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 November 30, 2022


☐	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)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading Symbol

Name of each exchange on which registered

None

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 and post 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 ☒

As of December 29, 2022, there were outstanding 3,502,546 shares of the registrant’s common stock, par value $.025 per share.

-2-

PART I	FINANCIAL INFORMATION		PAGE NO.

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets as of November 30, 2022 and May 31, 2022	4

		Condensed Consolidated Statements of Income for the three and six months ended November 30, 2022 and 2021	5

		Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended November 30, 2022 and 2021	6

		Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2022 and 2021	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		17
	Item 4.	Controls and Procedures		17

PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	18
	Item 1A.	Risk Factors	18
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
	Item 3.	Defaults Upon Senior Securities	18
	Item 4.	Mine Safety Disclosures	18
	Item 5.	Other Information	18
	Item 6.	Exhibits	19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			20
SIGNATURES			21

TAYLOR DEVICES, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets	(Unaudited)
	November 30,			May 31,
	2022			2022

Assets
Current assets:
Cash and cash equivalents	$	21,013,144		$	22,517,038
Short-term investments		1,097,450			1,097,450
Accounts and other receivables, net		5,940,731			4,466,686
Inventory		5,596,046			5,854,935
Costs and estimated earnings in excess of billings		5,295,376			3,336,474
Other current assets		890,506			704,436
Total current assets		39,833,253			37,977,019

Maintenance and other inventory, net		972,282			1,107,309
Property and equipment, net		10,610,010			9,854,759
Other assets		207,879			205,359
Deferred income taxes		74,615			74,615
Total assets	$	51,698,039		$	49,219,061
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,537,181		$	1,426,830
Billings in excess of costs and estimated earnings		1,089,884			1,122,763
Other current liabilities		3,087,615			3,414,314
Total current liabilities		5,714,680			5,963,907

Stockholders' Equity:
Common stock and additional paid-in capital		10,495,584			10,329,258
Retained earnings		38,402,777			35,840,898
		48,898,361			46,170,156
Treasury stock - at cost		(2,915,002	)		(2,915,002	)
Total stockholders’ equity		45,983,359			43,255,154
	$	51,698,039		$	49,219,061


See notes to condensed consolidated financial statements.


	November 30, 2022		May 31, 2022
Raw materials	$	575,415	$	488,393
Work-in-process		4,900,432		5,166,271
Finished goods		220,199		300,271
Gross inventory		5,696,046		5,954,935
Less allowance for obsolescence		100,000		100,000
Net inventory	$	5,596,046	$	5,854,935


	November 30, 2022		May 31, 2022
Customer deposits	$	954,262	$	1,347,709
Personnel costs		1,579,679		1,587,271
Other		553,674		479,334
Other current liabilities	$	3,087,615	$	3,414,314

Summary comparison of the six months ended November 30, 2022 and 2021
	Increase /
	(Decrease)
Sales, net	$	4,522,000
Cost of goods sold	$	1,506,000
Research and development costs	$	207,000
Selling, general and administrative expenses	$	772,000
Income before provision for income taxes	$	2,158,000
Provision for income taxes	$	438,000
Net income	$	1,720,000

	Six months ended November 30						Change
	2022			2021			Amount		Percent
Net Revenue	$	19,588,000		$	15,066,000		$	4,522,000		30	%
Cost of sales		12,109,000			10,603,000			1,506,000		14	%
Gross profit	$	7,479,000		$	4,463,000		$	3,016,000		68	%
… as a percentage of net revenues		38	%		30	%

Summary comparison of the three months ended November 30, 2022 and 2021
	Increase /
	(Decrease)
Sales, net	$	2,739,000
Cost of goods sold	$	1,236,000
Research and development costs	$	114,000
Selling, general and administrative expenses	$	413,000
Income before provision for income taxes	$	1,122,000
Provision for income taxes	$	222,000
Net income	$	900,000

