Arts Way Manufacturing Co Inc 10-Q for FY2026 Q1
Arts Way Manufacturing Co Inc (ARTW)
About this 10-Q
Arts Way Manufacturing Co Inc filed this 10-Q on April 13, 2026, covering the quarter ended February 28, 2026 (FY2026 Q1).
Headline figures
Quarter ended February 28, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $6.64M
- up 29.2% from $5.14M a year earlier
- Net income
- $196.44K
- compared with a net loss of $55.76K a year earlier
- Diluted EPS
- $0.04
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended |
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.
ART’S-WAY MANUFACTURING CO., INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| |
| (Address of principal executive offices) (Zip Code) |
(
(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 |
| | | The |
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.
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).
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 ☐ | Accelerated filer ☐ Smaller reporting company 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
Number of common shares outstanding as of April 1, 2026:
Art’s-Way Manufacturing Co., Inc.
Index
Page No.
| Item 1. |
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| Condensed Consolidated Balance Sheets as of February 28, 2026 and November 30, 2025 |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| Item 1A. |
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| Item 6. |
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PART I – FINANCIAL INFORMATION
ART’S-WAY MANUFACTURING CO., INC.
Condensed Consolidated Balance Sheets
| (Unaudited) | ||||||||
| February 28, 2026 | November 30, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Receivables, net | ||||||||
| Inventories, net | ||||||||
| Cost and profit in excess of billings | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant, and equipment, net | ||||||||
| Assets held for lease, net | ||||||||
| Deferred income taxes, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Customer deposits | ||||||||
| Billings in excess of cost and profit | ||||||||
| Income taxes payable | ||||||||
| Accrued expenses | ||||||||
| Line of credit | ||||||||
| Current portion of finance lease liabilities | ||||||||
| Insurance premium finance liability | ||||||||
| Current portion of long-term debt | ||||||||
| Total current liabilities | ||||||||
| Long-term portion of finance lease liabilities | ||||||||
| Long-term debt, excluding current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Notes 8, 10, 11 and 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Undesignated preferred stock - $ par value. Authorized shares on February 28, 2026 and November 30, 2025; issued and outstanding shares on February 28, 2026 and November 30, 2025. | ||||||||
| Common stock – $ par value. Authorized shares on February 28, 2026 and November 30, 2025; issued on February 28, 2026 and on November 30, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Treasury stock, at cost ( shares on February 28, 2026 and shares on November 30, 2025) | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| See accompanying notes to condensed consolidated financial statements. |
ART’S-WAY MANUFACTURING CO., INC.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended |
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| February 28, 2026 |
February 28, 2025 |
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| Sales |
$ | $ | ||||||
| Cost of goods sold |
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| Gross profit |
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| Expenses |
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| Engineering |
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| Selling |
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| General and administrative |
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| Total expenses |
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| Income (loss) from operations |
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| Other income (expense): |
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| Interest expense |
( |
) | ( |
) | ||||
| Other |
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| Total other income (expense) |
( |
) | ( |
) | ||||
| Income (loss) before income taxes |
( |
) | ||||||
| Income tax expense (benefit) |
( |
) | ||||||
| Net income (loss) |
$ | $ | ( |
) | ||||
| See accompanying notes to condensed consolidated financial statements. |
| Condensed Consolidated Statements of Stockholders' Equity |
| Three Months Ended February 28, 2026 and February 28, 2025 |
| (Unaudited) |
| Common Stock |
Additional |
Treasury Stock |
||||||||||||||||||||||||||
| Number of |
paid-in |
Retained |
Number of |
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| shares |
Par value |
capital |
earnings |
shares |
Amount |
Total |
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| Balance, November 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Stock based compensation |
( |
) | ||||||||||||||||||||||||||
| Net loss |
- | ( |
) | - | ( |
) | ||||||||||||||||||||||
| Balance, February 28, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Common Stock |
Additional |
Treasury Stock |
||||||||||||||||||||||||||
| Number of |
paid-in |
Retained |
Number of |
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| shares |
Par value |
capital |
earnings |
shares |
Amount |
Total |
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| Balance, November 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Stock based compensation |
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| Net income |
- | - | ||||||||||||||||||||||||||
