10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2020
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 000-5131

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.)

P.O. Box 288 

5556 Highway 9

Armstrong, Iowa 50514

(Address of principal executive offices, including zip code)

(712) 864-3131

(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 $.01 par value	ARTW	The Nasdaq Stock Market LLC

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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, 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 ☐
Non-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. ☐

Indicated by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing sale price on May 31, 2020 as reported on the Nasdaq Stock Market LLC ($1.94 per share), was approximately $3,719,120.

As of February 4, 2021, there were 4,523,407 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE 

Portions of the definitive proxy statement for the registrant’s 2021 Annual Meeting of Stockholders to be filed within 120 days of November 30, 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Art’s-Way Manufacturing Co., Inc.

Index to Annual Report on Form 10-K

	Page
Part I
Item 1. BUSINESS	4
Item 1A. RISK FACTORS	8
Item 1B. UNRESOLVED STAFF COMMENTS	8
Item 2. PROPERTIES	8
Item 3. LEGAL PROCEEDINGS	9
Item 4. MINE SAFETY DISCLOSURES	9
Part II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 11	10
Item 6. SELECTED FINANCIAL DATA	10
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11	10
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	17
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	18
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	39
Item 9A. CONTROLS AND PROCEDURES	39
Item 9B. OTHER INFORMATION	40
Part III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	41
Item 11. EXECUTIVE COMPENSATION	41
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 38	41
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 38	41
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	41
Part IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	42

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (this “report”) may contain forward-looking statements that reflect future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases forward-looking statements may be identified by the use of words such as “may,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. Forward-looking statements in this report generally relate to: our expectations regarding the impact of COVID-19 on our business condition and results of operations; our expectations regarding our warranty costs and order backlog; our beliefs regarding the sufficiency of working capital and cash flows; our expectations regarding our continued ability to renew or obtain financing on reasonable terms when necessary; the impact of recently issued accounting pronouncements; our intentions and beliefs relating to our costs, product developments and business strategies; our expected operating and financial results; our expectations concerning our primary capital and cash flow needs; our beliefs regarding competitive factors and our competitive strengths; our expectations regarding our capabilities and demand for our products; our predictions regarding the impact of seasonality; our beliefs regarding the impact of the farming industry on our business; our beliefs regarding our internal controls over financial reporting; and our intentions for paying dividends. Many of these forward-looking statements are located in this report under “Item 1. BUSINESS” and “Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” but they may appear in other sections as well.

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, the ongoing COVID-19 pandemic; the impact of changes in credit markets on our ability to continue to obtain financing on reasonable terms; our ability to repay current debt, continue to meet debt obligations and comply with financial covenants; obstacles related to liquidation of product lines; the effect of general economic conditions, including consumer and governmental spending, on the demand for our products and the cost of our supplies and materials; fluctuations in seasonal demand and our production cycle; the ability of our suppliers to meet our demands for raw materials and component parts; our original equipment manufacturer customers’ decisions regarding supply chain structure, inventory levels, and overall business conditions; fluctuations in the price of raw materials, especially steel; our ability to predict and meet the demands of each market in which our segments operate; the existence and outcome of product liability claims and other ordinary course litigation; changes in environmental, health and safety regulations and employment laws; our ability to retain our key employees; the cost of complying with laws, regulations, and standards relating to corporate governance and public disclosure, and the demand such compliance places on management’s time; and other factors described in this report and from time to time in our other reports filed with the Securities and Exchange Commission. We do not intend to update the forward-looking statements contained in this report other than as required by law. We caution investors not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. This report and the documents that we reference in this report and have filed as exhibits should be read 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.

PART I

Item 1. BUSINESS.

General

Art’s-Way Manufacturing Co., Inc., a Delaware corporation (“we,” “us,” “our,” and the “Company”), began operations as a farm equipment manufacturer in 1956. Since that time, we have become a worldwide manufacturer of agricultural equipment, specialized modular science buildings and steel cutting tools. Our principal manufacturing plant is located in Armstrong, Iowa.

We have organized our business into three 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. Our Agricultural Products segment manufactures and distributes farm equipment under our own and private labels. Our Modular Buildings segment manufactures modular buildings for various uses, commonly animal containment and research laboratories, through our wholly-owned subsidiary, Art’s-Way Scientific, Inc., an Iowa corporation. Our Tools segment manufactures standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond) and CBN (cubic boron nitride) inserts and tools through our wholly-owned subsidiary, Ohio Metal Working Products/Art’s Way, Inc., an Ohio corporation. For detailed financial information relating to segment reporting, see Note 16 “Segment Information” to our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report.

Information about Art’s-Way can be found on our website, http://www.artsway-mfg.com/. We are not including the information on our corporate website as a part of or incorporating it by reference into this report. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Exchange Act requires us to file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at http://www.sec.gov.

Business of Our Segments

Agricultural Products

Our Agricultural Products segment, which accounted for 58.4% of our net revenue in the 2020 fiscal year and 59.0% of our net revenue in the 2019 fiscal year, is located primarily in Armstrong, Iowa. This segment manufactures a variety of specialized farm machinery under our own label, including portable and stationary animal feed processing equipment and related attachments used to mill and mix feed grains into custom animal feed rations; a line of hay and forage equipment consisting of forage boxes, blowers, running gear, and dump boxes; a line of manure spreaders; sugar beet harvesting equipment; a line of land maintenance equipment and moldboard plows. We sell our labeled products through independent farm equipment dealers throughout the United States and Canada. In addition, we manufacture and supply silage blowers under original equipment manufacturer (“OEM”) agreements. Sales to our OEM customers accounted for 1% of our consolidated sales in the 2020 and 2019 fiscal years. We also provide after-market service parts that are available to keep our branded and OEM-produced equipment operating to the satisfaction of the end user of our products.

Modular Buildings

Our Modular Buildings segment, which accounted for 31.2% of our net revenue in the 2020 fiscal year and 31.7% of our net revenue in the 2019 fiscal year, is located in Monona, Iowa. This segment produces, sells and leases modular buildings, which are custom-designed to meet the specific research needs of our customers. The buildings we commonly produce range from basic swine buildings to complex containment research laboratories. We plan to continue our focus on providing research facilities for academic research institutions, government research and diagnostic centers, public health institutions and private research and pharmaceutical companies, as those are our primary market sectors. We provide services from start to finish by designing, manufacturing, delivering and installing these facilities to meet customers’ critical requirements. In addition to selling these facilities, we also offer a lease option to customers in need of temporary facilities.

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Tools

Our Tools segment, which is located in Canton, Ohio, accounted for 10.4% of our net revenue in the 2020 fiscal year and 9.3% of our net revenue in the 2019 fiscal year. This segment produces and sells standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond) and CBN (cubic boron nitride) inserts and tools and OEM specialty tools. The tools are used by manufacturers in various industries to cut and shape various parts, pipes, and fittings. The marketing of the tools is primarily through independent distributors supplying manufacturers with industrial tools and supplies. We plan to continue our focus on providing cutting tools to industries such as automotive, aerospace, oil and gas piping, and appliances.

Our Principal Agricultural Products

From our beginnings as a producer of portable grinder mixers, our Agricultural Products segment has grown through developing several new products and with our acquisitions. In 2012, we acquired the assets of Universal Harvester Co., Inc. (“UHC”) in Ames, Iowa and began selling reels for combines and swathers as UHC by Art’s-Way. In 2020, we decided to stop producing UHC reels in order to focus on core products. Today, our Agricultural Products segment manufactures a wide array of products relating to feed processing, crop production, manure spreaders, hay and forage, tillage and land management, and sugar beet harvesting equipment. Our Agricultural Products segment also maintains a small volume of OEM work for the industry’s leading manufacturers.

Grinder mixer line. The grinder mixer line represents our original product line. Our founder, Arthur Luscombe, designed the original power take-off unit powered grinder-mixer prior to our inception. Grinder mixers are used to grind grain and mix in proteins for animal feed. They have several agricultural applications and are commonly used in livestock operations. Our grinder mixers have wide swing radiuses to allow users to reposition the discharge tube from one side of the tank to the other in one step. Our 6105 grinder mixer offers a 105-bushel tank with a 20-inch hammermill. Our 6140 grinder mixer is a medium sized product with a 140-bushel tank, a 20-inch hammermill, and an 8-inch discharge auger. Our 7165 grinder mixer has a large 165- bushel tank with a 26-inch hammermill featuring self-contained hydraulics and 10-inch discharge augers yielding the fastest unload times in the industry. Our 8215 grinder mixer features a 215-bushel tank, which is the largest in the industry. Our Cattle Maxx rollermill mixer products offer consistent feed grain rations for beef and dairy operations and are available in 105-bushel, 140-bushel, and 165-bushel capacities. We also offer the JR50 and JR75 grinder mixer models for smaller operations featuring 50- and 75-bushel mixing tanks, respectively.

Stationary feed grain processing line. We offer stationary hammermills and rollermills. Harvesting leaves various amounts of extraneous materials that must be removed through processing the seeds. Hammermills are aggressive pre-cleaners that are designed to remove appendages, awns, and other chaff from seeds by vigorously scraping the seed over and through the screen. The screen has holes that are big enough to let the seed pass through undamaged but are small enough to catch and remove the appendages. Our rollermills roll the feed grain to minimize dust, and they fracture the outside hull to release the digestive juices more rapidly. Rolling feed provides more palatable and digestible feed for use in animal feeding operations.

Land management line. Land planes are used to ensure even distribution of rainfall or irrigation by eliminating water pockets, furrows, and implement scars in fields. Our land planes have a patented Art’s-Way floating hitch design. We offer pull-type graders to help our customers perform many tasks such as maintaining terraces and waterways, leveling ground, cleaning ditches, and removing snow. The pull-type graders follow close to the back of a tractor for leveling uneven areas or for turning in smaller spaces.

Moldboard plow line. The Art’s-Way moldboard plows offer conservation tillage choices to match each customer’s preference. Our moldboard plows are designed to slice and invert the soil to leave a rough surface exposed, and they are primarily used on clean-tilled cropland with high amounts of crop residue.

Sugar beet harvesting line. Our sugar beet defoliators and harvesters are innovative products in the industry due to our focus on continuous improvement, both in reaction to customer requests and in anticipation of our customers’ needs. Our machines can harvest six, eight, or twelve rows at one time. We were the first manufacturer to introduce a larger, 12-row harvester. Our sugar beet defoliators cut and remove the leaves of the sugar beets without damaging them, and the leaf particles are then incorporated back into the soil. We also offer a sonar leveling axle to improve the harvesting capability of our beet equipment.

Hay and forage line. We offer highly productive hay and forage tools for the full range of producers. This product line includes high capacity forage boxes for transporting hay from the field with optional running gear to provide superior stability and tracking. We offer the highest capacity forage boxes on the market. High velocity, high volume forage blowers are able to fill the tallest silos with lower power requirements.

Manure spreaders line. We offer vertical beaters and rear discharge manure spreaders in pull-type and depending on demand may begin offering truck mount configurations. Our manure spreaders offer flared sides for increased capacity and a guillotine slop gate for accurate metering. Our products are ideal for spreading livestock manure, compost, and lime. We offer a scale system and a scale system with GPS for proper nutrient placement. These spreaders boast a heavy-duty and rugged design with one of the best spread patterns in the industry, allowing for efficient and consistent nutrient and land management.

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Product Distribution and Markets

We distribute goods for our Agricultural Products segment primarily through a network of approximately 1,100 U.S. and Canadian independent dealers, as well as overseas dealers in the United Kingdom, Japan and Australia, whose customers require specialized agricultural machinery. We have sales representation in 48 states and seven Canadian provinces; however, many dealers sell only service parts for our products. Our dealers sell our products to various agricultural and commercial customers. We also maintain a local sales force in our Armstrong, Iowa facility to provide oversight services for our distribution network, communicate with end users, and recruit and train dealers on the uses of our products. Our local service parts staff is available to help customers and dealers with their service parts needs. Our Modular Buildings segment typically sells products customized to the end-user’s requirements directly to the end-user. Our Tools segment distributes products through manufacturers’ representatives, direct sales, and OEM sales channels.

We currently export products to nine foreign countries. We have been shipping grinder mixers abroad since 2006 and have exported portable rollermills and sugar beet harvesters as well. We continue to strengthen these relationships and intend to develop new international markets. Our international sales accounted for 3.4% of consolidated sales during the 2020 fiscal year compared to 5.0% in the 2019 fiscal year.

Backlog. Our backlogs of orders vary on a daily basis. As of February 3, 2021, our Tools segment had approximately $340,000 of backlog compared to $252,00 from the same date in 2020. Our Modular Buildings segment had approximately of $1,226,000 of backlog as of February 3, 2021, compared to $4,675,000 on that date in 2020. Our Agricultural Products segment had a net backlog of approximately $6,363,000 as of February 3, 2021 compared to $3,532,000 on February 3, 2020. Our backlog is up in two of three segments providing optimism about economic conditions in the year ahead. We expect that our order backlogs will continue to fluctuate as orders are received, filled, or canceled, and, due to dealer discount arrangements we may enter into from time to time, these figures are not necessarily indicative of future revenue.

Recent Product Developments

During the 2020 fiscal year, development in our Agricultural Products segment consisted of several products. We designed an all new Art’s Way forage box to replace our Miller Pro forage box line. The Art’s Way forage box provides an improved look on the Miller Pro version and comes complete with in-cab controls, which is a feature that is scarce in this industry. We also developed a metered application system for our X-series manure spreader that will give our customers the analytical data they need to improve profitability and comply with stiffening EPA regulations. We also redesigned the Miller Pro high dump to include a weigh bar and improved the look and manufacturability through the plant. Lastly, we have begun development on our commercial forage box to make it more marketable in the future.

Our Tools and Modular Buildings segments complete projects based on customer specifications and did not engage in specific product development during the 2020 fiscal year.

Competition

In addition to the competitive strengths of each of our segments described below, we believe our diversified revenue base, sales presence and customer base drawn from these three segments helps to provide protection against competitive factors in any one industry.

Agricultural Products

Our Agricultural Products segment competes in a highly competitive agricultural equipment industry. We compete with larger manufacturers and suppliers that have broader product offerings and significant resources at their disposal; however, we believe that our competitive strengths allow us to compete effectively in our market. 

Management believes that grain and livestock producers, as well as those who provide services to grain and livestock operations, are the primary purchasers of agricultural equipment. Many factors influence a buyer’s choice for agricultural equipment. Any one or all factors may be determinative, but they include brand loyalty, the relationship with dealers, product quality and performance, product innovation, product availability, parts and warranty programs, price, and customer service.

6

While our larger competitors may have resources greater than ours, we believe we compete effectively in the farm equipment industry by serving smaller markets in specific product areas rather than directly competing with larger competitors across an extensive range of products. Our Agricultural Products segment caters to niche markets in the agricultural industry. We do not have a direct competitor that has the same product offerings that we do. Instead, each of our product lines competes with similar products of many other manufacturers. Some of our product lines face greater competition than others, but we believe that our products are competitively priced with greater diversity than most competitor product lines. Other companies produce feed processing equipment, sugar beet harvesting and defoliating equipment, grinders, and other products similar to ours; therefore, we focus on providing the best product available at a reasonable price. Overall, we believe our products are competitively priced with above average quality and performance, in a market where price, product performance, and quality are principal elements.

In addition, in order to capitalize on brand recognition for our Agricultural Products segment, we have numerous product lines produced under our labels and private labels, and we have made strategic acquisitions to strengthen our dealer base. We also provide aftermarket service parts which are available to keep our branded and OEM-produced equipment operating to the satisfaction of the customer. We sell products to customers in the United States and nine foreign countries through a network of approximately 1,100 independent dealers in the United States and Canada, as well as overseas dealers in the United Kingdom and Australia.

We believe that our competitive pricing, product quality and performance, network of worldwide and domestic distributors, and strong market share for many of our products allow us to compete effectively in the agricultural products market.

Modular Buildings

We expect continued competition from our Modular Buildings segment’s existing competitors, which include conventional design/build firms, as well as competition from new entrants into the modular building market. To some extent, we believe barriers to entry in the modular building industry limit the competition we face in the industry. Barriers to entry in the market consist primarily of access to capital, access to a qualified labor pool, and the bidding process that accompanies many jobs in the health and education markets. Despite these barriers, manufacturers who have a skilled work force and adequate production facilities could adapt their manufacturing facilities to produce modular structures.

We believe the competitive strength of our Modular Buildings segment is our ability to design and produce high-tech modular buildings more quickly than conventional design/build firms. Conventional design/build construction may take two to five years, while our modular laboratories can be delivered in as little as six months. As one of the few companies in the industry to supply turnkey modular buildings and laboratories, we believe we provide high-quality buildings at reasonable prices that meet our customers’ time, flexibility, and security expectations.

Tools

We expect competition in our Tools segment from offshore products that have gained market share over the last 20 years. Our greatest threat continues to be emerging technologies that replace the need for brazed tools. These competitive threats are countered by our ability to offer the widest range of standard carbide tipped brazed tool inventories to be found in North America. These inventories are strategically located in four warehouses across the United States, enabling our customers to receive product quickly with minimal shipping costs. Our ability to produce special, engineered, value-added products in volume with short lead times sets us apart from our competitors. This is most evident in certain segments of the pipe processing industry, where we have been able to establish and maintain market share despite efforts from companies significantly larger than ourselves. In 2019 we expanded our tool offering by entering into an OEM agreement with a specialty tool manufacturer.

Raw Materials, Principal Suppliers, and Customers

Raw materials for our various segments are acquired from domestic and foreign sources and normally are readily available. Currently, we purchase the lifter wheels used to manufacture our sugar beet harvesters from a supplier located in China. We also purchase manure spreader beaters from a supplier in Italy. However, these suppliers are not principal suppliers and there are alternative sources for these materials.

7

We have an OEM supplier agreement with Case New Holland (“CNH”) for our Agricultural Products segment. Under the OEM agreement, we have agreed to supply CNH’s requirements for certain feed processing and service parts, primarily blowers, under CNH’s label. The agreement has no minimum requirements and can be cancelled upon certain conditions. The initial term of the agreement with CNH expired in September 2006, but the agreement continues in force until terminated or cancelled by either party. Neither party has terminated or cancelled the agreement as of November 30, 2020. We also sold reels to Honey Bee and Agco under an OEM agreement. Reels will no longer be a part of our product offering going forward. For the 2020 and 2019 fiscal years, sales to OEM customers were approximately 1% of consolidated sales.

We do not typically rely on sales to one customer or a small group of customers. During the 2020 fiscal year, one customer accounted for more than 18% of consolidated revenues as the result of a large contract in our Modular Buildings segment. Our highest recurring customer accounted for just under 6% of our consolidated net revenues.

Intellectual Property

We maintain manufacturing rights on several products, which cover unique aspects of design. We also have trademarks covering product identification. We believe our trademarks and licenses help us to retain existing business and secure new relationships with customers. The duration of these rights ranges from 5 to 10 years, with options for renewal. We currently have no pending applications for intellectual property rights.

We pay royalties for our use of certain manufacturing rights. Under our OEM supplier agreement with CNH, CNH sold us the license to manufacture, sell, and distribute certain plow products designed by CNH and their replacement and component parts. We pay semi-annual royalty payments based on the invoiced price of each licensed product and service part we sell. We have a licensing royalty agreement with Martin Harvesting, LLC to produce a commercial forage box in exchange for royalty payments in effect until August 2026. Our rights to manufacture and sell this product do not expire, but we will pay a royalty amount based on the sales price of each licensed product we sell. We also have a licensing and royalty agreement with Spreader, LLC to produce a loader mounted spreader in exchange for royalty payments until December 2027.

Government Relationships and Regulations; Environmental Compliance

Our Modular Buildings segment must design, manufacture, and install its modular buildings in accordance with state building codes, and we have been able to achieve the code standards in all instances. In addition, we are subject to various federal, state, and local laws and regulations pertaining to environmental protection and the discharge of materials into the environment. We do not expect that the cost of complying with these regulations will have a material impact on our consolidated results of operations, financial position, or cash flows.

Employees

As of November 30, 2020, we employed approximately 84 employees in our Agricultural Products segment, two of whom were employed on a part-time basis. As of the same date, we had 23 employees in our Tools segment, one of whom was employed on a part-time basis. The majority of the employees in our Tools segment are represented by a union and covered by a collective bargaining agreement. In addition, our Modular Buildings segment employed approximately 20 employees as of the same date, one of whom worked on a part-time basis. These numbers do not necessarily represent peak employment during the 2020 fiscal year.

Item 1A. RISK FACTORS.

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

Item 1B. UNRESOLVED STAFF COMMENTS.

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

Item 2. PROPERTIES.

Our executive offices, as well as the primary production and warehousing facilities for our Agricultural Products segment, are located in Armstrong, Iowa. These facilities were constructed after 1965 and remain in fair condition. The facilities in Armstrong contain approximately 249,000 square feet of usable space. We have engaged in several building improvement projects during the last several years including most recently updating our office spaces in 2020. In addition, we own approximately 127 acres of land west of Armstrong, on which the factory and inventory storage space is situated for our Agricultural Products segment.

8

We completed construction in November 2007 of our facility in Monona, Iowa, which houses the manufacturing for our Modular Buildings segment. The facility was custom-designed to meet our production needs. It has approximately 50,000 square feet of useable space and accommodates a sprinkler system and crane.

In connection with the acquisition of certain assets of Ohio Metal Working Products Company in September 2013, we also purchased the land and building used for manufacturing of the products sold by Ohio Metal Working Products Company, located in Canton, Ohio. The building contains approximately 39,000 square feet of usable space and is in good condition. The purchased land is approximately 4.50 acres and is used by our Tools segment.

All of our owned real property is subject to mortgages granted to Bank Midwest as security for our long-term debt and our line of credit. See “Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Liquidity and Capital Resources” for more information.

Item 3. LEGAL PROCEEDINGS.

From time to time in the ordinary course of business, we may be named as a defendant in legal proceedings incidental to the business, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We are not currently involved in any material legal proceedings, directly or indirectly, and we are not aware of any claims pending or threatened against us or any of the directors that could result in the commencement of material legal proceedings.

Item 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

Item 5. Market for REGISTRANT’S Common Equity, Related Stockholder Matters AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock trades on the Nasdaq Stock Market LLC under the symbol “ARTW.”

Stockholders

We have two classes of stock, undesignated preferred stock and $0.01 par value common stock. No shares of preferred stock have been issued or are outstanding. As of February 4, 2021, we had 80 common stock stockholders of record, which number does not include stockholders who hold our common stock in street name.

Dividends

We did not pay a dividend during the 2020 or 2019 fiscal years. We expect that the payment of and the amount of any future dividends will depend on our financial condition at that time.

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities by the Company

The following table presents the information with respect to purchases made by us of our common stock during the fourth quarter of the 2020 fiscal year:

	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
September 1 to September 30, 2020		892	$	2.27		N/A		N/A
October 1 to October 31, 2020		-	$	-		N/A		N/A
November 1 to November 30, 2020		892	$	2.73		N/A		N/A
		1,784	$	2.50

⁽¹⁾ Reflects shares withheld pursuant to the terms of restricted stock awards under our 2011 and 2020 Equity Plans 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.

Equity Compensation Plans

For information on our equity compensation plans, refer to Item 12, “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.”

Item 6. SELECTED FINANCIAL DATA.

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

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion, which focuses on our results of operations, contains forward-looking information and statements. Actual events or results may differ materially from those indicated or anticipated, as discussed in the section entitled “Forward Looking Statements.” The following discussion of our financial condition and results of operations should also be read in conjunction with our financial statements and notes to financial statements contained in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report.

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Financial Condition

Our 2020 fiscal year provided never before seen challenges as the world battled an ongoing pandemic and businesses everywhere suffered. We began the year with a strong first quarter in our Agricultural Products segment with our sales up 13% for the quarter compared to the prior year. In mid-March businesses began going into lockdown to try and slow the spread of COVID-19. Our sales suffered and we ended the second quarter with sales down approximately 4% year to date compared to the prior year. We were not able to recover and ultimately ended the year with our sales down 3% in our Agricultural Products segment compared to the prior year. Despite these dire market conditions, we did continue to improve operational efficiency as evidenced by improved labor efficiency rates. When measuring gross profit in our Agricultural Products segment, absent aged inventory scrap, we showed improvement of approximately 7% from fiscal 2019. Troubling market conditions over the last decade have forced us to adapt and improve our operations which gives us optimism about our ability to perform in times of economic boom. Our Modular Buildings segment struggled in fiscal 2020 mainly due to unexpected losses on a large construction contract. This segment also struggled to get new projects under contract as COVID-19 caused business disruption throughout the world. Our Tools segment suffered in the pandemic as oil and gas prices plummeted. The addition of an OEM customer in 2019 helped supplant the lost business from oil and gas customers in 2020.

Our consolidated balance sheet indicates a stable financial position as of November 30, 2020 despite continued net losses. While fiscal 2020 brought a net loss of $2,103,000, we had approximately $1,000,000 of expense from non-cash inventory scrap as we continued to purge inventory from previous acquisitions. We also spent approximately $216,000 on pandemic expenses and $286,000 for the recruitment and training of key management positions. Our bottom lines have suffered in recent years as we have tried to streamline our operations by addressing prior year acquisitions that have not served us well in poor market conditions.

We expect to have access to capital as needed throughout fiscal 2021 through the sale of inventory and from the use our line of credit. On November 30, 2020 we had $2,640,470 available on our line of credit. In 2020, we were able to obtain $1,242,900 of funding from the Small Business Administration’s Paycheck Protection Program. These funds were fully forgiven in November 2020 and helped offset losses during the pandemic as we continued to employ our workforce in full. We also received three Economic Injury Disaster Loans for a total of $450,000. These loans have a 30 year payback period. Despite the continued losses, our banking relationship has remained positive through transparency and continued communication. Our ability to not overuse our line of credit in times of losses has provided us with the confidence that we can manage our cash use until market conditions improve and our product offering and dealer network grow. Our working capital remained strong at approximately $4,137,000 in fiscal 2020 with a current ratio of 1.67. We also continue to maintain a debt to equity ratio below 1. We continue to put emphasis on reducing our inventory to more manageable levels to decrease carrying costs, implementing lean manufacturing practices, improving our inventory turnover, focusing our product offering, increasing our dealer network reach, and improving customer service. We do not foresee liquidity issues within the next twelve months.

