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EX-31.2 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORPexh31-2_17191.htm
EX-31.1 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORPexh31-1_17191.htm
EX-31.2 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORPexh32-2_17191.htm
EX-32.1 - EXECUTIVE OFFICER CERTIFICATION - INTERNATIONAL BALER CORPexh32-1_17191.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   July 31, 2011


Commission File No. 0-14443

 
INTERNATIONAL BALER CORPORATION
    (Exact name of registrant as specified in its charter)


Delaware
 
13-2842053
State or other jurisdiction of
 
(IRS Employer Identification No.)
Incorporation or organization
   

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
 
Accelerated filer  o
 
Non-accelerated filer  o
(Do not check if a smaller reporting company)
Smaller reporting company  x

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 August 31, 2011.



 
 
 
 
 
INTERNATIONAL BALER CORPORATION
 
TABLE OF CONTENTS
 
 
PAGE
 
PART I.
FINANCIAL INFORMATION
3
       
  ITEM 1. FINANCIAL STATEMENTS  
       
 
Condensed Balance Sheets as of July 31, 2011, and October 31, 2010
3
       
 
Condensed Statements of Operations for the three months and nine months ended July 31, 2011 and 2010
4
       
 
Condensed Statements of Changes in Stockholders’ Equity for the period from October 31, 2010 to July 31, 2011
5
       
 
Condensed Statements of Cash Flows for the nine months ended July 31, 2011 and 2010
6
       
 
Notes to Condensed Financial Statements (Unaudited)
7
       
       
 
ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
11
       
 
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
12
       
 
ITEM 4.        
CONTROLS AND PROCEDURES
12
       
       
     
PART II.
OTHER INFORMATION 13
       
 
ITEM 1.
LEGAL PROCEEDINGS
13
       
 
ITEM 5.
OTHER INFORMATION
13
       
 
ITEM 6.
EXHIBITS
14
       
SIGNATURES
    15
       
CERTIFICATIONS
 
  16
 
 
 
 
- 2 -

 
INTERNATIONAL BALER CORPORATION
CONDENSED BALANCE SHEETS
UNAUDITED
 
   
July 31, 2011
   
October 31, 2010
 
ASSETS
           
             
Current Assets:
           
  Cash and cash equivalents
  $ 2,235,923     $ 2,101,204  
  Accounts receivable, net of allowance for doubtful accounts
               
           of $71,764 in 2011 and 2010
    1,142,256       700,484  
  Inventories
    2,394,016       1,281,312  
  Prepaid expense and other current assets
    134,864       72,508  
  Deferred income taxes
    105,685       435,185  
          Total current assets
    6,012,744       4,590,693  
                 
Property, plant and equipment, at cost:
    2,627,921       2,414,055  
  Less:  accumulated depreciation
    1,688,074       1,622,757  
          Net property, plant and equipment
    939,847       791,298  
                 
Other assets:
               
  Other assets
    1,396       1,396  
  Due from former Director
    6,321       16,319  
  Deferred income taxes
    165,511       165,511  
          Total other assets
    173,228       183,226  
                 
TOTAL ASSETS
  $ 7,125,819     $ 5,565,217  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current liabilities:
               
  Accounts payable
  $ 591,675     $ 330,459  
  Accrued liabilities
    335,396       278,776  
  Current portion of deferred compensation
    67,000       67,000  
  Customer deposits
    972,299       279,424  
          Total current liabilities
    1,966,370       955,659  
                 
Deferred compensation, net of current portion
    30,845       76,213  
          Total liabilities
    1,997,215       1,031,872  
                 
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 and 6,179,875
         
        shares issued in 2011 and 2010, respectively
    64,299       61,799  
  Additional paid-in capital
    6,419,687       6,347,187  
  Accumulated deficit
    (673,972 )     (1,194,231 )
      5,810,014       5,214,755  
                 
   Less:  Treasury stock, 1,245,980 shares
               
                   in 2011 and 2010, at cost
    (681,410 )     (681,410 )
                 
                  Total stockholders' equity
    5,128,604       4,533,345  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 7,125,819     $ 5,565,217  
 
See accompanying notes to condensed financial statements.
 
