10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended February 28, 2021

or

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

Commission File No. 000-05131

ART’S-WAY MANUFACTURING CO., INC.

(Exact name of registrant as specified in its charter)

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

5556 Highway 9

Armstrong, Iowa 50514

(Address of principal executive offices) (Zip Code)

(712) 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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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

Large accelerated filer ☐	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.

☐

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

Number of common shares outstanding as of April 1, 2021: 4,513,402

Art’s-Way Manufacturing Co., Inc.

Index

Page No.

PART I – FINANCIAL INFORMATION        1

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets February 28, 2021 and November 30, 2020	1
	Condensed Consolidated Statements of Operations Three-month periods ended February 28, 2021 and February 29, 2020	2
	Condensed Consolidated Statements of Stockholders’ Equity Three-month periods ended February 28, 2021 and February 29, 2020	3
	Condensed Consolidated Statements of Cash Flows Three-month periods ended February 28, 2021 and February 29, 2020	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION 24

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	SIGNATURES	26

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Balance Sheets

(Unaudited)

	February 28, 2021			November 30, 2020
Assets
Current assets:
Cash	$	3,890		$	2,684
Accounts receivable-customers, net of allowance for doubtful accounts of $25,974 and $51,175 in 2021 and 2020, respectively		1,681,025			2,390,604
Inventories, net		7,902,244			7,762,400
Cost and profit in excess of billings		293,504			56,026
Net investment in sales-type leases, current		14,283			28,352
Other current assets		295,719			61,284
Total current assets		10,190,665			10,301,350
Property, plant, and equipment, net		5,222,809			5,218,662
Assets held for lease, net		521,555			521,555
Deferred income taxes		2,765,099			2,667,686
Other assets		81,642			93,760
Total assets	$	18,781,770		$	18,803,013
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,768,294		$	1,955,404
Customer deposits		1,377,421			198,225
Billings in excess of cost and profit		115,784			276,226
Income taxes payable		5,000			1,100
Accrued expenses		1,198,185			1,279,312
Line of credit		1,875,530			2,359,530
Current portion of long-term debt		91,336			94,979
Total current liabilities		6,431,550			6,164,776
Long-term liabilities
Long-term portion of operating lease liabilities		15,874			18,342
Long-term debt, excluding current portion		2,699,081			2,713,150
Total liabilities		9,146,505			8,896,268
Commitments and Contingencies (Notes 7, 9 and 10)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2021 and 2020; issued and outstanding 0 shares in 2021 and 2020.		-			-
Common stock – $0.01 par value. Authorized 9,500,000 shares; issued 4,563,504 and 4,470,004 at February 28, 2021 and November 30, 2020, respectively		45,635			44,700
Additional paid-in capital		3,557,362			3,496,243
Retained earnings		6,128,618			6,443,856
Treasury stock, at cost (40,667 in 2021 and 35,097 in 2020 shares)		(96,350	)		(78,054	)
Total stockholders’ equity		9,635,265			9,906,745
Total liabilities and stockholders’ equity	$	18,781,770		$	18,803,013

See accompanying notes to condensed consolidated financial statements.

1

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	February 28, 2021			February 29, 2020
Sales	$	5,400,572		$	5,025,924
Cost of goods sold		4,357,894			4,048,762
Gross profit		1,042,678			977,162
Expenses:
Engineering		121,391			109,852
Selling		472,974			455,684
General and administrative		816,836			881,322
Total expenses		1,411,201			1,446,858
(Loss) from operations		(368,523	)		(469,696	)
Other income (expense):
Interest expense		(58,684	)		(83,274	)
Other		27,657			9,199
Total other income (expense)		(31,027	)		(74,075	)
Income (loss) before income taxes		(399,550	)		(543,771	)
Income tax (benefit)		(84,312	)		(106,579	)
Net Income (Loss)		(315,238	)		(437,192	)

See accompanying notes to condensed consolidated financial statements.

2

ART’S-WAY MANUFACTURING CO., INC.

Consolidated Statements of Stockholders' Equity

Three Months Ended February 28, 2021 and February 29, 2020

(Unaudited)

	Common Stock				Additional					Treasury Stock
	Number of				paid-in		Retained			Number of
	shares		Par value		capital		earnings			shares		Amount			Total
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		53,750		537		37,043		-			10,517		(19,064	)		18,516
Net (loss)		-		-		-		(437,192	)		-		-			(437,192	)
Balance, February 29, 2020		4,374,837		43,748		3,287,130		8,110,150			29,359		(66,122	)		11,374,906

	Common Stock				Additional					Treasury Stock
	Number of				paid-in		Retained			Number of
	shares		Par value		capital		earnings			shares		Amount			Total
Balance, November 30, 2020		4,470,004	$	44,700	$	3,496,243	$	6,443,856			35,097	$	(78,054	)	$	9,906,745
Stock based compensation		93,500		935		61,119		-			5,570		(18,296	)		43,758
Net (loss)		-		-		-		(315,238	)		-		-			(315,238	)
Balance, February 28, 2021		4,563,504		45,635		3,557,362		6,128,618			40,667		(96,350	)		9,635,265

See accompanying notes to condensed consolidated financial statements.

3

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	February 28, 2021			February 29, 2020
Cash flows from operations:
Net (loss)	$	(315,238	)	$	(437,192	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Stock based compensation		62,054			37,580
Decrease in obsolete inventory reserves		(216,795	)		(118,974	)
Gain on disposal of property, plant, and equipment		(8,000	)		(1,251	)
Depreciation and amortization expense		161,107			227,456
Accrued interest on deferred debt payments		4,161			-
Change in allowance for doubtful accounts		25,201			10,215
Deferred income taxes		(97,413	)		(125,253	)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		684,378			(987,521	)
Inventories		76,951			(416,948	)
Net investment in sales-type leases		14,069			37,231
Other assets		(225,977	)		(191,484	)
Increase (decrease) in:
Accounts payable		(187,110	)		349,256
Contracts in progress, net		(397,920	)		559,252
Customer deposits		1,179,196			116,906
Income taxes payable		3,900			17,581
Accrued expenses		(81,262	)		(36,982	)
Net cash provided by (used in) operating activities		681,302			(960,128	)
Cash flows from investing activities:
Purchases of property, plant, and equipment		(163,927	)		(267,141	)
Net proceeds from sale of assets		8,000			1,251
Net cash used in investing activities		(155,927	)		(265,890	)
Cash flows from financing activities:
Net change in line of credit		(484,000	)		1,266,000
Repayment of term debt		(21,873	)		(20,776	)
Repurchases of common stock		(18,296	)		(19,064	)
Net cash provided by (used in) financing activities		(524,169	)		1,226,160
Net increase in cash		1,206			142
Cash at beginning of period		2,684			3,145
Cash at end of period	$	3,890		$	3,287
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	48,826		$	77,238
Income taxes		-			1,093

See accompanying notes to condensed consolidated financial statements.

4

Notes to Unaudited Condensed Consolidated Financial Statements

1) Description of the Company

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

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

The Company has organized its business into 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. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art’s-Way Manufacturing label and private labels. The Modular Buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses, and the Tools segment manufactures steel cutting tools and inserts.

2) Summary of Significant Accounting Policies

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and operating results for the interim periods. The financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020. The results of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending November 30, 2021.

Impact of COVID-19

The COVID-19 pandemic had little effect on the results of the first fiscal quarter of 2021. The Company did see signs of a strengthening economy in all three segments compared to fiscal 2020. The COVID-19 pandemic may continue to impact our business operations and financial operating results, and there is uncertainty in the nature and degree of its continued effects over time. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item 2 of this Form 10-Q) for further discussion.

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 Condensed Consolidated Statements of Cash Flows for the three months ended February 29, 2020, to identify the non-cash expense related to changes in the Company’s obsolete inventory reserve in the amount of $118,974. This change in classification does not affect previously reported cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

5

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the three months ended February 28, 2021. Actual results could differ from those estimates.

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.

6

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 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 9 “Product Warranty.”

7

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Guidance

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 twelve months or greater. 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 rental buildings. As a result of adoption, the Company recognized $34,316 as a right-of-use asset and $34,316 of lease liabilities on the balance sheet in the first quarter of fiscal 2020 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 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.

8

3) Disaggregation of Revenue

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

	Three Months Ended February 28, 2021
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,777,000	$	-	$	-	$	2,777,000
Farm equipment service parts		620,000		-		-		620,000
Steel cutting tools and inserts		-		-		606,000		606,000
Modular buildings		-		1,141,000		-		1,141,000
Modular building lease income		-		-		-		-
Other		103,000		150,000		4,000		257,000
	$	3,500,000	$	1,291,000	$	610,000	$	5,401,000

	Three Months Ended February 29, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,349,000	$	-	$	-	$	2,349,000
Farm equipment service parts		532,000		-		-		532,000
Steel cutting tools and inserts		-		-		609,000		609,000
Modular buildings		-		1,271,000		-		1,271,000
Modular building lease income		-		156,000		-		156,000
Other		72,000		30,000		7,000		109,000
	$	2,953,000	$	1,457,000	$	616,000	$	5,026,000

4) Contract Receivables, Contract Assets and Contract Liabilities

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

	February 28, 2021		November 30, 2020
Receivables	$	1,681,000	$	2,391,000
Assets		294,000		56,000
Liabilities		1,458,000		276,000

The amount of revenue recognized in the first three months of fiscal 2021 that was included in a contract liability at November 30, 2020 was approximately $265,000 compared to $89,000 in the same period of fiscal 2020. The decrease in contract receivables at February 28, 2021 is due to collection of receivables in the first quarter of fiscal 2021. Contract assets and contract liabilities increased during the three months ended February 28, 2021 as the Company completed progress on construction contracts in the modular buildings segment and received a large amount of deposits from an early order program.

