10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended May 31, 2018

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. 0-5131

ART’S-WAY MANUFACTURING CO., INC.

(Exact name of registrant as specified in its charter)

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

5556 Highway 9

Armstrong, Iowa 50514

(Address of principal executive offices)

(712) 864-3131

(Registrant’s telephone number, including area code)

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 [x]   No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or 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 [x]
(Do not check if a 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.  Yes [ ] No [ ]

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

Number of common shares outstanding as of July 9, 2018: 4,198,947

Art’s-Way Manufacturing Co., Inc.

Index

Page No.

PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets May 31, 2018 and November 30, 2017	1
	Condensed Consolidated Statements of Operations Three-month and six-month periods ended May 31, 2018 and May 31, 2017	2
	Condensed Consolidated Statements of Comprehensive Income Three-month and six-month periods ended May 31, 2018 and May 31, 2017	3
	Condensed Consolidated Statements of Cash Flows Six-month periods ended May 31, 2018 and May 31, 2017	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II – OTHER INFORMATION		20
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
	SIGNATURES	21

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Balance Sheets

	(Unaudited)
	May 31, 2018			November 30, 2017
Assets
Current assets:
Cash	$	3,622		$	212,400
Accounts receivable-customers, net of allowance for doubtful accounts of $22,829 and $32,298 in 2018 and 2017, respectively		2,075,212			1,910,294
Inventories, net		10,729,072			11,966,722
Cost and profit in excess of billings		269,081			65,146
Net investment in sales-type leases, current		120,542			-
Assets of discontinued operations		-			2,454
Other current assets		188,226			275,755
Total current assets		13,385,755			14,432,771
Property, plant, and equipment, net		5,745,784			5,946,957
Assets held for lease, net		1,957,565			1,217,164
Deferred income taxes		820,964			901,396
Goodwill		375,000			375,000
Net investment in sales-type leases, long-term		229,439			-
Other assets of discontinued operations		-			1,425,000
Other assets		79,151			81,545
Total assets	$	22,593,658		$	24,379,833
Liabilities and Stockholders’ Equity
Current liabilities:
Line of credit	$	2,124,530		$	2,462,530
Current portion of long-term debt		223,737			221,230
Accounts payable		1,057,810			673,653
Customer deposits		608,905			600,325
Billings in excess of cost and profit		-			48,211
Accrued expenses		832,361			981,558
Liabilities of discontinued operations		-			59,149
Income taxes payable		3,500			3,100
Total current liabilities		4,850,843			5,049,756
Long-term liabilities
Long-term liabilities of discontinued operations		-			590,366
Long-term debt, excluding current portion		2,636,875			2,748,677
Total liabilities		7,487,718			8,388,799
Commitments and Contingencies (Notes 8 and 9)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2018 and 2017; issued 0 shares in 2018 and 2017.		-			-
Common stock – $0.01 par value. Authorized 9,500,000 shares in 2018 and 2017; issued 4,208,233 in 2018 and 4,158,752 in 2017		42,082			41,587
Additional paid-in capital		2,969,993			2,859,052
Retained earnings		12,121,600			13,353,830
Accumulated other comprehensive expense		-			(257,010	)
Treasury stock, at cost (9,286 in 2018 and 1,954 in 2017 shares)		(27,735	)		(6,425	)
Total stockholders’ equity		15,105,940			15,991,034
Total liabilities and stockholders’ equity	$	22,593,658		$	24,379,833

See accompanying notes to condensed consolidated financial statements.

1

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	May 31, 2018			May 31, 2017			May 31, 2018			May 31, 2017
Sales	$	5,294,464		$	4,689,354		$	10,660,000		$	9,110,522
Cost of goods sold		4,187,450			3,877,870			8,399,610			7,185,215
Gross profit		1,107,014			811,484			2,260,390			1,925,307
Expenses:
Engineering		127,539			132,347			256,602			264,987
Selling		487,991			483,060			972,522			968,441
General and administrative		949,598			917,461			1,798,101			1,765,695
Total expenses		1,565,128			1,532,868			3,027,225			2,999,123
Income (Loss) from operations		(458,114	)		(721,384	)		(766,835	)		(1,073,816	)
Other income (expense):
Interest expense		(68,711	)		(79,253	)		(138,387	)		(143,047	)
Other		(252,687	)		63,245			(180,115	)		114,920
Total other income (expense)		(321,398	)		(16,008	)		(318,502	)		(28,127	)
Income (Loss) from continuing operations before income taxes		(779,512	)		(737,392	)		(1,085,337	)		(1,101,943	)
Income tax expense (benefit)		(125,533	)		(228,485	)		96,040			(339,396	)
Income (Loss) from continuing operations		(653,979	)		(508,907	)		(1,181,377	)		(762,547	)
Discontinued Operations
Income (loss) from operations of discontinued segment		(15,587	)		(27,665	)		(67,177	)		(22,789	)
Income tax expense (benefit)		(3,788	)		(9,012	)		(16,324	)		(7,748	)
Income (Loss) on discontinued operations		(11,799	)		(18,653	)		(50,853	)		(15,041	)
Net Income (Loss)		(665,778	)		(527,560	)		(1,232,230	)		(777,588	)
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.16	)	$	(0.12	)	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	-		$	-		$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)	$	(0.29	)	$	(0.18	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.16	)	$	(0.12	)	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	-		$	-		$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)	$	(0.29	)	$	(0.18	)
Weighted average outstanding shares used to compute basic net income per share		4,213,893			4,158,969			4,192,592			4,142,672
Weighted average outstanding shares used to compute diluted net income per share		4,213,893			4,158,969			4,192,592			4,142,672

See accompanying notes to condensed consolidated financial statements.

2

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended						Six Months Ended
	May 31, 2018			May 31, 2017			May 31, 2018			May 31, 2017
Net Income (Loss)	$	(665,778	)	$	(527,560	)	$	(1,232,230	)	$	(777,588	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments		10,528			(16,120	)		3,830			(5,098	)
Release of cumulative translation adjustment due to substantial liquidation of a foreign entity		253,180			-			253,180			-
Total Other Comprehensive Income (Loss)		263,708			(16,120	)		257,010			(5,098	)
Comprehensive (Loss)	$	(402,070	)	$	(543,680	)	$	(975,220	)	$	(782,686	)

See accompanying notes to condensed consolidated financial statements.

3

ART’S-WAY MANUFACTURING CO., INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	May 31, 2018			May 31, 2017
Cash flows from operations:
Net (loss) from continuing operations	$	(1,181,377	)	$	(762,547	)
Net (loss) from discontinued operations		(50,853	)		(15,041	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Stock based compensation		111,436			72,959
Loss on release of cumulative translation adjustment		253,180			-
Unrealized foreign currency gain (loss)		3,830			(5,098	)
(Gain)/Loss on disposal of property, plant, and equipment		(12,084	)		11,945
Depreciation and amortization expense		408,757			342,387
Bad debt expense (recovery)		(9,044	)		(4,952	)
Deferred income taxes		80,432			(360,464	)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		(155,874	)		(512,044	)
Inventories, net		437,307			(425,931	)
Income taxes receivable		-			16,505
Net investment in sales-type leases		(349,981	)		-
Other assets		87,529			(273,758	)
Increase (decrease) in:
Accounts payable		384,157			923,695
Contracts in progress, net		(252,146	)		34,618
Customer deposits		8,580			353,772
Income taxes payable		400			-
Accrued expenses		(149,197	)		(10,843	)
Net cash (used in) operating activities - continuing operations		(334,095	)		(599,756	)
Net cash (used in) operating activities - discontinued operations		(89,697	)		(22,635	)
Net cash (used in) operating activities		(423,792	)		(622,391	)
Cash flows from investing activities:
Purchases of property, plant, and equipment		(164,874	)		(293,919	)
Net proceeds from sale of assets		29,316			12,190
Net cash (used in) investing activities - continuing operations		(135,558	)		(281,729	)
Net cash provided by investing activities - discontinued operations		1,418,761			38,736
Net cash provided by (used in) investing activities		1,283,203			(242,993	)
Cash flows from financing activities:
Net change in line of credit		(338,000	)		450,000
Repayment of term debt		(109,295	)		(364,080	)
Repurchases of common stock		(21,310	)		(6,425	)
Net cash provided by (used in) financing activities - continuing operations		(468,605	)		79,495
Net cash (used in) financing activities - discontinued operations		(599,584	)		(65,035	)
Net cash provided by (used in) financing activities		(1,068,189	)		14,460
Net (decrease) in cash		(208,778	)		(850,924	)
Cash at beginning of period		212,400			1,063,716
Cash at end of period	$	3,622		$	212,792
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	142,426		$	148,203
Income taxes	$	5,237		$	-
Supplemental disclosures of non-cash operating and investing activities:
Transfer of inventory to assets held for lease	$	800,343		$	-

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 (“Manufacturing”) manufactures farm equipment under the Art’s-Way Manufacturing label and private labels. The modular buildings segment (“Scientific”) manufactures modular buildings for various uses, commonly animal containment and research laboratories. The tools segment (“Metals”) manufactures steel cutting tools and inserts. During the third quarter of fiscal 2016, the Company discontinued its pressurized vessels segment (“Vessels”) that manufactured pressurized vessels. For more information on discontinued operations, see Note 3 “Discontinued Operations.” For detailed financial information relating to segment reporting, see Note 16 “Segment Information.”

2) Summary of Significant Account Policies

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the 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, 2017. The results of operations for the three and six months ended May 31, 2018 are not necessarily indicative of the results for the fiscal year ending November 30, 2018.

The financial books of the Company’s Canadian operations are kept in the functional currency of Canadian dollars and the financial statements are converted to U.S. Dollars for consolidation. When consolidating the financial results of the Company into U.S. Dollars for reporting purposes, the Company uses the All-Current translation method. The All-Current method requires the balance sheet assets and liabilities to be translated to U.S. Dollars at the exchange rate as of quarter end. Stockholders’ equity is translated at historical exchange rates and retained earnings are translated at an average exchange rate for the period. Additionally, revenue and expenses are translated at average exchange rates for the periods presented. The resulting cumulative translation adjustment is carried on the balance sheet and is recorded in stockholders’ equity. Since no income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has not been tax adjusted. During the second quarter of fiscal 2018, the Company liquidated its investment in the Canadian subsidiary by selling off remaining inventory and filing dissolution paperwork. The cumulative translation adjustment carried on the balance sheet was released into net income in the second quarter 2018 and will no longer need translation each period. Since no income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has not been tax adjusted.

Sales-Type Leases

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

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 and six months ended May 31, 2018. Actual results could differ from those estimates.

3) Discontinued Operations

Effective October 31, 2016, the Company discontinued the operations of its Vessels segment in order to focus its efforts and resources on the business segments that have historically been more successful and that are expected to present greater opportunities for meaningful long-term shareholder returns.

In January 2018, the Company accepted an offer on the real estate assets for $1,500,000, which was below the carrying value at that time. Based on these facts the Company recorded an impairment of the real estate of approximately $289,000 for the fiscal year ended November 30, 2017, which reduced the value to $1,425,000, which is the value the Company expected to receive after commissions on the sale of this asset. On March 29, 2018, the remaining assets of Vessels, consisting of real estate assets, were disposed of at a selling price of $1,500,000.

