# EDGAR Filing Document

**Accession Number:** 0000007623
**File Stem:** 0001437749-25-030917
**Filing Date:** 2025-10
**Character Count:** 116547
**Document Hash:** 8f24a0a2d4b52ca9c8ae2f2d09f67200
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-030917.hdr.sgml**: 20251014

**ACCESSION NUMBER**: 0001437749-25-030917

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 87

**CONFORMED PERIOD OF REPORT**: 20250831

**FILED AS OF DATE**: 20251014

**DATE AS OF CHANGE**: 20251014

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ARTS WAY MANUFACTURING CO INC
- **CENTRAL INDEX KEY:** 0000007623
- **STANDARD INDUSTRIAL CLASSIFICATION:** FARM MACHINERY & EQUIPMENT [3523]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 420920725
- **STATE OF INCORPORATION:** NC
- **FISCAL YEAR END:** 1130

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-05131
- **FILM NUMBER:** 251391237

**BUSINESS ADDRESS:**
- **STREET 1:** 5556 HIGHWAY 9
- **CITY:** ARMSTRONG
- **STATE:** IA
- **ZIP:** 50514
- **BUSINESS PHONE:** 7122088467

**MAIL ADDRESS:**
- **STREET 1:** 5556 HIGHWAY 9
- **CITY:** ARMSTRONG
- **STATE:** IA
- **ZIP:** 50514

?xml version='1.0' encoding='ASCII'? artw20250831_10q.htm

[**Table of Contents**](#toc)

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 2025

or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______

Commission File No. 000-05131

<u>ART</u><u>'</u><u>S-WAY MANUFACTURING CO., INC.</u>

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| <u>Delaware</u> | <u>42-0920725</u> |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

---

---

| |
|:---|
| <u>5556 Highway 9</u><br> <u>Armstrong, Iowa 50514</u> |
| (Address of principal executive offices) (Zip Code) |

---

<u>(712) 208-8467</u>

(Registrant's telephone number, including area code)

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

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock $0.01 par value | ARTW | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | |
|:---|:---|
| Large accelerated filer ☐ <br> Non-accelerated filer ☒ | Accelerated filer ☐ <br> Smaller reporting company ☒<br> Emerging growth company ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of common shares outstanding as of October 1, 2025: 5,106,834

------

[**Table of Contents**](#toc)

**Art**'**s-Way Manufacturing Co., Inc.**

**Index**

**<u>Page No.</u>**

---

| | | |
|:---|:---|:---|
| [**PART I** – **FINANCIAL INFORMATION**](#part1) | [**PART I** – **FINANCIAL INFORMATION**](#part1) | **[1](#part1)** |
| Item 1. | [Financial Statements](#fs) | [1](#fs) |
|  | [Condensed Consolidated Balance Sheets as of August 31, 2025 and November 30, 2024](#bs) | [1](#bs) |
|  | [Condensed Consolidated Statements of Operations for the Three-month and Nine-month periods ended August 31, 2025 and August 31, 2024](#income) | [2](#income) |
|  | [Condensed Consolidated Statements of Stockholders' Equity for the Nine-month periods ended August, 31 2025 and August 31, 2024](#equity) | [3](#equity) |
|  | [Condensed Consolidated Statements of Cash Flows for the Nine-month periods ended August 31, 2025 and August 31, 2024](#cf) | [4](#cf) |
|  | [Notes to Unaudited Condensed Consolidated Financial Statements](#notes) | [5](#notes) |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#mda) | [19](#mda) |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#qqd) | [21](#qqd) |
| Item 4. | [Controls and Procedures](#cp) | [21](#cp) |
| [**PART II** – **OTHER INFORMATION**](#part2) | [**PART II** – **OTHER INFORMATION**](#part2) | **[22](#part2)** |
| Item 1. | [Legal Proceedings](#lp) | [22](#lp) |
| Item 1A. | [Risk Factors](#rf) | [22](#rf) |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#uses) | [22](#uses) |
| Item 3. | [Defaults Upon Senior Securities](#duss) | [22](#duss) |
| Item 4. | [Mine Safety Disclosures](#msd) | [22](#msd) |
| Item 5. | [Other Information](#oi) | [22](#oi) |
| Item 6. | [Exhibits](#exhibits) | [23](#exhibits) |
|  | [SIGNATURES](#sig) | [24](#sig) |

---

------

[**Table of Contents**](#toc)

**PART I** – **FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**ART'S-WAY MANUFACTURING CO., INC.**

Condensed Consolidated Balance Sheets

---

| | | |
|:---|:---|:---|
|  | (Unaudited) |  |
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp; Cash | $5960 | $1860 |
| &nbsp;&nbsp;&nbsp; Accounts receivable, net | 2023964 | 2372876 |
| &nbsp;&nbsp;&nbsp; Inventories, net | 11237942 | 10327913 |
| &nbsp;&nbsp;&nbsp; Cost and profit in excess of billings | 658955 | 213195 |
| &nbsp;&nbsp;&nbsp; Other current assets | 254410 | 208465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets | 14181231 | 13124309 |
| &nbsp;&nbsp;&nbsp; Property, plant, and equipment, net | 5104659 | 5150870 |
| &nbsp;&nbsp;&nbsp; Assets held for lease, net | 127796 | 89033 |
| &nbsp;&nbsp;&nbsp; Deferred income taxes, net | 1994267 | 2440297 |
| &nbsp;&nbsp;&nbsp; Other assets | 407787 | 436175 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $21815740 | $21240684 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable | $1175899 | $944448 |
| &nbsp;&nbsp;&nbsp; Customer deposits | 72765 | 180597 |
| &nbsp;&nbsp;&nbsp; Billings in excess of cost and profit | 352131 | 1929151 |
| &nbsp;&nbsp;&nbsp; Income taxes payable | 5000 | 5500 |
| &nbsp;&nbsp;&nbsp; Accrued expenses | 933965 | 1303718 |
| &nbsp;&nbsp;&nbsp; Line of credit | 2672437 | 1928437 |
| &nbsp;&nbsp;&nbsp; Current portion of finance lease liabilities | 246565 | 220908 |
| &nbsp;&nbsp;&nbsp; Current portion of long-term debt | 125979 | 119734 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 5584741 | 6632493 |
| &nbsp;&nbsp;&nbsp; Long-term portion of operating lease liabilities |  | 4700 |
| &nbsp;&nbsp;&nbsp; Long-term portion of finance lease liabilities | 436910 | 534436 |
| &nbsp;&nbsp;&nbsp; Long-term debt, excluding current portion | 1880280 | 1975232 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 7901931 | 9146861 |
| Commitments and Contingencies (Notes 9, 11, 12 and 15) |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp; Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares on August 31, 2025 and November 30, 2024; issued and outstanding 0 shares on August 31, 2025 and November 30, 2024. |  |  |
| &nbsp;&nbsp;&nbsp; Common stock – $0.01 par value. Authorized 9,500,000 shares on August 31, 2025 and November 30, 2024; 5,220,423 issued on August 31, 2025 and 5,149,173 on November 30, 2024 | 52204 | 51492 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 5161242 | 5020849 |
| &nbsp;&nbsp;&nbsp; Retained earnings | 9009051 | 7328628 |
| &nbsp;&nbsp;&nbsp; Treasury stock, at cost (113,589 shares on August 31, 2025 and 112,714 shares on November 30, 2024) | (308688) | (307146) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | 13913809 | 12093823 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $21815740 | $21240684 |

---

See accompanying notes to condensed consolidated financial statements.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1

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[**Table of Contents**](#toc)

**ART'S-WAY MANUFACTURING CO., INC.**

Condensed Consolidated Statements of Operations

(Unaudited)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *Three Months Ended* | *Three Months Ended* | *Nine Months Ended* | *Nine Months Ended* |
|  | ***August 31, 2025*** | ***August 31, 2024*** | ***August 31, 2025*** | ***August 31, 2024*** |
| Sales | $6432296 | $5875700 | $17909941 | $18329363 |
| Cost of goods sold | 4666131 | 4175575 | 12587490 | 13248961 |
| Gross profit | 1766165 | 1700125 | 5322451 | 5080402 |
| Expenses |  |  |  |  |
| Engineering | 87339 | 78949 | 256684 | 346373 |
| Selling | 350771 | 380797 | 1136650 | 1241187 |
| General and administrative | 983326 | 1086685 | 3071249 | 3550460 |
| Total expenses | 1421436 | 1546431 | 4464583 | 5138020 |
| Income (loss) from operations | 344729 | 153694 | 857868 | (57618) |
| Other income (expense): |  |  |  |  |
| Interest expense | (83668) | (150012) | (259022) | (471784) |
| Other | 60196 | (4165) | 1527881 | (13386) |
| Total other income (expense) | (23472) | (154177) | 1268859 | (485170) |
| Income (loss) from continuing operations before income taxes | 321257 | (483) | 2126727 | (542788) |
| Income tax expense (benefit) | 67147 | (2713) | 446304 | (116131) |
| Income (loss) from continuing operations | 254110 | 2230 | 1680423 | (426657) |
| Discontinued Operations (Note 3) |  |  |  |  |
| Loss from discontinued operations before income taxes |  | (35919) |  | (123849) |
| Income tax benefit |  | (7489) |  | (25954) |
| Loss on discontinued operations |  | (28430) |  | (97895) |
| Net Income (Loss) | $254110 | $(26200) | $1680423 | $(524552) |

---

See accompanying notes to condensed consolidated financial statements.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2

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[**Table of Contents**](#toc)

