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. þ Yes o No

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). þ Yes o No

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

     As of October 28, 2005, 26,865,548 shares of the issuer’s Common Stock were issued and outstanding.

     Pursuant to Rule 12b-25 of the Securities Exchange Act of 1934, as amended, Exhibit 10.2 has been omitted from Part II, Item 6 of this Form 10-Q and will be filed with a Form 10-Q/A within five calendar days following the due date of this Form 10-Q.

CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

September 30, 2005

     A summary of the significant accounting policies consistently applied in the preparation of the accompanying unaudited, consolidated financial statements follows:

     The consolidated financial statements include the accounts of A.S.V., Inc. (ASV or the Company) and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

     ASV recognizes revenue on its product sales when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectibility is reasonably assured. The Company considers delivery to have occurred at the time of shipment.

     All research and development costs are expensed as incurred.

     The accompanying unaudited, consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information. Accordingly, they do not include all of the footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Results for the interim periods are not necessarily indicative of the results for an entire year.

     The Company provides a limited warranty to its customers. Provision for estimated warranty costs is recorded when revenue is recognized based on estimated product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual failure rates, material usage or service delivery costs differ from the Company’s estimates, revision to the warranty liability may be required.

     Changes in the Company’s warranty liability are as follows:

     Certain 2004 balance sheet amounts have been reclassified to conform with the 2005 financial statement presentation, with no effect on previously reported operating results.

     At September 30, 2005, the Company had three stock-based compensation plans. The Company accounts for those plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost is reflected in net earnings, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

     The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation. The weighted average fair values of the options granted during the nine months ended September 30, 2005 and 2004 were $17.46 and $17.79, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions used for grants during the nine months ended September 30, 2005 and 2004, respectively: zero dividend yield; expected volatility of 39.45% and 52.1%, risk-free interest rate of 4.09% and 3.78% and expected lives of 6.05 and 6.92 years.

     Inventories consist of the following:

     On October 1, 2004, ASV acquired 100% of the outstanding common stock of Loegering Mfg. Inc. The results of Loegering’s operations have been included in the consolidated financial statements since that date. Loegering is a provider of traction products and attachments for the skid-steer industry.

     The aggregate purchase price was $18.23 million, consisting of $3.48 million in cash and approximately 430,000 shares of ASV common stock valued at $14.75 million. The value of the common shares issued was determined based on the average closing market price for the 15-day period prior to October 1, 2004. In a related transaction, ASV acquired real property representing Loegering’s manufacturing facility from Loegering affiliates for $1.57 million.

     On September 29, 2005 ASV signed a five-year Supply Agreement with Caterpillar Inc. (Caterpillar), effective November 1, 2005. The Supply Agreement replaces the Alliance Agreement, which expired October 31, 2005. Under the Supply Agreement, Caterpillar will purchase 100% of its undercarriage and original equipment manufacturer service parts requirements for current and specified future Caterpillar Multi-Terrain Loaders (MTLs,) as defined, from ASV. ASV will continue to be allowed to sell its rubber track undercarriages to other equipment manufacturers for machines that do not compete with Caterpillar’s MTLs and ASV will continue to utilize Caterpillar components in the manufacture of its products. The Supply Agreement commenced on November 1, 2005 and will continue through November 1, 2010. The Supply Agreement will automatically renew for successive one-year renewal terms unless either party provides at least six months prior written notice of termination.

SFAS 123 (Revised 2004), Share-Based Payment

     This revision to Statement No. 123, Accounting for Stock-Based Compensation, requires the fair value of all share-based payment transactions be recognized in the financial statements. SFAS 123 (Revised 2004) establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. This Statement is effective for the Company beginning January 1, 2006. The Company anticipates the effect of adopting this Statement could be material, but the impact on its diluted earnings per share for the year ended December 31, 2006 for those outstanding share-based payment transactions has not been completed.

     This Statement requires the accounting for idle facility expense, freight, handling costs and wasted material be recognized as current period charges. This Statement also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for the Company beginning January 1, 2006. Management does not believe the adoption of this pronouncement will have a material effect on the Company.

