Form 10-Q TAYLOR DEVICES INC For: Nov 30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 2014

OR

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o	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.

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(Exact name of registrant as specified in its charter)

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NEW YORK	�	16-0797789
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(State or other jurisdiction of incorporation or organization)	�	(I.R.S. Employer Identification No.)
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90 Taylor Drive, North Tonawanda, New York	�	14120-0748
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(Address of principal executive offices)	�	(Zip Code)

716-694-0800

(Registrant’s telephone number, including area code)

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

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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 o

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 o

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

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Large accelerated filer o			�	�	�	Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)						Smaller reporting company �

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

Yes o ����� No �

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As of January 12, 2015, there were outstanding 3,346,998 shares of the registrant’s common stock, par value $.025 per share.

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TAYLOR DEVICES, INC.

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Index to Form 10-Q

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PART I	FINANCIAL INFORMATION		PAGE NO.
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�	Item 1.	Financial Statements	�
�	�	�	�
�	�	Condensed Consolidated Balance Sheets as of �November 30, 2014 and May 31, 2014	3
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�	�	Condensed Consolidated Statements of Income for the three and six months ended November 30, 2014 and 2013	4
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�	�	Condensed Consolidated Statements of Cash Flows for the six months ended November 30, 2014 and 2013	5
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�	�	Notes to Condensed Consolidated Financial Statements	6
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�	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations �	7
�	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	�	14 �
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�	Item 4.	Controls and Procedures	�	14
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PART II	OTHER INFORMATION �		�
� �	Item 1.	Legal Proceedings	15
� �	Item 1A.	Risk Factors	15
� �	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
� �	Item 3.	Defaults Upon Senior Securities	15
� �	Item 4.	Mine Safety Disclosures	15
� �	Item 5.	Other Information	16
�	Item 6.	Exhibits	16
� �	�	�	�
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM �			17
SIGNATURES �		�	18

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TAYLOR DEVICES, INC. AND SUBSIDIARY	�	�	�	�
�	�	�	�	�
Condensed Consolidated Balance Sheets	(Unaudited)	�	�	�
�	November 30,	�	May 31,	�
�	2014	�	2014	�
�	�	�	�	�
Assets	�	�	�	�
Current assets:	�	�	�	�
�����Cash and cash equivalents	$ ����3,160,848	�	$�������2,793,642	�
�����Accounts receivable, net	3,031,469	�	2,894,344	�
�����Inventory	8,728,190	�	8,978,302	�
�����Costs and estimated earnings in excess of billings	4,773,115	�	2,373,791	�
�����Other current assets	1,661,703	�	1,521,832	�
����������Total current assets	21,355,325	�	18,561,911	�
�	�	�	�	�
Maintenance and other inventory, net	775,264	�	836,569	�
Property and equipment, net	7,786,120	�	7,867,728	�
Other assets	167,457	�	164,568	�
�	$���30,084,166	�	$����27,430,776	�
Liabilities and Stockholders' Equity	�	�	�	�
Current liabilities:	�	�	�	�
�����Accounts payable	$�����1,726,811	�	$������1,166,162	�
�����Accrued commissions	494,334	�	429,839	�
�����Billings in excess of costs and estimated earnings	2,430,296	�	850,531	�
�����Other current liabilities	845,786	�	1,343,788	�
����������Total current liabilities	5,497,227	�	3,790,320	�
�	�	�	�	�
Long-term liabilities	558,485	�	558,485	�
�	�	�	�	�
Stockholders' Equity:	�	�	�	�
�����Common stock and additional paid-in capital	7,828,858	�	7,778,994	�
�����Retained earnings	18,698,579	�	17,801,960	�
�	26,527,437	�	25,580,954	�
�����Treasury stock -��at cost	(2,498,983	)�	(2,498,983	)�
����������Total stockholders’ equity	24,028,454	�	23,081,971	�
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�	$���30,084,166	�	$����27,430,776	�
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See notes to condensed consolidated financial statements.	�	�	�	�

