UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

F O R M 10-K

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

For the fiscal year ended May 31, 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)

16-0797789

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

90 Taylor Drive, North Tonawanda, NY	14120
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (716) 694-0800

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

Title of each class

Trading Symbol

Name of each exchange on which registered

None

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

Common Stock ($.025 par value)

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter on November 30, 2021 is $38,294,000.

The number of shares outstanding of each of the registrant's classes of common stock as of August 19, 2022: 3,502,292.

Current fiscal year end date: --05-31

Entity current reporting status: Yes

-2-

TAYLOR DEVICES, INC.

DOCUMENTS INCORPORATED BY REFERENCE

Documents	Form 10-K Reference

Proxy Statement	Part III, Items 10-14

FORM 10-K INDEX

PART I			PAGE
	Item 1.	Business.	4
	Item 1A.	Risk Factors.	6
	Item 1B.	Unresolved Staff Comments.	6
	Item 2.	Properties.	6
	Item 3.	Legal Proceedings.	6
	Item 4.	Mine Safety Disclosures.	6
PART II
	Item 5.	Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	7
	Item 6.	Selected Financial Data.	8
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	8
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	17
	Item 8.	Financial Statements and Supplementary Data.	17
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	17
	Item 9A.	Controls and Procedures.	17
	Item 9B.	Other Information.	17
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance.	17
	Item 11.	Executive Compensation.	17
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	17
	Item 13.	Certain Relationships and Related Transactions, and Director Independence.	17
	Item 14.	Principal Accounting Fees and Services.	17
PART IV
	Item 15	Exhibits and Financial Statement Schedules	18

SIGNATURES			22

-3-

PART I

Item 1. Business.

The Company was incorporated in the State of New York on July 22, 1955 and is engaged in the design, development, manufacture and marketing of shock absorption, rate control, and energy storage devices for use in various types of machinery, equipment and structures. In addition to manufacturing and selling existing product lines, the Company continues to develop new and advanced technology products.

Principal Products

The Company manufactures and sells a group of very similar products that have many different applications for customers. These similar products are included in one of eight categories; namely, Seismic Dampers, Fluidicshoks®, Crane and Industrial Buffers, Self-Adjusting Shock Absorbers, Liquid Die Springs, Vibration Dampers, Machined Springs and Custom Actuators. Custom derivations of all of these products are designed and manufactured for many aerospace and defense applications. The following is a summary of the capabilities and applications for these products.

Seismic Dampers are designed to mitigate the effects of earthquakes on structures and represent a substantial part of the business of the Company. Fluidicshoks® are small, extremely compact shock absorbers with up to 19,200 inch-pound capacities, produced in 12 standard sizes for primary use in the defense, aerospace and commercial industry. Crane and industrial buffers are larger versions of the Fluidicshoks® with up to 10,890,000 inch-pound capacities, produced in more than 60 standard sizes for industrial applications on cranes and crane trolleys, truck docks, ladle and ingot cars, ore trolleys and train car stops. Self-adjusting shock absorbers, which include versions of Fluidicshoks® and crane and industrial buffers, automatically adjust to different impact conditions, and are designed for high cycle application primarily in heavy industry. Liquid die springs are used as component parts of machinery and equipment used in the manufacture of tools and dies. Vibration dampers are used primarily by the aerospace and defense industries to control the response of electronics and optical systems subjected to air, ship, or spacecraft vibration. Machined springs are precisely controlled mechanical springs manufactured from a variety of materials. These are used primarily for aerospace applications that require custom features that are not possible with conventional wound coil springs. Custom actuators are typically of the gas-charged type, using high pressure, that have custom features not available from other suppliers. These actuators are used for special aerospace and defense applications.

Distribution

The Company does not rely on sales representatives in the United States but uses the services of several representatives throughout the rest of the world. Specialized technical sales in custom marketing activities outside the U.S.A. are serviced by these sales representatives, under the direction and with the assistance of the Company's President and in-house technical sales staff. Sales representatives typically have non-exclusive agreements with the Company, which, in most instances, provide for payment of commissions on sales at 5% to 10% of the product's net aggregate selling price. A limited number of distributors also have non-exclusive agreements with the Company to purchase the Company's products for resale purposes.

Competition

The Company faces competition on mature aerospace and defense programs which may use more conventional products manufactured under less stringent government specifications. Two foreign companies and two U.S. companies are the Company's main competitors in the production of crane buffers.

