UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the fiscal year ended November 30, 2014 | |
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
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For the transition period from ___________ to ____________ | |
Commission file number 000-5131 |
ART’S-WAY MANUFACTURING CO., INC. | ||
(Exact name of registrant as specified in its charter) | ||
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Delaware |
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42-0920725 |
(State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
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5556 Highway 9 Armstrong, Iowa 50514 | ||
(Address of principal executive offices) | ||
(712) 864-3131 | ||
(Registrant’s telephone number, including area code) | ||
Securities registered under Section 12(b) of the Act: | ||
Common stock $.01 par value |
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The NASDAQ Stock Market LLC |
(Title of each class) |
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(Name of each exchange on which registered) |
Securities registered pursuant to Section 12(g) of the Act: | ||
None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 ☒ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $12,759,986
As of January 19, 2014, there were 4,048,552 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
Art’s-Way Manufacturing Co., Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended November 30, 2014, which was originally filed with the Securities and Exchange Commission (the “Commission”) on January 29, 2015 (the “Original Filing”), for the purpose of including the Consolidated Statement of Stockholders’ Equity table, which was inadvertently omitted from Item 8 of the Original Filing, and furnishing the associated XBRL Interactive Data File, which was inadvertently omitted from the Original Filing. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, this Amendment also includes currently dated certifications from the Company’s principal executive officer and principal financial officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and a currently dated consent of the independent auditor. As required by the rules of the Commission, this Amendment sets forth an amended “Item 15. Exhibits, Financial Statement Schedules” in its entirety, which includes the currently dated consent of the independent auditor and currently dated certifications of the Company's principal executive officer and principal financial officer as Exhibits 23.1, 31.1, 31.2, 32.1 and 32.2, respectively. This Amendment does not otherwise update any exhibits of the Original Filing.
Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the dates described in the Original Filing, and the Company has not updated the disclosures contained therein to reflect any events that occurred subsequent to such dates. Accordingly, this Amendment should be read in conjunction with the Company’s filings made with the Commission subsequent to the filing of the Original Filing, as information in such filings may update or supersede certain information contained in this Amendment.
Art’s-Way Manufacturing Co., Inc.
Index to Annual Report on Form 10-K/A
Amendment No. 1
Part I | ||
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
5 |
Part IV | ||
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
25 |
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Art's-Way Manufacturing Co., Inc.
Armstrong, Iowa
We have audited the accompanying consolidated balance sheets of Art's-Way Manufacturing Co., Inc. and Subsidiaries as of November 30, 2014 and 2013, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. Art's-Way Manufacturing Co., Inc. and Subsidiaries’ management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we do not express such an opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Art's-Way Manufacturing Co., Inc. and Subsidiaries as of November 30, 2014 and 2013, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Eide Bailly LLP
Fargo, North Dakota
January 29, 2015
ART’S-WAY MANUFACTURING CO., INC.
Consolidated Balance Sheets
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November 30, 2014 |
November 30, 2013 |
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Assets | ||||||||
Current assets: |
||||||||
Cash |
$ | 511,716 | $ | 207,950 | ||||
Accounts receivable-customers, net of allowance for doubtful accounts of $35,175 and $35,474 as of November 30 |
2,961,834 | 2,999,903 | ||||||
Inventories, net |
15,089,280 | 14,922,525 | ||||||
Deferred taxes |
1,259,943 | 1,228,097 | ||||||
Cost and Profit in Excess of Billings |
17,543 | 42,238 | ||||||
Income taxes receivable |
100,417 | 108,513 | ||||||
Other current assets |
125,229 | 242,146 | ||||||
Total current assets |
20,065,961 | 19,751,372 | ||||||
Property, plant, and equipment, net |
11,680,792 | 11,900,202 | ||||||
Assets held for lease, net |
58,500 | 122,318 | ||||||
Goodwill |
993,729 | 993,729 | ||||||
Other Assets |
47,360 | - | ||||||
Total assets |
$ | 32,846,342 | $ | 32,767,621 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
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Line of credit |
$ | 2,569,106 | $ | 3,350,000 | ||||
Current portion of term debt |
1,283,897 | 1,228,964 | ||||||
Accounts payable |
874,653 | 806,207 | ||||||
Customer deposits |
95,411 | 147,505 | ||||||
Billings in Excess of Cost and Profit |
96,382 | 17,721 | ||||||
Accrued expenses |
1,584,328 | 1,718,475 | ||||||
Total current liabilities |
6,503,777 | 7,268,872 | ||||||
Long-term liabilities |
||||||||
Deferred taxes |
1,141,580 | 952,645 | ||||||
Long Term debt, excluding current portion |
5,949,329 | 6,251,959 | ||||||
Total liabilities |
13,594,686 | 14,473,476 | ||||||
Commitments and Contingencies (Notes 7, 8, and 14) |
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Stockholders’ equity: |
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Undesignated preferred stock - $0.01 par value. Authorized 500,000 shares in 2014 and 2013; issued and outstanding 0 shares in 2014 and 2013. |
- | - | ||||||
Common stock – $0.01 par value. Authorized 9,500,000 shares in 2014 and 2013; issued and outstanding 4,048,552 in 2014 and 4,046,552 in 2013 |
40,486 | 40,466 | ||||||
Additional paid-in capital |
2,638,651 | 2,616,407 | ||||||
Retained earnings |
16,572,519 | 15,637,272 | ||||||
Total stockholders’ equity |
19,251,656 | 18,294,145 | ||||||
Total liabilities and stockholders’ equity |
$ | 32,846,342 | $ | 32,767,621 |
See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.
ART’S-WAY MANUFACTURING CO., INC.
Consolidated Statements of Operations
Years Ended |
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November 30, 2014 |
November 30, 2013 |
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Sales |
$ | 36,169,811 | $ | 34,226,553 | ||||
Cost of goods sold |
27,445,242 | 25,860,107 | ||||||
Gross profit |
8,724,569 | 8,366,446 | ||||||
Expenses: |
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Engineering |
482,057 | 514,086 | ||||||
Selling |
2,372,299 | 2,155,640 | ||||||
General and administrative |
4,205,375 | 3,879,580 | ||||||
Total expenses |
7,059,731 | 6,549,306 | ||||||
Income from operations |
1,664,838 | 1,817,140 | ||||||
Other income (expense): |
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Interest expense |
(351,899 | ) | (296,640 | ) | ||||
Other |
(10,434 | ) | 685,344 | |||||
Total other income (expense) |
(362,333 | ) | 388,704 | |||||
Income before income taxes |
1,302,505 | 2,205,844 | ||||||
Income tax expense |
367,258 | 654,468 | ||||||
Net income |
$ | 935,247 | $ | 1,551,376 | ||||
Net income per share: |
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Basic net income per share |
$ | 0.23 | $ | 0.38 | ||||
Diluted net income per share |
$ | 0.23 | $ | 0.38 | ||||
Weighted average outstanding shares used to compute basic net income per share |
4,047,796 | 4,039,530 | ||||||
Weighted average outstanding shares used to compute diluted net income per share |
4,052,703 | 4,049,791 |
See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.
ART’S-WAY MANUFACTURING CO., INC.
