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, 2004

[ ] 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
   Incorporation or Organization)               Identification No.)

         5556 Highway 9                               50514
        Armstrong, Iowa
       __________________                      ____________________
    (Address of Principal                           (Zip Code)
      Executive Offices)

                             (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: (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 ]

State issuer's revenues, for its most recent fiscal year: $12,784,396.

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:
$12,733,816.

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,
2005, 1,938,176 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for
the Registrant's 2005 Annual Meeting of Stockholders to be filed within
120 days of November 30, 2004, are incorporated by reference into Part
III of this form 10-KSB.


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


                                                                    Page
Part I

Item 1 - Description of Business                                  3 thru 5

Item 2 - Description of Property                                      5

Item 3 - Legal Proceedings                                            5

Item 4 - Submission of Matters to a Vote of Security Holders          5

Part II

Item 5 - Market for Common Equity, Related Stockholder Matters        6
and Small Business Issuers Purchases of Equity Securities

Item 6 - Management's Discussion and Analysis or                  7 thru 12
Plan of Operation

Item 7 - Financial Statements                                         12

Item 8 - Changes in and Disagreements with Accountants                13
on Accounting and Financial Disclosure

Item 8A - Controls and Procedures                                     13

Item 8B - Other Information                                           13

Part III

Item 9 - Directors and Executive Officers of the Registrant      14

Item 10 - Executive Compensation                                      14

Item 11 - Security Ownership of Certain Beneficial Owners
and Management And Related Stockholder Markets                      14

Item 12 - Certain Relationships and Related Transactions              14

Item 13 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K                                              14 thru 15

Item 14 - Principal Accountant Fees & Services                        15




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 Armstong. 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 2005 we will 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 and we are expecting a favorable first quarter
of 2005 as a result.

   (b)   Business of Issuer

We manufacture specialized farm machinery under our own and private
labels and steel truck bodies under the label of Cherokee Truck Bodies.

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 mowers and stalk shredders; sugar beet and
potato harvesting equipment; and a line of land maintenance equipment,
edible bean equipment, moldboard plows and grain drill equipment.

Starting in fiscal 2004 we manufactured moldboard plows under our own
label as per a license agreement with Case New Holland, Inc. (CNH).

Private label manufacturing of farm equipment accounted for 13% and 24%
of total sales for the years ended November 30, 2004 and 2003,
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.

Raw materials 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 two
material royalty's agreements are with CNH and Landstar, Inc. The
agreement with CNH will run through September 2006, on moldboard plows.
The agreement with Landstar was to run through 2007, however in February
2005 we settled for a one-time cash payment of $130,000. In our opinion,
our trademarks and licenses are of value in securing and retaining
business.

Sales of our agricultural products are seasonal; however, through the
development of mowers, shredders and beet harvesting machinery coupled
with private labeled products, the impact of seasonality has been
decreased because the peak periods 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 have an OEM supplier agreement with CNH. 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, 2004 and 2003, sales under the CNH label aggregated
approximately 8% and 17%, of total sales, respectively. In 2004 the
licensing agreement was changed which resulted in moldboard plow sales
being shifted from CNH label to Art's-Way branded product.

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. 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. 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 2005, was approximately
$4,730,000 compared to approximately $2,212,000 a year ago. The 2003
number did not include harvester orders or blower orders. Included in
the current backlog are $1,264,000 in beet equipment and $1,336,000 in
blower orders. Increased sales of our new grinders pushed the production
of our blowers back, and as a result the blowers remain in our backlog
as opposed to 2003. Overall we are looking forward to increased sales in
the first quarter.

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. Research and
development costs for the current fiscal year were down as we moved from
prototype into production. In 2005 we are expecting research and
development costs to increase as we develop another beet harvester,
targeted for foreign markets, and new beet defoliating equipment. All
research and development costs are expensed as incurred. Such costs
amounted to approximately $10,000 and $417,000 for the years ended
November 30, 2004 and 2003, respectively. (See also note 1 to the
financial statements).

We are subject to various federal, state and local laws and regulations
pertaining to environmental protection and the discharge of materials
into the environment. We are in the process of installing a different
paint system. This new paint system will significantly improve the
quality of our paint, in terms of luster, hardness and longevity. The
paint system will be located in a new location within the plant, as we
redesign our workflow to optimize productivity. We are obtaining permits
that will allow us to change the paint system and remain in compliance
with the laws and regulations.

During the year ended November 30, 2004, we had peak employment of 86
full-time and 23 part-time employees, of which 82 were factory and
production employees, 4 were engineers and engineering draftsman, 18
were administrative employees, and 5 were in sales and sales management.
Employee levels fluctuate based upon the seasonality of the product
line.

Our employees are not unionized. There has been no work stoppage in our
history and no stoppage is, or has been, threatened. We believe our
relationship with our employees is good.