Impact of COVID-19

While the COVID-19 pandemic had very little impact on our results of operations for the first quarter of fiscal 2020, it did impact our results of operations for the rest of fiscal 2020 and we believe that it may continue to do so for the foreseeable future. From March 23, 2020 until May 18, 2020 the majority of our office staff in all three segments worked remotely with the exception of key operations support. At the height of the initial outbreak our workforce was down approximately 17% due to self-quarantine. By the end of May 2020 our entire workforce had returned and operations have continued as normal with additional safety precautions in place. As COVID-19 cases began to rise in November 2020, we allowed employees that could perform their job functions remotely do so at their discretion. At this time approximately 75% of our office staff is working remote at least part-time and this has had minimal effect on how we operate as a business. We expect that by the end of February 2021 remote employees will return full time to the office. Future outbreaks could have a material effect on our operations and we are taking precautions to mitigate the spread of COVID-19.

In our Agricultural Products segment, we did not experience any order cancellations; however, calls for new whole goods slowed significantly in the second quarter of fiscal 2020 and many dealers held off on the shipping or pickup of their completed units. Our sales levels were comparatively steady to the last few years in the third and fourth quarters of fiscal 2020 and we ultimately ended the year down 3.1% on sales. Prior to the initial lockdowns in March 2020, we were anticipating an uptick in sales from recent years. We believe 2021 will bring better economic conditions for farmers because of stimulus payments received in 2020. We also believe that farmers were conservative in 2020, using excess funds to pay down debt, and will be ready to spend in 2021.

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Our Modular Buildings segment started fiscal 2020 with a more diverse backlog than we had at the beginning of fiscal 2019; however, we had some setbacks on site work as subcontractors were forced to quarantine after testing positive for COVID-19. Our workers have been hesitant to travel during the pandemic and, as a result, we have had some challenges completing site work in the third and fourth quarters of fiscal 2020. Because of COVID-19, many companies were hesitant to enter into long-term contracts in fiscal year 2020. As a result, our modular building rental fleet remained largely unused in fiscal 2020 which is evidenced by our decrease in lease revenue. Our sales outlook for fiscal 2021 reflects a continued decrease in demand, but sales activity saw a moderate increase near the end of fiscal 2020.

In our Tools segment, oil prices dropped significantly at the start of the pandemic, which caused our sales to drop significantly in the second quarter of fiscal 2020. The diversification of our business with our new OEM customer helped us get through the oil and gas industry lows during that time; however, since oil and gas prices have not yet reached their pre-pandemic levels, we have not seen our sales levels from these customers return. We are optimistic that we have passed the low point in our Tools segment and expect improved sales in fiscal 2021.

While our sales were affected in fiscal 2020 by the COVID-19 pandemic, government programs including the Paycheck Protection Program and Economic Injury Disaster Loan program helped protect our liquidity that may have otherwise been materially impacted. However, the COVID-19 pandemic could have a material impact on our operations in the future as suppliers lose access to labor and resources which could ultimately drive up prices. We are not currently able to measure this impact and at this time believe our operations will continue as normal. Travel restrictions and border closures have not had a major impact on our ability to operate and achieve business goals. While we did minimize our travel in 2020 our operations were not materially affected by the inability to travel. Many trade shows shifted to online and some canceled altogether, however, our sales volumes were not significantly affected by the cancellation of these shows. As vaccinations occur in 2021, we expect travel and trade show participation to pick up. While we are short of our pre-pandemic expectations, we believe the worst of the economic hardship has passed for us. We have built and improved our business over the last few years to help us better weather any economic storms that come our way.

CEO Transition

As previously announced, David King took over for Carrie Gunnerson as our Chief Executive Officer in the third quarter of fiscal 2020. Carrie Gunnerson’s final day as our Chief Executive Officer was July 21, 2020. Mr. King previously served as our Executive Vice President since March 30, 2020. Mr. King brings 25 years of agriculture industry experience in operations, marketing and business development. We look forward to Mr. King bringing Art’s Way new strategic business opportunities and providing a revitalized brand image.

Critical Accounting Policies

Our significant accounting policies are described in Note 1 “Summary of Significant Accounting Policies” to our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report. Critical accounting policies are those that we believe are both important to the portrayal of our financial condition and results of operations and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

We believe that the following represents the most critical accounting policies and estimates used in the preparation of our consolidated financial statements.

Inventories

Inventories are stated at the lower of cost or net realizable value, and cost is determined using the standard costing method. Management monitors the carrying value of inventories using inventory control and review processes that include, but are not limited to, sales forecast review, inventory status reports, and inventory reduction programs. We record inventory write downs to net realizable value based on expected usage information for raw materials and historical selling trends for finished goods. If the assumptions made by management do not occur, we may need to record additional write downs.

Revenue Recognition

In accordance with ASC 606, revenue is measured based on consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.

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Our revenues primarily result from contracts with customers. The major sources of revenue for the Agricultural Products and Tools segments are farm equipment, service parts related to farm equipment and steel cutting tools and inserts. The Agricultural Products and Tools segments generally execute short-term contracts that contain a single performance obligation – the delivery of product to the common carrier. We recognize revenue for the production and sale of farm equipment, service parts and cutting tools upon shipment of the goods. Shipment of the goods is the point in time when risk of ownership and title pass to the customer. The Tools segment has an OEM agreement with one customer for which sales are recognized FOB destination – when the goods hit the customer’s dock. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in our terms are documented in the most recently published price lists. Pricing is fixed and determinable according to our published equipment and parts price lists. Title to all equipment and parts sold pass to the customer upon delivery to the carrier and is not subject to a customer acceptance provision. Proof of the passing of title is documented by the signing of the delivery receipt by a representative of the carrier. Post shipment obligations are limited to any claim with respect to the condition of the equipment or parts. The Agricultural Products and Tools segments each typically require payment in full 30 days after the ship date. To take advantage of program discounts, some customers pay deposits up front. Any deposits received are considered unearned revenue and increase contract liabilities.

In certain circumstances, upon the customer’s written request, we may recognize revenue when production is complete, and the goods are ready for shipment. At the customer’s request, we will bill the customer upon completing all performance obligations, but before shipment. The customer dictates that we ship the goods per their direction from our manufacturing facility, as is customary with this type of agreement, in order to minimize shipping costs. The written agreement with the customer specifies that the goods will be delivered on a schedule to be determined by the customer, with a final specified delivery date, and that we will segregate the goods from our inventory, such that they are not available to fill other orders. This agreement also specifies that the customer is required to purchase all goods manufactured under this agreement. Title of the goods will pass to the customer when the goods are complete and ready for shipment, per the customer agreement. At the transfer of title, all risks of ownership have passed to the customer, and the customer agrees to maintain insurance on the manufactured items that have not yet been shipped. We have operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customers and us. The credit terms on this agreement are consistent with the credit terms on all other sales. All risks of loss are shouldered by the customer, and there are no exceptions to the customer’s commitment to accept and pay for these manufactured goods. Revenues recognized at the completion of production in fiscal 2020 and 2019 were approximately $0 and $16,000, respectively.

The Modular Buildings segment is in the construction industry with its major source of revenue arising from modular building sales. Sales of modular buildings are generally recognized using input methods to measure progress towards the satisfaction of a performance obligation using the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract costs consist of direct costs on contracts, including labor, materials, and amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract change orders, penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. We use significant judgements in determining estimated contract costs and completion percentages throughout the life of the project. Stock modular building sales also occur and are recognized at a point in time when the performance obligation is fulfilled through substantial completion. Substantial completion is achieved through customer acceptance of the completed building. The Modular Buildings segment executes contracts with customers that can be short- or long-term in nature. These contracts can have multiple performance obligations and revenue from these can be recognized over time or at a point in time depending on the nature of the contracts. Payment terms for the Modular Buildings segment vary by contract, but typically utilize money down and progress payments throughout the life of the contract. The payment terms of the Modular Buildings segment have the most impact on our contract receivables, contract assets and contract liabilities. Project invoicing from the Modular Buildings segment increases contract receivables and has an effect on contract liabilities through billings in excess of costs and estimated gross profit and advanced payments. The balance of contract assets is typically made up of the balance of costs and estimated gross profit in excess of billings. Costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are classified as current liabilities.

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We also lease modular buildings to certain customers and account for these transactions as operating or sales-type leases. These leases have terms of up to 36 months and are collateralized by a security interest in the related modular building. On sales-type leases, the lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the building is substantially complete. Profit related to the sale of the building is recorded upon fulfillment of our obligation to the lessee. On operating leases, we recognize rent when the lessee has all the rights and benefits of ownership of the asset.

The Agricultural Products segment offers variable consideration in the form of discounts depending on participation in yearly early order programs. This variable consideration is allocated to the transaction price of all products in a sales arrangement and is not contingent on future outcomes. The Agricultural Products segment does not offer rebates or credits. The Tools segment offers quantity discounts that are allocated to the transaction price of each product once the quantity break is achieved. The Tools segment does not offer rebates or credits. The Modular Buildings segment does not offer discounts, rebates or credits.

Our returns policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge, which is included in net sales. Whole goods are not returnable. Shipping costs charged to customers are included in net sales. Freight costs incurred are included in cost of goods sold. Customer deposits consist of advance payments from customers, in the form of cash, for revenue to be recognized in the following year.

For information on product warranty as it applies to ASC 606, refer to Note 8 “Product Warranty” contained in our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report.

Results of Operations

Fiscal Year Ended November 30, 2020 Compared to Fiscal Year Ended November 30, 2019

Our consolidated net sales totaled $22,409,000 for the 2020 fiscal year, which represents a 2.1% decrease from our consolidated net sales of $22,889,000 for the 2019 fiscal year. The decrease in revenue is due to decreases in sales in our Modular Building and Agricultural Products segments. Our Tools segment reported a 9.9% increase in sales compared to the 2019 fiscal year. Our consolidated gross profit as a percentage of net sales decreased to 10.7% in the 2020 fiscal year when compared to 17.2% of net sales in the 2019 fiscal year. We saw decreased gross profit percentage in all three segments in fiscal 2020 due to varying circumstances discussed below. Our consolidated operating expenses increased by 16.3%, from $5,424,000 in the 2019 fiscal year to $6,309,000 in the 2020 fiscal year. Because the majority of our corporate general and administrative expenses are borne by our Agricultural Products segment, that segment represented $4,483,000 of our total consolidated operating expenses, while our Modular Buildings segment represented $1,034,000 and our Tools segment represented $792,000.

Our consolidated operating loss for the 2020 fiscal year was $(3,910,000) compared to $(1,497,000) for the 2019 fiscal year. Our Agricultural Products segment had an operating loss of $(2,318,000), our Modular Buildings segment had operating loss of $(1,295,000) and our Tools segment had an operating loss of $(297,000).

Consolidated net loss for the 2020 fiscal year was $(2,103,000) compared to net loss of $(1,420,000) in the 2019 fiscal year, an increase in loss of $683,000.

Our effective tax rate for the 2020 and 2019 fiscal years was 28.9% and 19.7%, respectively. The increase in the effective tax rate is due to the tax treatment of Paycheck Protection Program loan forgiveness as discussed in Note 1, “Summary of Significant Accounting Policies” to our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report.

Agricultural Products. Our Agricultural Products segment’s net sales for the 2020 fiscal year were $13,085,000 compared to $13,508,000 during the 2019 fiscal year, a decrease of $423,000, or 3.1%. The decrease in sales can be primarily explained by a decrease in sales of our UHC reels year over year. In mid fiscal 2019, we lost our primary reel customer over disagreements on price, as we determined that the margins on reels weren’t enough to justify putting them into our production schedule and were only willing to produce them for an increased price. We expect further declines in our reel revenue as we discontinue production of this line and replace the production slots with products that provide us with greater margin. We also saw decreased demand for our beet equipment and forage and receiver boxes in the 2020 fiscal year compared to the 2019 fiscal year. We expect increased demand for these lines in fiscal 2021 as our backlog indicates we will have improved sales of beet equipment and we will be launching a new Art’s Way forage box. Sales of manure spreaders, dump boxes and grinders improved in fiscal 2020 over fiscal 2019. The improved success of these lines provides optimism for the future as we believe these are the core products we can market towards future growth.

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Gross profit percentage for the 2020 fiscal year was 16.5% compared to 16.3% for the 2019 fiscal year. We attribute the increase in gross profit to a 4% improvement on standard gross profit margin due to favorable product mix and fewer liquidation sales in fiscal 2020. We also saw a 5% increase in our measurable labor efficiency metric, which tells us how productive our workforce is. After eliminating $996,000 of inventory obsolescence expense in fiscal 2020 and $315,000 of the same expense in fiscal 2019 we had an increase in gross profit percent of approximately 7% year over year. We believe that presenting gross profit percentage excluding inventory obsolescence expense is useful because it excludes a significant expense that we do not expect to continue to occur going forward and therefore facilitates a better comparison of gross profit percentage over multiple periods and is a clearer reflection of our ongoing operations. The $996,000 of inventory obsolescence expense in fiscal 2020 was related to increasing reserves on product lines we eliminated strategically from our offering including UHC reels, Miller Pro forage boxes, rakes and augers. Our core product offering going forward includes products that we feel have strong demand, favorable margins and flow through our facility efficiently. We believe the gross margin improvements are a strong indicator of our ability to succeed as agricultural conditions continue to improve.

Our Agricultural Products segment’s operating expenses for the 2020 fiscal year were $4,483,000 compared to $3,796,000 for the 2019 fiscal year, an increase of $687,000, or 18.1%. Approximately $115,000 of this increase is due to the hiring of a new territory development manager to increase sales and strengthen our dealer network. We also incurred $116,000 of additional recruitment expense in fiscal 2020 when compared to fiscal 2019 related to hiring a new CEO, supply chain manager and product manager. We incurred approximately $73,000 of expense paying dual salaries as we transitioned these new roles. We also incurred approximately $148,000 of pandemic expense as we increased employee incentives for working during the pandemic, conducted sitewide COVID-19 testing and provided supplies to help keep our employees safe. We also incurred approximately $300,000 of additional bonus expense in fiscal 2020 recruiting new management talent, rewarding retiring management, and accruing bonuses for operational improvements during this agricultural downturn. This segment’s operating expenses for the 2020 fiscal year were 34.3% of sales compared to 28.1% of sales for the 2019 fiscal year. Total loss from operations for our Agricultural Products segment during the 2020 fiscal year was $(2,318,000) compared to an operating loss of $(1,599,000) for the 2019 fiscal year, an increase in loss of $719,000.

Modular Buildings. Our Modular Buildings segment’s net sales for the 2020 fiscal year were $6,993,000 compared to $7,260,000 for the 2019 fiscal year, a decrease of $267,000, or 3.7%. The decrease in sales was attributable to decreased operating lease activity in fiscal 2020 and a large construction project nearing completion. Gross profit for the 2020 fiscal year was (3.7)% compared to 16.1% during the 2019 fiscal year. The decreased gross profit was due to margin deterioration on a large construction contract for expenses that were unforeseen. Operating expenses for the 2020 fiscal year were 14.8% of sales compared to 13.3% for the 2019 fiscal year. The increase in operating expenses was due to $35,000 of pandemic expense related to employee incentives during COVID-19 lockdowns and supplies needed to mitigate the spread of COVID-19. Total loss from operations from our Modular Buildings segment during the 2020 fiscal year was $(1,295,000) compared to an operating income of $208,000 in the 2019 fiscal year, an increase in loss of $1,503,000. Our expected profits on a large construction project eroded in fiscal 2020, but we look forward to a fresh start in fiscal 2021.

Tools. Our Tools segment’s net sales for the 2020 fiscal year were $2,330,000 compared to $2,121,000 for the 2019 fiscal year, an increase of $209,000, or 9.9%. The increase is primarily due to the addition of a large OEM customer in the fourth quarter of fiscal 2019. We had projected larger revenue increases; however, the COVID-19 pandemic had a negative effect on our existing customer base, mainly the oil and gas industries. These sales have not fully recovered to date and we have relied heavily on our OEM customer in recent months. We are focused on expanding our portfolio of customers to help us diversify our business as different industries experience booms and busts. Gross profit for the 2020 fiscal year was 21.3% compared to 26.4% for the 2019 fiscal year. Our decreased gross margin for the twelve months is attributable to the hiring of a floor supervisor to help us manage the higher volumes of sales we were expecting with the addition of our OEM customer. This position is a necessary one to manage increased volumes through our shop floor and we are continuing to find ways to increase volumes to cover the expenses of this position. Operating expenses were $792,000 for the 2020 fiscal year compared to $666,000 for the 2019 fiscal year, an increase of $126,000, or 18.9%. This increase in operating expenses is due primarily to approximately $79,000 of additional costs related to implementation of our OEM line and $33,000 of pandemic expense related to the retention of employees during the pandemic and supply costs associated with mitigating the spread of COVID-19.

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Trends and Uncertainties

We are subject to a number of trends and uncertainties that may affect our short-term or long-term liquidity, sales revenues, and operations. Similar to other farm equipment manufacturers, we are affected by items unique to the farm industry, including fluctuations in farm income resulting from the change in commodity prices, crop damage caused by weather and insects, government farm programs, interest rate fluctuations, and other unpredictable variables. Other uncertainties include our OEM customers and the decisions they make regarding their current supply chain structure, inventory levels, and overall business conditions. Management believes that our business is dependent on the farming industry for the bulk of our sales revenues. As such, our business tends to reap the benefits of increases in farm net income, as farmers tend to purchase equipment in lucrative times and forgo purchases in less profitable years. Direct government payments have been increasing in the past two years and costs of agricultural production are increasing; therefore, we anticipate that further increases in the value of production will benefit our business, while any future decreases in the value of production will decrease farm net income and may harm our financial results.

As with other farm equipment manufacturers, we depend on our network of dealers to influence customers’ decisions, and dealer influence is often more persuasive than a manufacturer’s reputation or the price of the product.

Seasonality

Sales of our agricultural products are seasonal; however, we have tried to decrease the impact of this seasonality through the development of beet harvesting machinery coupled with private labeled products, as the peak periods for these different products occur at different times.

We believe that our tool sales are not seasonal. Our modular building sales are somewhat seasonal, and we believe that this is due to the budgeting and funding cycles of the universities that commonly purchase our modular buildings. We believe that this cycle can be offset by building backlogs of inventory and by increasing sales to other public and private sectors.

Liquidity and Capital Resources

Our main source of funds during the 2020 fiscal year was cash generated by financing activities. We received $1,242,900 of funding and forgiveness via a Paycheck Protection Program loan and also $450,000 of funding from the Economic Injury Disaster Loan program in fiscal 2020. We did use approximately $856,000 of cash in operations in fiscal 2020 which was largely from costs of production for the Agricultural Products and Modular Building segments. We used approximately $693,000 of cash to update facilities and equipment which includes software and hardware related to information technology advances, office space updates, and manufacturing equipment improvements that enhance our efficiency.

We have a Bank Midwest credit facility consisting of a $5,000,000 revolving line of credit, pursuant to which we had borrowed $2,359,530, with $2,640,470 remaining, as of November 30, 2020, and one term loan, which had an outstanding principal balance of $2,350,593 as of November 30, 2020. The revolving line of credit is being used for working capital purposes. We also have three Economic Injury Disaster Loans provided by the U.S. Small Business Administration with an aggregate principal balance of $450,000 as of November 30, 2020.

Our loans require us to comply with various covenants, including maintaining certain financial ratios and obtaining prior written consent from Bank Midwest for any investment in, acquisition of, or guaranty relating to another business or entity. We were out of compliance with our debt service coverage ratio and minimum working capital requirements covenants in place under the Bank Midwest loans as of November 30, 2020. Bank Midwest has issued a waiver forgiving the noncompliance as of November 30, 2020, and in turn waived the event of default. On January 12, 2021, Bank Midwest reduced our working capital requirement through an amendment to our covenants to a level that would put us in compliance at November 30, 2020.

For additional information about our financing activities, please refer to Note 9 “Loan and Credit Agreements” to our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report.

The following table represents our working capital and current ratio as of the end of the past two fiscal years:

	November 30, 2020		November 30, 2019
Current Assets	$	10,301,350	$	11,407,230
Current Liabilities		6,164,776		5,202,764
Working Capital	$	4,136,574	$	6,204,466
Current Ratio		1.67		2.19

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We believe that our current cash and financing arrangements will provide sufficient cash to finance operations for the next 12 months. We expect to continue to rely on cash from financing activities to supplement our cash flows from operations in order to meet our liquidity and capital expenditure needs in the near future. We expect to continue to be able to procure financing upon reasonable terms.

Off-Balance Sheet Arrangements

None.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Art's-Way Manufacturing Co., Inc.

Armstrong, Iowa

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Art's-Way Manufacturing Co., Inc. and Subsidiaries (the Company) as of November 30, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Eide Bailly LLP

We have served as the Company’s auditor since 2006.

Minneapolis, Minnesota

February 9, 2021

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ART’S-WAY MANUFACTURING CO., INC.

Consolidated Balance Sheets

	November 30, 2020			November 30, 2019
Assets
Current assets:
Cash	$	2,684		$	3,145
Accounts receivable-customers, net of allowance for doubtful accounts of $51,175 and $22,925 in 2020 and 2019, respectively		2,390,604			1,679,975
Inventories, net		7,762,400			8,778,507
Cost and profit in excess of billings		56,026			726,667
Net investment in sales-type leases, current		28,352			148,005
Other current assets		61,284			70,931
Total current assets		10,301,350			11,407,230
Property, plant, and equipment, net		5,218,662			5,362,907
Assets held for lease, net		521,555			713,782
Deferred income taxes		2,667,686			1,786,048
Net investment in sales-type leases, long-term		-			5,782
Other assets		93,760			71,189
Total assets	$	18,803,013		$	19,346,938
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,955,404		$	1,205,313
Customer deposits		198,225			105,363
Billings in excess of cost and profit		276,226			88,931
Income taxes payable		1,100			6,400
Accrued expenses		1,279,312			1,132,826
Line of credit		2,359,530			2,578,530
Current portion of long-term debt		94,979			85,401
Total current liabilities		6,164,776			5,202,764
Long-term liabilities
Long-term portion of operating lease liabilities		18,342			-
Long-term debt, excluding current portion		2,713,150			2,350,592
Total liabilities		8,896,268			7,553,356
Commitments and Contingencies (Notes 8, 9 and 15)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2020 and 2019; issued and outstanding 0 shares in 2020 and 2019.		-			-
Common stock – $0.01 par value. Authorized 9,500,000 shares in 2020 and 2019; issued 4,470,004 in 2020 and 4,321,087 in 2019		44,700			43,211
Additional paid-in capital		3,496,243			3,250,087
Retained earnings		6,443,856			8,547,342
Treasury stock, at cost (35,097 in 2020 and 18,842 in 2019 shares)		(78,054	)		(47,058	)
Total stockholders’ equity		9,906,745			11,793,582
Total liabilities and stockholders’ equity	$	18,803,013		$	19,346,938

See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.

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ART’S-WAY MANUFACTURING CO., INC.

Consolidated Statements of Operations

	Years Ended
	November 30, 2020			November 30, 2019
Sales	$	22,409,123		$	22,889,173
Cost of goods sold		20,009,523			18,961,260
Gross profit		2,399,600			3,927,913
Expenses:
Engineering		476,721			479,345
Selling		1,623,960			1,602,006
General and administrative		4,208,553			3,343,443
Total expenses		6,309,234			5,424,794
(Loss) from operations		(3,909,634	)		(1,496,881	)
Other income (expense):
Interest expense		(304,611	)		(358,174	)
Other		1,254,289			86,235
Total other income (expense)		949,678			(271,939	)
Income (loss) before income taxes		(2,959,956	)		(1,768,820	)
Income tax (benefit)		(856,470	)		(349,234	)
Net Income (Loss)		(2,103,486	)		(1,419,586	)
Net Income (Loss) per share
Basic Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Diluted Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Weighted average outstanding shares used to compute basic net loss per share		4,393,887			4,277,375
Weighted average outstanding shares used to compute diluted net loss per share		4,393,887			4,277,375

See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.

20

ART’S-WAY MANUFACTURING CO., INC.

Consolidated Statements of Stockholders' Equity

Years Ended November 30, 2020 and 2019

	Common Stock				Additional					Treasury Stock
	Number of				paid-in		Retained			Number of
	shares		Par value		capital		earnings			shares		Amount			Total
Balance, November 30, 2018		4,225,050	$	42,250	$	3,055,632	$	9,966,928			9,286	$	(27,735	)	$	13,037,075
Stock based compensation		96,037		961		194,455		-			9,556		(19,323	)		176,093
Net (loss)		-		-		-		(1,419,586	)		-		-			(1,419,586	)
Balance, November 30, 2019		4,321,087		43,211		3,250,087		8,547,342			18,842		(47,058	)		11,793,582
Stock based compensation		148,917		1,489		246,156					16,255		(30,996	)		216,649
Net (loss)								(2,103,486	)							(2,103,486	)
Balance, November 30, 2020		4,470,004		44,700		3,496,243		6,443,856			35,097		(78,054	)		9,906,745

See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.

21

ART’S-WAY MANUFACTURING CO., INC.

Consolidated Statements of Cash Flows

	Twelve Months Ended
	November 30, 2020			November 30, 2019
Cash flows from operations:
Net (loss)	$	(2,103,486	)	$	(1,419,586	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Stock based compensation		247,645			195,416
Increase in obsolete inventory reserves		556,303			79,265
(Gain) Loss on disposal of property, plant, and equipment		25,195			(9,999	)
Depreciation and amortization expense		818,234			1,003,541
Accrued interest on deferred debt payments		7,536			-
Change in allowance for doubtful accounts		28,250			(2,175	)
Debt forgiveness from Paycheck Protection Program loan		(1,242,900	)		-
Deferred income taxes		(881,638	)		(353,626	)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		(738,879	)		(140,687	)
Inventories		459,804			1,399,330
Net investment in sales-type leases		125,435			123,055
Other assets		9,649			54,158
Increase (decrease) in:
Accounts payable		750,091			403,251
Contracts in progress, net		857,936			(723,463	)
Customer deposits		92,862			(40,269	)
Income taxes payable		(5,300	)		-
Accrued expenses		136,949			239,542
Net cash provided by (used in) operating activities		(856,314	)		807,753
Cash flows from investing activities:
Purchases of property, plant, and equipment		(693,414	)		(447,025	)
Net proceeds from sale of assets		191,764			899,713
Net cash provided by (used in) investing activities		(501,650	)		452,688
Cash flows from financing activities:
Net change in line of credit		(219,000	)		(927,000	)
Proceeds from term debt		1,692,900			-
Repayment of term debt		(85,401	)		(314,485	)
Repurchases of common stock		(30,996	)		(19,323	)
Net cash provided by (used in) financing activities		1,357,503			(1,260,808	)
Net (decrease) in cash		(461	)		(367	)
Cash at beginning of period		3,145			3,512
Cash at end of period	$	2,684		$	3,145
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	263,598		$	329,356
Income taxes		28,514			3,855

See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.