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TAYLOR DEVICES, INC. AND SUBSIDIARY	�	�	�	�
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Condensed Consolidated Statements of Income	(Unaudited)		(Unaudited)
�	For the three months ended November 30,		For the six months ended November 30,
�	2014	2013	2014	2013
�	�	�	�	�
�	�	�	�	�
Sales, net	�$ 6,705,095	�$ 4,600,452	��$ 13,256,477	�$��9,897,118
�	�	�	�	�
Cost of goods sold	����4,716,882	����3,292,407	������9,583,157	�����7,309,972
�	�	�	�	�
�����Gross profit	����1,988,213	����1,308,045	������3,673,320	�����2,587,146
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Selling, general and administrative expenses	����1,216,975	�������883,678	������2,303,654	�����1,908,864
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�����Operating income	����771,238	�������424,367	������1,369,666	��������678,282
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Other income, �net	�������7,075	�����������2,056	������������10,953	����������10,404
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�����Income before provision for income taxes	����778,313	�������426,423	������1,380,619	��������688,686
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Provision for income taxes	�������274,000	�������120,000	���������484,000	��������181,000
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�����Net income	�$����504,313	�$����306,423	�$���896,619	�$�����507,686
�	�	�	�	�
Basic and diluted earnings per common share	���$�����0.15	$����������0.09	$����0.27	$���������0.15
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See notes to condensed consolidated financial statements. � � �		�	�	�

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TAYLOR DEVICES, INC. AND SUBSIDIARY	�	�	�	�
�	�	�	�	�
Condensed Consolidated Statements of Cash Flows	�	�	�	�
�	(Unaudited) November 30,
For the six months ended	2014	�	2013	�
�	�	�	�	�
Operating activities:	�	�	�	�
Net income	�$�����896,619	�	�$ ���507,686	�
Adjustments to reconcile net income to net cash flows from operating activities:	�	�	�	�
���Depreciation	371,256	�	356,343	�
���Stock options issued for services	37,112	�	43,301	�
���Changes in other assets and liabilities:	�	�	�	�
������Accounts receivable	(137,125	)	(117,769	)
������Inventory	311,417	�	(28,456	)
������Costs and estimated earnings in excess of billings	(2,399,324	)	(520,639	)
������Other current assets	(139,871	)	94,124	�
������Accounts payable	560,649	�	(23,576	)
������Accrued commissions	64,495	�	15,387	�
������Billings in excess of costs and estimated earnings	1,579,765	�	483,062	�
������Other current liabilities	(498,002	)	(567,679	)
����������Net operating activities	646,991	�	241,784	�
�	�	�	�	�
Investing activities:	�	�	�	�
���Acquisition of property and equipment	�(289,648	)	(1,073,625	)
���Other investing activities	�(2,889	)	�(2,700	)
����������Net investing activities	�(292,537	)	�(1,076,325	)
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Financing activities:	�	�	�	�
���Proceeds from issuance of common stock, net	12,752	�	163,232	�
�	�	�	�	�
����������Net change in cash and cash equivalents	367,206	�	(671,309	)
�	�	�	�	�
Cash and cash equivalents - beginning	2,793,642	�	1,997,874	�
�	�	�	�	�
����������Cash and cash equivalents - ending	�$��3,160,848	�	�$ �1,326,565	�
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See notes to condensed consolidated financial statements.	�	�	�	�

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TAYLOR DEVICES, INC.

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Notes to Condensed Consolidated Financial Statements

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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 of 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 financial position as of November 30, 2014 and May 31, 2014, the results of operations for the three and six months ended November 30, 2014 and 2013, and cash flows for the six months ended November 30, 2014 and 2013. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report to Shareholders for the year ended May 31, 2014.

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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.

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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.

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4.

For the six month periods ended November 30, 2014 and November 30, 2013, the net income was divided by 3,343,340 and 3,326,245 respectively, which is net of the Treasury shares, to calculate the net income per share. For the three month periods ended November 30, 2014 and November 30, 2013, the net income was divided by 3,343,137 and 3,322,424 respectively, which is net of the Treasury shares, to calculate the net income per share.

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5.

The results of operations for the three and six month periods ended November 30, 2014 are not necessarily indicative of the results to be expected for the full year.

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6.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2016 (fiscal year 2018 for the Company) and early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not yet determined the potential effects of the adoption of ASU 2014-09 on its Consolidated Financial Statements. Other recently issued Accounting Standards Codification (ASC) guidance has either been implemented or are not significant to the Company.

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

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Cautionary Statement

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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 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. The 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. 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.

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Results of Operations

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

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Summary comparison of the six months ended November 30, 2014 and 2013
�	�	Increase /	�	�
�	�	(Decrease)	�	�
Sales, net	�	�$���3,359,000	�	�
Cost of goods sold	�	�$ ��2,273,000	�	�
Selling, general and administrative expenses	�	�$ �����395,000	�	�
Income before provision for income taxes	�	�$������692,000	�	�
Provision for income taxes	�	�$ �����303,000	�	�
Net income	�	�$������389,000	�	�

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Sales under certain fixed-price contracts, requiring substantial performance over several periods prior to commencement of deliveries, are accounted for under 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.

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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.

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For financial statement presentation purposes, the Company nets progress billings against the total costs incurred 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.