Item 2. Description of Property

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

In May 2004, the Cherokee Truck Bodies operation was relocated into
excess warehousing space at our facility in Armstrong Iowa. Prior to
that time, the Cherokee Truck Bodies operation was located in rented
property on the northeast edge of Cherokee, Iowa, on approximately 17
acres. The plant consisted of one building, built in 1979-80, containing
42,000 square feet of production and 3,000 square feet of office space.
We still held the real estate mortgage on this property, as of November
30, 2004, however in December of 2004, we settled for approximately
$205,000, and we will recognize a gain on that settlement of
approximately $12,000.

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 the business or financial position of the
Company.

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

Not Applicable.

PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Small
Business Issuer Purchases of Equity Securities.

   (a) Market Information

                                Per Common Stock Bid Prices by Quarter
                                    Year ended          Year ended
                                November 30, 2004    November 30, 2003
                                 High       Low       High       Low
   First Quarter                5.360      4.530     3.980      2.700
   Second Quarter               5.600      4.990     4.100      3.400
   Third Quarter                5.360      4.620     5.240      3.700
   Fourth Quarter               6.240      4.290     5.250      4.400


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, 2005.

   (c) Dividends

We have not paid a dividend during the past five years, and do not have
any current plans to pay a dividend in the future. Future dividend
payments are restricted by our loan covenants and will depend upon
circumstances relevant at that time, including our results of
operations, capital requirements and financial conditions.

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

                         Number of      Weighted-average        Number of
                        securities       exercise price         securities
                       to be issued      of Outstanding     remaining available
                      upon exercise     options, Warrants       for future
                      of outstanding       and rights         issuance under
                    options, warrants                       equity compensation
                        and rights                     plans (excluding
                                                           securities reflected
                                                     in columns (a))

Equity compensation
plans approved by
security holders      (a) 45,000          (b) $2.736            (c) 20,000
Equity compensation
by security holders         --                  --                    --

Total                  45,000                --                  20,000



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.

   (a) Plan of Operation

In 2005 we plan to continue growth through new product development and
acquisition. In December, of fiscal year 2005, we started working with
an outside engineering firm to develop a new exportable sugar beet
harvester. Other projects include updating our defoliator and a self
propelled sugar beet harvester. We will continue to attempt to improve
our efficiencies, and to battle labor demand, through the implementation
of lean manufacturing processes.

   (b) Management's Discussion and Analysis of Financial Condition and
   Results of Operations

   (b)(i) 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 its manufacturing process or its 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.

   (b)(ii) Results of Operations

Twelve months ended November 30, 2004 compared to the twelve months
ended November 30, 2003

Our revenue of $12,784,000 for 2004 represents an 8.9% increase when
compared to $11,741,000 for 2003. Our branded products increased by
$1,828,000 while OEM sales decreased by $990,000. The sales of Cherokee
Truck Bodies, potato harvesters and UFT products were down 61%, 100% and
27%, respectively. However, sugar beet equipment, land planes,
vegetation cutting equipment, grinders, plows and ag scales were up 26%,
79%, 103%, 34%, 100% and 111%, respectively. Mills, land maintenance,
and supramix equipment along with replacement parts demand remained
steady. In June 2004 we had a 6.5% price increase or whole goods and
another 8.0% increase in September 2004. These price increases were to
offset increased steel prices and to remain competitive.

Gross profit, as a percent of sales was 28% for 2004 compared to 27% for
2003. The agricultural markets we serve are generally forecasted to
remain constant in 2005, yet we anticipate that our sales and profits
before tax for 2005 will increase slightly as we bring new or improved
products to market.

Operating expenses in 2004 increased $325,000 from 2003. As a percent of
sales, operating expenses were 20% and 19%, respectively, when comparing
2004 and 2003. In 2004 we began to produce the industries first 12 row
sugar beet harvesters and a new grinder mixer with increased capacity
and reduced feed batch cycle time. The transition to production of these
two new products resulted in a shift from engineering expenses related
to research and development to production. In 2003, we were working with
an outside engineering firm, to develop the new beet harvester. Again in
2005 we will be developing new product offerings, and as a result will
have increased expenses for research and development.

Selling expenses increased $202,000 from 2004 to 2003. Commissions
increased commensurate with sales and accounted for 59% of the increase,
or $119,000. We also attended many more farm and industry trade shows
during 2004 to regain visibility of our branded products, in addition to
increasing national advertising, which resulted in a $26,000 increase
from 2003. We also increased the sales force for both Art's-Way and
Cherokee Truck Bodies, which represents another 13% of the increased
costs, or $26,000. The added sales force will represent new regions, and
we believe, increase sales. As we introduced our new sugar beet
harvester, we also incurred additional expenses for manuals, customer
meetings to discus performance and improvements to the new machine which
resulted in additional expenses over 2003 of $20,000. Travel expenses
also increased $10,000, as we traveled overseas to further explore
export sales.

General and administrative expenses increased by $244,000. The largest
portion of the increase was related to Cherokee Truck Bodies. Cherokee
Truck Bodies wage expense has increased by $48,000, however that is
comparing 12 month of wages in 2004 to only 5 months in 2003. The move
of Cherokee Truck Bodies cost $59,000. These two items equated to 44% of
the increase. We also incurred additional engineering expenses that
accounted for $53,000.