The Company competes directly against two other firms supplying structural damping devices for use in the United States. For structural applications outside of the USA, the Company competes directly with several other firms particularly in Japan, China and Taiwan. The Company competes with numerous other firms that supply alternative seismic protection technologies.

Raw Materials and Supplies

The principal raw materials and supplies used by the Company in the manufacture of its products are provided by numerous U.S. and foreign suppliers. The loss of any one of these would not materially affect the Company's operations.

-4-

	Fiscal 2022				Fiscal 2021
	High		Low		High		Low
First Quarter	$	12.25	$	11.21	$	11.46	$	8.68
Second Quarter	$	12.00	$	10.93	$	10.54	$	8.58
Third Quarter	$	11.00	$	9.88	$	11.93	$	9.76
Fourth Quarter	$	10.24	$	8.75	$	12.43	$	10.58

		Equity Compensation Plan Information
Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders:
2008 Stock Option Plan 2012 Stock Option Plan 2015 Stock Option Plan 2018 Stock Option Plan		4,750 52,000 90,000 136,250	$ 8.06 $11.30 $12.72 $10.75	- - - 23,750
Equity compensation plans not approved by security holders:
2004 Employee Stock Purchase Plan (1)		-	-	217,287
Total		283,000		241,037

(1)	The Company's 2004 Employee Stock Purchase Plan (the "Employee Plan") permits eligible employees to purchase shares of the Company's common stock at fair market value through payroll deductions and without brokers' fees. Such purchases are without any contribution on the part of the Company. As of May 31, 2022, 217,287 shares were available for issuance.

Summary comparison of the years ended May 31, 2022 and 2021
	Increase /
	(Decrease)
Sales, net	$	8,357,000
Cost of goods sold	$	2,904,000
Selling, general and administrative expenses	$	628,000
Income before provision for income taxes	$	1,875,000
Provision for income taxes	$	698,000
Net income	$	1,177,000

	Year ended May 31						Change
	2022			2021			Amount		Percent
Net Revenue	$	30,867,000		$	22,510,000		$	8,357,000		37	%
Cost of sales		22,239,000			19,335,000			2,904,000		15	%
Gross profit	$	8,628,000		$	3,175,000		$	5,453,000		172	%
… as a percentage of net revenues		28	%		14	%

	2022			2021
Computed tax provision at the expected statutory rate	$	538,000		$	143,000
Tax effect of permanent differences:
Research tax credits		(275,000	)		(218,000	)
Foreign-derived intangible income deduction		(12,000	)		—
U.S. Government PPP loan forgiven		—			(307,000	)
Other permanent differences		3,000			42,000
Other		63,000			(41,000	)
	$	317,000		$	(381,000	)

	August 2021			April 2022
Risk-free interest rate:		2.875	%		2.25	%
Expected life of the options:		4 years			4 years
Expected share price volatility:		32	%		29	%
Expected dividends:		zero			zero
These assumptions resulted in estimated fair-market value per stock option:	$	3.42		$	2.52

			Weighted-
	Number of		Average
	Options		Exercise Price
Options outstanding and exercisable at May 31, 2021:		267,750	$	11.60
Options granted:		66,750	$	10.69
Less: Options expired:		51,500		—
Options outstanding and exercisable at May 31, 2022:		283,000	$	11.43
Closing value per share on NASDAQ at May 31, 2022:			$	9.30

	May 31, 2022				May 31, 2021				Increase /(Decrease)
Raw materials	$	488,000			$	503,000			$	(15,000	)	-3	%
Work-in-process		5,166,000				5,076,000				90,000		2	%
Finished goods		200,000				256,000				(56,000	)	-22	%
Inventory		5,854,000	84	%		5,835,000	78	%		19,000		0	%
Maintenance and other inventory		1,107,000	16	%		1,613,000	22	%		(506,000	)	-31	%
Total	$	6,961,000	100	%	$	7,448,000	100	%	$	(487,000	)	-7	%

Inventory turnover		3.1				2.1

	2022			2021
Number of projects in progress at year-end		19			14
Aggregate percent complete at year-end		47	%		32	%
Average total value of projects in progress at year-end	$	795,000		$	963,000
Percentage of total value invoiced to customer		35	%		30	%

