UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON D.C. 20549

                               FORM 10-KSB

(Mark one)

[x] Annual report under Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended November 30, 2005

[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from ______ to _______

Commission File No. 0-5131
                      ART'S-WAY MANUFACTURING CO., INC.
              (Name of Small Business Issuer In Its Charter)

              DELAWARE                            42-0920725
   _________________________             ________________________________
(State or Other Jurisdiction of        (I.R.S. Employee Identification No.)
Incorporation or Organization)

        5556 Highway 9
	Armstrong, Iowa                             50514
   _________________________             ________________________________
     (Address of Principal
       Executive Offices)	                  (Zip Code)
                          (712) 864-3131
        (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

                                             None

Securities registered pursuant to Section 12(g) of the Act:

                                             Common stock $.01 par value

Check whether the issuer is not required to file reports pursuant to
Section 13 on 15(d) of the Exchange Act. [ ]

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing for the past 90 days.
Yes [X] No []

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this form 10-KSB. [ x ]

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

State issuer's revenues, for its most recent fiscal year: $14,618,904.

State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked prices of
such common equity as of a specified date written the past 60 days:
$12,564,326. As of Feburary 10, 2006.

State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: As of February 3,
2006, there were 1,963,176 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Definitive Proxy
Statement for the registrant's 2006 Annual Meeting of Stockholders to be
filed within 120 days of November 30, 2005, are incorporated by
reference into Part III of this Form 10-KSB.

Transitional Small Business Issuer Forecast (check one): Yes [] No [X]


              Art's-Way Manufacturing Co., Inc. and Subsidiary
                          Index to Annual Report
                             on Form 10-KSB

                                                           Page
Part I

   Item 1 - Description of Business                      4 thru 6

   Item 2 - Description of Property                          6

   Item 3 - Legal Proceedings                                7

   Item 4 - Submission of Matters to a Vote of
            Security Holders                                 7

Part II

   Item 5 - Market for Common Equity and Related
            Stockholder Matters                              8

   Item 6 - Management's Discussion and Analysis or
            Plan of Operation                            9 thru 14

   Item 7 - Financial Statements                             14

   Item 8 - Changes in and Disagreements with
            Accountants on Accounting and
            Financial Disclosure                             15

   Item 8A - Controls and Procedures                         15

   Item 8B - Other Information                               15

Part III

   Item 9 - Directors and Executive Officers of
            the Registrant                                   16

   Item 10 - Executive Compensation                          16

   Item 11 - Security Ownership of Certain Beneficial
             Owners and Management And Related
             Stockholder Markets                             16

   Item 12 - Certain Relationships and
             Related Transactions                            16

   Item 13 - Exhibits                                        16

   Item 14 - Principal Accountant Fees & Services            16



                                  PART I

Item 1. Description of Business

  (a) Business Development

  Art's-Way Manufacturing Co., Inc. began operations as a farm equipment
  manufacturer in 1956. Our manufacturing plant is located in Armstrong,
  Iowa.

  On July 28, 2003, we purchased the assets of Obeco, Inc., a manufacturer
  of steel truck bodies located in Cherokee, Iowa, and changed the name to
  Cherokee Truck Bodies, Inc. The purchase included all inventory,
  intellectual materials, machinery, tooling, fixtures and the company
  name. We also acquired the real estate loan in the amount of $165,725.

  In May 2004, we moved the Cherokee Truck Bodies operation from Cherokee
  Iowa, to the facility in Armstrong. The move reduced overhead
  significantly and enables us to focus on sales growth.

  In August 2004, we delivered our new 6812 Sugar Beet Harvester. Sales
  were strong, as we introduced the industry's only 12 row harvester. End
  users were excited about the overall performance. In 2006 we will again
  bring an updated model to market to enhance customer satisfaction.

  In November 2004, we launched a second new product offering, our 5165
  Grinder Mixer, with faster cycle times and increased capacity. Sales
  exceeded our expectations.

  We continue to focus our efforts in research and design. In 2005 we saw
  sales of our feed processing equipment double, with the November 2004
  introduction of our new model 5165 Grinder Mixer. The sugar beet
  industry is still excited about our model 6812 which we continue to
  enhance with each new model year.

  During the 2005 beet harvesting season we field tested a new single pass
  defoliator; we project that this product will be in production and in
  the field for the 2006 beet harvest. We also tested a new exportable
  beet harvester. The export unit is designed off of our model 6812 but
  down sized to fit in a cargo container for shipping.

  In October 2005 we purchased certain assets of Vessel Systems Inc., a
  manufacturer of pressurized tanks and vessels, located in Dubuque, Iowa.
  We purchased the inventory, fixed assets and accounts receivable for the
  purchase price of $844,284, paid in cash. We will operate this new
  business through our wholly-owned subsidiary, Art's-Way Vessels, Inc.

  (b) Business of Issuer

  We manufacture specialized farm machinery under our own and private
  labels, steel truck bodies under the label of Cherokee Truck Bodies and
  now pressure vessels through our wholly owned subsidiary of Art's-Way
  Vessels, Inc.

  Equipment manufactured by the Company under our own label includes:
  portable & stationary animal feed processing equipment and related
  attachments used to mill and mix feed grains into custom animal feed
  rations; a high bulk mixing wagon to mix animal feeds containing silage,
  hay and grain; a line of stalk shredders; sugar beet and potato
  harvesting equipment; and a line of land maintenance equipment, edible
  bean equipment, moldboard plows and grain drill equipment.

  Private label manufacturing of farm equipment accounted for 15% and 13%
  of total sales for the years ended November 30, 2005 and 2004,
  respectively.

  Art's-Way labeled products are sold by farm equipment dealers throughout
  the United States. There is no contractual relationship with these
  dealers to distribute our products, and dealers may sell a competitor's
  product line.

  Automotive and other dealers throughout the United States sell Cherokee
  Truck Bodies labeled products.

  Art's-Way Vessels, Inc. sells pressurized vessels, both code and
  non-code. Vessels can range from 3 feet in length up to 40 feet. The
  diameter can be between 18 inches to 8 feet. These vessels are sold to
  manufacturing facilities that will use the vessel as a component part of
  their end product.

  Raw materials, for both Art's-Way Manufacturing and Art's-Way Vessels,
  Inc., in all aspects of our business are acquired from domestic and
  foreign sources and normally are readily available.

  We maintain manufacturing rights on several products covering unique
  aspects of design and have trademarks covering product identification.
  We pay royalties for use of certain manufacturing rights. Our material
  royalty agreement is with CNH. The agreement with CNH will run through
  September 2006 on moldboard plows. In our opinion, our trademarks and
  licenses are of value in securing and retaining business.

  Sales of our agricultural products are seasonal; however, we have tried
  to decrease this impact of seasonality through the development of
  mowers, shredders and beet harvesting machinery coupled with private
  labeled products, as the peak periods for these different products occur
  at different times. Similar to other manufacturers in the farm equipment
  industry, we are affected by factors peculiar to the farm equipment
  field, including items such as fluctuations in farm income resulting
  from the change in commodity prices, crop damage caused by weather and
  insects, government farm programs and other unpredictable variables such
  as interest rates.

  Sales of truck bodies are somewhat seasonal, being affected by the cold
  months of winter when sales tend to decrease.

  We believe that pressure vessel sales do not tend to be seasonal.

  We have an OEM supplier agreement with CNH (Case New Holland). Under the
  OEM agreement we have agreed to supply CNH's requirements for certain
  feed processing and service parts under CNH's label. The agreement has
  no minimum requirements and can be cancelled upon certain conditions.
  For the years ended November 30, 2005 and 2004, sales under the CNH
  label aggregated approximately 8% of total sales.

  Our feed processing products, including private labeled units, compete
  with similar products of many other manufacturers. We estimated that
  there are more than 15 competitors producing similar products although
  total market statistics are not available. We believe that our products
  are competitively priced with greater diversity than most competitor
  product lines. Beet harvesting equipment is manufactured by three
  companies that have a significant impact on the market. We estimate our
  share of the domestic market is estimated to be about 35%. Other
  products such as mowers, shredders and grain drills are manufactured by
  approximately 20 other companies. We believe our products are
  competitively priced with above average quality and performance, in a
  market where price, product performance and quality are principal
  elements.