We experienced a 5% decrease in interest and other expenses in 2004
compared to 2003. Interest expense was up due to higher average loan
balances by 15%, compared to 2003. This increase was offset by a 20%
increase in other income due primarily to high customer deposits that we
earned interest on.

Income before tax in 2004 was up 7% to 924,000 compared to 863,000 in
2003. We continue to strive to reduce costs, and are moving to a lean
manufacturing environment. Profits, although higher in 2004 versus 2003,
were negatively impacted in 2004 by high steel prices which were only
partially absorbed by price increases, the costs associated with the
consolidation of the Cherokee Truck Body's operation to Armstrong, and
continued investment in more efficient manufacturing processes in our
facility.

Net income of $1,402,000 year to date for 2004 compares to $1,664,000 in
2003. The decline in our net income is the result of the reduced impact
in 2004 of the deferred tax valuation allowance adjustment that was
recognized in 2004 versus 2003. Such adjustments accounted for $507,000
and $818,000 of the income tax benefit recognized in 2004 and 2003
respectively. At November 30, 2004, our deferred tax valuation allowance
was reduced to $41,000.

We believe as of 2004, our overall company has strengthened
significantly through the consolidation of manufacturing facilities and
new product offerings. Our backlog is $4,730,000 as of February 2005,
representing a 114% increase over the same period a year ago. The
increase is driven primarily from orders of sugar beet equipment and
feed grinders. We are expecting an improved first half of 2005 due to
the increased backlog, as well as improvements related to the
initiatives to improve our operations as discussed above.

(b)(iii) Liquidity and Capital Resources

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 new paint line costing $330,000 and are in
the installation process. We also invested $113,000 in tooling for the
new 6812 sugar beet harvester. These two items totaled 80% of our
capital expenditures in 2004.

Inventories increased significantly over the last year; $6,298,000
compared to $3,447,000 in 2003. This was partially due to the
significant increase in steel price during 2004. Nearly our entire
inventory is steel based; we estimate that 20% of the increase was
driven by steel prices. We are also carrying 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 carry over inventory in the 2005 build of harvesters. At the
end of 2004 we also purchased large amounts of raw steel for our grind
mixer build, the build was delayed slightly and the units were not
shipped until 2005. We will work to bring down our inventory value in
2005. This demand on cash was partially offset by the increase in
accounts payable related to these inventory purchases.

Accrued expenses are up as a result of rising insurance costs and
increased commissions' payable due to increased sales in November.

Twelve months ended November 30, 2003

Our main sources of funds were obtained from long-term financing and
improved profitability. Funds from long-term financing were used to
payoff existing debt, with the balance used towards working capital.

The positive cash flow from operations was used for the acquisition of
the assets of Obeco, Inc. and its real estate loan. Capital expenditures
for the year ended November 30, 2003 were $218,000.

Capital Resources

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

Facility #1 is a revolving line of credit for $2,500,000 with advances
funding the working capital, letter of credit and corporate credit card
needs that mature on March 31, 2005, however, we are in the process of securing
an extension for an additional year. 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 assets owned by the
Company including, but not limited to inventories, accounts receivable,
machinery and equipment. The draw on the line of credit financed part of
the increase in inventory. As of November 30, 2004 and 2003, the Company
had borrowed $870,071 and $0, respectively, against Facility #1.

Facility #2 is long-term financing for up to $3,000,000 that is
supported by a guarantee issued by the United States Department of
Agriculture (USDA) for 75% of the loan amount outstanding. The loan for
$2,000,000 refinanced existing debt to UPS Capital (approximately
$1,500,000), financed equipment (approximately $250,000), provided
permanent working capital (approximately $500,000) and satisfied closing
costs (approximately $50,000). Approximately $700,000 will be reserved
for future acquisitions. 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. We have an additional $1,000,000 which at November 30, 2004,
had not been drawn on, we did draw this amount in January, 2005. We intend to
use it for new product development. Collateral for Facility #2 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, 2004 the outstanding balance on Facility #2 was $1,836,565
compared to $1,950,975 at November 30, 2003.

J. Ward McConnell, Jr. was required to personally guarantee Facility #1
and Facility #2 on an unlimited and unconditional basis. The guarantees
of Facility #1 and Facility #2 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 $47,000 and
$26,000, for the years ended November 30, 2004, and 2003, respectively.

Other terms and conditions of both 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, 2004, we violated the restriction on capital
expenditures. Under our loan agreement the lender would have 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, the cash flow statement was supplied to them on a monthly
basis, they were fully aware of the amount of capital expenditures we
had incurred throughout the year. The bank views this spending
favorably, and waived the covenant.



