10-Q

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, 2012

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 ☑ No ☐

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 ☐ No ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

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 May 31, 2012

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INTERNATIONAL BALER CORPORATION

TABLE OF CONTENTS

			PAGE
PART I.		FINANCIAL INFORMATION	3
	ITEM 1.	FINANCIAL STATEMENTS
		Balance Sheets as of April 30, 2012, (unaudited) and October 31, 2011	3
		Statements of Operations for the three months and six months ended
		April 30, 2012 and 2011 (unaudited)	4
		Statements of Changes in Stockholders' Equity for the six
		months ended April 30, 2012 (unaudited)	5
		Statements of Cash Flows for he six months ended
		April 30, 2012 and 2011 (unaudited)	7
		Notes to Financial Statements (unaudited)	7
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
		CONDITION AND RESULTS OF OPERATIONS	10
	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 4.	SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS	13
	ITEM 5.	OTHER INFORMATION	13
	ITEM 6.	EXHIBITS	14
SIGNATURES			15
CERTIFICATIONS			16

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PART I.    FINANCIAL INFORMATION

INTERNATIONAL BALER CORPORATION
BALANCE SHEETS
		April 30, 2012		October 31, 2011
ASSETS		(Unaudited)
Current Assets:
Cash and cash equivalents	$	2,285,732	$	2,875,149
Accounts receivable, net of allowance for doubtful accounts
of $50,764 at April 30, 2012 and October 31, 2011		1,470,249		1,038,979
Inventories		4,231,269		2,583,100
Prepaid expense and other current assets		88,620		87,894
Deferred income taxes		180,313		180,313
Total current assets		8,256,183		6,765,435
Property, plant and equipment, at cost:		2,869,368		2,761,004
Less:  accumulated depreciation		1,781,906		1,711,704
Net property, plant and equipment		1,087,462		1,049,300
Other assets:
Other assets		1,396		1,396
Note from former Director		-		2,988
Deferred income taxes		11,074		11,074
Total other assets		12,470		15,458
TOTAL ASSETS	$	9,356,115	$	7,830,193
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,146,759	$	630,556
Accrued liabilities		456,487		525,655
Current portion of deferred compensation		49,966		67,000
Customer deposits		1,656,063		1,299,252
Total current liabilities		3,309,275		2,522,463
Deferred compensation, net of current portion		-		15,722
Total liabilities		3,309,275		2,538,185
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, par value $.0001,
10,000,000 shares authorized, none issued		-		-
Common stock, par value $.01,
25,000,000 shares authorized;  6,429,875 shares
issued at April 30, 2012 and October 31, 2011		64,299		64,299
Additional paid-in capital		6,419,687		6,419,687
Retained earnings (deficit)		244,264		(510,568)
		6,728,250		5,973,418
Less:  Treasury stock, 1,245,980 shares
at April 30, 2012 and October 31, 2011, at cost		(681,410)		(681,410)
Total stockholders' equity		6,046,840		5,292,008
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,356,115	$	7,830,193
See accompanying notes to financial statements.

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INTERNATIONAL BALER CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 2012 and 2011
UNAUDITED
		Three Months				Six Months
		2012		2011		2012		2011
Net Sales:
Equipment	$	4,135,769	$	2,438,430	$	7,945,149	$	3,851,050
Parts and Service		498,190		400,630		959,605		830,668
Total Net Sales		4,633,959		2,839,060		8,904,754		4,681,718
Cost of Sales		3,537,450		2,151,902		6,843,619		3,660,169
Gross Profit		1,096,509		687,158		2,061,135		1,021,549
Operating Expense:
Selling Expense		204,548		121,891		367,950		226,405
Administrative Expense		240,507		181,237		463,574		344,522
Total Operating Expense		445,055		303,128		831,524		570,927
Operating Income		651,454		384,030		1,229,611		450,622
Other Income (Expense):
Interest Income		1,555		2,391		3,221		4,396
Total Other Income		1,555		2,391		3,221		4,396
Income Before Income Taxes		653,009		386,421		1,232,832		455,018
Income Tax Provision		254,000		149,000		478,000		175,500
Net Income	$	399,009	$	237,421	$	754,832	$	279,518
Basic Income per share	$	0.08	$	0.05	$	0.15	$	0.06
Diluted Income per share		0.08		0.05		0.15		0.06
Weighted average number of shares outstanding - Basic		5,183,895		5,004,120		5,183,895		4,968,425
- Diluted		5,183,895		5,099,626		5,183,895		5,081,290
See accompanying notes to financial statements.