	May 31, 2022		May 31, 2021
Costs	$	3,250,000	$	2,362,000
Estimated earnings		2,642,000		410,000
Less: Billings to customers		2,556,000		1,272,000
CIEB	$	3,336,000	$	1,500,000
Number of projects in progress		11		9

	May 31, 2022		May 31, 2021		Increase /(Decrease)
Accounts and other receivables	$	4,467,000	$	4,121,000	$	346,000		8	%
Less: Other receivable		—		741,000		(741,000	)	-100	%
Accounts receivable		4,467,000		3,380,000		1,087,000		32	%
CIEB		3,336,000		1,500,000		1,836,000		122	%
Less: BIEC		1,123,000		1,362,000		(239,000	)	-18	%
Net	$	6,680,000	$	3,518,000	$	3,162,000		90	%

Number of an average day’s sales outstanding in accounts receivable (DSO)		42		42

DOCUMENTS FILED AS PART OF THIS REPORT:
	Index to Financial Statements:
		(i)		Report of Independent Registered Public Accounting Firm (PCAOB ID: 130)
		(ii)		Consolidated Balance Sheets as of May 31, 2022 and 2021
		(iii)		Consolidated Statements of Income for the years ended May 31, 2022 and 2021
		(iv)		Consolidated Statements of Stockholders' Equity for the years ended May 31, 2022 and 2021
		(v)		Consolidated Statements of Cash Flows for the years ended May 31, 2022 and 2021
		(vi)		Notes to Consolidated Financial Statements - May 31, 2022 and 2021
EXHIBITS:
	3		Articles of incorporation and by-laws
			(i)		Restated Certificate of Incorporation incorporated by reference to Exhibit (3)(i) of Annual Report on Form 10-K, dated August 24, 1983.
			(ii)		Amendment to Certificate of Incorporation incorporated by reference to Exhibit (3)(iv) to Form 8 [Amendment to Application or Report], dated September 24, 1993.
			(iii)		Amendment to Certificate of Incorporation eliminating and re-designating the Series A Junior Preferred Stock and creating 5,000 Series 2008 Junior Participating Preferred Stock, at $.05 par value, as filed by the Secretary of State of the State of New York on September 16, 2008, and incorporated by reference to Exhibit (3)(i) of Form 8-K, dated as of September 15, 2008 and filed September 18, 2008.
			(iv)		Certificate of Change incorporated by reference to Exhibit (3)(i) to Quarterly Report on Form 10-QSB for the period ending November 30, 2002.
			(v)		By-laws and Proxy Review Guidelines incorporated by reference to Exhibit (3) to Quarterly Report on Form 10-Q for the period ending February 28, 2015, filed April 14, 2015.
	4		Instruments defining rights of security holders, including indentures
			(i)		Rights Agreement by and between registrant and Computershare Trust Company, N.A., dated as of September 25, 2018 and letter to shareholders (including Summary of Rights), dated October 5, 2018, attached as Exhibits 4 and 20, respectively, to Registration Statement on Form 8-A 12G, filed with the Securities and Exchange Commission on October 5, 2018.
			(ii)		Description of registrant’s securities incorporated by reference to Exhibit 4(vi) to Annual Report on Form 10-K for the fiscal year ended May 31, 2019, filed August 2, 2019.