     On October 22, 2004, Congress passed the American Jobs Creation Act of 2004 (the Act). The Act provides a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010, as well as other tax implications. The domestic production deduction will be accounted for as a special deduction, and as such, will have no effect on deferred tax assets and liabilities existing at the date of enactment. The Company has not computed what impact this Act will have on future earnings, as final implementation information has only recently become available.

     On August 25, 2005, the Company completed a two-for-one stock split. All share data information has been restated to reflect the stock split.

Overview

     ASV designs, manufactures and sells rubber-tracked, all-purpose crawlers and related accessories and attachments. ASV also manufactures rubber-tracked undercarriages, which are a primary component on Caterpillar’s Multi Terrain Loaders (MTL). ASV’s products are able to traverse nearly any terrain with minimal damage to the ground, making it effective in industries such as construction, landscaping and agriculture. ASV distributes its products through an independent dealer network in the United States, Canada, Australia, New Zealand and Portugal. The undercarriages sold to Caterpillar are incorporated by Caterpillar in their MTL products and sold exclusively through the Caterpillar dealer network, primarily in North America.

     ASV experienced a significant increase in sales in the nine months ended September 30, 2005 due to several reasons as explained below:

     The following discussion and analysis of the Company’s financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, and related disclosures. On an on-going basis, management evaluates its estimates and judgments, including those related to accounts receivable, inventories and warranty obligations. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. Management bases its estimates and judgments on historical experience, observance of trends in the industry, information provided by customers and other outside sources and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.

     Revenue Recognition and Accounts Receivable. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectibility is reasonably assured. The Company has determined that the time of shipment is the most appropriate point to recognize revenue as the risk of loss passes to the customer when placed with a carrier for delivery (i.e., upon shipment). Any post-sale obligations on the part of ASV, consisting primarily of warranty obligations, are estimated and accrued for at the time of shipment. The Company generally obtains oral or written purchase authorizations from customers for a specified amount of product at a specified price and considers delivery to have occurred at the time of shipment. ASV maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of ASV’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

     Inventories. Inventories are stated at the lower of cost or market, cost being determined on the first-in, first-out method. Adjustments to slow moving and obsolete inventories to the lower of cost or market are provided based on historical experience and current product demand. The Company does not believe its inventories are subject to rapid obsolescence. The Company evaluates the adequacy of the inventories’ carrying value quarterly.

     Warranties. The Company provides limited warranties to purchasers of its products which vary by product. The warranties generally cover defects in materials and workmanship for one year from the delivery date to the first end user. The rubber tracks used on the Company’s products carry a pro-rated warranty up to 1,500 hours of usage. While ASV engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, ASV’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from ASV’s estimates, revisions to the estimated warranty liability may be required.

     Income Taxes. The Company records income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established when management determines it is more likely than not that a deferred tax asset is not realizable in the foreseeable future.

     Stock-Based Compensation. The Company accounts for employee stock-based compensation under the “intrinsic value” method prescribed in APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, as opposed to the “fair value” method prescribed by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. Pursuant to the provisions of APB 25, the Company generally does not record an expense for the value of stock-based awards granted to employees.

     The FASB issued an amendment to SFAS No. 123, Share-Based Payment, (SFAS No. 123R), which will be effective for public companies in periods beginning after December 15, 2005. We are required to implement the proposed standard no later than the quarter that begins January 1, 2006. SFAS No. 123R eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25, and generally would require instead that such transactions be accounted for using a fair-value-based method. Companies are required to recognize an expense for compensation cost related to share-based payment arrangements including stock options and employee stock purchase plans. The Company anticipates the effect of adopting this Statement could be material, but the impact on its diluted earnings per share for the year ended December 31, 2006 for those share-based payment transactions currently outstanding has not been completed.