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	INTERNATIONAL BALER CORPORATION
	STATEMENTS OF STOCKHOLDERS' EQUITY
	FOR THE SIX MONTHS ENDED APRIL 30, 2012
	UNAUDITED
		Common Stock							Treasury Stock
		NUMBER				ADDITIONAL		RETAINED	NUMBER				TOTAL
		OF SHARES		PAR		PAID-IN		EARNINGS	OF				STOCKHOLDERS'
		ISSUED		VALUE		CAPITAL		(DEFICIT)	SHARES		COST		EQUITY
Balance at October 31, 2011		6,429,875	$	64,299	$	6,419,687	$	(510,568)	1,245,980	$	(681,410)	$	5,292,008
	Net Income	-0-		-0-		-0-		754,832	-0-		-0-		754,832
Balance at April 30, 2012		6,429,875	$	64,299	$	6,419,687	$	244,264	1,245,980	$	(681,410)	$	6,046,840
See accompanying notes to financial statements.

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INTERNATIONAL BALER CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2012 AND 2011
UNAUDITED
		2012		2011
Cash flow from operating activities:
Net income	$	754,832	$	279,518
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		70,202		42,600
Deferred income taxes		-		175,500
Changes in operating assets and liabilities:
Accounts receivable		(431,270)		(253,051)
Inventories		(1,648,169)		(956,856)
Prepaid expenses and other current assets		(4,815)		(88,969)
Accounts payable		516,203		575,907
Accrued liabilities and deferred compensation		(101,924)		(14,732)
Customer deposits		356,811		787,001
Net cash (used in) provided by operating activities		(488,130)		546,918
Cash flows from investing activities:
Proceeds from notes receivable from former Director		7,077		6,666
Purchases of property and equipment		(108,364)		(105,079)
Net cash used in investing activities		(101,287)		(98,413)
Cash Flows from financing activities:
Issuance of common stock		-		75,000
Net cash provided by financing activities		-		75,000
Net (decrease) increase in cash and cash equivalents		(589,417)		523,505
Cash and cash equivalents at beginning of period		2,875,149		2,101,204
Cash and cash equivalents at end of period	$	2,285,732	$	2,624,709
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	440,000	$	-
See accompanying notes to financial statements.

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INTERNATIONAL BALER CORPORATION

NOTES TO 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 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 six-month period ended April 30, 2012 are not necessarily indicative of the results that may be expected for the year ending October 31, 2012. The accompanying balance sheet as of October 31, 2011 was derived from the audited financial statements as of October 31, 2011.

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. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(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 manufacture balers which include direct materials, direct and indirect labor, and overhead. Company personnel review the potential usage of inventory and inventory components on a regular basis.

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(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from 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, 2012 and April 30, 2011 was -0- shares and 112,865 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:

		2012		2011
Beginning balance	$	54,859	$	49,859
Warranty service provided		(121,250)		(76,543)
New product warranties		119,177		77,021
Changes to pre-existing warranty accruals		7,214		(4,522)
Ending balance	$	60,000	$	54,859

(f) Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.

4. Related Party Transactions:

The Company has a note receivable from its former president and director totaling $10,749 and $17,826 at April 30, 2012 and October 31, 2011, 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 $49,966, payable through January 2013 at $5,813 per month. 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 The American Baler Company, a competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from, The American Baler Company for the six months ended April 30, 2012 or 2011.