As Vessels was a unique business unit of the Company, its liquidation was a strategic shift. In accordance with Accounting Standard Codification Topic 360, the Company has classified Vessels as discontinued operations for all periods presented.

Income from discontinued operations, before income taxes in the accompanying Condensed Consolidated Statements of Operations is comprised of the following:

	Three Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		7,019			23,746
Income (loss) from operations		(7,019	)		(23,746	)
Income (loss) before tax		(15,587	)		(27,665	)

	Six Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		51,133			23,824
Income (loss) from operations		(51,133	)		(23,824	)
Income (loss) before tax		(67,177	)		(22,789	)

6

The components of discontinued operations in the accompanying Condensed Consolidated Balance Sheets are as follows:

	May 31, 2018		November 30, 2017
Cash	$	-	$	2,454
Property, plant, and equipment, net		-		1,425,000
Assets of discontinued operations	$	-	$	1,427,454
Accrued expenses		-		49,931
Notes Payable		-		599,584
Liabilities of discontinued operations	$	-	$	649,515

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

Basic net income (loss) per common share 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 earnings (loss) per common share.

Basic and diluted earnings (loss) per common share have been computed based on the following as of May 31, 2018 and May 31, 2017:

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(653,979	)	$	(508,907	)
Net (loss) income from discontinued operations		(11,799	)		(18,653	)
Net (loss) income	$	(665,778	)	$	(527,560	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)

7

	For the Six Months ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(1,181,377	)	$	(762,547	)
Net (loss) income from discontinued operations		(50,853	)		(15,041	)
Net (loss) income	$	(1,232,230	)	$	(777,588	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)

5) Inventory

Major classes of inventory are:

	May 31, 2018			November 30, 2017
Raw materials	$	8,293,049		$	8,731,985
Work in process		252,598			460,687
Finished goods		4,839,361			5,395,353
Gross inventory	$	13,385,008		$	14,588,025
Less: Reserves		(2,655,936	)		(2,621,303	)
Net Inventory	$	10,729,072		$	11,966,722

6) Accrued Expenses

Major components of accrued expenses are:

	May 31, 2018		November 30, 2017
Salaries, wages, and commissions	$	463,692	$	584,768
Accrued warranty expense		71,216		68,451
Other		297,453		328,339
	$	832,361	$	981,558

8

7) Assets Held for Lease

Major components of assets held for lease are:

	May 31, 2018		November 30, 2017
West Union Facility	$	1,105,561	$	1,118,330
Modular Buildings		852,004		98,834
Net assets held for lease	$	1,957,565	$	1,217,164

8) Product Warranty

The Company offers warranties of various lengths to its customers depending on the specific product and terms of the customer purchase agreement. The average length of the warranty period is one year from the date of purchase. The Company’s warranties require it to repair or replace defective products during the warranty period at no cost to the customer. 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 6 “Accrued Expenses.” Changes in the Company’s product warranty liability for the three and six months ended May 31, 2018 and May 31, 2017 are as follows:

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	54,135		$	125,672
Settlements / adjustments		(58,892	)		(36,186	)
Warranties issued		75,973			63,478
Balance, ending	$	71,216		$	152,964

	For the Six Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	68,451		$	134,373
Settlements / adjustments		(141,565	)		(109,135	)
Warranties issued		144,330			127,726
Balance, ending	$	71,216		$	152,964

9

9) Loan and Credit Agreements

The Company maintains a revolving line of credit and term loan with Bank Midwest as well as a term loan with The First National Bank of West Union.

Bank Midwest Revolving Line of Credit, Term Loans, and Covenants

On September 28, 2017, the Company entered into a credit facility with Bank Midwest, which supersedes and replaces in its entirety the Company’s previous credit facility with U.S. Bank. The Bank Midwest credit facility consists of a $5,000,000 revolving line of credit, a $2,600,000 term loan due October 1, 2037, and a $600,000 term loan due October 1, 2019. The proceeds of the new line of credit and the term loans were used to refinance all debt previously held by U.S. Bank in the amount of approximately $6,562,030, which consisted of $6,528,223 in unpaid principal and approximately $33,807 in accrued and unpaid interest and fees. The revolving line of credit is being used for working capital purposes. On March 29, 2018, the company paid in full the $600,000 term loan due October 1, 2019 using proceeds from the sale of the Company’s Dubuque, Iowa property. The payment consisted of $596,563 in principal and $2,328 in interest.

On May 31, 2018, the balance of the line of credit was $2,124,530 with $2,875,470 remaining available, limited by the borrowing base calculation. The 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 line of credit. Any unpaid principal amount borrowed on the revolving line of credit accrues interest at a floating rate per annum equal to 1.000% above the Wall Street Journal rate published from time to time in the money rates section of the Wall Street Journal. The interest rate floor is set at 4.250% per annum and the current interest rate is 6.000% per annum. The revolving line of credit was renewed on March 30, 2018. The revolving line of credit is payable upon demand by Bank Midwest, and monthly interest-only payments are required. If no earlier demand is made, the unpaid principal and accrued interest is due on March 30, 2019.

The $2,600,000 term loan accrues interest at a rate of 5.000% for the first sixty months. Thereafter, this loan will accrue interest at a floating rate per annum equal to 0.750% above the Wall Street Journal rate published from time to time in the money rates section of the Wall Street Journal. The interest rate floor is set at 4.150% 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. This loan is also guaranteed by the United States Department of Agriculture (“USDA”), which requires an upfront guarantee fee of $62,400 and 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 loan as well, 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 stock, is guaranteeing approximately 38% of this loan, for an annual fee of 2% of the personally guaranteed amount.  The initial guarantee fee will be amortized over the life of the loan, and the annual fees and personally guaranteed amounts are expensed monthly.  Prior to repayment, the $600,000 term loan accrued interest at a rate of 5.000%, and monthly payments of $3,249 for principal and interest were required.

Each of the revolving line of credit and the $2,600,000 term loan are governed by the terms of a separate Promissory Note, dated September 28, 2017, entered into between the Company and Bank Midwest. The $600,000 term loan was also governed by the terms of a separate Promissory Note, dated September 28, 2017, entered into between the Company and Bank Midwest.

In connection with the revolving 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 revolving 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 revolving line of credit, as set forth in Commercial Guaranties, each dated September 28, 2017.

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To further secure the line of credit, the Company has granted Bank Midwest a second mortgage on its West Union, Iowa property and Ohio Metal Working Products/Art’s-Way Inc. has granted Bank Midwest a mortgage on its property located in Canton, Ohio. The $2,600,000 term loan is secured by a mortgage on the Company’s Armstrong, Iowa and Monona, Iowa properties, and the $600,000 term loan was secured by a mortgage on the Company’s Dubuque, Iowa property. Each mortgage is governed by the terms of a separate Mortgage, dated September 28, 2017, and each property is also subject to a separate Assignment of Rents, dated September 28, 2017.

If the Company or its subsidiaries (as guarantors pursuant to the Commercial Guaranties) commits an event of default with respect to the promissory notes and fails or is unable to cure that default, Bank Midwest may immediately terminate its obligation, if any, to make additional loans to the Company and may accelerate the Company’s obligations under the promissory notes. Bank Midwest shall also have all other rights and remedies for default provided by the Uniform Commercial Code, as well as any other applicable law and the various loan agreements. In addition, in an event of default, Bank Midwest may foreclose on the mortgaged property.

Compliance with Bank Midwest covenants is measured annually at November 30. The terms of the Bank Midwest loan agreements require the Company to maintain a minimum working capital ratio of 1.75, while maintaining a minimum of $5,100,000 of working capital. Additionally, a maximum debt to worth ratio of 1 to 1 must be maintained, with a minimum of 40% tangible balance sheet equity, with variations subject to mutual agreement. The Company is also required to maintain a minimum debt service coverage ratio of 1.25, with a 0.10 tolerance. The Company was in compliance with all covenants as of November 30, 2017 other than the debt service coverage ratio. Bank Midwest issued a waiver forgiving the noncompliance, and no event of default has occurred. The next measurement date is November 30, 2018. The Company is also required to provide audited financial statements within 120 days of its fiscal year end.

Iowa Finance Authority Term Loan and Covenants

On May 1, 2010, the Company obtained a loan to finance the purchase of an additional facility located in West Union, Iowa to be used as a distribution center, warehouse facility, and manufacturing plant for certain products under the Art’s-Way brand. The funds for this loan were made available by the Iowa Finance Authority by the issuance of tax exempt bonds. This loan had an original principal amount of $1,300,000, an interest rate of 3.5% per annum and a maturity date of June 1, 2020. On February 1, 2013, the interest rate was decreased to 2.75% per annum. The other terms of the loan remain unchanged.

This loan from the Iowa Finance Authority, which has been assigned to The First National Bank of West Union (n/k/a Bank 1st), is governed by a Manufacturing Facility Revenue Note dated May 28, 2010 as amended February 1, 2013 and a Loan Agreement dated May 1, 2010 and a First Amendment to Loan Agreement dated February 1, 2013 (collectively, “the IFA Loan Agreement”), which requires the Company to provide quarterly internally prepared financial reports and year-end audited financial statements and to maintain a minimum debt service coverage ratio of 1.5 to 1.0, which is measured at November 30 of each year. Among other covenants, the IFA Loan Agreement also requires the Company to maintain proper insurance on, and maintain in good repair, the West Union Facility, and continue to conduct business and remain duly qualified to do business in the State of Iowa. The loan is secured by a mortgage on the Company’s West Union Facility, pursuant to a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement dated May 1, 2010 between the Company and The First National Bank of West Union (the “West Union Mortgage”).

If the Company commits an event of default under the IFA Loan Agreement or the West Union Mortgage and does not cure the event of default within the time specified by the IFA Loan Agreement, the lender may cause the entire amount of the loan to be immediately due and payable and take any other action that it is lawfully permitted to take or in equity to enforce the Company’s performance.

The Company was in compliance with all covenants except for the debt service coverage ratio covenant as measured on November 30, 2017. The First National Bank of West Union issued a waiver and the next measurement date is November 30, 2018.

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

	May 31, 2018		November 30, 2017
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,556,219	$	2,595,007
Bank Midwest loan payable in monthly installments of $3,249 including interest at 5.00%, paid in full as of March 29, 2018		-		599,584
Iowa Finance Authority loan payable in monthly installments of $12,500 including interest at 2.75%, due June 1, 2020		304,393		374,900
Total term debt	$	2,860,612	$	3,569,491
Less current portion of term debt		223,737		221,230
Term debt of discontinued operations		-		599,584
Term debt, excluding current portion	$	2,636,875	$	2,748,677

10) 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.

On December 22, 2017, the Tax Cuts and Job Act of 2017 was enacted, which reduced the top corporate income tax rate from 35% to 21%. This law is generally effective for tax years beginning after December 31, 2017. The application of this new rate was recognized in the first quarter of fiscal 2018. Tax expense from continuing operations includes an adjustment of approximately $300,000 related to the revaluation of the Company’s net deferred tax asset at the new statutory rate.

11) Related Party Transactions

During the three and six months ended May 31, 2018, the Company recognized expenses of $7,028 and $12,029 respectively, for transactions with a related party, compared to $0 and $3,691 for the same periods in 2017. The accrued expenses balance as of May 31, 2018 contains $1,646 due to a related party, compared to $0 for the same period in 2017.