The Company utilizes the practical expedient exception for these contracts and will report only on performance obligations greater than one year. As of February 28, 2021, the Company has no performance obligations with an original expected duration greater than one year.

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

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

9

Basic and diluted net income (loss) per share have been computed based on the following as of February 28, 2021 and February 29, 2020:

	For the Twelve Months Ended
	February 28, 2021			February 29, 2020
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(315,238	)	$	(437,192	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)

6) Inventory

Major classes of inventory are:

	February 28, 2021			November 30, 2020
Raw materials	$	7,647,204		$	7,086,367
Work in process		239,754			304,009
Finished goods		3,665,851			3,777,136
Total Gross Inventory	$	11,552,809		$	11,167,512
Less: Reserves		(3,650,565	)		(3,405,112	)
Net Inventory	$	7,902,244		$	7,762,400

7) Accrued Expenses

Major components of accrued expenses are:

	February 28, 2021		November 30, 2020
Salaries, wages, and commissions	$	683,180	$	726,625
Accrued warranty expense		295,581		291,454
Other		219,424		261,233
	$	1,198,185	$	1,279,312

8) Assets Held for Lease

Major components of assets held for lease are:

	February 28, 2021		November 30, 2020
Modular Buildings	$	521,555	$	521,555
Total assets held for lease	$	521,555	$	521,555

10

There were no rents recognized from assets held for lease included in sales on the Condensed Consolidated Statements of Operations during the three months ended February 28, 2021 compared to $155,508 for the three months ended February 29, 2020. 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.

There were no future minimum lease receipts from assets held for lease as of February 28, 2021.

9) Product Warranty

The Company offers warranties of various lengths to its customers depending on the specific product and terms of the customer purchase agreement. The average length of the warranty period is one year from the date of purchase. The Company’s warranties require it to repair or replace defective products during the warranty period at no cost to the customer. Product warranty is included in the price of the product and provides assurance that the product will function in accordance with agreed-upon specifications. It does not represent a separate performance obligation under ASC 606. The Company records a liability for estimated costs that may be incurred under its warranties. The costs are estimated based on historical experience and any specific warranty issues that have been identified. Although historical warranty costs have been within expectations, there can be no assurance that future warranty costs will not exceed historical amounts. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the balance as necessary. The accrued warranty balance is included in accrued expenses as shown in Note 7 “Accrued Expenses.” Changes in the Company’s product warranty liability for the three months ended February 28, 2021 and February 29, 2020 are as follows:

	For the Three Months Ended
	February 28, 2021			February 29, 2020
Balance, beginning	$	291,454		$	203,185
Settlements / adjustments		33,505			(28,576	)
Warranties issued		(29,378	)		64,624
Balance, ending	$	295,581		$	239,233

10) 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 February 28, 2021, the balance of the 2017 Line of Credit was $1,875,530 with $3,124,470 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 February 28, 2021, the 2017 Line of Credit was limited by the borrowing base calculation to a total borrowing of $4,969,155 ($3,093,625 remaining available). 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 February 11, 2021. The 2017 Line of Credit matures on March 30, 2022 and requires monthly interest-only payments.

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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 most 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 February 28, 2021, the funds on the 2019 Line of Credit remain undisbursed and are held by Bank Midwest. The Company expects to close the 2019 Line of Credit in the second quarter of fiscal 2021 as the Company’s bonding obligations are met.

The Term Loan is governed by the terms of a Promissory Note, dated September 28, 2017, entered into between the Company and Bank Midwest. Each of the 2017 and 2019 Lines of Credit is governed by the terms of a Promissory Note, dated February 11, 2021 and February 2, 2021, respectively, 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.

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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. 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 three months ended February 28, 2021. The Company was out of compliance with its debt service coverage ratio and the prior 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. The $4,000,000 working capital level serves as a trigger point for Bank Midwest and the Company to continue discussion of capital raising strategies to support additional capital injection. This new covenant is measured monthly. As of February 28, 2021, the Company was not in compliance with the working capital covenant. On March 22, 2021, Bank Midwest issued a letter to the Company allowing correction of the noncompliance by May 31, 2021. If the Company fails to get back in compliance, a meeting will be conducted to review the Company’s strategy to get back into compliance with the covenant. The Company will be considered in default if the plan is not accepted by Bank Midwest or the Company is unable to remedy in the time granted by Bank Midwest.

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 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, twelve months from the date of the EIDLs, in the amount of $731 per EIDL. The balance of principal and interest is payable 30 years from the date of the EIDL. The EIDLs are secured by a security interest on all of the Company’s assets. 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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On March 11, 2021, the American Rescue Plan Act of 2021 was enacted, which extends the first due date for repayment of EIDLs made in 2020 to 24 months from the date of the note.

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

	February 28, 2021		November 30, 2020
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,328,719	$	2,350,593
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2022, due June 24, 2050		153,838		152,450
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
Total term debt	$	2,790,417	$	2,808,129
Less current portion of term debt		91,336		94,979
Term debt, excluding current portion	$	2,699,081	$	2,713,150

A summary of the minimum maturities of term debt follows for the years ending February 28, 2021:

Year	Amount
2021	$	68,307
2022		98,275
2023		108,314
2024		113,474
2025		119,584
2026 and thereafter		2,282,463
	$	2,790,417

11) 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.

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12) Related Party Transactions

During the three months ended February 28, 2021 and February 29, 2020, 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 Loan 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 three months ended February 28, 2021, the Company recognized $4,669 of expense for transactions with related parties, compared to $4,588 for the three months ended February 29, 2020. As of February 28, 2021, accrued expenses contained a balance of $1,353 owed to a related party compared to $1,454 on February 29, 2020.

13) Sales-Type Leases

The Company accounts for leases of modular buildings to certain customers 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.

Modular buildings held for lease by the Modular Buildings segment are recorded at cost. Amortization of each modular building 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 components related to sales-type leases at February 28, 2021 and November 30, 2020 are as follows:

	February 28, 2021			November 30, 2020
Minimum lease receivable, current	$	14,502		$	29,002
Unearned interest income, current		(219	)		(650	)
Net investment in sales-type leases, current	$	14,283		$	28,352

There was no sales activity related to sales-type leases for the three months ended February 28, 2021 and February 29, 2020.

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

Year Ending November 30,	Amount
2021		14,502
Total	$	14,502

14) 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 Condensed Consolidated Balance Sheets while current lease liabilities are included accrued expenses. The long-term portion of operating lease liabilities are shown as long-term liabilities on the Condensed Consolidated Balance Sheets.

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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 Condensed Consolidated Balance Sheets at February 28, 2021 were as follows:

	February 28, 2021		November 30, 2020
Operating lease right-of-use assets	$	25,545		27,879
Current portion of operating lease liabilities	$	9,671		9,537
Long-term portion of operating lease liabilities		15,874		18,342
Total operating lease liabilities	$	25,545		27,879

The Company included $25,545 of operating lease right-of-use assets in other assets as of February 28, 2021 compared to $27,879 at November 30, 2020. The current portion of operating lease liabilities of $9,671 was included in accrued expenses and $15,874 of long-term operating lease liabilities was included in the long-term liability portion of the Condensed Consolidated Balance Sheets as of February 28, 2021, compared to $9,537 and $18,342, respectively, as of November 30, 2020. The Company recorded $6,080 of operating lease costs in the three months ended February 28, 2021, which included variable costs tied to usage, compared to $8,151 for the three months ended February 29, 2020. The Company’s operating leases carry a weighted average lease term of 32 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	8,135
2022	10,847
2023	6,911
2024	1,630
Total lease payments	27,524
Less imputed interest	(1,979	)
Total operating lease liabilities	25,545

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15) Equity Incentive Plan and Stock Based Compensation

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

The 2020 Plan permits the plan administrator to award nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance awards, and stock appreciation rights to employees (including officers), directors, and consultants. The Board has approved a director compensation policy pursuant to which 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 three months ended February 28, 2021, restricted stock awards of 88,500 shares were issued to various employees and directors,, which vest over three years from the date of issuance, and restricted stock awards of 5,000 shares were issued to directors as part of the director compensation policy, which vested immediately upon grant. In comparison, during the first three months of fiscal 2020, restricted stock awards of 48,750 shares were issued to various employees and directors, which vest over three years from the date of issuance, and restricted stock awards of 5,000 shares were issued to directors as part of the director compensation policy, which vested immediately upon grant.

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 three months ended February 28, 2021 or in the same respective period of fiscal 2020. The Company incurred a total of $62,054 and $37,580 of stock-based compensation expense for restricted stock awards during the three months ended February 28, 2021 and February 29, 2020, respectively. The Company repurchased 5,570 shares and 10,517 shares from employees in the form of treasury stock as consideration for payroll taxes paid on the employee’s behalf for the three months ended February 28, 2021 and February 29, 2020, respectively. Stock compensation net of treasury shares repurchased for the three months ended February 28, 2021 was $43,758 compared to $18,516, for the same period in fiscal 2020.

16) Disclosures About the Fair Value of Financial Instruments

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. At February 28, 2021 and November 30, 2020, 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.

