Arts Way Manufacturing Co Inc 10-Q for FY2026 Q3
Arts Way Manufacturing Co Inc (ARTW)
About this 10-Q
Arts Way Manufacturing Co Inc filed this 10-Q on October 13, 2026, covering the quarter ended August 31, 2026 (FY2026 Q3).
Headline figures
Quarter ended August 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.62M
- down 12.7% from $6.43M a year earlier
- Net loss
- $139.72K
- compared with net income of $254.11K a year earlier
- Diluted EPS
- -$0.03
- compared with $0.05 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 October 2, 2026:
Art’s-Way Manufacturing Co., Inc.
Index
Page No.
| Item 1. |
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| Condensed Consolidated Balance Sheets as of August 31, 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 1. |
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| Item 1A. |
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| Item 2. |
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| Item 3. |
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| Item 4. |
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| Item 5. |
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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) | ||||||||
| August 31, 2026 | November 30, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | ||||||||
| Receivables, net | ||||||||
| Inventories, net | ||||||||
| Cost and profit in excess of billings | ||||||||
| Net investment in sales-type leases, current | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant, and equipment, net | ||||||||
| Assets held for lease, net | ||||||||
| Deferred income taxes, net | ||||||||
| Net investment in sales-type leases, long-term | ||||||||
| 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 August 31, 2026 and November 30, 2025; issued and outstanding shares on August 31, 2026 and November 30, 2025. | ||||||||
| Common stock – $ par value. Authorized shares on August 31, 2026 and November 30, 2025; issued on August 31, 2026 and on November 30, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Treasury stock, at cost ( shares on August 31, 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 | Nine Months Ended | |||||||||||||||
| August 31, 2026 | August 31, 2025 | August 31, 2026 | August 31, 2025 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Expenses | ||||||||||||||||
| Engineering | ||||||||||||||||
| Selling | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other | ||||||||||||||||
| 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 |
| Nine Months Ended August 31, 2026 and August 31, 2025 |
| (Unaudited) |
| Common Stock | Additional | Treasury Stock | ||||||||||||||||||||||||||
| Number of | paid-in | Retained | Number of | |||||||||||||||||||||||||
| shares | Par value | capital | earnings | shares | Amount | Total | ||||||||||||||||||||||
| Balance, November 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock based compensation | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, August 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Common Stock | Additional | Treasury Stock | ||||||||||||||||||||||||||
| Number of | paid-in | Retained | Number of | |||||||||||||||||||||||||
| shares | Par value | capital | earnings | shares | Amount | Total | ||||||||||||||||||||||
| Balance, November 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Stock based compensation | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, August 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. |
| Condensed Consolidated Statements of Cash Flows |
| (Unaudited) |
| Nine Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Cash flows from operations: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Stock based compensation | ||||||||
| Decrease in obsolete inventory reserves | ( | ) | ( | ) | ||||
| Gain on disposal of property, plant, and equipment | ( | ) | ( | ) | ||||
| Net book value of property transferred to sales-type lease | ||||||||
| Depreciation and amortization expense | ||||||||
| Amortization of cloud computing implementation costs | ||||||||
| Decrease in allowance for expected credit losses - receivables | ( | ) | ( | ) | ||||
| Deferred income taxes | ||||||||
| Changes in assets and liabilities: | ||||||||
| (Increase) decrease in: | ||||||||
| Receivables | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Cost and profit in excess of billings | ( | ) | ||||||
| Net investment in sales-type leases | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Increase (decrease) in: | ||||||||
| Accounts payable | ||||||||
| Billings in excess of cost and profit | ( | ) | ||||||
| Customer deposits | ( | ) | ||||||
| Income taxes payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant, and equipment | ( | ) | ( | ) | ||||
| Net proceeds from sale of assets | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in line of credit | ||||||||
| Principal payments on finance lease obligations | ( | ) | ( | ) | ||||
| Principal payments on financed insurance premiums | ( | ) | ||||||
| Repayment of term debt | ( | ) | ( | ) | ||||
| Repurchases of common stock | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental disclosures of non-cash operating activities: | ||||||||
| Financed insurance premium (other current assets) | $ | $ | ||||||
| Right-of-use (ROU) assets acquired (included in other 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 and modular buildings. 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 under the Art's-Way Scientific name.
| 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 and nine months ended August 31, 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 and nine months ended August 31, 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 has considered the current interest rate environment and the overall health of the agricultural commodity market and believes its method of estimating 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.
