UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended ~~February~~May 2831, 2025

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

Commission File No. 000-05131

ART’S-WAY MANUFACTURING CO., INC.

(Exact name of registrant as specified in its charter)

Delaware	42-0920725
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5556 Highway 9

Armstrong, Iowa 50514

(Address of principal executive offices) (Zip Code)

(712) 208-8467

(Registrant’s telephone number, including area code)

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

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

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

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

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

Large accelerated filer ☐

Non-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 ☐ No ☒

Number of common shares outstanding as of ~~April~~July 41, 2025: 5,~~088~~108,084

Table of Contents

Art’s-Way Manufacturing Co., Inc.

Index

Page No.

PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of February 28, 2025 and November 30, 2024	1
	Condensed Consolidated Balance Sheets as of May 31, 2025 and November 30, 2024	1
	Condensed Consolidated Statements of Operations for the Three-month periods ended February 28. 2025 and February 29, 2024	2
	Condensed Consolidated Statements of Operations for the Three-month and Six-month periods ended May 31. 2025 and May 31, 2024	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three-month periods ended February 28, 2025 and February 29, 2024	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Six-month periods ended May 31 2025 and May 31, 2024	3
	Condensed Consolidated Statements of Cash Flows for the Three-month periods ended February 28, 2025 and February 29, 2024	4
	Condensed Consolidated Statements of Cash Flows for the Six-month periods ended May 31, 2025 and May 31, 2024	4
	Notes to Condensed Consolidated Financial Statements	5
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1619
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1821
Item 4.	Controls and Procedures	1821
PART II – OTHER INFORMATION		1922
Item 1.	Legal Proceedings	1922
Item 1A.	Risk Factors	1922
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1922
Item 3.	Defaults Upon Senior Securities	1922
Item 4.	Mine Safety Disclosures	1922
Item 5.	Other Information	1922
Item 6.	Exhibits	2023
	SIGNATURES	2124

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Balance Sheets

	(Unaudited)
	February 28, 2025			November 30, 2024
	May 31, 2025			November 30, 2024
Assets
Current assets:
Cash	$	4,~~133~~534		$	1,860
Accounts receivable, net		1,~~407~~840,~~411~~768			2,372,876
Inventories, net		10,~~881~~775,~~082~~803			10,327,913
Cost and profit in excess of billings		~~288~~336,~~141~~396			213,195
Other current assets		~~419~~330,~~933~~148			208,465
Total current assets		13,~~000~~287,~~700~~649			13,124,309
Property, plant, and equipment, net		54,~~015~~996,~~290~~765			5,150,870
Assets held for lease, net		~~134~~130,~~788~~463			89,033
Deferred income taxes, net		2,~~455~~061,~~387~~576			2,440,297
Other assets		~~398~~402,~~429~~867			436,175
Total assets	$	2120,~~004~~879,~~594~~320		$	21,240,684
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	~~945~~1,~~216~~248,135		$	944,448
Customer deposits		~~991~~206,~~664~~227			180,597
Billings in excess of cost and profit		1,~~155~~040,~~622~~804			1,929,151
Income taxes payable		5,000			5,500
Accrued expenses		~~856~~960,~~888~~079			1,303,718
Line of credit		21,~~199~~062,437			1,928,437
Current portion of finance lease liabilities		~~223~~235,~~593~~625			220,908
Current portion of long-term debt		~~121~~123,~~663~~801			119,734
Total current liabilities		64,~~499~~882,~~083~~108			6,632,493
Long-term portion of operating lease liabilities		~~2,364~~-			4,700
Long-term portion of finance lease liabilities		~~477~~462,~~783~~280			534,436
Long-term debt, excluding current portion		1,~~944~~912,~~621~~173			1,975,232
Total liabilities		87,~~923~~256,~~851~~561			9,146,861
Commitments and Contingencies (Notes 9, 11, 12 and 15)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares on February 28, 2025 and November 30, 2024; issued and outstanding 0 shares on February 28, 2025 and November 30, 2024.		-			-
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares on May 31, 2025 and November 30, 2024; issued and outstanding 0 shares on May 31, 2025 and November 30, 2024.		-			-
Common stock – $0.01 par value. Authorized 9,500,000 shares on February 28, 2025 and November 30, 2024; 5,200,173 issued on February 28, 2025 and 5,149,173 on November 30, 2024		52,002			51,492
Common stock – $0.01 par value. Authorized 9,500,000 shares on May 31, 2025 and November 30, 2024; 5,221,673 issued on May 31, 2025 and 5,149,173 on November 30, 2024		52,217			51,492
Additional paid-in capital		5,~~064~~124,~~558~~289			5,020,849
Retained earnings		78,~~272~~754,~~871~~941			7,328,628
Treasury stock, at cost (113,589 shares on February 28, 2025 and 112,714 shares on November 30, 2024)		(308,688	)		(307,146	)
Treasury stock, at cost (113,589 shares on May 31, 2025 and 112,714 shares on November 30, 2024)		(308,688	)		(307,146	)
Total stockholders’ equity		1213,~~080~~622,~~743~~759			12,093,823
Total liabilities and stockholders’ equity	$	2120,~~004~~879,~~594~~320		$	21,240,684

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	February 28, 2025			February 29, 2024
	May 31, 2025			May 31, 2024			May 31, 2025			May 31, 2024
Sales	$	56,~~140~~336,~~955~~690		$	56,~~723~~730,~~394~~268		$	11,477,645		$	12,453,663
Cost of goods sold		34,~~644~~276,~~446~~913			4,~~249~~823,~~870~~516			7,921,359			9,073,386
Gross profit		12,~~496~~059,~~509~~777			1,~~473~~906,~~524~~752			3,556,286			3,380,277
Expenses
Engineering		8584,~~230~~115			~~160~~107,~~353~~072			169,345			267,425
Selling		~~349~~435,~~977~~902			~~462~~397,~~759~~631			785,879			860,390
General and administrative		1,~~058~~029,~~817~~106			1,~~230~~233,~~494~~281			2,087,924			2,463,775
Total expenses		1,~~494~~549,~~024~~123			1,~~853~~737,~~606~~984			3,043,148			3,591,590
Income (loss) from operations		2510,~~485~~654			~~(380~~168,~~082~~768	)		513,138			(211,313	)
Other income (expense):
Interest expense		(7599,~~688~~666	)		(~~165~~159,~~639~~768	)		(175,354	)		(321,772	)
Other		21,~~794~~464,892			8(14,~~685~~270	)		1,467,686			(9,221	)
Total other expense		(72,894	)		(156,954	)
Total other income (expense)		1,365,226			(174,038	)		1,292,332			(330,993	)
Loss from continuing operations before income taxes		(70,409	)		(537,036	)
Income (loss) from continuing operations before income taxes		1,875,880			(5,270	)		1,805,470			(542,306	)
Income tax benefit		(14,652	)		(112,777	)
Income tax expense (benefit)		393,811			(613	)		379,157			(113,391	)
Loss from continuing operations		(55,757	)		(424,259	)
Income (loss) from continuing operations		1,482,069			(4,657	)		1,426,313			(428,915	)
Discontinued Operations (Note 3)
Loss from discontinued operations before income taxes		-			(4938,~~902~~028	)		-			(87,930	)
Income tax benefit		-			(9,~~121~~345	)		-			(18,465	)
Loss on discontinued operations		-			(4028,~~781~~683	)		-			(69,465	)
Net Loss	$	(55,757	)	$	(465,040	)
Net Income (Loss)	$	1,482,069		$	(33,340	)	$	1,426,313		$	(498,380	)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ART’S-WAY MANUFACTURING CO., INC. Condensed Consolidated Statements of Stockholders' Equity ~~Three~~Six Months Ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024 (Unaudited)

	Common Stock				Additional					Treasury Stock
	Number of				paid-in		Retained			Number of
	shares		Par value		capital		earnings			shares		Amount			Total
Balance, November 30, 2023		5,106,922	$	51,069	$	4,838,425	$	7,021,253			94,256	$	(269,492	)	$	11,641,255
Stock based compensation		7477,~~000~~250		~~740~~773		65126,~~217~~823		-			18,458		(37,654	)		2889,~~303~~942
Net loss		-		-		-		(~~465~~498,~~040~~380	)		-		-			(~~465~~498,~~040~~380	)
Balance, February 29, 2024		5,180,922	$	51,809	$	4,903,642	$	6,556,213			112,714	$	(307,146	)	$	11,204,518
Balance, May 31, 2024		5,184,172	$	51,842	$	4,965,248	$	6,522,873			112,714	$	(307,146	)	$	11,232,817