---

| |
|:---|
| **ART**'**S-WAY MANUFACTURING CO., INC.** |
| Condensed Consolidated Statements of Stockholders' Equity |
| Nine Months Ended August 31, 2025 and August 31, 2024 |
| (Unaudited) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Common Stock*** | ***Common Stock*** | ***Additional*** |  | ***Treasury Stock*** | ***Treasury Stock*** |  |
|  | ***Number of*** |  | ***paid-in*** | ***Retained*** | ***Number of*** |  |  |
|  | ***shares*** | ***Par value*** | ***capital*** | ***earnings*** | ***shares*** | ***Amount*** | ***Total*** |
| Balance, November 30, 2023 | 5106922 | $51069 | $4838425 | $7021253 | 94256 | $(269492) | $11641255 |
| Stock based compensation | 82250 | 823 | 186971 | *-* | 18458 | (37654) | 150140 |
| Net loss | *-* |  |  | (524552) | *-* |  | (524552) |
| Balance, August 31, 2024 | 5189172 | $51892 | $5025396 | $6496701 | 112714 | $(307146) | $11266843 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Common Stock*** | ***Common Stock*** | ***Additional*** |  | ***Treasury Stock*** | ***Treasury Stock*** |  |
|  | ***Number of*** |  | ***paid-in*** | ***Retained*** | ***Number of*** |  |  |
|  | ***shares*** | ***Par value*** | ***capital*** | ***earnings*** | ***shares*** | ***Amount*** | ***Total*** |
| Balance, November 30, 2024 | 5149173 | $51492 | $5020849 | $7328628 | 112714 | $(307146) | $12093823 |
| Stock based compensation | 71250 | 712 | 140393 | *-* | 875 | (1542) | 139563 |
| Net income | *-* |  |  | 1680423 | *-* |  | 1680423 |
| Balance, August 31, 2025 | 5220423 | $52204 | $5161242 | $9009051 | 113589 | $(308688) | $13913809 |

---

See accompanying notes to condensed consolidated financial statements.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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[**Table of Contents**](#toc)

---

| |
|:---|
| **ART**'**S-WAY MANUFACTURING CO., INC.** |
| Condensed Consolidated Statements of Cash Flows |
| (Unaudited) |

---

---

| | | |
|:---|:---|:---|
|  | *Nine Months Ended* | *Nine Months Ended* |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Cash flows from operations: |  |  |
| &nbsp;&nbsp;&nbsp; Net income (loss) from continuing operations | $1680423 | $(426657) |
| Net loss from discontinued operations |  | (97895) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation | 141105 | 187794 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Decrease in obsolete inventory reserves | (36233) | (154525) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of property, plant, and equipment | (9100) | (800) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization expense | 593954 | 663828 |
| Amortization of cloud computing implementation costs | 60909 | 91364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in allowance for expected credit losses - accounts receivable | (63947) | 24509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes | 446030 | (145112) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | 412859 | 464505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | (873796) | 494822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | (106853) | (193993) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 231451 | (1386227) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contracts in progress, net | (2022780) | 2433887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Customer deposits | (107832) | (253117) |
| Income taxes payable | (500) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses | (360682) | (294171) |
| Net cash provided by (used in) operating activities - continuing operations | (14992) | 1506107 |
| Net cash used in operating activities - discontinued operations |  | (76123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | (14992) | 1429984 |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp; Purchases of property, plant, and equipment | (474770) | (614367) |
| &nbsp;&nbsp;&nbsp; Net proceeds from sale of assets | 9100 | 800 |
| Net cash used in investing activities - continuing operations | (465670) | (613567) |
| Net cash provided by (used in) investing activities - discontinued operations | - |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (465670) | (613567) |
| Cash flows from financing activities: |  |  |
| Net change in line of credit | 744000 | (546083) |
| &nbsp;&nbsp;&nbsp; Principal payments on finance lease obligations | (168989) | (148129) |
| &nbsp;&nbsp;&nbsp; Repayment of term debt | (88707) | (81211) |
| &nbsp;&nbsp;&nbsp; Repurchases of common stock | (1542) | (37654) |
| Net cash provided by (used in) financing activities - continuing operations | 484762 | (813077) |
| Net cash used in financing activities - discontinued operations |  | (2235) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities | 484762 | (815312) |
| Net increase in cash | 4100 | 1105 |
| Cash at beginning of period | 1860 | 4014 |
| Cash at end of period | $5960 | $5119 |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp; Cash paid during the period for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest | $259022 | $476809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes | 829 | 90 |
| Supplemental disclosures of non-cash operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Right-of-use (ROU) assets acquired (included in other assets) | $97120 | $38192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of operating lease ROU assets (included in other assets) | $13774 | $6451 |

---

See accompanying notes to condensed consolidated financial statements.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4

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[**Table of Contents**](#toc)

**Notes to Unaudited Condensed Consolidated Financial Statements**

***1*)** **Description of the Company**

Unless otherwise specified, as used in this Quarterly Report on Form *10*-Q, the terms "we," "us," "our," "Art's-Way," and the "Company" refer to Art's-Way Manufacturing Co., Inc., a Delaware corporation headquartered in Armstrong, Iowa, and its wholly owned subsidiaries.

The Company began operations as a farm equipment manufacturer in *1956.* Since that time, it has become a major worldwide manufacturer of agricultural equipment. Its principal manufacturing plant is located in Armstrong, Iowa.

The Company has organized its business into two operating segments. Management separately evaluates the financial results of each segment because each is a strategic business unit offering different products and requiring different technology and marketing strategies. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art's-Way Manufacturing label and private labels. The Modular Buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses.

During the *third* quarter of fiscal *2023,* the Company ceased operations of its Tools business, which manufactured steel cutting tools and inserts. In previous periods, operations of the Tools business was reported in consolidated numbers as the Company's *third* operating segment. The Tools segment was *first* reported in discontinued operations beginning with the *three* and *nine* month periods ending *August 31, 2023.* The remaining assets and liabilities of the Tools segment were disposed in the *fourth* fiscal quarter of the year ended *November 30, 2024.* For more information on discontinued operations, see Note *3* "Discontinued Operations."

***2*)** **Summary of Significant Accounting Policies**

*Statement Presentation*

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company's financial position and operating results for the interim periods. The condensed consolidated financial statements should be read in conjunction with the condensed financial statements and notes thereto contained in the Company's Annual Report on Form *10*-K for the fiscal year ended *November 30, 2024*. The results of operations for the *three* and *nine* months ended *August 31, 2025* are *not* necessarily indicative of the results to be expected for the fiscal year ending *November 30, 2025*.

*Estimates*

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the *three* and *nine* months ended *August 31, 2025*. Actual results could differ from those estimates.

*Allowance for Credit Losses*

The Company uses aging categories to estimate expected credit losses on trade receivables. The Company considers the following factors in its analysis: historical loss experience, forward-looking macroeconomic factors, company credit risk including previous delinquencies, disputed amounts, and the intent and ability to pay. The Company's typical credit terms are Net *30,* however, it also offers terms up to *360* days on floor plan units. The Company considers trade receivables greater than *30* days past due, but is *not* required to disclose past due receivables with an original term less than *one* year. The Company performs additional analysis monthly on amounts over *90* days past due to determine collectability. The Company has assigned expected credit loss percentages based on where the asset falls in the aging schedule. The Company's actual credit losses have been low compared to historical allowance estimates. The Company has considered the current interest rate environment and the recent decline in the agricultural commodity market and believes its method of estimating a higher than historical loss percentage to be an adequate estimate of actual expected losses. The Company foresees decreased credit risk over the next year while inventory on dealer lots starts to decline, interest rates continue to drop and farm income strengthens.

The Company carries contract assets related to its Modular Buildings segment in the form of costs and profit in excess of billings. These contract assets are typically converted to trade receivables in *30* to *90* days, depending on contract terms, and are due *30* days or fewer from the billing date. Because these contract assets are typically converted to receivables and collected in less than a year, consideration for these contract assets has been included in the expected credit loss model for trade receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *5*

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[**Table of Contents**](#toc)

*Employee Retention Credit*

The Company qualified for federal government assistance through Employee Retention Credit ("ERC") provisions of the Consolidated Appropriations Act of *2021.* The purpose of the Employee Retention Credit was to encourage employers to keep employees on the payroll, even if they were *not* working during the covered period because of the coronavirus outbreak. The Company filed amended tax returns with the Internal Revenue Service ("IRS") in *October* of *2023* in the amount of $1,620,103; of which $798,836 was related to *Q2* of *2021* and $821,267 was related to *Q3* of *2021.* Because of the IRS moratorium in place on ERC refunds while filing, the Company did *not* record a receivable at the time of filing. The Company recorded the $1,620,103 of ERC refund in other income on the consolidated statement of operations and also incurred $405,026 of consulting fees for preparation of the credits and a tax study, which was recorded in other expense on the consolidated statement of operations. The Company also received $246,108 of interest income on the credits that was recorded in other income on the consolidated statement of operations.

