PAGE
PART I.
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FINANCIAL INFORMATION
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3 | |
ITEM 1. | FINANCIAL STATEMENTS | ||
●Condensed Balance Sheets as of April 30, 2011, and October 31, 2010
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3 | ||
●Condensed Statements of Operations for the three months and six months ended April 30, 2011 and 2010
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4 | ||
●Condensed Statements of Changes in Stockholders’ Equity for the period from October 31, 2010 to April 30, 2011
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5 | ||
●Condensed Statements of Cash Flows for the six months ended April 30, 2011 and 2010
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6 | ||
●Notes to Condensed Financial Statements (Unaudited)
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7 | ||
ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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11
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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12
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ITEM 4.
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CONTROLS AND PROCEDURES
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12
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PART II.
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OTHER INFORMATION | 13 | |
ITEM 1.
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LEGAL PROCEEDINGS
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13 | |
ITEM 4.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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13 | |
ITEM 5.
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OTHER INFORMATION
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14
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ITEM 6.
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EXHIBITS
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15
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SIGNATURES
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16 | ||
CERTIFICATIONS
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17 |
- 2 -
INTERNATIONAL BALER CORPORATION
CONDENSED BALANCE SHEETS
UNAUDITED
April 30, 2011
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October 31, 2010
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|||||||
ASSETS
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||||||||
Current Assets:
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||||||||
Cash and cash equivalents
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$ | 2,624,709 | $ | 2,101,204 | ||||
Accounts receivable, net of allowance for doubtful accounts
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||||||||
of $71,764 in 2011 and 2010
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953,535 | 700,484 | ||||||
Inventories
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2,238,168 | 1,281,312 | ||||||
Prepaid expense and other current assets
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161,477 | 72,508 | ||||||
Deferred income taxes
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259,685 | 435,185 | ||||||
Total current assets
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6,237,574 | 4,590,693 | ||||||
Property, plant and equipment, at cost:
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2,519,134 | 2,414,055 | ||||||
Less: accumulated depreciation
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1,665,357 | 1,622,757 | ||||||
Net property, plant and equipment
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853,777 | 791,298 | ||||||
Other assets:
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||||||||
Other assets
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1,396 | 1,396 | ||||||
Due from former Director
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9,653 | 16,319 | ||||||
Deferred income taxes
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165,511 | 165,511 | ||||||
Total other assets
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176,560 | 183,226 | ||||||
TOTAL ASSETS
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$ | 7,267,911 | $ | 5,565,217 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities:
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Accounts payable
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$ | 906,366 | $ | 330,459 | ||||
Accrued liabilities
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294,289 | 278,776 | ||||||
Current portion of deferred compensation
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67,000 | 67,000 | ||||||
Customer deposits
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1,066,425 | 279,424 | ||||||
Total current liabilities
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2,334,080 | 955,659 | ||||||
Deferred compensation, net of current portion
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45,968 | 76,213 | ||||||
Total liabilities
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2,380,048 | 1,031,872 | ||||||
Stockholders' equity:
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||||||||
Preferred stock, par value $.0001,
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||||||||
10,000,000 shares authorized, none issued
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— | — | ||||||
Common stock, par value $.01,
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||||||||
25,000,000 shares authorized; 6,429,875 and 6,179,875
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shares issued in 2011 and 2010, respectively
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64,299 | 61,799 | ||||||
Additional paid-in capital
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6,419,687 | 6,347,187 | ||||||
Accumulated deficit
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(914,713 | ) | (1,194,231 | ) | ||||
5,569,273 | 5,214,755 | |||||||
Less: Treasury stock, 1,245,980 shares
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||||||||
in 2011 and 2010, at cost
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(681,410 | ) | (681,410 | ) | ||||
Total stockholders' equity
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4,887,863 | 4,533,345 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 7,267,911 | $ | 5,565,217 |
See accompanying notes to condensed financial statements.