	Common Stock				Additional					Treasury Stock
	Number of				paid-in		Retained			Number of
	shares		Par value		capital		earnings			shares		Amount			Total
Balance, November 30, 2024		5,149,173	$	51,492	$	5,020,849	$	7,328,628			112,714	$	(307,146	)	$	12,093,823
Stock based compensation		5172,~~000~~500		~~510~~725		43103,~~709~~440		-			875		(1,542	)		42102,~~677~~623
Net loss		-		-		-		~~(55~~1,~~757~~426,313	)		-		-			~~(55~~1,~~757~~426,313	)
Balance, February 28, 2025		5,200,173	$	52,002	$	5,064,558	$	7,272,871			113,589	$	(308,688	)	$	12,080,743
Balance, May 31, 2025		5,221,673	$	52,217	$	5,124,289	$	8,754,941			113,589	$	(308,688	)	$	13,622,759

See accompanying notes to condensed consolidated financial statements.

Table of Contents

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	Six Months Ended
	February 28, 2025			February 29, 2024
	May 31, 2025			May 31, 2024
Cash flows from operations:
Net loss from continuing operations	$	(55,757	)	$	(424,259	)
Net income (loss) from continuing operations	$	1,426,313		$	(428,915	)
Net loss from discontinued operations		-			(4069,~~781~~465	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock based compensation		44104,~~219~~165			65127,~~957~~596
Decrease in obsolete inventory reserves		(271,~~142~~156	)		(6231,~~098~~220	)
Depreciation and amortization expense		~~208~~397,~~072~~937			~~208~~434,~~116~~300
Amortization of cloud computing implementation costs		3060,~~455~~909			3060,~~455~~909
Increase (decrease) in allowance for expected credit losses - accounts receivable		(260,~~399~~797	)		~~391~~17,540
Deferred income taxes		~~(15~~378,~~090~~721	)		(~~124~~134,~~863~~910	)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		~~967~~592,~~864~~905			~~385~~767,~~436~~716
Inventories		(~~551~~519,~~027~~046	)		54303,~~123~~321
Other assets		(~~241~~182,~~923~~593	)		(~~301~~218,~~491~~547	)
Increase (decrease) in:
Accounts payable		~~768~~303,687			(1,~~109~~237,~~202~~351	)
Contracts in progress, net		(~~848~~1,~~475~~011,548	)		~~858~~1,~~512~~895,655
Customer deposits		~~811~~25,~~067~~630			~~670~~(246,~~992~~625	)
Income taxes payable		(500	)		-
Accrued expenses		(~~446~~334,~~937~~566	)		(375,~~739~~425	)
Net cash used in operating activities - continuing operations		(101,805	)		(67,670	)
Net cash provided by operating activities - continuing operations		1,252,373			1,196,484
Net cash used in operating activities - discontinued operations		-			(3148,~~604~~862	)
Net cash used in operating activities		(101,805	)		(99,274	)
Net cash provided by operating activities		1,252,373			1,147,622
Cash flows from investing activities:
Purchases of property, plant, and equipment		(82213,~~730~~441	)		(~~281~~512,~~174~~547	)
Net proceeds from sale of assets		-			-
Net cash used in investing activities - continuing operations		(213,441	)		(512,547	)
Net cash used in investing activities - continuing operations		(82,730	)		(281,174	)
Net cash provided by (used in) investing activities - discontinued operations		-			-
Net cash used in investing activities		(82213,~~730~~441	)		(~~281~~512,~~174~~547	)
Cash flows from financing activities:
Net change in line of credit		~~271~~(866,000	)		~~466~~(463,~~917~~083	)
Principal payments on finance lease obligations		(53109,~~968~~724	)		(2277,~~769~~798	)
Repayment of term debt		(2858,~~682~~992	)		(2654,~~489~~260	)
Repurchases of common stock		(1,542	)		(37,654	)
Net cash provided by financing activities - continuing operations		186,808			380,005
Net cash used in financing activities - continuing operations		(1,036,258	)		(632,795	)
Net cash used in financing activities - discontinued operations		-			(1,~~086~~807	)
Net cash provided by financing activities		186,808			378,919
Net cash used in financing activities		(1,036,258	)		(634,602	)
Net increase (decrease) in cash		2,273			(1,529	)
Net increase in cash		2,674			473
Cash at beginning of period		1,860			4,014
Cash at end of period	$	4,~~133~~534		$	24,~~485~~487
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	68157,~~031~~131		$	~~161~~323,~~033~~633
Income taxes		-992			-90
Supplemental disclosures of non-cash operating activities:
Right-of-use (ROU) assets acquired (included in other assets)	$	-52,285		$	38,192
Amortization of operating lease ROU assets (included in other assets)	$	213,~~228~~774		$	24,~~383~~275

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Notes to Unaudited Condensed Consolidated Financial Statements

Description of the Company

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

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

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

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

Summary of Significant Accounting Policies

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and operating results for the interim periods. The condensed consolidated financial statements should be read in conjunction with the condensed financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2024. The results of operations for the three and six months ended ~~February~~May 2831, 2025 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2025.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the three and six months ended ~~February~~May 2831, 2025. Actual results could differ from those estimates.

Allowance for Credit Losses

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

The Company carries contract assets related to its Modular Buildings segment in the form of costs and profit in excess of billings. These contract assets are typically converted to trade receivables in 30 to 90 days, depending on contract terms, and due 30 days or less 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.

Table of Contents

Employee Retention Credit

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

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

	Agricultural Products			Modular Buildings			Consolidated (Continuing Operations)
Employee retention credit (other income)	$	1,370,231		$	249,872		$	1,620,103
Interest income (other income)		207,261			38,847			246,108
Consulting fees (other expense)		(342,558	)		(62,468	)		(405,026	)
Net proceeds	$	1,234,934		$	226,251		$	1,461,185

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

Table of Contents

Discontinued Operations

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

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

Segment information as of ~~February~~May 2931, 2024 for discontinued operations was as follows:

	Tools
	Three Months Ended
	February 29, 2024
	May 31, 2024
Revenue from external customers	$	-
Gross loss	$	(27,000	)
Gross Profit (loss)		(25,000	)
Operating Expense	$	10,000
Operating Expense (Income)		(1,000	)
Loss from operations	$	(3724,000	)
Loss before tax	$	(5038,000	)
Income tax benefit	$	(9,000	)
Total Assets		1,032,000
Capital expenditures	$	-
Depreciation & Amortization	$	7,000

	*Tools*
	*Six Months Ended*
	May 31, 2024
Revenue from external customers	$	-
Gross Profit (loss)		(52,000	)
Operating Expense		9,000
Loss from operations		(61,000	)
Loss before tax		(88,000	)
Total Assets		1,032,000
Capital expenditures		-
Depreciation & Amortization	$	14,000

Table of Contents

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Segment Reporting - Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures.” ASU 2023-07 adds enhanced disclosures about significant segment expenses, clarifies circumstances in which an entity can disclose multiple segment measures of profit and loss and provides new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption was permitted. The Company adopted ASU 2023-07 in Q1 of fiscal 2025. The application of ASU 2023-07 did not have a significant impact on segment disclosures. The Company recast periods presented prior to the ~~three~~six months ended ~~February~~May 2831, 2025.

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.