  Another important part of our business is after market service parts
  that are available to keep our branded and OEM produced equipment
  operating to the satisfaction of the end user.

  The backlog of orders booked in February 2006, was approximately
  $7,158,000. Art's-Way Vessels, Inc. had a backlog of $2,303,000, and
  Art's-Way Manufacturing had a backlog of $4,855,000. Art's-Way
  Manufacturing had approximately $4,707,000 in backlog a year ago.
  Overall we are looking forward to another strong year.

  We currently do no business with any local, state or federal government
  agencies.

  We are engaged in research and development work on a continual basis to
  improve the present products and create new products. In 2004 research
  and development costs were down $407,000 as we moved from prototype into
  production. In 2005 we invested heavily in research and development,
  $285,000 compared to only $10,000 in 2004. For further information
  please see Part II, Item 6, Results of Operations. We worked with an
  outside engineering firm to develop a new exportable beet harvester.

  Art's-Way Vessels, Inc. produces custom tanks and vessels that are
  manufactured to customer blue prints. Art's-Way Vessels, Inc. incurred
  no research and development costs in 2005.

  We are subject to various federal, state and local laws and regulations
  pertaining to environmental protection and the discharge of materials
  into the environment. In 2005 we completed the installation of a new
  powder coat paint system. We are also in the process of installing a
  different paint system for our whole goods. These new paint systems will
  significantly improve the quality of our paint, in terms of luster,
  hardness and longevity. The paint systems will be located in a new
  location within the plant, as we redesign our workflow to optimize
  productivity. We have obtained the proper permits that allow us to
  change the paint systems and remain in compliance with all applicable
  laws and regulations.

  During the year ended November 30, 2005, we had peak employment of 97
  full-time and 19 part-time employees, of which 90 were factory and
  production employees, 5 were engineers and engineering draftsman, 17
  were administrative employees, and 4 were in sales and sales management.
  Employee levels fluctuate based upon the seasonality of the product
  line.

Item 2. Description of Property

  Our existing executive offices, production and warehousing facilities in
  Armstrong are built of hollow clay block/concrete and contain
  approximately 240,000 square feet of usable space. Most of these
  facilities were constructed after 1965 and are in good condition. We own
  approximately 127 acres of land west of Armstrong, which includes the
  factory and inventory storage space. We currently lease excess land to
  third parties for farming.

  The facility in Dubuque is a leased building. The building was
  constructed in 2004 and is in excellent condition.

Item 3. Legal Proceedings

  We are from time to time a party to various legal actions arising in the
  normal course of business. We believe that there are no threatened or
  pending proceedings against us that if determined adversely, would have
  a material adverse effect on our business or financial position.

Item 4. Submission of Matters to a Vote of Security Holders

  Not Applicable.

                                  PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

  (a) Market Information

                                Per Common Stock Bid Prices by Quarter
                                  Year ended              Year ended
                               November 30, 2005      November 30, 2004
                                High        Low	       High        Low
      First Quarter            8.790	   5.50       5.360      4.530
      Second Quarter          11.500      5.110       5.600      4.990
      Third Quarter            9.050      5.110       5.360      4.620
      Fourth Quarter           5.950      4.500       6.240      4.290

  Our common stock trades on The NASDAQ Small Cap Stock Market under the
  symbol "ARTW." The range of closing bid prices shown above, are as
  reported by NASDAQ. The quotations shown reflect inter-dealer prices,
  without retail mark-up, mark-down, or commission and may not necessarily
  represent actual transactions.

  (b) Holders

  There were approximately 461 stockholders of our common stock as of
  February 6, 2006.

  (c) Dividends

  On October 27, 2005 our Board of Directors declared a dividend of $0.05
  per share to be paid on November 30, 2005 to stockholders of record as
  of November 15, 2005. The loan covenants that restricted the payment of
  dividends were waived by our lenders. While we anticipate that this
  dividend will be the first in our ongoing plan of future annual dividend
  payments, the declaration of and the amount of any future dividends will
  be governed by our financial position at that time, and may again
  require the waiver of loan covenants by our lenders.

  (d) Security Authorization for Issuance Under Equity Compensation Plans.

                Number of securities  Weighted-average   Number of securities
                 to be issued upon    exercise price of   remaining available
                   exercise of          Outstanding       for future issuance
                outstanding options,      options,           under equity
                warrants and rights  Warrants and rights  compensation plans
 	                                                     (excluding
                                                         securities reflected
                                                          in columns (a))
Equity compensation
plans approved
by security holders   (a) 25,000       (b) $3.22            (c) 5,000

Equity compensation
plans not approved
by security holders            -                                    -

Total                     25,000                                5,000

Item 6. Management's Discussion and Analysis or Plan of Operation

  The following discussion of our consolidated financial condition and
  results of operations should be read in conjunction with the financial
  statements and the related notes thereto included elsewhere in this Form
  10-KSB. The matters discussed herein contain forward-looking statements
  within the meaning of Section 21E of the Securities Exchange Act of
  1934, as amended, and Section 27A of the Securities Act of 1933, as
  amended, which involve risks and uncertainties. All statements other
  than statements of historical information provided herein may be deemed
  to be forward-looking statements. Without limiting the foregoing the
  words "believes", "anticipates", "plans", "expects" and similar
  expressions are intended to identify forward-looking statements. Factors
  that could cause actual results to differ materially from those in the
  forward-looking statements include our degree of financial leverage, the
  factors described in Item 1 of this Form 10-KSB, risks associated with
  acquisitions and in the integration thereof, risks associated with
  supplier/OEM agreements, dependence upon the farm economy and the impact
  of competitive services and pricing, as well as other risks referenced
  from time to time in our filings with the SEC. Readers are cautioned not
  to place undue reliance on these forward-looking statements, which
  reflect management's analysis, judgment, belief or expectation only as
  of the date hereof. We undertake no obligation to publicly revise these
  forward-looking statements to reflect events or circumstances that arise
  after the date hereof.

  Management's Discussion and Analysis of Financial Condition and Results
  of Operations

  Critical Accounting Policies

  We have identified the following accounting policies as critical to our
  operations.

  Revenue Recognition - Revenue is recognized when risk of ownership and
  title pass to the buyer, generally upon the shipment of the product. In
  very limited circumstances, and only upon a written customer agreement,
  we recognize revenue upon the production and invoicing of the products.

  Inventory Valuation - Inventories are stated at the lower of cost or
  market, and cost is determined using the first-in, first-out (FIFO)
  method. Management monitors the carrying value of inventories using
  inventory control and review processes that include, but are not limited
  to, sales forecast review, inventory status reports, and inventory
  reduction programs. We record inventory write downs to market based on
  expected usage information for raw materials and historical selling
  trends for finished goods. Write downs of inventory create a new cost
  basis. Additional write downs may be necessary if the assumptions made
  by management do not occur. We classified inventories not expected to be
  consumed in our manufacturing process or our parts fulfillment business
  within our normal operating cycle as a non-current asset in the
  accompanying balance sheets.

  Income Taxes - Income taxes are accounted for under the asset and
  liability method. Deferred tax assets and liabilities are recognized for
  the estimated future tax consequences attributable to differences
  between the financial statement carrying amounts of existing assets and
  liabilities and their respective tax bases and operating losses.
  Deferred tax assets and liabilities are measured using enacted tax rates
  in effect for the year in which those temporary differences are expected
  to be recovered or settled. The effect on deferred tax assets and
  liabilities of a change in tax rates is recognized in income in the
  period that includes the enactment date. In assessing the realizability
  of deferred tax assets, management considers whether it is more likely
  than not that some portion or all of the deferred tax assets will not be
  realized. The ultimate realization of deferred tax assets is entirely
  dependent upon the generation of future taxable income during the
  periods in which those temporary differences become deductible.
  Management considers the scheduled reversals of deferred tax
  liabilities, projected future taxable income, and tax planning
  strategies in making this assessment.