	Three months ended November 30						Change
	2022			2021			Amount		Percent
Net Revenue	$	10,497,000		$	7,758,000		$	2,739,000		35	%
Cost of sales		6,403,000			5,167,000			1,236,000		24	%
Gross profit	$	4,094,000		$	2,591,000		$	1,503,000		58	%
… as a percentage of net revenues		39	%		33	%

	November 2022			November 2021
Risk-free interest rate:		1.625	%		2.875	%
Expected life of the options:		4.1 years			4 years
Expected share price volatility:		30	%		32	%
Expected dividends:		zero			zero

These assumptions resulted in estimated fair-market value per stock option:	$	3.06		$	3.42

			Weighted-
	Number of		Average
	Options		Exercise Price
Options outstanding and exercisable at May 31, 2022:		283,000	$	11.43
Options granted:		42,000	$	11.45
Less: Options exercised:		4,000	$	8.06
Less: Options expired:		3,750		—
Options outstanding and exercisable at November 30, 2022:		317,250	$	11.49
Closing value per share on NASDAQ at November 30, 2022:			$	13.40

	November 30, 2022				May 31, 2022				Increase /(Decrease)
Raw materials	$	575,000			$	489,000			$	86,000		18	%
Work-in-process		4,901,000				5,166,000				(265,000	)	-5	%
Finished goods		120,000				200,000				(80,000	)	-40	%
Inventory		5,596,000	85	%		5,855,000	84	%		(259,000	)	-4	%
Maintenance and other inventory		972,000	15	%		1,107,000	16	%		(135,000	)	-12	%
Total	$	6,568,000	100	%	$	6,962,000	100	%	$	(394,000	)	-6	%

Inventory turnover		3.6				3.1

	November 30, 2022		May 31, 2022		Increase /(Decrease)
Accounts receivable	$	5,941,000	$	4,467,000	$	1,474,000		33	%
CIEB		5,295,000		3,336,000		1,959,000		59	%
Less: BIEC		1,090,000		1,123,000		(33,000	)	-3	%
Net	$	10,146,000	$	6,680,000	$	3,466,000		52	%

Number of an average day’s sales outstanding in accounts receivable		51		42

	November 30, 2022		May 31, 2022
Costs	$	3,380,000	$	3,250,000
Estimated Earnings		3,221,000		2,642,000
Less: Billings to customers		1,306,000		2,556,000
CIEB	$	5,295,000	$	3,336,000
Number of Projects in progress		16		11

	November 30, 2022		May 31, 2022
Billings to customers	$	2,037,000	$	2,711,000
Less: Costs		676,000		1,019,000
Less: Estimated Earnings		271,000		569,000
BIEC	$	1,090,000	$	1,123,000
Number of Projects in progress		4		8

ITEM 1	Legal Proceedings

	There are no other legal proceedings except for routine litigation incidental to the business.

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

	(a)	The Company sold no equity securities during the fiscal quarter ended November 30, 2022 that were not registered under the Securities Act.
	(b)	Use of proceeds following effectiveness of initial registration statement:
		Not Applicable
	(c)	Repurchases of Equity Securities – Quarter Ended November 30, 2022

		Period		(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

		September 1, 2022 -
		September 30, 2022		-	-	-	-

		October 1, 2022 -
		October 31, 2022		-	-	-	-

		November 1, 2022 -
		November 30, 2022		-	-	-	-

		Total		-	-	-	-



ITEM 3	Defaults Upon Senior Securities

	None

ITEM 4	Mine Safety Disclosures

	Not applicable

ITEM 5	Other Information

	(a)		Information required to be disclosed in a Report on Form 8-K, but not reported

			None

	(b)		Material changes to the procedures by which Security Holders may recommend nominees to the Registrant's Board of Directors

			None


ITEM 6	Exhibits
	3(v)	By-laws
	31(i)	Rule 13a-14(a) Certification of Chief Executive Officer.
	31(ii)	Rule 13a-14(a) Certification of Chief Financial Officer.
	32(i)	Section 1350 Certification of Chief Executive Officer.
	32(ii)	Section 1350 Certification of Chief Financial Officer.
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
	104	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101

SEC Form 10-Q filed by Taylor Devices Inc.