22

Art’s-Way Manufacturing Co., Inc.

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

(a) Nature of Business

Art’s-Way Manufacturing Co., Inc. (the “Company”) is primarily engaged in the fabrication and sale of specialized farm machinery in the agricultural sector of the United States. Primary product offerings include portable and stationary animal feed processing equipment; hay and forage equipment; sugar beet harvesting equipment; land maintenance equipment; manure spreaders and moldboard plows. The Company sells its labeled products through independent farm equipment dealers throughout the United States. In addition, the Company manufactures and supplies hay blowers pursuant to OEM agreements. The Company also provides after-market service parts that are available to keep its branded and OEM-produced equipment operating to the satisfaction of the end user of the Company’s products.

The Company’s Modular Buildings segment is primarily engaged in the construction of modular laboratories and animal housing facilities through the Company’s wholly-owned subsidiary, Art’s-Way Scientific, Inc. Buildings commonly produced range from basic swine buildings to complex containment research laboratories. This segment also provides services relating to the design, manufacturing, delivering, installation, and renting of the building units that it produces.

The Company’s Tools segment is a domestic manufacturer and distributor of standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond), CBN (cubic boron nitride) inserts and OEM specialty tools through the Company’s wholly-owned subsidiary, Ohio Metal Working Company/Art’s Way, Inc.

(b) Impact of COVID-19

While the COVID-19 pandemic had very little impact on the Company’s results of operations for the first quarter of fiscal 2020, it did impact results of operations for the rest of fiscal 2020 and the Company believes that it may continue to do so for the foreseeable future. From March 23, 2020 until May 18, 2020 the majority of the Company’s office staff in all three segments worked remotely with the exception of key operations support. At the height of the initial outbreak the Company’s workforce was down approximately 17% due to self-quarantine. By the end of May 2020, the Company’s entire workforce had returned and operations have continued as normal with additional safety precautions in place. As COVID-19 cases began to rise in November 2020, the Company allowed employees that could perform their job functions remotely do so at their discretion. At this time approximately 75% of the Company’s office staff is working remote at least part-time and this has had minimal effect on operations. The Company expects that by the end of February 2021 remote employees will return full time to the office. Future outbreaks could have a material effect on the Company’s operations and are taking precautions to mitigate the spread of COVID-19.

(c) Principles of Consolidation

The consolidated financial statements include the accounts of Art’s-Way Manufacturing Co., Inc. and its wholly-owned subsidiaries for the 2020 fiscal year, which includes Art’s-Way Scientific, Inc., and Ohio Metal Working Products/Art’s-Way, Inc. All material inter-company accounts and transactions are eliminated in consolidation.

(d) Change in Accounting Estimate

During the fiscal year 2020, the Company made a change in accounting estimate related to the estimated costs to complete a material construction contract. The change in estimate was related to the expected collectability of change orders driven from project modifications in the design process and scope gaps that occurred because of the design changes. Further unforeseen costs including increased costs from project delays due to COVID-19, issues with site conditions, subcontractor rework and expected liquidated damages have deteriorated the gross profit margin on the project further through the fourth fiscal quarter of 2020. Overall, approximately $1.3 million of additional revenue has been generated since inception of the contract compared to $2.8 million of additional estimated costs to complete. The Company determined this was a change in accounting estimate in accordance with Accounting Standards Codification (“ASC”) 250-10 “Accounting Changes and Error Corrections” based on the timing of when information was reasonably considered available for the expected additional costs. The Company has approximately $1 million in revenue to recognize at a reduced margin for the Modular Buildings segment in the first quarter of fiscal 2021 as a result of this change in estimate.

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In the fourth quarter of fiscal 2020, the Company made a change in accounting estimate related to the inventory obsolescence reserve for UHC reels, Miller Pro forage and rake, auger, and other non-current product lines. The Company concluded these items were not going to be a part of the Company’s strategic product offering going forward and increased the reserve on these items approximately $681,000 in November 2020. The Company is actively working on a scrap plan for these items to decrease carrying costs for inventory in 2021. The effect of the increased reserve reduced net inventory, added additional cost of goods sold expense reducing income from operations and also had an effect on working capital debt covenants by approximately $681,000. The Company determined this was a change in accounting estimated in accordance with Accounting Standards Codification (“ASC”) 250-10 “Accounting Changes and Error Corrections.”

(e) Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the Consolidated Statements of Cash Flows for the fiscal year ended November 30, 2019, to identify the non-cash expense related to changes in the Company’s obsolete inventory reserve in the amount of $79,265. This change in classification does not affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.

(f) Cash Concentration

The Company maintains several different accounts at one bank, and balances in these accounts could periodically exceed the federally insured limits. However, management believes the risk of loss to be low.

(g) Customer Concentration

During the 2020 and 2019 fiscal years, one customer accounted for more than 18% and 21%, respectively, of consolidated revenues due to a large contract in the Modular Buildings segment. The Company’s highest recurring customer accounted for just under 6% and 10% of consolidated net revenues in 2020 and 2019 fiscal years, respectively.

(h) Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. Accounts receivable are generally considered past due 60 days past invoice date, with the exception of international sales which primarily are sold with 180 day terms backed by export insurance.

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Trade receivables are stated at the amount billed to the customer. The Company charges interest on overdue customer account balances at a rate of 1.5% per month. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

(i) Inventories

Inventories are stated at the lower of cost or net realizable value, and cost is determined using the standard costing method. Management monitors the carrying value of inventories using inventory control and review processes that include, but are not limited to, sales forecast review, inventory status reports, and inventory reduction programs. The Company records inventory write downs to net realizable value based on expected usage information for raw materials and historical selling trends for finished goods. Additional write downs may be necessary if the assumptions made by management do not occur.

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(j) Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation of plant and equipment is provided using the straight-line method, based on the estimated useful lives of the assets which range from three to 40 years.

(k) Sales-Type Leases

Modular buildings held for short term lease by the Modular Buildings segment are recorded at cost. Amortization of the property is calculated over the useful life of the building. Estimated useful life is three to five years. Lease revenue is accounted for on a straight-line basis over the term of the related lease agreement. Lease income for modular buildings is included in sales on the Consolidated Statements of Operations.

The Company leases modular buildings to certain customers and accounts for these transactions as sales-type leases. These leases have terms of up to 36 months and are collateralized by a security interest in the related modular building. The lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the Company’s obligation to the lessee is complete. Profit related to the sale of the building is recorded upon fulfillment of the Company’s obligation to the lessee.

The components related to sales-type leases at November 30, 2020 and November 30, 2019 are as follows:

	November 30, 2020			November 30, 2019
Minimum lease receivable, current	$	29,002		$	162,425
Unearned interest income, current		(650	)		(14,420	)
Net investment in sales-type leases, current	$	28,352		$	148,005
Minimum lease receivable, long-term	$	-		$	5,851
Unearned interest income, long-term		-			(69	)
Net investment in sales-type leases, long-term	$	-		$	5,782

There was no sales activity related to sales-type leases for the years ended November 30, 2020 and November 30,2019.

Future minimum lease receipts from sales-type leases are as follows:

Year Ending November 30,	Amount
2021		29,002
Total	$	29,002

(l) Operating Leases

The Company determines if an arrangement is a lease at inception of a contract. The nature of the Company’s operating leases at this time is office equipment, mainly copiers, with terms of 12 to 60 months. Operating leases are included in other assets as operating lease right-of-use (“ROU”) assets on the Consolidated Balance Sheets while current lease liabilities are included as accrued expenses. The long-term portions of operating lease liabilities are shown as long-term liabilities on the Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

25

The Company has copier lease agreements with lease and non-lease components and has elected the practical expedient not to separate lease and non-lease components for this asset class. The Company has also elected not to recognize lease liabilities and ROU assets for short-term leases. The Company recognizes variable costs that depend on usage in profit or loss as they are incurred.

The components of operating leases on the Consolidated Balance Sheets at November 30, 2020 were as follows:

	November 30, 2020
Operating lease right-of-use assets	$	27,879
Current portion of operating lease liabilities	$	9,537
Long-term portion of operating lease liabilities		18,342
Total operating lease liabilities	$	27,879

The Company included $27,879 of operating lease ROU assets in other assets, the current portion of operating lease liabilities of $9,537 was included in accrued expenses and the $18,342 of long-term operating lease liabilities was included in the long-term liability portion of the Consolidated Balance Sheets. The Company recorded $23,121 of operating lease costs in the year ended November 30, 2020, which included variable costs tied to usage. The Company’s operating leases carry a weighted average lease term of 35 months and have a weighted average discount rate of 5.50%

Future maturities of operating lease liabilities are as follows:

Year Ending November 30,
2021	10,847
2022	10,847
2023	6,911
2024	1,630
Total lease payments	30,236
Less imputed interest	(2,356	)
Total operating lease liabilities	27,879

(m) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

On December 28, 2020 the Consolidated Appropriations Act, 2021 was signed into law. This law provides that no amount of loan forgiveness granted under the Paycheck Protection Program shall be included in gross income for tax purposes. The law also allows the deduction of expenses related to the Paycheck Protection Program creating a double tax benefit. The Company attributes 8.8% of tax rate benefit related to the permanent difference from this law.

The Company classifies interest and penalties to be paid on an underpayment of taxes as income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states and previously in Canada. The Company is no longer subject to Canadian, U.S. federal or state income tax examinations by tax authorities for years ended before November 30, 2017.

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(n) Revenue Recognition

The Company’s revenues primarily result from contracts with customers. The major sources of revenue for the Agricultural Products and Tools segments are farm equipment, service parts related to farm equipment and steel cutting tools and inserts. The Agricultural Products and Tools segments generally execute short-term contracts that contain a single performance obligation – the delivery of product to the common carrier. The Company recognizes revenue for the production and sale of farm equipment, service parts and cutting tools upon shipment of the goods. Risk of ownership and title pass to the customer upon shipment of the goods. The Tools segment has an OEM agreement with one customer for which sales are recognized FOB destination – when the goods hit the customer’s dock. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in the Company’s terms are documented in the most recently published price lists. Pricing is fixed and determinable according to the Company’s published equipment and parts price lists. Title to all equipment and parts sold passes to the customer upon delivery to the carrier and is not subject to a customer acceptance provision. Proof of the passing of title is documented and retained by the Company. Post shipment obligations are limited to any claim with respect to the condition of the equipment or parts. The Agricultural Products and Tools segments each typically require payment in full 30 days after the ship date. To take advantage of program discounts, some customers pay deposits up front. Any deposits received increase contract liabilities.

In certain circumstances, upon the customer’s written request, the Company may recognize revenue when production is complete, and the goods are ready for shipment. At the customer’s request, the Company will bill the customer upon completing all performance obligations, but before shipment. The customer dictates that the Company ship the goods per the customer’s direction from the Company’s manufacturing facility, as is customary with this type of agreement, in order to minimize shipping costs. The written agreement with the customer specifies that the goods will be delivered on a schedule to be determined by the customer, with a final specified delivery date, and that the Company will segregate the goods from its inventory, such that they are not available to fill other orders. This agreement also specifies that the customer is required to purchase all goods manufactured under this agreement. Title of the goods will pass to the customer when the goods are complete and ready for shipment, per the customer agreement. At the transfer of title, all risks of ownership have passed to the customer, and the customer agrees to maintain insurance on the manufactured items that have not yet been shipped. The Company has operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customer and the Company. The credit terms on these agreements are consistent with the credit terms on all other sales. All risks of loss are shouldered by the customer, and there are no exceptions to the customer’s commitment to accept and pay for these manufactured goods. Revenues recognized at the completion of production in the 2020 and 2019 fiscal years were approximately $0 and $16,000, respectively.    

The Modular Buildings segment is in the construction industry with its major source of revenue arising from modular building sales. Sales of modular buildings are generally recognized using input methods to measure progress towards the satisfaction of a performance obligation using the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract costs consist of direct costs on contracts, including labor, materials, amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract change orders, penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. The Company uses significant judgements in determining estimated contract costs and completion percentages throughout the life of the project. Stock modular building sales also occur and are recognized at a point in time when the performance obligation is fulfilled through substantial completion. Substantial completion is achieved through customer acceptance of the completed building. The Modular Buildings segment executes contracts with customers that can be short- or long-term in nature. These contracts can have multiple performance obligations and revenue from these can be recognized over time or at a point in time depending on the nature of the contracts. Payment terms for the Modular Buildings segment vary by contract, but typically utilize money down and progress payments throughout the life of the contract. The payment terms of the Modular Buildings segment have the most impact on the Company’s contract receivables, contract assets and contract liabilities. Project invoicing from the Modular Buildings segment increases contract receivables and has an effect on contract liabilities through billings in excess of costs and estimated gross profit and advanced payments. The balance of contract assets is typically made up of the balance of costs and estimated gross profit in excess of billings. Costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are classified as current liabilities.

27

The Company leases modular buildings to certain customers and accounts for these transactions as operating or sales-type leases. These leases have terms of up to 36 months and are collateralized by a security interest in the related modular building. On sales-type leases, the lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the building is substantially complete. Profit related to the sale of the building is recorded upon fulfillment of the Company’s obligation to the lessee. On operating leases, the Company recognizes rent when the lessee has all the rights and benefits of ownership of the asset.

The Agricultural Products segment offers variable consideration in the form of discounts depending on participation in yearly early order programs. This variable consideration is allocated to the transaction price of all products in a sales arrangement and is not contingent on future outcomes. The Agricultural Products segment does not offer rebates or credits. The Tools segment offers quantity discounts that are allocated to the transaction price of each product once the quantity break is achieved. The Tools segment does not offer rebates or credits. The Modular Buildings segment does not offer discounts, rebates or credits.

The Company’s returns policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge, which is included in net sales. Whole goods are not returnable. Shipping costs charged to customers are included in net sales. Freight costs incurred are included in cost of goods sold. Customer deposits consist of advance payments from customers, in the form of cash, for revenue to be recognized in the following year.

For information on product warranty as it applies to ASC 606, refer to Note 8 “Product Warranty.”

(o) 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.

	Twelve Months Ended November 30, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,149,000	$	-	$	-	$	10,149,000
Farm equipment service parts		2,519,000		-		-		2,519,000
Steel cutting tools and inserts		-		-		2,308,000		2,308,000
Modular buildings		-		6,517,000		-		6,517,000
Modular building lease income		-		318,000		-		318,000
Other		417,000		158,000		23,000		598,000
	$	13,085,000	$	6,993,000	$	2,331,000	$	22,409,000

	Twelve Months Ended November 30, 2019
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,435,000	$	-	$	-	$	10,435,000
Farm equipment service parts		2,638,000		-		-		2,638,000
Steel cutting tools and inserts		-		-		2,086,000		2,086,000
Modular buildings		-		6,460,000		-		6,460,000
Modular building lease income		-		674,000		-		674,000
Other		435,000		126,000		35,000		596,000
	$	13,508,000	$	7,260,000	$	2,121,000	$	22,889,000

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(p) 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 Consolidated Balance Sheets.

	November 30, 2020		November 30, 2019
Receivables	$	2,391,000	$	1,680,000
Assets		56,000		727,000
Liabilities		276,000		89,000

The amount of revenue recognized in fiscal year 2020 that was included in a contract liability at November 30, 2019 was approximately $89,000 compared to $185,000 for the same period of fiscal year 2019. The change in contract receivables reflected above results from contract billings for all three segments as performance obligations are met. The decrease in contract assets from November 30, 2019 is due to billings on construction contracts catching up to expenses incurred while the increase in contract liabilities is due to overbillings on projects for the Modular Buildings segment.

The Company will utilize the practical expedient exception for these contracts and will report only on performance obligations greater than one year. As of November 30, 2020, and November 30, 2019, the Company has no performance obligations with an original expected duration greater than one year.

(q) Research and Development

Research and development costs are expensed when incurred. Such costs approximated $199,000 and $149,000 for the 2020 and 2019 fiscal years, respectively.

(r) Advertising

Advertising costs are expensed when incurred. Such costs approximated $175,000 and $198,000 for the 2020 and 2019 fiscal years, respectively. The Company has made a concerted effort to reduce trade show participation that was not providing the level of product exposure expected.

(s) Net Income (Loss) Per Share of Common Stock

Basic net income (loss) per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted net income (loss) per share of common stock has been computed on the basis of the weighted average number of shares outstanding plus equivalent shares of common stock 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 of common stock.

Basic and diluted (loss) per common share have been computed based on the following as of November 30, 2020 and 2019:

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(2,103,486	)	$	(1,419,586	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)

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(t) Stock Based Compensation

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate and dividend yield. Restricted stock is valued at market value at the day of grant.

(u) Use of Estimates

Management has made a number of estimates and assumptions related to the reported amount of assets and liabilities, reported amount of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 

(v) Recently Issued Accounting Pronouncements

Adopted Accounting Pronouncements

Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, “Leases (Topic 842),” which requires a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for all leases with terms of 12 months or greater. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company adopted this guidance for fiscal 2020 using the modified retrospective approach, including interim periods within that reporting period. Under the modified retrospective approach, the Company did not adjust prior comparative periods. The Company has a moderate amount of leasing activity mainly as the lessee of office equipment and as the lessor of modular buildings. As a result of adoption in the first fiscal quarter of 2020, the Company recognized $34,316 as a right-of-use asset and $34,316 of lease liabilities on the balance sheet for office equipment it leases. The Company’s activity as a lessor will remain mostly unaffected by this guidance. The Company’s additional disclosures may include, but are not limited to:

• Nature of its leases

• Significant assumptions and judgements used

• Information about leases that have not yet commenced

• Related-party lease transactions

• Accounting policy election regarding short-term leases

• Finance, operating, short-term and variable lease costs

• Maturity analysis of operating lease payments, lease receivables and lease obligations

• Tabular disclosure of lease-related income

• Components of the net investment in a lease

• Information on the management of risk associated with residual asset

Accounting Pronouncements Not Yet Adopted

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt ASU 2016-13 in fiscal year 2024. The Company does not expect the application of the CECL impairment model to have a significant impact on its allowance for uncollectible amounts for accounts receivable.          

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(2) Allowance for Doubtful Accounts

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

	Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	22,925		$	25,100
Provision charged to expense		44,222			(1,602	)
Less amounts charged-off		(15,972	)		(573	)
Balance, ending	$	51,175		$	22,925

(3) Inventories

Major classes of inventory are:

	November 30, 2020			November 30, 2019
Raw materials	$	7,086,367		$	7,156,001
Work in process		304,009			492,125
Finished goods		3,777,136			3,905,373
Total Gross Inventory	$	11,167,512		$	11,553,499
Less: Reserves		(3,405,112	)		(2,774,992	)
Net Inventory	$	7,762,400		$	8,778,507

(4) Contracts in Progress

Amounts included in the consolidated financial statements related to uncompleted contracts are as follows:

	Cost and Profit in			Billings in Excess of
	Excess of Billings			Costs and Profit
November 30, 2020
Costs	$	511,152		$	9,697,061
Estimated earnings		98,084			579,747
		609,236			10,276,808
Less: amounts billed		(553,210	)		(10,553,034	)
	$	56,026		$	(276,226	)
November 30, 2019
Costs	$	3,805,906		$	629,501
Estimated earnings		1,044,612			155,790
		4,850,518			785,291
Less: amounts billed		(4,123,851	)		(874,222	)
	$	726,667		$	(88,931	)

The amounts billed on these long-term contracts are due 30 days from invoice date. All amounts billed are expected to be collected within the next 12 months. Retainage was $36,488 and $0 as of November 30, 2020 and 2019, respectively.

(5) Property, Plant, and Equipment

Major classes of property, plant, and equipment are:

	November 30, 2020			November 30, 2019
Land	$	220,503		$	220,503
Buildings and improvements		7,255,955			7,035,144
Construction in Progress		31,571			82,366
Manufacturing machinery and equipment		11,123,104			11,036,192
Trucks and automobiles		510,955			507,575
Furniture and fixtures		119,907			120,833
		19,261,995			19,002,613
Less accumulated depreciation		(14,043,333	)		(13,639,706	)
Property, plant and equipment	$	5,218,662		$	5,362,907

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Depreciation and amortization expense totaled $818,234 and $1,003,541 for the 2020 and 2019 fiscal years, respectively.

(6) Assets Held for Lease

Major components of assets held for lease are:

	November 30, 2020		November 30, 2019
Modular Buildings	$	521,555	$	713,782
Total assets held for lease	$	521,555	$	713,782

The Company’s Modular Buildings segment enters into leasing arrangements with customers from time-to-time. The Company had seven buildings in assets held for lease at November 30, 2020 compared to eight at November 30, 2019.

Rents recognized in sales were related to the leasing of modular buildings as a part of the normal course of business operations of the Modular Buildings segment. Rents recognized from assets held for lease included in sales on the consolidated statements of operations during the 2020 fiscal year were $318,000 compared to $674,000 in the 2019 fiscal year. Rents recognized from assets held for lease included in other income (expense) on the consolidated statements of operations during the 2019 fiscal year were $2,500.

The Company has no expected future minimum lease receipts from assets held for lease at November 30, 2020.

(7) Accrued Expenses

Major components of accrued expenses are:

	November 30, 2020		November 30, 2019
Salaries, wages, and commissions	$	726,625	$	555,201
Accrued warranty expense		291,454		203,185
Other		261,233		374,440
	$	1,279,312	$	1,132,826

(8) 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.

Changes in the Company’s product warranty liability included in accrued expenses for the 2020 and 2019 fiscal years are as follows:

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	203,185		$	96,786
Settlements / adjustments		(157,501	)		(279,992	)
Warranties issued		245,770			386,391
Balance, ending	$	291,454		$	203,185

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(9) Loan and Credit Agreements

The Company maintains two revolving lines of credit and one term loan with Bank Midwest. The Company also has three term loans with the U.S. Small Business Administration under the Economic Injury Disaster Loan program.

Bank Midwest Revolving Lines of Credit and Term Loan

The Company maintains a credit facility with Bank Midwest consisting of a $5,000,000 revolving line of credit (the “2017 Line of Credit”) used for working capital purposes, and a $2,600,000 term loan due October 1, 2037 (the “Term Loan”). On November 30, 2020, the balance of the 2017 Line of Credit was $2,359,530 with $2,640,470 remaining available, as may be limited by the borrowing base calculation. The 2017 Line of Credit borrowing base is an amount equal to 75% of accounts receivable balances (discounted for aged receivables), plus 50% of inventory, less any outstanding loan balance on the 2017 Line of Credit. At November 30, 2020, the 2017 Line of Credit was not limited by the borrowing base calculation. Any unpaid principal amount borrowed on the 2017 Line of Credit accrues interest at a floating rate per annum equal to 1.00% above the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor is set at 4.25% per annum and the current interest rate is 4.25% per annum. The 2017 Line of Credit was most recently renewed on March 30, 2020. The 2017 Line of Credit matures on March 30, 2021 and requires monthly interest-only payments.

The Term Loan accrues interest at a rate of 5.00% for the first sixty months. Thereafter, the Term Loan will accrue 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 is set at 4.15% per annum and the interest rate may only be adjusted by Bank Midwest once every five years. Monthly payments of $17,271 for principal and interest are required. 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. J. Ward McConnell Jr., the 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.

On February 13, 2019, the Company opened a $4,000,000 revolving line of credit (the “2019 Line of Credit”) with Bank Midwest in connection with bonding obligations for the Company’s performance of a large modular laboratory construction project. Funds under the 2019 Line of Credit will be undisbursed to the Company and will be held by Bank Midwest in connection with an Irrevocable Letter of Credit issued by Bank Midwest for the project. The 2019 Line of Credit accrues interest at a floating rate per annum equal to 1.00% above the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor is set at 4.25% per annum and the current interest rate is 4.25% per annum. The 2019 Line of Credit was recently renewed on February 2, 2021. The 2019 Line of Credit is payable upon demand by Bank Midwest. If no earlier demand is made, the unpaid principal and accrued interest will be payable in one payment, due on February 13, 2022. As of November 30, 2020, the funds on the 2019 Line of Credit remain undisbursed and are held by Bank Midwest. The Company expects to close the line when the project’s lien period closes later in fiscal 2021.

On April 20, 2020, the Company obtained a loan in the amount of $1,242,900 from Bank Midwest in connection with the U.S. Small Business Administration’s Paycheck Protection Program (the “PPP Loan”). The PPP Loan accrued interest at a rate per annum equal to 1.00% and was eligible to be used for payroll costs, employee benefits, rent, utilities and mortgage interest. The PPP Loan was unsecured. On November 4, 2020 complete forgiveness was granted from the U.S. Small Business Administration.

Each of the 2017 Line of Credit and the Term Loan are governed by the terms of a separate Promissory Note, dated September 28, 2017, entered into between the Company and Bank Midwest. The 2019 Line of Credit is governed by the terms of a Promissory Note, dated February 13, 2019, entered into between the Company and Bank Midwest.

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In connection with the 2017 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 2017 Line of Credit, as set forth in Commercial Guaranties, each dated September 28, 2017. The 2019 Line of Credit is also secured by these existing security documents.

To further secure the 2017 Line of Credit, the Company granted Bank Midwest a mortgage on its Canton, Ohio property held by Ohio Metal Working Products/Art’s-Way Inc. The 2019 Line of Credit is also secured by the mortgage on the Canton, Ohio property. 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 subsidiaries (as guarantors pursuant to the Commercial Guaranties) 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 notes. 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 at November 30. The terms of the Bank Midwest loan agreements require the Company to maintain a minimum working capital ratio of 1.75, while maintaining a minimum of $5,100,000 of working capital. Additionally, a maximum debt to worth ratio of 1 to 1 must be maintained, with a minimum of 40% tangible balance sheet equity, with variations subject to mutual agreement. 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 purchases or sales of equipment over $100,000 annually and maintain reasonable salaries and owner compensation. The Company received the necessary approvals for purchases of equipment over $100,000 for the twelve months ended November 30, 2020. The Company was out of compliance with its debt service coverage ratio and minimum working capital requirements covenants in place under the Bank Midwest loans as of November 30, 2020. Bank Midwest issued a waiver forgiving the noncompliance, and in turn waived the event of default. The next measurement date is November 30, 2021.

On January 12, 2021 Bank Midwest amended the Company’s working capital requirement of maintaining a minimum working capital ratio of 1.75, while also maintaining $5,100,000 of working capital. The new covenant requires the Company to maintain a working capital requirement of $4,000,000 and drops the requirement to maintain a minimum working capital ratio of 1.75.