     The following table sets forth certain Statement of Earnings data as a percentage of net sales:

     Net Sales. For the three months ended September 30, 2005, net sales increased 70% to $69.2 million, compared with $40.6 million for the same period in 2004. This increase was primarily the result of four factors. First, sales of the Company’s R-Series products increased 66% due to a greater number of R-Series dealers in 2005, the addition of one new model, the RCV, which went into production in the second quarter of 2005 and additional sales to the hurricane stricken areas in the United States. The Company estimates hurricane related sales totaled $5-6 million for the third quarter of 2005. Sales of R-Series products represented 45%, or $31.1 million, of the Company’s sales in the third quarter of 2005, compared with 46%, or $18.7 million, in the third quarter of 2004. Second, sales from Loegering, acquired in October 2004, totaled $7.3 million for the third quarter of 2005, compared to none in the third quarter of 2004. Third, sales of service parts doubled to $10 million in the third quarter of 2005 compared to $5 million in the third quarter of 2004 due to the increased population of machines and undercarriages in service. Finally, sales of the Company’s undercarriages to Caterpillar for use on its Multi-Terrain Loader (MTL) product line increased 25% to $20.2 million for the third quarter of 2005 compared with $16.2 million for the third quarter of 2004 due to a greater demand for the MTL products.

     Gross Profit. Gross profit for the three months ended September 30, 2005 increased to $17.3 million, compared with $9.3 million for the same period in 2004, and the gross profit percentage increased to 25.0% in the third quarter of 2005 compared with 22.9% for the same period in 2004. The increase in gross profit was due primarily to the increased sales experienced during the third quarter of 2005. The increase in gross profit percentage was due primarily to a shift in the mix of products sold as the Company had increased sales of R-Series Posi-Track products in the third quarter of 2005 over the third quarter of 2004. R-Series products generally carry a higher gross profit percentage than MTL undercarriages. The Company believes its raw material unit cost reduction project initiated in the first quarter of 2004 as well as operational efficiencies obtained from higher production volumes helped increase the gross profit percentage in 2005. The Company also believes the 3% price increase that was put in place for all machines ordered after February 15, 2005 contributed to the increase in the third quarter of 2005. Also contributing to the increase in 2005 was the increase in the sale of service parts, which generally carry a higher gross profit percentage than machines. In addition, the inclusion of Loegering’s sales for the third quarter of 2005 helped increase the overall gross profit percentage as Loegering’s products carry a higher gross profit percentage, on average, when compared with ASV’s products. Offsetting these increases were steel surcharges of $1.6 million in the third quarter of 2005, compared with $800,000 in the third quarter of 2004.

     Selling, General and Administrative. Selling, general and administrative expenses increased from $2.3 million, or 5.8% of net sales in the third quarter of 2004, to $4.3 million, or 6.2% of net sales in the third quarter of 2005. The increase was due primarily to the inclusion of Loegering, which does not yet experience the same degree of leverage as does ASV. In addition, the Company had increased sales commissions from increased sales of the Company’s R-Series products, increased advertising and promotion costs to promote the technology benefits of the Company’s products, and the overall increase in the volume of the Company’s business.

     Research and Development. Research and development expenses increased from $224,000 in the third quarter of 2004 to $453,000 in the third quarter of 2005. The increase was due to the on-going development of new products and additional applications of its track technology. The Company also began the development of a smaller version of the Loegering Versatile Track System product, which went into production in the third quarter of 2005. The Company anticipates its future spending on research and development activities will focus on additional product offerings and additional applications of its track technology.

     Other Income (Expense). For the three months ended September 30, 2005, other income (expense) totaled $283,000, compared with $188,000 for the third quarter of 2004. This increase was due primarily to increased interest income from greater funds available for investment and increased short-term interest rates in 2005. Funds increased in 2005 due to proceeds received from the exercise of employee stock options and net earnings generated in 2005 and 2004.

     Net Earnings. For the third quarter of 2005, net earnings were $8.0 million, compared with $4.4 million for the third quarter of 2004. The increase was primarily a result of increased sales with an increased gross profit percentage, offset in part by increased operating expenses.