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5. Inventories

Inventories consisted of the following:

		April 30, 2012		October 31, 2011
Raw materials	$	1,341,317	$	1,009,648
Work in process		2,628,106		1,429,606
Finished goods		261,846		143,846
	$	4,231,269	$	2,583,100

6. Debt

The Company has a $1,000,000 line of credit agreement with CenterState Bank of Florida. The line of credit allows the Company to borrow against the Company’s accounts receivable, inventory and property, plant and equipment. The line of credit bears interest at the prime rate plus one-quarter percent with a floor of 4.0%. The line of credit had no outstanding balance at April 30, 2012 and October 31, 2011, and the unused line of credit was $1,000,000 at April 30, 2012. The credit agreement contains covenants that require the Company to provide annual audited financial statements, quarterly internal financial statements and monthly accounts receivable and accounts payable aging reports to the lender.

7. Income Taxes

As of April 30, 2012, 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, 2012 and at October 31, 2011 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, 2012 and October 31, 2011, net deferred tax assets were $191,387.

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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, had an exercise price of $0.30 and a term of 10 years. 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 six months ended April 30, 2012 and 2011 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 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 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. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with our unaudited 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, 2011, 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, 2012, the Company had net sales of $4,633,959, compared to net sales of $2,839,060 in the second quarter of fiscal 2011, an increase of 63.2%. The increase in revenue is the result of higher shipments of four synthetic rubber balers in the second quarter of fiscal 2012 compared to the second quarter 2011. Also, the Company began expanding its dealer network by adding several new dealers and improving coverage of market areas in the United States.

The Company had pre-tax income of $653,009 in the second quarter, compared to $386,421 in the second quarter of fiscal 2011. The improvement in income was the result of the higher shipments of equipment and parts and service and the higher absorption of fixed costs. Selling and administrative expenses increased by $141,927 in the second quarter compared to the prior year second quarter.

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Results of Operations: Six Month Comparison

The Company had net sales of $8,904,754 in the first six months of fiscal 2012 compared to net sales of $4,681,718 in the same period of fiscal 2011, an increase of 90.2%. The higher net sales was the result of the shipment of nine rubber balers and eleven two-ram balers compared to no rubber balers and seven two-ram balers in the first six months of 2011.

Gross profit was $1,039,586 higher in the first half of 2012 than in the prior year and gross profit margins improved to 23.1% from 21.8% in 2011.

The Company had pre-tax income of $1,232,832 in the first six months of 2012 compared to income of $455,018 in the first half of fiscal 2011. Selling and administrative expenses were $260,597 higher in the first half of fiscal 2012 than in the prior year.

The sales order backlog was $6,830,000 at April 30, 2012 and $4,055,000 at April 30, 2011.

Financial Condition and Liquidity:

Net working capital at April 30, 2012 was $4,946,908, as compared to $4,242,972 at October 31, 2011. 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 2012 were 29.9 days, as compared to 47.7 days in the first six months of fiscal 2011. 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 days sales for the period (period sales ÷ 181).

During the six months ended April 30, 2012 and 2011, the Company made additions to plant and equipment of $108,364 and $105,079, respectively.

The Company has a $1,000,000 line of credit agreement with CenterState Bank of Florida. The line of credit allows the Company to borrow against the Company’s accounts receivable, inventory and property, plant and equipment. The line of credit bears interest at the prime rate plus one-quarter percent with a floor of 4.0%. The line of credit had no outstanding balance at April 30, 2012 and October 31, 2011, and the unused line of credit was $1,000,000 at April 30, 2012. The credit agreement contains covenants that require the Company to provide annual audited financial statements, quarterly internal financial statements and monthly accounts receivable and accounts payable reports to 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.

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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 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.

Management, with the participation of the Company’s principal executive and principal financial officers, assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2012. This assessment was performed using the criteria established under the Internal Control-Integrated Framework established by Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

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, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

(a) The annual meeting of stockholders of the Company was held on April 23, 2012.

(b) The first item voted on was the election of Directors. Ronald L. McDaniel and D. Roger Griffin were elected as Class lI Directors of the Company whose terms will expire in three (3) years at the annual meeting of stockholders to be held in 2015. The results of the voting were as follows: 3,976,550 votes for Ronald L. McDaniel and 5,143 withheld and 3,976,550 votes for D. Roger Griffin and 5,143 withheld.

(c) 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, 2012. The results of the voting were as follows:

4,627,172  Votes for the resolution,

0                Votes against and

2,500         Votes 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 INFORMATON

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: Septem D Dated: June 12, 2012

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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EX-31

Exhibit 31.1

I, D. Roger Griffin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended April 30, 2012 of International Baler Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation.