A summary of the amounts recorded on each operating segment related to the ERC refunds during the *nine* months ended *August 31, 2025* is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | *Agricultural Products* | *Modular Buildings* | *Consolidated (Continuing Operations)* |
| Employee retention credit (other income) | $1370231 | $249872 | $1620103 |
| Interest income (other income) | 207261 | 38847 | 246108 |
| Consulting fees (other expense) | (342558) | (62468) | (405026) |
| Net proceeds | $1234934 | $226251 | $1461185 |

---

The Agricultural Products segment includes $219,144 of net proceeds related to discontinued operations received after books and records were closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *6*

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[**Table of Contents**](#toc)

***3*)** **Discontinued Operations**

On *June 7, 2023* we announced we would be discontinuing our Tools segment with the last day of normal operations occurring on *July 14, 2023.* Just over a year later, on *October 21, 2024,* we completed the sale of the remaining real estate associated with our Tools segment for $1,800,000. The assets and liabilities of this segment were gone prior to *November 30, 2024* and are *no* longer reported in discontinued operations in our financial statements moving forward.

The cessation of operations and liquidation of the Tools segment as a unique business unit of the Company, represented a strategic shift in the Company's operations. In accordance with Accounting Standards Codification ("ASC") Topic *360,* the Company has reclassified Tools as discontinued operations for all periods presented.

Segment information as of *August 31, 2024* for discontinued operations was as follows:

---

| | |
|:---|:---|
|  | ***Tools*** |
|  | ***Three Months Ended*** |
|  | *August 31, 2024* |
| Revenue from external customers | $- |
| Gross Profit (loss) | (22000) |
| Operating Expense (Income) |  |
| Loss from operations | (22000) |
| Loss before tax | (36000) |
| Total Assets | 1024000 |
| Capital expenditures |  |
| Depreciation & Amortization | $7000 |

---

---

| | |
|:---|:---|
|  | ***Tools*** |
|  | ***Nine Months Ended*** |
|  | *August 31, 2024* |
| Revenue from external customers | $- |
| Gross Profit (loss) | (74000) |
| Operating Expense | 9000 |
| Loss from operations | (83000) |
| Loss before tax | (124000) |
| Total Assets | 1024000 |
| Capital expenditures |  |
| Depreciation & Amortization | $22000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *7*

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**Recently Issued Accounting Pronouncements**

Accounting Pronouncements Recently Adopted

<u>Segment Reporting - Improvements to Reportable Segment Disclosures</u>

In *November 2023,* the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") *2023*-*07,* "Segment Reporting - Improvements to Reportable Segment Disclosures." ASU *2023*-*07* adds enhanced disclosures about significant segment expenses, clarifies circumstances in which an entity can disclose multiple segment measures of profit and loss and provides new segment disclosure requirements for entities with a single reportable segment. ASU *2023*-*07* is effective for fiscal years beginning after *December 15, 2023,* and interim periods within fiscal years beginning after *December 15, 2024.* Early adoption was permitted. The Company adopted ASU *2023*-*07* in *Q1* of fiscal *2025.* The application of ASU *2023*-*07* did *not* have a significant impact on segment disclosures. The Company recast periods presented prior to the *nine* months ended *August 31, 2025*.

<u>Accounting Pronouncements *Not* Yet Adopted</u>

In *October 2023,* the FASB issued ASU *2023*-*06,* Disclosure Improvements ("ASU *2023*-*06"*), to clarify or improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB ASC with the SEC's regulations. The amendments in ASU *2023*-*06* will become effective on the date the related disclosures are removed from Regulation S-*X* or Regulation S-K by the SEC, and will *no* longer be effective if the SEC has *not* removed the applicable disclosure requirement by *June 30, 2027.* Early adoption is prohibited. We are currently evaluating the impact of ASU *2023*-*06* on the Company's consolidated financial statements and disclosures.

In *December 2023,* the FASB issued ASU *2023*-*09,* "Income Taxes (Topic *740*): Improvements to Income Tax Disclosures". The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The requirements will be effective for annual periods beginning after *December 15, 2024.* The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *8*

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***4*)** **Disaggregation of Revenue**

The following table displays revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

---

| | | | |
|:---|:---|:---|:---|
|  | ***Three Months Ended August 31, 2025*** | ***Three Months Ended August 31, 2025*** | ***Three Months Ended August 31, 2025*** |
|  | *Agricultural* | *Modular Buildings* | *Total* |
| Farm equipment | $1874000 | $- | $1874000 |
| Farm equipment service parts | 1039000 |  | 1039000 |
| Modular buildings |  | 3438000 | 3438000 |
| Modular building lease income |  | 3000 | 3000 |
| Other | 70000 | 8000 | 78000 |
|  | $2983000 | $3449000 | $6432000 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Three Months Ended August 31, 2024*** | ***Three Months Ended August 31, 2024*** | ***Three Months Ended August 31, 2024*** |
|  | *Agricultural* | *Modular Buildings* | *Total* |
| Farm equipment | $2367000 | $- | $2367000 |
| Farm equipment service parts | 532000 |  | 532000 |
| Modular buildings |  | 2776000 | 2776000 |
| Modular building lease income |  | 56000 | 56000 |
| Other | 89000 | 56000 | 145000 |
|  | $2988000 | $2888000 | $5876000 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Nine Months Ended August 31, 2025*** | ***Nine Months Ended August 31, 2025*** | ***Nine Months Ended August 31, 2025*** |
|  | *Agricultural* | *Modular Buildings* | *Total* |
| Farm equipment | $7192000 | $- | $7192000 |
| Farm equipment service parts | 2550000 |  | 2550000 |
| Modular buildings |  | 7783000 | 7783000 |
| Modular building lease income |  | 75000 | 75000 |
| Other | 214000 | 96000 | 310000 |
|  | $9956000 | $7954000 | $17910000 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Nine Months Ended August 31, 2024*** | ***Nine Months Ended August 31, 2024*** | ***Nine Months Ended August 31, 2024*** |
|  | *Agricultural* | *Modular Buildings* | *Total* |
| Farm equipment | $9870000 | $- | $9870000 |
| Farm equipment service parts | 1674000 |  | 1674000 |
| Modular buildings |  | 6268000 | 6268000 |
| Modular building lease income |  | 148000 | 148000 |
| Other | 235000 | 134000 | 369000 |
|  | $11779000 | $6550000 | $18329000 |

---

The Company offered floorplan terms in its Agricultural Products segment during its Fall of *2023* and *2024* early order programs to incentivize customers to stock farm equipment on their lots for fiscal *2024* and fiscal *2025*. Floorplan terms allow customers to pay the Company at the earliest of retail date or up to *360* days. This program can have an effect on the timing of the Company's cash flows compared with historical cash flows.

On *August 31, 2025*, the Company had approximately $274,000 in receivables on the floorplan program with a due date greater than *30* days compared to $341,000 on *August 31, 2024*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *9*

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***5*)** **Accounts receivable** 

Accounts receivable are shown net of allowances for expected credit losses. Expected losses are recorded in administrative expense at the time of receivable recognition.

The activity related to expected credit losses for the *nine* months ended *August 31, 2025* and *nine* months ended *August 31, 2024* was as follows:

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended (Continuing operations)*** | ***Nine Months Ended (Continuing operations)*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Balance, beginning | $108636 | $32137 |
| Provision charged to expense | (63947) | 37128 |
| Less amounts charged-off |  | (12619) |
| Balance, ending | $44689 | $56646 |

---

***6*)** **Contract Receivables, Contract Assets and Contract Liabilities**

The following table provides information about contract receivables, contract assets, and contract liabilities from contracts with customers included on the Condensed Consolidated Balance Sheets.

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Receivables | $2024000 | $2373000 |
| Assets | 659000 | 213000 |
| Liabilities | 425000 | 2110000 |

---

The amount of revenue recognized in the *first nine* months of fiscal *2025* that was included in a contract liability on *November 30, 2024* was approximately $255,000 compared to $686,000 in the same period of fiscal *2024*. The beginning contract receivables, assets and liabilities on *December 1, 2023* were approximately $3,432,000, $289,000 and $767,000, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *10*

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***7*)** **Net Income (Loss) Per Share of Common Stock**

Basic net income (loss) per share of common stock has been computed on the basis of the weighted average number of common shares outstanding. Diluted net income (loss) 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. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted net income (loss) per share.

Basic and diluted net income (loss) per share have been computed based on the following as of *August 31, 2025* and *August 31, 2024*:

---

| | | |
|:---|:---|:---|
|  | ***For the Three Months Ended*** | ***For the Three Months Ended*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Numerator for basic and diluted net income (loss) per share: |  |  |
| Net income from continuing operations | $254110 | $2230 |
| Net loss from discontinued operations |  | (28430) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (loss) | 254110 | (26200) |
| Denominator: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For basic net income (loss) per share - weighted average common shares outstanding | 5106033 | 5071512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of dilutive stock options |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For diluted net income (loss) per share - weighted average common shares outstanding | 5106033 | 5071512 |
| Net Income (loss) per share - Basic: |  |  |
| Continuing Operations | $0.05 | $- |
| Discontinued Operations |  | (0.01) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (loss) per share | $0.05 | $(0.01) |
| Net Income (loss) per share - Diluted: |  |  |
| Continuing Operations | $0.05 | $- |
| Discontinued Operations |  | (0.01) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income (loss) per share | $0.05 | $(0.01) |

---

---

| | | |
|:---|:---|:---|
|  | ***For the Nine Months Ended*** | ***For the Nine Months Ended*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Numerator for basic and diluted net income (loss) per share: |  |  |
| Net income (loss) from continuing operations | $1680423 | $(426657) |
| Net loss from discontinued operations |  | (97895) |
| Net income (loss) | 1680423 | (524552) |
| Denominator: |  |  |
| For basic net income (loss) per share - weighted average common shares outstanding | 5085183 | 5054092 |
| Effect of dilutive stock options |  |  |
| For diluted net income (loss) per share - weighted average common shares outstanding | 5085183 | 5054092 |
| Net Income (Loss) per share - Basic: |  |  |
| Continuing Operations | $0.33 | $(0.08) |
| Discontinued Operations |  | (0.02) |
| Net income (loss) per share | $0.33 | $(0.10) |
| Net Income (Loss) per share - Diluted: |  |  |
| Continuing Operations | $0.33 | $(0.08) |
| Discontinued Operations |  | (0.02) |
| Net income (loss) per share | $0.33 | $(0.10) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *11*