  Results of Operations

  Twelve months ended November 30, 2005 compared to the twelve months
  ended November 30, 2004

  Our consolidated revenue of $14,619,000 for 2005 represents a 14.3%
  increase when compared to $12,784,000 for 2004. Art's-Way Vessels, Inc.,
  had revenues of $358,000, for the period from its acquisition on October
  4, 2005 through November 2005. Art's-Way Manufacturing had revenues
  totaling $14,261,000. Art's-Way Manufacturing's branded products
  increased by $1,099,000 while OEM sales increased by $378,000.
  Gross profit as a percent of sales was 30% for 2005 compared to 28% for
  2004.  The agricultural markets we serve are generally forecasted to remain
  constant in 2006, yet we anticipate that our sales and profits before
  tax for 2006 will increase slightly as we bring new or improved products
  to market.

  Operating expenses in 2005 increased $210,000 from 2004. Art's-Way
  Vessels, Inc. represents 123,000 of that increase, while Art's-Way
  Manufacturing represents $87,000 of the total. As a percent of sales,
  operating expenses were 19% and 20%, respectively, when comparing 2005
  and 2004.

  Engineering expenses for Art's-Way Manufacturing increased by $294,000.
  This was due to the increase in new product development expenses of
  $275,000, for our new export beet harvester and new defoliator. We also
  engineered a new domestic defoliator. We increased our engineering staff
  by one degreed engineer and an additional part-time drafter. We also
  purchased new engineering software. We believe that by investing in our
  engineering department and research and development we are investing in
  the future of our company. We believe that by developing new products
  and updating our current products we will secure and better our position
  in our markets and allow the company to grow sales.

  Selling expenses for Art's-Way Manufacturing decreased $54,000 from 2005
  to 2004. Approximately $24,000 of that decrease was due to a reduction
  in commission expense as the Cherokee Truck Bodies sales decreased. In
  2004 commissions were up due to increased payments to a sales rep that
  helped to design the model 6812 harvester. That cost of approximately
  $18,000 went away in 2005. The decrease in commissions accounted for 78%
  of the decrease. In 2004 we also incurred the costs for design and
  formulation of manuals for the new model 6812, and this accounted for
  20% of the cost reduction.

  General and administrative expenses decreased by $30,000. The addition
  of Art's-Way Vessels, Inc. resulted in an increase of $123,000.
  Art's-Way Manufacturing accounted for a decrease of $153,000. In 2004 we
  moved the Cherokee Truck Bodies operation from Cherokee, Iowa to
  Armstrong and as a result of the move we incurred costs totaling
  $59,000. In 2005 our legal fees decreased $30,000 as we settled two
  suits in early 2005. Like many other businesses, we struggle with the
  ever rising costs of health insurance, and our overall health insurance
  costs increased over 20% in 2005. We chose to hold the amount that the
  company contributed at a constant and passed the cost of the increase on
  to our employees. As a result some of our employees elected to drop the
  coverage, resulting in a decrease in our group insurance costs of
  $28,000. During 2005 our general and administrative depreciation expense
  also decreased approximately $13,000. The remainder of the decrease
  comes from numerous other small decreases.

  Art's-Way Manufacturing experienced a 28% increase in interest and other
  expenses in 2005 compared to 2004. Interest expense was up 45%, compared
  to 2004, due to higher average loan balances, as we took an additional
  $1,000,000 to finance equipment purchases and acquisitions, and
  increased interest rates. This increase was offset by an increase in
  other income due primarily to larger cash balances, caused by increased
  customer deposits and profits from operations that earned interest.

  Income before tax in 2005 was up 60% to $1,474,000 compared to $924,000
  in 2004. Net income of $977,000 for 2005 compared to $1,402,000 in 2004.
  The decline in our net income is the result of the reversal of the
  deferred tax valuation allowance that was established in prior years and
  during 2004 we reduced this allowance resulting in the recognition of
  income tax benefit of approximately $479,000. Fiscal 2005 reflected
  normalized tax expense resulting in $497,000 of tax expense, a $976,000
  increase over 2004. Although we are recording tax expense, cash payments
  for income taxes was only $53,000 during 2005 due to the utilization of
  our operating loss carryforwards.

  We continue to strive to reduce costs, and continue our move to a lean
  manufacturing environment. We also continue to invest in our future
  through research and development as well as new equipment and
  acquisitions. We believe as of 2005, our overall company has
  strengthened through the consolidation of manufacturing facilities, new
  product offerings and the acquisition of Art's-Way Vessels, Inc. The
  backlog of orders booked in February 2006, totaled approximately
  $7,158,000. Art's-Way Vessels, Inc. had a backlog of $2,303,000, and
  Art's-Way Manufacturing had a backlog of $4,855,000. Art's-Way
  Manufacturing had approximately $4,707,000 in backlog a year ago.
  Overall we are looking forward to another strong year.

  Liquidity and Capital Resources

  Twelve months ended November 30, 2005

  Our main sources of funds were from our ability to generate cash from
  operations. Cash provided from operations was $2,497,000 for fiscal year
  2005. We are very excited about our ability to generate cash and what
  that means for our company as we look to the future. We will continue
  reinvesting in our company to strengthen its foundation and maximize
  long-term growth.

  In 2005 we paid a dividend to our stockholders for the
  first time in several years. This had a cash impact of $98,000.

  Twelve months ended November 30, 2004

  Our main sources of funds were obtained from our line of credit with
  West Bank. These funds were used to purchase fixed assets, with the
  balance used towards working capital. Capital expenditures for the year
  ended November 30, 2004 were $563,000 consisting mainly of two major
  expenditures. We purchased a paint line costing $330,000 and are in the
  installation process. We also invested $113,000 in tooling for the new
  model 6812 sugar beet harvester. These two items totaled 80% of our
  capital expenditures in 2004.

  Inventories increased significantly in 2004; $6,298,000 compared to
  $3,447,000 in 2003. This was partially due to the significant increase
  in steel prices during 2004. Nearly our entire inventory is steel based
  and we estimate that 20% of the increase was driven by steel prices. We
  also carried approximately $1,000,000 of inventory related to our sugar
  beet harvesters. We had intended for a large build in 2004, however as
  we moved our new harvester from prototype to production, we ran into
  typical transition issues. We will consume all carryover inventories in
  the 2005 build of harvesters. At the end of 2004 we also purchased large
  amounts of raw steel for our grinder mixer build, but the build was
  delayed slightly and the units were not shipped until 2005. This demand
  on cash was partially offset by the increase in accounts payable related
  to these inventory purchases.

  Accrued expenses for the fiscal year ended 2004 were up as a result of
  rising insurance costs and increased commissions' payable due to
  increased sales in November.

  Capital Resources

  We have long-term financing through West Bank. Credit facilities consist
  of three loan agreements totaling $5,500,000.

  Facility #1 is a revolving line of credit for $3,500,000 with advances
  funding the working capital, letter of credit and corporate credit card
  needs that mature on March 31, 2006. We are in the process of securing an
  extension for an additional year and expect to receive this extension. The
  interest rate is West Bank's prime interest rate plus 1%, adjusted daily.
  Monthly interest only payments are required and the unpaid principal is due
  on the maturity date. Collateral consists of a first position on our assets
  owned including, but not limited to inventories, accounts receivable,
  machinery and equipment. As of November 30, 2005 and 2004, the Company
  had borrowed $0 and $870,071 respectively, against Facility #1.

  Facility #2 is long-term financing for $2,000,000 that is supported by a
  guarantee issued by the United States Department of Agriculture (USDA)
  for 75% of the loan amount outstanding. The variable interest rate is
  West Bank's prime interest rate plus 1.5%, adjusted daily, monthly
  principle and interest payments are amortized over 20 years with final
  maturity date of March 31, 2023.

  Facility #3 is long-term financing for $1,000,000 that is also supported
  by a guarantee issued by the USDA for 75% of the loan amount outstanding.
  The loan for $1,000,000 was used for new product development.

  Collateral for Facilities #2 and #3 is primarily real estate with a second
  position on assets of Facility #1. The USDA subordinates collateral rights
  in all assets other than real estate in an amount equal to West Bank's other
  credit commitments. As of November 30, 2005 the outstanding balance on
  Facility #2 and #3 was $1,754,866 and $974,356 respectively compared to
  $1,836,565 and $0 at November 30, 2004.