     Net Sales. Net sales for the nine months ended September 30, 2005 increased 59% to $179.1 million, compared with $112.7 million for the same period in 2004. This increase was primarily the result of four factors. First, sales of the Company’s R-Series products increased 38% in the nine months ended September 30, 2005 compared with the same period in 2004 due to the addition of one new model, the RCV, in 2005, a greater number of R-Series dealers in 2005 and additional sales to the hurricane stricken areas in the United States. The Company’s dealer count increased 27% to 257 dealers at September 30, 2005 compared with September 30, 2004. The Company estimates hurricane related sales totaled $5-6 million for the third quarter of 2005. Second, sales from Loegering, acquired in October 2004, totaled $18.6 million for the first nine months of 2005, compared to none in 2004. Third, sales of the Company’s undercarriages to Caterpillar for use on its MTL product line increased 44% in the nine months ended September 30, 2005 compared with the same period in 2004 due to a greater demand for the MTL products and a low comparison figure for 2004. In 2004, the Company had lower undercarriages shipments in the first half of the year as Caterpillar changed over its production of MTLs to a newer series in the first half of 2004, thereby limiting its production of MTLs and its need for undercarriages. Finally, sales of service parts and other items increased 53% in the nine months ended September 30, 2005 compared with the same period in 2004 due to a greater number of machines and undercarriages in service.

     Gross Profit. For the nine months ended September 30, 2005, gross profit increased to $43.9 million, compared with $25.6 million for the same period in 2004, and the gross profit percentage increased from 22.7% in 2004 to 24.5% in 2005. The increase in gross profit was due primarily to the increased sales experienced during the nine months ended September 30, 2005 as discussed above. The increase in gross profit percentage was due primarily to a shift in the mix of products sold as the Company had increased sales of R-Series Posi-Track products in the first nine months of 2005 over the first nine months of 2004. R-Series products generally carry a higher gross profit percentage than MTL undercarriages. The Company believes its raw material unit cost reduction project initiated in the first quarter of 2004 as well as operational efficiencies obtained from higher production volumes helped increase the gross profit percentage in 2005. The Company also believes the 3% price increase that was put in place for all machines ordered after February 15, 2005 contributed to the increase in 2005. Also contributing to the increase in 2005 was the increase in the sale of service parts, which generally carry a higher gross profit percentage than machines. In addition, the inclusion of Loegering’s sales for 2005 helped increase the overall gross profit percentage as Loegering’s products carry a higher gross profit percentage, on average, when compared with ASV’s products. Offsetting these increases were steel surcharges of $4.1 million in the nine months ended September 30, 2005, compared with $1.5 million for the same period in 2004.

     Selling, General and Administrative. For the nine months ended September 30, 2005, selling, general and administrative expenses increased to $12.0 million, or 6.7% of net sales, compared with $6.3 million, or 5.6% of net sales, for the same period in 2004. The increase was due primarily to the inclusion of Loegering, which does not yet experience the same degree of leverage as does ASV. In addition, the Company had increased advertising and promotion costs to promote the technology benefits of the Company’s products, increased sales commissions from increased sales of the Company’s R-Series products and the overall increase in the volume of the Company’s business.

     Research and Development. Research and development expenses more than doubled to $1.3 million for the nine months ended September 30, 2005, compared with $561,000 for the nine months ended September 30, 2004. The increase was due to the on-going development of new products, including the Company’s newest R-Series product, the RCV, which went into production in April 2005, and additional applications of its track technology and the inclusion of Loegering’s operations in 2005. The Company also completed the development of a smaller version of the Loegering Versatile Track System product, which went into production in the third quarter of 2005. The Company anticipates its future spending on research and development activities will focus on additional product offerings and additional applications of its track technology.

     Other Income (Expense). For the nine months ended September 30, 2005, other income (expense) was $907,000, compared with $493,000 for the same period in 2004. This increase was due primarily to greater funds available for investment and increased short-term interest rates in 2005. Funds increased in 2005 due to proceeds received from the exercise of employee stock options and net earnings generated in 2005 and 2004.

     Net Earnings. Net earnings were $19.7 million for the nine months ended September 30, 2005, compared with $12.2 million for the nine months ended September 30, 2004. The increase was primarily a result of increased sales with an increased gross profit percentage, offset in part by increased operating expenses.