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***8*)** **Inventory**

Major classes of inventory are:

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Raw materials | $7906042 | $7882271 |
| Work in process | 375943 | 160209 |
| Finished goods | 4647244 | 3942435 |
| Total Gross Inventory | $12929229 | $11984915 |
| Less: Reserves | (1691287) | (1657002) |
| Net Inventory | $11237942 | $10327913 |

---

***9*)** **Accrued Expenses**

Major components of accrued expenses are:

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Salaries, wages, and commissions | $466382 | $803662 |
| Accrued warranty expense | 220550 | 225186 |
| Other | 247033 | 274870 |
| Total accrued expenses | $933965 | $1303718 |

---

***10*)** **Assets Held for Lease**

Major components of assets held for lease are:

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Modular Buildings | $61116 | $89033 |
| Agricultural products equipment | 66680 |  |
| Total assets held for lease (net) | $127796 | $89033 |

---

There were approximately $3,000 and $75,000 of rents recognized from assets held for lease included in sales on the Condensed Consolidated Statements of Operations during the *three* and *nine* months ended *August 31, 2025*, respectively, compared to $56,000 and $148,000 for the *three* and *nine* months ending *August 31, 2024*, respectively. There were no future minimum lease receipts as of *August 31, 2025*.

***11*)** **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 one year from the 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. Product warranty is included in the price of the product and provides assurance that the product will function in accordance with agreed-upon specifications. It does *not* represent a separate performance obligation under ASC *606.* 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. The accrued warranty balance is included in accrued expenses as shown in Note *9* "Accrued Expenses." Changes in the Company's product warranty liability for the *three* and *nine* months ended *August 31, 2025* and *August 31, 2024* are as follows:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended (Continuing Operations)*** | ***Three Months Ended (Continuing Operations)*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Balance, beginning | $213929 | $196668 |
| &nbsp;&nbsp;&nbsp; Provision charged to expense | 77334 | 71426 |
| &nbsp;&nbsp;&nbsp; Less amounts charged-off | (70713) | (52176) |
| Balance, ending | $220550 | $215918 |

---

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended (Continuing Operations)*** | ***Nine Months Ended (Continuing Operations)*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Balance, beginning | $225186 | $295113 |
| Provision charged to expense | 260709 | 250102 |
| Less amounts charged-off | (265345) | (329297) |
| Balance, ending | $220550 | $215918 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

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***12*)** **Loan and Credit Agreements**

<u>Bank Midwest Revolving Lines of Credit and Term Loans</u>

The Company maintains a $4,000,000 revolving line of credit (the *"2025* Line of Credit") with Bank Midwest. On *August 31, 2025*, the balance of the *2025* Line of Credit was $2,672,437 with $1,327,563 remaining available. The *2025* Line of Credit is subject to a borrowing base, which is an amount equal to 75% of accounts receivable balances (discounted for aged receivables), plus 50% of net inventory, less any outstanding loan balance on the Line of Credit. On *August 31, 2025*, the *2025* Line of Credit was *not* limited by the borrowing base calculation. Any unpaid principal amount borrowed on the *2025* Line of Credit accrued interest at a floating rate per annum equal to the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor is set at 6.00% per annum and the interest rate at *August 31, 2025* was 7.5% per annum. The *2025* Line of Credit was most recently renewed on *March 27, 2025* with a maturity date of *March 30, 2026* and required monthly interest-only payments. The *2025* Line of Credit is governed by the terms of a Promissory Note, dated *March 27, 2025,* entered into between the Company and Bank Midwest.

The Company carries a $2,600,000 term loan with Bank Midwest due *October 1, 2037 (*the "Term Loan"). The Term Loan accrues interest at a rate of 7.00%. The interest rate *may* only be adjusted by Bank Midwest once every *five* years. Monthly payments of $19,648 in principal and interest are required on the Term Loan. The Term Loan is also guaranteed by the United States Department of Agriculture ("USDA"), which required an upfront guarantee fee of $62,400 and requires an annual fee of 0.5% of the unpaid balance. As part of the USDA guarantee requirements, shareholders owning more than *20%* are required to personally guarantee a portion of the Term Loan, in an amount equal to their stock ownership percentage. The J. Ward McConnell Jr. Living Trust, the estate of the former Vice Chairman of the Board of Directors and a shareholder owning more than 20% of the Company's outstanding stock, is guaranteeing approximately 38% of the Term Loan, for an annual fee of 2% of the personally guaranteed amount. The initial guarantee fee is being amortized over the life of the Term Loan, and the annual fees and personally guaranteed amounts are expensed monthly. The Term Loan is governed by the terms of a Promissory Note, dated *September 28, 2017,* entered into between the Company and Bank Midwest.

On *October 1, 2025* the Company entered into a term loan with Bank Midwest in the amount of $516,971 (the "Roof Loan") to replace portions of the roof on its Armstrong facility. The Term Loan accrues interest at a rate of 7.25% with a payback period of 10 years. The interest rate will be adjusted after *60* payments to the *5*-Year Treasury Index plus a margin of 3.25% . Monthly payments of $6,102 in principal and interest are required on the Term Loan beginning on *November 5, 2025.* 

In connection with the Line of Credit, the Company, Art's-Way Scientific, Inc. and Ohio Metal Working Products/Art's-Way Inc. each entered into a Commercial Security Agreement with Bank Midwest, dated *September 28, 2017,* pursuant to which each granted to Bank Midwest a *first* priority security interest in certain inventory, equipment, accounts, chattel paper, instruments, letters of credit and other assets to secure the obligations of the Company under the line of credit. Each of Art's-Way Scientific, Inc. and Ohio Metal Working Products/Art's-Way Inc. also agreed to guarantee the obligations of the Company pursuant to the Line of Credit, as set forth in Commercial Guaranties, each dated *September 28, 2017.* The Ohio Metal Working Products/Art's-Way Inc.'s mortgage, commercial security agreements and commercial guaranties were released upon sale of the Ohio real estate associated with the Company's discontinued Tools segment in *October* of *2024.*

The Term Loan and Roof Loan are secured by a mortgage on the Company's Armstrong, Iowa and Monona, Iowa properties. Each mortgage is governed by the terms of a separate Mortgage, dated *September 28, 2017,* and each property is also subject to a separate Assignment of Rents, dated *September 28, 2017.*

If the Company or its subsidiary (as guarantor pursuant to the Commercial Guaranty) commits an event of default with respect to the promissory notes and fails or is unable to cure that default, Bank Midwest *may* immediately terminate its obligation, if any, to make additional loans to the Company and *may* accelerate the Company's obligations under the promissory note. Bank Midwest shall also have all other rights and remedies for default provided by the Uniform Commercial Code, as well as any other applicable law and the various loan agreements. In addition, in an event of default, Bank Midwest *may* foreclose on the mortgaged property.

Compliance with Bank Midwest covenants is measured annually each *November 30.* The terms of the Bank Midwest loan agreements require the Company to maintain a minimum of $4,000,000 of monthly working capital. The Company is also required to maintain a minimum debt service coverage ratio of 1.25, with a 0.10 tolerance. The Company also must receive bank approval for individual purchases or sales of equipment over $50,000 and maintain reasonable salaries and owner compensation. The Company was in compliance with all covenants of Bank Midwest loans as of *November 30, 2024*. The next measurement date is *November 30, 2025* for all covenants except the monthly working capital requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *13*

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<u>SBA Economic Injury Disaster Loans</u>

In *June* of *2020,* the Company executed the standard loan documents required for securing loans offered by the U.S. Small Business Administration under its Economic Injury Disaster Loan ("EIDL") assistance program in light of the impact of the COVID-*19* pandemic on the Company's business. One outstanding loan was executed on *June 18, 2020* with a principal amount of $150,000, with a *second* loan being executed on *June 24, 2020* with a principal amount of $150,000. Proceeds from these EIDLs were used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue from the date of inception. Installment payments, including principal and interest, were due monthly beginning *December 18, 2022* and *December 24, 2022 (thirty* months from the date of the EIDLs) in the amount of $731 per EIDL. The balance of principal and interest is payable 30 years from the date of the EIDL. The EIDLs are secured by a security interest on all of the Company's assets subordinate to Bank Midwest's security interest. Both EIDLs are governed by the terms of a separate Promissory Note, dated *June 18, 2020* and *June 24, 2020,* as applicable, entered into by the Company or the applicable subsidiary.

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

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Bank Midwest loan payable in monthly installments of $19,648 including interest at 7.00%, due October 1, 2037 | $1695544 | $1779877 |
| U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning December 18, 2022, due June 18, 2050 | 155110 | 157304 |
| U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning December 24, 2022, due June 24, 2050 | 155605 | 157785 |
| Total term debt | $2006259 | $2094966 |
| Less current portion of term debt | (125979) | (119734) |
| Term debt, excluding current portion | $1880280 | $1975232 |

---

A summary of the minimum maturities of term debt follows for the *twelve* month periods ending *August 31:*

---

| | |
|:---|:---|
| Year | *Amount* |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2026 | $125979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2027 | 134233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2028 | 143550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2029 | 154157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2030 | 165225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2031 and thereafter | 1283115 |
|  | $2006259 |

---

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

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***13*)** **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.