  J. Ward McConnell, Jr. was required to personally guarantee Facility #1,
  Facility #2 and Facility #3 on an unlimited and unconditional basis. The
  guarantees of Facility #1, Facility #2 and Facility #3 shall be reduced
  after the first three years to a percentage representing his ownership of
  the Company. Mr. McConnell's guarantees shall be removed from Facility #1
  and Facility #2 in the event that his ownership interest in the Company is
  reduced to a level less than 20% after the first three years of the loan.
  The Company compensates Mr. McConnell for his personal guarantees at an
  annual percentage rate of 2% of the outstanding balances paid monthly.
  Guarantee fee payments to Mr. McConnell were approximately $56,000 and
  $47,000, for the years ended November 30, 2005, and 2004, respectively.

  Other terms and conditions of all three facilities include providing
  monthly internally prepared financial reports including accounts
  receivable aging schedules and borrowing base certificates and year-end
  audited financial statements.  The borrowing bases shall limit advances
  from Facility #1 to 60% of accounts receivable less than 90 days, 60% of
  finished goods inventory, 50% of raw material inventory and 50% of
  work-in-process inventory plus 40% of appraisal value of machinery and
  equipment. Covenants include, but are not limited to, restrictions on debt
  service coverage ratio, debt/tangible net worth ratio, current ratio,
  capital expenditures, and tangible net worth. During the year ended
  November 30, 2005, we violated the restriction on capital expenditures,
  payment of dividends and loan to third parties. Under our loan agreement
  West Bank would have had the right to call the loan and/or increase the
  interest rate by three percentage points. As stated above, we provide
  West Bank with monthly financial statements, as well as a cash flow
  statement on a monthly basis.  Therefore they were aware of the amount of
  capital expenditures we had incurred throughout the year. They were also
  aware of the decision to pay dividends, and the inter-company loan to
  Art's-Way Vessels, Inc. in connection with the asset purchase from
  Vessels Systems, Inc., well in advance of the actual expenditures. The
  bank views this spending favorably, and waived the covenants.

  Contractual Obligations

  Contractual Obligation             Payments due by period
                            Total    < 1 yr   1-3 yrs  3-5 yrs   >5 yrs
   Long-term debt
     including interest   3,825,193  386,316  666,600  666,600  2,105,677
   Capital lease obligation       0        0        0        0          0
   Operating lease
     obligation             125,000  125,000        0        0          0
   Purchase Obligations      80,000   80,000        0        0          0
   Other                          0        0        0        0          0
     Total                4,030,193  591,316  666,600  666,600  2,105,677

   * Based on current interest rates at November 30, 2005.

  Our current ratio and its working capital are as shown in the following
  table:

                             November 30, 2005       November 30, 2004
      Current Assets            $9,481,557               $7,946,007
      Current Liabilities        2,060,486                2,513,444
      Working Capital           $7,421,071               $5,432,563

      Current Ratio                 4.6                      3.2

  Utilization of Deferred Tax Assets

  At November 30, 2005 and 2004, we had established a deferred tax asset
  valuation allowance of approximately $41,000. In assessing our deferred
  tax assets, management considers whether it is more likely than not that
  some portion of all of the deferred tax assets will not be realized. The
  ultimate realization of deferred tax assets is dependent upon the
  generation of future taxable income during the periods in which those
  temporary differences become deductible. In 2004 we utilized a portion
  of our net operating loss carryforward. Beginning in fiscal 2005 our
  financial results reflected the accrual of income tax expenses of
  $497,000, as opposed to 2004 when we recorded a net tax benefit of
  $479,000.

  For tax purposes, at November 30, 2005 we have utilized all of our net
  operating loss carryforwards. We had approximately $132,000 of research
  and development credits and $41,000 of state tax credits which begin to
  expire in the 2012 and 2007, respectively. We also had $41,000 in AMT
  credits that will not expire.

  Off-Balance Sheet Arrangements

  We have no off-balance sheet arrangements.

Item 7 Financial Statements





Report of Independent Registered Public Accounting Firm

To the Board of Directors
Art's-Way Manufacturing Co., Inc.
Armstrong, Iowa

We have audited the consolidated balance sheets of Art's-Way
Manufacturing Co., Inc. and subsidiary as of November 30, 2005 and 2004,
and the related consolidated statements of operations, stockholders'
equity and cash flows for the two years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Art's-Way Manufacturing Co., Inc. and subsidiary as of November 30, 2005
and 2004, and the results of their operations and their cash flows for
the years then ended in conformity with U.S. generally accepted
accounting principles.

Des Moines, Iowa
January 9, 2006


                      ART'S-WAY MANUFACTURING CO., INC.

                            Table of Contents

                                                           Page
Consolidated Statements of Operations -
  Years ended November 30, 2005 and 2004                    F-3

Consolidated Balance Sheets -
  November 30, 2005 and 2004                                F-4

Consolidated Statements of Stockholders' Equity -
  Years ended November 30, 2005 and 2004                    F-5

Consolidated Statements of Cash Flows -
  Years ended November 30, 2005 and 2004                    F-6

Notes to Consolidated Financial Statements -
  Years ended November 30, 2005 and 2004                F-7 - F-17


                      ARTS-WAY MANUFACTURING CO., INC.
                    Consolidated Statements of Operations
                   Years ended November 30, 2005 and 2004

                                                 2005             2004
Net sales                                     $14,618,904     $12,784,396
Cost of goods sold                             10,213,951       9,186,971
     Gross profit                               4,404,953       3,597,425

Expenses:
     Engineering                                  483,831         189,587
     Selling                                      680,219         734,141
     General and administrative                 1,551,213       1,581,458
        Total expenses                          2,715,263       2,505,186
        Income from operations                  1,689,690       1,092,239

Other income (expense):
     Interest expense                            (261,162)       (180,013)
     Other                                         45,792          11,416
        Total other expense                      (215,370)       (168,597)
        Income before income taxes              1,474,320         923,642
Income tax (benefit)                              497,003        (478,631)
        Net income                               $977,317      $1,402,273

Net income per share:
     Basic                                          $0.50           $0.72
     Diluted                                         0.50            0.72


See accompanying notes to consolidated financial statements.


                      ARTS-WAY MANUFACTURING CO., INC.
                        Consolidated Balance Sheets
                         November 30, 2005 and 2004

	Assets	                                  2005             2004
Current assets:
   Cash                                        $1,198,238        $116,001
   Accounts receivable customers,
     net of allowance for doubtful
     accounts of $46,385 and
     $30,417 in 2005 and 2004,
     respectively                                 956,391         737,008
   Inventories, net                             6,525,051       6,298,049
   Deferred taxes                                 673,000         539,000
   Real estate loan receivable                          0         165,725
   Other current assets                           128,877          90,224
       Total current assets                     9,481,557       7,946,007

Property, plant, and equipment, net             1,890,660       1,308,088
Inventories, noncurrent	                          144,871         459,792
Deferred taxes                                    191,000         786,000
Other assets                                       74,353         146,006
       Total assets                           $11,782,441     $10,645,893

    Liabilities and Stockholders
             Equity
Current liabilities:
   Notes payable to bank                               $0        $870,071
   Current portion of term debt                   223,946         174,674
   Accounts payable                               530,722         536,929
   Customer deposits                              569,354          77,975
   Accrued expenses                               736,464         853,795
       Total current liabilities                2,060,486       2,513,444

Long term liabilities                                   0         144,766
Term debt, excluding current portion            2,558,273       1,788,242
       Total liabilities                        4,618,759       4,446,452

Stockholders equity:
   Common stock-$0.01 par value.
     Authorized 5,000,000 shares;
     issued 1,963,176 and 1,938,176
     shares in 2005 and 2004                       19,632          19,382
   Additional paid-in capital                   1,719,787       1,634,954
   Retained earnings                            5,424,263       4,545,105
       Total stockholders equity                7,163,682       6,199,441
       Total liabilities and
        stockholders equity                   $11,782,441     $10,645,893

See accompanying notes to consolidated financial statements.