| Balance, February 28, 2026 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. |
| Condensed Consolidated Statements of Cash Flows |
| (Unaudited) |
| Three Months Ended |
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| February 28, 2026 |
February 28, 2025 |
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| Cash flows from operations: |
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| Net income (loss) |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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| Stock based compensation |
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| Decrease in obsolete inventory reserves |
( |
) | ( |
) | ||||
| Gain on disposal of property, plant, and equipment |
( |
) | ||||||
| Depreciation and amortization expense |
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| Amortization of cloud computing implementation costs |
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| Increase (decrease) in allowance for expected credit losses - receivables |
( |
) | ( |
) | ||||
| Deferred income taxes |
( |
) | ||||||
| Changes in assets and liabilities: |
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| (Increase) decrease in: |
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| Receivables |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Cost and profit in excess of billings |
( |
) | ( |
) | ||||
| Other assets |
( |
) | ( |
) | ||||
| Increase (decrease) in: |
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| Accounts payable |
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| Billings in excess of cost and profit |
( |
) | ||||||
| Customer deposits |
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| Income taxes payable |
( |
) | ||||||
| Accrued expenses |
( |
) | ( |
) | ||||
| Net cash provided by (used in) operating activities |
( |
) | ||||||
| Cash flows from investing activities: |
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| Purchases of property, plant, and equipment |
( |
) | ( |
) | ||||
| Net proceeds from sale of assets |
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| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
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| Net change in line of credit |
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| Principal payments on finance lease obligations |
( |
) | ( |
) | ||||
| Principal payments on financed insurance premiums |
( |
) | ||||||
| Repayment of term debt |
( |
) | ( |
) | ||||
| Repurchases of common stock |
( |
) | ||||||
| Net cash provided by financing activities |
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| Net increase in cash |
( |
) | ||||||
| Cash at beginning of period |
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| Cash at end of period |
$ | $ | ||||||
| Supplemental disclosures of cash flow information: |
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| Cash paid during the period for: |
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| Interest |
$ | $ | ||||||
| Income taxes |
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| Supplemental disclosures of non-cash operating activities: |
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| Financed insurance premium (other current assets) |
$ | $ | ||||||
| Amortization of operating lease ROU assets (included in other assets) |
$ | $ | ||||||
| See accompanying notes to condensed consolidated financial statements. |
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 national manufacturer of agricultural equipment. Its principal manufacturing plant is located in Armstrong, Iowa.
The Company has organized its business into 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.
| 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, 2025. The results of operations for the three months ended February 28, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2026.
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 months ended February 28, 2026. 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 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.
Recently Issued Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
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.
| 3) | 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 February 28, 2026 | ||||||||||||
| Agricultural Products | Modular Buildings | Total | ||||||||||
| Farm equipment | $ | $ | $ | |||||||||
| Farm equipment service parts | ||||||||||||
| Modular buildings | ||||||||||||
| Modular building lease income | ||||||||||||
| Other | ||||||||||||
| $ | $ | $ | ||||||||||
| Three Months Ended February 28, 2025 | ||||||||||||
| Agricultural Products | Modular Buildings | Total | ||||||||||
| Farm equipment | $ | $ | $ | |||||||||
| Farm equipment service parts | ||||||||||||
| Modular buildings | ||||||||||||
| Modular building lease income | ||||||||||||
| Other | ||||||||||||
| $ | $ | $ | ||||||||||
The Company offered floorplan terms in its Agricultural Products segment during its Fall of 2024 and 2025 early order programs to incentivize customers to stock farm equipment on their lots for fiscal 2025 and fiscal 2026. 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 February 28, 2026, the Company had approximately $
| 4) | Receivables |
Receivables 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 three months ended February 28, 2026 and three months ended February 28, 2025 was as follows:
| Three Months Ended | Three Months Ended | |||||||
| February 28, 2026 | February 28, 2025 | |||||||
| Balance, beginning | $ | $ | ||||||
| Provision charged to expense | ( | ) | ( | ) | ||||
| Less amounts charged-off | ||||||||
| Balance, ending | $ | $ | ||||||
| 5) | 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.