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 of which $
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) | $ | $ | $ | |||||||||
| Interest income (other income) | ||||||||||||
| Consulting fees (other expense) | ( | ) | ( | ) | ( | ) | ||||||
| Net proceeds | $ | $ | $ | |||||||||
Recently Issued Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In October 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements.
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 not expecting a significant impact to its financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact these standards will have on its financial statements.
| 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 August 31, 2026 | ||||||||||||
| Agricultural Products | Modular Buildings | Total | ||||||||||
| Farm equipment | $ | $ | $ | |||||||||
| Farm equipment service parts | ||||||||||||
| Modular buildings | ||||||||||||
| Modular building lease income | ||||||||||||
| Other | ||||||||||||
| $ | $ | $ | ||||||||||
| Three Months Ended August 31, 2025 | ||||||||||||
| Agricultural Products | Modular Buildings | Total | ||||||||||
| Farm equipment | $ | $ | $ | |||||||||
| Farm equipment service parts | ||||||||||||
| Modular buildings | ||||||||||||
| Modular building lease income | ||||||||||||
| Other | ||||||||||||
| $ | $ | $ | ||||||||||
| Nine Months Ended August 31, 2026 | ||||||||||||
| Agricultural | Modular Buildings | Total | ||||||||||
| Farm equipment | $ | $ | $ | |||||||||
| Farm equipment service parts | ||||||||||||
| Modular buildings | ||||||||||||
| Modular building lease income | ||||||||||||
| Other | ||||||||||||
| $ | $ | $ | ||||||||||
| Nine Months Ended August 31, 2025 | ||||||||||||
| Agricultural | 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 August 31, 2026, the Company had approximately $
| 4) | Receivables |
Receivables are shown net of allowances for expected credit losses. Expected losses are recorded in administrative expense.
The activity related to expected credit losses for the three and nine months ended August 31, 2026 and 2025 was as follows:
| Three Months Ended | Three Months Ended | |||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Balance, beginning | $ | $ | ||||||
| Provision charged to expense (expected recovery) | ( | ) | ( | ) | ||||
| Less amounts (charged-off) recovered | ||||||||
| Balance, ending | $ | $ | ||||||
| Nine Months Ended | Nine Months Ended | |||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Balance, beginning | $ | $ | ||||||
| Provision charged to expense (expected recovery) | ( | ) | ( | ) | ||||
| 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.
| August 31, 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 nine 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 |
Net income (loss) per share of common stock has been computed on the basis of the weighted average number of common shares outstanding.
Net income (loss) per share has been computed based on the following as of August 31, 2026 and August 31, 2025:
| For the Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Numerator for basic and diluted net income per share: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Denominator: | ||||||||
| For basic and diluted net income (loss) per share - weighted average common shares outstanding | ||||||||
| Net income per share - Basic: | ||||||||
| Net income (loss) per share | $ | ( | ) | $ | ||||
| Net income per share - Diluted: | ||||||||
| Net income (loss) per share | $ | ( | ) | $ | ||||
| For the Nine Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Numerator for basic and diluted net income per share: | ||||||||
| Net income | $ | $ | ||||||
| Denominator: | ||||||||
| For basic and diluted net income per share - weighted average common shares outstanding | ||||||||
| Net Income per share - Basic: | ||||||||
| Net income per share | $ | $ | ||||||
| Net Income per share - Diluted: | ||||||||
| Net income per share | $ | $ | ||||||
| 7) | Inventory |
Major classes of inventory are:
| August 31, 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:
| August 31, 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:
| August 31, 2026 | November 30, 2025 | |||||||
| Modular Buildings | $ | $ | ||||||
| Agricultural Products equipment | ||||||||
| Total assets held for lease (net) | $ | $ | ||||||
There were $
The future minimum lease receipts for twelve month periods ending November 30:
| Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |||
| 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 and nine months ended August 31, 2026 and August 31, 2025 are as follows:
| Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Balance, beginning | $ | $ | ||||||
| Provision charged to expense | ||||||||
| Less amounts charged-off | ( | ) | ( | ) | ||||
| Balance, ending | $ | $ | ||||||
| Nine Months Ended | ||||||||
| August 31, 2026 | August 31, 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 $
On June 22, 2026, the Company entered into a credit facility (the “Credit Facility”) with Bank Midwest, consisting of a $
The Company carries a $
The Company carries a second 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:
| August 31, 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 August 31:
| 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 and nine months ended August 31, 2026, and August 31, 2025, the Company did recognize any revenues from transactions with a related party, and
| 14) | Leases |
The components of sales-type leases as a lessor on the Condensed Consolidated Balance Sheets on August 31, 2026 were as follows:
| August 31, 2026 | ||||