   Contractual Obligations

                                       Payments due by period
                      Total     < 1 yr    1-3 yrs   3-5 yrs    >5 yrs
Long-term debt            1,962,916   174,674   275,664   252,216   1,260,362
Capital lease obligation            0         0         0         0           0
Operating lease obligation     10,800     3,600     7,200         0           0
Purchase Obligations           80,000    80,000         0         0           0
Other                               0         0         0         0           0
Total                       2,053,716   258,274   282,864   252,216   1,260,362

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

                    November 30, 2004       November 30, 2003
Current Assets                $7,946,007              $5,565,838
Current Liabilities             2,513,444               1,018,055
Working Capital                $5,432,563              $4,547,783

Current Ratio                      3.2                     5.5


   (b)(iv)Utilization of Deferred Tax Assets

At November 30, 2004 and 2003, we had established a deferred tax asset
valuation allowance of approximately $41,000 and $818,000, respectively.
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
and 2003 we utilized a portion of our net operating loss carry forward.
Beginning in fiscal 2005, we anticipate that our financial results will
reflect the accrual of income tax expenses, as opposed to 2004 and 2003
when we recorded a net tax benefit.

For tax purposes, we had available at November 30, 2004, net operating
loss carry forwards of approximately $1,581,000 which will begin to
expire in the year 2013. We also had approximately $128,000 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 $28,000 in AMT
credits that will not expire.

   (b)(v) Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

   (b)(vi) See recently issued accounting pronouncements discussed in Item
7, F-10

   (b)(vii) Quarterly Data

Although not required by Form 10-KSB, we are providing a quarterly data table
in Note 15 to the accompanying financial statements describing a shift in
sales and income between our first and second quarters in 2004 and 2003.
This restatement does not affect yearly results and has the effect of shifting
earning per share from the first to the second quarter of three cents per
share.

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 accompanying consolidated balance sheets of Art's-Way
Manufacturing Co., Inc. and subsidiary as of November 30, 2004 and 2003,
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, 2004
and 2003, 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 7, 2005

McGladrey & Pullen, LLP is an independent member firm of RSM
International, an affiliation of separate and independent legal
entities.


                      ART'S-WAY MANUFACTURING CO., INC.

                            Table of Contents


                                                                      Page

Statements of Operations -
    Years ended November 30, 2004 and 2003                            F-3

Balance Sheets -
     November 30, 2004 and 2003                       F-4

Statements of Stockholders' Equity -
     Years ended November 30, 2004 and 2003                           F-5

Statements of Cash Flows -
     Years ended November 30, 2004 and 2003                      F-6

Notes to Financial Statements -
     Years ended November 30, 2004 and 2003                        F-7 - F-18





                             ART'S-WAY MANUFACTURING CO., INC.
                           Consolidated Statements of Operations
                          Years ended November 30, 2004 and 2003

                                                   2004                     2003
Net sale                              $12,784,396    $11,741,478
Cost of goods sold                9,186,971        8,519,896
Gross profit                              3,597,425        3,221,582
Expenses:
    Engineering                            189,587              310,715
    Selling                                      734,141            531,769
    General and administrative       1,581,458         1,337,662
Total expenses                        2,505,186         2,180,146
Income from operations       1,092,239          1,041,437
Other income (expense):
                Interest expense          (180,013)           (156,113)
                Other                              11,416              (22,119)
Total other expense                     (168,597)            (178,232)
Income before income taxes       923,642            863,205
Income tax (benefit)                      (478,631)           (800,643)
Net income                                 $1,402,273      $1,663,848
Net income per share:
         Basic                                   $0.72                $0.86
         Diluted                                   0.72                   0.85



See accompanying notes to consolidated financial statements.



                            ART'S-WAY MANUFACTURING CO., INC.
                               Consolidated Balance Sheets
                               November 30, 2004 and 2003

Asset                         2004                        2003
Current assets:
Cash                               $116,001            $800,052
Accounts receivable-customers,
net of allowance for doubtful
accounts of $30,417 and $39,250
in 2004 and 2003, respectively                 737,008               885,890
Inventories, net                   6,298,049              3,446,711
Deferred taxes                         539,000               283,000
Real estate loan receivable                 165,725                      -
Other current assets               90,224                 150,185
    Total current assets                        7,946,007            5,565,838
Property, plant, and equipment, net      1,308,088            1,018,910
Inventories, noncurrent                          459,792               483,432
Real estate loan receivable            -                       165,725
Deferred taxes                           786,000               535,000
Other assets                        146,006                192,932
    Total assets                      $10,645,893          $7,961,837
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to bank               $870,071                 $    -
Current portion of term debt                   174,674              178,508
Accounts payable                       536,929                 83,874
Customer deposits                  77,975                  53,556
Accrued expenses                  853,795               702,117
    Total current liabilities           2,513,444            1,018,055
Long-term liabilities                   144,766                174,766
Term debt, excluding current portion         1,788,242             1,971,848
    Total liabilities                     4,446,452            3,164,669
Stockholders equity:
Common stock  $0.01 par value.
Authorized 5,000,000 shares;
issued 1,938,176 shares in 2003
and 2002                                   19,382                   19,382
Additional paid-in capital           1,634,954              1,634,954
    Retained earnings                4,545,105              3,142,832
    Total stockholders equity        6,199,441              4,797,168
    Total liabilities and
    stockholders equity           $10,645,893              $7,961,837

See accompanying notes to consolidated financial statements.