Table of Contents

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, 2025
	Three Months Ended May 31, 2025
	Agricultural		Modular Buildings		Total
Farm equipment	$	13,~~994~~350,000	$	-	$	13,~~994~~350,000
Farm equipment service parts		~~883~~603,000		-		~~883~~603,000
Modular buildings		-		2,~~119~~227,000		2,~~119~~227,000
Modular building lease income		-		4626,000		4626,000
Other		7172,000		2859,000		99131,000
	$	24,~~948~~025,000	$	2,~~193~~312,000	$	56,~~141~~337,000

	Three Months Ended February 29, 2024
	Three Months Ended May 31, 2024
	Agricultural		Modular Buildings		Total
Farm equipment	$	3,~~528~~975,000	$	-	$	3,~~528~~975,000
Farm equipment service parts		~~642~~500,000		-		~~642~~500,000
Modular buildings		-		12,~~392~~100,000		12,~~392~~100,000
Modular building lease income		-		3656,000		3656,000
Other		6680,000		5919,000		~~125~~99,000
	$	4,~~236~~555,000	$	12,~~487~~175,000	$	56,~~723~~730,000

The Company offered floorplan terms in its Agricultural Products segment during its Fall of 2023 and 2024 early order programs to incentivize customers to stock farm equipment on their lots for fiscal 2024 and fiscal 2025. Floorplan terms allow customers to pay the Company at the earliest of retail date or 180 days. This program has an effect on the timing of the Company’s cash flows compared with historical cash flows.

	*Six Months Ended May 31, 2025*
	Agricultural		Modular Buildings		Total
Farm equipment	$	5,344,000	$	-	$	5,344,000
Farm equipment service parts		1,486,000		-		1,486,000
Modular buildings		-		4,346,000		4,346,000
Modular building lease income		-		72,000		72,000
Other		143,000		87,000		230,000
	$	6,973,000	$	4,505,000	$	11,478,000

On February 28, 2025, the Company had approximately $184,000 in receivables on the floorplan program with a due date greater than 30 days compared to $1,011,000 on February 29, 2024.

	*Six Months Ended May 31, 2024*
	Agricultural		Modular Buildings		Total
Farm equipment	$	7,503,000	$	-	$	7,503,000
Farm equipment service parts		1,143,000		-		1,143,000
Modular buildings		-		3,491,000		3,491,000
Modular building lease income		-		92,000		92,000
Other		146,000		79,000		225,000
	$	8,792,000	$	3,662,000	$	12,454,000

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

On May 31, 2025, the Company had approximately $102,000 in receivables on the floorplan program with a due date greater than 30 days compared to $995,000 on May 31, 2024.

Table of Contents

Accounts receivable

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

The activity related to expected credit losses for the ~~three~~six months ended ~~February~~May 2831, 2025 and ~~three~~six months ended ~~February~~May 2931, 2024 was as follows:

	Three Months Ended (Continuing operations)			Three Months Ended (Continuing operations)
	Six Months Ended (Continuing operations)			Six Months Ended (Continuing operations)
	February 28, 2025			February 29, 2024
	May 31, 2025			May 31, 2024
Balance, beginning	$	108,636		$	32,137
Provision charged to expense		(260,~~400~~797	)		~~391~~30,159
Less amounts charged-off		-			-(12,619	)
Balance, ending	$	~~106~~47,~~236~~839		$	3274,~~528~~915

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, 2025		November 30, 2024
	May 31, 2025		November 30, 2024
Receivables	$	1,~~407~~841,000	$	2,373,000
Assets		~~288~~336,000		213,000
Liabilities	$	21,~~147~~247,000	$	2,110,000

The amount of revenue recognized in the first ~~three~~six months of fiscal 2025 that was included in a contract liability on November 30, 2024 was approximately $~~197~~248,000 compared to $~~560~~655,000 in the same period of fiscal 2024. The beginning contract receivables, assets and liabilities on December 1, 2023 were approximately $3,432,000; $289,000 and $767,000, respectively.

810

Table of Contents

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~~May 2831, 2025 and ~~February~~May 2931, 2024:

	For the Three Months Ended
	February 28, 2025			February 29, 2024
	May 31, 2025			May 31, 2024
Numerator for basic and diluted net income (loss) per share:
Net income from continuing operations	$	(55,757	)	$	(424,259	)
Net income (loss) from continuing operations	$	1,482,069		$	(4,657	)
Net loss from discontinued operations		-			(4028,~~781~~683	)
Net loss		(55,757	)		(465,040	)
Net income (loss)		1,482,069			(33,340	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		5,~~054~~094,~~665~~188			5,~~022~~067,~~680~~742
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		5,~~054~~094,~~665~~188			5,~~022~~067,~~680~~742
Net Income (loss) per share - Basic:
Continuing Operations	$	(0.0129	)	$	~~(0.08~~-	)
Discontinued Operations		-			(0.01	)
Net loss per share	$	(0.01	)	$	(0.09	)
Net income (loss) per share	$	0.29		$	(0.01	)
Net Income (loss) per share - Diluted:
Continuing Operations	$	(0.0129	)	$	~~(0.08~~-	)
Discontinued Operations		-			(0.01	)
Net loss per share	$	(0.01	)	$	(0.09	)
Net income (loss) per share	$	0.29		$	(0.01	)

	*For the Six Months Ended*
	*May 31, 2025*		*May 31, 2024*
Numerator for basic and diluted net income (loss) per share:

Net income (loss) from continuing operations	$	1,426,313	$	(428,915	)
Net loss from discontinued operations		-		(69,465	)
Net income (loss)		1,426,313		(498,380	)

Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		5,074,643		5,045,334
Effect of dilutive stock options		-		-
For diluted net income (loss) per share - weighted average common shares outstanding		5,074,643		5,045,334


Net Income (Loss) per share - Basic:
Continuing Operations	$	0.28	$	(0.09	)
Discontinued Operations		-		(0.01	)
Net income (loss) per share	$	0.28	$	(0.10	)

Net Income (Loss) per share - Diluted:
Continuing Operations	$	0.28	$	(0.09	)
Discontinued Operations		-		(0.01	)
Net income (loss) per share	$	0.28	$	(0.10	)

Table of Contents

Inventory

Major classes of inventory are:

	February 28, 2025			November 30, 2024
	May 31, 2025			November 30, 2024
Raw materials	$	87,~~163~~887,~~053~~295		$	7,882,271
Work in process		~~413~~456,~~111~~924			160,209
Finished goods		34,~~976~~063,~~465~~158			3,942,435
Total Gross Inventory	$	12,~~552~~407,~~629~~377		$	11,984,915
Less: Reserves		(1,~~671~~631,~~547~~574	)		(1,657,002	)
Net Inventory	$	10,~~881~~775,~~082~~803		$	10,327,913

Accrued Expenses

Major components of accrued expenses are:

	February 28, 2025		November 30, 2024
	May 31, 2025		November 30, 2024
Salaries, wages, and commissions	$	~~431~~537,~~544~~342	$	803,662
Accrued warranty expense		~~190~~213,~~831~~929		225,186
Other		~~234~~208,~~513~~808		274,870
Total accrued expenses	$	~~856~~960,~~888~~079	$	1,303,718

10)

Assets Held for Lease

Major components of assets held for lease are:

	February 28, 2025		November 30, 2024
	May 31, 2025		November 30, 2024
Modular Buildings	$	6261,~~775~~116	$	89,033
Agricultural products equipment		7269,~~013~~347		-
Total assets held for lease (net)	$	~~134~~130,~~788~~463	$	89,033

There were approximately $4626,000 and $72,000 of rents recognized from assets held for lease included in sales on the Condensed Consolidated Statements of Operations during the three and six months ended ~~February~~May 2831, 2025, compared to $3656,000 and $92,000 for the three and six months ending ~~February~~May 2931, 2024.