     For the nine months ended September 30, 2005, the Company generated $1.2 million of cash and cash equivalents compared with generating $14.5 million of cash and cash equivalents for the nine months ended September 30, 2004. During the first nine months of 2005, the Company generated $5.6 million of cash from operations, as increased profitability and increased payables were offset primarily by increased accounts receivables from increased sales and increased raw materials to facilitate expected future production levels and parts sales. The Company used $5.8 million of cash in investing activities during the first nine months of 2005, as the Company invested $11.0 million to purchase equipment integral to the manufacturing of certain inventory components. This cash use was partially offset by the redemption of certain short-term investments. In 2005, the Company chose to eliminate the use of auction-rate securities from its investment portfolio, which were classified as short-term investments, and replaced them with short-term tax-exempt investments, which are classified as cash equivalents. Financing activities generated an additional $1.4 million of cash due primarily to the exercise of stock options by employees and directors.

     Through October 31, 2005, the Company sold its undercarriages and service parts to Caterpillar under the terms of a Commercial Alliance Agreement (Alliance Agreement). The Alliance Agreement has been replaced, effective November 1, 2005, with a Supply Agreement as described below.

     Through October 31, 2005, the Company recognized as sales its cost for the MTL undercarriages, as defined in the Alliance Agreement between the Company and Caterpillar, plus a portion of the anticipated gross profit that Caterpillar expected to recognize upon sale of the MTLs to Caterpillar dealers, when the Company shipped undercarriages to Caterpillar. The gross profit percentage that we received for two of the three undercarriages we currently sell to Caterpillar was reduced by 33% on January 1, 2005, with the overall gross profit percentage on the sale of all three undercarriages expected to be approximately 20% for 2005. The gross profit percentage that we expected to receive for the third undercarriage sold to Caterpillar was scheduled to be reduced by 33% effective January 1, 2006. Both of these reductions would reduce the amount of gross profit we will recognize on the sale of these undercarriages to Caterpillar if the level of net sales in 2005 and 2006 were to be the same as in 2004.

     On September 29, 2005 we signed a five-year Supply Agreement with Caterpillar, effective November 1, 2005 (Supply Agreement). The Supply Agreement replaces the Alliance Agreement, which expired October 31, 2005. The key terms of the Supply Agreement are as follows:

     Scope:

     Pricing:

     Term:

     Along with the new Supply Agreement, ASV and Caterpillar entered into a Registration Rights Agreement that provides Caterpillar registration rights for shares of unregistered ASV common stock it currently holds. However, so long as the Supply Agreement remains in effect, Caterpillar has agreed not to sell or dispose of any of its ASV shares prior to January 1, 2009.

     In September 2005, we entered into a Commercial Alliance Agreement with Vermeer Manufacturing Inc. (Vermeer Agreement). Under the Vermeer Agreement, we will be the exclusive supplier of rubber track undercarriages and service parts to Vermeer for use on select products in Vermeer’s line of horizontal directional drills, utility trenchers and other products. The companies anticipate limited production of some of these new models in late fourth quarter 2005. The term of the Vermeer Agreement is eight years, with automatic one-year renewal periods unless either party gives the other party at least six months written notice of termination.

     Included in accounts receivable at September 30, 2005 is a note receivable for $774,000 from a customer. The note bears interest at 6% and is due in monthly installments through January 2009. As of October 28, 2005, the customer is current on all amounts owed the Company under this note.

     The Company has guaranteed the repayment of a note made by a customer to a non-affiliated finance company for payment of amounts owed to the Company by this customer. To determine the value of the financing guarantee, the lending institution provided us with the cost of the financing both with and without the guarantee. This differential was used to determine the amount of the financing guarantee of $35,000. This amount was recorded as a reduction of net sales for the year ended December 31, 2003, when the note and guarantee were entered into. A similar amount has been included in other accrued liabilities at June 30, 2005 and December 31, 2004. The balance of this note at September 30, 2005 was $340,000. As of October 28, 2005, the customer is current on all amounts owed to the finance company under this note.