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17) Segment Information

The Company has three reportable segments: Agricultural Products, Modular Buildings and Tools. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art’s-Way Manufacturing label and private labels. The Modular Buildings segment manufactures and installs modular buildings for various uses, commonly animal containment and research laboratories. 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, exclusive of nonrecurring gains and losses.

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

	Three Months Ended February 28, 2021
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,500,000		$	1,291,000		$	610,000		$	5,401,000
Income (loss) from operations	$	(198,000	)	$	(165,000	)	$	(6,000	)	$	(369,000	)
Income (loss) before tax	$	(212,000	)	$	(172,000	)	$	(16,000	)	$	(400,000	)
Total Assets	$	12,990,000		$	3,171,000		$	2,621,000		$	18,782,000
Capital expenditures	$	155,000		$	9,000		$	-		$	164,000
Depreciation & Amortization	$	99,000		$	29,000		$	33,000		$	161,000

	Three Months Ended February 29, 2020
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	2,953,000		$	1,457,000	$	616,000		$	5,026,000
Income (loss) from operations	$	(435,000	)	$	6,000	$	(41,000	)	$	(470,000	)
Income (loss) before tax	$	(498,000	)	$	6,000	$	(52,000	)	$	(544,000	)
Total Assets	$	13,870,000		$	4,373,000	$	2,757,000		$	21,000,000
Capital expenditures	$	241,000		$	26,000	$	-		$	267,000
Depreciation & Amortization	$	126,000		$	68,000	$	33,000		$	227,000

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

18) Subsequent Events

Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements, other than the enactment of the American Rescue Plan Act on March 11, 2021, which affects the first payment due date of the EIDLs as mentioned in Note 10.

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

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “report”) and the audited consolidated financial statements and related notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data,” as well as Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended November 30, 2020. Some of the statements in this report may be forward-looking statements that reflect our current view on future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. Many of these forward-looking statements are located in this report under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but they may appear in other sections as well. Forward-looking statements in this report generally relate to: (i) our warranty costs and order backlog; (ii) our beliefs regarding the sufficiency of working capital and cash flows; (iii) our expectation that we will continue to be able to renew or obtain financing on reasonable terms when necessary; (iv) the impact of recently issued accounting pronouncements; (v) our intentions and beliefs relating to our costs, business strategies, and future performance; (vi) our expected financial results; (vii) our expectations concerning our primary capital and cash flow needs; and (viii) our expectations regarding the impact of COVID-19 on our business condition and results of operations.

You should read this report thoroughly with the understanding that our actual results may differ materially from those set forth in the forward-looking statements for many reasons, including events beyond our control and assumptions that prove to be inaccurate or unfounded. We cannot provide any assurance with respect to our future performance or results. Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including but not limited to: (i) the impact of changing credit markets on our ability to continue to obtain financing on reasonable terms; (ii) our ability to repay current debt, continue to meet debt obligations and comply with financial covenants; (iii) the effect of general economic conditions, including consumer and governmental spending, on the demand for our products and the cost of our supplies and materials; (iv) the ongoing COVID-19 pandemic; (v) fluctuations in seasonal demand and our production cycle; and (vi) other factors described from time to time in our Securities and Exchange Commission filings. We do not intend to update the forward-looking statements contained in this report other than as required by law. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Critical Accounting Policies

Our critical accounting policies involving the more significant judgments and assumptions used in the preparation of our financial statements as of February 28, 2021 remain unchanged from November 30, 2020. Disclosure of these critical accounting policies is incorporated by reference from Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

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Results of Operations

Net Sales and Cost of Sales

Our consolidated corporate sales for the three-month period ended February 28, 2021 were $5,401,000 compared to $5,026,000 during the same period in fiscal 2020, an increase of $375,000, or 7.5%. The increase in consolidated revenue is due to increased sales in our Agricultural Products segment. Consolidated gross margin for the three-month period ended February 28, 2021 was 19.3% compared to 19.4% for the same period in fiscal 2020.

Our first quarter sales in our Agricultural Products segment were $3,500,000 compared to $2,953,000 for the same period in fiscal 2020, an increase of $547,000, or 18.5%. The increase in revenue is due to increased demand for our grinder mixers, beet equipment and service parts. We had a very successful early order program last fall producing the strongest backlog we have seen in the last five years, setting us up for a strong first half of the year. We attribute the increased backlog to the government payments farmers received last year coupled with recent years of conservative spending during times of agriculture downturn. According to the USDA's Coronavirus Food Assistance Program data, over $13 billion in financial assistance has been given to agricultural producers in the U.S. to date. Gross margin for the three-month period ended February 28, 2021 was 25.2% compared to 19.3% for the same period in fiscal 2020. The increase in gross margin is due to an efficient workforce in 2021 as the result of continuous improvement projects along with strong demand for higher margin products in 2021. We do expect some margin erosion in 2021 as commodity prices (mainly steel) have been steadily rising. We have increased prices to attempt to offset these increased costs.

Our first quarter sales in our Modular Buildings segment were $1,291,000 compared to $1,457,000 for the same period in fiscal 2020, a decrease of $166,000, or 11.4%. Our decrease in revenue is due largely to the progress on a large construction contract that neared completion at the end of the first quarter of fiscal 2021. Quoting activity for modular buildings increased greatly during the first quarter of fiscal 2021 compared to activity during fiscal 2020. We believe this bodes well for this business segment going forward. Gross margin for the three-month period ended February 28, 2021 was 2.9% compared to 17.6% for the same period in fiscal 2020. The decrease in gross profit is due to margin erosion on a large construction contract as our estimated costs to complete the contract increased with unforeseen project issues.

Our Tools segment had sales of $610,000 during the first quarter compared to $616,000 for the same period in fiscal 2020, a decrease of $6,000, or 1.0%. While the sales volume for the first quarter of fiscal 2021 is comparative to that of the first quarter of fiscal 2020, we believe the potential of this segment will grow as gas prices increase and as we are fully able to handle the volume of our OEM customer. Gross margin was 20.2% for the three-month period ended February 28, 2021 compared to 24.5% for the same period in fiscal 2020. The decreased gross margin is due to increased OEM work in the first quarter of fiscal 2021, which has a lower margin than our other product lines; however, we do not pay commissions on OEM work like we do the rest of our product offering so there is a trade off in selling expense.

Expenses

Our first quarter consolidated selling expenses were $473,000 compared to $456,000 for the same period in fiscal 2020. The increase in selling expenses is due to increased wages from the addition of a product manager in the Agricultural Products segment and increased commissions as a result of the 18.5% increase in sales from the same segment. Selling expenses as a percentage of sales were 8.8% for the three-month period ended February 28, 2021 compared to 9.1% for the same period in fiscal 2020.

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Consolidated engineering expenses were $121,000 for the three-month period ended February 28, 2021 compared to $110,000 from the same period in fiscal 2020. The increase is due to standard wage increases given in the later part of fiscal 2020 and research & development costs related to a landplane redesign. Engineering expenses as a percentage of sales were 2.2% for the three-month period ended February 28, 2021 compared to 2.2% for the same period in fiscal 2020.

Consolidated administrative expenses for the three-month period ended February 28, 2021 were $817,000 compared to $882,000 for the same period in fiscal 2020. The decrease in administrative expenses is due to recovery of bad debts, a decrease in expected bonus expense compared to fiscal 2020 and a reduction in implementation costs year on year from the Tools segment OEM customer. Administrative expenses as a percentage of sales were 15.1% for the three-month period ended February 28, 2021 compared to 17.5% for the same period in fiscal 2020.

Net Loss

Consolidated net loss was $(315,000) for the three-month period ended February 28, 2021 compared to net loss of $(437,000) for the same period in fiscal 2020. The decreased net loss is due to increased sales in our Agricultural Products segment and a decrease in our consolidated administrative costs. We are carrying strong backlogs into the second quarter in two of three segments and are expecting improved results for the second quarter of fiscal 2021.

Order Backlog

The consolidated order backlog net of discounts as of April 5, 2021 was $6,997,000 compared to $7,395,000 as of April 5, 2020. The agricultural products segment order backlog was $5,456,000 as of April 5, 2021 compared to $2,699,000 in fiscal 2020. While we did report an 18.5% increase in sales in fiscal Q1 of 2021 we are still carrying a backlog that is twice the size of last year’s backlog. The increase is due to increased farmer spending as a result of financial assistance received under coronavirus relief packages. The backlog for the modular buildings segment was $1,205,000 as of April 5, 2021, compared to $4,528,000 in fiscal 2020.  The decrease is due to progress made on a large contract that is not part of our typical year.  Excluding this project from backlog, our backlog would be $1,056,000 compared to $1,094,000 in fiscal 2020. The backlog for the tools segment was $336,000 as of April 5, 2021 compared to $168,000 in fiscal 2020. The increase in backlog for our tools segment is largely due to an OEM customer that has strengthened our business. Our order backlog is not necessarily indicative of future revenue to be generated from such orders due to the possibility of order cancellations and dealer discount arrangements we may enter into from time to time.

Potential Impact of COVID-19

While the COVID-19 pandemic had little effect on the first fiscal quarters of 2021 and 2020, we believe that there may be some lasting effects of the pandemic that can affect our operations going forward. 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 4% 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 March 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 including trying to organize mass vaccinations onsite. Workers in our Iowa facilities are eligible to receive the vaccine according to the state’s distribution plan and many employees have started to do so. A small portion of our Ohio facility’s workers have become eligible for the vaccine and have begun the vaccination process.