                      ARTS-WAY MANUFACTURING CO., INC.
               Consolidated Statements of Stockholders Equity
                   Years ended November 30, 2005 and 2004

                         Common stock      Additional
                      Number of             paid-in     Retained
                      shares    Par value   capital     earnings      Total

Balance,
 November 30, 2003   1,938,176   $19,382   $1,634,954   $3,142,832  $4,797,168
   Net income                0         0            0    1,402,273   1,402,273
Balance,
 November 30, 2004   1,938,176   $19,382   $1,634,954   $4,545,105  $6,199,441

 Exercise of
   stock options        25,000       250       79,033            0      79,283
 Stock based
  compensation               0         0        5,800            0       5,800
 Dividends paid, $0.05
  per share                  0         0            0      (98,159)    (98,159)
   Net income                0         0            0      977,317     977,317
Balance,
 November 30, 2005   1,963,176   $19,632   $1,719,787   $5,424,263  $7,163,682

See accompanying notes to consolidated financial statements.


                      ARTS-WAY MANUFACTURING CO., INC.
                    Consolidated Statements of Cash Flows
                   Years ended November 30, 2005 and 2004

                                                     2005              2004
Cash flows from operations:
  Net income                                        $977,317       $1,402,273
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Stock based compensation                         5,800                0
     (Gain) Loss on sale of property, plant,
       and equipment                                  (8,486)           7,134
      Depreciation and amortization                  268,616          311,314
      Deferred income taxes                          461,000         (507,000)
      Changes in assets and liabilities,
       net of Vessel Systems Inc acquisition:
       (Increase) decrease in:
         Accounts receivable                          21,202          148,882
         Inventories                                 204,736       (2,827,698)
         Other current assets                        127,072           59,961
         Other, net                                   71,653          (30,000)
       Increase (decrease) in:
         Accounts payable                             (6,207)         453,055
         Customer deposits                           491,379           24,419
         Accrued expenses                           (117,331)         151,678
           Net cash provided by/(used in)
               operating activities                2,496,751         (805,982)

Cash flows from investing activities:
  Purchases of property, plant,
   and equipment                                    (378,420)        (563,116)
  Purchase of assets of Vessels Systems Inc.        (844,284)	            0
  Proceeds from sale of property,
   plant, and equipment                               22,600            2,416
           Net cash (used in)
               investing activities               (1,200,104)        (560,700)

Cash flows from financing activities:
  Proceeds from Line of Credit                             0          870,071
  Payments on Line of Credit                        (870,071)               0
  Payments of notes payable to bank                 (180,697)        (187,440)
  Payments of long-term liabilities                 (144,766)               0
  Proceeds from term debt                          1,000,000                0
  Proceeds from the exercise of stock options	      79,283                0
  Dividends paid to stockholders                     (98,159)               0
           Net cash provided by (used in)
               financing activities                 (214,410)         682,631
           Net increase/(decrease) in cash         1,082,237         (684,051)
Cash at beginning of period                          116,001          800,052
Cash at end of period                             $1,198,238         $116,001

Supplemental disclosures of cash flow information:
  Cash paid/(received) during the period for:
     Interest                                       $246,598         $177,049
     Income taxes                                     52,993           (8,323)

Supplemental schedule of investing activities:
  Vessel Systems Inc acquisition:
     Accounts Receivable                            $240,585               $0
     Inventories                                     116,817                0
     Property, plant and equipment                   486,882                0
           Cash paid                                $844,284               $0


See accompanying notes to consolidated financial statements.


                 Notes to Consolidated Financial Statements

(1)   Summary of Significant Accounting Policies

    (a) Nature of Business

      Art's-Way Manufacturing Co., Inc. is primarily engaged in the fabrication
      and sale of metal products in the agricultural sector of the United
      States economy. Major product offerings include animal feed processing
      equipment, sugar beet and potato harvesting equipment, land maintenance
      equipment, finished mowing and crop shredding equipment, seed planting
      equipment and truck bodies. A significant part of the Company's business
      is supplying hay blowers to several original equipment manufacturers
      (OEMs). Another important part of the Company's business is after market
      service parts that are available to keep its branded and OEM produced
      equipment operating to the satisfaction of the end user of the
      Company's products.

      Art's-Way Vessels, Inc. is primarily engaged in the fabrication and sale
      of pressurized vessels and tanks.

    (b) Principles of Consolidation

      The consolidated financial statements include the accounts of Art's-Way
      Manufacturing Co., Inc. and its wholly-owned subsidiary, Art's-Way
      Vessels, Inc., which became active in October 2005 after purchasing
      certain assets of Vessel Systems, Inc. All material inter-company
      accounts and transactions are eliminated in consolidation.

    (c) Accounts Receivable

      Accounts receivable are carried at original invoice amount less an
      estimate made for doubtful accounts based on a review of all outstanding
      amounts on a monthly basis.  Management determines the allowance for
      doubtful accounts by identifying troubled accounts and by using
      historical experience applied to an aging of accounts. Accounts
      receivable are written-off when deemed uncollectible. Recoveries
      of accounts receivable previously written-off are recorded when
      received. Accounts receivable are considered past due 60 days past
      invoice date.

    (d) Inventories

      Inventories are stated at the lower of cost or market, and cost is
      determined using the first-in, first-out (FIFO) method. Management
      monitors the carrying value of inventories using inventory control
      and review processes that include, but are not limited to, sales
      forecast review, inventory status reports, and inventory reduction
      programs. The Company records inventory write downs to market based
      on expected usage information for raw materials and historical selling
      trends for finished goods. Additional write downs may be necessary
      if the assumptions made by management do not occur. The Company has
      classified inventories not expected to be consumed in its
      manufacturing process or its parts fulfillment business within the
      Company's normal operating cycle as a non-current asset in the
      accompanying balance sheets.

    (e) Property, Plant, and Equipment

      Property, plant, and equipment are recorded at cost. Depreciation
      of plant and equipment is provided using the straight-line method,
      based on the estimated useful lives of the assets which range from
      three to thirty-three years.

    (f)	Income Taxes

      Income taxes are accounted for under the asset and liability method.
      Deferred tax assets and liabilities are recognized for the estimated
      future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities
      and their respective tax bases and operating losses.  Deferred tax
      assets and liabilities are measured using enacted tax rates in effect
      for the year in which those temporary differences are expected to be
      recovered or settled. The effect on deferred tax assets and liabilities
      of a change in tax rates is recognized in income in the period that
      includes the enactment date. In assessing the realizability of
      deferred tax assets, management considers whether it is more likely
      than not that some portion or all of the deferred tax assets will not
      be realized. The ultimate realization of deferred tax assets is entirely
      dependent upon the generation of future taxable income during the
      periods in which those temporary differences become deductible.
      Management considers the scheduled reversals of deferred tax
      liabilities, projected future taxable income, and tax planning
      strategies in, making this assessment.

    (g) Revenue Recognition

      Revenue is recognized when risk of ownership and title pass to the
      buyer, generally upon the shipment of the product.  Shipping costs
      charged to customers are included in net sales. Freight costs incurred
      are included in cost of goods sold. In very limited circumstances,
      and only upon a written customer agreement, we recognize revenue upon
      the production and invoicing of the products.

    (h) Research and Development

      Research and development costs are expensed when incurred. Such costs
      approximated $285,000 and $10,000 for the years ended November 30, 2005,
      and 2004, respectively.

    (i)	Income Per Share

      Basic net income per common share has been computed on the basis of the
      weighted average number of common shares outstanding. Diluted net income
      per share has been computed on the basis of the weighted average number
      of common shares outstanding plus equivalent shares assuming exercise of
      stock options.