Consolidated Statements of Cash Flows
Years Ended |
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November 30, 2014 |
November 30, 2013 |
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Cash flows from operations: |
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Net income |
$ | 935,247 | $ | 1,551,376 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Stock based compensation |
14,504 | 29,812 | ||||||
(Gain) on disposal of property, plant, and equipment |
(6,268 | ) | (601,678 | ) | ||||
Depreciation expense |
906,702 | 704,457 | ||||||
Bad debt expense (recovery) |
4,540 | 7,516 | ||||||
Deferred income taxes |
157,089 | (111,138 | ) | |||||
Changes in assets and liabilities net of Agro Trend and Ohio Working Metals acquisitions: |
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(Increase) decrease in: |
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Accounts receivable |
33,529 | (229,412 | ) | |||||
Inventories |
(166,755 | ) | 769,641 | |||||
Income taxes receivable |
8,096 | (108,513 | ) | |||||
Other assets |
69,559 | 67,652 | ||||||
Increase (decrease) in: |
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Accounts payable |
68,447 | 151,885 | ||||||
Contracts in progress, net |
103,356 | (1,048,125 | ) | |||||
Customer deposits |
(52,094 | ) | (84,795 | ) | ||||
Income taxes payable |
- | (821,301 | ) | |||||
Accrued expenses |
(134,147 | ) | (279,721 | ) | ||||
Net cash provided by (used in) operating activities |
1,941,805 | (2,344 | ) | |||||
Cash flows from investing activities: |
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Purchases of property, plant, and equipment |
(633,078 | ) | (842,124 | ) | ||||
Return of asset held for lease |
- | 146,902 | ||||||
Proceeds from sale of assets |
15,870 | 835,534 | ||||||
Purchase of assets of Ohio Metal Working Products |
- | (3,171,805 | ) | |||||
Purchase of assets of Agro Trend |
- | (311,346 | ) | |||||
Net cash (used in) investing activities |
(617,208 | ) | (3,342,839 | ) | ||||
Cash flows from financing activities: |
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Net change in line of credit |
(780,894 | ) | 3,350,000 | |||||
Proceeds from term debt |
1,000,000 | 228,339 | ||||||
Repayment of term debt |
(1,247,697 | ) | (1,213,550 | ) | ||||
Proceeds from the exercise of stock options |
7,760 | 46,390 | ||||||
Dividends paid to stockholders |
- | (404,655 | ) | |||||
Net cash provided by (used in) financing activities |
(1,020,831 | ) | 2,006,524 | |||||
Net increase/(decrease) in cash |
303,766 | (1,338,659 | ) | |||||
Cash at beginning of period |
207,950 | 1,546,609 | ||||||
Cash at end of period |
$ | 511,716 | $ | 207,950 | ||||
Supplemental disclosures of cash flow information: |
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Cash paid during the period for: |
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Interest |
$ | 356,470 | $ | 296,640 | ||||
Income taxes |
299,988 | 1,644,520 | ||||||
Acquisitions: |
Agro Trend |
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Inventories |
$ | 223,172 | ||||||
Equipment, tools and dies |
88,174 | |||||||
Goodwill and intangible assets |
- | |||||||
Land and Building |
- | |||||||
Non-Cash Activity: Stock issued for purchase of assets |
- | |||||||
Cash paid |
$ | 311,346 | ||||||
Ohio Working Metals |
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Inventories |
$ | 1,141,512 | ||||||
Equipment, tools and dies |
868,250 | |||||||
Goodwill and intangible assets |
- | |||||||
Land and Building |
1,200,000 | |||||||
Non-Cash Activity: Assumed vacation liability |
(37,957 | ) | ||||||
Cash paid |
$ | 3,171,805 |
See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.
ART’S-WAY MANUFACTURING CO., INC.
Consolidated Statements of Stockholders' Equity
Years Ended November 30, 2014 and 2013
Common Stock |
Additional |
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Number of |
paid-in |
Retained |
||||||||||||||||||
shares |
Par value |
capital |
earnings |
Total |
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Balance, November 30, 2012 |
4,035,052 | $ | 40,351 | $ | 2,540,320 | $ | 14,490,551 | $ | 17,071,222 | |||||||||||
Exercise of stock options |
9,000 | 90 | 46,300 | - | 46,390 | |||||||||||||||
Stock based compensation |
2,500 | 25 | 29,787 | - | 29,812 | |||||||||||||||
Dividends paid, $0.10 per share |
- | - | - | (404,655 | ) | (404,655 | ) | |||||||||||||
Net income |
- | - | - | 1,551,376 | 1,551,376 | |||||||||||||||
Balance, November 30, 2013 |
4,046,552 | $ | 40,466 | $ | 2,616,407 | $ | 15,637,272 | $ | 18,294,145 | |||||||||||
Exercise of stock options |
2,000 | 20 | 7,740 | - | 7,760 | |||||||||||||||
Stock based compensation |
- | - | 14,504 | - | 14,504 | |||||||||||||||
Net income |
- | - | - | 935,247 | 935,247 | |||||||||||||||
Balance, November 30, 2014 |
4,048,552 | $ | 40,486 | $ | 2,638,651 | $ | 16,572,519 | $ | 19,251,656 |
See accompanying Report of Independent Registered Public Accounting Firm and notes to consolidated financial statements.
Art’s-Way Manufacturing Co., Inc.
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
(a) Nature of Business
Art’s-Way Manufacturing Co., Inc. is primarily engaged in the fabrication and sale of specialized farm machinery in the agricultural sector of the United States. Primary product offerings include: portable and stationary animal feed processing equipment; hay and forage equipment; sugar beet harvesting equipment; land maintenance equipment; a line of portable grain augers; a line of manure spreaders; moldboard plows and a line of reels. The Company sells its labeled products through independent farm equipment dealers throughout the United States. In addition, the Company manufactures and supplies hay blowers to OEMs. The Company also provides after-market service parts that are available to keep its branded and OEM produced equipment operating to the satisfaction of the end user of the Company’s products.
On June 25, 2013, the Company acquired the fixed assets, raw material inventory, work-in-progress inventory and select finished goods inventory of Agro Trend, a division of Rojac Industries, Inc. of Clifford, Ontario, Canada. Agro Trend distributes agricultural equipment and manufactures commercial snow blowers and agricultural trailers. Most of the existing Agro Trend operational team was retained to continue the manufacture of snow blowers and trailers. The acquired assets and operations are reported with our agricultural products segment. For financial information related to the acquisition, see Note 12, “Acquisitions”.
Our Pressurized Vessels segment is primarily engaged in the fabrication and sale of pressurized vessels and tanks through the Company’s wholly-owned subsidiary, Art’s-Way Vessels, Inc. This segment provides a combination of services as a manufacturer and supplier of steel vessels and steel containment systems. The vessels are primarily sold to manufacturing facilities that will use the vessel as a component part of their end product. In addition to its role as a fabricator of vessels, it provides services including: custom CAD drawing; welding; interior linings and exterior finishing; passivation of stainless steel; hydrostatic and pneumatic testing; design, build and finishing of skids; installation of piping; non-destructive examination and heat treating.
Our Modular Buildings segment is primarily engaged in the construction of modular laboratories and animal housing facilities through the Company’s wholly-owned subsidiary, Art’s-Way Scientific, Inc. Buildings commonly produced range from basic swine buildings to complex containment research laboratories. This segment also provides services relating to the design, manufacturing, delivering, installation and renting of the building units that it produces.