The Company has net operating losses and tax credits that are expected to offset any *2025* fiscal year tax liability and does *not* expect to have significant cash tax expense in the near future.

***14*)** **Related Party Transactions**

During the *three* and *nine* months ended *August 31, 2025*, and *August 31, 2024*, the Company did not recognize any revenues from transactions with a related party, and no amounts in accounts receivable balances were due from a related party. From time to time, the Company purchases various supplies from related parties, which are companies in which Marc McConnell, the Company's chairman and principal executive officer, has an ownership interest and also serves as President. The J. Ward McConnell, Jr. Living Trust, is paid a monthly fee to guarantee a portion of the Company's term debt in accordance with the USDA guarantee obtained on the Company's term debt. In the *three* and *nine* months ended *August 31, 2025*, the Company recognized $3,267 and $9,796 of expense for transactions with related parties compared to $3,869 and $11,549 for the *three* and *nine* months ended *August 31, 2024*. As of *August 31, 2025*, accrued expenses contained a balance of $1,094 owed to a related party compared to $1,299 on *August 31, 2024*.

***15*)** **Leases**

The components of operating leases on the Condensed Consolidated Balance Sheets on *November 30, 2024* were as follows:

---

| | |
|:---|:---|
|  | **November 30, 2024** |
| Operating lease right-of-use assets (in other assets) | $13774 |
| Current portion of operating lease liabilities (in accrued expenses) | $9074 |
| Long-term portion of operating lease liabilities | 4700 |
| Total operating lease liabilities | $13774 |

---

The components of finance leases on the Condensed Consolidated Balance Sheets on *August 31, 2025* and *November 30, 2024* were as follows:

---

| | | |
|:---|:---|:---|
|  | ***August 31, 2025*** | ***November 30, 2024*** |
| Finance lease right-of-use assets (net of amortization in other assets) | $367120 | $377753 |
| Current portion of finance lease liabilities | $246565 | $220908 |
| Long-term portion of finance lease liabilities | 436910 | 534436 |
| Total finance lease liabilities | $683475 | $755344 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

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***16*)** **Equity Incentive Plan and Stock Based Compensation** 

On *February 25, 2020,* the Board of Directors of the Company (the "Board") authorized and approved the Art's-Way Manufacturing Co., Inc. *2020* Equity Incentive Plan (the *"2020* Plan"). The *2020* Plan was approved by the stockholders on *April 30, 2020.* The *2020* Plan replaced the Art's-Way Manufacturing Co., Inc. *2011* Equity Incentive Plan (the *"2011* Plan") and prior plans. The *2020* Plan added an additional 500,000 shares to the number of shares reserved for issuance pursuant to equity awards. No further awards will be made under the *2011* Plan or other prior plans. Awards to directors and executive officers under the *2020* Plan are governed by the forms of agreement approved by the Board. Stock options or other awards granted prior to *February 25, 2020* are governed by the applicable prior plan and the forms of agreement adopted thereunder.

The *2020* Plan permits the plan administrator to award nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance awards, and stock appreciation rights to employees (including officers), directors, and consultants. The Board has approved a director compensation policy pursuant to which directors are automatically granted restricted stock awards of 3,000 shares of fully vested common stock annually or initially upon their election to the Board and another 1,000 shares of fully vested common stock on the last business day of each fiscal quarter.

Shares issued under the *2020* Plan for the *three* and *nine* month periods ended *August 31, 2025* and *August 31, 2024* are as follows:

---

| | | |
|:---|:---|:---|
|  | ***For the Three Months Ended*** | ***For the Three Months Ended*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Shares issued to directors (immediate vesting) | 5000 | 5000 |
| Unvested shares forfeited upon termination | (6250) |  |
| Total shares issued (forfeited) | (1250) | 5000 |

---

---

| | | |
|:---|:---|:---|
|  | ***For the Nine Months Ended*** | ***For the Nine Months Ended*** |
|  | ***August 31, 2025*** | ***August 31, 2024*** |
| Shares issued to directors (immediate vesting) | 30000 | 20000 |
| Shares issued to directors, employees, and consultants (three-year vesting) | 47500 | 69000 |
| Unvested shares forfeited upon termination | (6250) | (6750) |
| Total shares issued (forfeited) | 71250 | 82250 |

---

***17*)** **Disclosures About the Fair Value of Financial Instruments**

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. On *August 31, 2025* and *November 30, 2024*, the carrying amount approximated fair value for cash, accounts receivable, accounts payable, notes payable to bank, finance lease liabilities and other current and long-term liabilities. The carrying amounts of current assets and liabilities approximate fair value because of the short maturity of these instruments. The fair value of the finance lease liabilities also approximate recorded value, as its measurement is based on discounting future cash flows at rates implicit in the lease. The rates implicit in the lease do *not* materially differ from current market rates. The fair value of the Company's term loans payable also approximates recorded value because the interest rates do *not* substantially different from current interest rates the Company could obtain under similar terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *16*

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***18*)** **Segment Information**

In accordance with ASC *280,* "Segment Reporting," the Company's chief operating decision maker, or CODM, has been identified as its President, Chief Executive Officer and Chairman. The CODM reviews operating results to make decisions about allocating resources and assessing performance for the entire Company and utilizes gross profit and income from operations to evaluate segment performance and allocate resources. The Company's selling, general and administrative expenses and engineering expenses are charged to each segment as incurred by each reportable segment. The Company allocates a small portion of corporate expenses from the Agricultural Products segment to the Modular Buildings segment monthly for administrative support services provided.

The Company has two reportable segments: Agricultural Products and Modular Buildings. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art's-Way Manufacturing label. The Modular Buildings segment manufactures and installs modular buildings for various uses, commonly animal containment and research laboratories under the Art's Way Scientific and Evolution Modular labels.

The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. 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.

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| | | | |
|:---|:---|:---|:---|
|  | ***Three Months Ended August 31, 2025*** | ***Three Months Ended August 31, 2025*** | ***Three Months Ended August 31, 2025*** |
|  | *Agricultural Products* | *Modular Buildings* | Consolidated (Continuing Operations)<sup>1</sup> |
| Revenue from external customers | $2983000 | $3449000 | $6432000 |
| Gross profit | 546000 | 1220000 | 1766000 |
| Operating Expense | 1029000 | 392000 | 1421000 |
| Income (loss) from operations | (483000) | 828000 | 345000 |
| Income (loss) before tax | (491000) | 812000 | 321000 |
| Income tax expense (benefit) | $(103000) | $170000 | $67000 |
| Total Assets | $18323000 | $3493000 | $21816000 |
| Capital expenditures<sup>2</sup> | 218000 | 88000 | 306000 |
| Depreciation & Amortization | 150000 | 45000 | 195000 |
| Interest expense | 68000 | 16000 | 84000 |
| Engineering | 87000 |  | 87000 |
| Selling | 199000 | 152000 | 351000 |
| General and administrative (G&A) | 743000 | 240000 | 983000 |
| Corporate expense (included in G&A) | $85000 | $45000 | $130000 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Three Months Ended August 31, 2024*** | ***Three Months Ended August 31, 2024*** | ***Three Months Ended August 31, 2024*** |
|  | *Agricultural Products* | *Modular Buildings* | Consolidated (Continuing Operations)<sup>1</sup> |
| Revenue from external customers | $2988000 | $2888000 | $5876000 |
| Gross profit | 814000 | 886000 | 1700000 |
| Operating Expense | 1287000 | 259000 | 1546000 |
| Income (loss) from operations | (472000) | 626000 | 154000 |
| Income (loss) before tax | (618000) | 618000 |  |
| Income tax expense (benefit) | $(130000) | $127000 | $(3000) |
| Total Assets | $19311000 | $3136000 | $22447000 |
| Capital expenditures | 50000 | 52000 | 102000 |
| Depreciation & Amortization | 163000 | 66000 | 229000 |
| Interest Expense | 140000 | 10000 | 150000 |
| Engineering | 79000 |  | 79000 |
| Selling | 303000 | 78000 | 381000 |
| General and administrative (G&A) | 905000 | 181000 | 1086000 |
| Corporate expense (included in G&A) | $162000 | $30000 | $192000 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *17*

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| | | | |
|:---|:---|:---|:---|
|  | ***Nine Months Ended August 31, 2025*** | ***Nine Months Ended August 31, 2025*** | ***Nine Months Ended August 31, 2025*** |
|  | *Agricultural Products* | *Modular Buildings* | Consolidated (Continuing Operations)<sup>1</sup> |
| Revenue from external customers | $9956000 | $7954000 | $17910000 |
| Gross profit | 2428000 | 2894000 | 5322000 |
| Operating Expense | 3340000 | 1125000 | 4465000 |
| Income (loss) from operations | (911000) | 1769000 | 858000 |
| Income (loss) before tax | 176000 | 1951000 | 2127000 |
| Income tax expense (benefit) | $37000 | $409000 | $446000 |
| Total Assets | $18323000 | $3493000 | $21816000 |
| Capital expenditures2 | 419000 | 153000 | 572000 |
| Depreciation & Amortization | 445000 | 148000 | 593000 |
| Interest expense | 214000 | 45000 | 259000 |
| Engineering | 257000 |  | 257000 |
| Selling | 666000 | 471000 | 1137000 |
| General and administrative (G&A) | 2417000 | 654000 | 3071000 |
| Corporate expense (included in G&A) | $325000 | $135000 | $460000 |