| February 28, 2026 | November 30, 2025 | |||||||
| Receivables | $ | $ | ||||||
| Assets (cost and profit in excess of billings) | ||||||||
| Liabilities (billings in excess of profit and customer deposits) | ||||||||
The amount of revenue recognized in the first three months of fiscal 2026 that was included in a contract liability on November 30, 2025 was approximately $
| 6) | 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 February 28, 2026 and February 28, 2025:
| For the Three Months Ended | ||||||||
| February 28, 2026 | February 28, 2025 | |||||||
| Numerator for basic and diluted net income (loss) per share: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Denominator: | ||||||||
| For basic net income (loss) per share - weighted average common shares outstanding | ||||||||
| Effect of dilutive stock options | ||||||||
| For diluted net income (loss) per share - weighted average common shares outstanding | ||||||||
| Net Income (loss) per share - Basic: | ||||||||
| Net income (loss) per share | $ | $ | ( | ) | ||||
| Net Income (loss) per share - Diluted: | ||||||||
| Net income (loss) per share | $ | $ | ( | ) | ||||
| 7) | Inventory |
Major classes of inventory are:
| February 28, 2026 | November 30, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total Gross Inventory | $ | $ | ||||||
| Less: Reserves | ( | ) | ( | ) | ||||
| Net Inventory | $ | $ | ||||||
| 8) | Accrued Expenses |
Major components of accrued expenses are:
| February 28, 2026 | November 30, 2025 | |||||||
| Salaries, wages, and commissions | $ | $ | ||||||
| Accrued warranty expense | ||||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 9) | Assets Held for Lease |
Major components of assets held for lease are:
| February 28, 2026 | November 30, 2025 | |||||||
| Modular Buildings | $ | $ | ||||||
| Agricultural Products equipment | ||||||||
| Total assets held for lease (net) | $ | $ | ||||||
There were approximately $
| 10) | 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 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 8 “Accrued Expenses.” Changes in the Company’s product warranty liability for the three months ended February 28, 2026 and February 28, 2025 are as follows:
| Three Months Ended (Continuing Operations) | ||||||||
| February 28, 2026 | February 28, 2025 | |||||||
| Balance, beginning | $ | $ | ||||||
| Provision charged to expense | ||||||||
| Less amounts charged-off | ( | ) | ( | ) | ||||
| Balance, ending | $ | $ | ||||||
| 11) | Loan and Credit Agreements |
Bank Midwest Revolving Lines of Credit and Term Loans
The Company maintains a $
The Company carries a $
The Company carries a term loan with Bank Midwest in the amount of $
In connection with the Line of Credit, the Company and Art’s-Way Scientific, 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. Art’s-Way Scientific, Inc. also agreed to guarantee the obligations of the Company pursuant to the Line of Credit, as set forth in a Commercial Guaranty, dated September 28, 2017.
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 $
SBA Economic Injury Disaster Loans
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 $
A summary of the Company’s term debt is as follows:
| February 28, 2026 | November 30, 2025 | |||||||
| Bank Midwest loan payable in monthly installments of $ including interest at %, due | $ | $ | ||||||
| Bank Midwest loan payable in monthly installments of $ including interest at %, due | ||||||||
| U.S. Small Business Administration loan payable in monthly installments of $ including interest at % beginning , due | ||||||||
| U.S. Small Business Administration loan payable in monthly installments of $ including interest at % beginning due | ||||||||
| Total term debt | $ | $ | ||||||
| Less current portion of term debt | ||||||||
| Term debt, excluding current portion | $ | $ | ||||||
A summary of the minimum maturities of term debt follows for the twelve month periods ending February 28:
| Year | Amount | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| 2032 and thereafter | ||||
| $ | ||||
| 12) | 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 2026 fiscal year tax liability and does not expect to have significant cash tax expense in the near future.