On September 30, 2013, the Company acquired the assets of Ohio Metal Working Products Company (“Ohio Metals”) in Canton, Ohio consisting of inventory, equipment, land, and building. Ohio Metal is a domestic manufacturer and distributor of standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond) and CBN (cubic boron nitride) inserts and tools. The existing Ohio Metal operational team was retained to continue the manufacturing of the carbide, PCD, and CBN tipped tools and inserts. The acquired assets and operations are reported in our Tools segment for financial reporting purposes. For financial information related to the acquisition, see Note 12, “Acquisitions”.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of Art’s-Way Manufacturing Co., Inc. and its wholly-owned subsidiaries, Universal Harvester by Art’s-Way, Inc., Art’s-Way Vessels, Inc., Art’s-Way Scientific, Inc., Art’s-Way Manufacturing International LTD, and Ohio Metal Working Products/Art’s-Way, Inc. Universal Harvester by Art’s-Way was formed in 2012 in connection with the Company’s acquisition of certain assets of UHC. Art’s-Way Manufacturing International LTD was formed in June 2013 when the Company acquired certain assets of Agro Trend while Ohio Metal Working Products/Art’s-Way, Inc. was formed in September 2013 when the Company acquired certain assets of Ohio Metal. All material inter-company accounts and transactions are eliminated in consolidation.
The financial books of International 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 be translated to U.S. Dollars at the exchange rate as of quarter end. Owner’s 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 Company monitors the resulting cumulative translation adjustment and considers it to be immaterial.
(c) Cash Concentration
The Company maintains several different accounts at four different banks, and balances in these accounts are periodically in excess of federally insured limits. However, management believes the risk of loss to be low.
(d) Customer Concentration
During the years ended November 30, 2014, and November 30, 2013 no one customer accounted for more than 7% and 6% of consolidated revenues, respectively.
(e) Accounts Receivable
Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. Accounts receivable are generally considered past due 60 days past invoice date, with the exception of international sales which primarily are sold with a letter of credit for 180 day terms.
Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Trade receivables are stated at the amount billed to the customer. The Company charges interest on overdue customer account balances at a rate of 1.5% per month. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices.
(f) Inventories
Inventories are stated at the lower of cost or market, and cost is determined using the standard costing method. Management monitors the carrying value of inventories using inventory control and review processes that include, but are not limited to, sales forecast review, inventory status reports, and inventory reduction programs. The Company records inventory write downs to market based on expected usage information for raw materials and historical selling trends for finished goods. Additional write downs may be necessary if the assumptions made by management do not occur.
(g) Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Depreciation of plant and equipment is provided using the straight-line method, based on the estimated useful lives of the assets which range from three to forty years.
(h) Lessor Accounting
Modular buildings held for short term lease by our Modular Buildings segment are recorded at cost. Amortization of the property is calculated over the useful life of the building. Estimated useful life is five years. Lease revenue is accounted for on a straight-line basis over the term of the related lease agreement.
(i) Goodwill and Impairment
Goodwill represents costs in excess of the fair value of net tangible and identifiable net intangible assets acquired in business combinations. Art’s-Way performs an annual test for impairment of goodwill during the fourth quarter. There was no impairment of goodwill as of November 30, 2014 and 2013.
(j) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates as recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
The Company shall classify interest and penalties to be paid on an underpayment of taxes as income tax expense. The Company files income tax returns in the U.S. federal jurisdiction and various states and Canada. The company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years ended before November 30, 2010.
(k) Revenue Recognition
Revenue is recognized when risk of ownership and title pass to the buyer, generally upon the shipment of the product. All sales are made to authorized dealers whose application for dealer status has been approved and who have been informed of general sales policies. Any changes in Company terms are documented in the most recently published price lists. Pricing is fixed and determinable according to the Company’s published equipment and parts price lists. Title to all equipment and parts sold shall pass to the Buyer upon delivery to the carrier and is not subject to a customer acceptance provision. Proof of the passing of title is documented by the signing of the delivery receipt by a representative of the carrier. Post shipment obligations are limited to any claim with respect to the condition of the equipment or parts. Applicable sales taxes imposed on our revenues are presented on a net basis on the consolidated statements of operations and therefore do not impact net revenues or cost of goods sold. A provision for warranty expenses, based on sales volume, is included in the financial statements. The Company’s return policy allows for new and saleable parts to be returned, subject to inspection and a restocking charge which is included in net sales. Whole goods are not returnable. Shipping costs charged to customers are included in net sales. Freight costs incurred are included in cost of goods sold.
In certain circumstances, upon the customer’s written request, we may recognize revenue when production is complete and the good is ready for shipment. At the buyer’s request, we will bill the buyer upon completing all performance obligations, but before shipment. The buyer dictates that we ship the goods per their direction from our manufacturing facility, as is customary with this type of agreement, in order to minimize shipping costs. The written agreement with the customer specifies that the goods will be delivered on a schedule to be determined by the customer, with a final specified delivery date, and that we will segregate the goods from our inventory, such that they are not available to fill other orders. This agreement also specifies that the buyer is required to purchase all goods manufactured under this agreement. Title of the goods will pass to the buyer when the goods are complete and ready for shipment, per the customer agreement. At the transfer of title, all risks of ownership have passed to the buyer, and the buyer agrees to maintain insurance on the manufactured items that have not yet been shipped. The Company has operated using bill and hold agreements with certain customers for many years. The credit terms on this agreement are consistent with the credit terms on all other sales. All risks of loss are shouldered by the buyer, and there are no exceptions to the buyer’s commitment to accept and pay for these manufactured goods. Revenues recognized at the completion of production in 2014 and 2013 were approximately $628,000 and $788,000, respectively.
During fiscal 2014, the Company recognized revenues of $59,000 for transactions with related parties.
Our Modular Buildings segment is in the construction industry, and as such accounts for long-term contracts on the percentage of completion method. Revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. Contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss. Estimated contract costs include any and all costs appropriately allocable to the contract. The provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues.
Costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are classified as current liabilities.
(l) Research and Development
Research and development costs are expensed when incurred. Such costs approximated $191,000 and $174,000 for the years ended November 30, 2014 and 2013, respectively.
(m) Advertising
Advertising costs are expensed when incurred. Such costs approximated $511,000 and $479,000 for the years ended November 30, 2014 and 2013, respectively.
(n) Income Per Share
Basic net income per common share has been computed on the basis of the weighted average number of common shares outstanding. Diluted net income 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.
Basic and diluted earnings per common share have been computed based on the following as of November 30, 2014 and 2013:
For the twelve months ended |
||||||||
November 30, 2014 |
November 30, 2013 |
|||||||
Basic: |
||||||||
Numerator: net income |
$ | 935,247 | $ | 1,551,376 | ||||
Denominator: average number of common shares outstanding |
4,047,796 | 4,039,530 | ||||||
Basic earnings per common share |
$ | 0.23 | $ | 0.38 | ||||
Diluted: |
||||||||
Numerator: net income |
$ | 935,247 | $ | 1,551,376 | ||||
Average number of common shares outstanding |
4,047,796 | 4,039,530 | ||||||
Effect of dilutive stock options |
4,907 | 10,261 | ||||||
Denominator: dilutive average number of common shares outstanding |
4,052,703 | 4,049,791 | ||||||
Diluted earnings per common share |
$ | 0.23 | $ | 0.38 |
(o) Stock Based Compensation
Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. We estimate the fair value of each stock-based award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate and dividend yield. Restricted stock is valued at market value at the day of grant.
