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, 2021


☐	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, 2021, there were outstanding 3,497,144 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, 2021 and May 31, 2021	4

		Condensed Consolidated Statements of Income for the three and six months ended November 30, 2021 and 2020	5

		Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended November 30, 2021 and 2020	6

		Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2021 and 2020	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,
	2021			2021

Assets
Current assets:
Cash and cash equivalents	$	18,648,084		$	20,581,604
Short-term investments		1,101,705			1,097,012
Accounts and other receivables, net		4,309,880			4,120,564
Inventory		5,806,902			5,835,596
Costs and estimated earnings in excess of billings		3,884,776			1,499,604
Other current assets		622,627			977,525
Total current assets		34,373,974			34,111,905

Maintenance and other inventory, net		1,552,970			1,612,839
Property and equipment, net		9,739,390			9,816,594
Other assets		203,094			200,538
Deferred income taxes		190,115			190,115
Total assets	$	46,059,543		$	45,931,991
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,502,717		$	1,787,325
Accrued commissions		526,739			269,064
Other current liabilities		1,539,848			1,715,409
Billings in excess of costs and estimated earnings		716,487			1,361,985
Total current liabilities		4,285,791			5,133,783

Stockholders' Equity:
Common stock and additional paid-in capital		10,245,598			10,111,735
Retained earnings		34,443,156			33,601,475
		44,688,754			43,713,210
Treasury stock - at cost		(2,915,002	)		(2,915,002	)
Total stockholders’ equity		41,773,752			40,798,208
	$	46,059,543		$	45,931,991


See notes to condensed consolidated financial statements.


	November 30, 2021		May 31, 2021
Raw materials	$	495,791	$	503,344
Work-in-process		5,042,338		5,076,377
Finished goods		368,773		355,875
Gross inventory		5,906,902		5,935,596
Less allowance for obsolescence		100,000		100,000
Net inventory	$	5,806,902	$	5,835,596

Summary comparison of the six months ended November 30, 2021 and 2020
	Increase /
	(Decrease)
Sales, net	$	4,589,000
Cost of goods sold	$	2,740,000
Selling, general and administrative expenses	$	472,000
Income before provision for income taxes	$	(32,000	)
Provision for income taxes	$	(52,000	)
Net income	$	20,000

	Six months ended November 30						Change
	2021			2020			Amount		Percent
Net Revenue	$	15,066,000		$	10,477,000		$	4,589,000		44	%
Cost of sales		11,086,000			8,346,000			2,740,000		33	%
Gross profit	$	3,980,000		$	2,131,000		$	1,849,000		87	%
… as a percentage of net revenues		26	%		20	%

Summary comparison of the three months ended November 30, 2021 and 2020
	Increase /
	(Decrease)
Sales, net	$	3,041,000
Cost of goods sold	$	1,228,000
Selling, general and administrative expenses	$	363,000
Income before provision for income taxes	$	(12,000	)
Provision for income taxes	$	(27,000	)
Net income	$	15,000

	Three months ended November 30						Change
	2021			2020			Amount		Percent
Net Revenue	$	7,758,000		$	4,717,000		$	3,041,000		64	%
Cost of sales		5,369,000			4,141,000			1,228,000		30	%
Gross profit	$	2,389,000		$	576,000		$	1,813,000		315	%
… as a percentage of net revenues		31	%		12	%

	November 2021			November 2020
Risk-free interest rate:		2.875	%		1.750	%
Expected life of the options:		4 years			3.9 years
Expected share price volatility:		32	%		34	%
Expected dividends:		zero			zero

These assumptions resulted in estimated fair-market value per stock option:	$	3.42		$	2.88

			Weighted-
	Number of		Average
	Options		Exercise Price
Options outstanding and exercisable at May 31, 2021:		267,750	$	11.60
Options granted:		36,750	$	11.64
Less: Options expired:		1,500		—
Options outstanding and exercisable at November 30, 2021:		303,000	$	11.61
Closing value per share on NASDAQ at November 30, 2021:			$	10.95

	November 30, 2021				May 31, 2021				Increase /(Decrease)
Raw materials	$	496,000			$	503,000			$	(7,000	)	-1	%
Work-in-process		5,042,000				5,076,000				(34,000	)	-1	%
Finished goods		269,000				256,000				13,000		5	%
Inventory		5,807,000	79	%		5,835,000	78	%		(28,000	)	—
Maintenance and other inventory		1,553,000	21	%		1,613,000	22	%		(60,000	)	-4	%
Total	$	7,360,000	100	%	$	7,448,000	100	%	$	(88,000	)	-1	%

Inventory turnover		3.0				2.1

	November 30, 2021		May 31, 2021		Increase /(Decrease)
Accounts and other receivables	$	4,310,000	$	4,121,000	$	189,000		5	%
Less: Other receivable		—		741,000		(741,000	)	-100	%
Accounts receivable		4,310,000		3,380,000		930,000		28	%
CIEB		3,885,000		1,500,000		2,385,000		159	%
Less: BIEC		716,000		1,362,000		(646,000	)	-47	%
Net	$	7,479,000	$	3,518,000	$	3,961,000		113	%

Number of an average day’s sales outstanding in accounts receivable		50		42

	November 30, 2021		May 31, 2021
Costs	$	5,287,000	$	2,362,000
Estimated Earnings		1,825,000		410,000
Less: Billings to customers		3,227,000		1,272,000
CIEB	$	3,885,000	$	1,500,000
Number of Projects in progress		17		9

	November 30, 2021		May 31, 2021
Billings to customers	$	2,789,000	$	2,741,000
Less: Costs		1,424,000		1,011,000
Less: Estimated Earnings		649,000		368,000
BIEC	$	716,000	$	1,362,000
Number of Projects in progress		7		5

	November 30, 2021			May 31, 2021
Number of Projects in progress		24			14
Aggregate percent complete		61	%		32	%
Average total sales value of Projects in progress	$	621,000		$	963,000
Percentage of total value invoiced to customer		40	%		30	%

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, 2021 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, 2021

		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, 2021 -
		September 30, 2021		-	-	-	-

		October 1, 2021 -
		October 31, 2021		-	-	-	-

		November 1, 2021 -
		November 30, 2021		-	-	-	-

		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
	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

SEC Form 10-Q filed by Taylor Devices, Inc.