| 13) | Related Party Transactions |
During the three months ended February 28, 2026, and February 28, 2025, the Company did recognize any revenues from transactions with a related party, and
| 14) | Leases |
The components of finance leases on the Condensed Consolidated Balance Sheets on February 28, 2026 and November 30, 2025 were as follows:
| February 28, 2026 | November 30, 2025 | |||||||
| Finance lease right-of-use assets (net of amortization in other assets) | $ | $ | ||||||
| Current portion of finance lease liabilities | $ | $ | ||||||
| Long-term portion of finance lease liabilities | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| 15) | 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
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
Shares issued under the 2020 Plan for the three month periods ended February 28, 2026 and February 28, 2025 are as follows:
| For the Three Months Ended | ||||||||
| February 28, 2026 | February 28, 2025 | |||||||
| Shares issued to directors (immediate vesting) | ||||||||
| Shares issued to directors and employees (three-year vesting) | ||||||||
| Total shares issued (forfeited) | ||||||||
| 16) | 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 February 28, 2026 and November 30, 2025, the carrying amount approximated fair value for cash, receivables, 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 differ from current interest rates the Company could obtain under similar terms.
| 17) | 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 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.
| Three Months Ended February 28, 2026 | ||||||||||||
| Agricultural Products | Modular Buildings | Consolidated 1 | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Gross profit | ||||||||||||
| Operating Expense | ||||||||||||
| Income from operations | ||||||||||||
| Income (loss) before tax | ||||||||||||
| Income tax expense (benefit) | $ | $ | $ | |||||||||
| Total Assets | $ | $ | $ | |||||||||
| Capital expenditures | ||||||||||||
| Depreciation & Amortization | ||||||||||||
| Interest expense | ||||||||||||
| Engineering | ||||||||||||
| Selling | ||||||||||||
| General and administrative (G&A) | ||||||||||||
| Corporate expense (included in G&A) | $ | $ | $ | |||||||||
| Three Months Ended February 28, 2025 | ||||||||||||
| Agricultural Products | Modular Buildings | Consolidated 1 | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Gross profit | ||||||||||||
| Operating Expense | ||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||
| Income (loss) before tax | ( | ) | ( | ) | ||||||||
| Income tax expense (benefit) | $ | ( | ) | $ | $ | ( | ) | |||||
| Total Assets | $ | $ | $ | |||||||||
| Capital expenditures | ||||||||||||
| Depreciation & Amortization | ||||||||||||
| Interest Expense | ||||||||||||
| Engineering | ||||||||||||
| Selling | ||||||||||||
| General and administrative (G&A) | ||||||||||||
| Corporate expense (included in G&A) | $ | $ | $ | |||||||||
| 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. |
| 18) | Subsequent Events |
Management evaluated all other activity of the Company and concluded that no subsequent events have occurred other than the line of credit renewal and the change of terms agreements for the Company's two term loans that were signed on March 19, 2026, as discussed in Note 11 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, 2025. 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 February 28, 2026 remain unchanged from November 30, 2025. 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, 2025.
Results of Operations
Net Sales and Cost of Sales
Our consolidated corporate sales from continuing operations for the three- month period ended February 28, 2026 were $ 6,640,000 compared to $5,141,000 during the same period in fiscal 2025, an increase of $1,499,000, or 29.2%. Consolidated gross margin for the three months ended February 28, 2026 was 28.8% compared to 29.1% for the same periods in fiscal 2025.