- 3 -

 
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2011 and 2010
UNAUDITED
 
 
   
Three Months
   
Nine Months
 
                         
   
July 31, 2011
   
July 31, 2010
   
July 31, 2011
   
July 31, 2010
 
Net Sales:
                       
     Equipment
  $ 2,699,995     $ 1,599,815     $ 6,551,045     $ 4,661,541  
     Parts and Service
    405,113       335,857       1,235,781       921,811  
Total Net Sales
    3,105,108       1,935,672       7,786,826       5,583,352  
                                 
Cost of Sales
    2,377,455       1,526,568       6,037,624       4,467,834  
                                 
Gross Profit
    727,653       409,104       1,749,202       1,115,518  
                                 
                                 
Operating Expense:
                               
     Selling Expense
    130,995       73,143       357,400       307,128  
     Administrative Expense
    203,938       178,160       548,460       523,663  
Total Operating Expense
    334,933       251,303       905,860       830,791  
                                 
Operating Income
    392,720       157,801       843,342       284,727  
                                 
Other Income (Expense):
                               
     Interest Income
    2,021       2,284       6,417       7,795  
     Interest Expense
                      (3,160 )
     Other Income
                        64  
     Other Expense
          (25,000 )           (25,000 )
Total Other Income
    2,021       (22,716 )     6,417       (20,301 )
                                 
                                 
Income Before Income Taxes
    394,741       135,085       849,759       264,426  
                                 
Income Tax Provision
    154,000       53,500       329,500       103,150  
                                 
Net Income
  $ 240,741     $ 81,585     $ 520,259     $ 161,276  
                                 
                                 
Basic Income per share
  $ 0.05     $ 0.02     $ 0.10     $ 0.03  
Diluted Income per share
    0.05       0.02       0.10       0.03  
                                 
Weighted average number
of shares outstanding - Basic
    5,183,895       4,933,895       5,041,038       4,933,895  
                                        - Diluted
    5,183,895       5,056,776       5,115,867       5,038,264  
 
 
See accompanying notes to condensed financial statements.
 
- 4 -

 
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 2011
UNAUDITED
 
 
   
Common Stock
               
Treasury Stock
       
   
 
   
 
               
 
   
 
       
   
NUMBER
         
 
                     
 
 
   
OF SHARES
   
PAR
   
ADDITIONAL
PAID-IN
   
ACCUMULATED
   
NUMBER
OF
         
TOTAL
STOCKHOLDERS'
 
   
ISSUED
   
VALUE
   
CAPITAL
   
DEFICIT
   
SHARES
   
COST
   
EQUITY
 
                                           
Balance at October 31, 2010
    6,179,875     $ 61,799     $ 6,347,187     $ (1,194,231 )     1,245,980     $ (681,410 )   $ 4,533,345  
Issuance of 250,000
                                                       
shares of Common Stock
    250,000       2,500       72,500       -0-       -0-       -0-       75,000  
                                                         
Net Income
    -0-       -0-       -0-       520,259       -0-       -0-       520,259  
                                                         
Balance at July 31, 2011
    6,429,875     $ 64,299     $ 6,419,687     $ (673,972 )     1,245,980     $ (681,410 )   $ 5,128,604  
 
 
 
 
 
 
See accompanying notes to condensed financial statements.
 
- 5 -

 
INTERNATIONAL BALER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 2011 AND 2010
UNAUDITED
 
   
July 31, 2011
   
July 31, 2010
 
             
Cash flow from operating activities:
           
  Net income
  $ 520,259     $ 161,276  
Adjustments to reconcile net income to net cash provided by (used in)
         
  operating activities:
               
     Depreciation and amortization
    65,317       78,260  
     Provision for doubtful accounts, net of recoveries
          (7,106 )
     Deferred income taxes
    329,500       103,150  
     Changes in operating assets and liabilities:
               
       Accounts receivable
    (441,772 )     (844,705 )
       Inventories
    (1,112,704 )     (123,789 )
       Prepaid expenses and other current assets
    (62,356 )     (18,284 )
       Accounts payable
    261,216       (33,270 )
       Accrued liabilities and deferred compensation
    11,252       58,109  
       Customer deposits
    692,875       (21,188 )
           Net cash provided by (used in) operating activities
    263,587       (647,547 )
                 
Cash flows from investing activities:
               
   Proceeds from notes receivable from former Director
    9,998       9,417  
   Purchase of property and equipment
    (213,866 )      
   Restricted Cash
          224,100  
           Net cash (used in) provided by investing activities
    (203,868 )     233,517  
                 
Cash flows from financing activities:
               
    Issuance of common stock
    75,000        
            Net cash provided by financing activities
    75,000        
                 
Net increase (decrease) in cash and cash equivalents
    134,719       (414,030 )
                 
Cash and cash equivalents at beginning of period
    2,101,204       1,609,305  
                 
Cash and cash equivalents at end of period
  $ 2,235,923     $ 1,195,275  
                 
Supplemental disclosure of cash flow information:
               
Cash paid during period for:
               
    Interest
  $     $  
    Income taxes
           
 
 
 
See accompanying notes to condensed financial statements.
 