     The Company has affiliated itself with several finance companies that finance the sale of the Company’s products. By using these finance companies, the Company receives payment for its products shortly after their shipment. The Company pays a portion of the interest cost associated with financing these shipments that would normally be paid by the customer, over a period generally ranging from three to twelve months, depending on the amount of down payment made by the customer. The Company is also providing twelve-month terms for one machine to be used for demonstration purposes for each qualifying dealer. In addition, the Company does, from time to time, offer extended term financing on the sale of certain products to its dealers for periods ranging from 90 days to two years.

     In October 2005, the Company announced it had entered into an agreement with CIT Group Inc. (CIT) to form ASV Capital, a private label finance program to offer wholesale and retail financing options on the sale of ASV products. Representatives of ASV and CIT will make joint credit decisions, with CIT retaining the risk of the credit portfolio.

     SFAS 123 (Revised 2004) Share-Based Payment. This revision to Statement No. 123, Accounting for Stock-Based Compensation, requires the fair value from all share-based payment transactions be recognized in the financial statements. SFAS 123 (Revised 2004) establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. This Statement is effective for the Company beginning January 1, 2006. The Company anticipates the effect of adopting this Statement could be material, but the impact on its diluted earnings per share for the year ended December 31, 2006 for those share-based payment transactions currently outstanding has not been completed.

     SFAS 151 Inventory Costs. This Statement requires the accounting for idle facility expense, freight, handling costs and wasted material be recognized as current period charges. This Statement also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for the Company beginning January 1, 2006. Management does not believe the adoption of this pronouncement will have a material effect on the Company.

     On August 25, 2005, the Company completed a two-for-one stock split. All share data information has been restated to reflect the stock split.

     The Company believes cash expected to be generated from operations and its existing cash, cash equivalents and investments will satisfy the Company’s projected working capital needs and other cash requirements for the next twelve months and the foreseeable future.

     The statements set forth above under “Results of Operations” and elsewhere in this Form 10-Q regarding the effect of new accounting pronouncements, ASV’s future sales levels, gross profit percentage, new product availability, product mix, profitability, expense levels and liquidity are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Certain factors may affect whether these anticipated events occur including ASV’s ability to successfully manufacture the machines, unanticipated delays, costs or other difficulties in the manufacture of the machines, unanticipated problems or delays experienced by Caterpillar relating to the manufacturing or marketing of the MTL machines, market acceptance of the machines, deterioration of the general market and economic conditions, corporate developments at ASV or Caterpillar, ASV’s ability to realize the anticipated benefits from its relationship with Caterpillar and the other factors described below. Any forward-looking statements provided from time-to-time by the Company represent only management’s then-best current estimate of future results or trends.

     Under the terms of the Supply Agreement we entered into with Caterpillar, effective November 2005, we agreed to supply Caterpillar with undercarriages to allow them to manufacture a five-model line of Caterpillar branded rubber tracked skid steer loaders called Multi-Terrain Loaders (the Caterpillar Machines). The term of the Supply Agreement expires October 31, 2010. These machines utilize Caterpillar’s skid steer technology and our

rubber track undercarriage technology. All five models have been developed and are available to all Caterpillar dealers. The Caterpillar Machines are assembled in Sanford, North Carolina, at Caterpillar’s skid steer loader facility. The undercarriages are manufactured at our facility in Cohasset, Minnesota.

     The successful manufacturing and marketing of the Caterpillar Machines entail significant risks as described below:

     Caterpillar owns approximately 23.4% of the outstanding shares of our Common Stock. Accordingly, Caterpillar has the ability to influence our business and operations to a certain extent. In addition to its rights as a shareholder to influence us, Caterpillar has the right to designate directors for election to the Board of Directors under the Registration Rights Agreement between us and Caterpillar effective November 1, 2005, proportionate to its stock ownership interest, which increases Caterpillar’s ability to influence us. Currently, one of our nine directors has been designated by Caterpillar, despite the fact that Caterpillar would be entitled to designate two directors, assuming a board comprised of nine directors. If Caterpillar were to exercise its right to designate an additional director, based on its current stock ownership interest, we anticipate that, assuming there were no vacancies on our board, we would expand the size of our board and elect an additional director designated by Caterpillar.