SBA Economic Injury Disaster Loans

On June 18, 2020, and again on June 24, 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. Two loans were executed on June 18, 2020 with principal amounts of $150,000 each, with a third loan being executed on June 24, 2020 with a principal amount of $150,000. Proceeds from these EIDLs are being 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, are due monthly beginning June 18, 2021 (twelve months from the date of the EIDLs) and June 24, 2021 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. Each EIDL is governed by the terms of a separate Promissory Note, dated either June 18, 2020 or June 24, 2020, as applicable, entered into by the Company or the applicable subsidiary.

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

	November 30, 2020		November 30, 2019
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,350,593	$	2,435,993
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2021, due June 24, 2050		152,450		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
Total term debt	$	2,808,129	$	2,435,993
Less current portion of term debt		94,979		85,401
Term debt, excluding current portion	$	2,713,150	$	2,350,592

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

Year	Amount
2021	$	94,979
2022		104,026
2023		109,297
2024		114,499
2025		120,644
2026 and thereafter		2,264,684
	$	2,808,129

(10) Related Party Transactions

During the 2020 and 2019 fiscal years, 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 owned by J. Ward McConnell, Jr., the Vice Chairman of the Company’s Board of Directors. Marc McConnell, the Chairman of the Company’s Board of Directors also serves as President of these companies. J. Ward McConnell, Jr. as a shareholder owning more than 20% of the Company’s outstanding stock, was required to guarantee a portion of the Company’s term debt in accordance with the USDA guarantee on the Company’s term loan. J. Ward McConnell, Jr. is paid a monthly fee for his guarantee. In the 2020 fiscal year, the Company recognized $19,232 of expense for transactions with related parties, compared to $26,506 in the 2019 fiscal year. As of November 30, 2020, accrued expenses contained a balance of $1,464 owed to a related party compared to $1,517 on November 30, 2019.

(11) Employee Benefit Plans

The Company sponsors a defined contribution 401(k) savings plan which covers substantially all full-time employees who meet eligibility requirements. Participating employees may contribute as salary reductions any amount of their compensation up to the limit prescribed by the Internal Revenue Code. The Company makes a 25% matching contribution to employees contributing a minimum of 4% of their compensation, up to 1% of eligible compensation. Effective January 1, 2021 the Company began making a 50% matching contribution up to 3% of eligible compensation. The Company recognized an expense of $32,464 and $36,253 related to this plan during the 2020 and 2019 fiscal years, respectively.

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(12) Equity Incentive Plan

The compensation cost charged against income was $247,645 and $195,416 for the 2020 and 2019 fiscal years, respectively. The total income tax deductions for share-based compensation arrangements were $176,435 and $122,022 for the 2020 and 2019 fiscal years, respectively. No compensation cost was capitalized as part of inventory or fixed assets.

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 replaces the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and adds 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 non-employee directors are automatically granted restricted stock awards of 1,000 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. During the year ended November 30, 2020, restricted stock awards of 128,750 shares were issued to various employees, directors, and consultants, which vest over the next three years, and restricted stock awards of 25,000 shares were issued to directors as part of the director compensation policy, which vested immediately upon grant. In comparison, during fiscal 2019, restricted stock awards of 56,750 shares were issued to various employees, directors, and consultants, which vest over three years from the date of issuance, restricted stock awards of 9,000 shares were issued to various employees, which vested immediately upon grant, and restricted stock awards of 31,687 were issued to directors as part of the director compensation policy. During the 2020 fiscal year, 74,685 shares of restricted stock became unrestricted, 4,833 shares of restricted stock were forfeited, and the Company bought 16,255 shares back as treasury stock from employees to pay payroll tax on vested shares. During 2019 fiscal year, 32,600 shares of restricted stock became unrestricted, 1,400 shares of restricted stock were forfeited, and the Company bought 9,556 shares back as treasury stock from employees to pay payroll tax on vested shares.

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based option award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate, and dividend yield. Expected volatility is based on historical volatility of the Company’s stock and other factors. The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date. No stock options were granted during the years ended November 30, 2020 or 2019. Stock compensation net of treasury shares repurchased for the year ended November 30, 2020 was $216,649 compared to $176,093 for the same period in fiscal 2019.

The fair value of each option award is estimated on the date of grant using the Black Scholes option-pricing model. Expected volatility is based on historical volatility of the Company’s stock and other factors. The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date.

	2020		2019
Expected Volatility		-		-
Expected Dividend Yield		-		-
Expected Term (in years)		-		-
Risk-Free Rate		-		-

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The following is a summary of activity under the plans as of November 30, 2020 and 2019, and changes during the years then ended:

2020 Option Activity
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000		$	6.07
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(23,000	)	$	5.56
Options O/S at end of Period		36,000		$	6.40		2.57		-
Options Exercisable At end of the Period		36,000		$	6.40		2.57		-

2019 Option Activity
Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000	$	6.07
Granted		-	$	-
Exercised		-	$	-				-
Options Expired or Forfeited		-	$	-
Options O/S at end of period		59,000	$	6.07		2.86		-
Options Exercisable at end of the period		59,000	$	6.07		2.86		-

No options were granted or vested during the 2020 or 2019 fiscal years. As of both November 30, 2020 and November 30, 2019, there were no non-vested options. As of November 30, 2020, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan related to stock options.

The Company received no cash from the exercise of options during the 2020 or 2019 fiscal years.

(13) Income Taxes

Total income tax expense (benefit) for the 2020 and 2019 fiscal years consists of the following:

	November 30, 2020			November 30, 2019
Current expense (benefit)	$	25,168		$	4,392
Deferred expense (benefit)		(881,638	)		(353,626	)
Total income tax expense (benefit)	$	(856,470	)	$	(349,234	)

The reconciliation of the statutory Federal income tax rate is as follows:

	November 30, 2020			November 30, 2019
Statutory federal income tax rate		21.0	%		21.0	%
PPP Loan Forgiveness		8.8			-
Permanent differences and other		(0.9	)		(1.3	)
		28.9	%		19.7	%

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at November 30, 2020 and 2019 are presented as approximate amounts below:

	November 30
	2020			2019
Current deferred tax assets (liabilities):
Accrued expenses	$	161,000		$	100,000
Inventory capitalization		71,000			21,000
NOL and tax credit carryforward		1,695,000			1,182,000
Asset reserves		796,000			621,000
Total current deferred tax assets	$	2,723,000		$	1,924,000
Non-current deferred tax assets
Property, plant, and equipment	$	(55,000	)	$	(138,000	)
Total non-current deferred tax assets (liabilities)		(55,000	)		(138,000	)
Net deferred taxes	$	2,668,000		$	1,786,000

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In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s net operating loss amounting to approximately $7,479,000 and tax credit carryforward amounting to approximately $109,000 for its U.S. operations expire on November 30, 2036, 2037, 2038, 2039 and 2040. Management believes that the Company will be able to utilize the U.S. net operating losses and credits before their expiration.

(14) 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. At November 30, 2020 and November 30, 2019, the carrying amount approximated fair value for cash, accounts receivable, net investment in sales-type leases, accounts payable, notes payable to bank, 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 net investment in sales-type leases also approximates 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.

(15) Litigation and Contingencies

Various legal actions and claims that arise in the normal course of business are pending against the Company. In the opinion of management adequate provisions have been made in the accompanying financial statements for all pending legal actions and other claims.

(16) Segment Information

There are three reportable segments: Agricultural Products, Modular Buildings, and Tools. The Agricultural Products segment fabricates and sells farming products as well as replacement parts for these products in the United States and worldwide. The Modular Buildings segment produces modular buildings for animal containment and various laboratory uses. The Tools segment manufactures steel cutting tools and inserts.

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.

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

	Twelve Months Ended November 30, 2020
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	13,085,000		$	6,993,000		$	2,331,000		$	22,409,000
Income (loss) from operations	$	(2,318,000	)	$	(1,295,000	)	$	(297,000	)	$	(3,910,000	)
Income (loss) before tax	$	(1,723,000	)	$	(1,058,000	)	$	(179,000	)	$	(2,960,000	)
Total Assets	$	12,785,000		$	3,310,000		$	2,708,000		$	18,803,000
Capital expenditures	$	499,000		$	146,000		$	48,000		$	693,000
Depreciation & Amortization	$	481,000		$	205,000		$	132,000		$	818,000

	Twelve Months Ended November 30, 2019
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	13,508,000		$	7,260,000	$	2,121,000		$	22,889,000
Income (loss) from operations	$	(1,599,000	)	$	208,000	$	(106,000	)	$	(1,497,000	)
Income (loss) before tax	$	(1,843,000	)	$	220,000	$	(146,000	)	$	(1,769,000	)
Total Assets	$	13,169,000		$	3,584,000	$	2,594,000		$	19,347,000
Capital expenditures	$	257,000		$	147,000	$	43,000		$	447,000
Depreciation & Amortization	$	503,000		$	372,000	$	129,000		$	1,004,000

(17) Subsequent Events

Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements other than the change to the Company’s working capital covenant and the renewal of the 2019 Line of Credit, both discussed in Note 9 “Loan and Credit agreements” to our financial statements in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA”.

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Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. 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 November 30, 2020. 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.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed 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. Under the supervision and with the participation of management, including the persons serving as our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of November 30, 2020.

This report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this report.

Remediation of Material Weakness

Management previously identified that a material weakness existed as of November 30, 2019 related to the estimation of completed subcontract work on modular building contracts. Management recognizes that estimates are a necessary part of financial reporting; however, proper controls did not exist to review the accuracy of these estimates at the time of the transactions. Because we recorded an adjustment to the financial statements, this control deficiency did not result in a material misstatement of our consolidated financial statements for the year ended November 30, 2019.

Management implemented new internal controls in the first quarter of the 2020 fiscal year to remediate this material weakness. All accounts payable are reviewed and signed off on by the general manager and Chief Financial Officer for accuracy and completeness on a monthly basis with particular scrutiny on unvouchered receipts. Any subcontract work received over $75,000 requires approval signatures from the Chief Financial Officer and general manager if an invoice is not present. These controls help prevent and detect material misstatements that could otherwise results from the estimation of subcontract work. These new internal controls are subject to continued management review supported by testing, as well as oversight by the Audit Committee of our Board of Directors. Based on testing that occurred in the 2020 fiscal year we concluded that this material weakness has been fully remediated.

39

Limitations on Controls

Our management, including the persons serving as our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. In addition, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and controls may become inadequate if conditions change. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes to Internal Control Over Financial Reporting

There were no changes in our internal control 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 control over financial reporting except for the remediation of material weakness that was described previously.

Item 9B. OTHER INFORMATION.

None.

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PART III

Item 10. Directors, Executive Officers and corporate governance.

The information required by Item 10 is incorporated by reference to the sections entitled “Questions and Answers about the 2021 Annual Meeting and Voting,” “Election of Directors,” “Delinquent Section 16(a) Reports,” “Corporate Governance,” and “Executive Officers” in our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders.

Item 11. Executive Compensation.

The information required by Item 11 is incorporated by reference to the sections entitled “Executive Compensation” and “Director Compensation” in our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by Item 12 is incorporated by reference to the sections entitled “Security Ownership of Principal Stockholders,” “Security Ownership of Directors and Management” and “Equity Compensation Plan Information” in our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders.

Item 13. Certain Relationships and Related Transactions, and director independence.

The information required by Item 13 is incorporated by reference to the sections entitled “Corporate Governance” and “Certain Transactions and Business Relationships” in our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is incorporated by reference to the section entitled “Independent Registered Public Accountant Firm” in our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders.

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PART IV

Item 15.    Exhibits, FINANCIAL STATEMENT SCHEDULES.

(A) Financial Statements. The following financial statements are included in “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of this report:

Report of Eide Bailly, LLP on Consolidated Financial Statements as of November 30, 2020 and 2019

Consolidated Balance Sheets as of November 30, 2020 and 2019

Consolidated Statements of Operations for each of the years ended November 30, 2020 and 2019

Consolidated Statements of Stockholders’ Equity for each of the years ended November 30, 2020 and 2019

Consolidated Statements of Cash Flows for each of the years ended November 30, 2020 and 2019

Notes to Consolidated Financial Statements

(B) Financial Statement Schedules.

Not applicable.

(C) Exhibits.

Exhibit No.	Description
3.1	Conformed Certificate of Incorporation of Art’s-Way Manufacturing Co., Inc. – filed herewith.
3.2	Conformed Bylaws of Art’s-Way Manufacturing Co., Inc.– filed herewith.
4.1	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 – incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2019.
10.1*	Director Compensation Policy – incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2018.
10.2*	Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 3, 2011.
10.3*	Form of Incentive Stock Option Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 3, 2011.
10.4*	Form of Nonqualified Stock Option Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed May 3, 2011.
10.5*	Form of Restricted Stock Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed May 3, 2011.
10.6*	Form of Restricted Stock Unit Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed May 3, 2011.
10.7	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.8	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated February 2, 2021 – filed herewith

42

10.9	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated March 30, 2020 – incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2020.
10.10	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated April 20, 2020 – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 22, 2020.
10.11	Commercial Guaranty, by Ohio Metal Working Products/Art’s-Way Inc., dated September 28, 2017 - incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 29, 2017
10.12	Commercial Guaranty, by Art’s-Way Scientific Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.13	Commercial Security Agreement, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.14	Commercial Security Agreement, between Bank Midwest and Ohio Metal Working Products/Art’s-Way Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.15	Commercial Security Agreement, between Bank Midwest and Art’s-Way Scientific Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.16	Open-End Mortgage (3620 Progress Street ND, Canton, OH 44705), by Ohio Metal Working Products/Art’s-Way Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.17	Mortgage (556 Highway 9 and 203 West Oak Street, Armstrong & Monona, Iowa, 50514/55215), by Art’s-Way Manufacturing Co., Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.18	Modification of Mortgage (3620 Progress Street ND, Canton, OH 44705), by Ohio Metal Working Products/Art’s-Way Inc., dated March 30, 2018 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2018.
10.19	Assignment of Rents (3620 Progress Street ND, Canton, OH 44705), by Ohio Metal Working Products/Art’s-Way Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.20	Assignment of Rents (556 Highway 9 and 203 West Oak Street, Armstrong & Monona, Iowa, 50514/55215), by Art’s-Way Manufacturing Co., Inc., dated September 28, 2017 – incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K filed September 29, 2017.
10.21	Promissory Note, between the Small Business Administration and Art’s-Way Scientific Inc., dated June 18, 2020 – incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2020.
10.22	Promissory Note, between the Small Business Administration and Ohio Metal Working Products/Art’s-Way, dated June 18, 2020 – incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2020
10.23	Promissory Note, between the Small Business Administration and Art’s-Way Manufacturing Co., Inc., dated June 24, 2020 – incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2020.
10.24*	Employment Agreement between the Company and Michael Woods, dated February 1, 2020 – incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2020.
10.25*	Offer Letter between the Company and David King, dated March 5, 2020 – incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 11, 2020.
10.26*	Employment Agreement between the Company and David A. King, effective March 30, 2020 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2020.

43

10.27*	Art’s-Way Manufacturing Co., Inc. 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 4, 2020.
10.28*	Form of Restricted Stock Agreement under 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 4, 2020.
10.29*	Form of Restricted Stock Unit Agreement under 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed May 4, 2020.
10.30*	Form of Incentive Stock Option Award under 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed May 4, 2020.
10.31*	Form of Non-Qualified Option Award under 2020 Equity Incentive Plan – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed May 4, 2020.
10.32*	Consulting Agreement, between the Carrie Gunnerson and Art’s-Way Manufacturing Co., Inc., dated July 22, 2020 – incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2020.
21.1	List of Subsidiaries – filed herewith.
23.1	Consent of independent registered public accounting firm – filed herewith.
24.1	Power of Attorney (included on the “Signatures” page of this Annual Report on Form 10-K).
31.1	Certificate pursuant to 17 CFR 240 13(a)-14(a) – filed herewith.
31.2	Certificate pursuant to 17 CFR 240 13(a)-14(a) – filed herewith.
32.1	Certificate pursuant to 18 U.S.C. Section 1350 – filed herewith.
32.2	Certificate pursuant to 18 U.S.C. Section 1350 – filed herewith.
101	The following financial statements from the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders’ Equity, and (vi) Notes to the Consolidated Financial Statements.

(*) Indicates a management contract or compensatory plan or arrangement.

Item 16.      FORM 10-K SUMMARY.

Not applicable.

44

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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:	February 9, 2021	/s/ David A. King
		David A. King, President and Chief Executive Officer

POWER OF ATTORNEY 

Each person whose signature appears below appoints DAVID A. KING his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: February 9, 2021	/s/ David A. King
	David A. King, President and Chief Executive Officer
Date: February 9, 2021	/s/ Michael W. Woods
	Michael W. Woods, Chief Financial Officer
Date: February 9, 2021	/s/ Marc H. McConnell
	Marc H. McConnell, Chairman, Director
Date: February 9, 2021	/s/ J. Ward McConnell, Jr.
	J. Ward McConnell, Jr., Vice Chairman, Director
Date: February 9, 2021	/s/ Thomas E. Buffamante
	Thomas E. Buffamante, Director
Date: February 9, 2021	/s/ David R. Castle
	David R. Castle, Director
Date: February 9, 2021	/s/ David A. White
	David A. White, Director

45

EX-3.1

Exhibit 3.1

CONFORMED CERTIFICATE OF INCORPORATION

OF

ART’S-WAY MANUFACTURING CO., INC.

ARTICLE I

NAME

The name of the corporation is Art’s-Way Manufacturing Co., Inc. (“Corporation”).

ARTICLE II

REGISTERED OFFICE

The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

BUSINESS

The nature of the business or purpose to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE IV

AUTHORIZED CAPITAL STOCK

Section 1.  Authorized Shares.  The aggregate number of shares which the Corporation is entitled to issue is Ten Million (10,000,000) shares, $0.01 par value per share, which shall consist of 9,500,000 shares of common stock, and 500,000 shares of undesignated preferred stock. The Board of Directors has the authority, without first obtaining approval of the stockholders of the Corporation or any class thereof, to establish from the undesignated stock, by resolution adopted and filed in the manner provided by law, one or more classes or series (which may include, but is not limited to, additional common stock) and to fix the relative rights and preferences of each such class or series.

Section 2.  Dividends. Each stockholder shall be entitled to receive such dividends or distributions as are lawfully declared on the stock.

Section 3.  Voting. Each outstanding share of stock shall be entitled to one (1) vote on each matter submitted to a vote of the stockholders.

Section 4. Liquidation. Upon dissolution of the Corporation, each stockholder shall be entitled to share ratably in the assets of the Corporation which may be available for distribution after satisfaction of creditors and any other preferences which may then exist.

Section 5.  Notice. Each stockholder shall be entitled to have notice of any authorized meeting of stockholders.

ARTICLE V

CUMULATIVE VOTING

There shall be no cumulative voting.

ARTICLE VI

INCORPORATORS

The names and mailing addresses of the incorporators are as follows:

NAME	MAILING ADDRESS
James L. Koley	One Pacific Place, Suite 800 1125 South 103 Street Omaha, Nebraska  68124
Harold A. Westberg	Highway 9 West Armstrong, Iowa  50514

ARTICLE VII

DURATION

The Corporation is to have perpetual existence.

ARTICLE VIII

ELECTION OF DIRECTORS

Elections of directors need not be by written ballot unless the Bylaws of this Corporation so provide.

ARTICLE IX

MEETINGS

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision of Delaware law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

ARTICLE X

LIMITED LIABILITY

No director of the Corporation shall be personally liable to the Corporation or any stockholders for monetary damages for breach of fiduciary duty by such director as a director; provided, however, that this Article X shall not eliminate or limit the liability of a director to the extent provided by applicable law (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article X shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ARTICLE XI

INDEMNIFICATION

Section 1.  Indemnification by the Corporation. Each director or officer of the Corporation who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all costs, charges, expenses, liabilities and losses (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his heirs, executors and administrators; provided, however, that except for any proceeding seeking to enforce or obtain payment under any right to indemnification by the Corporation, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if the Corporation has joined in or consented to the initiation of such proceeding (or part thereof). The Corporation may, by action of its Board of Directors, either on a general basis or as designated by the Board of Directors, provide indemnification to employees and agents of the Corporation, and to directors, officers, employees and agents of the Corporation’s subsidiaries, with the same scope and effect as the foregoing indemnification of directors and officers.

The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article XI shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, Bylaw, agreement, vote of stockholders or directors or otherwise. Each person who is or becomes a director or officer of the Corporation shall be deemed to have served or to have continued to serve in such capacity in reliance upon the indemnity provided in this Article XI.

Section 2.  Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another Corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware.

Section 3.  Witness. To the extent that any director, officer employee or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he shall be indemnified against all costs and expenses actually and reasonably incurred by him on his behalf in connection therewith.

Section 4.  Agreements. The Corporation may enter into indemnity agreements with the persons who are members of its Board of Directors from time to time, and with such officers, employees and agents of the Corporation and with such officers, directors, employees and agents of subsidiaries as the Board may designate, such indemnity agreements to provide in substance that the Corporation will indemnify such persons as contemplated by this Article XI, and to include any other substantive or procedural provisions regarding indemnification as are not inconsistent with the General Corporation Law of Delaware. The provisions of such indemnity agreements shall prevail to the extent that they limit or condition or differ from the provisions of this Article XI.

Section 5.  Scope. For purposes of this Article XI, reference to the “Corporation” includes all constituent Corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director or officer of such constituent corporation shall stand in the same position under the provisions of this Article XI with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity.

ARTICLE XII

AMENDMENT OF CORPORATE DOCUMENTS

Section 1.  Certificate of Incorporation. The Corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by law, and all rights conferred by stockholders herein are granted subject to this reservation.

Section 2.  Bylaws. The Board of Directors is expressly authorized to make, amend, alter or repeal the Bylaws of the Corporation.

EX-3.2

Exhibit 3.2

CONFORMED BYLAWS OF

ART’S-WAY MANUFACTURING CO., INC.

ARTICLE I

OFFICES

Section 1.  The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2.  The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1.  Location.  All meetings of the stockholders for the election of directors shall be held in the City of Armstrong, State of Iowa, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting.  Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a’ duly executed waiver of notice thereof.

Section 2.  Annual Meetings.  Annual meetings of stockholders, commencing with the year 1989, shall be held on the third Tuesday in the month of October in each year, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which the stockholders shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting.

Section 3.  Notice of Annual Meeting.  Written notice of the annual meeting stating the place, date and hour of the meeting shall be given (unless otherwise prescribed by statute) to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.

Section 4.  List of Stockholders.  The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 5.  Special Meetings.  Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President of the Corporation and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote.  Such request shall state the purpose or purposes of the proposed meeting.

Section 6.  Notice of Special Meetings.  Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given (unless otherwise prescribed by statute) not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting.

Section 7.  Business at Special Meetings.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice provided for in Section 6 of this Article II.

Section 8.  Quorum.  The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation.  If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.  If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 9.  Voting.  When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation a different vote is required in which case such express provision shall govern and control the decision of such question.

Section 10.  Proxies.  Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three (3) years from its date, unless the proxy provides for a longer period.

Section 11.  Consent.  Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent, or consents, in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted; provided, however, that no consent will be effective to take corporate action unless written consent or consents sufficient to approve the action are delivered to the Corporation within sixty (60) days of the earliest dated consent received by the Corporation.  Any consent or consents allowed under this Section 11 of Article II must bear the date of the signature of each stockholder signing the consent and be delivered to the Corporation at the office of its registered agent in Delaware or at its principal place of business, or by delivering said consent or consents to the officer or agent having custody of the Corporation’s minute books.  Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

Section 12. Meetings of Stockholders, Nominations, Business.

(1)     Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (a) pursuant to the Corporation's notice at meeting; (b) by or at the direction of the Board of Directors; or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Bylaw, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Bylaw.

(2)     For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of Subsection (2) of this Bylaw, the stockholder must have given timely notice in writing to the Secretary of the Corporation and it must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice must be delivered to the Secretary at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(3)     Notwithstanding anything in the second sentence of Subsection (3) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least seventy (70) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

(4)     Only such persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors, and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these Bylaws. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposed business or nomination shall be disregarded.

(5)     For purposes of these Bylaws, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, or a comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(6)     Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.

ARTICLE III

DIRECTORS

Section 1.  Number and Term of Office.  The number of directors which shall constitute the whole board shall be ten (10) or such higher or lower number as the Board of Directors may determine from time to time by resolution of the board.  The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article III, and each director elected shall hold office until his successor is elected and qualified.  Directors need not be stockholders.

Section 2.  Vacancies.  Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced.  If there are no directors in office, then an election of directors may be held in the manner provided by statute.  If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 3.  Conduct of Business.  The business of the Corporation shall be managed by or under the direction of its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 4.  Meetings.  The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 5.  Regular Meetings.  Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the board.

Section 6.  Special Meetings.  Special meetings of the board may be called by or at the request of the President or any member of the Board of Directors.  Notice of any special meeting shall be given to U.S.  resident directors at least forty-eight (48) hours previously thereto by oral telephonic, telegraphic or written notice, delivered or mailed to each director at his or her address on file with the Corporation and in the case of directors resident outside the U.S., notice of at least five (5) days by telex notice sent to the telex address/number to be specified by the relevant director.  If mailed, telegraphed or telexed, such notice shall be deemed to be delivered when deposited in the United States mail or delivered to the telegraph company or sent by telex, as the case may be.  Any director may waive notice of a special meeting.  The attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 7.  Quorum.  At all meetings of the board a majority of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation.  If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 8.  Consent.  Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

Section 9.  Telephone Conferences.  Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

Section 10.  Committees.  The Board of Directors may, by resolution passed by a majority of the whole board, designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation.  The board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. 

In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation) adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger.  Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.  Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

Section 11.  Compensation.  Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors.  The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director.  No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 12.  Chairman of the Board.  One of the directors shall be designated by the Board as Chairman of the Board of Directors.  The Chairman shall preside at all meetings of the Board of Directors and of the shareholders.  He shall also perform such other duties as may from time to time be prescribed by the Board of Directors.

Section 13.  Removal.  Unless otherwise restricted by the Certificate of Incorporation or by law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

Section 14. Nominations to the Board of Directors. The Board of Directors shall appoint a Nominating Committee and a Nominating Committee Charter. The composition and duties of the Nominating Committee shall be as set forth in the Nominating Committee Charter. The Nominating Committee Charter shall be in compliance with applicable requirements of the Rules of the National Association of Securities Dealers, Inc. ("NASD") and NASDAQ. In lieu of the appointment of a Nominating Committee and the adoption of a Nominating Committee Charter, the entire Board may act as a nominating committee so long as in doing so it remains compliant with all applicable requirements of the NASD and NASDAQ.

ARTICLE IV

NOTICES

Section 1.  Notices.  Unless otherwise provided in these Bylaws, whenever, under the provisions of the statutes or of the Certificate of Incorporation or these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail.  Notice to directors may also be given by telegram or telex.  If telegraphed or telexed, such notice shall be deemed to be delivered when delivered to the telegraph company or sent by telex as the case may be.