The future minimum lease receipts for the years ended November 30 are as follows:

Year		Amount
2025		$	4419,~~536~~036

11)

Product Warranty

The Company offers warranties of various lengths to its customers depending on the specific product and terms of the customer purchase agreement. The average length of the warranty period is one year from the date of purchase. The Company’s warranties require it to repair or replace defective products during the warranty period at no cost to the customer. Product warranty is included in the price of the product and provides assurance that the product will function in accordance with agreed-upon specifications. It does not represent a separate performance obligation under ASC 606. The Company records a liability for estimated costs that may be incurred under its warranties. The costs are estimated based on historical experience and any specific warranty issues that have been identified. Although historical warranty costs have been within expectations, there can be no assurance that future warranty costs will not exceed historical amounts. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the balance as necessary. The accrued warranty balance is included in accrued expenses as shown in Note 9 “Accrued Expenses.” Changes in the Company’s product warranty liability for the three and six months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024 are as follows:

	Three Months Ended (Continuing Operations)
	February 28, 2025			February 29, 2024
	May 31, 2025			May 31, 2024
Balance, beginning	$	~~225~~190,~~186~~831		$	~~295~~211,~~113~~121
Provision charged to expense		8598,~~040~~336			8394,~~735~~940
Less amounts charged-off		(~~119~~75,~~395~~238	)		(~~167~~109,~~728~~393	)
Balance, ending	$	~~190~~213,~~831~~929		$	~~211~~196,~~120~~668

	*Six Months Ended (Continuing Operations)*
	*May 31, 2025*			*May 31, 2024*
Balance, beginning	$	225,186		$	295,113
Provision charged to expense		183,376			178,676
Less amounts charged-off		(194,633	)		(277,121	)
Balance, ending	$	213,929		$	196,668

Table of Contents

12)

Loan and Credit Agreements

Bank Midwest Revolving Lines of Credit and Term Loans

The Company ~~previously maintained~~ maintains a $54,~~500~~000,000 revolving line of credit (the “2025 Line of Credit”) with Bank Midwest. On ~~February~~May 2831, 2025, the balance of the 2025 Line of Credit was $ 21,~~199~~062,437 with $ 32,~~300~~937,563 remaining available. The 2025 Line of Credit was subject to a borrowing base, which was an amount equal to 75% of accounts receivable balances (discounted for aged receivables), plus 50% of net inventory, less any outstanding loan balance on the Line of Credit. On ~~February~~May 2831, 2025, the 2025 Line of Credit was not limited by the borrowing base calculation. Any unpaid principal amount borrowed on the 2025 Line of Credit accrued interest at a floating rate per annum equal to ~~0.75% above~~ the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor was set at 6.00% per annum and the interest rate at ~~February~~ May 2831, 2025 was 8 7.255% per annum. The 2025 Line of Credit was most recently renewed on March 427, ~~2024~~ 2025 with a maturity date of March 30, ~~2025~~2026 and required monthly interest-only payments. The 2025 Line of Credit is governed by the terms of a Promissory Note, dated March 427, ~~2024~~2025, entered into between the Company and Bank Midwest.

The Company ~~paid~~carries ~~off~~a ~~the~~$2,600,000 ~~remaining~~term ~~balance~~loan ofwith ~~the~~Bank ~~Line~~Midwest ofdue October ~~Credit~~1, ~~and~~2037 ~~entered~~(the ~~into~~“Term aLoan”). The ~~new~~Term ~~revolving~~Loan accrues interest ~~line~~at ofa ~~credit~~rate ~~(the "2025 Line~~ of ~~Credit")~~7.00%. The oninterest rate ~~March~~may ~~27,~~only ~~2025~~be ~~with~~adjusted by Bank Midwest. ~~The~~once ~~2025~~every ~~Line~~five ofyears. ~~Credit~~Monthly ispayments aof $419,~~000,000~~648 ~~revolving~~in ~~line~~principal ofand ~~credit limited~~interest byare ~~a borrowing~~required ~~base~~on ~~calculation~~the Term Loan. The ~~2025~~Term ~~Line~~Loan is also guaranteed by the United States Department of ~~Credit~~Agriculture ~~borrowing~~(“USDA”), ~~base~~which isrequired an ~~amount~~upfront ~~equal~~guarantee tofee 75of $62,400 and requires an annual fee of 0.5% of ~~accounts~~the ~~receivable~~unpaid ~~balances~~balance. ~~(discounted~~As ~~for~~part ~~aged~~of ~~receivables)~~the USDA guarantee requirements, ~~plus~~shareholders 50owning more than 20% are required to personally guarantee a portion of ~~net~~the ~~inventory~~Term Loan, ~~less~~in ~~any~~an ~~outstanding~~amount ~~loan~~equal ~~balance~~to ontheir ~~the~~stock ~~2025~~ownership ~~Line~~percentage. ofThe ~~Credit~~J. ~~Any~~ ~~unpaid~~Ward ~~principal~~McConnell ~~amount~~Jr. ~~borrowed~~Living onTrust, the ~~2025~~estate ~~Line~~of the former Vice Chairman of ~~Credit~~the ~~accrues~~Board ~~interest~~of atDirectors and a ~~floating~~shareholder ~~rate~~owning ~~per~~more ~~annum~~than ~~equal~~20% toof the ~~Wall~~Company’s ~~Street~~outstanding ~~Journal~~stock, ~~rate~~is ~~published~~guaranteeing inapproximately 38% of the ~~money~~Term ~~rates~~Loan, ~~section~~for an annual fee of 2% of the ~~Wall~~personally ~~Street~~guaranteed ~~Journal~~amount. The ~~interest~~initial ~~rate~~guarantee ~~floor~~fee is ~~set~~being atamortized ~~6.00%~~over ~~per~~the ~~annum~~life of the Term Loan, and the ~~current~~annual ~~interest~~fees ~~rate~~and ispersonally ~~7.5%~~guaranteed ~~per~~amounts ~~annum~~are expensed monthly. The ~~2025~~Term ~~Line~~Loan ~~of Credit~~ is governed by the terms of a ~~promissory~~Promissory ~~note~~Note, dated ~~March~~September 2728, ~~2025~~2017, entered into between the Company and Bank Midwest.

The Company carries a $2,600,000 term loan with Bank Midwest due October 1, 2037 (the “Term Loan”). The Term Loan accrues interest at a rate of 7.00%. The interest rate may only be adjusted by Bank Midwest once every five years. Monthly payments of $19,648 in principal and interest are required on the Term Loan. The Term Loan is also guaranteed by the United States Department of Agriculture (“USDA”), which required an upfront guarantee fee of $62,400 and requires an annual fee of 0.5% of the unpaid balance. As part of the USDA guarantee requirements, shareholders owning more than 20% are required to personally guarantee a portion of the Term Loan, in an amount equal to their stock ownership percentage. The J. Ward McConnell Jr. Living Trust, the estate of the former Vice Chairman of the Board of Directors and a shareholder owning more than 20% of the Company’s outstanding stock, is guaranteeing approximately 38% of the Term Loan, for an annual fee of 2% of the personally guaranteed amount. The initial guarantee fee will be amortized over the life of the Term Loan, and the annual fees and personally guaranteed amounts are expensed monthly. The Term Loan is governed by the terms of a Promissory Note, dated September 28, 2017, entered into between the Company and Bank Midwest. The Company made a $209,836 principal payment on the term loan on October 23, 2024 after receiving proceeds from the sale of the Ohio real estate from the Company's discontinued Tools segment.

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

The Term Loan is 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 guarantors pursuant to the Commercial Guaranties) commits an event of default with respect to the promissory note 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 on November 30. The terms of the Bank Midwest loan agreements require the Company to maintain a minimum of $4,000,000 of monthly working capital. The Company is also required to maintain a minimum debt service coverage ratio of 1.25, with a 0.10 tolerance. The Company also must receive bank approval for individual purchases or sales of equipment over $~~100~~50,000 and maintain reasonable salaries and owner compensation. The Company was in compliance with all covenants of Bank Midwest loans as of November 30, 2024. The next measurement date is November 30, 2025 for all covenants except the monthly working capital requirement.

1113

Table of Contents

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 $150,000, with a second loan being executed on June 24, 2020 with a principal amount of $150,000. Proceeds from these EIDLs were used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue from the date of inception. Installment payments, including principal and interest, were due monthly beginning December 18, 2022 and December 24, 2022 (thirty months from the date of the EIDLs) in the amount of $731 per EIDL. The balance of principal and interest is payable 30 years from the date of the EIDL. The EIDLs are secured by a security interest on all of the Company’s assets subordinate to Bank Midwest’s security interest. Both EIDLs are governed by the terms of a separate Promissory Note, dated June 18, 2020 and June 24, 2020, as applicable, entered into by the Company or the applicable subsidiary.

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

	February 28, 2025			November 30, 2024
	May 31, 2025			November 30, 2024
Bank Midwest loan payable in monthly installments of $19,648 including interest at 7.00%, due October 1, 2037	$	1,~~752~~723,~~607~~820		$	1,779,877
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning December 18, 2022, due June 18, 2050		~~156~~155,~~596~~832			157,304
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning December 24, 2022, due June 24, 2050		~~157~~156,~~081~~322			157,785
Total term debt	$	2,~~066~~035,~~284~~974		$	2,094,966
Less current portion of term debt		(~~121~~123,~~663~~801	)		(119,734	)
Term debt, excluding current portion	$	1,~~944~~912,~~621~~173		$	1,975,232

A summary of the minimum maturities of term debt follows for the twelve month periods ending ~~February~~May ~~28 or February 29, are as follows~~31:

Year	Amount
2026	$	~~121~~123,~~663~~801
2027		~~129~~131,~~593~~911
2028		~~138~~141,~~885~~066
2029		~~148~~151,~~547~~488
2030		~~159~~162,~~499~~362
2031 and thereafter		1,~~368~~325,~~097~~346
	$	2,~~066~~035,~~284~~974

1214

Table of Contents

13)

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses.