      Basic and diluted earnings per common share have been computed based on
      the following as of November 30, 2005 and 2004:

                                             2005             2004
      Basic:
        Numerator, net income             $977,317        $1,402,273
        Denominator, average number
          of common shares
          Outstanding                    1,951,108         1,938,176
        Basic earnings per
          common share                       $0.50             $0.72
      Diluted
        Numerator, net income             $977,317        $1,402,273
        Denominator:
          Average number of common       1,951,108         1,938,176

          Effect of dilutive stock
            options                         19,113            20,281
                                         1,970,221         1,958,457

      Diluted earnings per
            common share                     $0.50             $0.72

    (j) Stock Based Compensation

      The Company accounts for stock options in accordance with the
      provisions of APB Opinion No. 25 (APB 25), Accounting for Stock
      Issued to Employees, and related interpretations.  As such,
      compensation expense would be recorded on the date of grant only
      if the current market price of the underlying stock exceeded the
      exercise price. Statement of Financial Accounting Standards No. 123
      (SFAS 123), Accounting for Stock-Based Compensation, permits entities to
      recognize as expense over the vesting period by the fair value of all
      stock-based awards on the date of grant. SFAS 123 also allows entities
      to continue to apply the provisions of APB 25 and provide pro forma net
      income and income per share disclosure for employee stock option grants,
      as if the fair-value-based method defined in SFAS 123 had been applied.
      The Company has elected to continue to apply the provisions of APB 25
      and provide the pro forma disclosure provisions of SFAS 123.

      Since the Company applies APB Opinion No. 25 in accounting for its plans,
      compensation cost has only been recognized related to stock options
      issued with an exercise price less then the grant date current fair
      value. The impact on net income and earnings per share is insignificant,
      had the Company recorded compensation cost based on the fair value at
      the grant date for its stock options under SFAS No. 123.

    (k) Use of Estimates

      Management of the Company has made a number of estimates and assumptions
      related to the reported amount of assets and liabilities, reported
      amount of revenues and expenses, and the disclosure of contingent
      assets and liabilities to prepare these financial statements in
      conformity with generally accepted accounting principles. These
      estimates include the valuation of the Company's accounts receivable,
      inventories and realizability of the deferred tax assets. Actual results
      could differ from those estimates.

    (l) Recently Issued Accounting Pronouncements

      The Financial Accounting Standards Board (FASB) has issued Statement
      No. 123 (Revised), Share-Based Payment (FAS 123(R)). This Statement
      establishes standards for accounting for transactions in which an entity
      exchanges its equity instruments for goods or services. It also
      addresses transactions in which an entity incurs liabilities in exchange
      for goods or services that are based on the fair value of the entity's
      equity instruments, or that may be settled by the issuance of those
      equity instruments. Statement No. 123(R) covers a wide range of
      share-based compensation arrangements, including share options,
      restricted share plans, performance-based awards, share appreciation
      rights and employee share purchase plans. FAS 123(R) replaces existing
      requirements under FASB Statement No. 123, Accounting for Stock-Based
      Compensation, and eliminates the ability to account for share-based
      compensation transactions using APB Opinion No. 25, Accounting for Stock
      Issued to Employees. For the Company, the Statement is effective as of
      the first interim or annual reporting period that begins after
      December 15, 2005. The Company is assessing the effects of FAS 123(R).

(2)   Allowance for Doubtful Accounts

      A summary of the Company's activity in the allowance for doubtful
      accounts is as follows:

                                          2005            2004

        Balance, beginning              $30,417         $39,250
         Provision charged to expense    19,909          16,100
         Less amounts charged-off        (3,941)        (24,933)
        Balance, ending                 $46,385         $30,417

(3)   Inventories

      Major classes of inventory are:
                                          2005             2004
        Raw materials                  $2,820,591       $2,867,914
        Work in process                   455,077        1,495,985
        Finished goods                  3,394,254        2,393,942
                                       $6,669,922       $6,757,841

      Inventories as of November 30, 2005 and 2004 are stated net of a
      reserve for slow moving inventory of approximately $923,000 and
      $1,071,000, respectively.

(4)   Property, Plant, and Equipment

      Major classes of property, plant, and equipment are:

                                          2005             2004
          Land                          $180,909         $180,909
          Buildings and improvements   2,704,570        2,679,055
          Manufacturing machinery
           and equipment               9,163,149        8,516,686
          Trucks and automobiles         104,016          104,016
          Furniture and fixtures         110,834          119,882
                                      12,263,478       11,600,548
          Less accumulated
           depreciation               10,372,818       10,292,460
          Property, plant
           and equipment              $1,890,660       $1,308,088

(5)   Accrued Expenses

      Major components of accrued expenses are:

                                          2005             2004
          Salaries, wages,
           and commissions              $371,680         $412,663
          Accrued warranty expense       131,832          119,912
          Other                          232,952          321,220
                                        $736,464         $853,795

(6)   Product Warranty

      The Company offers warranties of various lengths to its customers
      depending on the specific product and terms of the customer purchase
      agreement. The average length of the warranty period is 1 year from
      date of purchase. The Company's warranties require it to repair or
      replace defective products during the warranty period at no cost to
      the customer. The Company records a liability for estimated costs
      that may be incurred under its warranties. The costs are estimated
      based on historical experience and any specific warranty issues that
      have been identified. Although historical warranty costs have been
      within expectations, there can be no assurance that future warranty
      costs will not exceed historical amounts. The Company periodically
      assesses the adequacy of its recorded warranty liability and adjusts
      the balance as necessary.

      Changes in the Company's product warranty liability for the years
      ended November 30, 2005, and 2004 are as follows:

                                          2005             2004

          Balance, beginning            $119,912          $59,207
            Settlements made in cash
             or in-kind                 (294,633)        (158,216)
            Warranties issued            306,553          218,921
          Balance, ending               $131,832         $119,912

(7)   Loan and Credit Agreements

      We have a revolving line of credit for $3,500,000 with advances
      funding the working capital, letter of credit and corporate credit
      card needs that mature on March 31, 2006. The interest rate is West
      Bank's prime interest rate, adjusted daily. Monthly interest only
      payments are required and the unpaid principal is due on the maturity
      date. Collateral consists of a first position on assets owned by the
      Company including, but not limited to inventories, accounts receivable,
      machinery and equipment. As of November 30, 2005 and 2004, the Company
      had borrowed none and $870,071, respectively. Other terms and conditions
      of the debt with West Bank include providing monthly internally
      prepared financial reports including accounts receivable aging schedules
      and borrowing base certificates and year-end audited financial
      statements. The borrowing base shall limit advances from line of credit
      to 60% of accounts receivable less than 90 days, 60% of finished goods
      inventory, 50% of raw material inventory and 50% of work-in-process
      inventory plus 40% of appraisal value of machinery and equipment.

      J. Ward McConnell, Jr. was required to personally guarantee the debt
      with West Bank on an unlimited and unconditional basis. The guarantee
      of the term debt shall be reduced after the first three years to a
      percentage representing his ownership of the Company. Mr. McConnell's
      guarantee shall be removed from the term debt in the event that his
      ownership interest in the Company is reduced to a level less than
      20% after the first three years of the loan. The Company compensates
      Mr. McConnell for his personal guarantee at an annual percentage rate
      of 2% of the outstanding balance to be paid monthly. Guarantee fee
      payments to Mr. McConnell were approximately $53,000 and $47,000,
      for the years ended November 30, 2005, and 2004, respectively.  A
      summary of the Company's term debt is as follows:

                                          2005             2004
        West Bank loan payable in
         monthly installments of
         $17,776 including interest at
         Bank's prime rate plus 1.5%
         due Mach 31, 2023 (A) (B)     $1,754,866       $1,836,565

        West Bank loan payable in
         monthly installments of
         $10,000 including interest at
         Bank's prime rate plus 1.5%
         due March 31, 2015 (A) (B)       974,356               --

        State of Iowa Community
         Development Block Grant
         promissory note at 0% interest,
         maturity 2006 with quarterly
         principal payments of $11,111     33,334           77,778

        State of Iowa Community
         Development Block Grant
         local participation promissory
         notes at 4% interest, maturity
         2006, with quarterly principal
         payments of $7,007                19,663           48,573

           Total term debt              2,782,219        1,962,916
         Less current portion of
           term debt                      223,946          174,674
                Term debt, excluding
                 current portion       $2,558,273       $1,788,242

      (A) Notes are supported by a guarantee issued by the United States
      Department of Agriculture (USDA) for 75% of the loan amount outstanding.
      Collateral for these loans are primarily real estate with a second
      position on assets securing the line of credit. The USDA subordinates
      collateral rights in all assets other than real estate in an amount
      equal to West Bank's other credit commitments.