Section 2.  Waiver.  Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE V

OFFICERS

Section 1.  Generally.  The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice-Presidents (the number thereof to be determined by the Board of Directors) , a Secretary and a Treasurer.  The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.  Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.  Officers need not be Directors or shareholders of the Corporation.

Section 2.  Election and Term of Office.  The officers of the Corporation shall be elected annually by the Board of Directors at its annual meeting immediately following the annual meeting of shareholders.  If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is convenient.  Vacancies may be filled, or new offices created and filled, at any meeting of the Board of Directors.  Each officer shall hold office until his successor shall have been duly elected or until his death, or until he shall resign or shall have been removed, in the manner hereafter provided.

Section 3.  Salaries.  The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

Section 4.  Removal.  The officers of the Corporation shall hold office until their successors are chosen and qualify.  Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors.  Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.

Section 5.  President.  The President shall in general supervise and control all the business and affairs of the Corporation.  In the absence of the Chairman of the Board, he shall preside at all meetings of the shareholders, the Board of Directors, and the Executive Committee, if there be one.  He may sign, with the Secretary or any other proper officer of the Corporation thereunto authorized by the Board of Directors, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officers or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President, and such other duties as may from time to time be prescribed by the Board of Directors.

Section 6.  Vice-Presidents.  One or more Vice-Presidents may be elected by the Board of Directors.  One Vice-President may be designated as Executive Vice-President and a Vice-President so designated shall perform all such duties of the President, as the President may from time to time, designate to him.  In addition, any Vice-President designated as the Executive Vice-President shall, in the absence of the Chairman of the Board and of the President, or in the event of the inability or refusal of both of each said officers to act, shall perform the duties of the Chairman of the Board and of the President, and when so acting, shall have all of the powers of and be subject to all the restrictions imposed upon those officers.  If there shall be no Executive Vice-President designated, and in the absence of the Chairman of the Board and of the President, or in the event of the inability or refusal of both of each said officers to act, the Vice-President, or if there be more than one, the Vice-Presidents in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall perform the duties of the Chairman of the Board and of the President, and when so acting, shall have all of the powers of and be subject to all of the restrictions imposed upon those officers.  All Vice-Presidents shall perform such duties as may be assigned to them by the President or by the Board of Directors from time to time.

Section 7.  Secretary.  The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required.  He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be.  He shall have custody of the corporate seal of the Corporation and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, the seal may be attested by his signature or by the signature of such Assistant Secretary.  The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

Section 8.  Assistant Secretary.  The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 9.  Treasurer.  The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.  He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation.

If required by the Board of Directors, he shall give the Corporation a bond (which shall be renewed every six (6) years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

Section 10.  Assistant Treasurer.  The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 11.  Other Officers.  Any other officers elected by the Board of Directors shall have such duties as may be assigned to them by the Board of Directors or the President.

ARTICLE VI

STOCK

Section 1.  Certificates of Stock.  The shares of the Corporation shall be represented by a certificate or shall be uncertificated.  Certificates shall be signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, or the President or a Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation.

Upon the face or back of each stock certificate issued to represent any partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, shall be set forth the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated.

If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder, who so requests, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of Delaware or a statement that the Corporation will furnish without charge to each stockholder, who so requests, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 2.  Signatures.  Any of or all the signatures on a certificate may be facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Section 3.  Lost Certificates.  The Board of Directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed.  When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 4.  Transfer of Stock.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.  Upon receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation.

Section 5.  Fixing Record Date.  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any lawful action, the Board of Directors may fix a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action; provided, however, that said record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 6.  Registered Stockholders.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII

GENERAL PROVISIONS

Section 1.  Dividends.  Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law.  Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Before payment of the dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 2.  Annual Statement.  The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

Section 3.  Checks.  All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 4.  Fiscal Year.  The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 5.  Corporate Seal.  The corporate seal shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware.”  The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

AMENDMENTS

Section 1.  Amendments.  These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws is contained in the notice of such special meeting.  If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

EX-10.8

Exhibit 10.8

*0339+0000720+040010079748*

PROMISSORY NOTE

Principal $4,000,000.00	Loan Date 02-02-2021	Maturity 02-13-2022	Loan No 040010079748	Call / Coll RC-C 4a / 43	Account 720	Officer JJN	Initials
References in the boxes above are for Lender's use only and do not limit the applicability  of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.

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

Principal Amount: $4,000,000.00 Date of Note: February 2, 2021 

PROMISE TO PAY. Art's-Way Manufacturing Co., Inc. ("Borrower") promises to pay to Bank Midwest ("Lender"), or order, in lawful money of the United States of America, the principal amount of Four Million & 00/100 Dollars ($4,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in full immediately upon Lender's demand. If no demand is made, Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on February 13, 2022. Unless otherwise agreed or required by applicable law, payments will be applied first to any escrow or reserve account payments as required under any mortgage, deed of trust, or other security instrument or security agreement securing this Note; then to any accrued unpaid interest; and then to principal. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. All payments must be made in U.S. dollars and must be received by Lender consistent with any written payment instructions provided by Lender. If a payment is made consistent with Lender's payment instructions but received after 5:30 PM Central Time, Lender will credit Borrower's payment on the next business day.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the Wall Street Journal Prime Rate as published in the Wall Street Journal Money Rates section (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each one (1) day. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate of 1.500 percentage points over the Index (the "Margin"), adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.750% per annum based on a year of 360 days. If Lender determines, in its sole discretion, that the Index has become unavailable or unreliable, either temporarily, indefinitely, or permanently, during the term of this Note, Lender may amend this Note by designating a substantially similar substitute index. Lender may also amend and adjust the Margin to accompany the substitute index. The change to the Margin may be a positive or negative value, or zero. In making these amendments, Lender may take into consideration any then-prevailing market convention for selecting a substitute index and margin for the specific Index that is unavailable or unreliable. Such an amendment to the terms of this Note will become effective and bind Borrower 10 business days after Lender gives written notice to Borrower without any action or consent of the Borrower. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.250% per annum or more than the maximum rate allowed by applicable law.

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

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

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the total sum due under this Note will continue to accrue interest at the interest rate under this Note. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default. Borrower fails to make any payment when due under this Note.

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

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

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

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

Loan No: 040010079748  PROMISSORY NOTE (Continued) Page 2

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

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

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

Insecurity. Lender in good faith believes itself insecure.

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

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

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

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

COLLATERAL. Borrower acknowledges this Note is secured by any and all security documents, including, but not limited to, all Security

Agreements, Supplemental Security Agreements, all Guaranties, Real Estate Mortgages and Assignment of Rents.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: Michael Woods, CFO of Art's-Way Manufacturing Co., Inc.; and David King, CEO of Art's-Way Manufacturing Co., Inc. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.

PURPOSE OF LOAN. The specific purpose of this loan is: 2021 Letter of Credit.

PRIOR NOTE. Renewal of Loan #40010054912.

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

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

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

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

BORROWER:

ART'S-WAY MANUFACTURING CO., INC.
By:		By:
	Michael Woods, CFO of Art's-Way Manufacturing Co., Inc.		David King, CEO of Art's-Way Manufacturing Co., Inc.

Loan No: 040010079748  PROMISSORY NOTE (Continued) Page 3

LENDER:
BANK MIDWEST
X
	Jeffrey J Newlin, SVP Market President

LaserPro, Ver. 20.3.10.002 Copr. Finastra USA Corporation 1997, 2021. All Rights Reserved. - IA K:\CFI\LPL\D20.FC TR-508250 PR-102

EX-21.1

Exhibit 21.1

Art’s-Way Manufacturing Co., Inc. and Subsidiaries

As of November 30, 2020

Company	Jurisdiction of Formation
Art’s-Way Scientific, Inc.	Iowa
Ohio Metal Working Products/Art’s Way, Inc.	Ohio

All Art’s-Way Manufacturing Co., Inc. subsidiaries are wholly-owned.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Art's-Way Manufacturing Co., Inc.

Armstrong, Iowa

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-169972, No. 333-173914, and No. 333-238469) of Art's-Way Manufacturing Co., Inc. of our report dated February 9, 2021, relating to the consolidated financial statements for the years ended November 30, 2020 and 2019, which appears in Art's-Way Manufacturing Co., Inc.’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

/s/ Eide Bailly LLP

Minneapolis, Minnesota

February 9, 2021 

EX-31.1

Exhibit 31.1

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

(SECTION 302 CERTIFICATION)

I, David A. King, certify that:

1. I have reviewed this annual report on Form 10-K 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:	February 9, 2021	/s/ David A. King
		David A. King
		President and Chief Executive Officer

EX-31.2

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 annual report on Form 10-K 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:	February 9, 2021	/s/ Michael W. Woods
		Michael W. Woods
		Chief Financial Officer

EX-32.1

Exhibit 32.1

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

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

In connection with the annual report on Form 10-K of Art’s-Way Manufacturing Co., Inc. (the “Company”) for the fiscal year ended November 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. King, as the President and Chief Executive 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:

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

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

Date:	February 9, 2021	/s/ David A. King
		David A. King
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

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

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

In connection with the annual report on Form 10-K of Art’s-Way Manufacturing Co., Inc. (the “Company”) for the fiscal year ended November 30, 2020, 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:

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

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

Date:	February 9, 2021	/s/ Michael W. Woods
		Michael W. Woods
		Chief Financial Officer

XML

Document And Entity Information - USD ($)	12 Months Ended
	Nov. 30, 2020	Feb. 04, 2021	May 31, 2020
Document Information [Line Items]
Entity Registrant Name	ARTS WAY MANUFACTURING CO INC
Entity Central Index Key	0000007623
Trading Symbol	artw
Current Fiscal Year End Date	--11-30
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		4,523,407
Entity Public Float			$ 3,719,120
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Nov. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(b) Security	Common stock $.01 par value

XML

Consolidated Balance Sheets - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Current assets:
Cash	$ 2,684	$ 3,145
Accounts receivable-customers, net of allowance for doubtful accounts of $51,175 and $22,925 in 2020 and 2019, respectively	2,390,604	1,679,975
Inventories, net	7,762,400	8,778,507
Cost and profit in excess of billings	56,026	726,667
Net investment in sales-type leases, current	28,352	148,005
Other current assets	61,284	70,931
Total current assets	10,301,350	11,407,230
Property, plant, and equipment, net	5,218,662	5,362,907
Assets held for lease, net	521,555	713,782
Deferred income taxes	2,667,686	1,786,048
Net investment in sales-type leases, long-term		5,782
Other assets	93,760	71,189
Total assets	18,803,013	19,346,938
Current liabilities:
Accounts payable	1,955,404	1,205,313
Customer deposits	198,225	105,363
Billings in excess of cost and profit	276,226	88,931
Income taxes payable	1,100	6,400
Accrued expenses	1,279,312	1,132,826
Line of credit	2,359,530	2,578,530
Current portion of long-term debt	94,979	85,401
Total current liabilities	6,164,776	5,202,764
Long-term liabilities
Long-term portion of operating lease liabilities	18,342
Long-term debt, excluding current portion	2,713,150	2,350,592
Total liabilities	8,896,268	7,553,356
Commitments and Contingencies (Notes 8, 9 and 15)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2020 and 2019; issued and outstanding 0 shares in 2020 and 2019.
Common stock – $0.01 par value. Authorized 9,500,000 shares in 2020 and 2019; issued 4,470,004 in 2020 and 4,321,087 in 2019	44,700	43,211
Additional paid-in capital	3,496,243	3,250,087
Retained earnings	6,443,856	8,547,342
Treasury stock, at cost (35,097 in 2020 and 18,842 in 2019 shares)	(78,054)	(47,058)
Total stockholders’ equity	9,906,745	11,793,582
Total liabilities and stockholders’ equity	$ 18,803,013	$ 19,346,938

XML

Consolidated Balance Sheets (Parentheticals) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Allowance for doubtful accounts	$ 51,175	$ 22,925
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	500,000	500,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	9,500,000	9,500,000
Common stock, issued (in shares)	4,470,004	4,321,087
Treasury stock (in shares)	35,097	18,842

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Sales	$ 22,409,123	$ 22,889,173
Cost of goods sold	20,009,523	18,961,260
Gross profit	2,399,600	3,927,913
Expenses:
Engineering	476,721	479,345
Selling	1,623,960	1,602,006
General and administrative	4,208,553	3,343,443
Total expenses	6,309,234	5,424,794
(Loss) from operations	(3,909,634)	(1,496,881)
Other income (expense):
Interest expense	(304,611)	(358,174)
Other	1,254,289	86,235
Total other income (expense)	949,678	(271,939)
Income (loss) before income taxes	(2,959,956)	(1,768,820)
Income tax (benefit)	(856,470)	(349,234)
Net Income (Loss)	$ (2,103,486)	$ (1,419,586)
Net Income (Loss) per share
Basic Net Income (Loss) per share (in dollars per share)	$ (0.48)	$ (0.33)
Diluted Net Income (Loss) per share (in dollars per share)	$ (0.48)	$ (0.33)
Weighted average outstanding shares used to compute basic net loss per share (in shares)	4,393,887	4,277,375
Weighted average outstanding shares used to compute diluted net loss per share (in shares)	4,393,887	4,277,375

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balance (in shares) at Nov. 30, 2018	4,225,050			9,286
Balance at Nov. 30, 2018	$ 42,250	$ 3,055,632	$ 9,966,928	$ (27,735)	$ 13,037,075
Stock based compensation (in shares)	96,037			9,556
Stock based compensation	$ 961	194,455		$ (19,323)	176,093
Net income (loss)			(1,419,586)		(1,419,586)
Balance (in shares) at Nov. 30, 2019	4,321,087			18,842
Balance at Nov. 30, 2019	$ 43,211	3,250,087	8,547,342	$ (47,058)	11,793,582
Stock based compensation (in shares)	148,917			16,255
Stock based compensation	$ 1,489	246,156		$ (30,996)	216,649
Net income (loss)			(2,103,486)		(2,103,486)
Balance (in shares) at Nov. 30, 2020	4,470,004			35,097
Balance at Nov. 30, 2020	$ 44,700	$ 3,496,243	$ 6,443,856	$ (78,054)	$ 9,906,745

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Cash flows from operations:
Net (loss)	$ (2,103,486)	$ (1,419,586)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Stock based compensation	247,645	195,416
Increase in obsolete inventory reserves	556,303	79,265
(Gain) Loss on disposal of property, plant, and equipment	25,195	(9,999)
Depreciation and amortization expense	818,234	1,003,541
Accrued interest on deferred debt payments	7,536
Change in allowance for doubtful accounts	28,250	(2,175)
Debt forgiveness from Paycheck Protection Program loan	(1,242,900)
Deferred expense (benefit)	(881,638)	(353,626)
Changes in assets and liabilities:
Accounts receivable	(738,879)	(140,687)
Inventories	459,804	1,399,330
Net investment in sales-type leases	125,435	123,055
Other assets	9,649	54,158
Accounts payable	750,091	403,251
Contracts in progress, net	857,936	(723,463)
Customer deposits	92,862	(40,269)
Income taxes payable	(5,300)
Accrued expenses	136,949	239,542
Net cash provided by (used in) operating activities	(856,314)	807,753
Cash flows from investing activities:
Purchases of property, plant, and equipment	(693,414)	(447,025)
Net proceeds from sale of assets	191,764	899,713
Net cash provided by (used in) investing activities	(501,650)	452,688
Cash flows from financing activities:
Net change in line of credit	219,000	927,000
Proceeds from term debt	1,692,900
Repayment of term debt	(85,401)	(314,485)
Repurchases of common stock	(30,996)	(19,323)
Net cash provided by (used in) financing activities	1,357,503	(1,260,808)
Net (decrease) in cash	(461)	(367)
Cash at beginning of period	3,145	3,512
Cash at end of period	2,684	3,145
Supplemental disclosures of cash flow information:
Interest	263,598	329,356
Income taxes	$ 28,514	$ 3,855

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

( 1 ) Summary of Significant Accounting Policies

(a) Nature of Business

Art's-Way Manufacturing Co., Inc. (the “Company”) is primarily engaged in the fabrication and sale of specialized farm machinery in the agricultural sector of the United States. Primary product offerings include portable and stationary animal feed processing equipment; hay and forage equipment; sugar beet harvesting equipment; land maintenance equipment; manure spreaders and moldboard plows. The Company sells its labeled products through independent farm equipment dealers throughout the United States. In addition, the Company manufactures and supplies hay blowers pursuant to OEM agreements. The Company also provides after-market service parts that are available to keep its branded and OEM-produced equipment operating to the satisfaction of the end user of the Company's products.

The Company's Modular Buildings segment is primarily engaged in the construction of modular laboratories and animal housing facilities through the Company's wholly-owned subsidiary, Art's-Way Scientific, Inc. Buildings commonly produced range from basic swine buildings to complex containment research laboratories. This segment also provides services relating to the design, manufacturing, delivering, installation, and renting of the building units that it produces.

The Company's Tools segment is a domestic manufacturer and distributor of standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond), CBN (cubic boron nitride) inserts and OEM specialty tools through the Company's wholly-owned subsidiary, Ohio Metal Working Company/Art's Way, Inc.

(b) Impact of COVID- 19

While the COVID-

19

pandemic had very little impact on the Company's results of operations for the

first

quarter of fiscal

2020,

it did impact results of operations for the rest of fiscal

2020

and the Company believes that it

may

continue to do so for the foreseeable future. From

March 23, 2020

until

May 18, 2020

the majority of the Company's office staff in all

three

segments worked remotely with the exception of key operations support. At the height of the initial outbreak the Company's workforce was down approximately

17%

due to self-quarantine. By the end of

May 2020,

the Company's entire workforce had returned and operations have continued as normal with additional safety precautions in place. As COVID-

19

cases began to rise in

November 2020,

the Company allowed employees that could perform their job functions remotely do so at their discretion. At this time approximately

75%

of the Company's office staff is working remote at least part-time and this has had minimal effect on operations. The Company expects that by the end of

February 2021

remote employees will return full time to the office. Future outbreaks could have a material effect on the Company's operations and are taking precautions to mitigate the spread of COVID-

19.

(c) Principles of Consolidation

The consolidated financial statements include the accounts of Art's-Way Manufacturing Co., Inc. and its wholly-owned subsidiaries for the

2020

fiscal year, which includes Art's-Way Scientific, Inc., and Ohio Metal Working Products/Art's-Way, Inc. All material inter-company accounts and transactions are eliminated in consolidation.

( d ) Change in Accounting Estimate

During the fiscal year

2020,

the Company made a change in accounting estimate related to the estimated costs to complete a material construction contract. The change in estimate was related to the expected collectability of change orders driven from project modifications in the design process and scope gaps that occurred because of the design changes. Further unforeseen costs including increased costs from project delays due to COVID-

19,

issues with site conditions, subcontractor rework and expected liquidated damages have deteriorated the gross profit margin on the project further through the

fourth

fiscal quarter of

2020.

Overall, approximately

$1.3

million of additional revenue has been generated since inception of the contract compared to

$2.8

million of additional estimated costs to complete. The Company determined this was a change in accounting estimate in accordance with Accounting Standards Codification (“ASC”)

250

-

10

“Accounting Changes and Error Corrections” based on the timing of when information was reasonably considered available for the expected additional costs. The Company has approximately

$1

million in revenue to recognize at a reduced margin for the Modular Buildings segment in the

first

quarter of fiscal

2021

as a result of this change in estimate.

In the

fourth

quarter of fiscal

2020,

the Company made a change in accounting estimate related to the inventory obsolescence reserve for UHC reels, Miller Pro forage and rake, auger, and other non-current product lines. The Company concluded these items were

not

going to be a part of the Company's strategic product offering going forward and increased the reserve on these items approximately

$681,000

in

November 2020.

The Company is actively working on a scrap plan for these items to decrease carrying costs for inventory in

2021.

The effect of the increased reserve reduced net inventory, added additional cost of goods sold expense reducing income from operations and also had an effect on working capital debt covenants by approximately

$681,000.

The Company determined this was a change in accounting estimated in accordance with Accounting Standards Codification (“ASC”)

250

-

10

“Accounting Changes and Error Corrections.”

( e ) Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had

no

effect on the reported results of operations. An adjustment has been made to the Consolidated Statements of Cash Flows for the fiscal year ended

November 30, 2019,

to identify the non-cash expense related to changes in the Company's obsolete inventory reserve in the amount of

$79,265.

This change in classification does

not

affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.

( f ) Cash Concentration

The Company maintains several different accounts at

one

bank, and balances in these accounts could periodically exceed the federally insured limits. However, management believes the risk of loss to be low.

( g ) Customer Concentration

During the

2020

and

2019

fiscal years,

one

customer accounted for more than

18%

and

21%,

respectively, of consolidated revenues due to a large contract in the Modular Buildings segment. The Company's highest recurring customer accounted for just under

6%

and

10%

of consolidated net revenues in

2020

and

2019

fiscal years, respectively.

(h) Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. Accounts receivable are generally considered past due

60

days past invoice date, with the exception of international sales which primarily are sold with

180

day terms backed by export insurance.

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within

30

days from the invoice date. Trade receivables are stated at the amount billed to the customer. The Company charges interest on overdue customer account balances at a rate of

1.5%

per month. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

(i) Inventories

Inventories are stated at the lower of cost or net realizable value, and cost is determined using the standard costing method. Management monitors the carrying value of inventories using inventory control and review processes that include, but are

not

limited to, sales forecast review, inventory status reports, and inventory reduction programs. The Company records inventory write downs to net realizable value based on expected usage information for raw materials and historical selling trends for finished goods. Additional write downs

may

be necessary if the assumptions made by management do

not

occur.

(j) Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation of plant and equipment is provided using the straight-line method, based on the estimated useful lives of the assets which range from

three

to

40

years.

( k ) S ales-Type Leases

Modular buildings held for short term lease by the Modular Buildings segment are recorded at cost. Amortization of the property is calculated over the useful life of the building. Estimated useful life is

three

to

five

years. Lease revenue is accounted for on a straight-line basis over the term of the related lease agreement. Lease income for modular buildings is included in sales on the Consolidated Statements of Operations.

The Company leases modular buildings to certain customers and accounts for these transactions as sales-type leases. These leases have terms of up to

36

months and are collateralized by a security interest in the related modular building. The lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the Company's obligation to the lessee is complete. Profit related to the sale of the building is recorded upon fulfillment of the Company's obligation to the lessee.

The components related to sales-type leases at

November 30, 2020

and

November 30, 2019

are as follows:

	November 30, 2020			November 30, 2019
Minimum lease receivable, current	$	29,002		$	162,425
Unearned interest income, current		(650	)		(14,420	)
Net investment in sales-type leases, current	$	28,352		$	148,005
Minimum lease receivable, long-term	$	-		$	5,851
Unearned interest income, long-term		-			(69	)
Net investment in sales-type leases, long-term	$	-		$	5,782

There was

no

sales activity related to sales-type leases for the years ended

November 30, 2020

and

November

30,2019.

Future minimum lease receipts from sales-type leases are as follows:

Year Ending November 30,	Amount
2021		29,002
Total	$	29,002

(l) Operating Leases

The Company determines if an arrangement is a lease at inception of a contract. The nature of the Company's operating leases at this time is office equipment, mainly copiers, with terms of

12

to

60

months. Operating leases are included in other assets as operating lease right-of-use (“ROU”) assets on the Consolidated Balance Sheets while current lease liabilities are included as accrued expenses. The long-term portions of operating lease liabilities are shown as long-term liabilities on the Consolidated Balance Sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value payments over the lease term. As most of the Company's leases do

not

provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease terms

may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has copier lease agreements with lease and non-lease components and has elected the practical expedient

not

to separate lease and non-lease components for this asset class. The Company has also elected

not

to recognize lease liabilities and ROU assets for short-term leases. The Company recognizes variable costs that depend on usage in profit or loss as they are incurred.

The components of operating leases on the Consolidated Balance Sheets at

November 30, 2020

were as follows:

	November 30, 2020
Operating lease right-of-use assets	$	27,879
Current portion of operating lease liabilities	$	9,537
Long-term portion of operating lease liabilities		18,342
Total operating lease liabilities	$	27,879

The Company included

$27,879

of operating lease ROU assets in other assets, the current portion of operating lease liabilities of

$9,537

was included in accrued expenses and the

$18,342

of long-term operating lease liabilities was included in the long-term liability portion of the Consolidated Balance Sheets. The Company recorded

$23,121

of operating lease costs in the year ended

November 30, 2020,

which included variable costs tied to usage. The Company's operating leases carry a weighted average lease term of

35

months and have a weighted average discount rate of

5.50%

Future maturities of operating lease liabilities are as follows:

Year Ending November 30,
2021	10,847
2022	10,847
2023	6,911
2024	1,630
Total lease payments	30,236
Less imputed interest	(2,356	)
Total operating lease liabilities	27,879

(m) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

On

December 28, 2020

the Consolidated Appropriations Act,

2021

was signed into law. This law provides that

no

amount of loan forgiveness granted under the Paycheck Protection Program shall be included in gross income for tax purposes. The law also allows the deduction of expenses related to the Paycheck Protection Program creating a double tax benefit. The Company attributes

8.8%

of tax rate benefit related to the permanent difference from this law.

The Company classifies interest and penalties to be paid on an underpayment of taxes as income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states and previously in Canada. The Company is

no

longer subject to Canadian, U.S. federal or state income tax examinations by tax authorities for years ended before

November 30, 2017.

(n) Revenue Recognition

The Company's revenues primarily result from contracts with customers. The major sources of revenue for the Agricultural Products and Tools segments are farm equipment, service parts related to farm equipment and steel cutting tools and inserts. The Agricultural Products and Tools segments generally execute short-term contracts that contain a single performance obligation – the delivery of product to the common carrier. The Company recognizes revenue for the production and sale of farm equipment, service parts and cutting tools upon shipment of the goods. Risk of ownership and title pass to the customer upon shipment of the goods. The Tools segment has an OEM agreement with

one

customer for which sales are recognized FOB destination – when the goods hit the customer's dock. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in the Company's terms are documented in the most recently published price lists. Pricing is fixed and determinable according to the Company's published equipment and parts price lists. Title to all equipment and parts sold passes to the customer upon delivery to the carrier and is

not

subject to a customer acceptance provision. Proof of the passing of title is documented and retained by the Company. Post shipment obligations are limited to any claim with respect to the condition of the equipment or parts. The Agricultural Products and Tools segments each typically require payment in full

30

days after the ship date. To take advantage of program discounts, some customers pay deposits up front. Any deposits received increase contract liabilities.