     Given the significant percentage of the outstanding shares of our Common Stock owned by Caterpillar, third parties also may be discouraged from making an offer to acquire control or ownership of us.

     Caterpillar owns approximately 23.4% of the outstanding shares of our Common Stock. Under the Registration Rights Agreement with Caterpillar, we have agreed to provide Caterpillar registration rights for shares of unregistered ASV common stock it currently holds. Caterpillar has agreed that, so long as the Supply Agreement remains in effect, Caterpillar will not sell or dispose of any of its ASV shares prior to January 1, 2009. However, sales by Caterpillar of substantial amounts of our Common Stock, or the perception that such sales could take place, could negatively affect the market price of our Common Stock. If this happens, then stockholders may face difficulty in selling their shares and the price at which they sell their shares may be reduced.

     Our management has had limited experience in managing companies experiencing growth like ours. Further growth and expansion of our business will place additional demands upon our current management and other resources. We believe that future growth and success depends to a significant extent on our ability to be able to effectively manage our growth in several areas, including, but not limited to: (i) production facility expansion/construction; (ii) entrance to new geographic and use markets; (iii) international sales, service and production; and (iv) employee and management development. No assurance can be given that our business will grow in the future and that we will be able to effectively manage such growth. If we are unable to manage growth effectively, our business, results of operations and financial condition would be materially adversely affected.

     Certain of the components included in our products are obtained from a limited number of suppliers, including the rubber track component used on our products. Disruption or termination of supplier relationships could have a material adverse effect on our operations. We believe that alternative sources could be obtained, if necessary, but the inability to obtain sufficient quantities of the components or the need to develop alternative sources, if and as required in the future, could result in delays or reductions in product shipments which in turn may have an adverse effect on our operating results and customer relationships.

     Companies whose products compete in the same markets as the R-Series Posi-Track products have substantially more financial, production and other resources than us, as well as established reputations within the industry and more extensive dealer networks. For the nine months ended September 30, 2005 sales of R-Series Posi-Track products accounted for approximately 45% of our net sales. Also, the growth potential of the markets being pursued by us could attract more competitors. There can be no assurance that we will be able to compete effectively in the marketplace or that we will be able to establish a significantly dominant position in the marketplace before our potential competitors are able to develop similar products.

     Our success is dependent upon increasing market acceptance of rubber track vehicles in the markets in which our products compete. Most small to medium sized tractor-type vehicles in competition with the Posi-Track are wheeled vehicles and most track-driven vehicles are designed for specific limited tasks. The market for rubber track vehicles is relatively new and there can be no assurance that our products will gain sufficient market acceptance to enable us to sustain profitable operations.

     In October 2004, we acquired all the outstanding common stock of Loegering Mfg. Inc. (Loegering) of Casselton, North Dakota for a combination of cash and shares of our Common Stock. We have not previously been involved in an acquisition of this nature, and there can be no assurance that we will be able to successfully manage and integrate the operations of Loegering.

     The process of integrating Loegering may be a difficult and time-consuming process. In particular, the process of combining sales and marketing forces, consolidating administrative functions, and coordinating product offerings can take longer, cost more, and provide fewer benefits than initially anticipated. Management may face difficulties, delays and costs as it works to retain customers, to minimize the risk of loss or reduction of customer orders due to the potential for market confusion, hesitation and delay, to coordinate infrastructure operations in an effective and efficient manner and to combine certain operations and functions using common information and

communication systems, operating procedures, financial controls and human resource practices. To the extent any of these events occurs, the benefits of the transaction may be reduced, at least for a period of time.

     We intend to increase our market penetration by developing and marketing new rubber-tracked vehicles and other new products. There can be no assurance that we will be able to successfully develop the new products, or that any new products developed by us will gain market acceptance.

     One of the expected benefits of the Loegering acquisition is future sales of its proprietary Versatile Track System^â (VTS), which we expect to account for a majority its net sales. If we are unable to achieve our anticipated sales of the VTS product, or if adequate quantities of raw materials to meet the expected demand for this product are not available, the benefits of the transaction may be reduced or delayed for a period of time. Our business may also be adversely affected if the VTS product does not gain market acceptance as quickly as we anticipate or at all.