21

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. We had a very successful early order program to start 2021 which left us with backlogs higher than we have seen in the last five years. We attribute the large increase in backlog to stimulus payments that farmers received in 2020 along with conservative spending by farmers in 2020. This conservatism allowed farmers to retire debt in 2020 and increase spending in 2021.

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 were hesitant to travel during the pandemic and, as a result, we had some challenges completing site work in the third and fourth quarters of fiscal 2020. Because of COVID-19, many companies were also hesitant to enter into long-term contracts in fiscal 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 quoting activity has picked up significantly in 2021 for both agricultural and research modular buildings and we believe there will be a lot of opportunity for this segment in 2021 as companies start spending again.

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. At the start of 2021, economic conditions improved in all three segments. In turn, we have seen rises in commodity prices (steel and lumber) driven by the current high demand for these products. In addition, our supplier lead times have increased providing new challenges in fulfilling our large backlog. 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 continue to occur in 2021, we expect travel and trade show participation to pick up. We believe the worst of the economic hardship caused by COVID-19 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.

22

Liquidity and Capital Resources

Our primary source of funds for the three months ended February 28, 2021 was cash generated by operating activities, including the collection of receivables and customer deposits related to cash deposit discounts offered on our early order program. Our primary uses of cash were related to the retirement of debt and progress on construction projects for our modular buildings segment. We expect our primary capital needs for the remainder of fiscal 2021 to relate to operating costs, primarily production costs, fulfillment of customer deposits, and the retirement of debt.

We have a $5,000,000 revolving line of credit with Bank Midwest that, as of February 28, 2021, had an outstanding principal balance of $1,875,530. This line of credit is scheduled to mature on March 30, 2022.

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

Off Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The persons serving as our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period subject to this report. Based on this evaluation, the persons serving as our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of February 28, 2021. Our management has concluded that the consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Changes in Internal Control over Financial Reporting

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

23

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

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

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

The following table presents the information with respect to purchases made by us of our common stock during the first quarter of fiscal 2021:

	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
December 1 to December 31, 2020		-	$	-		N/A		N/A
January 1 to January 31, 2021		-	$	-		N/A		N/A
February 1 to February 28, 2021		5,570	$	3.28		N/A		N/A
Total		5,570	$	3.28

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

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Line of Credit Renewals

Effective February 2, 2021, we renewed our $4,000,000 revolving line of credit with Bank Midwest. The revolving 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. The updated Promissory Note with Bank Midwest is included as Exhibit 10.1 hereto and is incorporated herein by reference.

Effective February 11, 2021, we renewed our $5,000,000 revolving line of credit with Bank Midwest. The revolving line of credit matures on March 30, 2022 and requires monthly interest-only payments. The updated Promissory Note with Bank Midwest is included as Exhibit 10.2 hereto and is incorporated herein by reference.

24

Item 6. Exhibits.

Exhibit No.	Description
10.1	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated February 2, 2021 – incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ending November 30, 2020.
10.2	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated February 11, 2021 – filed herewith.
31.1	Certificate of Chief Executive Officer pursuant to 17 CFR 13a-14(a) – filed herewith.
31.2	Certificate of Chief Financial Officer pursuant to 17 CFR 13a-14(a) – filed herewith.
32.1	Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 - filed herewith.
32.2	Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 - filed herewith.
101	The following materials from this report, formatted in XBRL (Extensible Business Reporting Language) are filed herewith: (i) condensed consolidated balance sheets, (ii) condensed consolidated statement of operations, (iii) condensed consolidated statements of cash flows, and (iv) the notes to the condensed consolidated financial statements.

25

SIGNATURES

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

ART’S-WAY MANUFACTURING CO., INC.

Date: April 9, 2021	By:	/s/ David A. King
		David A. King
		President and Chief Executive Officer
Date: April 9, 2021	By:	/s/ Michael W. Woods
		Michael W. Woods
		Chief Financial Officer

26

EX-10.2

Exhibit 10.2

*0339+0000720+040010079777*

_{PROMISSORY NOTE}

Principal $5,000,000.00	Loan Date 02-02-2021	Maturity 03-30-2022	Loan No 040010079777	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.	Lender:	Bank Midwest
	5556 Highway 9		Armstrong Branch
	Armstrong, IA 50514-7566		PO Box 136
			500 6th Street
			Armstrong, IA 50514

Principal Amount: $5,000,000.00 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 Five Million & 00/100 Dollars ($5,000,000.00) 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 one payment of all outstanding principal plus all accrued unpaid interest on March 30, 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.

	PROMISSORY NOTE
Loan No: 040010079777	(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 Operating Line of Credit.

PRIOR NOTE. Renewal of Loan #40010054776.

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. 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		David King, CEO of Art's-Way Manufacturing Co.,
	Co., Inc.		Inc.

	PROMISSORY NOTE
Loan No: 040010079777	(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-508372 PR-102

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-Q of Art’s-Way Manufacturing Co., Inc.;

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

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

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

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

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

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

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

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

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

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

		ART’S-WAY MANUFACTURING CO., INC.
Date:	April 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-Q of Art’s-Way Manufacturing Co., Inc.;

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

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

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

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

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

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

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

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

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

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

		ART’S-WAY MANUFACTURING CO., INC.
Date:	April 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-Q of Art’s-Way Manufacturing Co., Inc. (the “Company”) for the fiscal quarter ended February 28, 2021, 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:	April 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-Q of Art’s-Way Manufacturing Co., Inc. (the “Company”) for the fiscal quarter ended February 28, 2021, 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:

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

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

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

XML

Document And Entity Information - shares	3 Months Ended
	Feb. 28, 2021	Apr. 01, 2021
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 Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		4,513,402
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Feb. 28, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common stock $.01 par value

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Current assets:
Cash	$ 3,890	$ 2,684
Accounts receivable-customers, net of allowance for doubtful accounts of $25,974 and $51,175 in 2021 and 2020, respectively	1,681,025	2,390,604
Inventories, net	7,902,244	7,762,400
Cost and profit in excess of billings	293,504	56,026
Net investment in sales-type leases, current	14,283	28,352
Other current assets	295,719	61,284
Total current assets	10,190,665	10,301,350
Property, plant, and equipment, net	5,222,809	5,218,662
Assets held for lease, net	521,555	521,555
Deferred income taxes	2,765,099	2,667,686
Other assets	81,642	93,760
Total assets	18,781,770	18,803,013
Current liabilities:
Accounts payable	1,768,294	1,955,404
Customer deposits	1,377,421	198,225
Billings in excess of cost and profit	115,784	276,226
Income taxes payable	5,000	1,100
Accrued expenses	1,198,185	1,279,312
Line of credit	1,875,530	2,359,530
Current portion of long-term debt	91,336	94,979
Total current liabilities	6,431,550	6,164,776
Long-term liabilities
Long-term portion of operating lease liabilities	15,874	18,342
Long-term debt, excluding current portion	2,699,081	2,713,150
Total liabilities	9,146,505	8,896,268
Commitments and Contingencies (Notes 7, 9 and 10)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2021 and 2020; issued and outstanding 0 shares in 2021 and 2020.
Common stock – $0.01 par value. Authorized 9,500,000 shares; issued 4,563,504 and 4,470,004 at February 28, 2021 and November 30, 2020, respectively	45,635	44,700
Additional paid-in capital	3,557,362	3,496,243
Retained earnings	6,128,618	6,443,856
Treasury stock, at cost (40,667 in 2021 and 35,097 in 2020 shares)	(96,350)	(78,054)
Total stockholders’ equity	9,635,265	9,906,745
Total liabilities and stockholders’ equity	$ 18,781,770	$ 18,803,013

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Allowance for doubtful accounts	$ 25,974	$ 51,175
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)	4,563,504	4,470,004
Treasury stock (in shares)	40,667	35,097

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Sales	$ 5,400,572	$ 5,025,924
Cost of goods sold	4,357,894	4,048,762
Gross profit	1,042,678	977,162
Expenses:
Engineering	121,391	109,852
Selling	472,974	455,684
General and administrative	816,836	881,322
Total expenses	1,411,201	1,446,858
(Loss) from operations	(368,523)	(469,696)
Other income (expense):
Interest expense	(58,684)	(83,274)
Other	27,657	9,199
Total other income (expense)	(31,027)	(74,075)
Income (loss) before income taxes	(399,550)	(543,771)
Income tax (benefit)	(84,312)	(106,579)
Net Income (Loss)	$ (315,238)	$ (437,192)

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Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
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)	53,750			10,517
Stock based compensation	$ 537	37,043		$ (19,064)	18,516
Net (loss)			(437,192)		(437,192)
Balance (in shares) at Feb. 29, 2020	4,374,837			29,359
Balance at Feb. 29, 2020	$ 43,748	3,287,130	8,110,150	$ (66,122)	11,374,906
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
Stock based compensation (in shares)	93,500			5,570
Stock based compensation	$ 935	61,119		$ (18,296)	43,758
Net (loss)			(315,238)		(315,238)
Balance (in shares) at Feb. 28, 2021	4,563,504			40,667
Balance at Feb. 28, 2021	$ 45,635	$ 3,557,362	$ 6,128,618	$ (96,350)	$ 9,635,265