In certain circumstances, upon the customer's written request, the Company

may

recognize revenue when production is complete, and the goods are ready for shipment. At the customer's request, the Company will bill the customer upon completing all performance obligations, but before shipment. The customer dictates that the Company ship the goods per the customer's direction from the Company's manufacturing facility, as is customary with this type of agreement, in order to minimize shipping costs. The written agreement with the customer specifies that the goods will be delivered on a schedule to be determined by the customer, with a final specified delivery date, and that the Company will segregate the goods from its inventory, such that they are

not

available to fill other orders. This agreement also specifies that the customer is required to purchase all goods manufactured under this agreement. Title of the goods will pass to the customer when the goods are complete and ready for shipment, per the customer agreement. At the transfer of title, all risks of ownership have passed to the customer, and the customer agrees to maintain insurance on the manufactured items that have

not

yet been shipped. The Company has operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customer and the Company. The credit terms on these agreements are consistent with the credit terms on all other sales. All risks of loss are shouldered by the customer, and there are

no

exceptions to the customer's commitment to accept and pay for these manufactured goods. Revenues recognized at the completion of production in the

2020

and

2019

fiscal years were approximately

$0

and

$16,000,

respectively.    

The Modular Buildings segment is in the construction industry with its major source of revenue arising from modular building sales. Sales of modular buildings are generally recognized using input methods to measure progress towards the satisfaction of a performance obligation using the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract costs consist of direct costs on contracts, including labor, materials, amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract change orders, penalty provisions and final contract settlements

may

result in revisions to costs and income and are recognized in the period in which the revisions are determined. The Company uses significant judgements in determining estimated contract costs and completion percentages throughout the life of the project. Stock modular building sales also occur and are recognized at a point in time when the performance obligation is fulfilled through substantial completion. Substantial completion is achieved through customer acceptance of the completed building. The Modular Buildings segment executes contracts with customers that can be short- or long-term in nature. These contracts can have multiple performance obligations and revenue from these can be recognized over time or at a point in time depending on the nature of the contracts. Payment terms for the Modular Buildings segment vary by contract, but typically utilize money down and progress payments throughout the life of the contract. The payment terms of the Modular Buildings segment have the most impact on the Company's contract receivables, contract assets and contract liabilities. Project invoicing from the Modular Buildings segment increases contract receivables and has an effect on contract liabilities through billings in excess of costs and estimated gross profit and advanced payments. The balance of contract assets is typically made up of the balance of costs and estimated gross profit in excess of billings. Costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are classified as current liabilities.

The Company leases modular buildings to certain customers and accounts for these transactions as operating or sales-type leases. These leases have terms of up to

36

months and are collateralized by a security interest in the related modular building. On sales-type leases, the lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the building is substantially complete. Profit related to the sale of the building is recorded upon fulfillment of the Company's obligation to the lessee. On operating leases, the Company recognizes rent when the lessee has all the rights and benefits of ownership of the asset.

The Agricultural Products segment offers variable consideration in the form of discounts depending on participation in yearly early order programs. This variable consideration is allocated to the transaction price of all products in a sales arrangement and is

not

contingent on future outcomes. The Agricultural Products segment does

not

offer rebates or credits. The Tools segment offers quantity discounts that are allocated to the transaction price of each product once the quantity break is achieved. The Tools segment does

not

offer rebates or credits. The Modular Buildings segment does

not

offer discounts, rebates or credits.

The Company's returns policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge, which is included in net sales. Whole goods are

not

returnable. Shipping costs charged to customers are included in net sales. Freight costs incurred are included in cost of goods sold. Customer deposits consist of advance payments from customers, in the form of cash, for revenue to be recognized in the following year.

For information on product warranty as it applies to ASC

606,

refer to Note

8

“Product Warranty.”

( o ) 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.

	Twelve Months Ended November 30, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,149,000	$	-	$	-	$	10,149,000
Farm equipment service parts		2,519,000		-		-		2,519,000
Steel cutting tools and inserts		-		-		2,308,000		2,308,000
Modular buildings		-		6,517,000		-		6,517,000
Modular building lease income		-		318,000		-		318,000
Other		417,000		158,000		23,000		598,000
	$	13,085,000	$	6,993,000	$	2,331,000	$	22,409,000

	Twelve Months Ended November 30, 2019
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,435,000	$	-	$	-	$	10,435,000
Farm equipment service parts		2,638,000		-		-		2,638,000
Steel cutting tools and inserts		-		-		2,086,000		2,086,000
Modular buildings		-		6,460,000		-		6,460,000
Modular building lease income		-		674,000		-		674,000
Other		435,000		126,000		35,000		596,000
	$	13,508,000	$	7,260,000	$	2,121,000	$	22,889,000

( p ) 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 Consolidated Balance Sheets.

	November 30, 2020		November 30, 2019
Receivables	$	2,391,000	$	1,680,000
Assets		56,000		727,000
Liabilities		276,000		89,000

The amount of revenue recognized in fiscal year

2020

that was included in a contract liability at

November 30, 2019

was approximately

$89,000

compared to

$185,000

for the same period of fiscal year

2019.

The change in contract receivables reflected above results from contract billings for all

three

segments as performance obligations are met. The decrease in contract assets from

November 30, 2019

is due to billings on construction contracts catching up to expenses incurred while the increase in contract liabilities is due to overbillings on projects for the Modular Buildings segment.

The Company will utilize the practical expedient exception for these contracts and will report only on performance obligations greater than

one

year. As of

November 30, 2020,

and

November 30, 2019,

the Company has

no

performance obligations with an original expected duration greater than

one

year.

(q) Research and Development

Research and development costs are expensed when incurred. Such costs approximated

$199,000

and

$149,000

for the

2020

and

2019

fiscal years, respectively.

( r ) Advertising

Advertising costs are expensed when incurred. Such costs approximated

$175,000

and

$198,000

for the

2020

and

2019

fiscal years, respectively. The Company has made a concerted effort to reduce trade show participation that was

not

providing the level of product exposure expected.

(s) Net Income (Loss) Per Share of Common Stock

Basic net income (loss) per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted net income (loss) per share of common stock has been computed on the basis of the weighted average number of shares outstanding plus equivalent shares of common stock 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 of common stock.

Basic and diluted (loss) per common share have been computed based on the following as of

November 30, 2020

and

2019:

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(2,103,486	)	$	(1,419,586	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)

(t) Stock Based Compensation

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate and dividend yield. Restricted stock is valued at market value at the day of grant.

(u) Use of Estimates

Management has made a number of estimates and assumptions related to the reported amount of assets and liabilities, reported amount of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 

(v) Recently Issued Accounting Pronouncements

A

dopted Accounting Pronouncements

Leases

In

February 2016,

the Financial Accounting Standards Board (the “FASB”) issued ASU

2016

-

02,

“Leases (Topic

842

),” which requires a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for all leases with terms of

12

months or greater. This guidance is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those years. The Company adopted this guidance for fiscal

2020

using the modified retrospective approach, including interim periods within that reporting period. Under the modified retrospective approach, the Company did

not

adjust prior comparative periods. The Company has a moderate amount of leasing activity mainly as the lessee of office equipment and as the lessor of modular buildings. As a result of adoption in the

first

fiscal quarter of

2020,

the Company recognized

$34,316

as a right-of-use asset and

$34,316

of lease liabilities on the balance sheet for office equipment it leases. The Company's activity as a lessor will remain mostly unaffected by this guidance. The Company's additional disclosures

may

include, but are

not

limited to:

• Nature of its leases

• Significant assumptions and judgements used

• Information about leases that have not yet commenced

• Related-party lease transactions

• Accounting policy election regarding short-term leases

• Finance, operating, short-term and variable lease costs

• Maturity analysis of operating lease payments, lease receivables and lease obligations

• Tabular disclosure of lease-related income

• Components of the net investment in a lease

•	Information on the management of risk associated with residual asset
	Accounting Pronouncements Not Yet Adopted Measurement of Credit Losses on Financial Instruments

In

June 2016,

the FASB issued ASU

2016

-

13,

“Measurement of Credit Losses on Financial Instruments.” ASU

2016

-

13

adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2022,

including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company will adopt ASU

2016

-

13

in fiscal year

2024.

The Company does

not

expect the application of the CECL impairment model to have a significant impact on its allowance for uncollectible amounts for accounts receivable.          

XML

Note 2 - Allowance for Doubtful Accounts

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Allowance for Credit Losses [Text Block]

( 2 ) Allowance for Doubtful Accounts

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

	Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	22,925		$	25,100
Provision charged to expense		44,222			(1,602	)
Less amounts charged-off		(15,972	)		(573	)
Balance, ending	$	51,175		$	22,925

XML

Note 3 - Inventories

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

( 3 ) Inventories

Major classes of inventory are:

	November 30, 2020			November 30, 2019
Raw materials	$	7,086,367		$	7,156,001
Work in process		304,009			492,125
Finished goods		3,777,136			3,905,373
Total Gross Inventory	$	11,167,512		$	11,553,499
Less: Reserves		(3,405,112	)		(2,774,992	)
Net Inventory	$	7,762,400		$	8,778,507

XML

Note 4 - Contracts in Progress

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Long-term Contracts or Programs Disclosure [Text Block]

( 4 ) Contracts in Progress

Amounts included in the consolidated financial statements related to uncompleted contracts are as follows:

	Cost and Profit in			Billings in Excess of
	Excess of Billings			Costs and Profit
November 30, 2020
Costs	$	511,152		$	9,697,061
Estimated earnings		98,084			579,747
		609,236			10,276,808
Less: amounts billed		(553,210	)		(10,553,034	)
	$	56,026		$	(276,226	)
November 30, 2019
Costs	$	3,805,906		$	629,501
Estimated earnings		1,044,612			155,790
		4,850,518			785,291
Less: amounts billed		(4,123,851	)		(874,222	)
	$	726,667		$	(88,931	)

The amounts billed on these long-term contracts are due

30

days from invoice date. All amounts billed are expected to be collected within the next

12

months. Retainage was

$36,488

and

$0

as of

November 30, 2020

and

2019,

respectively.

XML

Note 5 - Property, Plant, and Equipment

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

( 5 ) Property, Plant, and Equipment

Major classes of property, plant, and equipment are:

	November 30, 2020			November 30, 2019
Land	$	220,503		$	220,503
Buildings and improvements		7,255,955			7,035,144
Construction in Progress		31,571			82,366
Manufacturing machinery and equipment		11,123,104			11,036,192
Trucks and automobiles		510,955			507,575
Furniture and fixtures		119,907			120,833
		19,261,995			19,002,613
Less accumulated depreciation		(14,043,333	)		(13,639,706	)
Property, plant and equipment	$	5,218,662		$	5,362,907

Depreciation and amortization expense totaled

$818,234

and

$1,003,541

for the

2020

and

2019

fiscal years, respectively.

XML

Note 6 - Assets Held for Lease

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Disclosure of Assets Available for Sale, Not Part of Discontinued Operations [Text Block]

( 6 ) Assets Held for Lease

Major components of assets held for lease are:

	November 30, 2020		November 30, 2019
Modular Buildings	$	521,555	$	713,782
Total assets held for lease	$	521,555	$	713,782

The Company's Modular Buildings segment enters into leasing arrangements with customers from time-to-time. The Company had

seven

buildings in assets held for lease at

November 30, 2020

compared to

eight

at

November 30, 2019.

Rents recognized in sales were related to the leasing of modular buildings as a part of the normal course of business operations of the Modular Buildings segment. Rents recognized from assets held for lease included in sales on the consolidated statements of operations during the

2020

fiscal year were

$318,000

compared to

$674,000

in the

2019

fiscal year. Rents recognized from assets held for lease included in other income (expense) on the consolidated statements of operations during the

2019

fiscal year were

$2,500.

The Company has

no

expected future minimum lease receipts from assets held for lease at

November 30, 2020.

XML

Note 7 - Accrued Expenses

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

( 7 ) Accrued Expenses

Major components of accrued expenses are:

	November 30, 2020		November 30, 2019
Salaries, wages, and commissions	$	726,625	$	555,201
Accrued warranty expense		291,454		203,185
Other		261,233		374,440
	$	1,279,312	$	1,132,826

XML

Note 8 - Product Warranty

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

( 8 ) 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.

Changes in the Company's product warranty liability included in accrued expenses for the

2020

and

2019

fiscal years are as follows:

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	203,185		$	96,786
Settlements / adjustments		(157,501	)		(279,992	)
Warranties issued		245,770			386,391
Balance, ending	$	291,454		$	203,185

XML

Note 9 - Loan and Credit Agreements

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

( 9 ) Loan and Credit Agreements

The Company maintains

two

revolving lines of credit and

one

term loan with Bank Midwest. The Company also has

three

term loans with the U.S. Small Business Administration under the Economic Injury Disaster Loan program.

Bank Midwest Revolving Lines of Credit and Term Loan

The Company maintains a credit facility with Bank Midwest consisting of a

$5,000,000

revolving line of credit (the

“2017

Line of Credit”) used for working capital purposes, and a

$2,600,000

term loan due

October 1, 2037 (

the “Term Loan”). On

November 30, 2020,

the balance of the

2017

Line of Credit was

$2,359,530

with

$2,640,470

remaining available, as

may

be limited by the borrowing base calculation. The

2017

Line of Credit borrowing base is an amount equal to

75%

of accounts receivable balances (discounted for aged receivables), plus

50%

of inventory, less any outstanding loan balance on the

2017

Line of Credit. At

November 30, 2020,

the

2017

Line of Credit was

not

limited by the borrowing base calculation. Any unpaid principal amount borrowed on the

2017

Line of Credit accrues interest at a floating rate per annum equal to

1.00%

above the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor is set at

4.25%

per annum and the current interest rate is

4.25%

per annum. The

2017

Line of Credit was most recently renewed on

March 30, 2020.

The

2017

Line of Credit matures on

March 30, 2021

and requires monthly interest-only payments.

The Term Loan accrues interest at a rate of

5.00%

for the

first

sixty

months. Thereafter, the Term Loan will accrue 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 is set at

4.15%

per annum and the interest rate

may

only be adjusted by Bank Midwest once every

five

years. Monthly payments of

$17,271

for principal and interest are required. 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. J. Ward McConnell Jr., the 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.

On

February 13, 2019,

the Company opened a

$4,000,000

revolving line of credit (the

“2019

Line of Credit”) with Bank Midwest in connection with bonding obligations for the Company's performance of a large modular laboratory construction project. Funds under the

2019

Line of Credit will be undisbursed to the Company and will be held by Bank Midwest in connection with an Irrevocable Letter of Credit issued by Bank Midwest for the project. The

2019

Line of Credit accrues interest at a floating rate per annum equal to

1.00%

above the Wall Street Journal rate published in the money rates section of the Wall Street Journal. The interest rate floor is set at

4.25%

per annum and the current interest rate is

4.25%

per annum. The

2019

Line of Credit was recently renewed on

February 2, 2021.

The

2019

Line of Credit is payable upon demand by Bank Midwest. If

no

earlier demand is made, the unpaid principal and accrued interest will be payable in

one

payment, due on

February 13, 2022.

As of

November 30, 2020,

the funds on the

2019

Line of Credit remain undisbursed and are held by Bank Midwest. The Company expects to close the line when the project's lien period closes later in fiscal

2021.

On

April 20, 2020,

the Company obtained a loan in the amount of

$1,242,900

from Bank Midwest in connection with the U.S. Small Business Administration's Paycheck Protection Program (the “PPP Loan”). The PPP Loan accrued interest at a rate per annum equal to

1.00%

and was eligible to be used for payroll costs, employee benefits, rent, utilities and mortgage interest. The PPP Loan was unsecured. On

November 4, 2020

complete forgiveness was granted from the U.S. Small Business Administration.

Each of the

2017

Line of Credit and the Term Loan are governed by the terms of a separate Promissory Note, dated

September 28, 2017,

entered into between the Company and Bank Midwest. The

2019

Line of Credit is governed by the terms of a Promissory Note, dated

February 13, 2019,

entered into between the Company and Bank Midwest.

In connection with the

2017

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

2017

Line of Credit, as set forth in Commercial Guaranties, each dated

September 28, 2017.

The

2019

Line of Credit is also secured by these existing security documents.

To further secure the

2017

Line of Credit, the Company granted Bank Midwest a mortgage on its Canton, Ohio property held by Ohio Metal Working Products/Art's-Way Inc. The

2019

Line of Credit is also secured by the mortgage on the Canton, Ohio property. 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 subsidiaries (as guarantors pursuant to the Commercial Guaranties) 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 notes. 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 at

November 30.

The terms of the Bank Midwest loan agreements require the Company to maintain a minimum working capital ratio of

1.75,

while maintaining a minimum of

$5,100,000

of working capital. Additionally, a maximum debt to worth ratio of

1

to

1

must be maintained, with a minimum of

40%

tangible balance sheet equity, with variations subject to mutual agreement. 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 purchases or sales of equipment over

$100,000

annually and maintain reasonable salaries and owner compensation. The Company received the necessary approvals for purchases of equipment over

$100,000

for the

twelve

months ended

November 30, 2020.

The Company was out of compliance with its debt service coverage ratio and minimum working capital requirements covenants in place under the Bank Midwest loans as of

November 30, 2020.

Bank Midwest issued a waiver forgiving the noncompliance, and in turn waived the event of default. The next measurement date is

November 30, 2021.

On

January 12, 2021

Bank Midwest amended the Company's working capital requirement of maintaining a minimum working capital ratio of

1.75,

while also maintaining

$5,100,000

of working capital. The new covenant requires the Company to maintain a working capital requirement of

$4,000,000

and drops the requirement to maintain a minimum working capital ratio of

1.75.

SBA Economic Injury Disaster Loans

On

June 18, 2020,

and again on

June 24, 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. Two loans were executed on

June 18, 2020

with principal amounts of

$150,000

each, with a

third

loan being executed on

June 24, 2020

with a principal amount of

$150,000.

Proceeds from these EIDLs are being 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, are due monthly beginning

June 18, 2021

(

twelve

months from the date of the EIDLs) and

June 24, 2021

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. Each EIDL is governed by the terms of a separate Promissory Note, dated either

June 18, 2020

or

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:

	November 30, 2020		November 30, 2019
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,350,593	$	2,435,993
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2021, due June 24, 2050		152,450		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
Total term debt	$	2,808,129	$	2,435,993
Less current portion of term debt		94,979		85,401
Term debt, excluding current portion	$	2,713,150	$	2,350,592

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

November 30:

Year	Amount
2021	$	94,979
2022		104,026
2023		109,297
2024		114,499
2025		120,644
2026 and thereafter		2,264,684
	$	2,808,129

XML

Note 10 - Related Party Transactions

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

( 10 ) Related Party Transactions

During the

2020

and

2019

fiscal years, 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 owned by J. Ward McConnell, Jr., the Vice Chairman of the Company's Board of Directors. Marc McConnell, the Chairman of the Company's Board of Directors also serves as President of these companies. J. Ward McConnell, Jr. as a shareholder owning more than

20%

of the Company's outstanding stock, was required to guarantee a portion of the Company's term debt in accordance with the USDA guarantee on the Company's term loan. J. Ward McConnell, Jr. is paid a monthly fee for his guarantee. In the

2020

fiscal year, the Company recognized

$19,232

of expense for transactions with related parties, compared to

$26,506

in the

2019

fiscal year. As of

November 30, 2020,

accrued expenses contained a balance of

$1,464

owed to a related party compared to

$1,517

on

November 30, 2019.

XML

Note 11 - Employee Benefit Plans

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

( 11 ) Employee Benefit Plans

The Company sponsors a defined contribution

401

(k) savings plan which covers substantially all full-time employees who meet eligibility requirements. Participating employees

may

contribute as salary reductions any amount of their compensation up to the limit prescribed by the Internal Revenue Code. The Company makes a

25%

matching contribution to employees contributing a minimum of

4%

of their compensation, up to

1%

of eligible compensation. Effective

January 1, 2021

the Company began making a

50%

matching contribution up to

3%

of eligible compensation. The Company recognized an expense of

$32,464

and

$36,253

related to this plan during the

2020

and

2019

fiscal years, respectively.

XML

Note 12 - Equity Incentive Plan

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

( 12 ) Equity Incentive Plan

The compensation cost charged against income was

$247,645

and

$195,416

for the

2020

and

2019

fiscal years, respectively. The total income tax deductions for share-based compensation arrangements were

$176,435

and

$122,022

for the

2020

and

2019

fiscal years, respectively.

No

compensation cost was capitalized as part of inventory or fixed assets.

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 replaces the Art's-Way Manufacturing Co., Inc.

2011

Equity Incentive Plan (the

“2011

Plan”) and adds 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 non-employee directors are automatically granted restricted stock awards of

1,000

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. During the year ended

November 30, 2020,

restricted stock awards of

128,750

shares were issued to various employees, directors, and consultants, which vest over the next

three

years, and restricted stock awards of

25,000

shares were issued to directors as part of the director compensation policy, which vested immediately upon grant. In comparison, during fiscal

2019,

restricted stock awards of

56,750

shares were issued to various employees, directors, and consultants, which vest over

three

years from the date of issuance, restricted stock awards of

9,000

shares were issued to various employees, which vested immediately upon grant, and restricted stock awards of

31,687

were issued to directors as part of the director compensation policy. During the

2020

fiscal year,

74,685

shares of restricted stock became unrestricted,

4,833

shares of restricted stock were forfeited, and the Company bought

16,255

shares back as treasury stock from employees to pay payroll tax on vested shares. During

2019

fiscal year,

32,600

shares of restricted stock became unrestricted,

1,400

shares of restricted stock were forfeited, and the Company bought

9,556

shares back as treasury stock from employees to pay payroll tax on vested shares.

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based option award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate, and dividend yield. Expected volatility is based on historical volatility of the Company's stock and other factors. The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date.

No

stock options were granted during the years ended

November 30, 2020

or

2019.

Stock compensation net of treasury shares repurchased for the year ended

November 30, 2020

was

$216,649

compared to

$176,093

for the same period in fiscal

2019.

The fair value of each option award is estimated on the date of grant using the Black Scholes option-pricing model. Expected volatility is based on historical volatility of the Company's stock and other factors. The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date.

	20 20		201 9
Expected Volatility		-		-
Expected Dividend Yield		-		-
Expected Term (in years)		-		-
Risk-Free Rate		-		-

The following is a summary of activity under the plans as of

November 30, 2020

and

2019,

and changes during the years then ended:

2020 Option Activity
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000		$	6.07
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(23,000	)	$	5.56
Options O/S at end of Period		36,000		$	6.40		2.57		-
Options Exercisable At end of the Period		36,000		$	6.40		2.57		-

2019 Option Activity
Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000	$	6.07
Granted		-	$	-
Exercised		-	$	-				-
Options Expired or Forfeited		-	$	-
Options O/S at end of period		59,000	$	6.07		2.86		-
Options Exercisable at end of the period		59,000	$	6.07		2.86		-

No

options were granted or vested during the

2020

or

2019

fiscal years. As of both

November 30, 2020

and

November 30, 2019,

there were

no

non-vested options. As of

November 30, 2020,

there was

no

unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan related to stock options.

The Company received

no

cash from the exercise of options during the

2020

or

2019

fiscal years.

XML

Note 13 - Income Taxes

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

( 13 ) Income Taxes

Total income tax expense (benefit) for the

2020

and

2019

fiscal years consists of the following:

	November 30, 2020			November 30, 2019
Current expense (benefit)	$	25,168		$	4,392
Deferred expense (benefit)		(881,638	)		(353,626	)
Total income tax expense (benefit)	$	(856,470	)	$	(349,234	)

The reconciliation of the statutory Federal income tax rate is as follows:

	November 30, 2020			November 30, 2019
Statutory federal income tax rate		21.0	%		21.0	%
PPP Loan Forgiveness		8.8			-
Permanent differences and other		(0.9	)		(1.3	)
		28.9	%		19.7	%

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at

November 30, 2020

and

2019

are presented as approximate amounts below:

	November 30
	2020			2019
Current deferred tax assets (liabilities):
Accrued expenses	$	161,000		$	100,000
Inventory capitalization		71,000			21,000
NOL and tax credit carryforward		1,695,000			1,182,000
Asset reserves		796,000			621,000
Total current deferred tax assets	$	2,723,000		$	1,924,000
Non-current deferred tax assets
Property, plant, and equipment	$	(55,000	)	$	(138,000	)
Total non-current deferred tax assets (liabilities)		(55,000	)		(138,000	)
Net deferred taxes	$	2,668,000		$	1,786,000

In assessing the realizability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's net operating loss amounting to approximately

$7,479,000

and tax credit carryforward amounting to approximately

$109,000

for its U.S. operations expire on

November 30, 2036,

2037,

2038,

2039

and

2040.

Management believes that the Company will be able to utilize the U.S. net operating losses and credits before their expiration.

XML

Note 14 - Disclosures About the Fair Value of Financial Instruments

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

( 14 ) 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. At

November 30, 2020

and

November 30, 2019,

the carrying amount approximated fair value for cash, accounts receivable, net investment in sales-type leases, accounts payable, notes payable to bank, 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 net investment in sales-type leases also approximates 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.

XML

Note 15 - Litigation and Contingencies

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

( 15 ) Litigation and Contingencies

Various legal actions and claims that arise in the normal course of business are pending against the Company. In the opinion of management adequate provisions have been made in the accompanying financial statements for all pending legal actions and other claims.

XML

Note 16 - Segment Information

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

( 16 ) Segment Information

There are

three

reportable segments: Agricultural Products, Modular Buildings, and Tools. The Agricultural Products segment fabricates and sells farming products as well as replacement parts for these products in the United States and worldwide. The Modular Buildings segment produces modular buildings for animal containment and various laboratory uses. The Tools segment manufactures steel cutting tools and inserts.

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.