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For the six months ended November 30, 2014 (All figures discussed are for the six months ended November 30, 2014 as compared to the six months ended November 30, 2013.)

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�	Six months ended November 30		Change
�	2014	2013	Amount	�	Percent
Net Revenue	�$����13,256,000	�$�����9,897,000	$���3,359,000��	�	34%
Cost of sales	���������9,583,000	��������7,310,000	2,273,000��	�	31%
Gross profit	�$������3,673,000	�$�����2,587,000	$���1,086,000��	�	42%
… as a percentage of net revenues	28%	26%	�	�	�

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The Company's consolidated results of operations showed a 34% increase in net revenues and an increase in net income of 77%. Revenues recorded in the current period for long-term construction projects (“Project(s)”) were 74% more than the level recorded in the prior year. We had 42 Projects in process during the current period compared with 34 during the same period last year. Revenues recorded in the current period for other-than long-term construction projects (non-projects) were 10% less than the level recorded in the prior year. Total sales within the U.S. increased 33% from the same period last year. Total sales to Asia are up 37% from the same period of the prior year. Sales increases recorded over the same period last year to customers involved in construction of buildings and bridges (31%) and aerospace / defense (53%), were slightly offset by a decrease in sales to industrial customers (14%). Please refer to the charts, below, which show the breakdown of sales.

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

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�		Six months ended November 30		�
�		2014	2013	�
Industrial	��7%		11%
Construction	52%		53%
Aerospace / Defense	41%		36%
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At November 30, 2013, the Company had 103 open sales orders in our backlog with a total sales value of $16.5 million. At November 30, 2014, the Company has 15% more open sales orders in our backlog (119 orders) and the total sales value is $27.1 million or 64% more than the prior year value.

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The Company's backlog, revenues, commission expense, gross margins, gross profits, and net income fluctuate from period to period. The changes in the current period, compared to the prior period, are not necessarily representative of future results.

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Net revenue by geographic region, as a percentage of total net revenue for the six month periods ended November 30, 2014 and November 30, 2013 is as follows:

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�	Six months ended November 30
�	2014	2013
USA	59%	59%
Asia	36%	36%
Other	��5%	��5%

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Selling, General and Administrative Expenses

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�	Six months ended November 30		Change
�	�2014	2013	�Amount	�	Percent
Outside Commissions	�$��������684,000	�$������379,000	�$�����305,000	�	��80%
Other SG&A	��������1,620,000	������1,530,000	�����90,000	�	����6%
Total SG&A	�$�����2,304,000	�$���1,909,000	�$ ����395,000	�	���21%
���… as a percentage of net revenues	17%	19%	�	�	�

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Selling, general and administrative expenses increased by 21% from the prior year. Outside commission expense increased by 80% from last year's level. This fluctuation was primarily due to the significant increase in commissionable sales in the current year. Other selling, general and administrative expenses decreased only slightly from last year to this.

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The above factors resulted in operating income of $1,370,000 for the six months ended November 30, 2014, slightly more than double the $678,000 in the same period of the prior year.

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Summary comparison of the three months ended November 30, 2014 and 2013
�	�	Increase /	�	�
�	�	(Decrease)	�	�
Sales, net	�	�$���2,105,000	�	�
Cost of goods sold	�	�$���1,425,000	�	�
Selling, general and administrative expenses	�	�$������333,000	�	�
Income before provision for income taxes	�	�$������352,000	�	�
Provision for income taxes	�	�$������154,000	�	�
Net income	�	�$������198,000	�	�

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For the three months ended November 30, 2014 (All figures discussed are for the three months ended November 30, 2014 as compared to the three months ended November 30, 2013.)

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�	Three months ended November 30		Change
�	2014	2013	Amount	�	Percent
Net Revenue	�$������6,705,000	�$�����4,600,000	$���2,105,000��	�	46%
Cost of sales	���������4,717,000	��������3,292,000	1,425,000��	�	43%
Gross profit	�$������1,988,000	�$�����1,308,000	$������680,000��	�	52%
… as a percentage of net revenues	30%	28%	�	�	�

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The Company's consolidated results of operations showed a 46% increase in net revenues and an increase in net income of 65%. Revenues recorded in the current period for long-term construction projects (“Project(s)”) were 93% more than the level recorded in the prior year. We had 31 Projects in process during the current period compared with 27 during the same period last year. Revenues recorded in the current period for other-than long-term construction projects (non-projects) were 3% less than the level recorded in the prior year. Total sales within the U.S. increased 69% from the same period last year. Total sales to Asia are up 4% from the same period of the prior year. Sales increases recorded over the same period last year to customers involved in construction of buildings and bridges (51%) and aerospace / defense (59%), were slightly offset by a decrease in sales to industrial customers (18%). Please refer to the charts, below, which show the breakdown of sales.

