UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~August~~November 3130, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-3498

Taylor Devices, Inc.

(Exact name of registrant as specified in its charter)


New York		16-0797789

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

90 Taylor Drive, North Tonawanda, New York		14120

(Address of principal executive offices)		(Zip Code)

716-694-0800

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $.025 par value per share

Preferred Stock Purchase Rights

TAYD

N/A

The Nasdaq Stock Market LLC

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of ~~September~~January 273, ~~2024~~2025 was 3,~~128~~136,~~463~~209.

TAYLOR DEVICES, INC.

Index to Form 10-Q

PART I	FINANCIAL INFORMATION		PAGE NO.
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets as of August 31, 2024 and May 31, 2024	4
		Condensed Consolidated Balance Sheets as of November 30, 2024 and May 31, 2024	4
		Condensed Consolidated Statements of Income for the three months ended August 31, 2024 and 2023	5
		Condensed Consolidated Statements of Income for the three and six months ended November 30, 2024 and 2023	5
		Condensed Consolidated Statements of Stockholders’ Equity for the three months ended August 31, 2024 and 2023	6
		Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended November 30, 2024 and 2023	6
		Condensed Consolidated Statements of Cash Flows for the three months ended August 31, 2024 and 2023	7
		Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2024 and 2023	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1417
	Item 4.	Controls and Procedures	1417
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	1518
	Item 1A.	Risk Factors	1518
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1518
	Item 3.	Defaults Upon Senior Securities	1518
	Item 4.	Mine Safety Disclosures	1518
	Item 5.	Other Information	1518
	Item 6.	Exhibits	1619
SIGNATURES		1720

TAYLOR DEVICES, INC. AND SUBSIDIARY
Part I – Financial Information Item 1. Financial Statements TAYLOR DEVICES, INC. AND SUBSIDIARY
Part I - Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets	(Unaudited)
Condensed Consolidated Balance Sheets	(Unaudited)
	August 31,	May 31,
	November 30,	May 31,
	2024	2024
Assets
Current assets:
Cash and cash equivalents	$2,~~163~~355,~~496~~333	$2,831,471
Short-term investments	24,~~972~~246,~~695~~282	28,131,279
Accounts and other receivables, net	68,~~779~~247,~~579~~705	5,212,408
Inventory	8,~~154~~610,~~045~~730	7,512,052
Costs and estimated earnings in excess of billings	43,~~333~~017,~~098~~641	4,356,565
Other current assets	12,~~617~~099,~~897~~632	725,506
Total current assets	48,~~020~~577,~~810~~323	48,769,281
Maintenance and other inventory, net	1,~~283~~427,~~527~~583	1,579,829
Property and equipment, net	11,~~047~~318,~~717~~103	11,180,933
Patents, net	~~287~~281,~~037~~481	292,593
Other assets	~~243~~244,~~280~~627	242,167
Deferred income taxes	1,012,615	1,012,615
	$61,894,986	$63,077,418
	$62,861,732	$63,077,418
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$1857,~~847,922~~351	$1,438,847
Accrued expenses	2,~~396~~497,~~249~~496	4,664,463
Billings in excess of costs and estimated earnings	23,~~984~~707,~~361~~908	5,601,274
Accrued income taxes	~~742,100~~-	126,148
Total current liabilities	7,~~970~~062,~~632~~755	11,830,732
Stockholders' Equity:
Common stock and additional paid-in capital	1314,~~074~~024,~~600~~605	13,063,587
Retained earnings	5354,~~793~~849,~~673~~833	51,127,018
	66,868,273	64,190,605
	68,874,438	64,190,605
Treasury stock - at cost	(1213,~~943~~075,~~919~~461)	(12,943,919)
Total stockholders’ equity	5355,~~924~~798,~~354~~977	51,246,686
	$61,894,986	$63,077,418
	$62,861,732	$63,077,418

See notes to condensed consolidated financial statements.

TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income	(Unaudited)		(Unaudited)
	For the three months ended August 31,
	For the three months ended		For the six months ended
	2024	2023
	November 30,2024	November 30,2023	November 30,2024	November 30,2023
Sales, net	$118,~~617~~548,~~856~~881	$910,~~923~~339,~~628~~875	$20,166,737	$20,263,503
Cost of goods sold	64,~~114~~662,~~226~~781	5,~~539~~529,~~052~~208	10,777,007	11,068,260
Gross profit	53,~~503~~886,~~630~~100	4,~~384~~810,~~576~~667	9,389,730	9,195,243
Research and development costs	69102,~~192~~922	~~129~~84,~~074~~081	172,114	213,155
Selling, general and administrative expenses	2,~~529~~838,~~537~~993	2,~~335~~672,~~957~~926	5,368,530	5,008,883
Operating income	2944,~~904,901~~185	12,~~919~~053,~~545~~660	3,849,086	3,973,205
Other income	~~376~~307,~~754~~871	~~361~~398,~~318~~688	684,625	760,006
Income before provision for income taxes	31,~~281~~252,~~655~~056	2,~~280~~452,~~863~~348	4,533,711	4,733,211
Provision for income taxes	~~615~~195,~~000~~896	~~433~~471,000	810,896	904,000
Net income	$21,~~666~~056,~~655~~160	$1,~~847~~981,~~863~~348	$3,722,815	$3,829,211
Basic and diluted earnings per common share	$0.8534	$0.5256	$1.19	$1.09

See notes to condensed consolidated financial statements.

TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders’ Equity
	(Unaudited)			(Unaudited)
	For the three months ended August 31,
	For the three months ended			For the six months ended
	2024	2023
	November 30,2024		November 30,2023	November 30,2024	November 30,2023
Common Stock
Beginning of period	$104,~~056~~076	~~$102,127~~	$102,168	$104,056	$102,127
Issuance of shares for employee stock purchase plan	1	3	3	2	6
Issuance of shares for employee stock option plan	19487	38	-	506	38
End of period	104,~~076~~564	~~102,168~~	102,171	104,564	102,171
Paid-in Capital
Beginning of period	12,~~959~~970,~~531~~524	~~10,947,089~~	10,965,730	12,959,531	10,947,089
Issuance of shares for employee stock purchase plan	21,~~426~~234	~~2,880~~	2,190	3,660	5,070
Issuance of shares for employee stock option plan	8217,~~567~~079	~~15,761~~	-	225,646	15,761
End of period	12,970,524	10,965,730
Stock options issued for services	731,204		301,308	731,204	301,308
Retained Earnings
End of period	13,920,041		11,269,228	13,920,041	11,269,228
Beginning of period	51,127,018	42,128,256
Retained Earnings
Net income	2,666,655	1,847,863
Beginning of period	53,793,673		43,976,119	51,127,018	42,128,256
End of period	53,793,673	43,976,119
Net income	1,056,160		1,981,348	3,722,815	3,829,211
Treasury Stock
End of period	54,849,833		45,957,467	54,849,833	45,957,467
Beginning of period	(12,943,919)	(3,084,742)
Treasury Stock
Issuance of shares for employee stock option plan	-	(15,799)
Beginning of period	(12,943,919)		(3,100,541)	(12,943,919)	(3,084,742)
End of period	(12,943,919)	(3,100,541)
Issuance of shares for employee stock option plan	(131,542)		-	(131,542)	(15,799)
Total stockholders' equity	$53,924,354	$51,943,476
End of period	(13,075,461)		(3,100,541)	(13,075,461)	(3,100,541)
Total stockholders' equity	$55,798,977		$54,228,325	$55,798,977	$54,228,325

See notes to condensed consolidated financial statements.

TAYLOR DEVICES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
	(Unaudited)
	For the three months ended August 31,
For the six months ended	November 30,2024	November 30,2023
	2024	2023
Operating activities:
Net income	$23,~~666~~722,~~655~~815	$13,~~847~~829,~~863~~211
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation	~~380~~833,~~178~~399	~~455~~910,~~478~~956
Amortization	511,~~556~~112	-
Stock options issued for services	731,204	301,308
Changes in other assets and liabilities:
Accounts and other receivables, net	(13,~~567~~035,~~171~~297)	~~149~~1,~~754~~481,404
Inventory	(~~345~~946,~~691~~432)	(~~918~~1,~~507~~224,268)
Costs and estimated earnings in excess of billings	231,~~467~~338,924	~~735~~2,~~211~~401,673
Other current assets	(~~892~~1,~~391~~374,126)	~~229~~271,~~533~~607
Accounts payable	~~409~~(581,~~075~~496)	(~~666~~549,~~200~~722)
Accrued expenses	(12,~~652~~293,~~262~~115)	(1,~~615~~045,~~575~~751)
Billings in excess of costs and estimated earnings	(21,~~616~~893,~~913~~366)	21,~~820~~013,~~563~~546
Net operating activities	(3,589,497)	3,038,120
Other assets	-	(27,343)
Net operating activities	(3,486,378)	7,362,621
Investing activities:
Acquisition of property and equipment	(~~246~~970,~~962~~569)	(~~427~~544,~~652~~801)
Purchase of short-term investments	(~~341~~2,~~416~~615,003)	(37,~~297~~234,~~983~~549)
Proceeds from sale of short-term investments	36,500,000	-
Other investing activities	(12,~~113~~460)	(12,~~128~~493)
Net investing activities	2,~~910~~911,~~509~~968	(37,~~726~~781,~~763~~843)
Financing activities:
Proceeds from issuance of common stock, net	11229,~~013~~814	1820,~~682~~875
Acquisition of treasury stock	-(131,542)	(15,799)
Net financing activities	1198,~~013~~272	25,~~883~~076
Net change in cash and cash equivalents	(~~667~~476,~~975~~138)	(~~685~~414,~~760~~146)
Cash and cash equivalents - beginning	2,831,471	3,575,219
Cash and cash equivalents - ending	$2,~~163~~355,~~496~~333	$23,~~889~~161,~~459~~073