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

	Twelve Months Ended November 30, 2020
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	13,085,000		$	6,993,000		$	2,331,000		$	22,409,000
Income (loss) from operations	$	(2,318,000	)	$	(1,295,000	)	$	(297,000	)	$	(3,910,000	)
Income (loss) before tax	$	(1,723,000	)	$	(1,058,000	)	$	(179,000	)	$	(2,960,000	)
Total Assets	$	12,785,000		$	3,310,000		$	2,708,000		$	18,803,000
Capital expenditures	$	499,000		$	146,000		$	48,000		$	693,000
Depreciation & Amortization	$	481,000		$	205,000		$	132,000		$	818,000

	Twelve Months Ended November 30, 2019
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	13,508,000		$	7,260,000	$	2,121,000		$	22,889,000
Income (loss) from operations	$	(1,599,000	)	$	208,000	$	(106,000	)	$	(1,497,000	)
Income (loss) before tax	$	(1,843,000	)	$	220,000	$	(146,000	)	$	(1,769,000	)
Total Assets	$	13,169,000		$	3,584,000	$	2,594,000		$	19,347,000
Capital expenditures	$	257,000		$	147,000	$	43,000		$	447,000
Depreciation & Amortization	$	503,000		$	372,000	$	129,000		$	1,004,000

XML

Note 17 - Subsequent Events

12 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

( 17 ) Subsequent Events

Management evaluated all other activity of the Company and concluded that

no

subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements other than the change to the Company's working capital covenant and the renewal of the

2019

Line of Credit, both discussed in Note

9

“Loan and Credit agreements” to our financial statements in “Item

8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA”.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Nov. 30, 2020

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

(a) Nature of Business

Art's-Way Manufacturing Co., Inc. (the “Company”) is primarily engaged in the fabrication and sale of specialized farm machinery in the agricultural sector of the United States. Primary product offerings include portable and stationary animal feed processing equipment; hay and forage equipment; sugar beet harvesting equipment; land maintenance equipment; manure spreaders and moldboard plows. The Company sells its labeled products through independent farm equipment dealers throughout the United States. In addition, the Company manufactures and supplies hay blowers pursuant to OEM agreements. The Company also provides after-market service parts that are available to keep its branded and OEM-produced equipment operating to the satisfaction of the end user of the Company's products.

The Company's Modular Buildings segment is primarily engaged in the construction of modular laboratories and animal housing facilities through the Company's wholly-owned subsidiary, Art's-Way Scientific, Inc. Buildings commonly produced range from basic swine buildings to complex containment research laboratories. This segment also provides services relating to the design, manufacturing, delivering, installation, and renting of the building units that it produces.

The Company's Tools segment is a domestic manufacturer and distributor of standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond), CBN (cubic boron nitride) inserts and OEM specialty tools through the Company's wholly-owned subsidiary, Ohio Metal Working Company/Art's Way, Inc.

Effect of COVID-19 Pandemic [Policy Text Block]

(b) Impact of COVID- 19

While the COVID-

19

pandemic had very little impact on the Company's results of operations for the

first

quarter of fiscal

2020,

it did impact results of operations for the rest of fiscal

2020

and the Company believes that it

may

continue to do so for the foreseeable future. From

March 23, 2020

until

May 18, 2020

the majority of the Company's office staff in all

three

segments worked remotely with the exception of key operations support. At the height of the initial outbreak the Company's workforce was down approximately

17%

due to self-quarantine. By the end of

May 2020,

the Company's entire workforce had returned and operations have continued as normal with additional safety precautions in place. As COVID-

19

cases began to rise in

November 2020,

the Company allowed employees that could perform their job functions remotely do so at their discretion. At this time approximately

75%

of the Company's office staff is working remote at least part-time and this has had minimal effect on operations. The Company expects that by the end of

February 2021

remote employees will return full time to the office. Future outbreaks could have a material effect on the Company's operations and are taking precautions to mitigate the spread of COVID-

19.

Consolidation, Policy [Policy Text Block]

(c) Principles of Consolidation

The consolidated financial statements include the accounts of Art's-Way Manufacturing Co., Inc. and its wholly-owned subsidiaries for the

2020

fiscal year, which includes Art's-Way Scientific, Inc., and Ohio Metal Working Products/Art's-Way, Inc. All material inter-company accounts and transactions are eliminated in consolidation.

Change In Accounting Estimate [Policy Text Block]

( d ) Change in Accounting Estimate

During the fiscal year

2020,

the Company made a change in accounting estimate related to the estimated costs to complete a material construction contract. The change in estimate was related to the expected collectability of change orders driven from project modifications in the design process and scope gaps that occurred because of the design changes. Further unforeseen costs including increased costs from project delays due to COVID-

19,

issues with site conditions, subcontractor rework and expected liquidated damages have deteriorated the gross profit margin on the project further through the

fourth

fiscal quarter of

2020.

Overall, approximately

$1.3

million of additional revenue has been generated since inception of the contract compared to

$2.8

million of additional estimated costs to complete. The Company determined this was a change in accounting estimate in accordance with Accounting Standards Codification (“ASC”)

250

-

10

“Accounting Changes and Error Corrections” based on the timing of when information was reasonably considered available for the expected additional costs. The Company has approximately

$1

million in revenue to recognize at a reduced margin for the Modular Buildings segment in the

first

quarter of fiscal

2021

as a result of this change in estimate.

In the

fourth

quarter of fiscal

2020,

the Company made a change in accounting estimate related to the inventory obsolescence reserve for UHC reels, Miller Pro forage and rake, auger, and other non-current product lines. The Company concluded these items were

not

going to be a part of the Company's strategic product offering going forward and increased the reserve on these items approximately

$681,000

in

November 2020.

The Company is actively working on a scrap plan for these items to decrease carrying costs for inventory in

2021.

The effect of the increased reserve reduced net inventory, added additional cost of goods sold expense reducing income from operations and also had an effect on working capital debt covenants by approximately

$681,000.

The Company determined this was a change in accounting estimated in accordance with Accounting Standards Codification (“ASC”)

250

-

10

“Accounting Changes and Error Corrections.”

Reclassification, Comparability Adjustment [Policy Text Block]

( e ) Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had

no

effect on the reported results of operations. An adjustment has been made to the Consolidated Statements of Cash Flows for the fiscal year ended

November 30, 2019,

to identify the non-cash expense related to changes in the Company's obsolete inventory reserve in the amount of

$79,265.

This change in classification does

not

affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

( f ) Cash Concentration

The Company maintains several different accounts at

one

bank, and balances in these accounts could periodically exceed the federally insured limits. However, management believes the risk of loss to be low.

( g ) Customer Concentration

During the

2020

and

2019

fiscal years,

one

customer accounted for more than

18%

and

21%,

respectively, of consolidated revenues due to a large contract in the Modular Buildings segment. The Company's highest recurring customer accounted for just under

6%

and

10%

of consolidated net revenues in

2020

and

2019

fiscal years, respectively.

Receivable [Policy Text Block]

(h) Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. Accounts receivable are generally considered past due

60

days past invoice date, with the exception of international sales which primarily are sold with

180

day terms backed by export insurance.

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within

30

days from the invoice date. Trade receivables are stated at the amount billed to the customer. The Company charges interest on overdue customer account balances at a rate of

1.5%

per month. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

Inventory, Policy [Policy Text Block]

(i) Inventories

Inventories are stated at the lower of cost or net realizable value, and cost is determined using the standard costing method. Management monitors the carrying value of inventories using inventory control and review processes that include, but are

not

limited to, sales forecast review, inventory status reports, and inventory reduction programs. The Company records inventory write downs to net realizable value based on expected usage information for raw materials and historical selling trends for finished goods. Additional write downs

may

be necessary if the assumptions made by management do

not

occur.

Property, Plant and Equipment, Policy [Policy Text Block]

(j) Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation of plant and equipment is provided using the straight-line method, based on the estimated useful lives of the assets which range from

three

to

40

years.

Short-term Leases [Policy Text Block]

( k ) S ales-Type Leases

Modular buildings held for short term lease by the Modular Buildings segment are recorded at cost. Amortization of the property is calculated over the useful life of the building. Estimated useful life is

three

to

five

years. Lease revenue is accounted for on a straight-line basis over the term of the related lease agreement. Lease income for modular buildings is included in sales on the Consolidated Statements of Operations.

The Company leases modular buildings to certain customers and accounts for these transactions as sales-type leases. These leases have terms of up to

36

months and are collateralized by a security interest in the related modular building. The lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the Company's obligation to the lessee is complete. Profit related to the sale of the building is recorded upon fulfillment of the Company's obligation to the lessee.

The components related to sales-type leases at

November 30, 2020

and

November 30, 2019

are as follows:

	November 30, 2020			November 30, 2019
Minimum lease receivable, current	$	29,002		$	162,425
Unearned interest income, current		(650	)		(14,420	)
Net investment in sales-type leases, current	$	28,352		$	148,005
Minimum lease receivable, long-term	$	-		$	5,851
Unearned interest income, long-term		-			(69	)
Net investment in sales-type leases, long-term	$	-		$	5,782

There was

no

sales activity related to sales-type leases for the years ended

November 30, 2020

and

November

30,2019.

Future minimum lease receipts from sales-type leases are as follows:

Year Ending November 30,	Amount
2021		29,002
Total	$	29,002

Lessee, Leases [Policy Text Block]

(l) Operating Leases

The Company determines if an arrangement is a lease at inception of a contract. The nature of the Company's operating leases at this time is office equipment, mainly copiers, with terms of

12

to

60

months. Operating leases are included in other assets as operating lease right-of-use (“ROU”) assets on the Consolidated Balance Sheets while current lease liabilities are included as accrued expenses. The long-term portions of operating lease liabilities are shown as long-term liabilities on the Consolidated Balance Sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value payments over the lease term. As most of the Company's leases do

not

provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease terms

may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has copier lease agreements with lease and non-lease components and has elected the practical expedient

not

to separate lease and non-lease components for this asset class. The Company has also elected

not

to recognize lease liabilities and ROU assets for short-term leases. The Company recognizes variable costs that depend on usage in profit or loss as they are incurred.

The components of operating leases on the Consolidated Balance Sheets at

November 30, 2020

were as follows:

	November 30, 2020
Operating lease right-of-use assets	$	27,879
Current portion of operating lease liabilities	$	9,537
Long-term portion of operating lease liabilities		18,342
Total operating lease liabilities	$	27,879

The Company included

$27,879

of operating lease ROU assets in other assets, the current portion of operating lease liabilities of

$9,537

was included in accrued expenses and the

$18,342

of long-term operating lease liabilities was included in the long-term liability portion of the Consolidated Balance Sheets. The Company recorded

$23,121

of operating lease costs in the year ended

November 30, 2020,

which included variable costs tied to usage. The Company's operating leases carry a weighted average lease term of

35

months and have a weighted average discount rate of

5.50%

Future maturities of operating lease liabilities are as follows:

Year Ending November 30,
2021	10,847
2022	10,847
2023	6,911
2024	1,630
Total lease payments	30,236
Less imputed interest	(2,356	)
Total operating lease liabilities	27,879

Income Tax, Policy [Policy Text Block]

(m) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

On

December 28, 2020

the Consolidated Appropriations Act,

2021

was signed into law. This law provides that

no

amount of loan forgiveness granted under the Paycheck Protection Program shall be included in gross income for tax purposes. The law also allows the deduction of expenses related to the Paycheck Protection Program creating a double tax benefit. The Company attributes

8.8%

of tax rate benefit related to the permanent difference from this law.

The Company classifies interest and penalties to be paid on an underpayment of taxes as income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states and previously in Canada. The Company is

no

longer subject to Canadian, U.S. federal or state income tax examinations by tax authorities for years ended before

November 30, 2017.

Revenue from Contract with Customer [Policy Text Block]

(n) Revenue Recognition

The Company's revenues primarily result from contracts with customers. The major sources of revenue for the Agricultural Products and Tools segments are farm equipment, service parts related to farm equipment and steel cutting tools and inserts. The Agricultural Products and Tools segments generally execute short-term contracts that contain a single performance obligation – the delivery of product to the common carrier. The Company recognizes revenue for the production and sale of farm equipment, service parts and cutting tools upon shipment of the goods. Risk of ownership and title pass to the customer upon shipment of the goods. The Tools segment has an OEM agreement with

one

customer for which sales are recognized FOB destination – when the goods hit the customer's dock. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in the Company's terms are documented in the most recently published price lists. Pricing is fixed and determinable according to the Company's published equipment and parts price lists. Title to all equipment and parts sold passes to the customer upon delivery to the carrier and is

not

subject to a customer acceptance provision. Proof of the passing of title is documented and retained by the Company. Post shipment obligations are limited to any claim with respect to the condition of the equipment or parts. The Agricultural Products and Tools segments each typically require payment in full

30

days after the ship date. To take advantage of program discounts, some customers pay deposits up front. Any deposits received increase contract liabilities.

In certain circumstances, upon the customer's written request, the Company

may

recognize revenue when production is complete, and the goods are ready for shipment. At the customer's request, the Company will bill the customer upon completing all performance obligations, but before shipment. The customer dictates that the Company ship the goods per the customer's direction from the Company's manufacturing facility, as is customary with this type of agreement, in order to minimize shipping costs. The written agreement with the customer specifies that the goods will be delivered on a schedule to be determined by the customer, with a final specified delivery date, and that the Company will segregate the goods from its inventory, such that they are

not

available to fill other orders. This agreement also specifies that the customer is required to purchase all goods manufactured under this agreement. Title of the goods will pass to the customer when the goods are complete and ready for shipment, per the customer agreement. At the transfer of title, all risks of ownership have passed to the customer, and the customer agrees to maintain insurance on the manufactured items that have

not

yet been shipped. The Company has operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customer and the Company. The credit terms on these agreements are consistent with the credit terms on all other sales. All risks of loss are shouldered by the customer, and there are

no

exceptions to the customer's commitment to accept and pay for these manufactured goods. Revenues recognized at the completion of production in the

2020

and

2019

fiscal years were approximately

$0

and

$16,000,

respectively.    

The Modular Buildings segment is in the construction industry with its major source of revenue arising from modular building sales. Sales of modular buildings are generally recognized using input methods to measure progress towards the satisfaction of a performance obligation using the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract costs consist of direct costs on contracts, including labor, materials, amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract change orders, penalty provisions and final contract settlements

may

result in revisions to costs and income and are recognized in the period in which the revisions are determined. The Company uses significant judgements in determining estimated contract costs and completion percentages throughout the life of the project. Stock modular building sales also occur and are recognized at a point in time when the performance obligation is fulfilled through substantial completion. Substantial completion is achieved through customer acceptance of the completed building. The Modular Buildings segment executes contracts with customers that can be short- or long-term in nature. These contracts can have multiple performance obligations and revenue from these can be recognized over time or at a point in time depending on the nature of the contracts. Payment terms for the Modular Buildings segment vary by contract, but typically utilize money down and progress payments throughout the life of the contract. The payment terms of the Modular Buildings segment have the most impact on the Company's contract receivables, contract assets and contract liabilities. Project invoicing from the Modular Buildings segment increases contract receivables and has an effect on contract liabilities through billings in excess of costs and estimated gross profit and advanced payments. The balance of contract assets is typically made up of the balance of costs and estimated gross profit in excess of billings. Costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are classified as current liabilities.

The Company leases modular buildings to certain customers and accounts for these transactions as operating or sales-type leases. These leases have terms of up to

36

months and are collateralized by a security interest in the related modular building. On sales-type leases, the lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the building is substantially complete. Profit related to the sale of the building is recorded upon fulfillment of the Company's obligation to the lessee. On operating leases, the Company recognizes rent when the lessee has all the rights and benefits of ownership of the asset.

The Agricultural Products segment offers variable consideration in the form of discounts depending on participation in yearly early order programs. This variable consideration is allocated to the transaction price of all products in a sales arrangement and is

not

contingent on future outcomes. The Agricultural Products segment does

not

offer rebates or credits. The Tools segment offers quantity discounts that are allocated to the transaction price of each product once the quantity break is achieved. The Tools segment does

not

offer rebates or credits. The Modular Buildings segment does

not

offer discounts, rebates or credits.

The Company's returns policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge, which is included in net sales. Whole goods are

not

returnable. Shipping costs charged to customers are included in net sales. Freight costs incurred are included in cost of goods sold. Customer deposits consist of advance payments from customers, in the form of cash, for revenue to be recognized in the following year.

For information on product warranty as it applies to ASC

606,

refer to Note

8

“Product Warranty.”

Research and Development Expense, Policy [Policy Text Block]

(q) Research and Development

Research and development costs are expensed when incurred. Such costs approximated

$199,000

and

$149,000

for the

2020

and

2019

fiscal years, respectively.

Advertising Cost [Policy Text Block]

( r ) Advertising

Advertising costs are expensed when incurred. Such costs approximated

$175,000

and

$198,000

for the

2020

and

2019

fiscal years, respectively. The Company has made a concerted effort to reduce trade show participation that was

not

providing the level of product exposure expected.

Earnings Per Share, Policy [Policy Text Block]

(s) Net Income (Loss) Per Share of Common Stock

Basic net income (loss) per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted net income (loss) per share of common stock has been computed on the basis of the weighted average number of shares outstanding plus equivalent shares of common stock 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 of common stock.

Basic and diluted (loss) per common share have been computed based on the following as of

November 30, 2020

and

2019:

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(2,103,486	)	$	(1,419,586	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)

Share-based Payment Arrangement [Policy Text Block]

(t) Stock Based Compensation

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate and dividend yield. Restricted stock is valued at market value at the day of grant.

Use of Estimates, Policy [Policy Text Block]

(u) Use of Estimates

Management has made a number of estimates and assumptions related to the reported amount of assets and liabilities, reported amount of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 

New Accounting Pronouncements, Policy [Policy Text Block]

(v) Recently Issued Accounting Pronouncements

A

dopted Accounting Pronouncements

Leases

In

February 2016,

the Financial Accounting Standards Board (the “FASB”) issued ASU

2016

-

02,

“Leases (Topic

842

),” which requires a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for all leases with terms of

12

months or greater. This guidance is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those years. The Company adopted this guidance for fiscal

2020

using the modified retrospective approach, including interim periods within that reporting period. Under the modified retrospective approach, the Company did

not

adjust prior comparative periods. The Company has a moderate amount of leasing activity mainly as the lessee of office equipment and as the lessor of modular buildings. As a result of adoption in the

first

fiscal quarter of

2020,

the Company recognized

$34,316

as a right-of-use asset and

$34,316

of lease liabilities on the balance sheet for office equipment it leases. The Company's activity as a lessor will remain mostly unaffected by this guidance. The Company's additional disclosures

may

include, but are

not

limited to:

• Nature of its leases

• Significant assumptions and judgements used

• Information about leases that have not yet commenced

• Related-party lease transactions

• Accounting policy election regarding short-term leases

• Finance, operating, short-term and variable lease costs

• Maturity analysis of operating lease payments, lease receivables and lease obligations

• Tabular disclosure of lease-related income

• Components of the net investment in a lease

•	Information on the management of risk associated with residual asset
	Accounting Pronouncements Not Yet Adopted Measurement of Credit Losses on Financial Instruments

In

June 2016,

the FASB issued ASU

2016

-

13,

“Measurement of Credit Losses on Financial Instruments.” ASU

2016

-

13

adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2022,

including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company will adopt ASU

2016

-

13

in fiscal year

2024.

The Company does

not

expect the application of the CECL impairment model to have a significant impact on its allowance for uncollectible amounts for accounts receivable.          

Disaggregation of Revenue, Policy [Policy Text Block]

( o ) 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.

	Twelve Months Ended November 30, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,149,000	$	-	$	-	$	10,149,000
Farm equipment service parts		2,519,000		-		-		2,519,000
Steel cutting tools and inserts		-		-		2,308,000		2,308,000
Modular buildings		-		6,517,000		-		6,517,000
Modular building lease income		-		318,000		-		318,000
Other		417,000		158,000		23,000		598,000
	$	13,085,000	$	6,993,000	$	2,331,000	$	22,409,000

	Twelve Months Ended November 30, 2019
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,435,000	$	-	$	-	$	10,435,000
Farm equipment service parts		2,638,000		-		-		2,638,000
Steel cutting tools and inserts		-		-		2,086,000		2,086,000
Modular buildings		-		6,460,000		-		6,460,000
Modular building lease income		-		674,000		-		674,000
Other		435,000		126,000		35,000		596,000
	$	13,508,000	$	7,260,000	$	2,121,000	$	22,889,000

( p ) 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 Consolidated Balance Sheets.

	November 30, 2020		November 30, 2019
Receivables	$	2,391,000	$	1,680,000
Assets		56,000		727,000
Liabilities		276,000		89,000

The amount of revenue recognized in fiscal year

2020

that was included in a contract liability at

November 30, 2019

was approximately

$89,000

compared to

$185,000

for the same period of fiscal year

2019.

The change in contract receivables reflected above results from contract billings for all

three

segments as performance obligations are met. The decrease in contract assets from

November 30, 2019

is due to billings on construction contracts catching up to expenses incurred while the increase in contract liabilities is due to overbillings on projects for the Modular Buildings segment.

The Company will utilize the practical expedient exception for these contracts and will report only on performance obligations greater than

one

year. As of

November 30, 2020,

and

November 30, 2019,

the Company has

no

performance obligations with an original expected duration greater than

one

year.

XML

Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Sales-type Leases [Table Text Block]

	November 30, 2020			November 30, 2019
Minimum lease receivable, current	$	29,002		$	162,425
Unearned interest income, current		(650	)		(14,420	)
Net investment in sales-type leases, current	$	28,352		$	148,005
Minimum lease receivable, long-term	$	-		$	5,851
Unearned interest income, long-term		-			(69	)
Net investment in sales-type leases, long-term	$	-		$	5,782

Sales-type and Direct Financing Leases, Lease Receivable, Maturity [Table Text Block]

Year Ending November 30,	Amount
2021		29,002
Total	$	29,002

Lessee, Operating Leases, Assets and Liabilities [Table Text Block]

	November 30, 2020
Operating lease right-of-use assets	$	27,879
Current portion of operating lease liabilities	$	9,537
Long-term portion of operating lease liabilities		18,342
Total operating lease liabilities	$	27,879

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year Ending November 30,
2021	10,847
2022	10,847
2023	6,911
2024	1,630
Total lease payments	30,236
Less imputed interest	(2,356	)
Total operating lease liabilities	27,879

Disaggregation of Revenue [Table Text Block]

	Twelve Months Ended November 30, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,149,000	$	-	$	-	$	10,149,000
Farm equipment service parts		2,519,000		-		-		2,519,000
Steel cutting tools and inserts		-		-		2,308,000		2,308,000
Modular buildings		-		6,517,000		-		6,517,000
Modular building lease income		-		318,000		-		318,000
Other		417,000		158,000		23,000		598,000
	$	13,085,000	$	6,993,000	$	2,331,000	$	22,409,000

	Twelve Months Ended November 30, 2019
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	10,435,000	$	-	$	-	$	10,435,000
Farm equipment service parts		2,638,000		-		-		2,638,000
Steel cutting tools and inserts		-		-		2,086,000		2,086,000
Modular buildings		-		6,460,000		-		6,460,000
Modular building lease income		-		674,000		-		674,000
Other		435,000		126,000		35,000		596,000
	$	13,508,000	$	7,260,000	$	2,121,000	$	22,889,000

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	November 30, 2020		November 30, 2019
Receivables	$	2,391,000	$	1,680,000
Assets		56,000		727,000
Liabilities		276,000		89,000

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(2,103,486	)	$	(1,419,586	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,393,887			4,277,375
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.48	)	$	(0.33	)

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Note 2 - Allowance for Doubtful Accounts (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	22,925		$	25,100
Provision charged to expense		44,222			(1,602	)
Less amounts charged-off		(15,972	)		(573	)
Balance, ending	$	51,175		$	22,925

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Note 3 - Inventories (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	November 30, 2020			November 30, 2019
Raw materials	$	7,086,367		$	7,156,001
Work in process		304,009			492,125
Finished goods		3,777,136			3,905,373
Total Gross Inventory	$	11,167,512		$	11,553,499
Less: Reserves		(3,405,112	)		(2,774,992	)
Net Inventory	$	7,762,400		$	8,778,507

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Note 4 - Contracts in Progress (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Long-Term Contract or Program Disclosure [Table Text Block]

	Cost and Profit in			Billings in Excess of
	Excess of Billings			Costs and Profit
November 30, 2020
Costs	$	511,152		$	9,697,061
Estimated earnings		98,084			579,747
		609,236			10,276,808
Less: amounts billed		(553,210	)		(10,553,034	)
	$	56,026		$	(276,226	)
November 30, 2019
Costs	$	3,805,906		$	629,501
Estimated earnings		1,044,612			155,790
		4,850,518			785,291
Less: amounts billed		(4,123,851	)		(874,222	)
	$	726,667		$	(88,931	)

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Note 5 - Property, Plant, and Equipment (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Property, Plant and Equipment [Table Text Block]

	November 30, 2020			November 30, 2019
Land	$	220,503		$	220,503
Buildings and improvements		7,255,955			7,035,144
Construction in Progress		31,571			82,366
Manufacturing machinery and equipment		11,123,104			11,036,192
Trucks and automobiles		510,955			507,575
Furniture and fixtures		119,907			120,833
		19,261,995			19,002,613
Less accumulated depreciation		(14,043,333	)		(13,639,706	)
Property, plant and equipment	$	5,218,662		$	5,362,907

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Note 6 - Assets Held for Lease (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Property Subject to or Available for Operating Lease [Table Text Block]

	November 30, 2020		November 30, 2019
Modular Buildings	$	521,555	$	713,782
Total assets held for lease	$	521,555	$	713,782

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Note 7 - Accrued Expenses (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	November 30, 2020		November 30, 2019
Salaries, wages, and commissions	$	726,625	$	555,201
Accrued warranty expense		291,454		203,185
Other		261,233		374,440
	$	1,279,312	$	1,132,826

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Note 8 - Product Warranty (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	For the Twelve Months Ended
	November 30, 2020			November 30, 2019
Balance, beginning	$	203,185		$	96,786
Settlements / adjustments		(157,501	)		(279,992	)
Warranties issued		245,770			386,391
Balance, ending	$	291,454		$	203,185

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Note 9 - Loan and Credit Agreements (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Debt [Table Text Block]

	November 30, 2020		November 30, 2019
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,350,593	$	2,435,993
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2021, due June 24, 2050		152,450		-
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2021, due June 18, 2050		152,543		-
Total term debt	$	2,808,129	$	2,435,993
Less current portion of term debt		94,979		85,401
Term debt, excluding current portion	$	2,713,150	$	2,350,592

Schedule of Maturities of Long-term Debt [Table Text Block]

Year	Amount
2021	$	94,979
2022		104,026
2023		109,297
2024		114,499
2025		120,644
2026 and thereafter		2,264,684
	$	2,808,129

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Note 12 - Equity Incentive Plan (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	20 20		201 9
Expected Volatility		-		-
Expected Dividend Yield		-		-
Expected Term (in years)		-		-
Risk-Free Rate		-		-

Share-based Payment Arrangement, Option, Activity [Table Text Block]

2020 Option Activity
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000		$	6.07
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(23,000	)	$	5.56
Options O/S at end of Period		36,000		$	6.40		2.57		-
Options Exercisable At end of the Period		36,000		$	6.40		2.57		-

2019 Option Activity
Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000	$	6.07
Granted		-	$	-
Exercised		-	$	-				-
Options Expired or Forfeited		-	$	-
Options O/S at end of period		59,000	$	6.07		2.86		-
Options Exercisable at end of the period		59,000	$	6.07		2.86		-