| Minimum lease receivable, current | $ | |||
| Unearned interest income, current | ( | ) | ||
| Net investment in sales-type leases, current | $ | |||
| Minimum lease receivable, long-term | $ | |||
| Unearned interest income, long-term | ( | ) | ||
| Net investment in sales-type leases, long-term | $ |
| ||
The future minimum lease receipts for the twelve month periods ended November 30 are as follows:
| Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
The components of finance leases as a lessee on the Condensed Consolidated Balance Sheets on August 31, 2026 and November 30, 2025 were as follows:
| August 31, 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 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 and nine month periods ended August 31, 2026 and 2025 are as follows:
| For the Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Shares issued to directors (immediate vesting) | ||||||||
| Unvested shares forfeited upon termination | ( | ) | ||||||
| Total shares issued (forfeited) | ( | ) | ||||||
| For the Nine Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Shares issued to directors (immediate vesting) | ||||||||
| Shares issued to directors and employees (three-year vesting) | ||||||||
| Unvested shares forfeited upon termination | ( | ) | ||||||
| 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 August 31, 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 August 31, 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 August 31, 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 expenditures2 | ||||||||||||
| Depreciation & Amortization | ||||||||||||
| Interest Expense | ||||||||||||
| Engineering | ||||||||||||
| Selling | ||||||||||||
| General and administrative (G&A) | ||||||||||||
| Corporate expense (included in G&A) | $ | $ | ||||||||||
| Nine Months Ended August 31, 2026 | ||||||||||||
| Agricultural Products | Modular Buildings | Consolidated (Continuing Operations)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) | $ | $ | $ | |||||||||
| Nine Months Ended August 31, 2025 | ||||||||||||
| Agricultural Products | Modular Buildings | Consolidated (Continuing Operations)1 | ||||||||||
| Revenue from external customers | $ | $ | ||||||||||
| Gross profit | ||||||||||||
| Operating Expense | ||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||
| Income (loss) before tax | ||||||||||||
| Income tax expense (benefit) | $ | $ | ||||||||||
| Total Assets | $ | $ | ||||||||||
| Capital expenditures3 | ||||||||||||
| 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. |
| 2. | Includes $ |
| 3. | Includes $ |
| 18) | Subsequent Events |
Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements with the exception of the Laser Loan as discussed in Note 11 - Loan and Credit Agreements.
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 August 31, 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- and nine-month periods ended August 31, 2026 were $5,616,000 and $20,109,000, respectively, compared to $6,432,000 and $17,910,000, respectively, during the same periods in fiscal 2025. Our sales decreased $816,000, or 12.7% for the three months ended August 31, 2026 and increased $2,199,000, or 12.3% for the nine months ended August 31, 2026 compared to same periods in fiscal 2025. Consolidated gross margin for the three and nine months ended August 31, 2026 was 29.6% and 27.9% compared to 27.5% and 29.7% for the same periods in fiscal 2025.
Sales in our Agricultural Products segment during the third quarter of fiscal 2026 were $3,065,000 compared to $2,983,000 during the same period of fiscal 2025, an increase of $82,000, or 2.7%. Sales for the nine months ended August 31, 2026 were $11,193,000 compared to $9,956,000 during the same period of fiscal 2025, an increase of $1,237,000, or 12.4%. The overall outlook for the agricultural sector remains bleak with modest row crop prices and rising input costs. Despite this, our sales have increased compared to fiscal 2025 as heightened dealer inventories from previous years have returned to normal stocking levels. So far, fiscal 2026 has seen increased demand for grinder mixers, manure spreaders and bale processors from fiscal 2025, which we attribute mostly to strong livestock prices. Our sugar beet equipment demand is down noticeably from prior years, as sugar beet prices declined in the first fiscal quarter of 2026. We believe this softening demand was mitigated by the introduction of our new ClearView beet head in twelve and eight row configurations this year. We strategically deployed an experienced product specialist into our primary beet territory beginning in April 2026 to drive new customer activity and further technological development. We are still carrying elevated whole good inventory levels in beet and manure spreading equipment compared to prior years to put us in position to react to spikes in demand. We will build up grinder mixer inventory in the event we are able to work through our backlog, but have yet to get ahead of demand for these products. Gross margin for our Agricultural Products segment for the three-month period ended August 31, 2026 was 26.7% compared to 18.3% for the same period in fiscal 2025. Gross margin for the nine months ended August 31, 2026 was 28.4% compared to 24.4% for the same period of fiscal 2025. The margin increase for fiscal 2026 is due primarily to increased sales, which resulted in better absorption of fixed manufacturing costs. Our grinder mixer sales are up approximately $1,523,000 year-on-year. Steel prices are up over 31% from our fiscal year end and rising oil prices may challenge our margins for the rest of fiscal 2026.