- 3 -
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 2011 and 2010
UNAUDITED
Three Months
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Six Months
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April 30, 2011
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April 30, 2010
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April 30, 2011
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April 30, 2010
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Net Sales:
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Equipment
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$ | 2,438,430 | $ | 1,752,327 | $ | 3,851,050 | $ | 3,061,726 | ||||||||
Parts and Service
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400,630 | 340,430 | 830,668 | 585,954 | ||||||||||||
Total Net Sales
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2,839,060 | 2,092,757 | 4,681,718 | 3,647,680 | ||||||||||||
Cost of Sales
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2,151,902 | 1,657,162 | 3,660,169 | 2,941,266 | ||||||||||||
Gross Profit
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687,158 | 435,595 | 1,021,549 | 706,414 | ||||||||||||
Operating Expense:
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Selling Expense
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121,891 | 132,025 | 226,405 | 233,985 | ||||||||||||
Administrative Expense
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181,237 | 177,508 | 344,522 | 345,503 | ||||||||||||
Total Operating Expense
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303,128 | 309,533 | 570,927 | 579,488 | ||||||||||||
Operating Income
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384,030 | 126,062 | 450,622 | 126,926 | ||||||||||||
Other Income (Expense):
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Interest Income
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2,391 | 2,739 | 4,396 | 5,511 | ||||||||||||
Interest Expense
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— | (1,097 | ) | — | (3,160 | ) | ||||||||||
Other Income
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— | 5 | — | 64 | ||||||||||||
Total Other Income
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2,391 | 1,647 | 4,396 | 2,415 | ||||||||||||
Income Before Income Taxes
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386,421 | 127,709 | 455,018 | 129,341 | ||||||||||||
Income Tax Provision
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149,000 | 49,000 | 175,500 | 49,650 | ||||||||||||
Net Income
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$ | 237,421 | $ | 78,709 | $ | 279,518 | $ | 79,691 | ||||||||
Basic Income per share
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$ | 0.05 | $ | 0.02 | $ | 0.06 | $ | 0.02 | ||||||||
Diluted Income per share
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0.05 | 0.02 | 0.06 | 0.02 | ||||||||||||
Weighted average number of shares outstanding
- Basic
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5,004,120 | 4,933,895 | 4,968,425 | 4,933,895 | ||||||||||||
- Diluted
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5,099,626 | 5,045,006 | 5,081,290 | 5,027,645 |
See accompanying notes to condensed financial statements.
- 4 -
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED APRIL 30, 2011
UNAUDITED
Common Stock
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Treasury Stock
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NUMBER
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OF
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ADDITIONAL
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NUMBER
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TOTAL
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SHARES
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PAR
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PAID-IN
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ACCUMULATED
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OF
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STOCKHOLDERS'
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ISSUED
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VALUE
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CAPITAL
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DEFICIT
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SHARES
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COST
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EQUITY
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Balance at October 31, 2010
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6,179,875
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$61,799
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$6,347,187
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$(1,194,231)
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1,245,980
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$(681,410)
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$4,533,345
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Issuance of 250,000
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shares of Common Stock
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250,000
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2,500
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72,500
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-0-
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-0-
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-0-
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75,000
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Net Income
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-0-
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-0-
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-0-
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279,518
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-0-
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-0-
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279,518
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Balance at April 30, 2011
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6,429,875
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$64,299
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$6,419,687
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$(914,713)
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1,245,980
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$(681,410)
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$4,887,863
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See accompanying notes to condensed financial statements.
- 5 -
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2011 AND 2010
UNAUDITED
April 30, 2011
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April 30, 2010
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Cash flow from operating activities:
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Net income
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$ | 279,518 | $ | 79,691 | ||||
Adjustments to reconcile net income to net cash provided by (used in)
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operating activities:
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Depreciation and amortization
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42,600 | 53,060 | ||||||
Provision for doubtful accounts, net of recoveries
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— | (7,106 | ) | |||||
Deferred income taxes
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175,500 | 49,650 | ||||||
Changes in operating assets and liabilities:
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Accounts receivable
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(253,051 | ) | (805,000 | ) | ||||
Inventories
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(956,856 | ) | (308,789 | ) | ||||
Prepaid expenses and other current assets
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(88,969 | ) | (34,852 | ) | ||||
Accounts payable
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575,907 | 217,659 | ||||||
Accrued liabilities and deferred compensation
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(14,732 | ) | 40,399 | |||||
Customer deposits
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787,001 | 109,809 | ||||||
Net cash provided by (used in) operating activities
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546,918 | (605,479 | ) | |||||
Cash flows from investing activities:
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Proceeds from notes receivable from former Director
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6,666 | 6,278 | ||||||
Purchase of property and equipment
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(105,079 | ) | — | |||||
Net cash (used in) provided by investing activities
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(98,413 | ) | 6,278 | |||||
Cash flows from financing activities:
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Issuance of common stock
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75,000 | — | ||||||
Net cash provided by financing activities
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75,000 | — | ||||||
Net increase (decrease) in cash and cash equivalents
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523,505 | (599,201 | ) | |||||
Cash and cash equivalents at beginning of period
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2,101,204 | 1,609,305 | ||||||
Cash and cash equivalents at end of period
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$ | 2,624,709 | $ | 1,010,104 | ||||
Supplemental disclosure of cash flow information:
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Cash paid during period for:
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Interest
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$ | — | $ | — | ||||
Income taxes
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— | — |
See accompanying notes to condensed financial statements.