10	Material Contracts
	(i)	2005 Taylor Devices, Inc. Stock Option Plan attached as Appendix B to Definitive Proxy Statement, filed with the Securities and Exchange Commission on September 27, 2005.
	(ii)	2008 Taylor Devices, Inc. Stock Option Plan attached as Appendix C to Definitive Proxy Statement, filed with the Securities and Exchange Commission on September 26, 2008.
	(iii)	2012 Taylor Devices, Inc. Stock Option Plan attached as Appendix C to Definitive Proxy Statement, filed with the Securities and Exchange Commission on September 21, 2012.
	(iv)	2015 Taylor Devices, Inc. Stock Option Plan attached as Appendix B to Definitive Proxy Statement, filed with the Securities and Exchange Commission on April 8, 2016.
	(v)	2018 Taylor Devices, Inc. Stock Option Plan attached as Appendix B to Definitive Proxy Statement, filed with the Securities and Exchange Commission on September 27, 2018.
	(vi)	The 2004 Taylor Devices, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8, File No. 333-114085, filed with the Securities and Exchange Commission on March 31, 2004.
	(vii)	Post-Effective Amendment No. 1 to Registration Statement on Form S-8, File No. 333-114085, for the 2004 Taylor Devices, Inc. Employee Stock Purchase Plan, filed with the Securities and Exchange Commission on August 24, 2006.
	(viii)	Form of Indemnification Agreement between registrant and directors and executive officers, attached as Appendix A to Definitive Proxy Statement, filed with the Securities and Exchange Commission on September 27, 2007.
	(ix)	Management Bonus Policy dated as of March 4, 2011 between the Registrant and executive officers, incorporated by reference to Exhibit 10(i) to Quarterly Report on Form 10-Q for the period ending February 28, 2011.
	(x)	Negative Pledge Agreement dated August 30, 2017 by the Registrant in favor of M&T Bank, incorporated by reference to Exhibit 10(xiv) to Quarterly Report on Form 10-Q for the period ending August 31, 2017..
	(xi)	Employment Agreement dated as of June 14, 2018 between the Registrant and Alan R. Klembczyk, incorporated by reference to Exhibit 10(i) to Current Report on Form 8-K filed June 19, 2018.
	(xii)	Employment Agreement dated as of June 14, 2018 between the Registrant and Mark V. McDonough, incorporated by reference to Exhibit 10(ii) to Current Report on Form 8-K filed June 19, 2018.
	(xiii)	Employment Agreement dated as of August 9, 2021 between the Registrant and Timothy J. Sopko, incorporated by reference to Exhibit 10 to Current Report on Form 8-K filed August 13, 2021.

32	Officer Certifications
	(i)	Section 1350 Certification of Chief Executive Officer.
	(ii)	Section 1350 Certification of Chief Financial Officer.
101	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		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	May 31, 2022		May 31, 2021
Billings to customers	$	2,711,000	$	2,741,000
Less: Costs		1,019,000		1,011,000
Less: Estimated earnings		569,000		368,000
BIEC	$	1,123,000	$	1,362,000
Number of projects in progress		8		5

11	Statement regarding computation of per share earnings

	REG. 228.601(A)(11) Statement regarding computation of per share earnings

	Weighted average of common stock/equivalents outstanding - fiscal year ended May 31, 2022

			Weighted average common stock outstanding			3,497,345
			Common shares issuable under stock option plans using treasury stock method			2,208
			Weighted average common stock outstanding assuming dilution			3,499,553

			Net income fiscal year ended May 31, 2022	(1)	$ 2,239,423
			Weighted average common stock	(2)	3,497,345
			Basic income per common share (1) divided by (2)		$ 0.64

			Net income fiscal year ended May 31, 2022	(3)	$ 2,239,423
			Weighted average common stock outstanding assuming dilution	(4)	3,499,553
			Diluted income per common share (3) divided by (4)		$ 0.64

	Weighted average of common stock/equivalents outstanding - fiscal year ended May 31, 2021

			Weighted average common stock outstanding			3,490,213
			Common shares issuable under stock option plans using treasury stock method			1,674
			Weighted average common stock outstanding assuming dilution			3,491,887

			Net income fiscal year ended May 31, 2021	(1)	$ 1,062,895
			Weighted average common stock	(2)	3,490,213
			Basic income per common share (1) divided by (2)		$ 0.30

			Net income fiscal year ended May 31, 2021	(3)	$ 1,062,895
			Weighted average common stock outstanding assuming dilution	(4)	3,491,887
			Diluted income per common share (3) divided by (4)		$ 0.30

13	The Annual Report to Security Holders for the fiscal year ended May 31, 2022, attached to this Annual Report on Form 10-K.

21	Subsidiaries of the registrant
	Tayco Realty Corporation is a New York corporation organized on September 8, 1977, owned by the Company.
23	The Consent of Independent Registered Public Accounting Firm precedes the Consolidated Financial Statements.
31	Officer Certifications
	(i)	Rule 13a-14(a) Certification of Chief Executive Officer.
	(ii)	Rule 13a-14(a) Certification of Chief Financial Officer.