See notes to condensed consolidated financial statements.

TAYLOR DEVICES, INC. ~~AND SUBSIDIARY~~

Notes to Condensed Consolidated Financial Statements

1.The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of ~~August~~November 3130, 2024 and May 31, 2024, ~~the~~ results of operations for the three and six months ended ~~August~~November 3130, 2024 and 2023, and cash flows for the ~~three~~six months ended ~~August~~November 3130, 2024 and 2023. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended May 31, 2024, filed with the U.S. Securities and Exchange Commission (“SEC”) on August 15, 2024 (the “Form 10-K”).

2.The Company has evaluated events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued.

3.There is no provision nor shall there be any provisions for profit sharing, dividends, or any other benefits of any nature at any time for this fiscal year.

4.For the ~~three~~six-month periods ended ~~August~~November 3130, 2024 and 2023, the net income was divided by 3,~~118~~124,~~975~~720 and 3,~~520~~521,~~910~~099 respectively, which is net of the Treasury shares, to calculate the net income per share. For the three-month periods ended November 30, 2024 and 2023, net income was divided by 3,127,793 and 3,521,428 respectively, which is net of the Treasury shares, to calculate the net income per share.

5.The results of operations for the three and six-month ~~period~~periods ended ~~August~~November 3130, 2024 are not necessarily indicative of the results to be expected for the full year.

6.Recently issued Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) guidance has either been implemented or is not significant to the Company.

7.Short-term Investments:

At times, the Company invests excess funds in liquid interest earning instruments. Short-term investments at ~~August~~November 3130, 2024 and May 31, 2024 include money market funds, U.S. treasury securities and corporate bonds stated at fair value, which approximates cost. ~~The short-term investments mature on various dates, ranging from September 2024 to August 2027.~~ Unrealized holding gains and losses would be presented as a separate component of accumulated other comprehensive income, net of deferred income taxes. Realized gains and losses on the sale of investments are determined using the specific identification method.

The short-term investments are valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings.

8.Inventory:

	August 31, 2024	May 31, 2024
	November 30, 2024	May 31, 2024
Raw materials	$~~911~~844,~~532~~391	$886,947
Work-in-process	7,~~008~~612,~~921~~075	6,412,497
Finished goods	~~292~~217,~~592~~264	271,608
	8,213,045	7,571,052
	8,673,730	7,571,052
Less allowance for obsolescence	5963,000	59,000
	$8,154,045	$7,512,052
	$8,610,730	$7,512,052

9.Revenue Recognition:

Revenue is recognized (generally at fixed prices) when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations.

For contracts with customers in which the Company satisfies a promise to the customer to provide a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time (generally less than one year) using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead. Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. Other sales to customers are recognized upon shipment to the customer based on contract prices and terms. In the ~~three~~six months ended ~~August~~November 3130, 2024, 6163% of revenue was recorded for contracts in which revenue was recognized over time while 3937% was recognized at a point in time. In the ~~three~~six months ended ~~August~~November 3130, 2023, 5557% of revenue was recorded for contracts in which revenue was recognized over time while 4543% was recognized at a point in time.

Progress payments are typically negotiated for longer term projects. Payments are otherwise due once performance obligations are complete (generally at shipment and transfer of title). For financial statement presentation purposes, the Company nets progress billings against the total costs incurred and estimated earnings recognized on uncompleted contracts. The asset, “costs and estimated earnings in excess of billings,” represents revenues recognized in excess of amounts billed. The liability, “billings in excess of costs and estimated earnings,” represents billings in excess of revenues recognized.

If applicable, the Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. As of ~~August~~November 3130, 2024 and May 31, 2024, the Company does not have material incremental costs on any open contracts with an original expected duration of greater than one year, and therefore such costs are expensed as incurred. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer.