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

14)

Related Party Transactions

During the three and six months ended ~~February~~May 2831, 2025, and ~~February~~May 2931, 2024, the Company did not recognize any revenues from transactions with a related party, and no amounts in accounts receivable balances were due from a related party. From time to time, the Company purchases various supplies from related parties, which are companies in which Marc McConnell, the Company's chairman and principal executive officer, has an ownership interest and also serves as President. J.The ~~Ward McConnell Jr.’s estate, the~~ J. Ward McConnell, Jr. Living Trust, is paid a monthly fee to guarantee a portion of the Company’s term debt in accordance with the USDA guarantee obtained on the Company’s term debt. In the three and six months ended ~~February~~May 2831, 2025, the Company recognized $3,~~355~~175 and $6,530 of expense for transactions with related parties compared to $3,~~931~~ 749 and $7,680 for the three and six months ended ~~February~~May 2931, 2024. As of ~~February~~May 2831, 2025, accrued expenses contained a balance of $1,~~131~~077 owed to a related party compared to $1,~~329~~272 on ~~February~~May 2931, 2024.

15)

Leases

The components of operating leases on the Condensed Consolidated Balance Sheets on ~~February 28, 2025 and~~ November 30, 2024 were as follows:

	February 28, 2025		November 30, 2024
	November 30, 2024
Operating lease right-of-use assets (in other assets)	$	1113,~~546~~774	$	~~13,774~~
Current portion of operating lease liabilities (in accrued expenses)	$	9,~~182~~074	$	~~9,074~~
Long-term portion of operating lease liabilities		24,~~364~~700		~~4,700~~
Total operating lease liabilities	$	1113,~~546~~774	$	~~13,774~~

The components of finance leases on the Condensed Consolidated Balance Sheets on ~~February~~May 2831, 2025 and November 30, 2024 were as follows:

	February 28, 2025		November 30, 2024
	May 31, 2025		November 30, 2024
Finance lease right-of-use assets (net of amortization in other assets)	$	~~343~~360,~~562~~872	$	377,753
Current portion of finance lease liabilities	$	~~223~~235,~~593~~625	$	220,908
Long-term portion of finance lease liabilities		~~477~~462,~~783~~280		534,436
Total finance lease liabilities	$	~~701~~697,~~376~~905	$	755,344

1315

Table of Contents

16)

Equity Incentive Plan and Stock Based Compensation

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

The 2020 Plan permits the plan administrator to award nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance awards, and stock appreciation rights to employees (including officers), directors, and consultants. The Board has approved a director compensation policy pursuant to which directors are automatically granted restricted stock awards of 3,~~500~~000 shares of fully vested common stock annually or initially upon their election to the Board and another 1,000 shares of fully vested common stock on the last business day of each fiscal quarter.

Shares issued under the 2020 Plan for the three ~~months~~and six month periods ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024 are as follows:

	For the Three Months Ended
	February 28, 2025		February 29, 2024
	May 31, 2025		May 31, 2024
Shares issued to directors (immediate vesting)		520,000		510,000
Shares issued to directors, employees, and consultants (three-year vesting)		46,000		69,000
Shares issued to directors, employees, and consultants (three year vesting)		1,500		-
Total shares issued		5121,~~000~~500		7410,000

	*For the Six Months Ended*
	*May 31, 2025*		*May 31, 2024*
Shares issued to directors (immediate vesting)		25,000		15,000
Shares issued to directors, employees, and consultants (three-year vesting)		47,500		69,000
Unvested shares forfeited upon termination		-		(6,750	)
Total shares issued		72,500		77,250

17)

Disclosures About the Fair Value of Financial Instruments

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. On ~~February~~May 2831, 2025 and November 30, 2024, the carrying amount approximated fair value for cash, accounts receivable, accounts payable, notes payable to bank, finance lease liabilities and other current and long-term liabilities. The carrying amounts of current assets and liabilities approximate fair value because of the short maturity of these instruments. The fair value of the finance lease liabilities also approximate recorded value as that 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 charged under the loan terms are not substantially different from current interest rates.

1416

Table of Contents

18)

Segment Information

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

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

The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. Management evaluates the performance of each segment based on profit or loss from operations before income taxes, exclusive of nonrecurring gains and losses.

Approximate financial information with respect to the reportable segments is as follows.

	Three Months Ended February 28, 2025
	Three Months Ended May 31, 2025
	Agricultural Products			Modular Buildings		Consolidated (Continuing Operations)*1
Revenue from external customers	$	24,~~948~~025,000		$	2,~~193~~312,000	$	56,~~141~~337,000
Gross profit	$	~~788~~1,095,000		$	~~708~~965,000	$	12,~~496~~060,000
Operating Expense	$	1,~~167~~144,000		$	~~327~~406,000	$	1,~~494~~550,000
Income (loss) from operations	$	(~~379~~49,000	)	$	~~381~~559,000	$	2510,000
Income (loss) before tax	$	~~(438~~1,105,000	)	$	~~368~~771,000	$	~~(70~~1,876,000	)
Income tax expense (benefit)	$	~~(92~~232,000	)	$	77162,000	$	~~(15~~394,000	)
Total Assets	$	1817,~~857~~848,000		$	23,~~148~~031,000	$	2120,~~005~~879,000
Capital expenditures	$	67,000		$	16,000	$	83,000
Capital expenditures2		134,000			49,000		183,000
Depreciation & Amortization	$	148,000		$	6042,000	$	~~208~~190,000
Interest expense	$	6185,000		$	1514,000	$	7699,000
Engineering	$	8584,000		$	-	$	8584,000
Selling	$	~~206~~261,000		$	~~144~~175,000	$	~~350~~436,000
General and administrative (G&A)	$	~~876~~799,000		$	~~183~~231,000	$	1,~~059~~030,000
Corporate expense (included in G&A)	$	~~101~~139,000		$	45,000	$	~~146~~184,000

	Three Months Ended February 29, 2024
	Three Months Ended May 31, 2024
	Agricultural Products			Modular Buildings		Consolidated (Continuing Operations)*1
Revenue from external customers	$	4,~~236~~555,000		$	12,~~487~~175,000	$	56,~~723~~730,000
Gross profit	$	1,~~141~~323,000		$	~~332~~584,000	$	1,~~473~~907,000
Operating Expense	$	1,~~568~~481,000		$	~~286~~257,000	$	1,~~854~~738,000
Income (loss) from operations	$	(~~426~~158,000	)	$	46327,000	$	~~(380~~169,000	)
Income (loss) before tax	$	(~~574~~323,000	)	$	37318,000	$	(~~537~~5,000	)
Income tax expense (benefit)	$	(~~121~~68,000	)	$	867,000	$	(~~113~~1,000	)
Total Assets	$	2019,~~470~~528,000		$	2,~~746~~611,000	$	2322,~~216~~139,000
Capital expenditures	$	~~184~~205,000		$	9727,000	$	~~281~~232,000
Depreciation & Amortization	$	~~148~~161,000		$	6071,000	$	~~208~~232,000
Interest Expense	$	~~153~~150,000		$	139,000	$	~~166~~159,000
Engineering	$	~~160~~107,000		$	-	$	~~160~~107,000
Selling	$	~~386~~321,000		$	77,000	$	~~463~~398,000
General and administrative (G&A)	$	1,~~022~~053,000		$	~~209~~180,000	$	1,~~231~~233,000
Corporate expense (included in G&A)	$	136,000		$	30,000	$	166,000