(p) Use of Estimates
Management of the Company has made a number of estimates and assumptions related to the reported amount of assets and liabilities, reported amount of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
(q) Recently Issued Accounting Pronouncements
Presentation of an Unrecognized Tax Benefit
In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” that clarifies how an unrecognized tax benefit should be presented in the financial statements when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists; as a reduction to a deferred tax asset or as a liability. The amendments are meant to eliminate the diversity that exists in the financial statement presentation of the unrecognized tax benefits. The amendments in this ASU do not require new recurring disclosures and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The effective date for the Company will be the fiscal year beginning December 1, 2014. The Company currently has no unrecognized tax benefits that are impacted by the amendment and the Company does not expect this standard to have a material impact on our consolidated financial statements.
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, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. We are evaluating the new standard, but do not at this time expect this standard to have a material impact on our consolidated financial statements.
Going Concern
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern” which is authoritative guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and provide related footnote disclosures, codified in ASC 205-40, Going Concern. The guidance provides a definition of the term substantial doubt, requires an evaluation every reporting period including interim periods, provides principles for considering the mitigating effect of management’s plans, requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, requires an express statement and other disclosures when substantial doubt is not alleviated, and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU No. 2015-15 is effective for annual reporting periods ending after December 15, 2016. The Company will adopt this guidance for the year-ended November 30, 2017, and it will apply to each interim and annual period thereafter. Its adoption is not expected to have a material effect on the Company's consolidated financial statements.
(q) Fair Value Measurements
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices in active markets for identical securities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly; and Level 3, defined as unobservable inputs that are not corroborated by market data.
(2) Allowance for Doubtful Accounts
A summary of the Company’s activity in the allowance for doubtful accounts is as follows:
For the 12 months ended |
||||||||
November 30, 2014 |
November 30, 2013 |
|||||||
Balance, beginning |
$ | 35,474 | $ | 27,958 | ||||
Provision charged to expense |
4,540 | 7,516 | ||||||
Less amounts charged-off |
(4,839 | ) | - | |||||
Balance, ending |
$ | 35,175 | $ | 35,474 |
(3) Inventories
Major classes of inventory are:
November 30, 2014 |
November 30, 2013 |
|||||||
Raw materials |
$ | 10,037,055 | $ | 10,322,014 | ||||
Work in process |
467,110 | 511,016 | ||||||
Finished goods |
8,504,062 | 7,305,301 | ||||||
$ | 19,008,227 | 18,138,331 | ||||||
Less: Reserves |
(3,918,947 | ) | (3,215,806 | ) | ||||
$ | 15,089,280 | $ | 14,922,525 |
(4) Contracts in Progress
Amounts included in the consolidated financial statements related to uncompleted contracts are as follows:
The amounts billed on these long term contracts are due 30 days from invoice date. All amounts billed are expected to be collected within the next 12 months. Retainage was $8,048 and $0 as of November 30, 2014 and 2013, respectively.
Cost and Profit in |
Billings in Excess of |
|||||||
Excess of Billings |
Costs and Profit |
|||||||
November 30, 2014 |
||||||||
Costs |
$ | 14,724 | $ | 623,670 | ||||
Estimated earnings |
4,819 | 204,114 | ||||||
19,543 | 827,784 | |||||||
Less: amounts billed |
(2,000 | ) | (924,166 | ) | ||||
$ | 17,543 | $ | (96,382 | ) | ||||
November 30, 2013 |
||||||||
Costs |
$ | 326,560 | $ | 115,789 | ||||
Estimated earnings |
106,848 | 21,470 | ||||||
433,408 | 137,259 | |||||||
Less: amounts billed |
(391,170 | ) | (154,980 | ) | ||||
$ | 42,238 | $ | (17,721 | ) |
(5) Property, Plant, and Equipment
Major classes of property, plant, and equipment are:
November 30, 2014 |
November 30, 2013 |
|||||||
Land |
$ | 1,188,155 | $ | 1,188,155 | ||||
Buildings and improvements |
10,542,327 | 10,315,222 | ||||||
Construction in Progress |
107,807 | 404,016 | ||||||
Manufacturing machinery and equipment |
14,097,934 | 13,555,073 | ||||||
Trucks and automobiles |
433,962 | 436,367 | ||||||
Furniture and fixtures |
149,022 | 149,022 | ||||||
26,519,207 | 26,047,855 | |||||||
Less accumulated depreciation |
(14,838,415 | ) | (14,147,653 | ) | ||||
Property, plant and equipment |
$ | 11,680,792 | $ | 11,900,202 |
Depreciation expense totaled $906,702 and $704,457 for the fiscal years ended November 30, 2014 and 2013, respectively.
(6) Accrued Expenses
Major components of accrued expenses are:
November 30, 2014 |
November 30, 2013 |
|||||||
Salaries, wages, and commissions |
$ | 673,934 | $ | 836,200 | ||||
Accrued warranty expense |
234,266 | 220,719 | ||||||
Other |
676,128 | 661,556 | ||||||
$ | 1,584,328 | $ | 1,718,475 |
(7) 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 1 year from 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.
Changes in the Company’s product warranty liability included in “accrued expenses” for the years ended November 30, 2014 and 2013 are as follows:
November 30, 2014 |
November 30, 2013 |
|||||||
Balance, beginning |
$ | 220,719 | $ | 578,864 | ||||
Settlements / adjustments |
(421,787 | ) | (605,281 | ) | ||||
Warranties issued |
435,334 | 247,136 | ||||||
Balance, ending |
$ | 234,266 | $ | 220,719 |
(8) Loan and Credit Agreements
On May 1, 2013, the Company began to move all banking arrangements previously held through West Bank to U.S. Bank. The relationship with U.S. Bank now includes an $8,000,000 revolving line of credit (the “Line of Credit”) which was renewed in 2014, and is now scheduled to mature on May 1, 2015. The Line of Credit is renewable annually with advances funding the Company’s working capital needs and is secured by real property and fixed asset collateral. The interest rate is U.S. Bank’s prime interest rate, adjusted each time that the Federal prime rate changes, with a minimum rate of 3.50%. As of November 30, 2014, the interest rate was the minimum of 3.50%. Monthly interest-only payments are required and the unpaid principal is due on the maturity date. As of November 30, 2014, the Company had a principal balance of $2,569,109 outstanding against the Line of Credit. The Line of Credit states that the borrowing base will be an amount equal to the sum of 75% of accounts receivable (discounted for aged accounts and customer balances exceeding 20% of aggregate receivables), plus 50% of inventory (this component cannot exceed $6,000,000 and only includes finished goods and raw materials deemed to be in good condition and not obsolete), less any outstanding loan balance of the Line of Credit, and less undrawn amounts of outstanding letters of credit issued by U.S. Bank or any affiliate. The Company’s obligations under the Line of Credit are evidenced by a Revolving Credit Note effective May 1, 2013, a Revolving Credit Agreement dated May 1, 2013 and certain other ancillary documents.