---

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| | | | |
|:---|:---|:---|:---|
|  | ***Nine Months Ended August 31, 2024*** | ***Nine Months Ended August 31, 2024*** | ***Nine Months Ended August 31, 2024*** |
|  | *Agricultural Products* | *Modular Buildings* | Consolidated (Continuing Operations)<sup>1</sup> |
| Revenue from external customers | $11779000 | $6550000 | $18329000 |
| Gross profit | 3278000 | 1802000 | 5080000 |
| Operating Expense | 4336000 | 802000 | 5138000 |
| Income (loss) from operations | (1057000) | 999000 | (58000) |
| Income (loss) before tax | (1516000) | 973000 | (543000) |
| Income tax expense (benefit) | $(318000) | $202000 | $(116000) |
| Total Assets | $19311000 | $3136000 | $22447000 |
| Capital expenditures | 438000 | 176000 | 614000 |
| Depreciation & Amortization | 472000 | 192000 | 664000 |
| Interest expense | 443000 | 28000 | 471000 |
| Engineering | 346000 | 1000 | 347000 |
| Selling | 1010000 | 232000 | 1242000 |
| General and administrative (G&A) | 2980000 | 569000 | 3549000 |
| Corporate expense (included in G&A) | $486000 | $90000 | $576000 |

---

*1.* The consolidated total in the tables is a sum of segment figures and *may not* tie to actual figures in the condensed consolidated financial statements due to rounding.

*2.* Includes $45,000 of Right of Use Assets acquired in the Agricultural Products Segment.

*3.* Includes $97,000 of Right of Use Assets acquired in the Agricultural Products Segment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *18*

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***19*)** **Subsequent Events**

Management evaluated all other activity of the Company and concluded that *no* subsequent events have occurred other than the roof loan that was signed on *October 1, 2025* in Note *12* Loan and Credit Agreements that would require recognition in the condensed consolidated financial statements.

**Item 2. Management**'**s Discussion and Analysis of Financial Condition and Results of Operations**

**Forward-Looking Statements**

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "report") and the audited consolidated financial statements and related notes thereto included in Part II, Item 8, "Financial Statements and Supplementary Data," as well as Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. Some of the statements in this report may be forward-looking statements that reflect our current view on future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," "foresee," "opportunity," or the negative of these terms or other similar expressions. Many of these forward-looking statements are located in this report under Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," but they may appear in other sections as well. Forward-looking statements in this report generally relate to: (i) our expectations with respect to order backlog, future demand for products, expected product mix and resulting sales; (ii) our beliefs regarding the sufficiency of working capital and cash flows; (iii) our expectation that we will continue to be able to renew or obtain financing on reasonable terms when necessary as well as our continued positive relationship with our creditors and lenders; (iv) our beliefs regarding production capabilities; (v) our intentions and beliefs relating to our costs, business strategies, and future performance, including without limitation, the impact of cost cutting measures, process improvement measures and new product development; (vi) our beliefs that normalizing dealer equipment stock levels may positively impact future demand for our agricultural products (vii) our beliefs regarding our early order program providing a picture of future demand; (viii) our expected financial results, including without limitation, our expected results for the Modular Buildings and Agricultural Products segments; and (ix) our expectations concerning our primary capital and cash flow needs.

You should read this report thoroughly with the understanding that our actual results may differ materially from those set forth in the forward-looking statements for many reasons, including events beyond our control and assumptions that prove to be inaccurate or unfounded. We cannot provide any assurance with respect to our future performance or results. Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including but not limited to: (i) the impact of changing credit markets on our ability to continue to obtain financing on reasonable terms; (ii) our ability to repay current debt, continue to meet debt obligations and comply with financial covenants; (iii) the effect of inflation as well as general economic conditions, including consumer and governmental spending, on the demand for our products and the cost of our supplies and materials; (iv) impacts caused by fluctuating commodity prices and fluctuating farm income; (v) fluctuations in seasonal demand and our production cycle; (vi) the ability of our suppliers to meet our demands for raw materials and component parts; (vii) fluctuations in the price of raw materials, especially steel and the impact of U.S. tariff policy and retaliatory tariffs on our business; (viii) our ability to predict and meet the demands of each market in which our segments operate; (ix) the impact of future interest rate changes on our business and the demand of our products, or interest rate changes may be different than we currently expect; and (x) other factors described from time to time in our Securities and Exchange Commission filings. We do not intend to update the forward-looking statements contained in this report other than as required by law. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

**Critical Accounting Policies**

Our critical accounting policies involving the more significant judgments and assumptions used in the preparation of our financial statements as of August 31, 2025 remain unchanged from November 30, 2024. Disclosure of these critical accounting policies is incorporated by reference from Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended November 30, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19

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**Results of Operations**

*Net Sales and Cost of Sales*

Our consolidated corporate sales from continuing operations for the three- and nine-month period ended August 31, 2025 were $6,432,000, and $17,910,000, respectively, compared to $5,876,000 and $18,329,000, respectively, during the same periods in fiscal 2024. For the three months ended August 31, 2025, we saw a sales increase of $556,000, or 9.5%, from the same period in fiscal 2024. For the nine months ended August 31, 2025, we saw a sales decrease of $419,000, or 2.3%, from the same period in fiscal 2024. Consolidated gross margin for the three and nine months ended August 31, 2025 was 27.5% and 29.7%, respectively, compared to 28.9% and 27.7%, respectively, for the same periods in fiscal 2024.

Our 2025 third fiscal quarter sales in our Agricultural Products segment were $2,983,000 compared to $2,988,000 during the same period of fiscal 2024, a decrease of $5,000, or 0.2%. For the nine months ended August 31, 2025, our sales in the Agricultural Products segment were $9,956,000 compared to $11,779,000 during the same period of fiscal 2024, a decrease of $1,823,000, or 15.5%. We have experienced decreased demand for the last six fiscal quarters due to difficult agricultural market conditions highlighted by high interest rates, increasing input costs and low row crop prices. Although our inventory decreased from heightened levels in fiscal 2024, many dealers are still sitting on inventory from other equipment manufacturers, which hampers our ability to get these dealers to stock more of our equipment. We believe product availability will be key for the next two fiscal quarters to capitalize on retail opportunities and year end tax buying. Strategically, we are continuing to build inventory through our fiscal year end despite low demand in order to be responsive to farmers; needs this fall. Livestock prices, predominately cattle, continue to be at all-time highs in fiscal 2025 and have driven strong grinder mixer sales activity thus far in fiscal 2025. We expect cattle farmers to have strong earnings in 2025 and we could potentially see retail opportunities in an attempt to offset tax liability prior to the calendar year-end. The agriculture market is highly cyclical, and we believe this is the bottom of the cycle. We anticipate that conditions will start to improve in the next 9 to 15 months in our market. Our efforts in fiscal 2024 to right-size our production and administrative staff has reduced our operating expenses which is aiding in our efforts to weather the bottom of the cycle. Our fall early order program starts in October and runs through January 15th. Gross margin for our Agricultural Products segment for the three-month period ended August 31, 2025 was 18.3% compared to 27.2% for the same period in fiscal 2024, while our gross margin for the nine-month period ended August 31, 2025 was 24.4% compared to 27.8% for the same period of fiscal 2024. The sales decreases for the three- and nine- months periods ended August 31, 2025 compared to the same periods in fiscal 2024, resulted in less variable margin to cover our fixed costs comparatively while inflationary forces also negatively affected our gross margin. Steel prices began to rise in February 2025 due to tariff uncertainty and infrastructure projects that impacted domestic demand. While steel prices have dropped from their peak in April 2025, we have not seen them return to 2024 levels. We are also paying higher prices from tariff charges for imported products, which is negatively affecting our margin. We are exploring reshoring options for these items in an attempt to reduce the gross margin impact. We expect to pass on a 3-5% price increase to our customers with our fall early order program due to rising costs from our suppliers.

Our third fiscal quarter sales in our Modular Buildings segment were $3,449,000 compared to $2,888,000 for the same period in fiscal 2024, an increase of $561,000, or 19.4%. Our Modular Buildings segment sales for the nine months ended August 31, 2025 were $7,954,000 compared to $6,550,000 for the same period of fiscal 2024, an increase of $1,404,000, or 21.4%. Consistent execution on our backlog by our project managers and production team has driven sales up approximately 20% for the quarter and year to date ending August 31, 2025. We continue to grow our reputation with impactful projects in the custom research and laboratory fields in fiscal 2025. Quoting activity and custom build inquiries continue to remain strong as we cross into Q4 of fiscal 2025, despite earlier concerns about a pullback of governmental grants and funding. In Q1 of fiscal 2025, we brought on a Director of Business Development and Sales who replaced our then-serving President and Director of Sales. Our outgoing President and Director of Sales is working part time as a consultant moving forward to maintain customer relationships. With the additional sales help we are exploring new markets where our custom buildings can offer competitiveness to the marketplace including but not limited to: datacenters, wastewater treatment facilities, petroleum and mining analysis labs, chemical production and transportation offices. Gross margin in the Modular Buildings segment for the three- and nine-month period ended August 31, 2025 was 35.4% and 36.4%, respectively, compared to 30.7% and 27.5%, respectively, for the same periods in fiscal 2024. We continue to see strong margins in this segment from increased workforce proficiency and software improvements, which have improved our data analytics and ability to remain within budgeted costs.