                             ART'S-WAY MANUFACTURING CO., INC.
                            Statements of Stockholders Equity
                          Years ended November 30, 2004 and 2003

                                        Additional
                 Number of  Stated/    paid-in   Retained  Treasury
                  shares   par value   capital   earnings   stock     Total
Balance, November 30, 2002
                1,938,176  $19,382  $1,634,954  $1,478,984   $-  $3,133,320
Net income              -        -          -  1,663,848    -     1,663,848
Balance,  November 30, 2003
                1,938,176  19,382  1,634,954 3,142,832    -     4,797,168
Net income              -        -     -   1,402,273    -     1,402,273
Balance, November 30, 2004
                1,938,176 $19,382 $1,634,954 $4,545,105 $-     $6,199,441



See accompanying notes to consolidated financial statements.


                             ART'S-WAY MANUFACTURING CO., INC.
                            Consolidated Statements of Cash Flows
                           Years ended November 30, 2004 and 2003

                                              2004                     2003
Cash flows from operations:
Net income                             $1,402,273         $1,663,848
Adjustments to reconcile net
  income to net cash
  provided by operating activities:
  Loss on sale of property, plant,
  and equipment                            7,134                     -
  Depreciation and amortization            311,314            278,962
  Deferred income taxes                (507,000)         (818,000)
  Changes in assets and liabilities,
  net of Obeco acquisition:
  (Increase) decrease in:
  Accounts receivable                   148,882            (292,945)
  Inventories                              (2,827,698)            327,424
  Other current assets               59,961              (54,800)
  Other, net                                   (30,000)             (29,521)
  Increase (decrease) in:
  Accounts payable                  453,055            (439,618)
  Customer deposits                    24,419            (196,200)
  Accrued expenses                  151,678               71,145
    Net cash provided by/(used in) operating
      activities                     (805,982)           510,295
Cash flows from investing activities:
  Purchases of property, plant, and equipment     (563,116)          (217,513)
  Purchase of assets of Obeco, Inc.          -            (355,998)
  Purchase of real estate loan           -              (165,725)
  Proceeds from sale of property,
  plant, and equipment           2,416              -
   Net cash (used in) investing
   activities               (560,700)          (739,236)
Cash flows from financing activities:
  Proceeds from Line of Credit              870,071              -
  Payments of notes payable to bank           (187,440)          (319,222)
  Principal payments on term debt                    -                  -
    and long-term liabilities                   -              (727,143)
  Proceeds from term debt              -                     2,000,000
    Net cash provided by
    financing activities                  682,631              953,635
    Net increase/(decrease) in cash          (684,051)           724,694
Cash at beginning of period                       800,052               75,358
Cash at end of period                   $116,001           $800,052

Supplemental disclosures of
  cash flow information:
Cash paid/(received) during the period for:
    Interest                     $177,049           $136,568
    Income taxes                     (8,323)                5,841

Supplemental disclosures of
  noncash investment and
  financing activities:
    Obeco acquisition:
    Inventories                                   $ -              $250,351
    Property, plant and equipment                   -               105,647
                                                 $ -              $355,998

See accompanying notes to consolidated financial statements.


(1)Summary of Significant Accounting Policies

(a) Nature of Business

Art's-Way Manufacturing Co., Inc. and subsidiary (the Company) are
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.

(b) Principles of Consolidation

The consolidated financial statements include the accounts of Art's-Way
Manufacturing Co., Inc. and its wholly-owned subsidiary, Cherokee Truck
Bodies, Inc., which was formed during the year ended November 30, 2003.
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. Non-current assets
are those inventory items which have had very little or no activity in
the last three years. These non-current assets consist primarily of
manufactured and purchased parts.

(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. 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 $10,000 and $417,000 for the years ended November 30, 2004,
and 2003, 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, 2004 and 2003:

                                         2004           2003

Basic:
  Numerator, net income              $ 1,402,273    $ 1,663,848
  Denominator, average
   number of common shares
   outstanding                         1,938,176      1,938,176
  Basic earnings per common share    $    0.72    $      0.86
Diluted
  Numerator, net income              $ 1,402,273    $ 1,663,848
  Denominator, average
   number of common
   outstanding                         1,938,176      1,938,176

Effect of dilutive stock options          20,281         16,232
                                       1,958,457      1,954,408
Diluted earnings per common share    $    0.72    $      0.85


(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. Accordingly, the
Company has not recognized compensation expense for its options granted.
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, no
compensation cost has been recognized for its stock options in the
financial statements. Had the Company recorded compensation cost based
on the fair value at the grant date for its stock options under SFAS No.
123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:

                              November 30,        November 30,
                                 2004                2003

Net income:
   As reported                $ 1,402,273        $ 1,663,848
Deduct: Total stock-based
 employee compensation
 expense determined under
 fair value based method
 for all awards, net of
 related tax effects          (13,332)           (13,332)
   Pro forma                    1,388,941          1,650,516

Basic earnings per share:
   As reported                $      0.72        $      0.86
   Pro forma                         0.72               0.85
Diluted earnings per share:
   As reported              $      0.72        $      0.85
   Pro forma                         0.71               0.84

See Note 10 for disclosure of significant assumptions used to determine
pro forma stock-based employee compensation expenses.