10.Accrued Expenses:

	August 31, 2024	May 31, 2024
	November 30, 2024	May 31, 2024
Customer deposits	$2843,~~563~~916	$285,689
Personnel costs	1,~~830~~897,~~290~~433	3,763,777
Other	~~537~~556,~~396~~147	614,997
	$2,396,249	$4,664,463
	$2,497,496	$4,664,463

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

Cautionary Statement

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q that does not consist of historical facts, are "forward-looking statements." Statements accompanied or qualified by, or containing, words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements and, as such, are not a guarantee of future performance. These statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others: reductions in capital budgets by our customers and potential customers; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products; the kind, frequency and intensity of natural disasters that affect demand for the Company’s products; and other factors, many or all of which are beyond the Company's control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results. Except as may be required by law, the Company disclaims any obligation to release publicly any updates or revisions to the forward-looking statements herein to reflect any change in the Company's expectations with regard thereto, or any changes in events, conditions or circumstances on which any such statement is based.

Results of Operations

A summary of the period-to-period changes in the principal items included in the condensed consolidated statements of income is shown below:

Summary comparison of the three months ended August 31, 2024 and 2023
Summary comparison of the six months ended November 30, 2024 and November 30, 2023
		Increase /
		(Decrease)
Sales, net		$1(96,~~694,~~000)
Cost of goods sold		$~~575~~(291,000)
Research and development costs		$(6041,000)
Selling, general and administrative expenses		$~~194~~360,000
Other income		$16(75,000)
Income before provision for income taxes		$1(199,~~001,~~000)
Provision for income taxes		$~~182~~(93,000)
Net income		$~~819~~(106,000)

Sales under certain fixed-price contracts, in which the product has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date, inclusive of profit, are ~~accounted~~recognized ~~for~~over ~~under~~time ~~the percentage-of-completion method of accounting~~ whereby revenues are ~~recognized~~ based on estimates of completion prepared on a ratio of cost to total estimated cost basis. Costs include all material and direct and indirect charges related to specific contracts.

Adjustments to cost estimates are made periodically and any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. However, any profits expected on contracts in progress are recognized over the life of the contract.

For financial statement presentation purposes, the Company nets progress billings against the total costs incurred and estimated earnings recognized on uncompleted contracts. The asset, "costs and estimated earnings in excess of billings," represents revenues recognized in excess of amounts billed. The liability, "billings in excess of costs and estimated earnings," represents billings in excess of revenues recognized.

For the ~~three~~six months ended ~~August~~November 3130, 2024 (All figures discussed are for the ~~three~~six months ended ~~August~~November 3130, 2024, as compared to the ~~three~~six months ended ~~August~~November 3130, 2023).

	Three months ended August 31		Change
	Six months ended		Change
	2024	2023	Amount	Percent
	November 30,2024	November 30,2023	Amount	Percent
Sales, net	$11,618,000	$9,924,000	$1,694,000	17%
Net Revenue	$20,167,000	$20,263,000	$(96,000)	0%
Cost of goods sold	6,114,000	5,539,000	575,000	10%
Cost of sales	10,777,000	11,068,000	(291,000)	-3%
Gross profit	$59,~~504~~390,000	$49,~~385~~195,000	$1195,~~119,~~000	262%
… as a percentage of net revenues	47%	4445%

The Company's consolidated results of operations showed a ~~17%~~$0.1 ~~increase~~million decrease in net revenues and a $0.81 million ~~increase~~decrease in net income. Revenues recorded in the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 for long-term projects (“Projects”) were 3010% higher than the level recorded in the prior year. The Company had 2327 Projects in process during the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 as compared to 2229 during the same period last year. Revenues recorded in the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 for other-than long-term projects (non-projects) were 214% ~~higher~~lower than the level recorded in the prior year. Total sales within the U.S. during the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 ~~increased~~decreased 107% from the same period last year. Total sales to Asia during the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 increased 3837% from the same period of the prior year. The shift in domestic and international sales concentration from the prior year is attributable to normal changes in structural project activity. Sales increases were recorded over the same period last year to ~~customers in aerospace / defense (20%) and~~ industrial customers (~~111~~43%) with adecreases ~~decrease~~ to customers involved in construction of buildings and bridges (-512%). ~~The~~Sales ~~increase~~to customers in aerospace / defense ~~sales~~were isconsistent ~~due,~~with inthe ~~part,~~same toperiod alast ~~combination of providing production hardware on several legacy programs and new development programs~~year.