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INTERNATIONAL BALER CORPORATION
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 which generate the materials for baling and recycling. The Company sells its products worldwide with 10% to 35% of its annual sales outside the United States.
2.
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Basis of Presentation:
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The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles 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 United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the six-month period ended April 30, 2011 are not necessarily indicative of the results that may be expected for the year ending October 31, 2011. The accompanying balance sheet as of October 31, 2010 was derived from the audited financial statements as of October 31, 2010.
3. Summary of Significant Accounting Policies:
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(a) Accounts Receivable & Allowance for Doubtful Accounts:
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the statements of cash flows. 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. 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.
(b) 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
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manufacture balers which includes direct materials, direct and indirect labor, and overhead. The Company maintains an allowance for excess or slow moving inventory based on the expectation that this inventory will become obsolete or unusable within a reasonable time period. Company personnel review the potential usage of inventory and inventory components on a regular basis.
(c) Revenue Recognition:
The Company recognizes revenue when products are shipped and the customer takes ownership and assumes the risk of loss. Parts sales are approximately 15% of total sales. The Company recognizes revenue from installations and start-ups and repair services in the period in which the service is provided.
(d) Basic and Diluted Income Per Share:
Basic income per share is calculated using the weighted average number of common shares outstanding during each period. Diluted income per share includes the net additional number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss periods as they would be antidilutive. The dilutive impact of options outstanding at April 30, 2011 and April 30, 2010 was 112,865 shares and 93,750 shares, respectively.
(e) Warranties and Service
The Company warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers a service plan for other required repairs and maintenance. 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 under warranty, and known warranty issues.
Following is a tabular reconciliation of the changes in the warranty accrual for the six-month period ended April 30:
2011 | 2010 | |||||||
Beginning balance
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$ | 49,859 | $ | 55,059 | ||||
Warranty service provided
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(76,543 | ) | (28,117 | ) | ||||
Warranties issued
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77,021 | 36,477 | ||||||
Changes to pre-existing warranty accruals
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4,522 | (8,360 | ) | |||||
Ending balance
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$ | 54,859 | $ | 55,059 |
(f) Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements.” ASU 2009-13 amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB ASC Topic 605. This consensus provides accounting principles and application guidance on how the arrangement should be separated, and the consideration allocated. This guidance changes how to determine the fair value of undelivered products and services for separate revenue recognition. Allocation of consideration under this pronouncement is based on management’s estimate of the selling price for an undelivered item where there is no other means to determine the fair value of that undelivered
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item. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early application permitted. The adoption of this standard did not have any impact on the Company’s financial statements.
(g) Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, revolving promissory note, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.
(h) Subsequent Events
The Company evaluated all events or transactions that occurred after April 30, 2011 up through the date the Company issued its financial statements.
4. Related Party Transactions:
The Company has a note receivable from its former president and director totaling $24,491 and $31,157 at April 30, 2011 and October 31, 2010, respectively. Interest accrues at the rate of 6% per annum.
The Company has an agreement with the former president and director of the Company for deferred compensation payments. The Company will make payments with a present value of $112,968, payable over the next two years. A portion of the payments will be used to repay the outstanding note receivable discussed above.
Leland E. Boren, a shareholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls 53.6% of the outstanding shares of the Company. Avis owns 100% of American Baler Company, a competitor of the Company. These baler companies operate independent of each other.