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

5. The registrants certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 12, 2012

By:/S/ D. Roger Griffin

D. Roger Griffin

Chief Executive Officer

EX-31

Exhibit 31.2

I, William E. Nielsen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended April 30, 2012 of International Baler Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation.

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

5. The registrants certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(c) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(d) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 12, 2012

By: /S/William E. Nielsen

William E. Nielsen

Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:

I have reviewed the Quarterly Report of International Baler Corp. on Form 10-Q for the quarter ended April 30, 2012 (the “Report”);

To the best of my knowledge, the Report (i) fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and (ii) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of International Baler Corporation during the period covered by this Report.

Dated: June 12, 2012

By: /S/D. Roger Griffin

D. Roger Griffin

Chief Executive Officer

EX-32

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:

I have reviewed the Quarterly Report of International Baler Corp. on Form 10-Q for the quarter ended April 30, 2012 (the “Report”);

To the best of my knowledge, the Report (i) fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and (ii) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of International Baler Corporation during the period covered by this Report.

Dated: June 12, 2012

By: /S/William E. Nielsen

William E. Nielsen

Chief Financial Officer

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Summary of Significant Accounting Policies

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Summary of Significant Accounting Policies

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. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

(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 manufacture balers which include direct materials, direct and indirect labor, and overhead. Company personnel review the potential usage of inventory and inventory components on a regular basis.

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from 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, 2012 and April 30, 2011 was -0- shares and 112,865 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:

		2012		2011
Beginning balance	$	54,859	$	49,859
Warranty service provided		(121,250)		(76,543)
New product warranties		119,177		77,021
Changes to pre-existing warranty accruals		7,214		(4,522)
Ending balance	$	60,000	$	54,859

(f) Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.

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Basis of Presentation

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Basis of Presentation

2. Basis of Presentation:

The accompanying unaudited 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 six-month period ended April 30, 2012 are not necessarily indicative of the results that may be expected for the year ending October 31, 2012. The accompanying balance sheet as of October 31, 2011 was derived from the audited financial statements as of October 31, 2011.

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BALANCE SHEETS (USD $)	Apr. 30, 2012	Oct. 31, 2011
Current Assets:
Cash and cash equivalents	$ 2,285,732	$ 2,875,149
Accounts receivable, net of allowance for doubtful accounts of $50,764 at April 30, 2012 and October 31, 2011		1,038,979
Inventories		2,583,100
Prepaid expense and other current assets		87,894
Deferred income taxes		180,313
Total current assets		6,765,435
Property, plant and equipment, at cost:		2,761,004
Less: accumulated depreciation		1,711,704
Net property, plant and equipment		1,049,300
Other assets:
Other assets		1,396
Note from former Director		2,988
Deferred income taxes		11,074
Total other assets		15,458
TOTAL ASSETS		7,830,193
Current liabilities:
Accounts payable		630,556
Accrued liabilities		525,655
Current portion of deferred compensation		67,000
Customer deposits		1,299,252
Total current liabilities		2,522,463
Deferred compensation, net of current portion		15,722
Total liabilities		2,538,185
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, par value $.0001, 10,000,000 shares authorized, none issued
Common stock, par value $.01, 25,000,000 shares authorized; 6,429,875 shares issued at April 30, 2012 and October 31, 2011		64,299
Additional paid-in capital		6,419,687
Retained earnings (deficit)		(510,568)
Total stockholders' equity before treasury stock		5,973,418
Less: Treasury stock, 1,245,980 shares at April 30, 2012 and October 31, 2011, at cost		(681,410)
Total stockholders' equity	6,046,840	5,292,008
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		7,830,193
Unaudited
Current Assets:
Cash and cash equivalents	2,285,732
Accounts receivable, net of allowance for doubtful accounts of $50,764 at April 30, 2012 and October 31, 2011	1,470,249
Inventories	4,231,269
Prepaid expense and other current assets	88,620
Deferred income taxes	180,313
Total current assets	8,256,183
Property, plant and equipment, at cost:	2,869,368
Less: accumulated depreciation	1,781,906
Net property, plant and equipment	1,087,462
Other assets:
Other assets	1,396
Note from former Director
Deferred income taxes	11,074
Total other assets	12,470
TOTAL ASSETS	9,356,115
Current liabilities:
Accounts payable	1,146,759
Accrued liabilities	456,487
Current portion of deferred compensation	49,966
Customer deposits	1,656,063
Total current liabilities	3,309,275
Deferred compensation, net of current portion
Total liabilities	3,309,275
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, par value $.0001, 10,000,000 shares authorized, none issued
Common stock, par value $.01, 25,000,000 shares authorized; 6,429,875 shares issued at April 30, 2012 and October 31, 2011	64,299
Additional paid-in capital	6,419,687
Retained earnings (deficit)	244,264
Total stockholders' equity before treasury stock	6,728,250
Less: Treasury stock, 1,245,980 shares at April 30, 2012 and October 31, 2011, at cost	(681,410)
Total stockholders' equity	6,046,840
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 9,356,115