In addition to the Line of Credit, on May 1, 2013, the Company refinanced all outstanding West Bank term loans with U.S. Bank. The West Bank long-term debt, which had outstanding principal balances of $4,342,000 at a fixed interest rate of 4.75% and $1,749,000 at a fixed interest rate of 4.50%, was paid off with four U.S. Bank loans totaling $6,319,000 at a fixed interest rate of 2.98% (the “2013 U.S. Bank Term Loans”). As detailed in the Company’s long-term debt summary below, monthly principal and interest payments in the aggregate amount of $93,850 are required, with final payments of principal and accrued interest on the four loans, in the aggregate amount of $1,372,000, due on May 1, 2018.
As a result of paying off the West Bank loans, the Company incurred $130,000 worth of prepayment penalties which were financed by the U.S. Bank loans. The penalties were booked to fixed costs on the income statement for the quarter ended May 31, 2013. Closing costs amounted to $9,000 and will be amortized over the life of the loans.
On May 29, 2014, the Company obtained $1,000,000 in long-term debt from U.S. Bank to partially pay down the line of credit draw from 2013 that it had used to finance the building and property of Ohio Metal in Canton, Ohio. The maturity date of this loan is May 25, 2017, with a final payment of principal and accrued interest in the amount of $890,000 due May 25, 2017. This loan is secured by a mortgage on the building and property acquired from Ohio Metal in Canton, Ohio pursuant to a Mortgage, Security Agreement and Assignment of Rents between the Company and U.S. Bank, dated May 29, 2014. The Term Loan Agreements also require the Company to comply with a covenant to obtain consent from U.S. Bank prior to declaring a dividend payment.
Except for the U.S. Bank UHC Loan (as defined below), each of the Company’s term loans from U.S. Bank is governed by a Term Note and a Term Loan Agreement. Each Term Loan Agreement and the Revolving Credit Agreement require the Company to provide monthly internally prepared financial reports, year-end audited financial statements, and a monthly aging of accounts receivable. The Company, as of the end of each fiscal quarter, must maintain a debt to tangible net worth ratio of not more than 1.5 to 1.0 and a fixed charge coverage ratio of at least 1.15 to 1.00. The Company was in compliance with all covenants under the Term Loan Agreements and the Revolving Credit Agreement as measured on November 30, 2014. The next measurement date is February 28, 2015. The loans are secured by a first position security interest on the assets of the Company and its subsidiaries, including but not limited to, inventories, machinery, equipment and real estate, in accordance with the Business Security Agreements entered into by the Company and its subsidiaries and the Pledge Agreements entered into by the subsidiaries. Additionally, the Company has mortgaged certain real property in favor of U.S. Bank as documented by mortgage agreements dated May 1, 2013 and May 29, 2014 (together, the “Mortgages”).
If the Company or its subsidiaries (as guarantors pursuant to continuing guaranties) commits an event of default under the Term Loan Agreements, Business Security Agreements, Pledge Agreements, Mortgages, or Revolving Credit Agreement and fails or is unable to cure that default, the interest rate on each of the loans and Line of Credit could increase by 5.0% per annum and U.S. Bank can immediately terminate its obligation, if any, to make additional loans to the Company. In addition, U.S. Bank may collect any and all money due or to become due and shall 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, including, without limitation, the right to repossess, render unusable and/or dispose of the collateral without judicial process. In addition, in an event of default, U.S. Bank may foreclose on mortgaged property pursuant to the terms of the Mortgages.
On May 10, 2012, the Company obtained $880,000 in long-term debt from U.S. Bank issued to acquire the building and property of UHC located in Ames, Iowa (the “U.S. Bank UHC Loan”). The maturity date of this loan is May 10, 2017, with a final payment of principal and accrued interest in the amount of $283,500 due May 10, 2017. This loan is secured by a mortgage on the building and property acquired from UHC in Ames, Iowa, pursuant to a Mortgage, Security Agreement and Assignment of Rents between the Company and U.S. Bank, dated May 10, 2012. On May 1, 2013, the U.S. Bank UHC Loan and the Mortgage were amended to extend the mortgage to secure the 2013 U.S. Bank Term Loans in addition to the U.S. Bank UHC Loan.
If the Company or its subsidiaries (as guarantors) commits an event of default under the agreement governing the U.S. Bank UHC Loan and fails or is unable to cure during any applicable cure periods, the lender may cause the entire amount of the loan to be immediately due and payable, may foreclose on the property, or may increase the interest rate to 5.00% per annum, plus the interest rate otherwise payable under the U.S. Bank UHC Loan.
On June 1, 2009, Art’s-Way Scientific received funds from two $95,000 promissory notes in connection with an agreement signed August 7, 2007 between Art’s-Way Scientific and the Iowa Department of Economic Development. Art’s-Way Scientific paid off these loans at their respective maturities in June and July of 2014.
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 and an interest rate of 3.5%. On February 1, 2013, the interest rate was decreased to 2.75%. 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 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 under the IFA Loan Agreement as measured on November 30, 2014. The next measurement date is November 30, 2015.
A summary of the Company’s term debt is as follows:
November 30, 2014 |
November 30, 2013 |
|||||||
U.S. Bank loan payable in monthly installments of $42,500 including interest at 2.98%, due May 1, 2018 |
$ | 1,662,311 | $ | 2,114,675 | ||||
U.S. Bank loan payable in monthly installments of $11,000 including interest at 2.98%, due May 1, 2018 |
850,930 | 955,507 | ||||||
U.S. Bank loan payable in monthly installments of $12,550 including interest at 2.98%, due May 1, 2018 |
965,889 | 1,085,350 | ||||||
U.S. Bank loan payable in monthly installments of $27,800 including interest at 2.98%, due May 1, 2018 |
1,407,366 | 1,693,752 | ||||||
U.S. Bank loan payable in monthly installments of $11,700 including interest at 3.15%, due May 10, 2017 |
588,101 | 707,719 | ||||||
U.S. Bank loan payable in monthly installments of $5,556 including interest at 2.98%, due May 25, 2017 |
980,940 | - | ||||||
Iowa Finance Authority loan payable in monthly installments of $12,500 including interest at 2.75%, due June 1, 2020 |
777,689 | 904,662 | ||||||
IDED loan payable in monthly installments of $2,437 including interest at 6%, due June 1, 2014 |
- | 14,375 | ||||||
IDED loan payable in monthly installments of $813 including interest at 0%, due June 1, 2014 |
- | 4,883 | ||||||
Total term debt |
$ | 7,233,226 | $ | 7,480,923 | ||||
Less current portion of term debt |
1,283,897 | 1,228,964 | ||||||
Term debt, excluding current portion |
$ | 5,949,329 | $ | 6,251,959 |
A summary of the minimum maturities of term debt follows for the years ending November 30:
Year: |
Amount |
|||
2015 |
$ | 1,283,897 | ||
2016 |
1,322,663 | |||
2017 |
2,433,936 | |||
2018 |
1,959,763 | |||
2019 |
145,941 | |||
2020 and thereafter |
87,026 | |||
$ | 7,233,226 |
(9) Employee Benefit Plans
The Company sponsors a defined contribution 401(k) savings plan which covers substantially all full-time employees who meet eligibility requirements. Participating employees may contribute as salary reductions any amount of their compensation up to the limit prescribed by the Internal Revenue Code. The Company makes a 25% matching contribution to employees contributing a minimum of 4% of their compensation, up to 1% of eligible compensation. The Company recognized an expense of $54,544 and $38,145 related to this plan during the years ended November 30, 2014 and 2013, respectively.