By:	/s/Timothy J. Sopko	Date:	August 19, 2022
	Timothy J. Sopko
	Chief Executive Officer
	(Principal Executive Officer)

By:	/s/Mark V. McDonough	Date:	August 19, 2022
	Mark V. McDonough
	Chief Financial Officer

By:	/s/John Burgess	By:	/s/Robert M. Carey
	John Burgess, Director		Robert M. Carey, Director
	August 19, 2022		August 19, 2022

By:	/s/F. Eric Armenat	By:	/s/Alan R. Klembczyk
	F. Eric Armenat, Director		Alan R. Klembczyk, President and Director
	August 19, 2022		August 19, 2022

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

May 31,	2022			2021

Assets
Current assets:
Cash and cash equivalents	$	22,517,038		$	20,581,604
Short-term investments		1,097,450			1,097,012
Accounts and other receivables, net		4,466,686			4,120,564
Inventory		5,854,935			5,835,596
Prepaid expenses		468,489			522,747
Prepaid income taxes		235,947			454,778
Costs and estimated earnings in excess of billings		3,336,474			1,499,604
Total current assets		37,977,019			34,111,905

Maintenance and other inventory, net		1,107,309			1,612,839
Property and equipment, net		9,854,759			9,816,594
Cash value of life insurance, net		205,359			200,538
Deferred income taxes		74,615			190,115
Total assets	$	49,219,061		$	45,931,991
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		1,426,830			1,787,325
Accrued commissions		84,907			269,064
Other accrued expenses		3,329,407			1,715,409
Billings in excess of costs and estimated earnings		1,122,763			1,361,985
Total current liabilities		5,963,907			5,133,783


Stockholders' Equity:
Common stock, $.025 par value, authorized 8,000,000 shares, issued 4,056,771 and 4,055,275 shares		101,342			101,305
Paid-in capital		10,227,916			10,010,430
Retained earnings		35,840,898			33,601,475
Stockholders’ equity before treasury stock		46,170,156			43,713,210
Treasury stock – 558,834 shares at cost		(2,915,002	)		(2,915,002	)
Total stockholders' equity		43,255,154			40,798,208
Total liabilities and stockholders’ equity	$	49,219,061		$	45,931,991

See notes to consolidated financial statements.

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

For the years ended May 31,	2022		2021


Sales, net	$	30,866,582	$	22,509,641

Cost of goods sold		22,239,070		19,334,950

Gross profit		8,627,512		3,174,691

Selling, general and administrative expenses		6,154,735		5,526,774

Operating income (loss)		2,472,777		(2,352,083	)

Other income
Interest, net		4,543		53,654
Paycheck Protection Program loan forgiveness		—		1,461,500
Employee Retention Credit		53,508		1,510,131
Miscellaneous		25,595		8,693
Total other income		83,646		3,033,978

Income before provision for income taxes		2,556,423		681,895

Provision for income taxes (benefit)		317,000		(381,000	)

Net income	$	2,239,423	$	1,062,895

Basic and diluted earnings per common share	$	0.64	$	0.30

See notes to consolidated financial statements.

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Shareholders’ Equity

For the years ended May 31,	2022			2021

Common Stock
Beginning of period	$	101,305		$	100,943
Issuance of shares for employee stock purchase plan		37			37
Issuance of shares for employee stock option plan		—			325
End of period		101,342			101,305

Paid-in Capital
Beginning of period		10,010,430			9,759,063
Issuance of shares for employee stock purchase plan		16,208			14,954
Issuance of shares for employee stock option plan		—			82,070
Stock options issued for services		201,278			154,343
End of period		10,227,916			10,010,430

Retained Earnings
Beginning of period		33,601,475			32,538,580
Net income		2,239,423			1,062,895
End of period		35,840,898			33,601,475

Treasury Stock
Beginning of period		(2,915,002	)		(2,861,032	)
Issuance of shares for employee stock option plan		—			(53,970	)
End of period		(2,915,002	)		(2,915,002	)

Total stockholders' equity	$	43,255,154		$	40,798,208

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the years ended May 31,	2022			2021

Operating activities:
Net income	$	2,239,423		$	1,062,895
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation		1,347,442			1,212,713
Stock options issued for services		201,278			154,343
Bad debt expense		—			134,000
Gain on disposal of property and equipment		(1,530	)		—
Provision for inventory obsolescence		—			1,500,000
Deferred income taxes		115,500			(20,000	)
Paycheck Protection Program loan forgiveness		—			(1,461,500	)
Changes in other current assets and liabilities:
Accounts and other receivables		(346,122	)		1,564,907
Inventory		486,191			2,038,052
Prepaid expenses		54,258			(62,535	)
Prepaid income taxes		218,831			(404,630	)
Costs and estimated earnings in excess of billings		(1,836,870	)		254,969
Accounts payable		(360,495	)		417,150
Accrued commissions		(184,157	)		(36,821	)
Other accrued expenses		1,613,998			51,495
Billings in excess of costs and estimated earnings		(239,222	)		625,119
Net operating activities		3,308,525			7,030,157