The gross profit as a percentage of net revenue of 47% in the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 is ~~three~~two percentage points higher than the same period of the prior year (4445%). The Company has been able to increase sales prices to recover more of the increased costs for materials and labor that were incurred over the past year. Management continues to work with suppliers to obtain more visibility of conditions affecting their respective markets. These actions combined with benefits from the Company’s continuous improvement initiatives and increased volume have helped to improve the gross margin as a percentage of revenue over the prior year.

Sales of the Company’s products are made to three general groups of customers: industrial, structural and aerospace / defense. A breakdown of sales to the three general groups of customers is as follows:

	Three months ended August 31
	Six months ended
	2024	2023
	November 30,2024	November 30,2023
Industrial	12%	78%
Structural	29%	3533%
Aerospace / Defense	59%	5859%

At ~~August~~November 3130, 2023, the Company had ~~131~~141 open sales orders in our backlog with a total sales value of $2835.35 million. At ~~August~~November 3130, 2024, the Company ~~has~~had ~~118~~156 open sales orders in our backlog, ~~and~~with ~~the~~a total sales value isof $2834.45 million. The Company expects to recognize revenue for the majority of the backlog during ~~the~~fiscal ~~current~~years ~~fiscal~~2025 ~~year~~and 2026.

The Company's backlog, revenues, gross profits, and net income fluctuate from period to period. The changes in the ~~quarter~~six-month period ended ~~August~~November 3130, 2024, compared to the same period in the prior year, are not necessarily representative of future results.

Net revenue by geographic region, as a percentage of total net revenue for the ~~three~~six-month periods ended ~~August~~November 3130, 2024 and 2023, is as follows:

	Three months ended August 31
	Six months ended
	2024	2023
	November 30,2024	November 30,2023
US	78%	83%
U.S.	82%	87%
Asia	1411%	128%
Other	87%	5%

Research and Development Costs

	Three months ended August 31		Change
	Six months ended		Change
	2024	2023	Amount	Percent
	November 30,2024	November 30,2023	Amount	Percent
R & D	$ 69172,000	$ ~~129~~213,000	$ (6041,000)	-4719%
… as a percentage of net revenues	0.69%	1.31%

Research and development costs declined $6041,000 ~~during the quarter ended August 31, 2024,~~ from the same period in the prior year, due to a change in the mix of engineering resource driven projects, inclusive of customer funded development.

Selling, General and Administrative Expenses

	Three months ended August 31		Change
	Six months ended		Change
	2024	2023	Amount	Percent
	November 30,2024	November 30,2023	Amount	Percent
S G & A	$ 25,~~530~~369,000	$ 25,~~336~~009,000	$ ~~194~~360,000	87%
… as a percentage of net revenues	2227%	2425%

Selling, general and administrative expenses during the ~~quarter~~six-month period ended ~~August~~November 3130, 2024 increased 8by 7% from the same period in the prior year. This change is primarily due to increased ~~employee~~stock ~~compensation~~option ~~costs~~expense. The ~~including~~Company ~~incentive~~expenses stock options using the fair value recognition provisions of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”). The Company recognized $731,000 and $301,000 of compensation cost for the six-month periods ended November 30, 2024 and 2023, respectively.

Operating Income

Operating income was $23,~~905~~849,000 for the ~~three~~six-month ~~months~~period ended ~~August~~November 3130, 2024, ~~better~~lower than the $13,~~920~~973,000 in the same period of the prior year. ~~The increase in Operating income was attributed to increased gross margin from higher levels of sales.~~

Other Income

Other income was $~~377~~685,000 for the ~~three~~six-month ~~months~~period ended ~~August~~November 3130, 2024, a 410% ~~increase~~decrease from the same period of the prior year. This ~~increase~~decrease was driven by short-term investment interest income.

Summary comparison of the three months ended November 30, 2024 and November 30, 2023
		Increase /
		(Decrease)
Sales, net		$(1,791,000)
Cost of goods sold		$(866,000)
Research and development costs		$19,000
Selling, general and administrative expenses		$166,000
Other income		$(90,000)
Income before provision for income taxes		$(1,200,000)
Provision for income taxes		$(275,000)
Net income		$(925,000)

For the three months ended November 30, 2024 (All figures discussed are for the three months ended November 30, 2024 as compared to the three months ended November 30, 2023).