*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. 17

Table of Contents

	*Six Months Ended May 31, 2025*
	Agricultural Products			Modular Buildings		Consolidated (Continuing Operations)1
Revenue from external customers	$	6,973,000		$	4,505,000	$	11,478,000
Gross profit		1,883,000			1,674,000		3,557,000
Operating Expense		2,310,000			733,000		3,043,000
Income (loss) from operations		(428,000	)		941,000		513,000
Income (loss) before tax		667,000			1,138,000		1,805,000
Income tax expense (benefit)	$	140,000		$	239,000	$	379,000
							-
Total Assets	$	17,848,000		$	3,031,000	$	20,879,000
Capital expenditures2		200,000			65,000		265,000
Depreciation & Amortization		295,041			103,000		398,041
Interest expense		147,000			29,000		176,000
Engineering		169,000			-		169,000
Selling		467,000			319,000		786,000
General and administrative (G&A)		1,674,000			414,000		2,088,000
Corporate expense (included in G&A)	$	240,000		$	90,000	$	330,000

	*Six Months Ended May 31, 2024*
	Agricultural Products			Modular Buildings		Consolidated (Continuing Operations)1
Revenue from external customers	$	8,792,000		$	3,662,000	$	12,454,000
Gross profit		2,464,000			916,000		3,380,000
Operating Expense		3,049,000			543,000		3,592,000
Income (loss) from operations		(584,000	)		373,000		(211,000	)
Income (loss) before tax		(897,000	)		355,000		(542,000	)
Income tax expense (benefit)	$	(188,000	)	$	75,000	$	(113,000	)

Total Assets	$	19,528,000		$	2,611,000	$	22,139,000
Capital expenditures		389,000			124,000		513,000
Depreciation & Amortization		308,000			126,000		434,000
Interest expense		303,000			19,000		322,000
Engineering		266,000			1,000		267,000
Selling		707,000			154,000		861,000
General and administrative (G&A)		2,076,000			388,000		2,464,000
Corporate expense (included in G&A)	$	324,000		$	60,000	$	384,000

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 $52,000 of Right of Use Assets acquired in the Agricultural Products Segment.

Table of Contents

19)

Subsequent Events

Management evaluated all other activity of the Company and concluded that no subsequent events have occurred ~~other than the 2025 Line of Credit renewal in Note 12 - Loan and Credit Agreements~~ that would require recognition in the condensed consolidated financial statements.

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

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “report”) and the audited consolidated financial statements and related notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data,” as well as Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. Some of the statements in this report may be forward-looking statements that reflect our current view on future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” "“foresee,"“ 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 and Agricultural Products segments; and (ix) our expectations ~~regarding receiving Employer Retention Credit refunds; and (x) 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~~May 2831, 2025 remain unchanged from November 30, 2024. Disclosure of these critical accounting policies is incorporated by reference from Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended November 30, 2024.

1619

Table of Contents

Results of Operations

Net Sales and Cost of Sales

Our consolidated corporate sales from continuing operations for the three- and six-month period ended ~~February~~May 2831, 2025 were $ 56,~~141~~337,000 , and $11,478,000, respectively, compared to $56,~~723~~730,000 and $12,454,000, respectively, during the same ~~period~~ periods in fiscal 2024. For the three months ended May 31, 2025, we saw a sales decrease of $~~582~~393,000, or 105.28%, from the same period in fiscal 2024. For the six months ended May 31, 2025, we saw a sales decrease ~~for~~of $976,000, or 7.8%, from the ~~comparative~~same ~~three~~period ~~months~~in fiscal 2024. Consolidated gross margin for the three and six months ended ~~February~~May 2831, 2025 was 2932.15% and 31.0%, respectively, compared to 2528.73% and 27.1%, respectively, for the same ~~period~~ periods in fiscal 2024.

Our 2025 ~~first~~second fiscal quarter sales in our Agricultural Products segment were $24,~~948~~025,000 compared to $4,~~236~~555,000 during the same period of fiscal 2024, a decrease of $1530,~~288,~~000, or 3011.46%. ~~After~~For athe six ~~period~~months ofended ~~heightened~~May ~~demand~~31, in2025, ~~fiscal~~our ~~2023,~~sales wein ~~started~~the toAgricultural ~~see~~Products asegment ~~decline~~were in$6,973,000 compared ~~demand~~to $8,792,000 ~~for~~during ~~our~~the ~~agricultural~~same ~~products~~period inof Q1fiscal 2024, ~~due~~a todecrease ~~rising~~of ~~interest rates~~$1,819,000, ~~declining~~or ~~commodity prices and decreases~~20.7%. inWeakened ~~expected~~row ~~net~~crop ~~farm~~prices ~~incomes~~and as high asinterest ~~30%~~rates ~~compared~~continue to ~~the~~make ~~previous~~for ~~year. The~~a ~~leveling~~difficult ~~off~~agricultural ofmarket ~~demand~~through ~~in this period drove~~ the ~~decrease~~ infirst ~~sales~~six ~~from~~months Q1 of fiscal ~~2024 to Q1 of fiscal~~ 2025. InLivestock Q1prices, ofpredominately ~~fiscal 2025~~cattle, are weat ~~are~~all ~~still~~time ~~battling~~highs ~~high~~in ~~interest~~fiscal ~~rates~~2025 and ~~low~~have ~~row~~driven ~~crop~~strong ~~commodity~~grinder ~~prices~~mixer ~~but~~sales ~~are~~activity ~~starting~~thus tofar ~~see improvement~~ in ~~dealer equipment~~ ~~stock~~fiscal ~~levels~~2025. ~~Equipment~~While ~~dealer~~we ~~lots~~have ~~were~~seen ~~oversaturated~~quite ~~for~~a ~~much~~bit of ~~fiscal 2024 and slowed incoming demand for us. We expect~~ destocking tofrom ~~continue~~heightened levels in fiscal ~~2025~~2024, ~~which~~many wedealers ~~believe~~are ~~will~~not ~~increase~~eager ~~demand~~to ~~for~~replace ~~our~~their ~~products~~stock ~~moving~~at ~~forward.~~current interest rate levels. The agriculture market is highly cyclical, and we still believe ~~fiscal~~we ~~2024~~are ~~was~~at the bottom of the cycle. We ~~spent~~anticipate ~~the~~that ~~majority~~conditions ofwill ~~fiscal~~improve ~~2024~~in ~~right-sizing~~the ~~our~~next ~~production~~12 ~~and administrative staff~~ to ~~help~~18 usmonths ~~weather~~in ~~the~~our ~~agricultural downturn~~market. WeOur ~~believe~~efforts wein ~~are~~fiscal at2024 ~~staffing~~to ~~levels~~right-size our ~~where~~production ~~we can see positive earnings~~ and ~~cash~~administrative staff ~~flow~~has ~~based~~reduced onour ~~sales~~operating ~~levels~~expenses wewhich ~~have~~is ~~seen~~aiding in ~~past~~our ~~years~~efforts to weather ofthe ~~agricultural~~bottom ~~downturns~~of asthe ~~long as similar demand persists~~cycle. ~~While~~In ~~the~~Q3 ~~Federal Reserve most recently held interest rates steady, they reported anticipation~~ of ~~two interest~~ ~~rate cuts for~~ fiscal 2025 ~~and further cuts for fiscal 2026, which~~ we ~~believe~~expect ~~will~~to ~~help~~be ~~stimulate~~building ~~all~~stock ~~economic~~inventory ~~growth.~~in Weorder ~~have~~to ~~seen~~react to ~~relatively~~retail ~~steady~~opportunities ~~demand for our grinder mixer products and beet harvesting equipment~~ in the ~~first~~second ~~fiscal~~half ~~quarter~~ of fiscal 2025. We ~~plan~~will tocontinue to release ~~some~~ product specific programs in the second half of fiscal 2025 to ~~continue to~~ turn inventory and unlock cash from product lines where our inventory levels are ~~high~~higher, which has been successful so far in fiscal 2025. Gross margin for our Agricultural Products segment for the three-month period ended ~~February~~May 2831, 2025 was 2627.72% compared to 2629.90% for the same ~~periods~~ period in fiscal 2024., ~~Despite~~while our gross margin for the six-month period ended May 31, 2025 was 27.0% 30compared to 28.40% ~~decrease~~for inthe ~~sales~~same ~~and~~period ~~less~~of ~~variable~~fiscal ~~margin~~2024. toThe ~~cover~~sales ~~our~~decreases ~~fixed~~for ~~costs,~~the ~~our~~three ~~gross~~and ~~margin~~six ~~percentage~~months ~~held~~periods ~~steady,~~ended May ~~comparatively~~31, ~~for~~2025 compared ~~the~~to ~~first~~ fiscal ~~quarter~~2024, ofresulted ~~2025~~in ~~due~~less tovariable ~~cuts~~margin to ~~manufacturing~~cover ~~expenses~~our wefixed ~~made~~costs ~~during fiscal 2024~~comparatively. We ~~expect~~are seeing tosteel ~~see~~prices ~~some~~rise ~~short~~as ~~term~~tariff ~~cost~~uncertainty ~~increases~~impacts ~~until~~domestic ~~the~~demand. We expect U.S.-based steel manufacturers ~~are~~ to be able to ~~meet~~increase ~~increased~~production ~~American~~to ~~steel~~meet ongoing demand ~~that~~and ~~could~~note bethe ~~induced~~presence ~~from~~of a ~~retaliatory~~major U.S. investment ~~tariffs~~by Nippon Steel for a new US Steel mill. The United States currently imports approximately 25% of steel used by industry with Canada, Brazil and Mexico being the top suppliers. The majority of our manufacturing components are sourced in the U.S., however, some of our suppliers do source some of their components from China and other countries. We have also been ~~notified of expected~~ seeing tariff charges from some of these suppliers and expect some minor impact from these tariffs on our gross profit.