(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

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity (SFAS 150). SFAS 150 established standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a
liability (or asset in some circumstances). The Company adopted SFAS 150
on July 1, 2003 and such adoption did not have a material effect on its
financial position or results of operations. The effective date of SFAS
No. 150 has been indefinitely deferred by the FASB for certain mandatory
redeemable instruments when certain criteria are met. The Company has no
instruments subject to these provisions.

FIN No. 46, Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51, (FIN 46)
establishes accounting guidance for consolidation of variable interest
entities (VIE) that function to support the activities of the primary
beneficiary. Prior to the implementation of FIN 46, VIEs were generally
consolidated by an enterprise when the enterprise had a controlling
financial interest through ownership of a majority of voting interest in
the entity. The provisions of FIN 46 were effective immediately for all
arrangements entered into after January 31, 2003. In December 2003, the
FASB issued a revision to FIN 46 (FIN 46R) which clarified certain
implementation issues and revised implementation dates for VIEs created
before January 31, 2003. Under the new guidance, special effective date
provisions apply to enterprises that have fully or partially applied FIN
46 prior to issuance of the revised Interpretation. Otherwise,
application of FIN 46R (or FIN 46) is required in financial statements
of public entities that have interests in special-purpose entities for
periods ending after December 15, 2003. Application by public entities,
other than small business issuers, for all other types of VIEs is
required in financial statements for periods ending after March 15,
2004.

The interpretations of FIN 46 and its application to various transaction
types and structures are evolving. Management continuously monitors
emerging issues related to FIN 46, some of which could potentially
impact the Company's financial statements. We are not aware of any VIEs.

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).

The Financial Accounting Standards Board (FASB) has issued Statement No.
151, Inventory Costs, an amendment of ARB No. 43, Chapter 4. This
Statement clarifies that items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs should be classified as
current-period charges, regardless of whether they meet the criterion of
"so abnormal." Also, this Statement requires the allocation of fixed
production overhead to inventory based on the normal capacity of the
production facilities. The Statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. We are
assessing the effects of FAS 151.

(2) Allowance for Doubtful Accounts

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

                                     2004           2003

Balance, beginning                $ 39,250       $ 50,000
  Provision charged to expense      16,100         18,800
  Less amounts charged-off         (24,933)       (29,550)
Balance, ending                   $ 30,417       $ 39,250


(3) Inventories

Major classes of inventory are:

                                     2004            2003
Raw materials                    $ 2,867,914    $   744,549
Work in process                    1,495,985        805,142
Finished goods                     2,393,942      2,380,452
                                 $ 6,757,841$ 3,930,143

Inventories as of November 30, 2004 and 2003 are stated net of a reserve
for slow moving inventory of approximately $1,071,000 and $954,000,
respectively.

(4) Property, Plant, and Equipment Major classes of property, plant,
and equipment are:

                                         2004             2003
Land                                  $   180,909     $   180,909
Buildings and improvements        2,679,055       2,639,416
Manufacturing machinery and equipment   8,516,686       8,019,299
Trucks and automobiles                    104,016          89,626
Furniture and fixtures                    119,882         119,882
                                       11,600,548      11,049,132
Less accumulated depreciation          10,292,460      10,030,222
Property, plant and equipment         $1,308,088     $1,018,910

(5) Accrued Expenses Major components of accrued expenses are:

                                             November 30,
                                         2004          2003
Salaries, wages, and commissions      $ 412,663       $ 366,842
Accrued warranty expense                119,912          59,207
Other                                   321,220         276,068
                                      $853,795       $ 702,117

(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, 2004, and 2003 are as follows:

                                        2004            2003
Balance, beginning                   $  59,207         $  60,232
Settlements made in cash or in-kind   (158,216)         (113,705)
Warranties issued                      218,921           112,680
Balance, ending                      $ 119,912         $  59,207

(7) Loan and Credit Agreements

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

Facility #1 is a revolving line of credit for $2,500,000 with advances
funding the working capital, letter of credit and corporate credit card
needs that mature on March 31, 2005. 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 assets owned by the
Company including, but not limited to inventories, accounts receivable,
machinery and equipment. The draw on the line of credit financed part of
the increase in inventory. As of November 30, 2004 and 2003, the Company
had borrowed $870,071 and $0, respectively, against Facility #1.

Facility #2 is long-term financing for up to $3,000,000 that is
supported by a guarantee issued by the United States Department of
Agriculture (USDA) for 75% of the loan amount outstanding. The loan for
$2,000,000 refinanced existing debt to UPS Capital (approximately
$1,500,000), financed equipment (approximately $250,000), provided
permanent working capital (approximately $500,000) and satisfied closing
costs (approximately $50,000). Approximately $700,000 will be reserved
for future acquisitions. 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. We have an additional $1,000,000 which at November 30, 2004,
had not been drawn on. The variable interest rate will be West Bank's
prime interest rate plus 1.5%, adjusted daily. Monthly principal and
interest payments are amortized over 20 years, at which time the loan
matures. Collateral for Facility #2 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, 2004
the outstanding balance on Facility #2 was $1,836,565 compared to
$1,950,975 at November 30, 2003.