	Three months ended		Change
	November 30, 2024	November 30, 2023	Amount	Percent
Net Revenue	$8,549,000	$10,340,000	$(1,791,000)	-17%
Cost of sales	4,663,000	5,529,000	(866,000)	-16%
Gross profit	$3,886,000	$4,811,000	$(925,000)	-19%
… as a percentage of net revenues	45%	47%

The Company's consolidated results of operations showed a 17% decrease in net revenues and 47% decrease in net income. Revenues recorded in the quarter ended November 30, 2024 for Projects were 8% lower than the level recorded in the prior year. The Company had 22 Projects in process during the quarter ended November 30, 2024 as compared to 16 during the same period last year. Revenues recorded in the quarter ended November 30, 2024 for other-than long-term projects (non-projects) were 31% lower than the level recorded in the prior year. Total sales within the U.S. during the quarter ended November 30, 2024 decreased 21% from the same period last year. Total sales to Asia during the quarter ended November 30, 2024 increased 34% from the same period of the prior year. Sales decreases were recorded over the same period last year to customers in aerospace / defense (-19%), customers involved in construction of buildings and bridges (-19%) and industrial customers (-2%). The decrease in sales from the prior year was attributed to differences in the timing of backlog conversion to revenue.

The gross profit as a percentage of net revenue of 45% in the quarter ended November 30, 2024 is two percentage points lower than the same period of the prior year (47%).

	Three months ended
	November 30, 2024	November 30, 2023
Industrial	11%	9%
Structural	30%	31%
Aerospace / Defense	59%	60%

Net revenue by geographic region, as a percentage of total net revenue for the three-month periods ended November 30, 2024 and 2023, is as follows:

	Three months ended
	November 30, 2024	November 30, 2023
U.S.	88%	92%
Asia	7%	4%
Other	5%	4%

Research and Development Costs

	Three months ended		Change
	November 30, 2024	November 30, 2023	Amount	Percent
R & D	$ 103,000	$ 84,000	$ 19,000	23%
… as a percentage of net revenues	1.2%	0.8%

Research and development costs increased $19,000 from the prior year due to a change in the mix of engineering resource driven projects, inclusive of customer funded development.

Selling, General and Administrative Expenses

	Three months ended		Change
	November 30, 2024	November 30, 2023	Amount	Percent
S G & A	$ 2,839,000	$ 2,673,000	$ 166,000	6%
… as a percentage of net revenues	33%	26%

Selling, general and administrative expenses during the quarter ended November 30, 2024 increased 6% from the same period in the prior year. This change is primarily due to increased stock option expense. The Company expenses stock options using the fair value recognition provisions of the FASB ASC. The Company recognized $731,000 and $301,000 of compensation cost for the three-month periods ending November 30, 2024 and 2023, respectively.

Operating Income

Operating income was $944,000 for the three months ended November 30, 2024, lower than the $2,054,000 in the same period of the prior year. The decrease in Operating income was attributed to lower revenue and increased stock option expense.

Other Income

Other income was $308,000 for the three months ended November 30, 2024, a 23% decrease from the same period of the prior year. This decrease was driven by short-term investment interest income.

Liquidity and Capital Resources

The Company'’s primary liquidity requirements depend on its working capital needs. Working capital consists primarily of cash and short-term investments, inventory, accounts receivable, costs and estimated earnings in excess of billings, accounts payable, accrued expenses and billings in excess of costs and estimated earnings. The Company'’s primary source of liquidity has been excess cash flow from operations.

Capital expenditures for the ~~three~~six-month ~~months~~period ended ~~August~~November 3130, 2024 were $~~247~~971,000 compared to $~~428~~545,000 in the same period of the prior year. As of ~~August~~November 3130, 2024, the Company has commitments for capital expenditures totaling $1881,~~264,~~000 during the next twelve months. ~~The Board of Directors is evaluating additional capital expenditures to expand capacity.~~

Inventory and Maintenance Inventory

	August 31, 2024		May 31, 2024		Increase /(Decrease)
	November 30, 2024		May 31, 2024		Increase /(Decrease)
Raw materials	$~~912~~845,000		$887,000		$25(42,000)	3-5 %
Work-in-process	7,~~009~~612,000		6,412,000		~~597~~1,200,000	919 %
Finished goods	~~233~~154,000		213,000		20(59,000)	9-28 %
Inventory	8,~~154~~611,000	86 %	7,512,000	83 %	~~642~~1,099,000	915 %
Maintenance and other inventory	1,~~284~~428,000	14 %	1,580,000	17 %	(~~296~~152,000)	-1910 %
Total	$910,~~438~~039,000	100 %	$9,092,000	100 %	$~~346~~947,000	410 %
Inventory turnover	2.63		3.0

NOTE: Inventory turnover is annualized for the ~~three~~six-month period ended ~~August~~November 3130, 2024.