(10) Equity Incentive Plan
On November 30, 2014, the Company had one equity incentive plan, the 2011 Plan, which is described below. The compensation cost charged against income was $14,504 and $29,812 for 2014 and 2013, respectively. The total income tax deductions for share-based compensation arrangements were $7,260 and $17,210 for 2014 and 2013, respectively. No compensation cost was capitalized as part of inventory or fixed assets.
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”), subject to approval by the stockholders on or before January 27, 2012. 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 will be 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 non-qualified stock options to purchase 2,000 shares of common stock annually or initially upon their election to the Board, which are fully vested.
Stock options granted prior to January 27, 2011 are governed by the applicable Prior Plan and the forms of agreement adopted thereunder.
The fair value of each option award is estimated on the date of grant using the Black Scholes option-pricing model. Expected volatility is based on historical volatility of the Company’s stock and other factors. The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date.
2014 |
2013 |
||||||||
Expected Volatility |
32.28% | 53.71 | % | ||||||
Expected Dividend Yield |
1.236% | - | 1.277% | 1.063 | % | ||||
Expected Term (in years) |
2 | 2 | |||||||
Risk-Free Rate |
3.25% | 3.25 | % |
Summary of activity under the plans as of November 30, 2014 and 2013, and changes during the years then ended as follows:
2014 Option Activity
Options |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
||||||||||||
Options Outstanding at beginning of period |
143,000 | $ | 9.00 | - | - | |||||||||||
Granted |
19,000 | $ | 6.10 | - | - | |||||||||||
Exercised |
(2,000 | ) | $ | 3.88 | - | $ | 4,020 | |||||||||
Options Expired or Forfeited |
- | $ | - | - | - | |||||||||||
Options Outstanding at end of Period |
160,000 | $ | 8.72 | 5.14 | $ | 15,400 | ||||||||||
Options Exercisable at end of Period |
155,000 | $ | 8.81 | 5.27 | $ | 15,400 |
2013 Option Activity
Options |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
||||||||||||
Options Outstanding at beginning of period |
163,000 | $ | 9.16 | - | - | |||||||||||
Granted |
14,000 | $ | 6.40 | - | - | |||||||||||
Exercised |
(9,000 | ) | $ | 5.15 | - | $ | 13,970 | |||||||||
Options Expired or Forfeited |
(25,000 | ) | $ | 10.04 | - | - | ||||||||||
Options Outstanding at end of Period |
143,000 | $ | 9.00 | 5.71 | ||||||||||||
Options Exercisable at end of Period |
143,000 | $ | 9.00 | 5.71 | $ | 48,400 |
The weighted-average grant-date fair value of options granted during the year 2014 and 2013 was $1.17 and $2.64 respectively.
A summary of the status of the Company’s non-vested shares as of November 30, 2014, and changes during the year ended November 30, 2014, is presented below:
Non-vested Shares |
Shares |
Weighted-Average Grant-Date Fair Value |
||||||
Non-vested at beginning of period |
- | $ | 0.00 | |||||
Granted |
19,000 | $ | 1.17 | |||||
Vested |
(14,000) | $ | 1.18 | |||||
Forfeited |
- | $ | 0.00 | |||||
Non-vested at end of period |
5,000 |
As of November 30, 2014, there was $3,881 unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan. The total fair value of shares vested during the years ended November 30, 2014 and 2013 was $0 and $2,100 respectively.
The cash received from the exercise of options during fiscal year 2014 was $7,760, compared to $46,390 in 2013.
During the fiscal year 2014 the Company did not issue any restricted stock, and 500 shares of restricted stock became unrestricted. During fiscal year 2013 the Company issued 2,500 shares of restricted stock under the 2011 Plan. During fiscal year 2013, 1300 shares of restricted stock became unrestricted. Compensation expense of $3,240 and $8,554 was recognized in 2014 and 2013, respectively, for shares of restricted stock.
(11) Income Taxes
Total income tax expense (benefit) for the years ended November 30, 2014 and 2013 consists of the following:
November 30 |
||||||||
2014 |
2013 |
|||||||
Current Expense |
$ | 307,452 | $ | 765,606 | ||||
Deferred expense (benefit) |
59,806 | (111,138 | ) | |||||
$ | 367,258 | $ | 654,468 |
The reconciliation of the statutory Federal income tax rate is as follows:
November 30 |
||||||||
2014 |
2013 |
|||||||
Statutory federal income tax rate |
34.0 | % | 34.0 | % | ||||
R&D tax credits |
(2.0 | ) | (1.0 | ) | ||||
Permanent Differences and Other |
(3.8 | ) | (3.3 | ) | ||||
28.2 | % | 29.7 | % |
Tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at November 30, 2014 and 2013 are presented below:
November 30 |
||||||||
2014 |
2013 |
|||||||
Current deferred tax assets (liabilities): |
||||||||
Accrued expenses |
$ | 147,000 | $ | 168,000 | ||||
Inventory capitalization |
22,000 | 24,000 | ||||||
Asset reserves |
1,091,000 | 1,036,000 | ||||||
Total current deferred tax assets |
$ | 1,260,000 | $ | 1,228,000 | ||||
Non-current deferred tax assets |
||||||||
Property, plant, and equipment |
$ | (1,142,000 | ) | $ | (953,000 | ) | ||
Total non-current deferred tax assets (liabilities) |
$ | (1,142,000 | ) | $ | (953,000 | ) |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
(12) Acquisitions
On June 25, 2013, the Company acquired the fixed assets, raw material inventory, work-in-process inventory, and select finished good inventory of Agro Trend, a division of Rojac Industries, Inc. of Clifford, Ontario, Canada. A new entity was formed, Art's Way Manufacturing International LTD, which is included in the agricultural products segment for financial reporting purposes. International will lease the facility in Clifford, Ontario and is continuing manufacturing, marketing and sales from the Canadian location. The amount paid in US dollars for the acquisition of assets totaled $311,000 ($88,000 in fixed assets and $223,000 in inventory). The amounts paid in the acquisition approximate fair value, which was determined utilizing the cost and, to a lesser extent, the market approach. This non-recurring fair value measurement is based Level 3 inputs of the fair value hierarchy, which are discussed in more detail in Note 13. Key assumptions used in determining the fair value include estimated replacement costs, physical deterioration, economic and functional obsolescence to adjust the current replacement costs as well as the estimated economic lives of the assets. The purchase price allocation has been reviewed and is final. The operating results of the acquired business are reflected in the Company’s consolidated statement of operations from the acquisition date forward. The acquisition was made to continue the Company’s growth strategy and diversify its product offerings inside the agricultural industry.
The acquisition also includes a consignment arrangement regarding $600,000 of select finished good inventory. As part of the arrangement, International agreed to use reasonable efforts to sell the inventory including providing a sales and marketing plan with projections within 60 days of the closing date and meeting with the consignor quarterly to discuss progress. On a monthly basis, International agreed to pay the consignor an amount equal to the cost base of the inventory sold that month. As of November 30, 2014, International had sold $393,000 of the consigned inventory.