Our third fiscal quarter sales in our Modular Buildings segment were $2,551,000 compared to $3,449,000 for the same period in fiscal 2025, a decrease of $898,000, or 26.0%. Our sales for the nine months ended August 31, 2026 were $8,916,000 compared to $7,954,000 for the same period of fiscal 2025, an increase of $962,000, or 12.1%. While sales for the nine months ended August 31, 2026 were up year on year, our third fiscal quarter had a lull in progress on contracts as we concluded on-site projects and completed design work for expected construction contracts that eventually became backlog. Current backlog is the highest in the history of this segment and is expected to carry us through the end of fiscal 2027. Gross margin in the Modular Buildings segment for the three- and nine-month periods ended August 31, 2026 was 33.0% and 27.2%, respectively, compared to 35.4% and 36.4% for the same periods in fiscal 2025. Our margin decrease for the first nine months of fiscal 2026 is due to the selling of a warrantied agriculture modular building at cost, project overages on site work while completing current contracts and contingencies that became profits in the first quarter of fiscal 2025 that was not repeated in the first nine months of fiscal 2026.
Expenses
Consolidated selling expenses from continuing operations for the three and nine months ended August 31, 2026 were $424,000, and $1,294,000, respectively, compared to $351,000 and $1,137,000 for the same periods in fiscal 2025. The increase in selling expenses is due to increased commissions and royalties from increased sales along with additional targeted advertising campaign expenditures in fiscal 2026. Selling expenses as a percentage of sales were 7.5% and 6.4% for the three and nine months ended August 31, 2026, respectively, compared to 5.5% and 6.3% for the same periods of fiscal 2025.
Consolidated engineering expenses from continuing operations were $99,000 for the three months ended August 31, 2026 compared to $87,000 for the same period in fiscal 2025. Consolidated engineering expenses from continuing operations were $300,000 for the nine months ended August 31, 2026 compared to $257,000 for the same period in fiscal 2025. The increase in engineering expenses is related to additional research and development costs incurred in 2026 to make product changes that we anticipate could drive more sugar beet product demand. Engineering expenses as a percentage of sales were 1.8% and 1.5% for the three and nine months ended August 31, 2026, respectively, compared to 1.4% and for the same periods in fiscal 2025.
Consolidated administrative expenses from continuing operations for the three months ended August 31, 2026 were $1,208,000 compared to $983,000 for the same period in fiscal 2025. Consolidated administrative expenses from continuing operations for the nine months ended August 31, 2026 were $3,463,000 compared to $3,071,000 for the same period in fiscal 2025. Administrative expenses as a percentage of sales were 21.5% and 17.2% for the three and nine months ended August 31, 2026, respectively, compared to 15.3% and 17.1% for the same periods in fiscal 2025. Administrative fees are up for the fiscal quarter and year due to professional fees, pending litigation for which we are the plantiff and early retirement paid out in the third fiscal quarter. We do not anticipate replacing the early retirees unless an agricultural market upticks, so we anticipate savings from offering early retirement over the next 12 months.
Net income (loss)
Consolidated net loss was $140,000 for the three-month period ended August 31, 2026, compared to net income of $254,000 for the same period in fiscal 2025. Consolidated net income was $230,000 for the nine-month period ended August 31, 2026, compared to net income of $1,680,000 for the same period in fiscal 2025. In the nine months ended August 31, 2025 we received approximately $1,154,000 of Employee Retention Credit refunds net of preparation fees and tax, which is the largest difference in comparability of net income from fiscal 2025 to fiscal 2026. Despite the increase in net sales, there are other factors decreasing net income including: steel prices (up over 39% since year end), increased legal expenses, increase in advertising footprint and early retirement offering. While our Agricultural Products segment was not profitable for the nine months ended August 31, 2025, we are continuing to make operational improvements including the acquisition of a new laser, brake press and roller to prepare for the next uptick in the ag market. We believe the acquisition of this equipment will greatly improve our operational capacity, efficiency and enhance quality. Our Modular Buildings segment continues to have strong profitability and is carrying historic backlog.