12) Sales-Type Leases

The components related to sales-type leases at May 31, 2018 and November 30, 2017 are as follows:

	May 31, 2018			November 30, 2017
Minimum lease receivable, current	$	174,000		$	-
Unearned interest income, current		(53,458	)		-
Net investment in sales-type leases, current		120,542			-
Minimum lease receivable, long-term		263,927			-
Unearned interest income, long-term		(34,488	)		-
Net investment in sales-type leases, long-term	$	229,439		$	-

The profit recognized in continuing operations on the condensed consolidated statements of operations from commencement of sales-type leases in the three and six months ended May 31, 2018 was $0 and $129,104 respectively, compared to $0 and $0 from the same periods in 2017.

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Future minimum lease receipts are as follows:

Year Ending November 30,	Amount
2018	$	98,575
2019		174,000
2020		162,425
2021		2,927
2022		-
Thereafter		-
Total	$	437,927

13) Recently Issued Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic 605)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and is to be applied retrospectively, with early application not permitted. The Company is evaluating the new standard and at this time believes that its Scientific segment will be impacted most significantly by this standard. The Company believes that this segment will need to revise its standard contracts with customers to more clearly define the rights and consideration transferred at the various milestones identified in the contracts. The Company believes that its other segments already have the necessary tools to evaluate their revenues in a manner consistent with the application of this standard and will have the ability to meet the disclosure requirements using current systems. The Company continues to research and assess the implications of the adoption of this standard on its consolidated financial statements. The Company is in the process of documenting revenue streams and the application of the new revenue standard to each stream to ensure compliance with the new standard.

Leases

In February 2016, 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. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company will adopt this guidance for the fiscal year ending November 30, 2020, including interim periods within that reporting period. The Company has a moderate amount of leasing activity and is currently evaluating the impact of this guidance on its consolidated financial statements.

14) Equity Incentive Plan and Stock Based Compensation

On January 27, 2011, the Board of Directors of the Company authorized and approved the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan was approved by the stockholders on April 28, 2011. It replaced the Employee Stock Option Plan and the Directors’ Stock Option Plan (collectively, the “Prior Plans”), and no further stock options will be awarded under the Prior Plans. Awards to directors and executive officers under the 2011 Plan are governed by the forms of agreement approved by the Board of Directors.

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The 2011 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 of Directors 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 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. Additionally, directors can elect to receive their board compensation as restricted stock. During the first six months of fiscal 2018, restricted stock awards of 46,200 shares were issued to various employees, directors, and consultants, which vest over the next three years, and restricted stock awards of 20,281 have been issued to directors as part of the compensation policy, which vested immediately upon grant. During the first six months of fiscal 2018, 17,000 shares of restricted stock were forfeited upon the departure of certain employees.

Stock options granted prior to January 27, 2011 are governed by the applicable Prior Plan and the forms of agreement adopted thereunder.

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 six months ended May 31, 2018 or in the same respective period of fiscal 2017. The Company incurred a total of $61,879 and $111,436 of stock-based compensation expense for restricted stock awards during the three and six months ended May 31, 2018 compared to $46,402 and $72,959 of stock-based compensation expense for restricted stock awards for the same respective periods of fiscal 2017.

15) 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 May 31, 2018, and November 30, 2017, the carrying amount approximated fair value for cash, accounts receivable, net investment in sale-type leases, accounts payable, notes payable to bank, and other current and long-term liabilities. The carrying amounts 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 installment term loans payable also approximates recorded value because the interest rates charged under the loan terms are not substantially different than current interest rates.

16) Segment Information

There are three reportable segments: agricultural products, modular buildings and tools. The agricultural products segment fabricates and sells farming products as well as related equipment and replacement parts for these products in the United States and worldwide. The modular buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses. The tools segment manufactures steel cutting tools and inserts.

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

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Approximate financial information with respect to the reportable segments is as follows. The tables below exclude income and balance sheet data from discontinued operations. See Note 3 “Discontinued Operations.”

	Three Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,937,000		$	834,000		$	524,000		$	5,295,000
Income (loss) from operations		(263,000	)		(146,000	)		(50,000	)	$	(459,000	)
Income (loss) before tax		(576,000	)		(141,000	)		(63,000	)	$	(780,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		42,000			859,000			-		$	901,000
Depreciation & Amortization		132,000			5,500			32,000		$	169,500

	Three Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,162,000		$	888,000		$	639,000		$	4,689,000
Income (loss) from operations		(657,000	)		(19,000	)		(45,000	)	$	(721,000	)
Income (loss) before tax		(647,000	)		(34,000	)		(56,000	)	$	(737,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		75,000			-			24,000		$	99,000
Depreciation & Amortization		126,000			14,000			32,000		$	172,000

	Six Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	7,866,000		$	1,573,000		$	1,221,000		$	10,660,000
Income (loss) from operations		(537,000	)		(206,000	)		(23,000	)	$	(766,000	)
Income (loss) before tax		(845,000	)		(194,000	)		(47,000	)	$	(1,086,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		71,000			894,000			-		$	965,000
Depreciation & Amortization		265,000			80,000			64,000		$	409,000

	Six Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	6,531,000		$	1,276,000		$	1,304,000		$	9,111,000
Income (loss) from operations		(876,000	)		(173,000	)		(25,000	)	$	(1,074,000	)
Income (loss) before tax		(865,000	)		(192,000	)		(45,000	)	$	(1,102,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		204,000			-			90,000		$	294,000
Depreciation & Amortization		251,000			28,000			63,000		$	342,000

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

17) Subsequent Event

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.

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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 Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the fiscal year ended November 30, 2017. Some of the statements in this report may contain 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 “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 and changes to tax laws; (v) our intentions and beliefs relating to our costs, business strategies, and future performance; (vi) our expected financial results; and (vii) our expectations concerning our primary capital and cash flow needs.

You should read this report thoroughly with the understanding that our actual results may differ materially from those set forth in the forward-looking statements for many reasons, including events beyond our control and assumptions that prove to be inaccurate or unfounded. We cannot provide any assurance with respect to our future performance or results. Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including but not limited to: (i) the impact of changing credit markets on our ability to continue to obtain financing on reasonable terms; (ii) our ability to repay current debt, continue to meet debt obligations and comply with financial covenants; (iii) obstacles related to liquidation of product lines and segments; (iv) 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; (v) fluctuations in seasonal demand and our production cycle; and (vi) other factors described from time to time in our reports to the Securities and Exchange Commission. We do not intend to update the forward-looking statements contained in this report other than as required by law. We caution 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 the financial statements as of May 31, 2018 remain unchanged from November 30, 2017, with the exception of the addition of a critical accounting policy regarding sales-type lease activity. Other than this new policy regarding sales-type lease activity, which is set forth below, disclosure of these critical accounting policies is incorporated by reference from Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2017.

Sales-Type Lease Activity

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

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Results of Operations – Continuing Operations

Net Sales and Cost of Goods Sold

Our consolidated corporate sales for continuing operations for the three- and six-month periods ended May 31, 2018 were $5,294,000 and $10,660,000 compared to $4,689,000 and $9,111,000 during the same respective periods in 2017, a $605,000 or 12.9%, increase for the three months and a $1,549,000, or 17.0%, increase for the six months. The increases in revenue are primarily due to the increased demand for our agricultural products and modular buildings. Consolidated gross margin for the three-month period ended May 31, 2018 was 20.9% compared to 17.3% for the same period in fiscal 2017. Consolidated gross margin for the six-month period ended May 31, 2018 was 21.2% compared to 21.1% for the same period in fiscal 2017. These increased gross margins are largely attributable to the agricultural products segment as margins have decreased in our modular building and tools segments.

Our second quarter sales at Manufacturing were $3,937,000 compared to $3,162,000 during the same period of 2017, an increase of $775,000, or 24.5%. Our year-to-date sales at Manufacturing were $7,866,000 compared to $6,531,000 during the same period in 2017, an increase of $1,335,000, or 20.4%. The revenue increase is due to increased demand for portable feed equipment, land maintenance equipment, manure spreaders, bale processors and UHC reels. Gross margin for Manufacturing for the three-month period ended May 31, 2018 was 22.6% compared to 13.8% for the same period in 2017. Gross margin for Manufacturing for the six-month period ended May 31, 2018 was 21.9% compared to 19.7% for the same period in 2017. The increase in gross margin in 2018 is due to increased efficiency from our direct labor as a part of recently-launched lean initiatives. Although our gross margin is up we did receive downward pressure from rising costs of cost of goods sold impacted by steel tariffs. Our gross margin was negatively impacted in 2017 by inefficiencies in production during the prototyping process for our commercial forage box.

Our second quarter sales at Scientific were $834,000 compared to $888,000 for the same period in 2017, a decrease of $54,000, or 6.1%. Our year-to-date sales at Scientific were $1,573,000 compared to $1,276,000 for the same period in 2017, an increase of $297,000, or 23.3%. Our year-to-date increase in revenue is largely attributable to sales-type leases executed during the first quarter of 2018. Gross margin for the three- and six-month periods ended May 31, 2018 was 10.0% and 12.7% compared to 20.5% and 16.7% for the same respective periods in 2017. The decrease in gross margin is due to an increase in production staff in anticipation of a busier summer production schedule, inefficiency in production, and added depreciation on leased buildings.

Metals had sales of $524,000 and $1,221,000 during the three- and six-month periods ended May 31, 2018 compared to $639,000 and $1,304,000 for the same respective periods in 2017, a 18.0% and 6.4% decrease, respectively. The decrease is mainly due to the loss of a large volume customer. Gross margin was 25.6% and 27.9% for the three- and six-month periods ended May 31, 2018 compared to 30.2% and 32.8% for the same respective periods in 2017. Our decreased gross margin is largely due to lower revenues with less variable margin to absorb fixed costs.

Expenses 

Our second quarter consolidated selling expenses were $488,000 compared to $483,000 for the same period in 2017. Our year-to-date selling expenses were $973,00 in fiscal 2018 compared to $968,000 for the same period in 2017. The increase in selling expenses is due to increased commissions as a result of higher sales. Selling expenses as a percentage of sales were 9.2% and 9.1% for the three- and six-month periods ended May 31, 2018 compared to 10.3% and 10.6% for the same respective periods in 2017.

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Consolidated engineering expenses were $128,000 and $257,000 for the three- and six-month periods ended May 31, 2018 compared to $132,000 and $265,000 for the same respective periods in 2017. The decrease in engineering expenses is directly related to only having one engineering tech on staff this year as opposed to two last year. Engineering expenses as a percentage of sales were 2.4% and 2.4% for the three- and six-month periods ended May 31, 2018 compared to 2.8% and 2.9% for the same periods in 2017.

Consolidated administrative expenses for the three- and six-month periods ended May 31, 2018 were $949,000 and $1,798,000 compared to $918,000 and $1,766,000 for the same respective periods in 2017. These increases are largely related to increased stock compensation expense. Administrative expenses as a percentage of sales were 17.9% and 16.9% for the three- and six-month periods ended May 31, 2018 compared to 19.6% and 19.4% for the same periods in 2017.