- 6 -

 
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.
Basis of Presentation:

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 nine-month period ended July 31, 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:

(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
 
- 7 -

 
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 July 31, 2011 and July 31, 2010 was 74,829 shares and 104,369 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 nine-month period ended July 31:
 
    2011     2010  
Beginning balance
  $ 49,859     $ 55,059  
Warranty service provided
    (112,759 )     (55,443 )
Warranties issued
    98,265       46,615  
Changes to pre-existing warranty accruals
    19,494       8,828  
Ending balance
  $ 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
 
- 8 -

 
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 July 31, 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 $21,159 and $31,157 at July 31, 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 $97,845, 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 51.0% 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:
 
   
July 31,
2011
   
October 31,
2010
 
Raw Materials
  $ 896,498     $ 694,446  
Work in process
    1,074,877       377,977  
Finished Goods
    422,641       208,889  
    $ 2,394,016     $ 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 July 31, 2011 and October 31, 2010, and the unused line of credit was $1,000,000 at July 31, 2011. The credit agreement contains covenants that require the Company to provide annual audited financial statements and quarterly
 
- 9 -

 
internal financial statements to the lender. There are no other covenants or restrictions.

7. 
Income Taxes

As of July 31, 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 July 31, 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 July 31, 2011 and October 31, 2010, deferred tax assets were $271,196 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 were fully vested, there was no impact to net income for the nine months ended July 31, 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.
 
 
- 10 -

 
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 third quarter ended July 31, 2011, the Company had net sales of $3,105,108, compared to net sales of $1,935,672 in the third quarter of fiscal 2010, an increase of 60.4%. The increase in revenue is the result of higher shipments in the third quarter of fiscal 2011 reflecting the improved market conditions and higher commodity prices for recycled materials compared to the third quarter 2010.  In the current quarter the company sold thirty-five balers and conveyors with an average price of approximately $75,000 compared to thirty-two balers and conveyors with an average price of $50,000 in the prior year quarter. The market for baling equipment has been moving toward larger, more productive and efficient equipment in recent years. Parts and service sales increased by $69,256 in the current year compared to the prior year.

The Company had pre-tax income of $394,741 in the third quarter compared to pre-tax income of $135,085 in third quarter of fiscal 2010. Gross profit margin in the quarter was 23.4% compared to 21.1% in the third 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 increased by $83,630 in the third quarter of 2011 compared to the prior year second quarter.  The third quarter of 2010 included the recovery of a previously reserved for receivable.

Results of Operations: Nine Month Comparison

The Company had net sales of $7,786,826 in the first nine months of fiscal 2011 compared to net sales of $5,583,352 in the same period of fiscal 2010, an increase of 39.5%. Gross profit was $633,684 higher in the first half of 2011 than in the prior year and gross profit margins improved to 22.5% from 20.0% in 2010.

The Company had pre-tax income of $849,759 in the first nine months of 2011 compared to income of $264,426 in the first nine months of fiscal 2010. Selling and administrative expenses were $75,099 higher in the first nine months of fiscal 2011 than in the prior year.

The sales order backlog was $4,700,000 at July 31, 2011 and $1,495,000 at July 31, 2010.

Financial Condition and Liquidity:

Net working capital at July 31, 2011 was $4,046,374, 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 nine months of fiscal 2011 were 26.6 days, as compared to 52.2 days in the first nine months of fiscal 2010. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by nine, and dividing that result by the average days sales for the period (period sales ÷ 273).

 
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In fiscal 2011 the company has made additions to plant and equipment of $213,866 and is committed to an additional $106,088 in the fourth quarter.  Included in these capitol expenditures are a hydraulic press break, a ten-ton bridge crane, a two-ton bridge crane and a large fork lift truck.

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 July 31, 2011 and October 31, 2010, and the unused line of credit was $1,000,000 at July 31, 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
 
 
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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 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 July 31, 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 5.       OTHER INFORMATION

None.

 
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ITEM 6.       EXHIBITS

The following exhibits are submitted herewith:

 
Exhibit       
31.1
Certification of D. Roger Griffin, Chief Executive Officer, pursuant to Rule 13a–14(a)/15d-14(a).
 
 
31.2
Certification of William E. Nielsen, Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).
 
 
32.1
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.
 
 
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.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


 
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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:          September 12, 2011
 

 
 
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  
       










 
 
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