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Cash flows from operations:
Net (loss)	$ (315,238)	$ (437,192)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Stock based compensation	62,054	37,580
Decrease in obsolete inventory reserves	(216,795)	(118,974)
Gain on disposal of property, plant, and equipment	(8,000)	(1,251)
Depreciation and amortization expense	161,107	227,456
Accrued interest on deferred debt payments	4,161
Change in allowance for doubtful accounts	25,201	10,215
Deferred income taxes	(97,413)	(125,253)
Changes in assets and liabilities:
Accounts receivable	684,378	(987,521)
Inventories	76,951	(416,948)
Net investment in sales-type leases	14,069	37,231
Other assets	(225,977)	(191,484)
Accounts payable	(187,110)	349,256
Contracts in progress, net	(397,920)	559,252
Customer deposits	1,179,196	116,906
Income taxes payable	3,900	17,581
Accrued expenses	(81,262)	(36,982)
Net cash provided by (used in) operating activities	681,302	(960,128)
Cash flows from investing activities:
Purchases of property, plant, and equipment	(163,927)	(267,141)
Net proceeds from sale of assets	8,000	1,251
Net cash used in investing activities	(155,927)	(265,890)
Cash flows from financing activities:
Net change in line of credit	484,000	(1,266,000)
Repayment of term debt	(21,873)	(20,776)
Repurchases of common stock	(18,296)	(19,064)
Net cash provided by (used in) financing activities	(524,169)	1,226,160
Net increase in cash	1,206	142
Cash at beginning of period	2,684	3,145
Cash at end of period	3,890	3,287
Supplemental disclosures of cash flow information:
Interest	48,826	77,238
Income taxes		$ 1,093

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Note 1 - Description of the Company

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Nature of Operations [Text Block]

1 ) Description of the Company

Unless otherwise specified, as used in this Quarterly Report on Form

10

-Q, the terms “we,” “us,” “our,” “Art's-Way,” and the “Company” refer to Art's-Way Manufacturing Co., Inc., a Delaware corporation headquartered in Armstrong, Iowa, and its wholly-owned subsidiaries.

The Company began operations as a farm equipment manufacturer in

1956.

Since that time, it has become a major worldwide manufacturer of agricultural equipment. Its principal manufacturing plant is located in Armstrong, Iowa.

The Company has organized its business into

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. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art's-Way Manufacturing label and private labels. The Modular Buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses, and the Tools segment manufactures steel cutting tools and inserts.

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Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2 ) Summary of Significant Accounting Policies

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company's financial position and operating results for the interim periods. The financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form

10

-K for the fiscal year ended

November 30, 2020.

The results of operations for the

three

months ended

February 28, 2021

are

not

necessarily indicative of the results to be expected for the fiscal year ending

November 30, 2021.

Impact of COVID-

19

The COVID-

19

pandemic had little effect on the results of the

first

fiscal quarter of

2021.

The Company did see signs of a strengthening economy in all

three

segments compared to fiscal

2020.

The COVID-

19

pandemic

may

continue to impact our business operations and financial operating results, and there is uncertainty in the nature and degree of its continued effects over time. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item

2

of this Form

10

-Q) for further discussion.

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 Condensed Consolidated Statements of Cash Flows for the

three

months ended

February

29,

2020,

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

$118,974.

This change in classification does

not

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

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the

three

months ended

February 28, 2021.

Actual results could differ from those estimates.

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.

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 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

9

“Product Warranty.”

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Guidance

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

twelve

months or greater. 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 rental buildings. As a result of adoption, the Company recognized

$34,316

as a right-of-use asset and

$34,316

of lease liabilities on the balance sheet in the

first

quarter of fiscal

2020

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

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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Note 3 - Disaggregation of Revenue

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3 ) Disaggregation of Revenue

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

	Three Months Ended February 28, 2021
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,777,000	$	-	$	-	$	2,777,000
Farm equipment service parts		620,000		-		-		620,000
Steel cutting tools and inserts		-		-		606,000		606,000
Modular buildings		-		1,141,000		-		1,141,000
Modular building lease income		-		-		-		-
Other		103,000		150,000		4,000		257,000
	$	3,500,000	$	1,291,000	$	610,000	$	5,401,000

	Three Months Ended February 29, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,349,000	$	-	$	-	$	2,349,000
Farm equipment service parts		532,000		-		-		532,000
Steel cutting tools and inserts		-		-		609,000		609,000
Modular buildings		-		1,271,000		-		1,271,000
Modular building lease income		-		156,000		-		156,000
Other		72,000		30,000		7,000		109,000
	$	2,953,000	$	1,457,000	$	616,000	$	5,026,000

XML

Note 4 - Contract Receivables, Contract Assets and Contract Liabilities

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Contract Receivable, Contract Assets, and Contract Liabilities [Text Block]

4 ) Contract Receivables, Contract Assets and Contract Liabilities

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

	February 28, 2021		November 30, 2020
Receivables	$	1,681,000	$	2,391,000
Assets		294,000		56,000
Liabilities		1,458,000		276,000

The amount of revenue recognized in the

first

three

months of fiscal

2021

that was included in a contract liability at

November 30, 2020

was approximately

$265,000

compared to

$89,000

in the same period of fiscal

2020.

The decrease in contract receivables at

February 28, 2021

is due to collection of receivables in the

first

quarter of fiscal

2021.

Contract assets and contract liabilities increased during the

three

months ended

February 28, 2021

as the Company completed progress on construction contracts in the modular buildings segment and received a large amount of deposits from an early order program.

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

one

year. As of

February 28, 2021,

the Company has

no

performance obligations with an original expected duration greater than

one

year.

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Note 5 - Net Income (Loss) Per Share of Common Stock

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

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

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

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

February 28, 2021

and

February

29,

2020:

	For the Twelve Months Ended
	February 28, 2021			February 29, 2020
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(315,238	)	$	(437,192	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)

XML

Note 6 - Inventory

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Inventory Disclosure [Text Block]

6 ) Inventory

Major classes of inventory are:

	February 28, 2021			November 30, 2020
Raw materials	$	7,647,204		$	7,086,367
Work in process		239,754			304,009
Finished goods		3,665,851			3,777,136
Total Gross Inventory	$	11,552,809		$	11,167,512
Less: Reserves		(3,650,565	)		(3,405,112	)
Net Inventory	$	7,902,244		$	7,762,400

XML

Note 7 - Accrued Expenses

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

7 ) Accrued Expenses

Major components of accrued expenses are:

	February 28, 2021		November 30, 2020
Salaries, wages, and commissions	$	683,180	$	726,625
Accrued warranty expense		295,581		291,454
Other		219,424		261,233
	$	1,198,185	$	1,279,312

XML

Note 8 - Assets Held for Lease

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

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

8 ) Assets Held for Lease

Major components of assets held for lease are:

	February 28, 2021		November 30, 2020
Modular Buildings	$	521,555	$	521,555
Total assets held for lease	$	521,555	$	521,555

There were

no

rents recognized from assets held for lease included in sales on the Condensed Consolidated Statements of Operations during the

three

months ended

February 28, 2021

compared to

$155,508

for the

three

months ended

February

29,

2020.

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.

There were

no

future minimum lease receipts from assets held for lease as of

February 28, 2021.

XML

Note 9 - Product Warranty

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

9 ) Product Warranty

The Company offers warranties of various lengths to its customers depending on the specific product and terms of the customer purchase agreement. The average length of the warranty period is

one

year from the date of purchase. The Company's warranties require it to repair or replace defective products during the warranty period at

no

cost to the customer. Product warranty is included in the price of the product and provides assurance that the product will function in accordance with agreed-upon specifications. It does

not

represent a separate performance obligation under ASC

606.

The Company records a liability for estimated costs that

may

be incurred under its warranties. The costs are estimated based on historical experience and any specific warranty issues that have been identified. Although historical warranty costs have been within expectations, there can be

no

assurance that future warranty costs will

not

exceed historical amounts. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the balance as necessary. The accrued warranty balance is included in accrued expenses as shown in Note

7

“Accrued Expenses.” Changes in the Company's product warranty liability for the

three

months ended

February 28, 2021

and

February

29,

2020

are as follows:

	For the Three Months Ended
	February 28, 2021			February 29, 2020
Balance, beginning	$	291,454		$	203,185
Settlements / adjustments		33,505			(28,576	)
Warranties issued		(29,378	)		64,624
Balance, ending	$	295,581		$	239,233

XML

Note 10 - Loan and Credit Agreements

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

10 ) 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

February 28, 2021,

the balance of the

2017

Line of Credit was

$1,875,530

with

$3,124,470

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

February 28, 2021,

the

2017

Line of Credit was limited by the borrowing base calculation to a total borrowing of

$4,969,155

(

$3,093,625

remaining available). 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

February 11, 2021.

The

2017

Line of Credit matures on

March 30, 2022

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 most 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

February 28, 2021,

the funds on the

2019

Line of Credit remain undisbursed and are held by Bank Midwest. The Company expects to close the

2019

Line of Credit in the

second

quarter of fiscal

2021

as the Company's bonding obligations are met.

The Term Loan is governed by the terms of a Promissory Note, dated

September 28, 2017,

entered into between the Company and Bank Midwest. Each of the

2017

and

2019

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

February 11, 2021

and

February 2, 2021,

respectively, 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.

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

three

months ended

February 28, 2021.

The Company was out of compliance with its debt service coverage ratio and the prior 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.

The

$4,000,000

working capital level serves as a trigger point for Bank Midwest and the Company to continue discussion of capital raising strategies to support additional capital injection. This new covenant is measured monthly. As of

February 28, 2021,

the Company was

not

in compliance with the working capital covenant. On

March 22, 2021,

Bank Midwest issued a letter to the Company allowing correction of the noncompliance by

May 31, 2021.