(Loss) from Continuing Operations

Consolidated net (loss) from continuing operations was $(654,000) for the three-month period and $(1,181,000) for the six-month period ended May 31, 2018 compared to net (loss) of $(509,000) and $(763,000) for the same respective periods in 2017. The increased loss from continuing operations was largely due to the revaluing of our deferred tax asset at the new income tax rates for the 2018 tax year, which was a loss of approximately $(300,000), along with the liquidation of our Canadian subsidiary. We recognized a loss of approximately $(253,000) from the liquidation of our Canadian subsidiary related to the cumulative translation adjustment in the second quarter of fiscal 2018. These expenses were non-cash expenses and one-time adjustments.

Income Tax Adjustment

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was enacted, which reduced the top corporate income tax rate from 35% to 21%. We have assessed the impact of the law on our reported assets, liabilities, and results of operations, and we believe that, going forward, the overall rate reduction will have a positive impact on our net earnings in the long run. However, during the first quarter of fiscal 2018, we substantially reduced our net deferred tax asset using the new lower rates. Based on our recorded deferred tax asset at November 30, 2017, we reduced the deferred tax asset by approximately $300,000, which was recorded as an adjustment to our tax provision in the first quarter of fiscal 2018.

Order Backlog

The consolidated order backlog net of discounts for continuing operations as of July 8, 2018 was $3,156,000 compared to $3,270,000 as of July 8, 2017.  The agricultural products segment order backlog was $2,475,000 as of July 8, 2018 compared to $2,622,000 in fiscal 2017.  The backlog for the modular buildings segment was $465,000 as of July 8, 2018, compared to $494,000 in fiscal 2017. The backlog for the tools segment was $216,000 as of July 8, 2018, compared to $153,000 in fiscal 2017.  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.

Results of Operations – Discontinued Operations

During the third quarter of fiscal 2016, we made the decision to exit the pressurized vessels industry. On March 29, 2018 we disposed of the remaining assets of our Vessels segment at a selling price of $1,500,000.

Liquidity and Capital Resources

Our primary sources of funds for the six months ended May 31, 2018 were funds received from the sale of real estate from discontinued operations and the reduction of inventory. Our primary uses of cash were costs of operation and payments on our debt.  We expect our primary capital needs for the remainder of the fiscal year to relate to costs of operation, including production.

18

We have a $5,000,000 revolving line of credit with Bank Midwest that, as of May 31, 2018, had an outstanding principal balance of $2,124,530. The revolving line of credit was renewed on March 30, 2018 and is scheduled to mature on March 30, 2019.

We believe that our cash flows from operations and 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 person serving as our principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e), as of the end of the period subject to this report. Based on this evaluation, the person serving as our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective and provide reasonable assurance that information required to be disclosed by us in the periodic and current reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified by the Securities and Exchange Commission’s rules and forms.

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.

19

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.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Effective March 30, 2018, we renewed our $5,000,000 revolving line of credit with Bank Midwest. The revolving line of credit is payable upon demand by Bank Midwest, and monthly interest-only payments are required. If no earlier demand is made, the unpaid principal and accrued interest is due on March 30, 2019. The updated Promissory Note with Bank Midwest as well as Modifications of Mortgage for our properties in Canton, Ohio and West Union, Iowa are included as Exhibits 10.2, 10.3 and 10.4 hereto and are incorporated herein by reference.

Item 6. Exhibits.

Exhibit No.	Description
10.1	Consulting Agreement dated May 18, 2018, effective June 1, 2018 – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 31, 2018.
10.2	Promissory Note, between Bank Midwest and Art’s-Way Manufacturing Co., Inc., dated March 30, 2018– incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed April 2, 2018.
10.3	Modification of Mortgage (3620 Progress Street NE, Canton, OH 44705), by Ohio Metal Working Products/Art’s-Way Inc., dated March 30, 2018 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed April 2, 2018.
10.4	Modification of Mortgage (800 Highway 150 South, West Union, IA 52175), by Art’s-Way Manufacturing Co., Inc., dated March 30, 2018– incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed April 2, 2018.
31.1	Certificate of Chief Executive Officer and Interim Chief Financial Officer pursuant to 17 CFR 13a-14(a) – filed herewith.
32.1	Certificate of Chief Executive Officer and Interim 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.

20

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: July 12, 2018		By: /s/ Carrie L. Gunnerson
		Carrie L. Gunnerson
		President, Chief Executive Officer and Interim Chief Financial Officer

21

EX-31.1

Exhibit 31.1

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

(SECTION 302 CERTIFICATION)

I, Carrie L. Gunnerson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc.;

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

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

4. I am 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. I have disclosed, based on my 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 controls over financial reporting.

		ART’S-WAY MANUFACTURING CO., INC.
Date:	July 12, 2018	/s/ Carrie L. Gunnerson
		Carrie L. Gunnerson
		President, Chief Executive Officer and Interim 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 quarterly report on Form 10-Q of Art’s-Way Manufacturing Co., Inc. (the “Company”) for the fiscal quarter ended May 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carrie L. Gunnerson, as the President, Chief Executive Officer and Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

		ART’S-WAY MANUFACTURING CO., INC.
Date:	July 12, 2018	/s/ Carrie L. Gunnerson
		Carrie L. Gunnerson
		President, Chief Executive Officer and Interim Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	May 31, 2018	Jul. 09, 2018
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	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		4,198,947
Document Type	10-Q
Document Period End Date	May 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	May 31, 2018	Nov. 30, 2017
Current assets:
Cash	$ 3,622	$ 212,400
Accounts receivable-customers, net of allowance for doubtful accounts of $22,829 and $32,298 in 2018 and 2017, respectively	2,075,212	1,910,294
Inventories, net	10,729,072	11,966,722
Cost and profit in excess of billings	269,081	65,146
Net investment in sales-type leases, current	120,542
Assets of discontinued operations		2,454
Other current assets	188,226	275,755
Total current assets	13,385,755	14,432,771
Property, plant, and equipment, net	5,745,784	5,946,957
Assets held for lease, net	1,957,565	1,217,164
Deferred income taxes	820,964	901,396
Goodwill	375,000	375,000
Net investment in sales-type leases, long-term	229,439
Other assets of discontinued operations		1,425,000
Other assets	79,151	81,545
Total assets	22,593,658	24,379,833
Current liabilities:
Line of credit	2,124,530	2,462,530
Current portion of long-term debt	223,737	221,230
Accounts payable	1,057,810	673,653
Customer deposits	608,905	600,325
Billings in excess of cost and profit		48,211
Accrued expenses	832,361	981,558
Liabilities of discontinued operations		59,149
Income taxes payable	3,500	3,100
Total current liabilities	4,850,843	5,049,756
Long-term liabilities
Long-term liabilities of discontinued operations		590,366
Long-term debt, excluding current portion	2,636,875	2,748,677
Total liabilities	7,487,718	8,388,799
Commitments and Contingencies (Notes 8 and 9)
Stockholders’ equity:
Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2018 and 2017; issued 0 shares in 2018 and 2017.
Common stock – $0.01 par value. Authorized 9,500,000 shares in 2018 and 2017; issued 4,208,233 in 2018 and 4,158,752 in 2017	42,082	41,587
Additional paid-in capital	2,969,993	2,859,052
Retained earnings	12,121,600	13,353,830
Accumulated other comprehensive expense		(257,010)
Treasury stock, at cost (9,286 in 2018 and 1,954 in 2017 shares)	(27,735)	(6,425)
Total stockholders’ equity	15,105,940	15,991,034
Total liabilities and stockholders’ equity	$ 22,593,658	$ 24,379,833

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	May 31, 2018	Nov. 30, 2017
Allowance for doubtful accounts	$ 22,829	$ 32,298
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
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)	4,208,233	4,158,752
Treasury stock (in shares)	9,286	1,954

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Sales	$ 5,294,464	$ 4,689,354	$ 10,660,000	$ 9,110,522
Cost of goods sold	4,187,450	3,877,870	8,399,610	7,185,215
Gross profit	1,107,014	811,484	2,260,390	1,925,307
Expenses:
Engineering	127,539	132,347	256,602	264,987
Selling	487,991	483,060	972,522	968,441
General and administrative	949,598	917,461	1,798,101	1,765,695
Total expenses	1,565,128	1,532,868	3,027,225	2,999,123
Income (Loss) from operations	(458,114)	(721,384)	(766,835)	(1,073,816)
Other income (expense):
Interest expense	(68,711)	(79,253)	(138,387)	(143,047)
Other	(252,687)	63,245	(180,115)	114,920
Total other income (expense)	(321,398)	(16,008)	(318,502)	(28,127)
Income (Loss) from continuing operations before income taxes	(779,512)	(737,392)	(1,085,337)	(1,101,943)
Income tax expense (benefit)	(125,533)	(228,485)	96,040	(339,396)
Income (Loss) from continuing operations	(653,979)	(508,907)	(1,181,377)	(762,547)
Discontinued Operations
Income (loss) from operations of discontinued segment	(15,587)	(27,665)	(67,177)	(22,789)
Income tax expense (benefit)	(3,788)	(9,012)	(16,324)	(7,748)
Income (Loss) on discontinued operations	(11,799)	(18,653)	(50,853)	(15,041)
Net Income (Loss)	$ (665,778)	$ (527,560)	$ (1,232,230)	$ (777,588)
Earnings (Loss) per share - Basic:
Continuing Operations (in dollars per share)	$ (0.16)	$ (0.12)	$ (0.28)	$ (0.18)
Discontinued Operations (in dollars per share)			(0.01)
Net Income (Loss) per share (in dollars per share)	(0.16)	(0.12)	(0.29)	(0.18)
Earnings (Loss) per share - Diluted:
Continuing Operations (in dollars per share)	(0.16)	(0.12)	(0.28)	(0.18)
Discontinued Operations (in dollars per share)			(0.01)
Net Income (Loss) per share (in dollars per share)	$ (0.16)	$ (0.12)	$ (0.29)	$ (0.18)
Weighted average outstanding shares used to compute basic net income per share (in shares)	4,213,893	4,158,969	4,192,592	4,142,672
Weighted average outstanding shares used to compute diluted net income per share (in shares)	4,213,893	4,158,969	4,192,592	4,142,672