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STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011
Cash flow from operating activities:
Net Income	$ 754,832	$ 279,518
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	70,202	42,600
Deferred income taxes		175,500
Changes in operating assets and liabilities:
Accounts receivable	(431,270)	(253,051)
Inventories	(1,648,169)	(956,856)
Prepaid expenses and other current assets	(4,815)	(88,969)
Accounts payable	516,203	575,907
Accrued liabilities and deferred compensation	(101,924)	(14,732)
Customer deposits	356,811	787,001
Net cash (used in) provided by operating activities	(488,130)	546,918
Cash flows from investing activities:
Proceeds from notes receivable from former Director	7,077	6,666
Purchase of property and equipment	(108,364)	(105,079)
Net cash (used in) provided by investing activities	(101,287)	(98,413)
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	(589,417)	523,505
Cash and cash equivalents at beginning of period	2,875,149	2,101,204
Cash and cash equivalents at end of period	2,285,732	2,624,709
Supplemental disclosure of cash flow information:
Cash paid during the period for Income taxes	$ 440,000

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Nature of Business

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Nature of Business

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.

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BALANCE SHEETS (Parenthetical) (USD $)	Oct. 31, 2011	Apr. 30, 2012 Unaudited
Current Assets:
Accounts receivable, net of allowance for doubtful accounts	$ 50,764	$ 50,764
Stockholders' equity:
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, share authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	6,429,875	6,429,875
Treasury stock, shares	1,245,980	1,245,980

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Warranties and Service

		2012		2011
Beginning balance	$	54,859	$	49,859
Warranty service provided		(121,250)		(76,543)
New product warranties		119,177		77,021
Changes to pre-existing warranty accruals		7,214		(4,522)
Ending balance	$	60,000	$	54,859

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Document and Entity Information	3 Months Ended
	Apr. 30, 2012	May 31, 2012
Document And Entity Information
Entity Registrant Name	International Baler Corporation
Entity Central Index Key	0000781902
Document Type	10-Q
Document Period End Date	Apr. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--10-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,183,895
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012

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Inventories (Tables)

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Inventories

		April 30, 2012		October 31, 2011
Raw materials	$	1,341,317	$	1,009,648
Work in process		2,628,106		1,429,606
Finished goods		261,846		143,846
	$	4,231,269	$	2,583,100

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STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Apr. 30, 2012	Apr. 30, 2011	Apr. 30, 2012	Apr. 30, 2011
Net Sales:
Equipment	$ 4,135,769	$ 2,438,430	$ 7,945,149	$ 3,851,050
Parts and Service	498,190	400,630	959,605	830,668
Total Net Sales	4,633,959	2,839,060	8,904,754	4,681,718
Cost of Sales	3,537,450	2,151,902	6,843,619	3,660,169
Gross Profit	1,096,509	687,158	2,061,135	1,021,549
Operating Expense:
Selling Expense	204,548	121,891	367,950	226,405
Administrative Expense	240,507	181,237	463,574	344,522
Total Operating Expense	445,055	303,128	831,524	570,927
Operating Income	651,454	384,030	1,229,611	450,622
Other Income (Expense):
Interest Income	1,555	2,391	3,221	4,396
Total Other Income	1,555	2,391	3,221	4,396
Income Before Income Taxes	653,009	386,421	1,232,832	455,018
Income Tax Provision	254,000	149,000	478,000	175,500
Net Income	$ 399,009	$ 237,421	$ 754,832	$ 279,518
Basic Income per share (in dollars per share)	$ 0.08	$ 0.05	$ 0.15	$ 0.06
Diluted Income per share (in dollars per share)	$ 0.08	$ 0.05	$ 0.15	$ 0.06
Weighted average number of shares outstanding
- Basic (in shares)	5,183,895	5,004,120	5,183,895	4,968,425
- Diluted (in shares)	5,183,895	5,099,626	5,183,895	5,081,290