      (B) Covenants include, but are not limited to, restrictions on payment
      of dividends, debt service coverage ratio, debt/tangible net worth ratio,
      current ratio, limitation on capital expenditures, and tangible net
      worth. During the year ended November 30, 2005, and 2004, the Company
      violated certain debt covenants that were waived.

      A summary of the minimum maturities of term debt follows for the years
      ending November 30:

                 Year:                                    Amount
                  2005                                   $223,946
                  2006                                    182,352
                  2007                                    193,918
                  2008                                    206,326
                  2009                                    219,545
               Thereafter                               1,756,132
                                                       $2,782,219

(8)   Employee Benefit Plans The Company sponsors a defined contribution
      401(k) savings plan which covers substantially all full-time
      employees who meet eligibility requirements. Participating employees
      may contribute as salary reductions a minimum of 4% of their
      compensation up to the limit prescribed by the Internal Revenue Code.
      The Company began making 25% matching contribution up to 1% of eligible
      compensation starting June 2005. The Company recognized an expense of
      $10,613 and none related to this plan during the years ending November
      30, 2005 and 2004, respectively.

(9)   Stock Option Plans

      Under the 2001 Director Option Plan, stock options may be granted to
      non-employee directors to purchase shares of common stock of the Company
      at a price not less than fair market value at the date the options are
      granted.  Non-employee directors who have served for at least one year
      are automatically granted options to purchase 5,000 shares of common
      stock.  Options granted are nonqualified stock options. The option price,
      vesting period, and term are set by the Compensation Committee of the
      Board of Directors of the Company. Options for an aggregate of 50,000
      common shares may be granted under the Plan. Each option will be for a
      period of 10 years and may be exercised at a rate of 25% at the date of
      grant and 25% on the first, second, and third anniversary date of the
      grant on a cumulative basis. At November 30, 2004, the Company had
      approximately 5,000 shares available for issuance pursuant to subsequent
      grants under the 2001 Director Option Plan.

      Under the previously effective 1991 Employee Stock Option Plan, stock
      options were granted to key employees to purchase shares of common stock
      of the Company at a price not less than fair market value at the date
      the options are granted. Options granted were either nonqualified or
      incentive stock options. The option price, vesting period, and term were
      set by the Compensation Committee of the Board of Directors of the
      Company. Each option was for a period of 10 years and could be exercised
      at a rate of 25% at the date of grant and 25% on the first, second, and
      third anniversary date of the grant on a cumulative basis. Effective
      April 2001, the period available for option grants under the 1991
      Employee Stock Option Plan expired, and as a result, no shares are
      available for issuance pursuant to subsequent grants under the 1991
      Employee Stock Option Plan.

      A summary of changes in the stock option plans is as follows:

                                             November 30
                                           2005        2004
        Options outstanding at
         beginning of period              45,000      45,000
        Granted                            5,000           -
        Exercised                        (25,000)          -
        Options outstanding at
         end of period                    25,000      45,000

        Options price range for
         the period                       $ 2.32      $ 2.32
                                              To          To
                                          $ 5.21      $ 3.50

        Options exercisable at
         end of period                    20,000      41,250

      At November 30, 2005 and 2004, the weighted-average remaining
      contractual life of options outstanding was 6.9 years and 6.4 years
      respectively, and the weighted-average exercise price was $3.22 and
      $2.74, respectively. The weighted-average exercise price for options
      exercisable at November 30, 2005 was $2.98.

      The per share weighted-average fair value of stock options granted
      in the year ended November 30, 2005, was $2.30, on the date of grant
      using the Black Scholes option-pricing model with the following
      weighted-average assumptions: expected dividend yield 0.0%, risk-free
      interest rate 4.25%, expected volatility factor of 30.01%, and an
      expected life of 10 years.

(10)  Income Taxes

      Total income tax expense (benefit) for the years ended
      November 30, 2005 and 2004 consists of the following:

                                             November 30
                                          2005         2004
        Current expense                $574,003      $370,369
        Benefit of utilization
         of operating loss
         carryforward                  (538,000)     (342,000)
        Deferred expense (benefit)      461,000	     (507,000)
                                       $497,003     $(478,631)

      The reconciliation of the statutory Federal income tax rate and the
      effective tax rate are as follows:

                                             November 30
                                          2005         2004
        Statutory federal income tax rate 34.0%	       34.0%
        Other due primarily to change in
         valuation allowance              (0.3)       (85.9)
                                          33.7%       (51.9)%

      Tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets at November 30, 2005 and 2004 are
      presented below:
                                                  November 30
                                               2005         2004
        Deferred tax assets:
         Net operating loss
          carryforwards                          $0      $538,000
         Tax credits                        214,000       197,000
         Accrued expenses                   100,000       101,000
         Inventory capitalization           243,000       155,000
         Asset reserves                     330,000       375,000
         Property, plant, and equipment      18,000             0
             Total deferred tax assets      905,000     1,366,000
         Less valuation allowance            41,000        41,000
             Net deferred tax assets       $864,000    $1,325,000

      At November 30, 2005 the Company has approximately $132,000 of research
      and development credits, $41,000 of state tax credits, and $41,000 of
      AMT credits. The R&D and state tax credits will begin to expire in 2012
      and 2007, respectively.

      The Company has established a deferred tax asset valuation allowance of
      $41,000 at November 30, 2005 and 2004, due to the uncertainty of
      realizing its deferred tax assets related to the state tax credits.
      In assessing the realizability of deferred tax assets, management
      considers whether it is more likely than not that some portion or all
      of the deferred tax assets will not be realized. The ultimate
      realization of deferred tax assets is dependent upon the generation
      of future taxable income during the periods in which those temporary
      differences become deductible.

(11)  Disclosures About the Fair Value of Financial Instruments

      SFAS 107, Disclosures about Fair Value of Financial Instruments, defines
      fair value of a financial instrument as the amount at which the
      instrument could be exchanged in a current transaction between willing
      parties. At November 30, 2005 and 2004, the carrying amount approximates
      fair value for cash, accounts receivable, accounts payable, notes payable
      to bank, term debt, and other current and long-term liabilities.
      The carrying amounts approximate fair value because of the short maturity
      of these instruments. The fair value of the Company's installment term
      loan payable also approximates fair value because the interest rate is
      variable as it is tied to the lender's borrowing rate.

(12)  Litigation and Contingencies

      Various legal actions and claims are pending against the Company. In the
      opinion of management adequate provisions have been made in the
      accompanying financial statements for all pending legal actions and
      other claims.

(13)  Lease Obligations

      The Company leases the facility in Dubuque Iowa. Under a operating lease
      agreement which expires in October 2006. The minimum lease payments for
      the fiscal year ended November 30, 2006 will be approximately $125,000.
      Total rent expense recognized for the year ended November 30, 2005 was
      $25,000.

(14)  2005 Acquisition

      Effective October 4, 2005, the Company acquired the operating assets of
      Vessels Systems, Inc. for a cash purchase price of approximately
      $844,000. The operating results of the acquired business are reflected
      in the Company's consolidated statement of income from the acquisition
      date forward. The acquisition was made to continue the Company's growth
      strategy and diversify its product offerings outside the agricultural
      industry. The purchase price was determined based on an arms-length
      negotiated value. The transaction was accounted for under the purchase
      method of accounting, with the purchase price allocated to the
      individual assets acquired. (See cash flow statement supplemental
      disclosure)

      Proforma sales and net income information for Vessels Systems, Inc. for
      2005 and 2004 is not included as management believes that Vessels
      Systems, Inc. would not have had a material impact on the Company's
      financial statements.

(15)  Segment Information

      On October 4, 2005, the Company purchased certain assets of Vessels
      Systems, Inc. which created a separate operating segment. Prior to the
      date of this acquisition the Company operated in one reportable segment.

      Our reportable segments are strategic business units that offer
      different products. They are managed separately because each business
      requires different technology and marketing strategies.