5. Inventories
Inventories consisted of the following:
April 30, 2011 | October 31, 2010 | |||||||
Raw Materials
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$ | 922,902 | $ | 694,446 | ||||
Work in process
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1,047,877 | 377,977 | ||||||
Finished Goods
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267,389 | 208,889 | ||||||
$ | 2,238,168 | $ | 1,281,312 |
6. Debt
The Company has a $1,000,000 line of credit agreement with First Guaranty Bank and Trust Company of Jacksonville. The line of credit allows the Company to borrow against the Company’s property, plant and equipment. The line of credit bears interest at the prime rate plus one-half percent with a floor of 5.0%, with a re-affirmation date of February 28, 2012. The line of credit had no outstanding balance at April 30, 2011 and October 31, 2010, and the unused line of credit was $1,000,000 at April 30, 2011. The credit agreement contains covenants that require the Company to provide annual audited financial statements and quarterly internal financial statements to the lender. There are no other covenants or restrictions.
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7. Income Taxes
As of April 30, 2011, the Company’s anticipated annual effective tax rate is 39%. The difference between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income tax is primarily the result of state income tax expense and permanent deductible differences.
Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. Factors considered included, historical results of operations, volatility of the economic conditions and projected earnings based on current operations. Based on this evidence, it is more likely than not that the deferred tax assets would be realized. Accordingly, the valuation allowance as of April 30, 2011 and at October 31, 2010 is $0. However, if it is determined that all or part of the deferred tax assets will not be used in the future, an adjustment to the deferred tax assets would be charged against net income in the period such determination is made. As of April 30, 2011 and October 31, 2010, deferred tax assets were $425,196 and $600,696, respectively. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future.
8. Stock-Based Compensation
In June 2002, the Company granted 250,000 nonqualified stock options to purchase shares of the Company’s common stock. These options, which vested immediately, have an exercise price of $0.30 and a term of 10 years. The options or shares purchased thereunder may be registered pursuant to the Securities Act of 1933. The Company has no remaining authorized shares available for grant under existing stock option plans. As all options are fully vested, there was no impact to net income for the six months ended April 30, 2011 and 2010 related to stock options. The stock options were exercised in April 2011 and 250,000 shares of common stock were issued.
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 condensed 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.
On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff has demanded $2,500,000 to settle this claim. The Company intends to vigorously defend this case and has contacted its liability insurance carrier to request defense and indemnification of any losses incurred in connection with this lawsuit. The claim is currently in discovery and the outcome is unknown.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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, 2010, 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
In the second quarter ended April 30, 2011, the Company had net sales of $2,839,060, compared to net sales of $2,092,757 in the second quarter of fiscal 2010, an increase of 35.7%. The increase in revenue is the result of higher shipments in the second quarter of fiscal 2011 reflecting the improved market conditions and higher commodity prices for recycled materials compared to the first quarter 2010. Baler and conveyor unit sales increased from twenty-three units in the prior year second quarter to thirty-eight units in the current year second quarter. Parts and service sales increased by $60,200 in the current year compared to the prior year. The market for baling equipment has been moving toward larger, more productive and efficient equipment in recent years.
The Company had pre-tax income of $386,421 in the second quarter compared to pre-tax income of $127,709 in second quarter of fiscal 2010. Gross profit margin in the quarter was 24.2% compared to 20.8% in the second quarter of 2010. The improvement in income and profit margins were the result of the higher shipments of equipment and parts and service. Also, the significant cost reductions implemented in the second half of fiscal 2009 remain in place. Selling and administrative expenses decreased by $6,405 in the second quarter of 2011 compared to the prior year second quarter.
Results of Operations: Six Month Comparison
The Company had net sales of $4,681,718 in the first six months of fiscal 2011 compared to net sales of $3,647,680 in the same period of fiscal 2010, an increase of 28.3%. Gross profit was $315,135 higher in the first half of 2011 than in the prior year and gross profit margins improved to 21.8% from 19.4% in 2010.
The Company had pre-tax income of $455,018 in the first six months of 2011 compared to income of $129,341 in the first half of fiscal 2010. Selling and administrative expenses were $8,561 lower in the first half of fiscal 2011 than in the prior year.
The sales order backlog was $4,055,000 at April 30, 2011 and $1,545,000 at April 30, 2010.