*Expenses*

Consolidated selling expenses from continuing operations for the three months ended August 31, 2025 were $351,000, compared to $381,000 for the same period in fiscal 2024. For the nine months ended August 31, 2025, our consolidated selling expenses from continuing operations were $1,137,000 compared to $1,241,000 from the same period in fiscal 2024. The decrease in selling expenses is due to a reduction of employees on the sales and marketing teams in the Agricultural Products segment. Selling expenses as a percentage of sales were 6.3% for the nine months ended August 31, 2025 compared to 6.8% for nine months ended August 31, 2024.

Consolidated engineering expenses from continuing operations were $87,000 for Q3 of fiscal 2025 compared to $79,000 for the same period in fiscal 2024. For the nine months ended August 31, 2025, consolidated engineering expenses were $257,000 compared to $346,000 for the same period in fiscal 2024. The decrease in engineering expenses is related to the reduction in our engineer headcount at the beginning of fiscal 2024. We expect to add a product development manager to our team as we find the right candidate to fit our business in an attempt to bolster our product offerings. Engineering expenses as a percentage of sales were 1.4% for the nine months ended August 31, 2025, compared to 1.9% for the same period in fiscal 2024.

Consolidated administrative expenses from continuing operations for the three- and nine-month period ended August 31, 2025 were $983,000 and $3,071,000, respectively, compared to $1,087,000 and $3,550,000, respectively, for the same periods in fiscal 2024. Administrative expenses as a percentage of sales were 17.1% for the nine months ended August 31, 2025, compared to 19.4% for the same period in fiscal 2024. Administrative expenses decreased year-over-year primarily due to early retirement incentives we offered to help right-size our workforce in Q1 of fiscal 2024, which was not repeated in fiscal 2025. We also reduced administrative headcount including our Chairman of the Board stepping in to fill our Chief Executive Officer role in Q4 of fiscal 2024, which positively impacted administrative expenses in fiscal 2025 versus fiscal 2024. Cloud computing expenses related to upgrading an enterprise resource planning system in the Agricultural Products segment was fully amortized in Q2 of fiscal 2025, and has reduced our administrative expenses in fiscal 2025 and is expected to continue to do so comparatively in fiscal 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20

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*Net income (loss) from continuing operations*

Consolidated net income from continuing operations was $254,000 for the three-month period ended August 31, 2025, compared to net income of $2,000 for the same period in fiscal 2024. Our consolidated net income from continuing operations was $1,680,000 for the nine months ended August 31, 2025, compared to net loss of $427,000 for the same period in fiscal 2024. Our operating results are improved in both reportable segments year on year, despite the decrease in sales for our Agricultural Products segment. Cost cutting procedures enacted in fiscal 2024 in the Agricultural Products segment has stabilized our operating results while the agriculture market waits for a rebound. We remain focused on maintaining our agricultural product reputation and price competitiveness to ensure our brand endures the current slowdown. We have identified some existing product line opportunities to capitalize on in fiscal 2026 that we believe help drive up our sales even in a downtown. We believe, this segment will be poised to capitalize and provide profitability when markets do improve. Our Modular Buildings segment continues to perform with solid operating income and near record sales. We expect continued success in the Modular Buildings segment as leads continue converting to contract. Our consolidated net income from continuing operations for the nine months ended August 31, 2025 also benefited largely from the receipt of Employee Retention Credit refunds in the approximate amount of $1,154,000 including interest, net of consulting fees to prepare credit and tax study and net of tax.

*Order Backlog*

The consolidated order backlog net of discounts for continuing operations as of October 5, 2025 was $3,532,000 compared to $5,455,000 as of October 5, 2025, a 35.2% decrease. The order backlog in our Agricultural Products segment was $847,000 as of October 5, 2025 compared to $708,000 in fiscal 2024, a 19.7% increase. We expect to see fall orders pick up as yearend tax buying occurs for cattle farmers who are seeing record beef prices. The backlog for the Modular Buildings segment was $2,685,000 as of October 5, 2025, compared to $4,747,000 in fiscal 2024, a 43.4% decrease. The backlog decrease is due mostly to the timing of when project contracts were signed. We expect similar results in this segment due to project opportunities we are quoting that are not under contract yet. Our order backlog is not necessarily indicative of future revenue to be generated from such orders due to the possibility of order cancellations and dealer discount arrangements we may enter into from time to time.

**Liquidity and Capital Resources**

Our primary source of funds for the nine months ended August 31, 2025 was cash generated by financing activities, mainly the use of our line of credit. Our line usage increased as we fulfilled obligations on our contracts in progress in the Modular Buildings segment; moving from a position where we were overbilled by approximately $1,715,000 at November 30, 2024 to our position at August 31, 2025, underbilled by approximately $307,000. Our line usage is also up due to increasing inventory in the Agricultural Products segment as we build stocking inventory to be responsive to end user needs. With equipment dealers not in a position to stock, we need to be able to react to retail opportunities quickly. We received a cash boost in Q2 of fiscal 2025, receiving net proceeds of approximately $1,461,000 from Employer Retention Credit refunds. Collection of accounts receivable and an increase in accounts payable drove cash in for the nine months ended August 31, 2025. We also had operating income from continuing operations of approximately $858,000 for the nine months ended August 31, 2025 with approximately $687,000 of non-cash reconciling items. We expect progress on construction products to be a major generator of cash and line of credit usage to remain steady for the remainder of fiscal 2025. We expect our primary cash needs for the remainder of the fiscal year to be inventory increases in the Agricultural Products segment and capital needs including fixing a portion of our roof and equipment that increases our production efficiency.

As of August 31, 2025, our revolving credit line had an outstanding principal balance of $2,672,437. We renewed our revolving line of credit with Bank Midwest on March 27, 2025, with a scheduled maturity date of March 30, 2026. In our most recent renewal, we dropped our principal balances from $5,500,000 to $4,000,000 and also negotiated an interest rate 75 basis points lower than our previous line of credit. Bank Midwest's credit committee has preapproved an additional $1,500,000 of principal for the 2025 renewal, consistent with the borrowing availability of our previous line of credit, in the event we need additional funding.

We believe our current financing arrangements will provide sufficient cash to finance operations and pay debt when due during the next twelve months. We expect to continue to be able to procure financing upon reasonable terms.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

**Item 4. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

The persons serving as our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period subject to this report. Based on this evaluation, the persons serving as our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of August 31, 2025. Our management has concluded that the consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

**Changes in Internal Control over Financial Reporting**

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21

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**PART II** – **OTHER INFORMATION**

**Item 1. Legal Proceedings.**

We are currently not a party to any material pending legal proceedings.

**Item 1A. Risk Factors.**

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

We did not purchase any shares of our common stock during the third quarter of fiscal 2025.

**Item 3. Defaults Upon Senior Securities.**

None.

**Item 4. Mine Safety Disclosures.**

Not applicable.

**Item *5.* Other Information.**

*Insider Trading Arrangements*. During the *three* months ended *August 31, 2025*, no director or officer (as defined in Rule *16a*-*1*(f) under the Exchange Act) of the Company adopted or terminated a "Rule *10b5*-*1* trading arrangement" or "non-Rule *10b5*-*1* trading arrangement," as each term is defined in Item *408*(a) of Regulation S-K.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *22*

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**Item 6. Exhibits.** 

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| | |
|:---|:---|
| **Exhibit**<br> **No.** | **Description** |
| 3.1 | [Conformed Certificate of Incorporation of Art's-Way Manufacturing Co., Inc. – incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2020.](http://www.sec.gov/Archives/edgar/data/7623/000143774921002312/ex_224746.htm) |
| 3.2 | [Conformed Bylaws of Art's-Way Manufacturing Co., Inc.– incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2020.](http://www.sec.gov/Archives/edgar/data/7623/000143774921002312/ex_224747.htm) |
| 10.1 | [<u>Promissory Note, between Bank Midwest and Art's-Way Manufacturing Co., Inc. - filed herewith</u>.](ex_867687.htm) |
| 31.1 | [Certification of Chief Executive Officer pursuant to 17 CFR 13a-14(a) – filed herewith.](ex_841875.htm) |
| 31.2 | [Certification of Chief Financial Officer pursuant to 17 CFR 13a-14(a) – filed herewith.](ex_841876.htm) |
| 32.1 | [Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 - furnished herewith.](ex_841877.htm) |
| 32.2 | [Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 - furnished herewith.](ex_841878.htm) |
| 101 | The following materials from this report, formatted in iXBRL (Inline Extensible Business Reporting Language) are filed herewith: (i) condensed consolidated balance sheets, (ii) condensed consolidated statement of operations, (iii) condensed consolidated statements of stockholders' equity, (iv) condensed consolidated statements of cash flows, and (v) the notes to the condensed consolidated financial statements. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101). |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | |
|:---|:---|
|  | ART'S-WAY MANUFACTURING CO., INC. |
| Date: October 14, 2025 | By: <u>/s/ Marc H. McConnell</u>  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marc H. McConnell |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; President, Chief Executive Officer and Chairman |
| Date: October 14, 2025 | By: <u>/s/ Michael W. Woods</u>  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael W. Woods |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Financial Officer |

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## Exhibit 10.1

**Exhibit 10.1**

**PROMISSORY NOTE**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Principle | Loan Date | Maturity | Loan No | Call/Coll | Account | Officer Initials |
| $516971.00 | **10-01-2025** | **10-05-2035** | 40010192010 | **RC-C 1e1 / 40** | **720** | **NRS** |
| References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. | References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. |
| Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. | Any item above containing ""\*\*\*" has been omitted due to text length limitations. |