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Net Income (Loss)	$ (665,778)	$ (527,560)	$ (1,232,230)	$ (777,588)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	10,528	(16,120)	3,830	(5,098)
Release of cumulative translation adjustment due to substantial liquidation of a foreign entity	253,180		253,180
Total Other Comprehensive Income (Loss)	263,708	(16,120)	257,010	(5,098)
Comprehensive (Loss)	$ (402,070)	$ (543,680)	$ (975,220)	$ (782,686)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	May 31, 2018	May 31, 2017
Cash flows from operations:
Net (loss) from continuing operations	$ (1,181,377)	$ (762,547)
Net (loss) from discontinued operations	(50,853)	(15,041)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Stock based compensation	111,436	72,959
Loss on release of cumulative translation adjustment	253,180
Unrealized foreign currency gain (loss)	3,830	(5,098)
(Gain)/Loss on disposal of property, plant, and equipment	(12,084)	11,945
Depreciation and amortization expense	408,757	342,387
Bad debt expense (recovery)	(9,044)	(4,952)
Deferred income taxes	80,432	(360,464)
Changes in assets and liabilities:
Accounts receivable	(155,874)	(512,044)
Inventories, net	437,307	(425,931)
Income taxes receivable		16,505
Net investment in sales-type leases	(349,981)
Other assets	87,529	(273,758)
Accounts payable	384,157	923,695
Contracts in progress, net	(252,146)	34,618
Customer deposits	8,580	353,772
Income taxes payable	400
Accrued expenses	(149,197)	(10,843)
Net cash (used in) operating activities - continuing operations	(334,095)	(599,756)
Net cash (used in) operating activities - discontinued operations	(89,697)	(22,635)
Net cash (used in) operating activities	(423,792)	(622,391)
Cash flows from investing activities:
Purchases of property, plant, and equipment	(164,874)	(293,919)
Net proceeds from sale of assets	29,316	12,190
Net cash (used in) investing activities - continuing operations	(135,558)	(281,729)
Net cash provided by investing activities - discontinued operations	1,418,761	38,736
Net cash provided by (used in) investing activities	1,283,203	(242,993)
Cash flows from financing activities:
Net change in line of credit	338,000	(450,000)
Repayment of term debt	(109,295)	(364,080)
Repurchases of common stock	(21,310)	(6,425)
Net cash provided by (used in) financing activities - continuing operations	(468,605)	79,495
Net cash (used in) financing activities - discontinued operations	(599,584)	(65,035)
Net cash provided by (used in) financing activities	(1,068,189)	14,460
Net (decrease) in cash	(208,778)	(850,924)
Cash at beginning of period	212,400	1,063,716
Cash at end of period	3,622	212,792
Supplemental disclosures of cash flow information:
Interest	142,426	148,203
Income taxes	5,237
Supplemental disclosures of non-cash operating and investing activities:
Transfer of inventory to assets held for lease	$ 800,343

XML

Note 1 - Description of the Company

6 Months Ended

May 31, 2018

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 (“Manufacturing”) manufactures farm equipment under the Art’s-Way Manufacturing label and private labels. The modular buildings segment (“Scientific”) manufactures modular buildings for various uses, commonly animal containment and research laboratories. The tools segment (“Metals”) manufactures steel cutting tools and inserts. During the

third

quarter of fiscal

2016,

the Company discontinued its pressurized vessels segment (“Vessels”) that manufactured pressurized vessels. For more information on discontinued operations, see Note

3

“Discontinued Operations.” For detailed financial information relating to segment reporting, see Note

16

“Segment Information.”

XML

Note 2 - Summary of Significant Account Policies

6 Months Ended

May 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2 ) Summary of Significant Account Policies

Statement Presentation

The foregoing condensed consolidated financial statements of the Company are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the 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, 2017.

The results of operations for the

three

and

six

months ended

May 31, 2018

are

not

necessarily indicative of the results for the fiscal year ending

November 30, 2018.

The financial books of the Company’s Canadian operations are kept in the functional currency of Canadian dollars and the financial statements are converted to U.S. Dollars for consolidation. When consolidating the financial results of the Company into U.S. Dollars for reporting purposes, the Company uses the All-Current translation method. The All-Current method requires the balance sheet assets and liabilities to be translated to U.S. Dollars at the exchange rate as of quarter end. Stockholders’ equity is translated at historical exchange rates and retained earnings are translated at an average exchange rate for the period. Additionally, revenue and expenses are translated at average exchange rates for the periods presented. The resulting cumulative translation adjustment is carried on the balance sheet and is recorded in stockholders’ equity. Since

no

income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has

not

been tax adjusted. During the

second

quarter of fiscal

2018,

the Company liquidated its investment in the Canadian subsidiary by selling off remaining inventory and filing dissolution paperwork. The cumulative translation adjustment carried on the balance sheet was released into net income in the

second

quarter

2018

and will

no

longer need translation each period. Since

no

income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has

not

been tax adjusted.

Sales-Type Leases

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

36

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

Estimates

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

three

and

six

months ended

May 31, 2018.

Actual results could differ from those estimates.

XML

Note 3 - Discontinued Operations

6 Months Ended

May 31, 2018

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3 ) Discontinued Operations

Effective

October 31, 2016,

the Company discontinued the operations of its Vessels segment in order to focus its efforts and resources on the business segments that have historically been more successful and that are expected to present greater opportunities for meaningful long-term shareholder returns.

In

January 2018,

the Company accepted an offer on the real estate assets for

$1,500,000,

which was below the carrying value at that time. Based on these facts the Company recorded an impairment of the real estate of approximately

$289,000

for the fiscal year ended

November 30, 2017,

which reduced the value to

$1,425,000,

which is the value the Company expected to receive after commissions on the sale of this asset. On

March 29, 2018,

the remaining assets of Vessels, consisting of real estate assets, were disposed of at a selling price of

$1,500,000.

As Vessels was a unique business unit of the Company, its liquidation was a strategic shift. In accordance with Accounting Standard Codification Topic

360,

the Company has classified Vessels as discontinued operations for all periods presented.

Income from discontinued operations, before income taxes in the accompanying Condensed Consolidated Statements of Operations is comprised of the following:

	Three Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		7,019			23,746
Income (loss) from operations		(7,019	)		(23,746	)
Income (loss) before tax		(15,587	)		(27,665	)

	Six Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		51,133			23,824
Income (loss) from operations		(51,133	)		(23,824	)
Income (loss) before tax		(67,177	)		(22,789	)

The components of discontinued operations in the accompanying Condensed Consolidated Balance Sheets are as follows:

	May 31, 2018		November 30, 2017
Cash	$	-	$	2,454
Property, plant, and equipment, net		-		1,425,000
Assets of discontinued operations	$	-	$	1,427,454
Accrued expenses		-		49,931
Notes Payable		-		599,584
Liabilities of discontinued operations	$	-	$	649,515

XML

Note 4 - Net Income (Loss) Per Share of Common Stock

6 Months Ended

May 31, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

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

Basic net income (loss) per common share 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 earnings (loss) per common share.

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

May 31, 2018

and

May 31, 2017:

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(653,979	)	$	(508,907	)
Net (loss) income from discontinued operations		(11,799	)		(18,653	)
Net (loss) income	$	(665,778	)	$	(527,560	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)

	For the Six Months ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(1,181,377	)	$	(762,547	)
Net (loss) income from discontinued operations		(50,853	)		(15,041	)
Net (loss) income	$	(1,232,230	)	$	(777,588	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)

XML

Note 5 - Inventory

6 Months Ended

May 31, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

5 ) Inventory

Major classes of inventory are:

	May 31, 2018			November 30, 2017
Raw materials	$	8,293,049		$	8,731,985
Work in process		252,598			460,687
Finished goods		4,839,361			5,395,353
Gross inventory	$	13,385,008		$	14,588,025
Less: Reserves		(2,655,936	)		(2,621,303	)
Net Inventory	$	10,729,072		$	11,966,722

XML

Note 6 - Accrued Expenses

6 Months Ended

May 31, 2018

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

6 ) Accrued Expenses

Major components of accrued expenses are:

	May 31, 2018		November 30, 2017
Salaries, wages, and commissions	$	463,692	$	584,768
Accrued warranty expense		71,216		68,451
Other		297,453		328,339
	$	832,361	$	981,558

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Note 7 - Assets Held for Lease

6 Months Ended

May 31, 2018

Notes to Financial Statements

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

7 ) Assets Held for Lease

Major components of assets held for lease are:

	May 31, 2018		November 30, 2017
West Union Facility	$	1,105,561	$	1,118,330
Modular Buildings		852,004		98,834
Net assets held for lease	$	1,957,565	$	1,217,164

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Note 8 - Product Warranty

6 Months Ended

May 31, 2018

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

8 ) Product Warranty

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

one

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

no

cost to the customer. 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

6

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

three

and

six

months ended

May 31, 2018

and

May 31, 2017

are as follows:

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	54,135		$	125,672
Settlements / adjustments		(58,892	)		(36,186	)
Warranties issued		75,973			63,478
Balance, ending	$	71,216		$	152,964

	For the Six Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	68,451		$	134,373
Settlements / adjustments		(141,565	)		(109,135	)
Warranties issued		144,330			127,726
Balance, ending	$	71,216		$	152,964

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Note 9 - Loan and Credit Agreements

6 Months Ended

May 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

9 ) Loan and Credit Agreements

The Company maintains a revolving line of credit and term loan with Bank Midwest as well as a term loan with The First National Bank of West Union.

Bank Midwest Revolving Line o

f Credit,

Term Loans

,

and

Covenants

On

September 28, 2017,

the Company entered into a credit facility with Bank Midwest, which supersedes and replaces in its entirety the Company’s previous credit facility with U.S. Bank. The Bank Midwest credit facility consists of a

$5,000,000

revolving line of credit, a

$2,600,000

term loan due

October 1, 2037,

and a

$600,000

term loan due

October 1, 2019.

The proceeds of the new line of credit and the term loans were used to refinance all debt previously held by U.S. Bank in the amount of approximately

$6,562,030,

which consisted of

$6,528,223

in unpaid principal and approximately

$33,807

in accrued and unpaid interest and fees. The revolving line of credit is being used for working capital purposes. On

March 29, 2018,

the company paid in full the

$600,000

term loan due

October 1, 2019

using proceeds from the sale of the Company’s Dubuque, Iowa property. The payment consisted of

$596,563

in principal and

$2,328

in interest.

On

May 31, 2018,

the balance of the line of credit was

$2,124,530

with

$2,875,470

remaining available, limited by the borrowing base calculation. The 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 line of credit. Any unpaid principal amount borrowed on the revolving line of credit accrues interest at a floating rate per annum equal to

1.000%

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

4.250%

per annum and the current interest rate is

6.000%

per annum. The revolving line of credit was renewed on

March 30, 2018.

The revolving line of credit is payable upon demand by Bank Midwest, and monthly interest-only payments are required. If

no

earlier demand is made, the unpaid principal and accrued interest is due on

March 30, 2019.

The

$2,600,000

term loan accrues interest at a rate of

5.000%

for the

first

sixty

months. Thereafter, this loan will accrue interest at a floating rate per annum equal to

0.750%

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

4.150%

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. This loan is also guaranteed by the United States Department of Agriculture (“USDA”), which requires an upfront guarantee fee of

$62,400

and 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 loan as well, 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 stock, is guaranteeing approximately

38%

of this loan, for an annual fee of

2%

of the personally guaranteed amount.  The initial guarantee fee will be amortized over the life of the loan, and the annual fees and personally guaranteed amounts are expensed monthly.  Prior to repayment, the

$600,000

term loan accrued interest at a rate of

5.000%,

and monthly payments of

$3,249

for principal and interest were required.

Each of the revolving line of credit and the

$2,600,000

term loan are governed by the terms of a separate Promissory Note, dated

September 28, 2017,

entered into between the Company and Bank Midwest. The

$600,000

term loan was also governed by the terms of a separate Promissory Note, dated

September 28, 2017,

entered into between the Company and Bank Midwest.

In connection with the revolving 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 revolving 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 revolving line of credit, as set forth in Commercial Guaranties, each dated

September 28, 2017.

To further secure the line of credit, the Company has granted Bank Midwest a

second

mortgage on its West Union, Iowa property and Ohio Metal Working Products/Art’s-Way Inc. has granted Bank Midwest a mortgage on its property located in Canton, Ohio. The

$2,600,000

term loan is secured by a mortgage on the Company’s Armstrong, Iowa and Monona, Iowa properties, and the

$600,000

term loan was secured by a mortgage on the Company’s Dubuque, Iowa property. Each mortgage is governed by the terms of a separate Mortgage, dated

September 28, 2017,

and each property is also subject to a separate Assignment of Rents, dated

September 28, 2017.