The financial books of the International 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 International 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 be translated to U.S. Dollars at the exchange rate as of quarter end. Owner’s 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 Company monitors the resulting cumulative translation adjustment and considers it to be immaterial.
On September 30, 2013, the Company acquired the assets of Ohio Metal in Canton, Ohio consisting of inventory, equipment, real property, and intangible assets. A new entity was formed, Ohio Metal Working Products/Art’s-Way, Inc (“Metals”). A new segment called Tools was created for financial reporting purposes. Ohio Metal Working Products/Art’s-Way, Inc. is a domestic manufacturer and distributor of standard single point brazed carbide tipped tools as well as PCD (polycrystalline diamond) and CBN (cubic boron nitride) inserts and tools. The amount paid for the acquisition totaled approximately $3,172,000 ($1,142,000 in inventory, $1,200,000 in land and building, $868,000 in fixed assets, and a reduction for assumed vacation liability of $38,000). The amounts paid in the acquisition approximate fair value, which was determined utilizing the cost and, to a lesser extent, the market approach. This non-recurring fair value measurement is based Level 3 inputs of the fair value hierarchy, which are discussed in more detail in Note 13. Key assumptions used in determining the fair value include estimated replacement costs, physical deterioration, economic and functional obsolescence to adjust the current replacement costs as well as the estimated economic lives of the assets. The acquisition was financed by accessing the line of credit available through U.S. Bank, and on May 29, 2014 the Company obtained a mortgage for the property and buildings in the amount of $1,000,000 which was used to pay down on the line of credit. The operating results of the acquired business are reflected in the Company’s consolidated statements of operations from the acquisition date forward. The acquisition was made to continue the Company’s growth strategy and diversify its product offerings.
(13) Disclosures About the Fair Value of Financial Instruments
At November 30, 2014 and 2013, the carrying amount approximates fair value for cash, accounts receivable, accounts payable, notes payable to bank, and other current liabilities due to the short maturity of these instruments. The fair value of the Company’s installment term loans payable also approximate recorded value because the interest rates charged under the loan terms are not substantially different than current interest rates.
(14) Litigation and Contingencies
Various legal actions and claims that arise in the normal course of business are pending against the Company. In the opinion of management adequate provisions have been made in the accompanying financial statements for all pending legal actions and other claims.
(15) Segment Information
There are four reportable segments: agricultural products, pressurized vessels, modular buildings, and tools. The agricultural products segment fabricates and sells farming products as well as replacement parts for these products in the United States and worldwide. The pressurized vessel segment produces and services pressurized tanks. The modular building segment produces modular buildings for animal containment and various laboratory uses. The tools segment manufactures steel cutting tools and inserts.
The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies. Management evaluates the performance of each segment based on profit or loss from operations before income taxes.
Approximate financial information with respect to the reportable segments is as follows.
Twelve Months Ended November 30, 2014 |
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Agricultural Products |
Pressurized Vessels |
Modular Buildings |
Tools |
Consolidated |
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Revenue from external customers |
$ | 27,952,000 | $ | 1,736,000 | $ | 2,965,000 | $ | 3,517,000 | $ | 36,170,000 | ||||||||||
Gross Profit |
7,150,000 | 39,000 | 626,000 | 910,000 | $ | 8,725,000 | ||||||||||||||
Operating Expense |
5,051,000 | 351,000 | 768,000 | 890,000 | $ | 7,060,000 | ||||||||||||||
Income (loss) from operations |
2,099,000 | (312,000 | ) | (142,000 | ) | 20,000 | $ | 1,665,000 | ||||||||||||
Income (loss) before tax |
1,842,000 | (341,000 | ) | (165,000 | ) | (33,000 | ) | $ | 1,303,000 | |||||||||||
Total Assets |
24,587,000 | 2,548,000 | 2,503,000 | 3,210,000 | $ | 32,846,000 | ||||||||||||||
Capital expenditures |
581,000 | 27,000 | - | 25,000 | $ | 633,000 | ||||||||||||||
Depreciation & Amortization |
537,000 | 108,000 | 146,000 | 116,000 | $ | 907,000 |
Twelve Months Ended November 30, 2013 |
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Agricultural Products |
Pressurized Vessels |
Modular Buildings |
Tools |
Consolidated |
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Revenue from external customers |
$ | 28,199,000 | $ | 2,137,000 | $ | 3,240,000 | $ | 651,000 | $ | 34,227,000 | ||||||||||
Gross Profit |
6,508,000 | 234,000 | 1,441,000 | 183,000 | $ | 8,366,000 | ||||||||||||||
Operating Expense |
5,275,000 | 360,000 | 769,000 | 145,000 | $ | 6,549,000 | ||||||||||||||
Income (loss) from operations |
1,234,000 | (127,000 | ) | 672,000 | 38,000 | $ | 1,817,000 | |||||||||||||
Income (loss) before tax |
1,718,000 | (221,000 | ) | 680,000 | 29,000 | $ | 2,206,000 | |||||||||||||
Total Assets |
23,279,000 | 2,758,000 | 3,092,000 | 3,639,000 | $ | 32,768,000 | ||||||||||||||
Capital expenditures |
776,000 | 41,000 | 20,000 | 5,000 | $ | 842,000 | ||||||||||||||
Depreciation & Amortization |
413,000 | 105,000 | 158,000 | 28,000 | $ | 704,000 |
(16) Subsequent Events
Management evaluated all other activity of the Company and concluded that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes to the consolidated financial statements.
PART IV
Item 15. Exhibits, FINANCIAL STATEMENT SCHEDULES.
(a) Documents filed as part of this report.
(1) |
Financial Statements. The following financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K/A: | |
Report of Eide Bailly, LLP on Consolidated Financial Statements as of November 30, 2014 and 2013 | ||
Consolidated Balance Sheets as of November 30, 2014 and 2013 | ||
Consolidated Statements of Operations for each of the two years in the period ended November 30, 2014 and 2013 | ||
Consolidated Statements of Cash Flows for each of the two years in the period ended November 30, 2014 and 2013 | ||
Consolidated Statements of Stockholders’ Equity for each of the two years in the period ended November 30, 2014 and 2013 | ||
Notes to Consolidated Financial Statements | ||
(2) | Financial Statement Schedules. Not applicable. | |
(3) | Exhibits. See “Exhibit Index to Form 10-K/A” immediately following the signature page of this Form 10-K/A. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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ART’S-WAY MANUFACTURING CO., INC. | ||
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Date: |
March 17, 2015 |
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/s/ Carrie L. Majeski |
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Carrie L. Majeski | ||
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President and Chief Executive Officer | ||
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Art’s-Way Manufacturing Co., Inc.