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Note 13 - Income Taxes (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	November 30, 2020			November 30, 2019
Current expense (benefit)	$	25,168		$	4,392
Deferred expense (benefit)		(881,638	)		(353,626	)
Total income tax expense (benefit)	$	(856,470	)	$	(349,234	)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	November 30, 2020			November 30, 2019
Statutory federal income tax rate		21.0	%		21.0	%
PPP Loan Forgiveness		8.8			-
Permanent differences and other		(0.9	)		(1.3	)
		28.9	%		19.7	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	November 30
	2020			2019
Current deferred tax assets (liabilities):
Accrued expenses	$	161,000		$	100,000
Inventory capitalization		71,000			21,000
NOL and tax credit carryforward		1,695,000			1,182,000
Asset reserves		796,000			621,000
Total current deferred tax assets	$	2,723,000		$	1,924,000
Non-current deferred tax assets
Property, plant, and equipment	$	(55,000	)	$	(138,000	)
Total non-current deferred tax assets (liabilities)		(55,000	)		(138,000	)
Net deferred taxes	$	2,668,000		$	1,786,000

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Note 16 - Segment Information (Tables)

12 Months Ended

Nov. 30, 2020

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Twelve Months Ended November 30, 2020
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	13,085,000		$	6,993,000		$	2,331,000		$	22,409,000
Income (loss) from operations	$	(2,318,000	)	$	(1,295,000	)	$	(297,000	)	$	(3,910,000	)
Income (loss) before tax	$	(1,723,000	)	$	(1,058,000	)	$	(179,000	)	$	(2,960,000	)
Total Assets	$	12,785,000		$	3,310,000		$	2,708,000		$	18,803,000
Capital expenditures	$	499,000		$	146,000		$	48,000		$	693,000
Depreciation & Amortization	$	481,000		$	205,000		$	132,000		$	818,000

	Twelve Months Ended November 30, 2019
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	13,508,000		$	7,260,000	$	2,121,000		$	22,889,000
Income (loss) from operations	$	(1,599,000	)	$	208,000	$	(106,000	)	$	(1,497,000	)
Income (loss) before tax	$	(1,843,000	)	$	220,000	$	(146,000	)	$	(1,769,000	)
Total Assets	$	13,169,000		$	3,584,000	$	2,594,000		$	19,347,000
Capital expenditures	$	257,000		$	147,000	$	43,000		$	447,000
Depreciation & Amortization	$	503,000		$	372,000	$	129,000		$	1,004,000

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	2 Months Ended	3 Months Ended		12 Months Ended
	May 18, 2020	Feb. 28, 2021	Nov. 30, 2020	Nov. 30, 2020	Nov. 30, 2019	Feb. 29, 2020
Number of Operating Segments	3			3
Revenues, Total				$ 22,409,123	$ 22,889,173
Inventory Write-down				$ 556,303	79,265
Accounts Receivable, Threshold Period On International Sales (Day)				180 days
Overdue Trade Receivables Interest Rate Percent of Account Balances Per Month				1.50%
Operating Lease, Right-of-Use Asset			$ 27,879	$ 27,879
Operating Lease, Liability, Noncurrent			$ 18,342	18,342
Lease, Cost, Total				$ 23,121
Operating Lease, Weighted Average Remaining Lease Term (Month)			2 years 330 days	2 years 330 days
Operating Lease, Weighted Average Discount Rate, Percent			5.50%	5.50%
Effective Income Tax Rate Reconciliation, Debt Forgiveness, Paycheck Protection Program Under CARES Act				8.80%
Contract with Customer, Liability, Revenue Recognized				$ 89,000	$ 185,000
Research and Development Expense, Total				199,000	149,000
Advertising Expense				175,000	198,000
Operating Lease, Liability, Total			$ 27,879	27,879
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset						$ 34,316
Operating Lease, Liability, Total						$ 34,316
Product [Member]
Contract with Customer, Liability, Revenue Recognized				0	$ 16,000
Other Assets [Member]
Operating Lease, Right-of-Use Asset			27,879	27,879
Accrued Expenses [Member]
Operating Lease, Liability, Current			$ 9,537	$ 9,537
Maximum [Member]
Property, Plant and Equipment, Useful Life (Year)				40 years
Lessor, Capital Lease, Term of Contract (Month)				3 years
Lessee, Operating Lease, Term of Contract (Month)			5 years	5 years
Maximum [Member] | Assets Leased to Others [Member]
Property, Plant and Equipment, Useful Life (Year)				5 years
Minimum [Member]
Property, Plant and Equipment, Useful Life (Year)				3 years
Lessee, Operating Lease, Term of Contract (Month)			1 year	1 year
Minimum [Member] | Assets Leased to Others [Member]
Property, Plant and Equipment, Useful Life (Year)				3 years
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number Of Major Customers				1	1
Concentration Risk, Percentage				18.00%	21.00%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Major Customer [Member] | Maximum [Member]
Concentration Risk, Percentage				6.00%	10.00%
Estimated Costs To Complete Material Contract [Member]
Revenues, Total				$ 1,300,000
Estimated Costs On Uncompleted Contracts			$ 2,800,000	$ 2,800,000
Change in Accounting Method Accounted for as Change in Estimate [Member] | Forecast [Member]
Revenues, Total		$ 1,000,000
Inventory Valuation and Obsolescence [Member]
Inventory Write-down			$ 681,000
COVID 19 [Member]
Percentage of Workforce in Self-quarantine	17.00%
Percentage of Workforce Working Remote	75.00%

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Note 1 - Summary of Significant Accounting Policies - Components Related to Sales-type Leases (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Minimum lease receivable, current	$ 29,002	$ 162,425
Unearned interest income, current	(650)	(14,420)
Net investment in sales-type leases, current	28,352	148,005
Minimum lease receivable, long-term		5,851
Unearned interest income, long-term		(69)
Net investment in sales-type leases, long-term		$ 5,782

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Note 1 - Summary of Significant Accounting Policies - Future Minimum Lease Receipts (Details)	Nov. 30, 2020 USD ($)
2021	$ 29,002
Total	$ 29,002

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Note 1 - Summary of Significant Accounting Policies - Components of Operating Leases (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Operating lease right-of-use assets	$ 27,879
Long-term portion of operating lease liabilities	18,342
Total operating lease liabilities	27,879
Accrued Expenses [Member]
Current portion of operating lease liabilities	$ 9,537

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Note 1 - Summary of Significant Accounting Policies - Maturities of Operating Lease Liabilities (Details)	Nov. 30, 2020 USD ($)
2021	$ 10,847
2022	10,847
2023	6,911
2024	1,630
Total lease payments	30,236
Less imputed interest	(2,356)
Total operating lease liabilities	$ 27,879

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Note 1 - Summary of Significant Accounting Policies - Disaggregated Revenue From External Customer (Details) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Revenue	$ 22,409,000	$ 22,889,000
Farm Equipment [Member]
Revenue	10,149,000	10,435,000
Farm Equipment Service Parts [Member]
Revenue	2,519,000	2,638,000
Steel Cutting Tools and Inserts [Member]
Revenue	2,308,000	2,086,000
Modular Buildings [Member]
Revenue	6,517,000	6,460,000
Modular Buildings Lease Income [Member]
Revenue	318,000	674,000
Product and Service, Other [Member]
Revenue	598,000	596,000
Agricultural Products [Member]
Revenue	13,085,000	13,508,000
Agricultural Products [Member] | Farm Equipment [Member]
Revenue	10,149,000	10,435,000
Agricultural Products [Member] | Farm Equipment Service Parts [Member]
Revenue	2,519,000	2,638,000
Agricultural Products [Member] | Steel Cutting Tools and Inserts [Member]
Revenue
Agricultural Products [Member] | Modular Buildings [Member]
Revenue
Agricultural Products [Member] | Modular Buildings Lease Income [Member]
Revenue
Agricultural Products [Member] | Product and Service, Other [Member]
Revenue	417,000	435,000
Modular Buildings [Member]
Revenue	6,993,000	7,260,000
Modular Buildings [Member] | Farm Equipment [Member]
Revenue
Modular Buildings [Member] | Farm Equipment Service Parts [Member]
Revenue
Modular Buildings [Member] | Steel Cutting Tools and Inserts [Member]
Revenue
Modular Buildings [Member] | Modular Buildings [Member]
Revenue	6,517,000	6,460,000
Modular Buildings [Member] | Modular Buildings Lease Income [Member]
Revenue	318,000	674,000
Modular Buildings [Member] | Product and Service, Other [Member]
Revenue	158,000	126,000
Tools [Member]
Revenue	2,331,000	2,121,000
Tools [Member] | Farm Equipment [Member]
Revenue
Tools [Member] | Farm Equipment Service Parts [Member]
Revenue
Tools [Member] | Steel Cutting Tools and Inserts [Member]
Revenue	2,308,000	2,086,000
Tools [Member] | Modular Buildings [Member]
Revenue
Tools [Member] | Modular Buildings Lease Income [Member]
Revenue
Tools [Member] | Product and Service, Other [Member]
Revenue	$ 23,000	$ 35,000

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Note 1 - Summary of Significant Accounting Policies - Contract With Customers (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Receivables	$ 2,391,000	$ 1,680,000
Assets	56,000	727,000
Liabilities	$ 276,000	$ 89,000

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Note 1 - Summary of Significant Accounting Policies - Basic and Diluted Earnings Per Common Share (Details) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$ (2,103,486)	$ (1,419,586)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding (in shares)	4,393,887	4,277,375
Effect of dilutive stock options (in shares)
For diluted net income (loss) per share - weighted average common shares outstanding (in shares)	4,393,887	4,277,375
Net Income (Loss) per share - Basic:
Net Income (Loss) per share (in dollars per share)	$ (0.48)	$ (0.33)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share (in dollars per share)	$ (0.48)	$ (0.33)

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Note 2 - Allowance for Doubtful Accounts - Activity in the Allowance for Doubtful Accounts (Details) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Balance, beginning	$ 22,925	$ 25,100
Provision charged to expense	44,222	(1,602)
Less amounts charged-off	(15,972)	(573)
Balance, ending	$ 51,175	$ 22,925

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Note 3 - Inventories - Major Classes of Inventory (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Raw materials	$ 7,086,367	$ 7,156,001
Work in process	304,009	492,125
Finished goods	3,777,136	3,905,373
Total Gross Inventory	11,167,512	11,553,499
Less: Reserves	(3,405,112)	(2,774,992)
Net Inventory	$ 7,762,400	$ 8,778,507

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Note 4 - Contracts in Progress (Details Textual) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Construction Contractor, Receivable, Retainage, Total	$ 36,488	$ 0

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Note 4 - Contracts in Progress - Long-term Contracts (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Costs in Excess of Billings, Cost	$ 511,152	$ 3,805,906
Billings in Excess of Costs, Costs	9,697,061	629,501
Costs in Excess of Billings, Estimated Earnings	98,084	1,044,612
Billings in Excess of Costs, Estimated Earnings	579,747	155,790
Costs in Excess of Billings, Costs and Estimated Earnings	609,236	4,850,518
Billings in Excess of Costs, Costs and Estimated Earnings	10,276,808	785,291
Costs in Excess of Billings, Amounts Billed	(553,210)	(4,123,851)
Billings in Excess of Costs, Amounts Billed	(10,553,034)	(874,222)
Cost and Profit in Excess of Billings	56,026	726,667
Billings in Excess of Cost	$ (276,226)	$ (88,931)

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Note 5 - Property, Plant, and Equipment (Details Textual) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Depreciation, Depletion and Amortization, Total	$ 818,234	$ 1,003,541

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Note 5 - Property, Plant, and Equipment - Major Classes of Property, Plant, and Equipment (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Property, plant and equipment, gross	$ 19,261,995	$ 19,002,613
Less accumulated depreciation	(14,043,333)	(13,639,706)
Property, plant and equipment	5,218,662	5,362,907
Land [Member]
Property, plant and equipment, gross	220,503	220,503
Building and Building Improvements [Member]
Property, plant and equipment, gross	7,255,955	7,035,144
Construction in Progress [Member]
Property, plant and equipment, gross	31,571	82,366
Machinery and Equipment [Member]
Property, plant and equipment, gross	11,123,104	11,036,192
Vehicles [Member]
Property, plant and equipment, gross	510,955	507,575
Furniture and Fixtures [Member]
Property, plant and equipment, gross	$ 119,907	$ 120,833

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Note 6 - Assets Held for Lease (Details Textual)	12 Months Ended
	Nov. 30, 2020 USD ($)	Nov. 30, 2019 USD ($)
Lessor, Operating Lease, Payments to be Received, Total	$ 0
Sales [Member]
Operating Lease, Lease Income, Total	$ 318,000	$ 674,000
Other Nonoperating Income (Expense) [Member]
Operating Leases, Income Statement, Lease Revenue, Total		$ 2,500
Modular Buildings [Member] | Leased Buildings [Member]
Property Subject to or Available for Operating Lease, Number of Units	7	8

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Note 6 - Assets Held for Lease - Summary of Assets Held for Lease (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Modular Buildings	$ 5,218,662	$ 5,362,907
Modular Buildings [Member]
Modular Buildings		713,782
Modular Buildings [Member]
Modular Buildings	521,555
Assets Leased to Others [Member]
Modular Buildings	$ 521,555	$ 713,782

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Note 7 - Accrued Expenses - Major Components Of Accrued Expenses (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Salaries, wages, and commissions	$ 726,625	$ 555,201
Accrued warranty expense	291,454	203,185
Other	261,233	374,440
Total accrued liabilities, current	$ 1,279,312	$ 1,132,826

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Note 8 - Product Warranty (Details Textual)	12 Months Ended
	Nov. 30, 2019
Standard Product Warrant Term (Year)	1 year

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Note 8 - Product Warranty - Changes in Product Warranty Liability (Details) - USD ($)	12 Months Ended
	Nov. 30, 2019	Nov. 30, 2018
Balance, beginning	$ 203,185	$ 96,786
Settlements / adjustments	(157,501)	(279,992)
Warranties issued	245,770	386,391
Balance, ending	$ 291,454	$ 203,185

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Note 9 - Loan and Credit Agreements (Details Textual)							12 Months Ended
	Jan. 12, 2021 USD ($)	Jun. 24, 2020 USD ($)	Jun. 18, 2020 USD ($)	Apr. 20, 2020 USD ($)	Feb. 13, 2019 USD ($)	Sep. 28, 2017 USD ($)	Nov. 30, 2020 USD ($)	Nov. 30, 2019 USD ($)
Long-term Debt, Total							$ 2,808,129	$ 2,435,993
Proceeds from Paycheck Protection Program Under CARES Act				$ 1,242,900			1,692,900
Term Loan Due October 2037 [Member]
Long-term Debt, Total							$ 2,350,593	$ 2,435,993
Debt Instrument, Interest Rate, Stated Percentage							5.00%	5.00%
Debt Instrument, Periodic Payment, Total							$ 17,271	$ 17,271
EIDL Assistance Program, Loan One [Member]
Proceeds from Issuance of Debt			$ 150,000
EIDL Assistance Program, Loan Two [Member]
Debt Instrument, Periodic Payment, Total		$ 731
Proceeds from Issuance of Debt			$ 150,000
EIDL Assistance Program, Loan Three [Member]
Proceeds from Issuance of Debt		$ 150,000
Debt Instrument, Date of First Required Payment		Jun. 24, 2021
Economic Injury Distaster Loan Assistance Program [Member]
Debt Instrument, Interest Rate, Stated Percentage		3.75%
Debt Instrument, Term (Year)		30 years
EIDL Assistance Program, Loans One and Two [Member]
Debt Instrument, Date of First Required Payment			Jun. 18, 2021
Bank Midwest [Member]
Long-term Line of Credit, Total							2,359,530
Line of Credit Facility, Remaining Borrowing Capacity							$ 2,640,470
Line of Credit, Borrowing Base, Accounts Receivable							75.00%
Line of Credit, Borrowing Base, Inventory							50.00%
Debt Instrument, Covenant, Minimum Working Capital Ratio						1.75
Debt Instrument, Covenant, Minimum Working Capital						$ 5,100,000
Debt Instrument, Covenant, Maximum Debt to Worth Ratio						1
Debt Instrument, Covenant, Minimum Tangible Balance Sheet Equity, Percentage						40.00%
Debt Instrument, Covenant, Minimum Debt Service Coverage Ratio						1.25
Debt Instrument, Covenant, Minimum Debt Service Coverage Ratio, Tolerance						0.1
Debt Instrument, Covenant, Annual Purchases or Sales Price of Equipment Before Requiring Bank Approval						$ 100,000
Bank Midwest [Member] | Term Loan Due October 2037 [Member]
Long-term Debt, Total						2,600,000
Debt Instrument, Periodic Payment, Total							$ 17,271
Bank Midwest [Member] | Term Loan Due October 2037 [Member] | United States Department of Agriculture [Member]
Upfront Guarantee Fee							$ 62,400
Guarantee Fee, Annual Fee, Percentage							0.50%
Guarantee Requirement, Personally Guarantee, Shareholders Ownership Percentage							20.00%
Bank Midwest [Member] | Term Loan Due October 2037 [Member] | J. Ward McConnell Jr. [Member]
Personally Guaranteed, Percentage of Loan							38.00%
Personally Guaranteed, Fee, Percentage of Guaranteed Amount							2.00%
Bank Midwest [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity						$ 5,000,000
Debt Instrument, Basis Spread on Variable Rate					1.00%
Line of Credit Facility, Interest Rate During Period							4.25%
Debt Instrument, Interest Rate, Effective Percentage					4.25%
Bank Midwest [Member] | Revolving Credit Facility [Member] | Wall Street Journal Rate [Member]
Long-term Line of Credit, Total					$ 4,000,000
Debt Instrument, Basis Spread on Variable Rate							1.00%
Line of Credit Facility, Interest Rate During Period							4.25%
Bank Midwest [Member] | Term Loan Due October 2037 [Member]
Debt Instrument, Interest Rate, Stated Percentage							5.00%
Bank Midwest [Member] | Term Loan Due October 2037 [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Effective Percentage							4.15%
Bank Midwest [Member] | Term Loan Due October 2037 [Member] | Wall Street Journal Rate [Member]
Debt Instrument, Basis Spread on Variable Rate							0.75%
Bank Midwest, New Amended Covenant [Member] | Subsequent Event [Member]
Debt Instrument, Covenant, Minimum Working Capital Ratio	1.75
Debt Instrument, Covenant, Minimum Working Capital	$ 4,000,000

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Note 9 - Loan and Credit Agreements - Summary of Term Debt (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Long-term Debt, Total	$ 2,808,129	$ 2,435,993
Less current portion of term debt	94,979	85,401
Term debt, excluding current portion	2,713,150	2,350,592
Term Loan Due October 2037 [Member]
Long-term Debt, Total	2,350,593	2,435,993
SBA Loan One [Member]
Long-term Debt, Total	152,543
SBA Loan Two [Member]
Long-term Debt, Total	152,450
SBA Loan Three [Member]
Long-term Debt, Total	$ 152,543

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Note 9 - Loan and Credit Agreements - Summary of Term Debt (Details) (Parentheticals) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Term Loan Due October 2037 [Member]
Debt Instrument, Periodic Payment, Total	$ 17,271	$ 17,271
Debt Instrument, Interest Rate, Stated Percentage	5.00%	5.00%
SBA Loan One [Member]
Debt Instrument, Periodic Payment, Total	$ 731
Debt Instrument, Interest Rate, Stated Percentage	3.75%
SBA Loan Two [Member]
Debt Instrument, Periodic Payment, Total	$ 731
Debt Instrument, Interest Rate, Stated Percentage	3.75%
SBA Loan Three [Member]
Debt Instrument, Periodic Payment, Total	$ 731
Debt Instrument, Interest Rate, Stated Percentage	3.75%

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Note 9 - Loan and Credit Agreements - Summary of Minimum Maturities of Term Debt (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
2021	$ 94,979
2022	104,026
2023	109,297
2024	114,499
2025	120,644
2026 and thereafter	2,264,684
Long-term Debt, Total	$ 2,808,129	$ 2,435,993

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Note 10 - Related Party Transactions (Details Textual) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Revenue from Related Parties	$ 0	$ 0
Related Party Transaction, Expenses from Transactions with Related Party	19,232	26,506
Due to Related Parties, Total	1,464	1,517
Due from Related Parties, Total	$ 0	$ 0
J. Ward McConnell Jr. [Member]
Related Party, Ownership Percentage	20.00%

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Note 11 - Employee Benefit Plans (Details Textual) - USD ($)		12 Months Ended
	Jan. 01, 2021	Nov. 30, 2020	Nov. 30, 2019
Defined Contribution Plan, Employer Matching Contribution, Percent of Match		25.00%
Defined Contribution Plan Minimum Threshold Percentage of Employee Contributions		4.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent		1.00%
Defined Contribution Plan, Cost		$ 32,464	$ 36,253
Subsequent Event [Member]
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	50.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent	3.00%

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Note 12 - Equity Incentive Plan (Details Textual) - USD ($)		12 Months Ended
	Feb. 25, 2020	Nov. 30, 2020	Nov. 30, 2019	Jan. 27, 2011
Share-based Payment Arrangement, Expense		$ 247,645	$ 195,416
Share-based Payment Arrangement, Expense, Tax Benefit		$ 176,435	122,022
Share-based Payment Arrangement, Amount Capitalized			$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)		0
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)		16,255	9,556
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)		0	0
Share-based Payment Arrangement, Expense, Net of Shares Repurchased		$ 216,649	$ 176,093
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares (in shares)		0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Ending Balance (in shares)		0	0
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		$ 0
Proceeds from Stock Options Exercised		$ 0	$ 0
Non-qualified Stock Units to Non-employee Directors Annually or Upon Election [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)		1,000		1,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		3 years	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period (in shares)		74,685	32,600
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (in shares)		4,833	1,400
Restricted Stock [Member] | Employees, Directors, and Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		128,750	56,750
Restricted Stock [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		25,000	31,687
Restricted Stock [Member] | Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			9,000
The 2020 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)	500,000

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Note 12 - Equity Incentive Plan - Fair Value Assumptions (Details)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Expected Volatility
Expected Dividend Yield
Expected Term (Year)
Risk-Free Rate

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Note 12 - Equity Incentive Plan - Option Activity (Details) - $ / shares	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Options O/S at beginning of period (in shares)	59,000	59,000
Options O/S at beginning of period, Weighted Average Exercise Price (in dollars per share)	$ 6.07	$ 6.07
Granted, Shares (in shares)	0	0
Granted, Weighted Average Exercise Price (in dollars per share)
Exercised, Shares (in shares)
Exercised, Weighted Average Exercise Price (in dollars per share)
Options Expired or Forfeited, Shares (in shares)	(23,000)
Options Expired or Forfeited, Weighted Average Exercise Price (in dollars per share)	$ 5.56
Options O/S at end of Period (in shares)	36,000	59,000
Options O/S at end of period, Weighted Average Exercise Price (in dollars per share)	$ 6.40	$ 6.07
Options Outstanding at the End of the Period, Weighted Average Remaining Contractual Term (Year)	2 years 208 days	2 years 313 days
Options Exercisable At end of the Period (in shares)	36,000	59,000
Options Exercisable At end of the Period (in dollars per share)	$ 6.40	$ 6.07
Options Exercisable At end of the Period (Year)	2 years 208 days	2 years 313 days

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Note 13 - Income Taxes (Details Textual)	Nov. 30, 2020 USD ($)
Operating Loss Carryforwards, Total	$ 7,479,000
Tax Credit Carryforward, Amount	$ 109,000

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Note 13 - Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Current expense (benefit)	$ 25,168	$ 4,392
Deferred expense (benefit)	(881,638)	(353,626)
Total income tax expense (benefit)	$ (856,470)	$ (349,234)

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Note 13 - Income Taxes - Reconciliation of the Statutory Federal Income Tax Rate (Details)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Statutory federal income tax rate	21.00%	21.00%
PPP Loan Forgiveness	8.80%
Permanent differences and other	(0.90%)	(1.30%)
Total	28.90%	19.70%

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Note 13 - Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($)	Nov. 30, 2020	Nov. 30, 2019
Accrued expenses	$ 161,000	$ 100,000
Inventory capitalization	71,000	21,000
NOL and tax credit carryforward	1,695,000	1,182,000
Asset reserves	796,000	621,000
Total current deferred tax assets	2,723,000	1,924,000
Property, plant, and equipment	(55,000)	(138,000)
Total non-current deferred tax assets (liabilities)	(55,000)	(138,000)
Net deferred taxes	$ 2,668,000	$ 1,786,000

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Note 16 - Segment Information (Details Textual)	12 Months Ended
	Nov. 30, 2020
Number of Reportable Segments	3

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Note 16 - Segment Information - Segment Reporting Information (Details) - USD ($)	12 Months Ended
	Nov. 30, 2020	Nov. 30, 2019
Revenues, Total	$ 22,409,123	$ 22,889,173
Income (loss) from operations	(3,909,634)	(1,496,881)
Total Assets	18,803,013	19,346,938
Capital expenditures	693,414	447,025
Depreciation, Depletion and Amortization, Total	818,234	1,003,541
Operating Segments [Member]
Revenues, Total	22,409,000	22,889,000
Income (loss) from operations	(3,910,000)	(1,497,000)
Income (loss) before tax	(2,960,000)	(1,769,000)
Total Assets	18,803,000	19,347,000
Capital expenditures	693,000	447,000
Depreciation, Depletion and Amortization, Total	818,000	1,004,000
Operating Segments [Member] | Agricultural Products [Member]
Revenues, Total	13,085,000	13,508,000
Income (loss) from operations	(2,318,000)	(1,599,000)
Income (loss) before tax	(1,723,000)	(1,843,000)
Total Assets	12,785,000	13,169,000
Capital expenditures	499,000	257,000
Depreciation, Depletion and Amortization, Total	481,000	503,000
Operating Segments [Member] | Modular Buildings [Member]
Revenues, Total	6,993,000	7,260,000
Income (loss) from operations	(1,295,000)	208,000
Income (loss) before tax	(1,058,000)	220,000
Total Assets	3,310,000	3,584,000
Capital expenditures	146,000	147,000
Depreciation, Depletion and Amortization, Total	205,000	372,000
Operating Segments [Member] | Tools [Member]
Revenues, Total	2,331,000	2,121,000
Income (loss) from operations	(297,000)	(106,000)
Income (loss) before tax	(179,000)	(146,000)
Total Assets	2,708,000	2,594,000
Capital expenditures	48,000	43,000
Depreciation, Depletion and Amortization, Total	$ 132,000	$ 129,000