If the Company or its subsidiaries (as guarantors pursuant to the Commercial Guaranties) commits an event of default with respect to the promissory notes and fails or is unable to cure that default, Bank Midwest

may

immediately terminate its obligation, if any, to make additional loans to the Company and

may

accelerate the Company’s obligations under the promissory notes. Bank Midwest shall also have all other rights and remedies for default provided by the Uniform Commercial Code, as well as any other applicable law and the various loan agreements. In addition, in an event of default, Bank Midwest

may

foreclose on the mortgaged property.

Compliance with Bank Midwest covenants is measured annually at

November 30.

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

1.75,

while maintaining a minimum of

$5,100,000

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

1

to

1

must be maintained, with a minimum of

40%

tangible balance sheet equity, with variations subject to mutual agreement. The Company is also required to maintain a minimum debt service coverage ratio of

1.25,

with a

0.10

tolerance. The Company was in compliance with all covenants as of

November 30, 2017

other than the debt service coverage ratio. Bank Midwest issued a waiver forgiving the noncompliance, and

no

event of default has occurred. The next measurement date is

November 30, 2018.

The Company is also required to provide audited financial statements within

120

days of its fiscal year end.

Iowa Finance Authority Term Loan and Covenants

On

May 1, 2010,

the Company obtained a loan to finance the purchase of an additional facility located in West Union, Iowa to be used as a distribution center, warehouse facility, and manufacturing plant for certain products under the Art’s-Way brand. The funds for this loan were made available by the Iowa Finance Authority by the issuance of tax exempt bonds. This loan had an original principal amount of

$1,300,000,

an interest rate of

3.5%

per annum and a maturity date of

June 1, 2020.

On

February 1, 2013,

the interest rate was decreased to

2.75%

per annum. The other terms of the loan remain unchanged.

This loan from the Iowa Finance Authority, which has been assigned to The First National Bank of West Union (n/k/a Bank

1st

), is governed by a Manufacturing Facility Revenue Note dated

May 28, 2010

as amended

February 1, 2013

and a Loan Agreement dated

May 1, 2010

and a First Amendment to Loan Agreement dated

February 1, 2013 (

collectively, “the IFA Loan Agreement”), which requires the Company to provide quarterly internally prepared financial reports and year-end audited financial statements and to maintain a minimum debt service coverage ratio of

1.5

to

1.0,

which is measured at

November 30

of each year. Among other covenants, the IFA Loan Agreement also requires the Company to maintain proper insurance on, and maintain in good repair, the West Union Facility, and continue to conduct business and remain duly qualified to do business in the State of Iowa. The loan is secured by a mortgage on the Company’s West Union Facility, pursuant to a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Financing Statement dated

May 1, 2010

between the Company and The First National Bank of West Union (the “West Union Mortgage”).

If the Company commits an event of default under the IFA Loan Agreement or the West Union Mortgage and does

not

cure the event of default within the time specified by the IFA Loan Agreement, the lender

may

cause the entire amount of the loan to be immediately due and payable and take any other action that it is lawfully permitted to take or in equity to enforce the Company’s performance.

The Company was in compliance with all covenants except for the debt service coverage ratio covenant as measured on

November 30, 2017.

The First National Bank of West Union issued a waiver and the next measurement date is

November 30, 2018.

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

	May 31, 2018		November 30, 2017
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,556,219	$	2,595,007
Bank Midwest loan payable in monthly installments of $3,249 including interest at 5.00%, paid in full as of March 29, 2018		-		599,584
Iowa Finance Authority loan payable in monthly installments of $12,500 including interest at 2.75%, due June 1, 2020		304,393		374,900
Total term debt	$	2,860,612	$	3,569,491
Less current portion of term debt		223,737		221,230
Term debt of discontinued operations		-		599,584
Term debt, excluding current portion	$	2,636,875	$	2,748,677

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Note 10 - Income Taxes

6 Months Ended

May 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10 ) 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.

On

December 22, 2017,

the Tax Cuts and Job Act of

2017

was enacted, which reduced the top corporate income tax rate from

35%

to

21%.

This law is generally effective for tax years beginning after

December 31, 2017.

The application of this new rate was recognized in the

first

quarter of fiscal

2018.

Tax expense from continuing operations includes an adjustment of approximately

$300,000

related to the revaluation of the Company’s net deferred tax asset at the new statutory rate.

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Note 11 - Related Party Transactions

6 Months Ended

May 31, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

11 ) Related Party Transactions

During the

three

and

six

months ended

May 31, 2018,

the Company recognized expenses of

$7,028

and

$12,029

respectively, for transactions with a related party, compared to

$0

and

$3,691

for the same periods in

2017.

The accrued expenses balance as of

May 31, 2018

contains

$1,646

due to a related party, compared to

$0

for the same period in

2017.

XML

Note 12 - Sales-type Leases

6 Months Ended

May 31, 2018

Notes to Financial Statements

Capital Leases in Financial Statements of Lessor Disclosure [Text Block]

12 ) Sales-Type Leases

The components related to sales-type leases at

May 31, 2018

and

November 30, 2017

are as follows:

	May 31, 2018			November 30, 2017
Minimum lease receivable, current	$	174,000		$	-
Unearned interest income, current		(53,458	)		-
Net investment in sales-type leases, current		120,542			-
Minimum lease receivable, long-term		263,927			-
Unearned interest income, long-term		(34,488	)		-
Net investment in sales-type leases, long-term	$	229,439		$	-

The profit recognized in continuing operations on the condensed consolidated statements of operations from commencement of sales-type leases in the

three

and

six

months ended

May 31, 2018

was

$0

and

$129,104

respectively, compared to

$0

and

$0

from the same periods in

2017.

Future minimum lease receipts are as follows:

Year Ending November 30,	Amount
2018	$	98,575
2019		174,000
2020		162,425
2021		2,927
2022		-
Thereafter		-
Total	$	437,927

XML

Note 13 - Recently Issued Accounting Pronouncements

6 Months Ended

May 31, 2018

Notes to Financial Statements

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

13 ) Recently Issued Accounting Pronouncements

Accounting Pronouncements

Not

Yet Adopted

Revenue from Contracts with Customers

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

“Revenue from Contracts with Customers” which supersedes the guidance in “Revenue Recognition (Topic

605

)” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU

2014

-

09

is effective for annual reporting periods beginning after

December 15, 2017,

including interim periods within that reporting period, and is to be applied retrospectively, with early application

not

permitted. The Company is evaluating the new standard and at this time believes that its Scientific segment will be impacted most significantly by this standard. The Company believes that this segment will need to revise its standard contracts with customers to more clearly define the rights and consideration transferred at the various milestones identified in the contracts. The Company believes that its other segments already have the necessary tools to evaluate their revenues in a manner consistent with the application of this standard and will have the ability to meet the disclosure requirements using current systems. The Company continues to research and assess the implications of the adoption of this standard on its consolidated financial statements. The Company is in the process of documenting revenue streams and the application of the new revenue standard to each stream to ensure compliance with the new standard.

Leases

In

February 2016,

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. This guidance is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those years. The Company will adopt this guidance for the fiscal year ending

November 30, 2020,

including interim periods within that reporting period. The Company has a moderate amount of leasing activity and is currently evaluating the impact of this guidance on its consolidated financial statements.

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Note 14 - Equity Incentive Plan and Stock Based Compensation

6 Months Ended

May 31, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

14 ) Equity Incentive Plan and Stock Based Compensation

On

January 27, 2011,

the Board of Directors of the Company authorized and approved the Art’s-Way Manufacturing Co., Inc.

2011

Equity Incentive Plan (the

“2011

Plan”). The

2011

Plan was approved by the stockholders on

April 28, 2011. 

It replaced the Employee Stock Option Plan and the Directors’ Stock Option Plan (collectively, the “Prior Plans”), and

no

further stock options will be awarded under the Prior Plans. Awards to directors and executive officers under the

2011

Plan are governed by the forms of agreement approved by the Board of Directors.

The

2011

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 of Directors 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 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. Additionally, directors can elect to receive their board compensation as restricted stock. During the

first

six

months of fiscal

2018,

restricted stock awards of

46,200

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

three

years, and restricted stock awards of

20,281

have been issued to directors as part of the compensation policy, which vested immediately upon grant. During the

first

six

months of fiscal

2018,

17,000

shares of restricted stock were forfeited upon the departure of certain employees.

Stock options granted prior to

January 27, 2011

are governed by the applicable Prior Plan and the forms of agreement adopted thereunder.

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

six

months ended

May 31, 2018

or in the same respective period of fiscal

2017.

The Company incurred a total of

$61,879

and

$111,436

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

three

and

six

months ended

May 31, 2018

compared to

$46,402

and

$72,959

of stock-based compensation expense for restricted stock awards for the same respective periods of fiscal

2017.

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Note 15 - Disclosures About the Fair Value of Financial Instruments

6 Months Ended

May 31, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

15 ) 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

May 31, 2018,

and

November 30, 2017,

the carrying amount approximated fair value for cash, accounts receivable, net investment in sale-type leases, accounts payable, notes payable to bank, and other current and long-term liabilities. The carrying amounts 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 installment term loans payable also approximates recorded value because the interest rates charged under the loan terms are

not

substantially different than current interest rates.

XML

Note 16 - Segment Information

6 Months Ended

May 31, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

16 ) Segment Information

There are

three

reportable segments: agricultural products, modular buildings and tools. The agricultural products segment fabricates and sells farming products as well as related equipment and replacement parts for these products in the United States and worldwide. The modular buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses. The tools segment manufactures steel cutting tools and inserts.

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

Approximate financial information with respect to the reportable segments is as follows. The tables below exclude income and balance sheet data from discontinued operations. See Note

3

“Discontinued Operations.”

	Three Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,937,000		$	834,000		$	524,000		$	5,295,000
Income (loss) from operations		(263,000	)		(146,000	)		(50,000	)	$	(459,000	)
Income (loss) before tax		(576,000	)		(141,000	)		(63,000	)	$	(780,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		42,000			859,000			-		$	901,000
Depreciation & Amortization		132,000			5,500			32,000		$	169,500

	Three Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,162,000		$	888,000		$	639,000		$	4,689,000
Income (loss) from operations		(657,000	)		(19,000	)		(45,000	)	$	(721,000	)
Income (loss) before tax		(647,000	)		(34,000	)		(56,000	)	$	(737,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		75,000			-			24,000		$	99,000
Depreciation & Amortization		126,000			14,000			32,000		$	172,000

	Six Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	7,866,000		$	1,573,000		$	1,221,000		$	10,660,000
Income (loss) from operations		(537,000	)		(206,000	)		(23,000	)	$	(766,000	)
Income (loss) before tax		(845,000	)		(194,000	)		(47,000	)	$	(1,086,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		71,000			894,000			-		$	965,000
Depreciation & Amortization		265,000			80,000			64,000		$	409,000

	Six Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	6,531,000		$	1,276,000		$	1,304,000		$	9,111,000
Income (loss) from operations		(876,000	)		(173,000	)		(25,000	)	$	(1,074,000	)
Income (loss) before tax		(865,000	)		(192,000	)		(45,000	)	$	(1,102,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		204,000			-			90,000		$	294,000
Depreciation & Amortization		251,000			28,000			63,000		$	342,000

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

may

not

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

XML

Note 17 - Subsequent Event

6 Months Ended

May 31, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

17 ) Subsequent Event

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.