Our ~~first~~second fiscal quarter sales in our Modular Buildings segment were $2,~~193~~312,000 compared to $12,~~487~~175,000 for the same period in fiscal 2024, an increase of $~~706~~137,000, or 476.53%. AOur ~~strong demand~~Modular ~~driven~~Buildings ~~backlog~~segment atsales for the six ~~end~~months ofended ~~fiscal~~May ~~2024~~31, 2025 were $4,505,000 compared to a$3,662,000 for ~~limited backlog at~~ the ~~end~~same period of fiscal ~~2023~~2024, ~~drove~~an ~~our~~ increase inof $843,000, ~~sales~~or 23.0%. Demand for Q1our ofmodular ~~fiscal~~buildings ~~2025.~~continue to Webe ~~continued~~strong toin ~~see~~fiscal ~~strong~~2025. ~~demand~~Our ~~for~~expertise ~~our~~and ~~buildings~~execution in the ~~first fiscal~~custom ~~quarter~~research ~~of 2025,~~ and welaboratory market ~~intend~~has established us toas ~~focus~~an onindustry ~~moving~~leader. ~~projects~~There ~~currently~~continues ~~under~~to ~~contract~~be ina ~~the~~copious ~~engineering~~amount ~~phase~~of toquoting ~~signed~~activity ~~construction~~and ~~contracts~~custom inbuild Q2inquiries of in fiscal 2025, todespite ~~continue~~some ~~our~~concerns ~~strong~~about ~~run~~governmental ~~from~~grants ~~the~~and ~~past two fiscal years~~funding. In Q1 of fiscal 2025, we brought on a Director of Business Development and Sales who is transitioning to replace our current President and Director of Sales. WeThe ~~expect the~~ overlap in these positions in fiscal 2025 ~~will~~is ~~provide~~providing additional sales ~~opportunities~~capacity for us in fiscal 2025. We also expect to utilize our outgoing President and Director of Sales as a consultant moving forward to improve sales and maintain customer relationships. We are utilizing the transition period to explore new markets where our custom building can offer competitiveness to the marketplace. Gross margin in the Modular Buildings segment for the three- and six-month period ended ~~February~~May 2831, 2025 was 3241.37% and 37.2%, respectively, compared to 2226.39% and 25.0%, respectively, for the same ~~respective~~periods ~~period~~ in fiscal 2024. The increased margin is due to ~~increased~~our ~~variable~~team ~~margin~~performing onunder ~~increased~~budget ~~sales.~~on ~~Our~~large ~~operations~~research ~~team~~projects ~~has also continuously come~~ in onfiscal ~~or under~~2025. ~~budget~~Investments inmade ~~their projects~~ in ~~the~~construction ~~last~~software 18and ~~months,~~human ~~which~~capital ~~has~~from ~~resulted~~years inpast ~~higher~~is ~~margins~~coming ~~and~~together anto ~~improved~~produce results ~~bottom~~in ~~line~~this segment.

Expenses

Consolidated selling expenses from continuing operations for the three months ended ~~February~~May 2831, 2025 were $~~350~~436,000, compared to $~~463~~398,000 for the same period in fiscal 2024. For the six months ended May 31, 2025, our consolidated selling expenses from continuing operations were $786,000 compared to $860,000 from the same period in fiscal 2024. The decrease in selling expenses is due to a reduction of employees on the sales and marketing teams in the Agricultural Products segment. Selling expenses as a percentage of sales ~~was~~were 6.8% for the ~~three~~six months ended ~~February~~May 2831, 2025 compared to 86.19% for ~~three~~six months ended ~~February~~May 2931, 2024. The increase is selling expenses as a percentage of sales is due to more commissionable sales in the Modular Buildings segment in the first six months of fiscal 2025 compared to fiscal 2024.

Consolidated engineering expenses from continuing operations were $8584,000 for Q1 Q2 of fiscal 2025 compared to $~~160~~107,000 for the same period in fiscal 2024. For the six months ended May 31, 2025, consolidated engineering expenses were $169,000 compared to $267,000 for same period in fiscal 2024. The decrease in engineering expenses is related to the reduction in our engineer headcount at the beginning of fiscal 2024. We expect to add a product development manager to our team in fiscal 2025 in order to bolster our product offerings. Engineering expenses as a percentage of sales were 1.75% for the ~~three~~six months ended ~~February~~May 2831, 2025, compared to 2.81% for the same period in fiscal 2024.

Consolidated administrative expenses from continuing operations for the three- and six-month period ended ~~February~~May 2831, 2025 were $1,~~059~~029,000 and $2,088,000, respectively, compared to $1,~~230~~233,000 and $2,464,000, respectively, for the same ~~period~~ periods in fiscal 2024. Administrative expenses as a percentage of sales were 2018.62% for the ~~three~~six months ended ~~February~~May 2831, 2025, compared to 2119.58% for the same period in fiscal 2024. Administrative expenses decreased year-over-year primarily due to early retirement incentives we offered to help right-size our workforce in Q1 of fiscal 2024, which was not repeated in ~~Q1 of~~ fiscal 2025. We also reduced administrative headcount including our Chairman of the Board stepping in to fill our Chief Executive Officer role in Q4 of fiscal 2024, which positively impacted administrative expenses in ~~Q1 of~~ fiscal 2025 versus ~~Q1 of~~ fiscal 2024.

1720

Table of Contents

Net income (loss ) from continuing operations

Consolidated net ~~loss~~income from continuing operations was $561,482,000 for the three-month period ended ~~February~~May 2831, 2025, compared to net loss of $~~424~~5,000 for the same period in fiscal 2024. WeOur ~~saw~~consolidated ~~improved results~~net inincome from continuing operations was $1,426,000 for the Q1six months ended May 31, 2025, ~~fiscal~~compared ~~quarter~~to ~~despite~~net aloss 10of $429,000 for the same period in fiscal 2024.2% Our operating ~~decrease~~results are improved in ~~sales~~both ~~for~~reportable segments year on year. Despite the ~~fiscal~~decrease ~~quarter~~in ~~due~~sales tofor our ~~efforts~~Agricultural toProducts ~~reduce~~segment, ~~staffing~~our ~~and~~operating ~~cut~~loss ~~expenses~~is inmuch ~~fiscal~~improved ~~2024.~~from Wea ~~believe~~year weago ~~are~~due ~~set~~to upcost tocutting ~~perform~~procedures ~~better~~enacted onin ~~reduced~~fiscal ~~sales~~2024. Our ~~with~~team continues ~~upside~~to ~~potential~~be ifcommitted ~~market~~to ~~conditions~~reducing manufacturing ~~become~~and ~~more~~overhead ~~favorable~~expenses in fiscal 2025., ~~Based~~as onwe manage ~~recent~~the ~~Federal~~reduced ~~Reserve~~demand ~~reports~~from adverse agricultural economic conditions. We believe, wethis ~~expect interest~~segment ~~rates~~will be poised to ~~drop~~capitalize and ~~become~~provide ~~more~~profitability ~~conducive~~in tothe ~~economic~~event ~~growth~~markets inimprove. ~~fiscal~~Our ~~2025~~Modular ~~and~~Buildings wesegment ~~share~~continues ~~sentiment~~to perform with ~~others~~solid inoperating ~~our~~income ~~industry~~and ~~that continued dealer~~near ~~destocking~~record ~~would have~~sales. aWe ~~positive~~expect ~~impact~~continued onsuccess ~~our~~in ~~operations~~the ~~going~~Modular ~~forward.~~Buildings ~~Our~~segment ~~team~~as isleads ~~committed~~continue converting to ~~continuing~~contract. Our tonet ~~reduce~~income ~~manufacturing~~for the three and ~~overhead~~six ~~expenses~~months inended May ~~fiscal~~31, 2025, also asbenefited ~~we manage~~largely from the ~~reduced~~receipt ~~demand~~of weEmployee ~~have~~Retention ~~been~~Credit ~~experiencing~~refunds in ~~our~~the ~~Agricultural~~approximate ~~Products~~amount inof ~~light~~$1,154,000 including interest, net of ~~current~~consulting ~~economic~~fees ~~conditions~~to ~~affecting~~prepare ~~the~~credit ~~agriculture~~and ~~system~~tax study and net of tax.