      There are two reportable segments: agricultural products and pressurized
      vessels. The agricultural products segment fabricates and sells farming
      products as well as replacement parts for these products throughout the
      United States. The pressurized vessel segment produces pressurized
      tanks.

      The accounting policies applied to determine the segment information are
      the same as those described in the summary of significant accounting
      policies. Currently interest expense on long-term debt is all located
      within the agricultural products segment with no interest being charged
      to the pressurized vessels segment related to intercompany borrowings.
      Intersegment sales and transfers are accounted for at historical cost.

      Management evaluates the performance of each segment based on profit or
      loss from operations before income taxes, exclusive of nonrecurring
      gains and losses.

      Approximate financial information with respect to the reportable
      segments is as follows. The agricultural products segment information is
      for the year ended November 30, 2005 and the pressurized vessels segment
      information is for the period from acquisition to November 30, 2005.

                                Agricultural 	Pressurized 	Consolidated
                                  Products        Vessels
         Revenue from external
          customers              $14,261,000      $358,000      $14,619,000
         Income from operations    1,683,000         7,000        1,690,000
         Income before tax         1,467,000         7,000        1,474,000
         Segment profit              972,000         5,000          977,000
         Total Assets             10,737,000     1,045,000       11,782,000
         Capital expenditures        374,000         4,000          378,000
         Depreciation                262,000         7,000          269,000

Item 8. Changes in and Disagreements With Accountants on Accounting and
        Financial Disclosure.

        Not Applicable

Item 8A. Controls and Procedures.

        Senior management, including the Chief Executive Officer and Chief
        Financial Officer, evaluated the effectiveness of our disclosure
        controls and procedures as of the end of the period covered by this
        report. Based on that evaluation, the Chief Executive Officer and
        Chief Financial Officer concluded that our disclosure controls and
        procedures are effective to ensure that information required to be
        disclosed by us in the reports that we file or submit under the
        Exchange Act is (a) accumulated and communicated to our management,
        including our Chief Executive Officer and Chief Financial Officer,
        as appropriate to allow timely decisions regarding required
        disclosure; and (b) recorded, processed, summarized and reported,
        within the time specified in the SEC's rules and forms. Since that
        evaluation process was completed there have been no significant
        changes in our disclosure controls or in other factors that could
        significantly affect these controls.

        There were no changes in our internal control over financial reporting,
        identified in connection with this evaluation that occurred during the
        fourth fiscal quarter that materially affected, or is reasonably
        likely to materially affect, our internal control over financial
        reporting.



Item 8B. Other Information.

        Not Applicable

                                  PART III

Item 9. Directors and Executive Officers of the Registrant.

        The information required by Item 9 is incorporated by reference to our
        Definitive Proxy Statement to be filed pursuant to Regulation 14A
        within 120 days after November 30, 2005.

        We have adopted a Code of Ethics that applies to our principal
        executive officer, principal financial officer, principal accounting
        officer or controller. A copy of the Code of Ethics may be obtained
        free of charge by writing to us at the following address:

                      Art's-Way Manufacturing Co., Inc.
                                5556 Highway 9
                              Armstong, IA 50514

Item 10. Executive Compensation.

        The information required by Item 10 is incorporated by reference to our
        Definitive Proxy Statement to be filed pursuant to Regulation 14A
        within 120 days after November 30, 2005.

Item 11. Security Ownership of Certain Beneficial Owners & Management
         and Related Stockholder Matters.

        The information required by Item 11 is incorporated by reference to our
        Definitive Proxy Statement to be filed pursuant to Regulation 14A
        within 120 days after November 30, 2005.

Item 12. Certain Relationships and Related Transactions.

        The information required by Item 12 is incorporated by reference to our
        Definitive Proxy Statement to be filed pursuant to Regulation 14A
        within 120 days after November 30, 2005.

Item 13. Exhibits.

        Please see Exhibit Index.

Item 14. Principal Accountant Fees and Services.

        The information required by Item 14 is incorporated by reference to our
        Definitive Proxy Statement to be filed pursuant to Regulation 14A
        within 120 days after November 30, 2005.

                                 Signatures

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

ART'S-WAY MANUFACTURING CO., INC.

By: __________________________  By: __________________________
    John C. Breitung                Carrie L. Majeski
    Chief Executive Officer         Chief Financial Officer
    Date:_____________________      Date:_____________________

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

______________________________                 February 28, 2006
J. Ward McConnell, Jr.
Chairman of the Board and Director                   Date

______________________________                 February 28, 2006
David R. Castle
Director                                             Date

______________________________                 February 28, 2006
George A. Cavanaugh, Jr.
Director                                             Date

______________________________                 February 28, 2006
James L. Koley
Director                                             Date

______________________________                 February 28, 2006
Douglas McClellan
Director                                             Date

_____________________________                  February 28, 2006
Marc H. McConnell
Director                                             Date

_____________________________                  February 28, 2006
Thomas E. Buffamante
Director                                             Date



         Art's-Way Manufacturing Co., Inc. Exhibit Index

Number	Exhibit Description

2       Agreement & Plan of Merger for Reincorporation of Art's-Way
        Manufacturing Co., Inc., in Delaware. Incorporated by reference to
        Exhibit 2 of Annual Report on Form 10-K for the year ended May 27,
        1989.
3       Certificate of Incorporation and By-laws for Art's-Way
        Manufacturing Co., Inc. Incorporated by reference to Exhibit 3 of
        Annual Report on Form 10-K for the year ended May 27, 1989.
3.1     Amendments to Bylaws of Art's-Way Manufacturing Co., Inc. Incorporated
        by reference to Exhibit 3.1 to the Form 10-QSB for the quarter ended
        May 31, 2004
10	Incorporated by reference to the material contracts filed as
        Exhibit 10 to the Annual Report on Form 10-K for the fiscal year
        ended May 30, 1991.
10.1    Art's-Way Manufacturing Co., Inc. 401 (k) Savings Plan. Incorporated
        by reference to Exhibit 28 (a) to the Art's-Way Manufacturing Co., Inc.
        Registration Statement on Form S-8 filed on October 23, 1992.
10.2    Art's-Way Manufacturing Co., Inc. Employee Stock Option Plan (1991).
        Incorporated by reference to Exhibit "A" to Proxy Statement for Annual
        Meeting of Stockholders held on October 15, 1991.
10.3    Art's-Way Manufacturing Co., Inc. Director Stock Option Plan (2001).
        Incorporated by reference as Exhibit 10.3.1 of the Annual Report on
        Form 10-K for the fiscal year ended November 30, 2002.
10.4    Asset Purchase Agreement between the Company and J. Ward
        McConnell, Jr., and Logan Harvesters, Inc. Incorporated by reference to
        Current Report on Form 8-K dated September 6, 1996.
10.5    Agreement dated February 12, 2002 between the Company and J. Ward
        McConnell, Jr., purchase of 640,000 shares of common stock.
        Incorporated by reference to Current Report on Form 8-K filed
        February 22, 2002.
10.6    Forbearance Agreement and Fifteenth Amendment to Loan and Security
        Agreement dated January 31, 2003 between the Company and UPS Capital
        Corporation. Incorporated by reference to the Form 10-Q for the quarter
        ended February 28, 2003.
10.7	Long-term Financing Agreement dated April 25, 2003 between the Company
        and West Des Moines State Bank.  Incorporated by reference to the
        Form 10-Q for the quarter ended May 31, 2003.
10.8    Asset Purchase Agreement between the Company and Obeco Truck Body, Inc.
        Incorporated by reference to the Form 10-Q filed for the quarter ended
        August 31, 2003.
10.9    Purchase Agreement with Vessels Systems Inc.
21	Subsidiaries of the small business issuer.
23      Consent of McGladrey & Pullen, LLP
31.1    Certification of Chief Executive Officer under the Section 302 of the
        Sarbanes-Oxley Act of 2002.
31.2    Certification of Chief Financial Officer under the Section 302 of the
        Sabanes-Oxley Act of 2002.
32.1    Certification of Chief Executive Officer under 18 U.S.C. Section 1350.
32.2    Certification of Chief Financial Officer under 18 U.S.C. Section 1350.