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Significant Accounting Policies (Policies)

6 Months Ended

May 31, 2018

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) which are, in the opinion of management, necessary for a fair presentation of the 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, 2017.

The results of operations for the

three

and

six

months ended

May 31, 2018

are

not

necessarily indicative of the results for the fiscal year ending

November 30, 2018.

The financial books of the Company’s Canadian operations are kept in the functional currency of Canadian dollars and the financial statements are converted to U.S. Dollars for consolidation. When consolidating the financial results of the Company into U.S. Dollars for reporting purposes, the Company uses the All-Current translation method. The All-Current method requires the balance sheet assets and liabilities to be translated to U.S. Dollars at the exchange rate as of quarter end. Stockholders’ equity is translated at historical exchange rates and retained earnings are translated at an average exchange rate for the period. Additionally, revenue and expenses are translated at average exchange rates for the periods presented. The resulting cumulative translation adjustment is carried on the balance sheet and is recorded in stockholders’ equity. Since

no

income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has

not

been tax adjusted. During the

second

quarter of fiscal

2018,

the Company liquidated its investment in the Canadian subsidiary by selling off remaining inventory and filing dissolution paperwork. The cumulative translation adjustment carried on the balance sheet was released into net income in the

second

quarter

2018

and will

no

longer need translation each period. Since

no

income tax benefit will be received from the foreign equity sale, the cumulative translation adjustment has

not

been tax adjusted.

Lessor, Leases [Policy Text Block]

Sales-Type Leases

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

36

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

Use of Estimates, Policy [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

and

six

months ended

May 31, 2018.

Actual results could differ from those estimates.

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Note 3 - Discontinued Operations (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement [Table Text Block]

	Three Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		7,019			23,746
Income (loss) from operations		(7,019	)		(23,746	)
Income (loss) before tax		(15,587	)		(27,665	)

	Six Months Ended
	May 31, 2018			May 31, 2017
Revenue from external customers	$	-		$	-
Gross Profit		-			-
Operating Expense		51,133			23,824
Income (loss) from operations		(51,133	)		(23,824	)
Income (loss) before tax		(67,177	)		(22,789	)

Disposal Groups, Including Discontinued Operations [Table Text Block]

	May 31, 2018		November 30, 2017
Cash	$	-	$	2,454
Property, plant, and equipment, net		-		1,425,000
Assets of discontinued operations	$	-	$	1,427,454
Accrued expenses		-		49,931
Notes Payable		-		599,584
Liabilities of discontinued operations	$	-	$	649,515

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Note 4 - Net Income (Loss) Per Share of Common Stock (Tables)

6 Months Ended

May 31, 2018

Notes Tables

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

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(653,979	)	$	(508,907	)
Net (loss) income from discontinued operations		(11,799	)		(18,653	)
Net (loss) income	$	(665,778	)	$	(527,560	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,213,893			4,158,969
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.16	)	$	(0.12	)
Discontinued Operations	$	-		$	-
Net Income (Loss) per share	$	(0.16	)	$	(0.12	)

	For the Six Months ended
	May 31, 2018			May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$	(1,181,377	)	$	(762,547	)
Net (loss) income from discontinued operations		(50,853	)		(15,041	)
Net (loss) income	$	(1,232,230	)	$	(777,588	)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Effect of dilutive stock options		-			-
For diluted (loss) earnings per share - weighted average common shares outstanding		4,192,592			4,142,672
Earnings (Loss) per share - Basic:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)
Earnings (Loss) per share - Diluted:
Continuing Operations	$	(0.28	)	$	(0.18	)
Discontinued Operations	$	(0.01	)	$	-
Net Income (Loss) per share	$	(0.29	)	$	(0.18	)

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Note 5 - Inventory (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	May 31, 2018			November 30, 2017
Raw materials	$	8,293,049		$	8,731,985
Work in process		252,598			460,687
Finished goods		4,839,361			5,395,353
Gross inventory	$	13,385,008		$	14,588,025
Less: Reserves		(2,655,936	)		(2,621,303	)
Net Inventory	$	10,729,072		$	11,966,722

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Note 6 - Accrued Expenses (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	May 31, 2018		November 30, 2017
Salaries, wages, and commissions	$	463,692	$	584,768
Accrued warranty expense		71,216		68,451
Other		297,453		328,339
	$	832,361	$	981,558

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Note 7 - Assets Held for Lease (Tables)

6 Months Ended

May 31, 2018

Notes Tables

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

	May 31, 2018		November 30, 2017
West Union Facility	$	1,105,561	$	1,118,330
Modular Buildings		852,004		98,834
Net assets held for lease	$	1,957,565	$	1,217,164

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Note 8 - Product Warranty (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	For the Three Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	54,135		$	125,672
Settlements / adjustments		(58,892	)		(36,186	)
Warranties issued		75,973			63,478
Balance, ending	$	71,216		$	152,964

	For the Six Months Ended
	May 31, 2018			May 31, 2017
Balance, beginning	$	68,451		$	134,373
Settlements / adjustments		(141,565	)		(109,135	)
Warranties issued		144,330			127,726
Balance, ending	$	71,216		$	152,964

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Note 9 - Loan and Credit Agreements (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	May 31, 2018		November 30, 2017
Bank Midwest loan payable in monthly installments of $17,271 including interest at 5.00%, due October 1, 2037	$	2,556,219	$	2,595,007
Bank Midwest loan payable in monthly installments of $3,249 including interest at 5.00%, paid in full as of March 29, 2018		-		599,584
Iowa Finance Authority loan payable in monthly installments of $12,500 including interest at 2.75%, due June 1, 2020		304,393		374,900
Total term debt	$	2,860,612	$	3,569,491
Less current portion of term debt		223,737		221,230
Term debt of discontinued operations		-		599,584
Term debt, excluding current portion	$	2,636,875	$	2,748,677

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Note 12 - Sales-type Leases (Tables)

6 Months Ended

May 31, 2018

Notes Tables

Schedule of Sales-type Leases [Table Text Block]

	May 31, 2018			November 30, 2017
Minimum lease receivable, current	$	174,000		$	-
Unearned interest income, current		(53,458	)		-
Net investment in sales-type leases, current		120,542			-
Minimum lease receivable, long-term		263,927			-
Unearned interest income, long-term		(34,488	)		-
Net investment in sales-type leases, long-term	$	229,439		$	-

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

Year Ending November 30,	Amount
2018	$	98,575
2019		174,000
2020		162,425
2021		2,927
2022		-
Thereafter		-
Total	$	437,927

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Note 16 - Segment Information (Tables)

6 Months Ended

May 31, 2018

Notes Tables

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

	Three Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,937,000		$	834,000		$	524,000		$	5,295,000
Income (loss) from operations		(263,000	)		(146,000	)		(50,000	)	$	(459,000	)
Income (loss) before tax		(576,000	)		(141,000	)		(63,000	)	$	(780,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		42,000			859,000			-		$	901,000
Depreciation & Amortization		132,000			5,500			32,000		$	169,500

	Three Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	3,162,000		$	888,000		$	639,000		$	4,689,000
Income (loss) from operations		(657,000	)		(19,000	)		(45,000	)	$	(721,000	)
Income (loss) before tax		(647,000	)		(34,000	)		(56,000	)	$	(737,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		75,000			-			24,000		$	99,000
Depreciation & Amortization		126,000			14,000			32,000		$	172,000

	Six Months Ended May 31, 2018
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	7,866,000		$	1,573,000		$	1,221,000		$	10,660,000
Income (loss) from operations		(537,000	)		(206,000	)		(23,000	)	$	(766,000	)
Income (loss) before tax		(845,000	)		(194,000	)		(47,000	)	$	(1,086,000	)
Total Assets		16,688,000			3,486,000			2,420,000		$	22,594,000
Capital expenditures		71,000			894,000			-		$	965,000
Depreciation & Amortization		265,000			80,000			64,000		$	409,000

	Six Months Ended May 31, 2017
	Agricultural Products			Modular Buildings			Tools			Consolidated
Revenue from external customers	$	6,531,000		$	1,276,000		$	1,304,000		$	9,111,000
Income (loss) from operations		(876,000	)		(173,000	)		(25,000	)	$	(1,074,000	)
Income (loss) before tax		(865,000	)		(192,000	)		(45,000	)	$	(1,102,000	)
Total Assets		19,443,000			3,400,000			2,702,000		$	25,545,000
Capital expenditures		204,000			-			90,000		$	294,000
Depreciation & Amortization		251,000			28,000			63,000		$	342,000

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Note 1 - Description of the Company (Details Textual)	6 Months Ended
	May 31, 2018
Number of Operating Segments	3

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Note 2 - Summary of Significant Account Policies (Details Textual)	6 Months Ended
	May 31, 2018
Maximum [Member]
Lessor, Capital Lease, Term of Contract	3 years

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Note 3 - Discontinued Operations (Details Textual)	1 Months Ended
	Jan. 31, 2018 USD ($)
Real Estate Held for Sale, Sale Price Offer	$ 1,500,000
Impairment of Real Estate	289,000
Real Estate Held for Sale, Expected Proceeds	$ 1,425,000

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Note 3 - Discontinued Operations - Income From Discontinued Operations Before Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Income (loss) before tax	$ (15,587)	$ (27,665)	$ (67,177)	$ (22,789)
Discontinued Operations, Held-for-sale [Member] | Vessels Segment [Member]
Revenue from external customers
Gross Profit
Operating Expense	7,019	23,746	51,133	23,824
Income (loss) from operations	(7,019)	(23,746)	(51,133)	(23,824)
Income (loss) before tax	$ (15,587)	$ (27,665)	$ (67,177)	$ (22,789)

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Note 3 - Discontinued Operations - Components of Discontinued Operations (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Notes Payable		$ 599,584
Discontinued Operations, Held-for-sale [Member] | Vessels Segment [Member]
Cash		2,454
Property, plant, and equipment, net		1,425,000
Assets of discontinued operations		1,427,454
Accrued expenses		49,931
Notes Payable		599,584
Liabilities of discontinued operations		$ 649,515

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Note 4 - Net Income (Loss) Per Share of Common Stock - Basic and Diluted Earnings Per Common Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations	$ (653,979)	$ (508,907)	$ (1,181,377)	$ (762,547)
Net (loss) income from discontinued operations	(11,799)	(18,653)	(50,853)	(15,041)
Net (loss) income	$ (665,778)	$ (527,560)	$ (1,232,230)	$ (777,588)
Denominator:
For basic (loss) earnings per share - weighted average common shares outstanding (in shares)	4,213,893	4,158,969	4,192,592	4,142,672
Effect of dilutive stock options (in shares)
For diluted (loss) earnings per share - weighted average common shares outstanding (in shares)	4,213,893	4,158,969	4,192,592	4,142,672
Earnings (Loss) per share - Basic:
Continuing Operations (in dollars per share)	$ (0.16)	$ (0.12)	$ (0.28)	$ (0.18)
Discontinued Operations (in dollars per share)			(0.01)
Net Income (Loss) per share (in dollars per share)	(0.16)	(0.12)	(0.29)	(0.18)
Earnings (Loss) per share - Diluted:
Continuing Operations (in dollars per share)	(0.16)	(0.12)	(0.28)	(0.18)
Discontinued Operations (in dollars per share)			(0.01)
Net Income (Loss) per share (in dollars per share)	$ (0.16)	$ (0.12)	$ (0.29)	$ (0.18)