If the Company fails to get back in compliance, a meeting will be conducted to review the Company's strategy to get back into compliance with the covenant. The Company will be considered in default if the plan is

not

accepted by Bank Midwest or the Company is unable to remedy in the time granted by Bank Midwest.

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 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,

twelve

months from the date of the EIDLs, in the amount of

$731

per EIDL. The balance of principal and interest is payable

30

years from the date of the EIDL. The EIDLs are secured by a security interest on all of the Company's assets. 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.

On

March 11, 2021,

the American Rescue Plan Act of

2021

was enacted, which extends the

first

due date for repayment of EIDLs made in

2020

to

24

months from the date of the note.

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

	February 28, 2021		November 30, 2020
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,328,719	$	2,350,593
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2022, due June 24, 2050		153,838		152,450
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
Total term debt	$	2,790,417	$	2,808,129
Less current portion of term debt		91,336		94,979
Term debt, excluding current portion	$	2,699,081	$	2,713,150

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

February 28, 2021:

Year	Amount
2021	$	68,307
2022		98,275
2023		108,314
2024		113,474
2025		119,584
2026 and thereafter		2,282,463
	$	2,790,417

XML

Note 11 - Income Taxes

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11 ) 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.

XML

Note 12 - Related Party Transactions

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

12 ) Related Party Transactions

During the

three

months ended

February 28, 2021

and

February

29,

2020,

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 Loan 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

three

months ended

February 28, 2021,

the Company recognized

$4,669

of expense for transactions with related parties, compared to

$4,588

for the

three

months ended

February

29,

2020.

As of

February 28, 2021,

accrued expenses contained a balance of

$1,353

owed to a related party compared to

$1,454

on

February

29,

2020.

XML

Note 13 - Sales-type Leases

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Lessor, Sales-type Leases [Text Block]

13 ) Sales-Type Leases

The Company accounts for leases of modular buildings to certain customers 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.

Modular buildings held for lease by the Modular Buildings segment are recorded at cost. Amortization of each modular building 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 components related to sales-type leases at

February 28, 2021

and

November 30, 2020

are as follows:

	February 28, 2021			November 30, 2020
Minimum lease receivable, current	$	14,502		$	29,002
Unearned interest income, current		(219	)		(650	)
Net investment in sales-type leases, current	$	14,283		$	28,352

There was

no

sales activity related to sales-type leases for the

three

months ended

February 28, 2021

and

February

29,

2020.

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

Year Ending November 30,	Amount
2021		14,502
Total	$	14,502

XML

Note 14 - Operating Leases

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

14 ) 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 Condensed Consolidated Balance Sheets while current lease liabilities are included accrued expenses. The long-term portion of operating lease liabilities are shown as long-term liabilities on the Condensed 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 Condensed Consolidated Balance Sheets at

February 28, 2021

were as follows:

	February 28, 2021		November 30, 2020
Operating lease right-of-use assets	$	25,545		27,879
Current portion of operating lease liabilities	$	9,671		9,537
Long-term portion of operating lease liabilities		15,874		18,342
Total operating lease liabilities	$	25,545		27,879

The Company included

$25,545

of operating lease right-of-use assets in other assets as of

February 28, 2021

compared to

$27,879

at

November 30, 2020.

The current portion of operating lease liabilities of

$9,671

was included in accrued expenses and

$15,874

of long-term operating lease liabilities was included in the long-term liability portion of the Condensed Consolidated Balance Sheets as of

February 28, 2021,

compared to

$9,537

and

$18,342,

respectively, as of

November 30, 2020.

The Company recorded

$6,080

of operating lease costs in the

three

months ended

February 28, 2021,

which included variable costs tied to usage, compared to

$8,151

for the

three

months ended

February

29,

2020.

The Company's operating leases carry a weighted average lease term of

32

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	8,135
2022	10,847
2023	6,911
2024	1,630
Total lease payments	27,524
Less imputed interest	(1,979	)
Total operating lease liabilities	25,545

XML

Note 15 - Equity Incentive Plan and Stock Based Compensation

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

15 ) Equity Incentive Plan and Stock Based Compensation

On

February 25, 2020,

the Board of Directors of the Company (the “Board”) authorized and approved the Art's-Way Manufacturing Co., Inc.

2020

Equity Incentive Plan (the

“2020

Plan”). The

2020

Plan was approved by the stockholders on

April 30, 2020.

The

2020

Plan replaced the Art's-Way Manufacturing Co., Inc.

2011

Equity Incentive Plan (the

“2011

Plan”) and added an additional

500,000

shares to the number of shares reserved for issuance pursuant to equity awards.

No

further awards will be made under the

2011

Plan or other prior plans. Awards to directors and executive officers under the

2020

Plan are governed by the forms of agreement approved by the Board of Directors. Stock options or other awards granted prior to

February 25, 2020

are governed by the applicable prior plan and the forms of agreement adopted thereunder.

The

2020

Plan permits the plan administrator to award nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance awards, and stock appreciation rights to employees (including officers), directors, and consultants. The Board has approved a director compensation policy pursuant to which 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

three

months ended

February 28, 2021,

restricted stock awards of

88,500

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

three

years from the date of issuance, and restricted stock awards of

5,000

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

first

three

months of fiscal

2020,

restricted stock awards of

48,750

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

three

years from the date of issuance, and restricted stock awards of

5,000

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

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

three

months ended

February 28, 2021

or in the same respective period of fiscal

2020.

The Company incurred a total of

$62,054

and

$37,580

of stock-based compensation expense for restricted stock awards during the

three

months ended

February 28, 2021

and

February

29,

2020,

respectively. The Company repurchased

5,570

shares and

10,517

shares from employees in the form of treasury stock as consideration for payroll taxes paid on the employee's behalf for the

three

months ended

February 28, 2021

and

February

29,

2020,

respectively. Stock compensation net of treasury shares repurchased for the

three

months ended

February 28, 2021

was

$43,758

compared to

$18,516,

for the same period in fiscal

2020.

XML

Note 16 - Disclosures About the Fair Value of Financial Instruments

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

16 ) Disclosures About the Fair Value of Financial Instruments

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. At

February 28, 2021

and

November 30, 2020,

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 17 - Segment Information

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

17 ) Segment Information

The Company has

three

reportable segments: Agricultural Products, Modular Buildings and Tools. The Agricultural Products segment manufactures and sells farm equipment and related replacement parts under the Art's-Way Manufacturing label and private labels. The Modular Buildings segment manufactures and installs modular buildings for various uses, commonly animal containment and research laboratories. 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, exclusive of nonrecurring gains and losses.

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

	Three Months Ended February 28, 2021
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,500,000		$	1,291,000		$	610,000		$	5,401,000
Income (loss) from operations	$	(198,000	)	$	(165,000	)	$	(6,000	)	$	(369,000	)
Income (loss) before tax	$	(212,000	)	$	(172,000	)	$	(16,000	)	$	(400,000	)
Total Assets	$	12,990,000		$	3,171,000		$	2,621,000		$	18,782,000
Capital expenditures	$	155,000		$	9,000		$	-		$	164,000
Depreciation & Amortization	$	99,000		$	29,000		$	33,000		$	161,000

	Three Months Ended February 29, 2020
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	2,953,000		$	1,457,000	$	616,000		$	5,026,000
Income (loss) from operations	$	(435,000	)	$	6,000	$	(41,000	)	$	(470,000	)
Income (loss) before tax	$	(498,000	)	$	6,000	$	(52,000	)	$	(544,000	)
Total Assets	$	13,870,000		$	4,373,000	$	2,757,000		$	21,000,000
Capital expenditures	$	241,000		$	26,000	$	-		$	267,000
Depreciation & Amortization	$	126,000		$	68,000	$	33,000		$	227,000

*The consolidated total in the tables is a sum of segment figures and

may

not

tie to actual figures in the condensed consolidated financial statements due to rounding.

XML

Note 18 - Subsequent Events

3 Months Ended

Feb. 28, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

18 ) Subsequent Events

Management evaluated all other activity of the Company and concluded that

no

subsequent events have occurred that would require recognition in the condensed consolidated financial statements, other than the enactment of the American Rescue Plan Act on

March 11, 2021,

which affects the

first

payment due date of the EIDLs as mentioned in Note

10.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Feb. 28, 2021

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company's financial position and operating results for the interim periods. The financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form

10

-K for the fiscal year ended

November 30, 2020.

The results of operations for the

three

months ended

February 28, 2021

are

not

necessarily indicative of the results to be expected for the fiscal year ending

November 30, 2021.

Effect of COVID-19 Pandemic [Policy Text Block]

Impact of COVID-

19

The COVID-

19

pandemic had little effect on the results of the

first

fiscal quarter of

2021.

The Company did see signs of a strengthening economy in all

three

segments compared to fiscal

2020.

The COVID-

19

pandemic

may

continue to impact our business operations and financial operating results, and there is uncertainty in the nature and degree of its continued effects over time. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item

2

of this Form

10

-Q) for further discussion.

Reclassification, Comparability Adjustment [Policy Text Block]

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 Condensed Consolidated Statements of Cash Flows for the

three

months ended

February

29,

2020,

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

$118,974.

This change in classification does

not

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

Change In Accounting Estimate [Policy Text Block]

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the

three

months ended

February 28, 2021.

Actual results could differ from those estimates.

Revenue from Contract with Customer [Policy Text Block]

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.

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 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

9

“Product Warranty.”