Exhibit Index to Form 10-K/A (Amendment No. 1)
For Fiscal Year Ended November 30, 2014
Exhibit No. |
Description | ||
2.1 |
Asset Purchase Agreement, between Art’s-Way Manufacturing Co., Inc. and Ohio Metal Working Products Company, dated September 30, 2013 – incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed October 4, 2013. | ||
3.1 |
Certificate of Incorporation of Art’s-Way Manufacturing Co., Inc.– incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter year ended May 31, 2012. | ||
3.2 |
Certificate of Amendment to the Certificate of Incorporation of Art’s-Way Manufacturing Co., Inc. – incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-K for the quarter ended May 31, 2012. | ||
3.3 |
Bylaws of Art’s-Way Manufacturing Co., Inc.– incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2008. | ||
3.4 |
Amendments to Bylaws of Art’s-Way Manufacturing Co., Inc. – incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended May 31, 2004. | ||
10.1* |
Art’s-Way Manufacturing Co., Inc. 2007 Non-Employee Directors Stock Option Plan – incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2007. | ||
10.2* |
Art’s-Way Manufacturing Co., Inc. 2007 Employee Stock Option Plan – incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2009. | ||
10.3* |
Form of Non-Qualified Option Agreement under 2007 Non-Employee Directors’ Stock Option Plan and 2007 Employee Stock Option Plan – incorporated by reference to Exhibit 10.30 of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2009. | ||
10.4* |
Director Compensation Policy – incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2014. | ||
10.5* |
Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 28, 2011. | ||
10.6* |
Form of Incentive Stock Option Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 28, 2011. | ||
10.7* |
Form of Nonqualified Stock Option Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 28, 2011. | ||
10.8* |
Form of Restricted Stock Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 28, 2011. | ||
10.9* |
Form of Restricted Stock Unit Agreement under the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated April 28, 2011. | ||
10.10* |
Employment Agreement, by and between the Company and Carrie L. Majeski, dated December 20, 2011 – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 20, 2011. | ||
10.11* |
Amendment to Employment Agreement, by and between the Company and Carrie L. Majeski, dated January 26, 2012 – incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended February 29, 2012. | ||
10.12 |
Manufacturing Facility Revenue Note in the principal amount of $1,300,000, from Art’s-Way Manufacturing Co., Inc. to Iowa Finance Authority dated May 28, 2010 – incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2010 | ||
10.13 |
Loan Agreement Between Iowa Finance Authority and Art’s-Way Manufacturing Co., Inc. dated May 1, 2010 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2010 |
10.14 |
Installment or Single Payment Note between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 10, 2012 – incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed July 16, 2012. | ||
10.15 |
Manufacturing Facility Revenue Note, dated May 28, 2010, as amended February 1, 2013 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2013. | ||
10.16 |
First Amendment to Loan Agreement between the Company and the Iowa Finance Authority, dated February 1, 2013 – incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2013. | ||
10.17 |
Revolving Credit Note, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.18 |
Revolving Credit Agreement, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.19 |
Term Note for loan in the amount of $1,143,600, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.20 |
Term Loan Agreement for loan in the amount of $1,143,600, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.21 |
Term Note for loan in the amount of $2,335,500, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.22 |
Term Loan Agreement for loan in the amount of $2,335,500, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.23 |
Term Note for loan in the amount of $1,833,510.26, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.24 |
Term Loan Agreement for loan in the amount of $1,833,510.26, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.25 |
Term Note for loan in the amount of $1,006,500, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.26 |
Term Loan Agreement for loan in the amount of $1,006,500, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank N.A., dated May 1, 2013 – incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.27 |
Business Security Agreement, by Art’s-Way Manufacturing Co., Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.28 |
Business Security Agreement, by Art’s-Way Vessels, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.29 |
Business Security Agreement, by Art’s-Way Scientific, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.30 |
Business Security Agreement, by Universal Harvester by Art’s-Way, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.31 |
Pledge Agreement, by Art’s-Way Vessels, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.32 |
Pledge Agreement, by Art’s-Way Scientific, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.33 |
Pledge Agreement, by Universal Harvester by Art’s-Way, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.34 |
Continuing Guaranty (Unlimited), by Art’s-Way Vessels, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.35 |
Continuing Guaranty (Unlimited), by Art’s-Way Scientific, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.20 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. |
10.36 |
Continuing Guaranty (Unlimited), by Universal Harvester by Art’s-Way, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.21 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.37 |
Mortgage, Security Agreement and Assignment of Rents, by Art’s-Way Manufacturing Co., Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.22 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.38 |
Mortgage, Security Agreement and Assignment of Rents, by Art’s-Way Vessels, Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.39 |
Amendment to Note dated May 10, 2012, by Art’s-Way Manufacturing Co., Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.24 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.40 |
Amendment to Mortgage dated May 10, 2012, by Art’s-Way Manufacturing Co., Inc., dated May 1, 2013 – incorporated by reference to Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013. | ||
10.41* |
Employment Agreement, by and between the Company and Amber Murra, dated May 1, 2014 (effective as of May 27, 2014) – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 6, 2014. | ||
10.42 |
Term Note for loan in the amount of $1,000,000, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank National Association, dated May 29, 2014 – incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.43 |
Term Loan Agreement for loan in the amount of $1,000,000, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank National Association, dated May 29, 2014 – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.44 |
Open-End Mortgage, Security Agreement and Assignment of Rents and Leases, between Ohio Metal Working Products/Art’s-Way, Inc. and U.S. Bank National Association, dated May 29, 2014-- incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.45 |
Amendment to Loan Agreements, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank National Association, dated June, 2014 incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.46 |
Amendment to Loan Agreement, between Art's-Way Manufacturing Co., Inc. and U.S. Bank National Association, regarding Ohio Term Note and Loan Agreement, dated June, 2014 incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.47 |
Pledge Agreement, by Ohio Metal Working Products/Art’s-Way, Inc., dated June, 2014 -- incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.48 |
Reaffirmation of Guaranty, by Ohio Metal Working Products/Art’s-Way, Inc., dated May 29, 2014 – incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.49 |
Reaffirmation of Guaranty, by Art’s-Way Vessels, Inc., dated May 29, 2014 – incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.50 |
Reaffirmation of Guaranty, by Art’s-Way Scientific, Inc., dated May 29, 2014 – incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.51 |
Reaffirmation of Guaranty, by Universal Harvester by Art’s-Way, Inc., dated May 29, 2014 – incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
10.52 |
Amendment to Loan Agreement and Note, between Art’s-Way Manufacturing Co., Inc. and U.S. Bank National Association, dated June 1, 2014 – incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2014. | ||
21.1 |
List of Subsidiaries – incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2014. | ||
23.1 |
Consent of independent registered public accounting firm – filed herewith. | ||
24.1 |
Power of Attorney (included on the “Signatures” page of the Annual Report on Form 10-K for the fiscal year ended November 30, 2014). | ||
31.1 |
Certificate pursuant to 17 CFR 240 13(a)-14(a) – filed herewith. | ||
31.2 | Certificate pursuant to 17 CFR 240 13(a)-14(a) – filed herewith. | ||
32.1 | Certificate pursuant to 18 U.S.C. Section 1350 – filed herewith. | ||
32.2 |
Certificate pursuant to 18 U.S.C. Section 1350 – filed herewith. | ||
101 |
The following financial statements from the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the consolidated Balance Sheets, (ii) the Consolidated Statement of Operations, (iii) the Consolidated Statement of Cash Flows, (iv) the Consolidated Statement of Stockholders’ Equity filed herewith, and (v) Notes to the Consolidated Financial Statements. | ||
(*) Indicates a management contract or compensatory plan or arrangement.
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