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Note 5 - Inventory - Major Classes of Inventory (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Raw materials	$ 8,293,049	$ 8,731,985
Work in process	252,598	460,687
Finished goods	4,839,361	5,395,353
Gross inventory	13,385,008	14,588,025
Less: Reserves	(2,655,936)	(2,621,303)
Net Inventory	$ 10,729,072	$ 11,966,722

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Note 6 - Accrued Expenses - Major Components Of Accrued Expenses (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Salaries, wages, and commissions	$ 463,692	$ 584,768
Accrued warranty expense	71,216	68,451
Other	297,453	328,339
Total accrued liabilities, current	$ 832,361	$ 981,558

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Note 7 - Assets Held for Lease - Summary of Assets Held for Lease (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Assets held for lease	$ 1,957,565	$ 1,217,164
West Union Facility [Member]
Assets held for lease	1,105,561	1,118,330
Modular Buildings [Member]
Assets held for lease	$ 852,004	$ 98,834

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Note 8 - Product Warranty (Details Textual)	6 Months Ended
	May 31, 2018
Standard Product Warrant Term	1 year

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Note 8 - Product Warranty - Changes In Product Warranty Liability (Details) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Balance, beginning	$ 54,135	$ 125,672	$ 68,451	$ 134,373
Settlements / adjustments	(58,892)	(36,186)	(141,565)	(109,135)
Warranties issued	75,973	63,478	144,330	127,726
Balance, ending	$ 71,216	$ 152,964	$ 71,216	$ 152,964

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Note 9 - Loan and Credit Agreements (Details Textual)			6 Months Ended		12 Months Ended
	Mar. 29, 2018 USD ($)	Sep. 28, 2017 USD ($)	May 31, 2018 USD ($)	May 31, 2017 USD ($)	Nov. 30, 2017 USD ($)	Feb. 28, 2018	Feb. 01, 2013	May 01, 2010 USD ($)
Long-term Debt, Total			$ 2,860,612		$ 3,569,491
Repayments of Long-term Debt, Total			109,295	$ 364,080
Term Loan Due October 2037 [Member]
Long-term Debt, Total			$ 2,556,219		$ 2,595,007
Debt Instrument, Interest Rate, Stated Percentage			5.00%		5.00%
Debt Instrument, Periodic Payment, Total			$ 17,271		$ 17,271
Term Loan Due October 2019 [Member]
Long-term Debt, Total					$ 599,584
Debt Instrument, Interest Rate, Stated Percentage					5.00%
Debt Instrument, Periodic Payment, Total					$ 3,249
Iowa Finance Authority Term Loan [Member]
Long-term Debt, Total			$ 304,393		$ 374,900
Debt Instrument, Interest Rate, Stated Percentage			2.75%		2.75%
Debt Instrument, Periodic Payment, Total			$ 12,500		$ 12,500
Bank Midwest [Member]
Long-term Line of Credit, Total			2,124,530
Line of Credit Facility, Remaining Borrowing Capacity			$ 2,875,470
Line of Credit, Borrowing Base, Accounts Receivable						75.00%
Line of Credit, Borrowing Base, Inventory						50.00%
Debt Instrument, Covenant, Minimum Working Capital Ratio		1.75
Debt Instrument, Covenant, Minimum Working Capital		$ 5,100,000
Debt Instrument, Covenant, Maximum Debt to Worth Ratio		1
Debt Instrument, Covenant, Minimum Tangible Balance Sheet Equity, Percentage		40.00%
Debt Instrument, Covenant, Minimum Debt Service Coverage Ratio		1.25
Debt Instrument, Covenant, Minimum Debt Service Coverage Ratio, Tolerance		0.1
Bank Midwest [Member] | Term Loan Due October 2037 [Member]
Long-term Debt, Total		$ 2,600,000
Debt Instrument, Interest Rate, Stated Percentage		5.00%
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] | 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 [Member] | Term Loan Due October 2019 [Member]
Long-term Debt, Total		$ 600,000
Repayments of Long-term Debt, Total	$ 600,000
Repayments of Long-term Debt, Principal	596,563
Repayments of Long-term Debt, Interest	$ 2,328
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt Instrument, Periodic Payment, Total		$ 3,249
Bank Midwest [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 5,000,000
Line of Credit Facility, Interest Rate During Period		6.00%
Bank Midwest [Member] | Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility, Interest Rate During Period		4.25%
Bank Midwest [Member] | Revolving Credit Facility [Member] | Wall Street Journal Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.00%
US Bank [Member]
Repayments of Lines of Credit		$ 6,562,030
Repayments of Lines of Credit, Unpaid Principal		6,528,223
Repayments of Lines of Credit, Accrued and Unpaid Interest and Fees		$ 33,807
The First National Bank of West Union [Member] | Iowa Finance Authority Term Loan [Member]
Debt Instrument, Interest Rate, Stated Percentage							2.75%	3.50%
Debt Instrument, Face Amount								$ 1,300,000
Debt Instrument, Covenant Debt Service Coverage Ratio					1.5

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Note 9 - Loan and Credit Agreements - Summary of Term Debt (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Term debt	$ 2,860,612	$ 3,569,491
Less current portion of term debt	223,737	221,230
Term debt of discontinued operations		599,584
Term debt, excluding current portion	2,636,875	2,748,677
Term Loan Due October 2037 [Member]
Term debt	2,556,219	2,595,007
Term Loan Due October 2019 [Member]
Term debt		599,584
Iowa Finance Authority Term Loan [Member]
Term debt	$ 304,393	$ 374,900

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Note 9 - Loan and Credit Agreements - Summary of Term Debt (Details) (Parentheticals) - USD ($)	6 Months Ended	12 Months Ended
	May 31, 2018	Nov. 30, 2017
Term Loan Due October 2037 [Member]
Debt instrument, periodic payment	$ 17,271	$ 17,271
Debt instrument, interest rate, stated percentage	5.00%	5.00%
Term Loan Due October 2019 [Member]
Debt instrument, periodic payment		$ 3,249
Debt instrument, interest rate, stated percentage		5.00%
Iowa Finance Authority Term Loan [Member]
Debt instrument, periodic payment	$ 12,500	$ 12,500
Debt instrument, interest rate, stated percentage	2.75%	2.75%

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Note 10 - Income Taxes (Details Textual)	6 Months Ended
	May 31, 2018 USD ($)
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability	$ 300,000

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Note 11 - Related Party Transactions (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	Feb. 28, 2017	May 31, 2018	May 31, 2017
Related Party Transaction, Expenses from Transactions with Related Party	$ 7,028	$ 0	$ 12,029	$ 3,691
Due to Related Parties, Total	$ 1,646		$ 1,646	$ 0

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Note 12 - Sales-type Leases (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017
Capital Leases, Income Statement, Sales Type Lease Revenue	$ 0	$ 0	$ 129,104	$ 0

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Note 12 - Sales-type Leases - Components Related to Sales-type Leases (Details) - USD ($)	May 31, 2018	Nov. 30, 2017
Minimum lease receivable, current	$ 174,000
Unearned interest income, current	(53,458)
Net investment in sales-type leases, current	120,542
Minimum lease receivable, long-term	263,927
Unearned interest income, long-term	(34,488)
Net investment in sales-type leases, long-term	$ 229,439

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Note 12 - Sales-type Leases - Future Minimum Lease Receipts (Details)	May 31, 2018 USD ($)
2018	$ 98,575
2019	174,000
2020	162,425
2021	2,927
2022
Thereafter
Total	$ 437,927

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Note 14 - Equity Incentive Plan and Stock Based Compensation (Details Textual) - USD ($)	3 Months Ended			6 Months Ended
	May 31, 2018	May 31, 2017	Feb. 28, 2017	May 31, 2018	May 31, 2017	Jan. 27, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			0	0
Allocated Share-based Compensation Expense, Total	$ 61,879	$ 46,402		$ 111,436	$ 72,959
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	1,000			1,000		1,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period				17,000
Restricted Stock [Member] | Employees, Directors, and Consultants [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				46,200
Restricted Stock [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				20,281

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Note 16 - Segment Information (Details Textual)	6 Months Ended
	May 31, 2018
Number of Reportable Segments	3

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Note 16 - Segment Information - Segment Reporting Information (Details) - USD ($)		3 Months Ended		6 Months Ended
		May 31, 2018	May 31, 2017	May 31, 2018	May 31, 2017	Nov. 30, 2017
Revenue from external customers		$ 5,294,464	$ 4,689,354	$ 10,660,000	$ 9,110,522
Income (loss) from operations		(458,114)	(721,384)	(766,835)	(1,073,816)
Total Assets		22,593,658		22,593,658		$ 24,379,833
Capital expenditures				164,874	293,919
Depreciation & Amortization				408,757	342,387
Operating Segments [Member]
Revenue from external customers	[1]	5,295,000	4,689,000	10,660,000	9,111,000
Income (loss) from operations	[1]	(459,000)	(721,000)	(766,000)	(1,074,000)
Income (loss) before tax	[1]	(780,000)	(737,000)	(1,086,000)	(1,102,000)
Total Assets	[1]	22,594,000	25,545,000	22,594,000	25,545,000
Capital expenditures	[1]	901,000	99,000	965,000	294,000
Depreciation & Amortization	[1]	169,500	172,000	409,000	342,000
Operating Segments [Member] | Agricultural Products [Member]
Revenue from external customers		3,937,000	3,162,000	7,866,000	6,531,000
Income (loss) from operations		(263,000)	(657,000)	(537,000)	(876,000)
Income (loss) before tax		(576,000)	(647,000)	(845,000)	(865,000)
Total Assets		16,688,000	19,443,000	16,688,000	19,443,000
Capital expenditures		42,000	75,000	71,000	204,000
Depreciation & Amortization		132,000	126,000	265,000	251,000
Operating Segments [Member] | Modular Buildings [Member]
Revenue from external customers		834,000	888,000	1,573,000	1,276,000
Income (loss) from operations		(146,000)	(19,000)	(206,000)	(173,000)
Income (loss) before tax		(141,000)	(34,000)	(194,000)	(192,000)
Total Assets		3,486,000	3,400,000	3,486,000	3,400,000
Capital expenditures		859,000		894,000
Depreciation & Amortization		5,500	14,000	80,000	28,000
Operating Segments [Member] | Tools [Member]
Revenue from external customers		524,000	639,000	1,221,000	1,304,000
Income (loss) from operations		(50,000)	(45,000)	(23,000)	(25,000)
Income (loss) before tax		(63,000)	(56,000)	(47,000)	(45,000)
Total Assets		2,420,000	2,702,000	2,420,000	2,702,000
Capital expenditures			24,000		90,000
Depreciation & Amortization		$ 32,000	$ 32,000	$ 64,000	$ 63,000

[1] The consolidated total in the table is a sum of segment figures and may not tie to actual figures in the condensed consolidated financial statements due to rounding.