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Guidance

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

twelve

months or greater. 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 rental buildings. As a result of adoption, the Company recognized

$34,316

as a right-of-use asset and

$34,316

of lease liabilities on the balance sheet in the

first

quarter of fiscal

2020

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

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 3 - Disaggregation of Revenue (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended February 28, 2021
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,777,000	$	-	$	-	$	2,777,000
Farm equipment service parts		620,000		-		-		620,000
Steel cutting tools and inserts		-		-		606,000		606,000
Modular buildings		-		1,141,000		-		1,141,000
Modular building lease income		-		-		-		-
Other		103,000		150,000		4,000		257,000
	$	3,500,000	$	1,291,000	$	610,000	$	5,401,000

	Three Months Ended February 29, 2020
	Agricultural		Modular Buildings		Tools		Total
Farm equipment	$	2,349,000	$	-	$	-	$	2,349,000
Farm equipment service parts		532,000		-		-		532,000
Steel cutting tools and inserts		-		-		609,000		609,000
Modular buildings		-		1,271,000		-		1,271,000
Modular building lease income		-		156,000		-		156,000
Other		72,000		30,000		7,000		109,000
	$	2,953,000	$	1,457,000	$	616,000	$	5,026,000

XML

Note 4 - Contract Receivables, Contract Assets and Contract Liabilities (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

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

	February 28, 2021		November 30, 2020
Receivables	$	1,681,000	$	2,391,000
Assets		294,000		56,000
Liabilities		1,458,000		276,000

XML

Note 5 - Net Income (Loss) Per Share of Common Stock (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

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

	For the Twelve Months Ended
	February 28, 2021			February 29, 2020
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	(315,238	)	$	(437,192	)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Effect of dilutive stock options		-			-
For diluted net income (loss) per share - weighted average common shares outstanding		4,475,279			4,315,481
Net Income (Loss) per share - Basic:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share	$	(0.07	)	$	(0.10	)

XML

Note 6 - Inventory (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	February 28, 2021			November 30, 2020
Raw materials	$	7,647,204		$	7,086,367
Work in process		239,754			304,009
Finished goods		3,665,851			3,777,136
Total Gross Inventory	$	11,552,809		$	11,167,512
Less: Reserves		(3,650,565	)		(3,405,112	)
Net Inventory	$	7,902,244		$	7,762,400

XML

Note 7 - Accrued Expenses (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	February 28, 2021		November 30, 2020
Salaries, wages, and commissions	$	683,180	$	726,625
Accrued warranty expense		295,581		291,454
Other		219,424		261,233
	$	1,198,185	$	1,279,312

XML

Note 8 - Assets Held for Lease (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

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

	February 28, 2021		November 30, 2020
Modular Buildings	$	521,555	$	521,555
Total assets held for lease	$	521,555	$	521,555

XML

Note 9 - Product Warranty (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	For the Three Months Ended
	February 28, 2021			February 29, 2020
Balance, beginning	$	291,454		$	203,185
Settlements / adjustments		33,505			(28,576	)
Warranties issued		(29,378	)		64,624
Balance, ending	$	295,581		$	239,233

XML

Note 10 - Loan and Credit Agreements (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Schedule of Debt [Table Text Block]

	February 28, 2021		November 30, 2020
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,328,719	$	2,350,593
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 24, 2022, due June 24, 2050		153,838		152,450
U.S. Small Business Administration loan payable in monthly installments of $731 including interest at 3.75% beginning June 18, 2022, due June 18, 2050		153,930		152,543
Total term debt	$	2,790,417	$	2,808,129
Less current portion of term debt		91,336		94,979
Term debt, excluding current portion	$	2,699,081	$	2,713,150

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

Year	Amount
2021	$	68,307
2022		98,275
2023		108,314
2024		113,474
2025		119,584
2026 and thereafter		2,282,463
	$	2,790,417

XML

Note 13 - Sales-type Leases (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

Schedule of Sales-type Leases [Table Text Block]

	February 28, 2021			November 30, 2020
Minimum lease receivable, current	$	14,502		$	29,002
Unearned interest income, current		(219	)		(650	)
Net investment in sales-type leases, current	$	14,283		$	28,352

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

Year Ending November 30,	Amount
2021		14,502
Total	$	14,502

XML

Note 14 - Operating Leases (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

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

	February 28, 2021		November 30, 2020
Operating lease right-of-use assets	$	25,545		27,879
Current portion of operating lease liabilities	$	9,671		9,537
Long-term portion of operating lease liabilities		15,874		18,342
Total operating lease liabilities	$	25,545		27,879

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

Year Ending November 30,
2021	8,135
2022	10,847
2023	6,911
2024	1,630
Total lease payments	27,524
Less imputed interest	(1,979	)
Total operating lease liabilities	25,545

XML

Note 17 - Segment Information (Tables)

3 Months Ended

Feb. 28, 2021

Notes Tables

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

	Three Months Ended February 28, 2021
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,500,000		$	1,291,000		$	610,000		$	5,401,000
Income (loss) from operations	$	(198,000	)	$	(165,000	)	$	(6,000	)	$	(369,000	)
Income (loss) before tax	$	(212,000	)	$	(172,000	)	$	(16,000	)	$	(400,000	)
Total Assets	$	12,990,000		$	3,171,000		$	2,621,000		$	18,782,000
Capital expenditures	$	155,000		$	9,000		$	-		$	164,000
Depreciation & Amortization	$	99,000		$	29,000		$	33,000		$	161,000

	Three Months Ended February 29, 2020
	Agricultural Products			Modular Buildings		Tools			Consolidated
Revenue from external customers	$	2,953,000		$	1,457,000	$	616,000		$	5,026,000
Income (loss) from operations	$	(435,000	)	$	6,000	$	(41,000	)	$	(470,000	)
Income (loss) before tax	$	(498,000	)	$	6,000	$	(52,000	)	$	(544,000	)
Total Assets	$	13,870,000		$	4,373,000	$	2,757,000		$	21,000,000
Capital expenditures	$	241,000		$	26,000	$	-		$	267,000
Depreciation & Amortization	$	126,000		$	68,000	$	33,000		$	227,000

XML

Note 1 - Description of the Company (Details Textual)	3 Months Ended
	Feb. 28, 2021
Number of Operating Segments	3

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Feb. 28, 2021 USD ($)	Feb. 29, 2020 USD ($)	Nov. 30, 2020 USD ($)
Number of Operating Segments	3
Inventory Write-down	$ (216,795)	$ (118,974)
Operating Lease, Right-of-Use Asset	25,545		$ 27,879
Operating Lease, Liability, Total	$ 25,545		$ 27,879
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		34,316
Operating Lease, Liability, Total		$ 34,316

XML

Note 3 - Disaggregation of Revenue - Disaggregated Revenue From External Customer (Details) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Revenue	$ 5,401,000	$ 5,026,000
Farm Equipment [Member]
Revenue	2,777,000	2,349,000
Farm Equipment Service Parts [Member]
Revenue	620,000	532,000
Steel Cutting Tools and Inserts [Member]
Revenue	606,000	609,000
Modular Buildings [Member]
Revenue	1,141,000	1,271,000
Modular Buildings Lease Income [Member]
Revenue		156,000
Product and Service, Other [Member]
Revenue	257,000	109,000
Agricultural Products [Member]
Revenue	3,500,000	2,953,000
Agricultural Products [Member] | Farm Equipment [Member]
Revenue	2,777,000	2,349,000
Agricultural Products [Member] | Farm Equipment Service Parts [Member]
Revenue	620,000	532,000
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	103,000	72,000
Modular Buildings [Member]
Revenue	1,291,000	1,457,000
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	1,141,000	1,271,000
Modular Buildings [Member] | Modular Buildings Lease Income [Member]
Revenue		156,000
Modular Buildings [Member] | Product and Service, Other [Member]
Revenue	150,000	30,000
Tools [Member]
Revenue	610,000	616,000
Tools [Member] | Farm Equipment [Member]
Revenue
Tools [Member] | Farm Equipment Service Parts [Member]
Revenue
Tools [Member] | Steel Cutting Tools and Inserts [Member]
Revenue	606,000	609,000
Tools [Member] | Modular Buildings [Member]
Revenue
Tools [Member] | Modular Buildings Lease Income [Member]
Revenue
Tools [Member] | Product and Service, Other [Member]
Revenue	$ 4,000	$ 7,000

XML

Note 4 - Contract Receivables, Contract Assets and Contract Liabilities (Details Textual) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Contract with Customer, Liability, Revenue Recognized During Period	$ 265,000	$ 89,000

XML

Note 4 - Contract Receivables, Contract Assets and Contract Liabilities - Contract With Customers (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2019
Receivables	$ 1,681,000	$ 2,391,000
Assets	294,000	56,000
Liabilities	$ 1,458,000	$ 276,000

XML

Note 5 - Net Income (Loss) Per Share of Common Stock - Basic and Diluted Earnings Per Common Share (Details) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$ (315,238)	$ (437,192)
Denominator:
For basic net income (loss) per share - weighted average common shares outstanding (in shares)	4,475,279	4,315,481
Effect of dilutive stock options (in shares)
For diluted net income (loss) per share - weighted average common shares outstanding (in shares)	4,475,279	4,315,481
Net Income (Loss) per share - Basic:
Net Income (Loss) per share (in dollars per share)	$ (0.07)	$ (0.10)
Net Income (Loss) per share - Diluted:
Net Income (Loss) per share (in dollars per share)	$ (0.07)	$ (0.10)