Inventory, at $8,154,000 as of August 31, 2024, is $642,000 more than the prior year-end level of $7,512,000. Approximately 86% of the inventory as of August 31, 2024 was work in process, 3% was finished goods, and 11% was raw materials. 14

12Inventory, at $8,611,000 as of November 30, 2024, is $1,099,000 more than the prior year-end level of $7,512,000. As of November 30, 2024, approximately 88% of the inventory was work in process, 2% was finished goods, and 10% was raw materials.

Maintenance and other inventory represent stock that is estimated to have a product life cycle in excess of twelve months. This stock represents certain items the Company is required to maintain for service of products sold and items that are generally subject to spontaneous ordering. This inventory is particularly sensitive to technological obsolescence in the near term due to its use in industries characterized by the continuous introduction of new product lines, rapid technological advances and product obsolescence. Management of the Company has recorded an allowance for potential inventory obsolescence. The provision for potential inventory obsolescence was $0zero and $144,000 for the ~~three~~six-month periods ended ~~August~~November 3130, 2024 and 2023, respectively.

Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB"), and Billings in Excess of Costs and Estimated Earnings ("BIEC")

	August 31, 2024	May 31, 2024		Increase /(Decrease)
	November 30, 2024	May 31, 2024	Increase /(Decrease)
Accounts receivable	$68,~~780~~248,000	$5,212,000		$13,~~568~~036,000	3058%
CIEB	43,~~333~~018,000	4,357,000		(241,339,000)	-131%
Less: BIEC	23,~~984~~708,000	5,601,000		(21,~~617~~893,000)	-4734%
Net	$87,~~129~~558,000	$3,968,000		$43,~~161~~590,000	~~105~~90%
Number of an average day’s salesoutstanding in accounts receivable	5387	39

The Company combines the totals of accounts receivable, the current asset, CIEB, and the current liability, BIEC, to determine how much cash the Company will eventually realize from revenue recorded to date. As the accounts receivable figure rises in relation to the other two figures, the Company can anticipate increased cash receipts within the ensuing 30-60 days.

Accounts receivable of $68,~~780~~248,000 as of ~~August~~November 3130, 2024 includes $2949,000 of an allowance for doubtful accounts (“Allowance”). The accounts receivable balance as of May 31, 2024 of $5,212,000 included an Allowance of $29,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) increased from 39 days at May 31, 2024 to 5387 days at ~~August~~November 3130, 2024. The Accounts Receivable and DSO increase were the result of delayed collections for structural project invoices. The DSO is a function of (1) the level of sales for an average day (for example, total sales for the past three months divided by 90 days) and (2) the level of accounts receivable at the balance sheet date. The Company expects to collect the net accounts receivable balance during the next twelve months.

As noted above, CIEB represents revenues recognized in excess of amounts billed. Whenever possible, the Company negotiates a provision in sales contracts to allow the Company to bill, and collect from the customer, payments in advance of shipments. Unfortunately, such provisions are often not possible. The $43,~~333~~018,000 balance in this account at ~~August~~November 3130, 2024 is 131% lower than the prior year-end balance. This decrease is the result of normal flow of the Projects through production with billings to the customers as permitted in the related contracts. 34 82% of the CIEB balance as of the end of the last fiscal quarter, ~~May~~August 31, 2024, was billed to those customers in the fiscal quarter ended ~~August~~November 3130, 2024. The remainder will be billed as the Projects progress, in accordance with the terms specified in the various contracts.

The balances in this account are comprised of the following components:

	August 31, 2024	May 31, 2024
	November 30, 2024	May 31, 2024
Costs	$ 82,~~945~~832,000	$ 9,644,000
Estimated Earnings	91,~~107~~771,000	9,782,000
Less: Billings to customers	131,~~719~~585,000	15,069,000
CIEB	$ 43,~~333~~018,000	$ 4,357,000
Number of Projects in progress	1510	14

As noted above, BIEC represents billings to customers in excess of revenues recognized. The $23,~~984~~708,000 balance in this account at ~~August~~November 3130, 2024 is down 4734% from the $5,601,000 balance at the end of the prior year. The balance in this account fluctuates in the same manner and for the same reasons as the CIEB, discussed above. Final delivery of product under these contracts is expected to occur during the next twelve months.