Financial Condition and Liquidity:
Net working capital at April 30, 2011 was $3,903,494, as compared to $3,635,034 at October 31, 2010. The Company currently believes that it will have sufficient cash flow to be able to fund other operating activities for the next twelve months.
Average days sales outstanding (DSO) in the first six months of fiscal 2011 were 30.0 days, as compared to 47.7 days in first six months of fiscal 2010. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by six, and dividing that result by the average days sales for the period (period sales ÷ 181).
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The Company has a $1,000,000 line of credit agreement with First Guaranty Bank and Trust Company of Jacksonville. The line of credit allows the Company to borrow against the Company’s property, plant and equipment. The line of credit bears interest at the prime rate plus one-half percent with a floor of 5.0%, with a re-affirmation date of February 28, 2012. The line of credit had no outstanding balance at April 30, 2011 and October 31, 2010, and the unused line of credit was $1,000,000 at April 30, 2011. The credit agreement contains covenants that require the Company to provide annual audited financial statements and quarterly internal financial statements to the lender. There are no other covenants or restrictions.
At the current time, the line of credit continues to be available and there have not been any issues obtaining additional funds from the lender. 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.
Forward Looking Statements
Certain statements in this Report contain forward-looking statements within the meaning of Section 21B of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company’s present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties including, but not limited to, changes in general economic conditions and changing competition which could cause actual results to differ materially from those indicated.
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. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
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assurance of achieving the desired control objectives, and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As of the end of the period covered by this report, and under the supervision and with the participation of the management, including the Company’s Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the design and operation of these disclosure controls and procedures. Based on this evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
As part of a continuing effort to improve the Company’s business processes management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.
Changes in Internal Control over Financial Reporting
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 April 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff has demanded $2,500,000 to settle this claim. The Company intends to vigorously defend this case and has contacted its liability insurance carrier to request defense and indemnification of any losses incurred in connection with this lawsuit. The claim is currently in discovery and the outcome is unknown.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
(a)
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The annual meeting of stockholders of the Company was held on April 30, 2011.
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(b)
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The first item voted on was the election of Directors. Leland E. Boren and Matthew M. Price were elected as Class I Directors of the Company whose terms will expire in three (3) years at the annual meeting of stockholders to be held in 2013. The results of the voting were as follows: 3,775,393 votes for Leland E. Boren and 85,600 withheld, 3,112,828 votes for Matthew M. Price and 662,564 withheld.
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(c)
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The next item of business was the proposal to ratify the appointment of The GriggsGroup, CPAs, the independent registered public accounting firm of the Company, for the fiscal year ending October 31, 2011. The results of the voting were as follows:
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4,439,912Votes for the resolution,
69,801Votes against and
3,786Votes abstained.
A majority of the votes cast at the meeting have voted for the resolution, the resolution was duly passed.
No other matters were voted on at the meeting.
ITEM 5. OTHER INFORMATION
On February 10, 2011, LaRita R. Boren, Director and the Company’s largest shareholder, suddenly and unexpectedly passed away. Her shares are now controlled by the Estate of LaRita R. Boren.
At a Board of Directors meeting held on April 15, 2011, the Board of Directors named Mr. Lael E. Boren to the Board of Directors of the Company. Most recently Mr. Boren has served as general manager and president of various organizations including Badger Equipment Company and The Pierce Company. Prior to that, Mr. Boren owned an electronics business in Muncie and Marion, Indiana. He attended Ball State University. Mr. Boren is replacing his mother, LaRita R. Boren, on the Board of Directors of the Company.
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ITEM 6. EXHIBITS
The following exhibits are submitted herewith:
Exhibit
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31.1
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Certification of D. Roger Griffin, Chief Executive Officer, pursuant to Rule 13a–14(a)/15d-14(a).
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31.2
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Certification of William E. Nielsen, Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).
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32.1
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Certification of D. Roger Griffin, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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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.
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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: June 13, 2011
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INTERNATIONAL BALER CORPORATION | |||
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By:
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/s/ D. Roger Griffin | |
D. Roger Griffin | |||
Chief Executive Officer | |||
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By:
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/s/ William E. Nielsen | |
William E. Nielsen | |||
Chief Financial Officer | |||
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