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Income Taxes

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Income Taxes

7. Income Taxes

As of April 30, 2012, 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, 2012 and at October 31, 2011 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, 2012 and October 31, 2011, net deferred tax assets were $191,387.

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Inventories

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Inventories

5. Inventories

Inventories consisted of the following:

		April 30, 2012		October 31, 2011
Raw materials	$	1,341,317	$	1,009,648
Work in process		2,628,106		1,429,606
Finished goods		261,846		143,846
	$	4,231,269	$	2,583,100

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Stock-Based Compensation

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Stock-Based Compensation

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, had an exercise price of $0.30 and a term of 10 years. 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 six months ended April 30, 2012 and 2011 related to stock options. The stock options were exercised in April 2011 and 250,000 shares of common stock were issued.

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Debt

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Debt

6. Debt

The Company has a $1,000,000 line of credit agreement with CenterState Bank of Florida. The line of credit allows the Company to borrow against the Company’s accounts receivable, inventory and property, plant and equipment. The line of credit bears interest at the prime rate plus one-quarter percent with a floor of 4.0%. The line of credit had no outstanding balance at April 30, 2012 and October 31, 2011, and the unused line of credit was $1,000,000 at April 30, 2012. The credit agreement contains covenants that require the Company to provide annual audited financial statements, quarterly internal financial statements and monthly accounts receivable and accounts payable aging reports to the lender.

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Commitments and Contingencies

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Commitments and Contingencies

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 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. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Accounts Receivable & Allowance for Doubtful Accounts

(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. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

5. Inventories

Inventories consisted of the following:

		April 30, 2012		October 31, 2011
Raw materials	$	1,341,317	$	1,009,648
Work in process		2,628,106		1,429,606
Finished goods		261,846		143,846
	$	4,231,269	$	2,583,100

Revenue Recognition

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from installations and start-ups and repair services in the period in which the service is provided.

Basic and Diluted Income Per Share

(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, 2012 and April 30, 2011 was -0- shares and 112,865 shares, respectively.

Warranties and Service

(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:

		2012		2011
Beginning balance	$	54,859	$	49,859
Warranty service provided		(121,250)		(76,543)
New product warranties		119,177		77,021
Changes to pre-existing warranty accruals		7,214		(4,522)
Ending balance	$	60,000	$	54,859

Fair Value of Financial Instruments

(f) Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.

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STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $)	Common Stock	Additional Paid-In Capital	Retained Earnings (Deficit)	Treasury Stock	Total
Beginning Balance, Value at Oct. 31, 2011	$ 64,299	$ 6,419,687	$ (510,568)	$ (681,410)	$ 5,292,008
Beginning Balace, Shares at Oct. 31, 2011	6,429,875			1,245,980
Net Income	0	0	754,832	0	754,832
End Balance, Value at Apr. 30, 2012	$ 64,299	$ 6,419,687	$ 244,264	$ (681,410)	$ 6,046,840
End Balance, Shares at Apr. 30, 2012	6,429,875			1,245,980

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Related Party Transactions

3 Months Ended

Apr. 30, 2012

Notes to Financial Statements

Related Party Transactions

4. Related Party Transactions:

The Company has a note receivable from its former president and director totaling $10,749 and $17,826 at April 30, 2012 and October 31, 2011, 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 $49,966, payable through January 2013 at $5,813 per month. 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 The American Baler Company, a competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from, The American Baler Company for the six months ended April 30, 2012 or 2011.