Sales in our Agricultural Products segment during the first quarter of fiscal 2026 were $3,754,000 compared to $2,948,000 during the same period of fiscal 2025, an increase of $806,000, or 27.3%. We have experienced increased demand this quarter, as compared to the same period in 2025, with increased sales on grinder mixers, manure spreaders and bale processors. While row crop commodity prices have increased from their lowest point in 2024, they remain substantially below the peak levels experienced in 2022. The slight increase in commodity prices and product availability did, however, lead to improved results for the first quarter of fiscal 2026. Livestock prices remained elevated through Q1 of fiscal 2026 and are driving most of the demand for our agricultural products as a large portion of our customer base raises livestock and row crops. Sugar beet prices declined in the first fiscal quarter of 2026 and we are expecting less demand for our sugar beet equipment for the remainder of fiscal 2026. To offset some of the anticipated decrease in demand, we are deploying a product specialist into our primary beet territory to drive new customer activity and technological development as we unveil a new product in that market for fiscal 2026. Our fall early order program ended with a 62% increase in orders on our non beet equipment, while our beet orders were down 63%. Overall order book from the early order program was up 11%, which leads us to believe the agricultural market is entering a recovery despite continued increasing input costs. Gross margin for our Agricultural Products segment for the three-month period ended February 28, 2026 was 34.5% compared to 26.7% for the same period in fiscal 2025. The margin increase is due primarily to the mix of products sold in Q1 of fiscal 2026. Our grinder mixer sales were up $909,000 year-on-year and was our most profitable product line for the first quarter of fiscal 2026. We continue to carry strong grinder mixer backlog into the second quarter of fiscal 2026 and foresee steady shipments in the second quarter of fiscal 2026.. Steel prices continued to rise in the first quarter of fiscal 2026 and will challenge our strong first fiscal quarter margins. Rising fuel prices in fiscal 2026 could negatively affect demand if it has a large impact on farmer's input costs and
Our first fiscal quarter sales in our Modular Buildings segment were $2,886,000 compared to $2,193,000 for the same period in fiscal 2025, an increase of $693,000, or 31.6%. We carried strong modular building backlog into fiscal 2026, unlike a year ago, which drove the revenue increase this year. We experienced continued strong demand for our buildings on both the livestock and research sides in the first quarter of fiscal 2026. Current backlog is expected to carry us well into the third quarter of fiscal 2026, which is somewhat unusual given the sales life cycle in our Modular Buildings segment. Our leads remain abundant and we continue to be optimistic about the future prospects and continued success of this business segment. Gross margin in the Modular Buildings segment for the three- month period ended February 28, 2026 was 21.3% compared to 32.3% for the same period in fiscal 2025. Our margin decrease in the first fiscal quarter of fiscal 2026 is due to the selling of a warrantied agriculture modular building at cost and project overages on site work while completing current contracts.
Expenses
Consolidated selling expenses from continuing operations for the three months ended February 28, 2026 were $437,000, compared to $350,000 for the same period in fiscal 2025. The increase in selling expenses is due to increased commissions and royalties on increased sales along with additional targeted advertising campaign expenditures. Selling expenses as a percentage of sales were 6.6% for the three months ended February 28, 2026 compared to 6.8% for three months ended February 28, 2025.
Consolidated engineering expenses from continuing operations were $107,000 for three months ended February 28, 2026 compared to $85,000 for the same period in fiscal 2025. The increase in engineering expenses is related to additional research and development costs incurred in 2026 as we made product changes that we felt could drive more sugar beet product demand. Engineering expenses as a percentage of sales were 1.6% for the three months ended February 28, 2026, compared to 1.7% for the same period in fiscal 2025.
Consolidated administrative expenses from continuing operations for the three- month period ended February 28, 2026 were $1,038,000 compared to $1,059,000 for the same period in fiscal 2025. Administrative expenses as a percentage of sales were 15.6% for the three months ended February 28, 2026, compared to 20.6% for the same period in fiscal 2025. Administrative expenses have decreased slightly in fiscal 2026 despite the increase in sales as we have not replaced overhead cut in previous years. We continue to be conscious of adding additional overhead while market conditions are still slow in the Agricultural Products segment.
Net income (loss)
Consolidated net income was $196,000 for the three-month period ended February 28, 2026, compared to net loss of $56,000 for the same period in fiscal 2025. We are reporting positive operating results in both of our business segments through the first quarter of fiscal 2026. The small uptick in the agricultural market coupled with cost cutting procedures enacted in fiscal 2024 in the Agricultural Products segment has stabilized our operating result to prepare us for a future uptrend in the agriculture cycle. We continue to focus on remaining competitive with pricing, features and availability to ensure we are considered for retail opportunities. Our Modular Buildings segment's success is expected to continue as solid leads make their way to our sales team.
Order Backlog
The consolidated order backlog net of discounts as of April 7, 2026 was $7,287,000 compared to $4,482,000 as of April 7, 2025, a 62.6% increase. The order backlog in our Agricultural Products segment was $2,774,000 as of April 7, 2026 compared to $2,016,000 in fiscal 2025, a 37.6% increase. Demand has remained steady throughout fiscal 2026 for our agriculture products and is much improved from a year ago due to higher row crop prices and record cattle prices. The backlog for the Modular Buildings segment was $4,513,000 as of April 7, 2026, compared to $2,466,000 in fiscal 2025, an 83% increase. Quoting activity in both the research and agriculture buildings markets have been strong so far in fiscal 2026, with further contracts expected to execute with customers we are performing design agreements for. 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 three months ended February 28, 2026 was cash generated by operating activities including profitability and the increase of customer deposits and accounts payable as we incurred costs on construction contracts. We expect the collection of accounts receivable, progress on construction contracts and reduction of inventory to be primary sources of cash for the remainder of fiscal 2026. We expect our primary cash needs for the remainder of the fiscal year to be tied to operating expenses and retirement of debt.