Investing activities:
Acquisition of property and equipment		(1,391,577	)		(1,621,817	)
Proceeds from disposal of property and equipment		7,500			—
Increase in short-term investments		(438	)		(25,062	)
Increase in cash value of life insurance		(4,821	)		(4,917	)
Net investing activities		(1,389,336	)		(1,651,796	)

Financing activities:
Proceeds from issuance of common stock		16,245			43,416

Net change in cash and cash equivalents		1,935,434			5,421,777

Cash and cash equivalents - beginning		20,581,604			15,159,827
Cash and cash equivalents - ending	$	22,517,038		$	20,581,604

See notes to consolidated financial statements.

	2022		2021
Customers	$	4,292,300	$	3,184,970
Customers – retention		190,492		200,956
Gross accounts receivable		4,482,792		3,385,926
Less allowance for doubtful accounts		16,106		6,781
Add other receivables		—		741,419
Net accounts receivable	$	4,466,686	$	4,120,564

	2022		2021
Costs incurred on uncompleted contracts	$	4,268,608	$	3,372,276
Estimated earnings		3,211,392		778,011
Total costs and estimated earnings		7,480,000		4,150,287
Less billings to date		5,266,289		4,012,668
Costs and estimated earnings not billed	$	2,213,711	$	137,619

	2022		2021
Land	$	195,220	$	195,220
Buildings and improvements		9,821,812		9,584,087
Machinery and equipment		12,824,696		12,366,569
Office furniture and equipment		2,744,400		2,536,688
Autos and trucks		24,818		24,818
Land improvements		483,929		476,429
Gross property and equipment		26,094,875		25,183,811
Less accumulated depreciation		16,240,116		15,367,217
Property and equipment, net	$	9,854,759	$	9,816,594

	2022		2021
Customer deposits	$	1,347,709	$	867,652
Personnel costs		1,587,271		659,623
Other		394,427		188,134
Total other accrued expenses	$	3,329,407	$	1,715,409

	2022		2021
Structural	$	16,267,162	$	10,137,468
Aerospace / Defense		12,440,687		10,183,399
Industrial		2,158,733		2,188,774
Sales, net	$	30,866,582	$	22,509,641

	2022		2021
Current tax provision (benefit):
Federal	$	200,100	$	(361,000	)
State		1,400		—
Total current tax provision		201,500		(361,000	)
Deferred tax provision (benefit):
Federal		115,500		(20,000	)
State		—		—
Total deferred tax provision		115,500		(20,000	)
Total tax provision	$	317,000	$	(381,000	)

	2022			2021
Deferred tax assets:
Allowance for doubtful receivables	$	3,400		$	1,400
Tax inventory adjustment		92,200			22,900
Allowance for obsolete inventory		278,800			440,800
Accrued vacation		84,300			81,400
Accrued commissions		7,000			5,900
Warranty reserve		48,800			23,900
R&D tax credit		84,000			—
Stock options issued for services		277,600			238,500
Total deferred tax assets		876,100			814,800
Deferred tax liabilities:
Excess tax depreciation		(801,485	)		(624,685	)
Net deferred tax assets	$	74,615		$	190,115

	2022		2021
Average common shares outstanding		3,497,345		3,490,213
Common shares issuable under stock option plans		2,208		1,674
Average common shares outstanding assuming dilution		3,499,553		3,491,887

	2022			2021
Risk-free interest rate		2.59	%		2.31	%
Expected life in years		4.0 years			4.0 years
Expected volatility		31	%		33	%
Expected dividend yield		0	%		0	%

	Shares		Weighted Average Exercise Price		Intrinsic Value
Outstanding - May 31, 2020		252,250	$	11.52	$	209,835
Options granted		47,250	$	11.26
Less: options exercised		13,000	$	6.34
Less: options expired		18,750	$	13.31
Outstanding - May 31, 2021		267,750	$	11.60	$	271,426
Options granted		66,750	$	10.69
Less: options expired		51,500		—
Outstanding - May 31, 2022		283,000	$	11.43	$	28,248

SEC Form 10-K filed by Taylor Devices Inc.