J. Ward McConnell, Jr. was required to personally guarantee Facility #1
and Facility #2 on an unlimited and unconditional basis. The guarantee
of Facility #2 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 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 guarantee at an annual percentage rate of 2%
of the outstanding balance to be paid monthly. Guarantee fee payments to
Mr. McConnell were approximately $47,000 and $26,000, for the years
ended November 30, 2004, and 2003, respectively.

Other terms and conditions of both 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, limitation on capital expenditures, and tangible net worth.
During the year ended November 30, 2004, and 2003, the Company violated
certain debt covenants that were waived.

A summary of the Company's term debt is as follows:

                                          2004             2003
West Bank Facility #2 loan payable
in monthly installments of $17,776
including interest at Bank's prime
rate plus 1.5%                      $ 1,836,565      $ 1,950,975

State of Iowa Community Development
Block Grant promissory note at 0%
interest, maturity 2006 with quarterly
principal payments of $11,111              77,778          122,223

State of Iowa Community Development
Block Grant local participation
promissory notes at 4% interest,
maturity 2006, with quarterly payments
of $7,007                                  48,573           77,158

Total term debt                        1,962,916        2,150,356
Less current portion of term debt         174,674          178,508
Term debt, excluding current portion  $ 1,788,242      $ 1,971,848

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

              Year:                Amount
              2005                  $   174,674
              2006                      160,869
              2007                      114,795
              2008                      122,179
              2009                      130,037
           Thereafter                 1,260,362
                                    $ 1,962,916

(8) Long-Term Liabilities

Under an agreement with a former manufacturer of one of the Company's
product lines, the Company is required to remit annual royalty payments
through fiscal year 2007 for the right to manufacture and sell the
product line. The agreement calls for the payment of royalties based on
a percentage of the product line's annual sales, subject to annual and
aggregate minimums, as defined in the agreement. A summary of the
minimum payments follows for the years ending November 30:

             Year:                                Amount
             2005                              $  60,000
             2006                                 30,000
             2007                                160,000
     Total minimum royalty payments              250,000
     Less amount representing discount (9%)       45,234
     Present value of minimum royalty payments   204,766
     Less current portion, classified as
          accrued expenses                  60,000
     Long-term liabilities                     $ 144,766


(9) 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 may make matching
contributions at a discretionary percent upon approval from the Board of
Directors. No contributions were made by the Company in the years ended
November 30, 2004 and 2003.

(10)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 20,000 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
                                                2004       2003
Options outstanding at beginning of period     45,000     40,000
Granted                                             -      5,000
Options outstanding at end of period           45,000     45,000
Options price range for the period             $ 2.32     $ 2.32
                                                  to         to
                                               $ 3.50     $ 3.50
Options exercisable at end of period           41,250     30,000

At November 30, 2004, and 2003, the weighted-average remaining
contractual life of options outstanding was 6.4 years and, 7.8 years
respectively, and the weighted-average exercise price was $2.74,
respectively. The weighted-average exercise price for options
exercisable at November 30, 2004 was $2.69.

The per share weighted-average fair value of stock options granted in the
year ended November 30, 2003, 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.

(11) Income Taxes

Total income tax (benefit) for the years ended
November 30, 2004, and 2003 consists of the following:

                                          November 30
                                       2004          2003
Current:
   Federal                         $  10,589             -
   State                              17,780        17,357
                                      28,369        17,357

Deferred:
   Federal                          (507,000)     (818,000)
   State                                   -             -
                                    (507,000)     (818,000)
                                  $ (478,631)     (800,643)


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

                                           November 30
                                        2004          2003
Statutory federal income tax rate       34.0 %        34.0 %
(Decrease) due primarily to change
 in valuation allowance               (85.9)       (126.8)
                                       (51.9)%       (92.8)%

Tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at November 30, 2004 and 2003 are
presented below:

                                           November 30
                                        2004          2003
Deferred tax assets:
  Net operating loss carry forwards  $ 538,000   $ 880,000
  Tax credits                          197,000       160,000
  Accrued expenses                     101,000        57,000
  Inventory capitalization             155,000       160,000
  Asset reserves                       375,000       339,000
  Property, plant, and equipment     -        40,000
      Total deferred tax assets      1,366,000     1,636,000
  Less valuation allowance              41,000       818,000
      Net deferred tax assets      $ 1,325,000   $ 818,000


For tax purposes, the Company has available at November 30, 2004, net
operating loss carry forwards of approximately $1,581,000 which will
begin to expire in the year 2020.

The Company has approximately $128,000 of research and development
credits, $41,000 of state tax credits, and $28,000 of ATM 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 approximately $41,000 and $818,000 at November 30, 2004 and
2003, respectively, due to the uncertainty of realizing its deferred tax
assets. 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.