XML

Note 6 - Inventory - Major Classes of Inventory (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020	Nov. 30, 2019
Raw materials	$ 7,647,204		$ 7,086,367
Work in process	239,754		304,009
Finished goods	3,665,851		3,777,136
Total Gross Inventory	11,552,809		11,167,512
Less: Reserves	(3,650,565)		(3,405,112)
Net Inventory	$ 7,902,244	$ 7,762,400	$ 7,762,400

XML

Note 7 - Accrued Expenses - Major Components of Accrued Expenses (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Salaries, wages, and commissions	$ 683,180	$ 726,625
Accrued warranty expense	295,581	291,454
Other	219,424	261,233
Total accrued liabilities, current	$ 1,198,185	$ 1,279,312

XML

Note 8 - Assets Held for Lease (Details Textual) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020	Nov. 30, 2020
Lessor, Operating Lease, Payments to be Received, Total			$ 0
Sales [Member]
Operating Lease, Lease Income, Total	$ 0	$ 155,508

XML

Note 8 - Assets Held for Lease - Summary of Assets Held for Lease (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Modular Buildings	$ 5,222,809	$ 5,218,662
Modular Buildings [Member]
Modular Buildings		521,555
Modular Buildings [Member]
Modular Buildings	521,555
Assets Leased to Others [Member]
Modular Buildings	$ 521,555	$ 521,555

XML

Note 9 - Product Warranty (Details Textual)	3 Months Ended
	Feb. 28, 2021
Standard Product Warrant Term (Year)	1 year

XML

Note 9 - Product Warranty - Changes in Product Warranty Liability (Details) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Balance, beginning	$ 291,454	$ 203,185
Settlements / adjustments	33,505	(28,576)
Warranties issued	(29,378)	64,624
Balance, ending	$ 295,581	$ 239,233

XML

Note 10 - Loan and Credit Agreements (Details Textual)						3 Months Ended	12 Months Ended
	Jan. 12, 2021 USD ($)	Jun. 24, 2020 USD ($)	Jun. 18, 2020 USD ($)	Feb. 13, 2019 USD ($)	Sep. 28, 2017 USD ($)	Feb. 28, 2021 USD ($)	Nov. 30, 2020 USD ($)
Long-term Debt, Total						$ 2,790,417	$ 2,808,129
Term Loan Due October 2037 [Member]
Long-term Debt, Total						$ 2,328,719	$ 2,350,593
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
Economic Injury Distaster Loan Assistance Program [Member]
Debt Instrument, Interest Rate, Stated Percentage		3.75%
Debt Instrument, Term (Year)		30 years
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
Bank Midwest [Member]
Long-term Line of Credit, Total						1,875,530
Line of Credit Facility, Remaining Borrowing Capacity						$ 3,124,470
Line of Credit, Borrowing Base, Accounts Receivable						75.00%
Line of Credit, Borrowing Base, Inventory						50.00%
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
Long-term Line of Credit, Total						4,969,155
Line of Credit Facility, Remaining Borrowing Capacity						$ 3,093,625
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]
Debt Instrument, Covenant, Minimum Working Capital	$ 4,000,000
Debt Instrument, Covenant, Minimum Working Capital Ratio	1.75

XML

Note 10 - Loan and Credit Agreements - Summary of Term Debt (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Long-term Debt, Total	$ 2,790,417	$ 2,808,129
Less current portion of term debt	91,336	94,979
Term debt, excluding current portion	2,699,081	2,713,150
Term Loan Due October 2037 [Member]
Long-term Debt, Total	2,328,719	2,350,593
SBA Loan One [Member]
Long-term Debt, Total	153,930	152,543
SBA Loan Two [Member]
Long-term Debt, Total	153,838	152,450
SBA Loan Three [Member]
Long-term Debt, Total	$ 153,930	$ 152,543

XML

Note 10 - Loan and Credit Agreements - Summary of Term Debt (Details) (Parentheticals) - USD ($)	3 Months Ended	12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020
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%

XML

Note 10 - Loan and Credit Agreements - Summary of Minimum Maturities of Term Debt (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
2021	$ 68,307
2022	98,275
2023	108,314
2024	113,474
2025	119,584
2026 and thereafter	2,282,463
Long-term Debt, Total	$ 2,790,417	$ 2,808,129

XML

Note 12 - Related Party Transactions (Details Textual) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Revenue from Related Parties	$ 0	$ 0
Due from Related Parties, Total	0	0
Related Party Transaction, Expenses from Transactions with Related Party	4,669	4,588
Due to Related Parties, Total	$ 1,353	$ 1,454
J. Ward McConnell Jr. [Member]
Related Party, Ownership Percentage	20.00%

XML

Note 13 - Sales-type Leases (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Sales-type Lease, Lease Income, Total	$ 0	$ 0
Maximum [Member] | Assets Leased to Others, Modular Buildings [Member]
Lessor, Sales-type Lease, Term of Contract (Month)	3 years
Property, Plant and Equipment, Useful Life (Year)	5 years
Minimum [Member] | Assets Leased to Others, Modular Buildings [Member]
Property, Plant and Equipment, Useful Life (Year)	3 years

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Note 13 - Sales-type Leases - Components Related to Sales-type Leases (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
Minimum lease receivable, current	$ 14,502	$ 29,002
Unearned interest income, current	(219)	(650)
Net investment in sales-type leases, current	$ 14,283	$ 28,352

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Note 13 - Sales-type Leases - Future Minimum Lease Receipts (Details)	Feb. 28, 2021 USD ($)
2021	$ 14,502
Total	$ 14,502

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Note 14 - Operating Leases (Details Textual) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020	Nov. 30, 2020
Operating Lease, Right-of-Use Asset	$ 25,545		$ 27,879
Operating Lease, Liability, Current	9,671		9,537
Operating Lease, Liability, Noncurrent	15,874	$ 18,342	18,342
Lease, Cost, Total	$ 6,080	8,151
Operating Lease, Weighted Average Remaining Lease Term (Month)	2 years 240 days
Operating Lease, Weighted Average Discount Rate, Percent	5.50%
Other Assets [Member]
Operating Lease, Right-of-Use Asset	$ 25,545		$ 27,879
Accrued Expenses [Member]
Operating Lease, Liability, Current	$ 9,671	$ 9,537
Minimum [Member]
Lessee, Operating Lease, Term of Contract (Month)		1 year
Maximum [Member]
Lessee, Operating Lease, Term of Contract (Month)		5 years

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Note 14 - Operating Leases - Components of Operating Leases (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020	Feb. 29, 2020
Operating lease right-of-use assets	$ 25,545	$ 27,879
Current portion of operating lease liabilities	9,671	9,537
Long-term portion of operating lease liabilities	15,874	18,342	$ 18,342
Total operating lease liabilities	$ 25,545	$ 27,879

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Note 14 - Operating Leases - Maturities of Operating Lease Liabilities (Details) - USD ($)	Feb. 28, 2021	Nov. 30, 2020
2021	$ 8,135
2022	10,847
2023	6,911
2024	1,630
Total lease payments	27,524
Less imputed interest	(1,979)
Total operating lease liabilities	$ 25,545	$ 27,879

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Note 15 - Equity Incentive Plan and Stock Based Compensation (Details Textual) - USD ($)		3 Months Ended
	Feb. 25, 2020	Feb. 28, 2021	Feb. 29, 2020	Feb. 28, 2020	Aug. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures, Total (in shares)		0
Share-based Payment Arrangement, Expense		$ 62,054	$ 37,580
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)		5,570	10,517
Share-based Payment Arrangement, Expense, Net of Shares Repurchased		$ 43,758	$ 18,516
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
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		3 years		3 years
Restricted Stock [Member] | Employees and Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		88,500		48,750
Restricted Stock [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		5,000		5,000
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 17 - Segment Information (Details Textual)	3 Months Ended
	Feb. 28, 2021
Number of Reportable Segments	3

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Note 17 - Segment Information - Segment Reporting Information (Details) - USD ($)	3 Months Ended
	Feb. 28, 2021	Feb. 29, 2020	Nov. 30, 2020
Revenue from external customers	$ 5,400,572	$ 5,025,924
Income (loss) from operations	(368,523)	(469,696)
Total Assets	18,781,770		$ 18,803,013
Capital expenditures	163,927	267,141
Depreciation & Amortization	161,107	227,456
Operating Segments [Member]
Revenue from external customers	5,401,000	5,026,000
Income (loss) from operations	(369,000)	(470,000)
Income (loss) before tax	(400,000)	(544,000)
Total Assets	18,782,000	21,000,000
Capital expenditures	164,000	267,000
Depreciation & Amortization	161,000	227,000
Operating Segments [Member] | Agricultural Products [Member]
Revenue from external customers	3,500,000	2,953,000
Income (loss) from operations	(198,000)	(435,000)
Income (loss) before tax	(212,000)	(498,000)
Total Assets	12,990,000	13,870,000
Capital expenditures	155,000	241,000
Depreciation & Amortization	99,000	126,000
Operating Segments [Member] | Modular Buildings [Member]
Revenue from external customers	1,291,000	1,457,000
Income (loss) from operations	(165,000)	6,000
Income (loss) before tax	(172,000)	6,000
Total Assets	3,171,000	4,373,000
Capital expenditures	9,000	26,000
Depreciation & Amortization	29,000	68,000
Operating Segments [Member] | Tools [Member]
Revenue from external customers	610,000	616,000
Income (loss) from operations	(6,000)	(41,000)
Income (loss) before tax	(16,000)	(52,000)
Total Assets	2,621,000	2,757,000
Capital expenditures
Depreciation & Amortization	$ 33,000	$ 33,000