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| | | | |
|:---|:---|:---|:---|
| **Borrower:** | **Art's-Way Manufacturing Co., Inc.**<br> **5556 Highway 9**<br> **Armstrong, IA 50514-7566** | **Lender:** | **Bank Midwest** <br> **Armstrong Branch** <br> **PO Box 136**<br> **500 6th Street**<br> **Armstrong, IA 50514** |

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| | |
|:---|:---|
| Principal Amount: $516,971.00 | Date of Note: October 1, 2025 |

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PROMISE TO PAY. Art's-Way Manufacturing Co., Inc. ("Borrower") promises to pay to Bank Midwest ("Lender''), or order, in lawful money of the United States of America, the principal amount of Five Hundred Sixteen Thousand Nine Hundred Seventy-one & **00/100** Dollars ($516,971.00), together with Interest on the unpaid principal balance from October **1,** 2025, until paid in full

PAYMENT. Subject to any payment changes resulting from changes In the Index, Borrower will pay this loan in' accordance with the following payment schedule, which calculates interest on the unpaid principal balances as described in the "INTEREST CALCULATION METHOD" paragraph using the Interest rates described in this paragraph: 60 monthly consecutive principal and Interest payments in the initial amount of $6,102.36 each, beginning November 5, 2025, with subsequent payments due the same day each month after that, and with interest calculated on the unpaid principal balances using an initial interest rate of 7.250% per annum based on a year of 360 days; 59 monthly consecutive principal and interest payments in the initial estimated amount of $6,065.66 each, beginning November 5, 2030, with subsequent payments due the same day each month after that, and with interest calculated on the unpaid principal balances using an interest rate based on the weekly average yield on the United States Treasury Securities adjusted to a constant maturity of five years (5 Year Treasury Index) (currently 3.750%), plus a margin of 3.250%, resulting in an initial interest rate of 7.000% per annum based on a year of 360 days; and one principal and Interest payment of $6,065.97 on October 5, 2035, with interest calculated on the unpaid principal balances using an interest rate based on the weekly average yield on the United States Treasury Securities adjusted to a constant maturity of five years (5 Year Treasury Index) (currently 3.750%), plus a margin of 3.250%, resulting in an Initial interest rate of 7.000% per annum based on a year of 360 days. This estimated final payment is based on the assumption that all payments will be made exactly as scheduled and that the Index does not change; the actual final payment will be for all principal and accrued interest not yet paid, together with any other unpaid amounts under this Note. Unless otherwise agreed or required by applicable law, payments will be applied first to any escrow or reserve account payments as required under any mortgage; deed of trust, or other security instrument or security agreement securing this Note; then to any accrued unpaid Interest; and then to principal. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. All payments must be made in U.S. dollars and must be received by Lender consistent with any written payment instructions provided by Lender. If a payment is made consistent with Lender's payment instructions but received after 5:30 PM Central Time, Lender will credit Borrower's payment on the next business day.

**VARIABLE INTEREST RATE.** For the first 60 payments, the interest rate on this loan will be 7.250%. Thereafter, the interest rate on this Note IS subject to change from time to time based on changes in an independent index which is the weekly average yield on the United States Treasury Securities adjusted to a constant maturity of five years (5 Year Treasury Index) (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If Lender determines, In Its sole discretion, that the Index for this Note has become unavailable or unreliable., either temporarily, indefinitely, or permanently, during the term of this Note, Lender may amend this Note by designating a substantially similar substitute Index. Lender may also amend and adjust any margin corresponding to the Index being substituted to accompany the substitute Index. Margins corresponding to the Index are described in the "Payments"' section. The change to the margin may be positive or negative value, or zero. In making these amendments, Lender may take into consideration any then-prevailing market convention for selecting a substitute index and margin for the specific Index that is unavailable or unreliable. Such an amendment to the tenns of this Note will become effective and bind Borrower 1O business days .after Lender gives written notice to Borrower without any action or consent of the Borrower. Lender will tell Borrower the c:urrent Index rate upon Borrower's request. The Interest rate change will not occur more often than each five (5) years. Borrower understands that Lender may make loans based on other rates as well. The Index currently **is 3.750%** per annum. The interest rate or rates to be applied *to* the unpaid principal balance during this Note will be the rare or rates set forth herein in the "Payment" section. Notwithstanding any other provision of this Note, after the first payment stream, the interest rate for each subsequent payment stream will be effective as of the due date of the last payment in the just-ending payment stream. NOTICE: Under no circumstances will the interest rate on this Note be less than 5.000% per annum or more than the maximum rate allowed by applicable law. Whenever changes occur in the interest rate, Lender, at its option, may do one or more of the following: (A) change Borrowers payments by setting a new payment amount calculated by amortizing the outstanding principal balance at the new interest rate over the remaining term of the loan, (B) increase Borrower's payments to cover accruing interest if the interest rate adjustment is an increase, (C) change the number of Borrower's payments, and (D) continue Borrower's payments at the same amount and change Borrower's final payment amount.

**INTEREST CALCULATION METHOD. Interest** on **this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding** principal **balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.**

**PREPAYMENT.** Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full"', ''without recourse"', or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. **All written** communications concerning **disputed** amounts, including **any check or other payment** instrument **that indicates that the payment constitutes "payment** in **full"** of the amount **owed or that is tendered with other** conditions or limitations **or as** full **satisfaction of a disputed amount must be mailed or delivered to: Bank Midwest, Armstrong Branch, PO Box 136, 500 6th Street, Armstrong, IA 50514.**

**LATE CHARGE.** If a payment is 30 days or more late. Borrower will be charged **5.000% of** the **unpaid** portion of the regularly scheduled payment **or $8.50,** whichever **is greater.**

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| | | |
|:---|:---|:---|
|  | **PROMISSORY NOTE** |  |
| **Loan No: 040010192010** | **(Continued)** | **Page 2** |

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**INTEREST AFTER DEFAULT.** Upon default, including failure to pay upon final maturity, the total sum due under this Note will continue to accrue interest at the interest rate under this Note, with the final interest rate described in this Note applying after maturity, or after maturity would have occurred had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment **Default.** Borrower fails to make any payment when due under this Note.

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

**False Statements.** Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

**Insolvency.** The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

**Creditor or Forfeiture Proceedings.** Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

**Change** In **Ownership.** Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

**Adverse** Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

**LENDER'S RIGHTS.** Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

**ATTORNEYS' FEES; EXPENSES.** Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower **will** pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Iowa without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Iowa.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts.

COLLATERAL. Borrower acknowledges this Note is secured by any and all security documents, including, but not limited to, all Security Agreements, Supplemental Security Agreements, all Guaranties, Real Estate Mortgages and Assignment of Rents including Real Estate Mortgage dated 9/28/2017.

**PURPOSE OF LOAN.** The specific purpose of this loan is: **Armstrong Roof.**

**SUCCESSOR INTERESTS.** The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

**SHARING CUSTOMER INFORMATION WITH AFFILIATES.** Borrower acknowledges and agrees that Lender may share Borrower's financial information **with** any affiliate of Bank Midwest. Lender agrees that **it** will require those affiliates to maintain the privacy of such information.

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| | | |
|:---|:---|:---|
|  | **PROMISSORY NOTE** |  |
| Loan No: 040010192010 | **(Continued)** | Page 3 |

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**GENERAL PROVISIONS.** If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

**BORROWER:**

<u>**ART'S-WAY MANUFACTURING** CO., **INC.**</u>

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| | |
|:---|:---|
| **/s/ Marc H. McConnell** | **/s/ Michael W. Woods** |
| Marc H. McConnell <br> President, Chairman and Chief Executive Officer | Michael W. Woods<br> Chief Financial Officer |

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Bank Midwest:

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| |
|:---|
| /s/ Nicole Simpson |
| Nicole Simpson<br> **SVP Market** President |

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION PURSUANT TO 17 CFR 240.13(a)-14(a)**

**(SECTION 302 CERTIFICATION)**

I, Marc H. McConnell, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Art's-Way Manufacturing Co., Inc.;

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

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

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

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

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

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

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

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

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

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

---

| | | |
|:---|:---|:---|
| | | ART'S-WAY MANUFACTURING CO., INC. |
| Date: | October 14, 2025 | /s/ Marc H. McConnell |
| | | Marc H. McConnell |
| | | President, Chief Executive Officer and Chairman |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION PURSUANT TO 17 CFR 240.13(a)-14(a)**

**(SECTION 302 CERTIFICATION)**

I, Michael W. Woods, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Art's-Way Manufacturing Co., Inc.;

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

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

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

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

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

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

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

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

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

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

---

| | | |
|:---|:---|:---|
| | | ART'S-WAY MANUFACTURING CO., INC. |
| Date: | October 14, 2025 | /s/ Michael W. Woods |
| | | Michael W. Woods |
| | | Chief Financial Officer |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350**

**AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report on Form 10-Q of Art's-Way Manufacturing Co., Inc. (the "Company") for the fiscal quarter ended August 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marc H. McConnell, as the President, Chief Executive Officer and Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: | October 14, 2025 | /s/ Marc H. McConnell |
| | | Marc H. McConnell |
| | | President, Chief Executive Officer and Chairman |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350**

**AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the quarterly report on Form 10-Q of Art's-Way Manufacturing Co., Inc. (the "Company") for the fiscal quarter ended August 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael W. Woods, as the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: | October 14, 2025 | /s/ Michael W. Woods |
| | | Michael W. Woods |
| | | Chief Financial Officer |

---