     The construction and farm equipment industries, in which the Posi-Track competes, have historically been cyclical. Sales of construction and agricultural equipment are generally affected by the level of activity in the construction and agricultural industries, including farm production and demand, weather conditions, interest rates and construction levels (especially housing starts). In addition, the demand for our products may be affected by the seasonal nature of the activities in which they are used and by overall economic conditions in general. Therefore, an economic downturn in the construction and farm equipment industries, which could result in part based upon seasonal factors, could materially harm our business.

     Our future success depends to a significant extent upon the continued service of certain key personnel, including our CEO, Gary Lemke. We have key-person life insurance on the life of Mr. Lemke, but we do not have an employment agreement with Mr. Lemke. The loss of the services of any key member of our management could have a material adverse effect on our ability to achieve our objectives.

     Like most manufacturing companies, we may be subject to significant claims for product liability and may have difficulty in obtaining product liability insurance or be forced to pay high premiums. We currently have product liability insurance and have not been subject to material claims for product liability. However, there can be no assurance that we will be able to obtain adequate insurance in the future or that our present or future insurance would prove adequate to cover potential product claims.

     We currently hold four patents on certain aspects of the suspension and drive mechanisms used in certain of our products. We have also filed additional patent applications. There can be no assurance that the patents will be granted or that patents under any future applications will be issued, or that the scope of the current or any future patent will exclude competitors or provide competitive advantages to us, that any of our patents will be held valid if subsequently challenged or that others will not claim rights in or ownership to the patents and other proprietary rights held by us. Furthermore, there can be no assurance that others have not developed or will not develop similar products, duplicate any of our products or design around such patents. Litigation, which could result in substantial cost to and diversion of effort by us, may be necessary to enforce patents issued to us, to defend us against claimed infringement of the rights of others or to determine the ownership, scope or validity of our and other’s proprietary rights.

     Our products are manufactured exclusively at our two manufacturing facilities in Grand Rapids and Cohasset, Minnesota and at our Loegering facility in Casselton, North Dakota. In the event that any of these manufacturing facilities were to be damaged or destroyed or become otherwise inoperable, we may be unable to manufacture our products for sale until the facility is either repaired or replaced, either of which could take a considerable period of time. Although we maintain business interruption insurance, there can be no assurance that such insurance would adequately compensate us for the losses we would sustain in the event that our manufacturing facilities were unavailable for any reason.

     Our operations, products and properties are subject to environmental and safety regulations by governmental authorities. We may be liable under environmental laws for waste disposal and releases into the environment. In addition, our products are subject to regulations regarding emissions and other environmental and safety requirements. While we believe that compliance with existing and proposed environmental and safety regulations will not have a material adverse effect on our financial condition or results of operations, there can be no assurance that future regulations or the cost of complying with existing regulations will not exceed current estimates.

     The Company’s interest income on cash equivalents and long-term investments is affected by changes in interest rates in the United States. Cash equivalents include money market funds and 7-day variable rate demand notes which are highly liquid instruments with interest rates set every 7 days that can be tendered to the remarketer upon 7 days notice for payment of principal and accrued interest amounts. The 7-day tender feature of these variable rate demand notes is further supported by irrevocable letters of credit from banks. To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the bank’s letter of credit. The Company’s cash and cash equivalents are held primarily in money market mutual funds and variable rate demand notes. The Company’s long-term investments consist of highly-rated securities, including U.S. Treasury and tax-exempt municipal obligations. Changes in interest rates have not had a material effect on the Company, and the Company does not anticipate that future exposure to interest rate market risk will be material.

     The Company has no history of, and does not anticipate in the future, investing in derivative financial instruments. Most transactions with international customers are entered into in U.S. dollars, precluding the need for foreign currency cash flow hedges.

     Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

     Changes in Internal Control Over Financial Reporting. During the third fiscal quarter, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

     None

     None

     None

     None

     None

     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.