As of February 28, 2026, our revolving credit line had an outstanding principal balance of $3,431,937. We renewed our revolving line of credit with Bank Midwest on March 19, 2026, with a scheduled maturity date of March 30, 2027. In our most recent renewal, we negotiated an interest rate 50 basis points lower than our previous line of credit tied to SOFR to recognize expected interest rate decreases sooner. Bank Midwest's credit committee has preapproved an additional $1,500,000 of principal for the 2026 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 February 28, 2026. 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.
We are currently not a party to any material pending legal proceedings.
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 first quarter of fiscal 2026.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Insider Trading Arrangements. During the three months ended February 28, 2026, 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.
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.
| ART’S-WAY MANUFACTURING CO., INC. |
|
| Date: April 13, 2026 |
By: /s/ Marc H. McConnell |
| Marc H. McConnell |
|
| President, Chief Executive Officer and Chairman |
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| Date: April 13, 2026 |
By: /s/ Michael W. Woods |
| Michael W. Woods |
|
| Chief Financial Officer |
Exhibit 10.1
PROMISSORY NOTE
|
Principle |
Loan Date |
Maturity | Loan No | Call/Coll |
Account |
Officer Initials | |
| $516,971.00 | 10-01-2025 | 10-05-2035 |
40010192010 |
RC-C 1e1 / 40 |
720 | NRS | |
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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. |
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Any item above containing ""***" has been omitted due to text length limitations. |
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| Borrower: |
Art's-Way Manufacturing Co., Inc. 5556 Highway 9 Armstrong, IA 50514-7566 |
Lender: |
Bank Midwest Armstrong Branch PO Box 136 500 6th Street Armstrong, IA 50514 |
| Principal Amount: $516,971.00 | Date of Note: October 1, 2025 |
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 |
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Loan No: 040010192010 |
(Continued) |
Page 2 |
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 |
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Loan No: 040010192010 |
(Continued) |
Page 3 |
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:
ART'S-WAY MANUFACTURING CO., INC.
| /s/ Marc H. McConnell | /s/ Michael W. Woods | |
|
Marc H. McConnell President, Chairman and Chief Executive Officer |
Michael W. Woods Chief Financial Officer |
Bank Midwest:
| /s/ Nicole Simpson | ||
|
Nicole Simpson SVP Market President |
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 31.1
CERTIFICATION PURSUANT TO 17 CFR 240.13(a)-14(a)
(SECTION 302 CERTIFICATION)
I, Marc H. McConnell, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc.; |
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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; |
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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; |
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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: |
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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; |
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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; |
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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 |
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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 |
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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): |
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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 |
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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. |
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ART’S-WAY MANUFACTURING CO., INC. |
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Date: |
/s/ Marc H. McConnell |
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Marc H. McConnell |
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President, Chief Executive Officer and Chairman |
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Exhibit 31.2
CERTIFICATION PURSUANT TO 17 CFR 240.13(a)-14(a)
(SECTION 302 CERTIFICATION)
I, Michael W. Woods, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc.; |
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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; |
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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; |
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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: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
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 |
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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): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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ART’S-WAY MANUFACTURING CO., INC. |
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Date: |
/s/ Michael W. Woods |
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|
Michael W. Woods |
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Chief Financial Officer |
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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 February 28, 2026, 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:
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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 |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Date: |
April 13, 2026 |
/s/ Marc H. McConnell |
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|
Marc H. McConnell |
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President, Chief Executive Officer and Chairman |
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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 February 28, 2026, 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:
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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 |
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4. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Date: |
/s/ Michael W. Woods |
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|
Michael W. Woods |
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|
Chief Financial Officer |
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