Order Backlog
The consolidated order backlog net of discounts as of October 6, 2026 was $19,075,000 compared to $3,595,000 as of October 6, 2025, a 430.6% increase. The order backlog in our Agricultural Products segment was $1,643,000 as of October 6, 2026 compared to $848,000 in fiscal 2025, a 93.8% increase. Record cattle prices continue to fuel demand for our grinder mixers and manure spreaders as we close out fiscal 2026. Demand is improved from the previous year but overall it is not a strong farm economy. It will take rising row crop prices to increase our demand in this segment. The backlog for the Modular Buildings segment was $17,432,000 as of October 6, 2026, compared to $2,747,000 in fiscal 2025, a 534.6% increase. The Modular Buildings segment secured two significant contracts in the third fiscal quarter of 2026 that we expect will drive strong revenues through fiscal 2027. 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, 2026 was cash generated by operating activities including profitability and reduction of inventory. While our billings in excess of costs indicate strong cash generation, most of that is still in accounts receivable as indicated by a mostly offsetting cash utilization amount. We expect the collection of accounts receivable including progress on construction contracts and the reduction of inventory to be primary sources of cash for the remainder of fiscal 2026 as we work through on hand manure spreader and beet harvesting equipment. We expect our primary cash needs for the remainder of the fiscal year to be tied to operating expenses, acquisition of capital equipment that improves operations, and the retirement of debt.
As of August 31, 2026, our revolving credit line (the "Line of Credit") had an outstanding principal balance of $3,645,000. 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. On June 22, 2026, we entered into a credit facility consisting of a $500,000 revolving line of credit (the “Reserve Line of Credit”). The Reserve Line of Credit is secondary to the Line of Credit and will be utilized upon the Line of Credit reaching capacity. The Reserve Line of Credit was activated in June 2026 to pay large equipment deposits on a new fiberoptic laser and crane system and has since been paid off with operational cash flow. The deposits and balance of this equipment will be funded with a term loan when installation is complete later this year. The Company expects this capital expenditure will improve quality, efficiency and reliability of our products.
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, 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.
On May 26, 2026, Art's Way Manufacturing Co., Inc. (the "Company") filed a complaint in the United States District Court for the Northern District of Iowa Central Division against Leon Newswanger, Exceed Manufacturing LLC, and Wood Lake, LLC. The complaint alleges, among other things, that the defendants misappropriated the Company's trade secrets and confidential and proprietary information in connection with the development, manufacture and sale of a product that competes with the Company's grinder mixer products.
The Company seeks monetary damages in excess of $2.0 million, punitive and exemplary damages, attorneys' fees and costs, as well as injunctive relief requiring the defendants to cease the alleged conduct and return the Company's trade secrets and confidential and proprietary information. The litigation remains pending.
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.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Insider Trading Arrangements. During the three months ended August 31, 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.
| Exhibit No. |
Description |
| 3.1 |
|
| 3.2 |
|
| 10.1 | Promissory Note, Between Bank Midwest and Art's Way Manufacturing Co., Inc. dated June 22, 2026 - incorporated by reference to Exhibit 1.01 to the Company's Current Report on Form 8-K filed June 29, 2026. |
| 31.1 |
Certification of Chief Executive Officer pursuant to 17 CFR 13a-14(a) – filed herewith. |
| 31.2 |
Certification of Chief Financial Officer pursuant to 17 CFR 13a-14(a) – filed herewith. |
| 32.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 - furnished herewith. |
| 32.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 - furnished herewith. |
| 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). |
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: October 13, 2026 |
By: /s/ Marc H. McConnell |
| Marc H. McConnell |
|
| President, Chief Executive Officer and Chairman |
|
| Date: October 13, 2026 |
By: /s/ Michael W. Woods |
| Michael W. Woods |
|
| Chief Financial Officer |
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.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report; |
|
4. |
The 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 |
|
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. |
|
ART’S-WAY MANUFACTURING CO., INC. |
|||
|
Date: |
/s/ Marc H. McConnell |
||
|
Marc H. McConnell |
|||
|
President, Chief Executive Officer and Chairman |
|||
Exhibit 31.2
CERTIFICATION PURSUANT TO 17 CFR 240.13(a)-14(a)
(SECTION 302 CERTIFICATION)
I, Michael W. Woods, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report; |
|
4. |
The 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/ 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 August 31, 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: |
October 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 August 31, 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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