Order Backlog

The consolidated order backlog net of discounts for continuing operations as of ~~April~~July 47, 2025 was $64,~~201~~728,000 compared to $117,~~416~~784,000 as of ~~April~~July 47, ~~2024~~2025, a 4539.73% decrease. ~~The~~Immediately following the 2025 planting season, we experienced a period of slow demand in the Agricultural Products segment. The order backlog in this segment was $2863,~~136,~~000 as of ~~April~~July 47, 2025 compared to $21,~~476~~348,000 in fiscal 2024, a 1336.70% decrease. ~~While~~As ~~our~~we ~~backlog~~get isinto ~~down~~harvest inseason, ~~this~~we ~~segment,~~expect ~~our~~to ~~incoming~~see orders ~~for~~pick ~~agriculture~~up ~~equipment~~again ~~in fiscal~~as ~~2025~~yearend ~~have~~tax ~~been~~buying ~~more consistent than they were a year ago~~occurs. WeLivestock ~~carried~~operators acontinue ~~heightened~~to ~~backlog~~see ~~into~~record ~~the~~high ~~2024~~prices ~~fiscal~~and ~~year~~we ~~that~~expect ~~fueled~~them usto ~~through~~have ~~Q2 of~~money ~~fiscal~~to ~~2024. Demand~~spend ~~was~~while ~~spotty for~~ the ~~final~~row ~~two quarters of~~crop ~~fiscal~~farmers ~~2024~~are ~~due~~continuing to ~~oversaturation~~experience five ofyear ~~dealer inventory. Despite continued interest rate pressure and~~ low commodity prices~~, we believe the ongoing destocking of dealer inventory will continue to give us stable demand in fiscal 2025~~. The backlog for the Modular Buildings segment was $43,~~065~~865,000 as of ~~April~~July 47, 2025, compared to $86,~~940~~436,000 in fiscal 2024, a 5439.59% decrease. Despite out recent backlog being down year on year, our Modular building demand continues to be strong in fiscal 2025. Our sales ~~leads~~are ~~and~~up ~~projects~~23.0% ~~under~~year ~~engineering~~to ~~contracts~~date ~~are~~with strong future expected toproject closings that ~~bring~~we expect will give us similar ~~revenue~~ results to fiscal 2024 ~~despite~~for ~~not~~the ~~being~~remainder inof ~~backlog~~our ~~yet~~year. 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~~six months ended ~~February~~May 2831, 2025 was cash generated by ~~financing~~ operating activities, mainly ~~the~~net ~~use~~income from continuing operations. We received net proceeds of ~~our~~approximately ~~line~~$1,461,000 from Employer Retention Credit refunds in Q2 of ~~credit~~fiscal 2025. We ~~saw strong~~also ~~cash~~had ~~inflows~~operating income from ~~collection~~continuing operations of ~~accounts~~approximately ~~receivable~~$513,000 ~~and~~with ~~customer~~an ~~deposits~~additional $952,000 of non cash reconciling items to net income for the ~~three~~six months ended ~~February~~May 2831, 2025. Our primary cash ~~consumption~~usage activities infor Q1the first six months of fiscal 2025 ~~were~~ was a reduction of billings in excess of costs through progress on our construction projects, ~~increased~~increasing of inventory ~~for~~as ~~our~~we ~~beet~~made speculative beet equipment ~~run~~for year end tax buying in the Agricultural Products segment and payment of accrued expenses. We expect ~~our~~progress ~~inventory~~on construction products and line of credit usage to be a primary source of cash for the remainder of our fiscal year. We expect our primary cash needs for the remainder of the fiscal year to be ~~fulfillment of construction contracts,~~ operating expenses and ~~the~~inventory ~~retirement~~stocking ofin ~~debt. We also expect $1.2 million of net Employer Retention Credit ("ERC") refunds to provide a material inflow of cash, although~~ the ~~timing~~Agricultural ofProducts ~~any such refunds is unknown and not within our control~~segment. ~~Recent announcements related to the cutting of staff at the U.S. Internal Revenue Service could further impact the processing timeline for outstanding ERC claims such as ours.~~

As of ~~February~~May 2831, 2025, our revolving credit line had an outstanding principal balance of $21,~~199~~062,437. We renewed our revolving line of credit with Bank Midwest on March 27, 2025, with a scheduled maturity date of March 30, 2026. In our most recent renewal, we dropped our principal balances from $5,500,000 to $4,000,000 and also negotiated an interest rate 75 basis points lower than our previous line of credit. The bank's credit committee has preapproved an additional $1,500,000 of principal for the 2025 renewal, consistent with the borrowing availability of our previous line of credit, in the event we need additional funding.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The persons serving as our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period subject to this report. Based on this evaluation, the persons serving as our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~February~~May 2831, 2025. Our management has concluded that the consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Changes in Internal Control over Financial Reporting

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

1821

Table of Contents

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

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

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

~~The~~We ~~following~~did ~~table~~not ~~presents~~purchase ~~the~~any ~~information~~shares ~~with respect to purchases made by us of~~ our common stock during the ~~first~~second quarter of fiscal 2025:.

Total Number of

Approximate Dollar

Purchased as part

Value of Shares that

Total

Average

May

Number

Price

Publicly

Yet Be Purchased

of Shares

Paid per

Announced

under the

Purchased (1)

Plans or Programs

December 1 to December 31, 2024

N/A

January 1 to January 31, 2025

269

1.80

N/A

February 1 to February 28, 2025

606

1.72

N/A

Total

875

1.74

(1) Reflects shares withheld pursuant to the terms of restricted stock awards under our 2020 Plan to offset tax withholding obligations that occur upon vesting and release of shares. The value of the shares withheld is the closing price of our common stock on the date the relevant transaction occurs.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Insider Trading Arrangements. During the ~~fiscal~~six ~~quarter~~months ended ~~February~~ May 2831, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

1922

Table of Contents

Item 6. Exhibits.

Exhibit No.	Description
3.1	Conformed Certificate of Incorporation of Art’s-Way Manufacturing Co., Inc. – incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020.
3.2	Conformed Bylaws of Art’s-Way Manufacturing Co., Inc.– incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020.
10.1	Promissory Note, between Bank Midwest and Art's-Way Manufacturing Co., Inc. ~~dated~~incorporated ~~March~~by ~~27,~~reference ~~2025~~to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q ~~filed~~for ~~herewith~~the quarterly period ended February 28, 2025
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).

2023

Table of Contents

SIGNATURES

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

	ART’S-WAY MANUFACTURING CO., INC.
Date: April 10, 2025	By: /s/ Marc H. McConnell
Date: July 14, 2025	By: /s/ Marc H. McConnell
	Marc H. McConnell
	President, Chief Executive Officer and Chairman
Date: April 10, 2025	By: /s/ Michael W. Woods
Date: July 14, 2025	By: /s/ Michael W. Woods
	Michael W. Woods
	Chief Financial Officer

2124

Filing Compare · ARTS WAY MANUFACTURING CO INC