(12) Credit Concentration

The Company's sales to one major OEM were $980,728 and $1,517,747 for
the years ended November 30, 2004, and 2003, respectively. Accounts
receivable from this customer are unsecured, and were $95,027 and
$56,262 at November 30, 2004 and 2003, respectively. The Company's sales
to one major dealership were $914,482 and $1,398,898 for the years ended
November 30, 2004, and 2003, respectively. Accounts receivable from this
customer are unsecured, and were $0 and $157,162 at November 30, 2004
and 2003, respectively.

(13) 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, 2004 and 2003, the carrying amount approximates
fair value for cash and cash equivalents, 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
national money market rate.

(14) 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.

(15) Quarterly Data Table (unaudited)

Presented below is restated information related to our results for the
first and second quarters of fiscal 2004 and 2003.

In early 2005 we discovered an error in our first quarter revenue
recognition related to a sales arrangement with a specific customer.
These sales were recorded in the first quarter of both 2004 and 2003;
however, the sales should have been recorded in the second quarter in
each of those years. This matter affects only the results between the
first and second quarters and does not affect results for fiscal years
2004 and 2003.

The table below presents sales, net income and diluted earnings per
share as originally reported on form 10-QSB and restated amounts revised
for the matter described in the previous paragraph. For 2004, sales
between the quarters are adjusted by $268,000, net income by $62,000 and
earnings per share by $0.03. For 2003 the amounts are adjusted by
$274,000, $72,000 and $0.03, respectively.

Fiscal year 2004                Quarter 1    Quarter 2   Quarter 3   Quarter 4

Sales as originally reported   $ 2,892,000   2,917,000   3,399,000   3,576,000
Sales as revised               $ 2,624,000   3,185,000   3,399,000   3,576,000

Net Income as
originally reported            $    86,000     256,000     485,000     575,000
Net Income as revised          $    24,000     318,000     485,000     575,000

Earnings per share as
originally reported            $      0.04        0.13        0.25        0.29
Earnings per share as revised  $      0.01        0.16        0.25        0.29

Fiscal year 2003

Sales as originally reported   $ 2,579,000   2,510,000   3,808,000   2,844,000
Sales as revised               $ 2,305,000   2,784,000   3,808,000   2,844,000

Net Income as
originally reported            $   113,000     262,000   323,000     966,000
Net Income as revised          $    41,000     334,000   323,000     966,000

Earnings per share as
originally reported            $      0.06        0.13        0.17        0.49
Earnings per share as revised  $      0.03        0.16        0.17        0.49

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

Not Applicable

Item 8A. Controls and Procedures

As of the end of the period covered by this report, an evaluation was
performed under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer of the effectiveness of
our disclosure controls and procedures (as defined in Exchange Act Rule
240.13a-15(e)). Based on that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that our current 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 recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commission's rules and forms.

There were no changes in our internal control over financial reporting
(as defined in Exchange Act Rule 13a-15(f)) that occurred during the
period covered by this report that have materially affected, or are
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 the
definitive Proxy Statement to be filed pursuant to Regulation 14A within
120 days after November 30, 2004.

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 the
definitive Proxy Statement to be filed pursuant to Regulation 14A within
120 days after November 30, 2004.

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

The information required by Item 11 is incorporated by reference to the
definitive Proxy Statement to be filed pursuant to Regulation 14A within
120 days after November 30, 2004.

Item 12. Certain Relationships and Related Transactions.

The information required by Item 12 is incorporated by reference to the
definitive Proxy Statement to be filed pursuant to Regulation 14A within
120 days after November 30, 2004.

Item 13. Exhibits.

Index to Exhibits

NumberExhibit 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.
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.

Item 14. Principal Accountant Fees and Services.

The information required by Item 14 is incorporated by reference to the
definitive Proxy Statement to be filed pursuant to Regulation 14A within
120 days after November 30, 2004.

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


Exhibit 23 - Consent of McGladrey & Pullen, LLP.

Exhibit 31.1 - Certification of Chief Executive Officer under the Section 302
               of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 - Certification of Chief Financial Officer under the Section 302
               of the Sabanes-Oxley Act of 2002.
Exhibit 32.1 - Certification of Chief Executive Officer under 18 U.S.C.
               Section 1350.
Exhibit 32.2 - Certification of Chief Financial Officer under 18 U.S.C.
               Section 1350.

                                 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, 2005
J. Ward McConnell, Jr.                           Date
Chairman of the Board and Director

______________________________           February 28, 2005
David R. Castle                                  Date
Director

______________________________           February 28, 2005
George A. Cavanaugh, Jr.                         Date
Director

______________________________           February 28, 2005
James L. Koley                                   Date
Director

______________________________           February 28, 2005
Douglas McClellan                                Date
Director

_____________________________           February 28, 2005
Marc H. McConnell                                Date
Director

_____________________________           February 28, 2005
Thomas E. Buffamante                             Date
Director