The balances in this account are comprised of the following components:

	August 31, 2024	May 31, 2024
Billings to customers	$9,093,000	$7,211,000
Less: Costs	3,013,000	933,000
Less: Estimated Earnings	3,096,000	677,000
BIEC	$2,984,000	$5,601,000
Number of Projects in progress	5	5

	November 30, 2024	May 31, 2024
Billings to customers	$11,183,000	$7,211,000
Less: Costs	3,451,000	933,000
Less: Estimated Earnings	4,024,000	677,000
BIEC	$3,708,000	$5,601,000
Number of Projects in progress	8	5

Summary of factors affecting the balances in CIEB and BIEC:

	August 31, 2024	May 31, 2024
	November 30, 2024	May 31, 2024
Number of Projects in progress	2018	19
Aggregate percent complete	5848%	53%
Average total sales value of Projects in progress	$21,~~043~~397,000	$2,089,000
Percentage of total value invoiced to customer	5651%	56%

The Company's backlog of sales orders at ~~August~~November 3130, 2024 is $2834.45 million, ~~down~~up from $33.1 million at the end of the prior year. $1713.61 million of the Company’s backlog as of ~~August~~November 3130, 2024 was onfor Projects already in progress.

Other Balance Sheet Items

Accounts payable, at $1857,~~848,~~000 as of ~~August~~November 3130, 2024, is 2840% ~~higher~~lower than the prior year-end. Accrued expenses decreased 4948% from the prior year-end, to $2,~~396~~497,000, due to the payout of fiscal year 2024 incentive compensation. The Company expects the accrued amounts to be paid or applied during the next twelve months.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information called for by this item.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

The Company's chief executive officer (its principal executive officer) and chief financial officer (its principal financial officer) have evaluated the Company's disclosure controls and procedures as of ~~August~~November 3130, 2024 and have concluded that as of the evaluation date, the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended ~~August~~November 3130, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.

1417

Part II - Other Information

Item 1. Legal Proceedings

Refer to Note 17, “Legal Proceedings,” to the Consolidated Financial Statements in the Company’s Form 10-K for information regarding the Company’s legal proceedings,. ~~which~~There ishave ~~incorporated~~been byno ~~reference~~material ~~into~~developments in any legal proceedings that require reporting in this ~~Item~~Form 110-Q.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information called for by this item.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended ~~August~~November 3130, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

1518

Item 6. Exhibits

		3 (i)	Articles of incorporation and by-laws. Restated Certificate of Incorporation, as amended, incorporated by reference to Exhibit (3)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed August 15, 2024.
	3	Articles of incorporation and by-laws.
		(ii) 4 (i) (ii) 31	By-laws, incorporated by reference to Exhibit 3(v) to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2022, filed January 6, 2023. Instruments defining the rights of security holders. Rights Agreement by and between the Registrant and Computershare Trust Company, N.A., incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018. Letter to Holders of the Registrant’s Common Stock, incorporated by reference to Exhibit 20 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018. Officer certifications.
		(i)	Restated Certificate of Incorporation, as amended, incorporated by reference to Exhibit (3)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed August 15, 2024.
		(i)	Rule 13a-14(a) Certification of Chief Executive Officer.*
		(ii)	By-laws, incorporated by reference to Exhibit 3(v) to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2022, filed January 6, 2023.
		(ii) 32	Rule 13a-14(a) Certification of Chief Financial Officer.* Officer certifications
	4	Instruments defining the rights of security holders.
		(i)	~~Section~~Rights ~~1350~~Agreement ~~Certification~~by ofand ~~Chief~~between ~~Executive~~the ~~Officer~~Registrant and Computershare Trust Company, N.**A., incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018.
		(ii)	~~Section~~Letter ~~1350~~to ~~Certification~~Holders of ~~Chief~~the ~~Financial~~Registrant’s ~~Officer~~Common Stock, incorporated by reference to Exhibit 20 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018.**
		101 101.SCH	Inline XBRL Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. Inline XBRL Taxonomy Extension Schema Document
	31	Officer certifications.
		101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
		(i)	Rule 13a-14(a) Certification of Chief Executive Officer.*
		101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
		(ii)	Rule 13a-14(a) Certification of Chief Financial Officer.*
		101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
	32	Officer certifications.
		101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
		(i)	Section 1350 Certification of Chief Executive Officer.**
		104	Cover Page Interactive Data File – the cover page Inline XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101
		(ii)	Section 1350 Certification of Chief Financial Officer.**
	101	Inline XBRL Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
	101.SCH	Inline XBRL Taxonomy Extension Schema Document
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
	104	Cover Page Interactive Data File – the cover page Inline XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101
* Exhibit filed with this report. **Exhibit furnished with this report.

* Exhibit filed with this report.19

**Exhibit furnished with this report.

TAYLOR DEVICES, INC.

Signatures

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

	TAYLOR DEVICES, INC.
	(Registrant)

Date:	~~September~~January 273, ~~2024~~2025			/s/ Paul Heary
				Paul Heary Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

1720

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