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

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�		Three months ended November 30		�
�		2014	2013	�
Industrial	��7%		12%
Construction	49%		48%
Aerospace / Defense	44%		40%
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Net revenue by geographic region, as a percentage of total net revenue for the three month periods ended November 30, 2014 and November 30, 2013 is as follows:

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�	Three months ended November 30
�	2014	2013
USA	66%	56%
Asia	30%	43%
Other	��4%	��1%

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Selling, General and Administrative Expenses

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�	Three months ended November 30		Change
�	�2014	2013	�Amount	�	Percent
Outside Commissions	�$��������362,000	�$������133,000	�$�����229,000	�	��172%
Other SG&A	�����������855,000	���������751,000	�����104,000	�	����14%
Total SG&A	�$�����1,217,000	�$������884,000	�$�����333,000	�	���38%
���… as a percentage of net revenues	18%	19%	�	�	�

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Selling, general and administrative expenses increased by 38% from the prior year. Outside commission expense increased by 172% from last year's level. This fluctuation was primarily due to the significant increase in commissionable sales in the current year. Other selling, general and administrative expenses decreased only slightly from last year to this.

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The above factors resulted in operating income of $771,000 for the three months ended November 30, 2014, up 82% from the $424,000 in the same period of the prior year.

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Stock Options

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The Company has a stock option plan which provides for the granting of nonqualified or incentive stock options to officers, key employees and non-employee directors. Options granted under the plan are exercisable over a ten year term. Options not exercised at the end of the term expire.

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The Company expenses stock options using the fair value recognition provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The Company recognized $37,000 and $43,000 of compensation cost for the six month periods ended November 30, 2014 and November 30, 2013.

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The fair value of each stock option grant has been determined using the Black-Scholes model. The model considers assumptions related to exercise price, expected volatility, risk-free interest rate, and the weighted average expected term of the stock option grants. Expected volatility assumptions used in the model were based on volatility of the Company's stock price for the thirty month period ending on the date of grant. The risk-free interest rate is derived from the U.S. treasury yield. The Company used a weighted average expected term.

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The following assumptions were used in the Black-Scholes model to estimate the fair market value of the Company's stock option grants:

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�	November �2014	�	November ��2013
Risk-free interest rate:	2.375%	�	3.25%
Expected life of the options:	3 years	�	3 years
Expected share price volatility:	31%	�	36%
Expected dividends:	zero	�	zero
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These assumptions resulted in estimated fair-market value per stock option:	$2.06	�	$2.41

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The ultimate value of the options will depend on the future price of the Company's common stock, which cannot be forecast with reasonable accuracy.

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A summary of changes in the stock options outstanding during the six month period ended November 30, 2014 is presented below:

�	�	�	�	Weighted-
�	�	Number of	�	Average
�	�	Options	�	Exercise Price
Options outstanding and exercisable at May 31, 2014:	�	�����������219,500	�	$7.31
Options granted:	�	�������������18,000	�	$8.52
Options exercised:	�	������������������750	�	$6.04
Options outstanding and exercisable at November 30, 2014:	�	�����������236,750	�	$7.41
Closing value per share on NASDAQ at November 30, 2014:	�	�	�	$9.73

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Capital Resources, Line of Credit and Long-Term Debt

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The Company's primary liquidity is dependent upon the working capital needs. These are mainly inventory, accounts receivable, costs and estimated earnings in excess of billings, accounts payable, accrued commissions, and billings in excess of costs and estimated earnings. The Company's primary source of liquidity has been operations and bank financing.

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Capital expenditures for the six months ended November 30, 2014 were $290,000 compared to $1,074,000 in the same period of the prior year. As of November 30, 2014, the Company has commitments for capital expenditures totaling $18,000 during the next twelve months.

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The Company believes it is carrying adequate insurance coverage on its facilities and their contents.

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The Company has available a $6,000,000 bank demand line of credit, with interest payable at the Company's option of 30, 60, 90 or 180 day LIBOR rate plus 2.5%, or the bank's prime rate less .25%. There is no balance outstanding as of November 30, 2014 or as of May 31, 2014. The line is secured by accounts receivable, equipment, inventory, and general intangibles, and a negative pledge of the Company’s real property. This line of credit is subject to the usual terms and conditions applied by the bank, is subject to renewal annually, and is not subject to an express requirement on the bank’s part to lend. The outstanding balance on the line of credit fluctuates as the Company's various long-term projects progress.

�

The Company is in compliance with restrictive covenants under the line of credit. In these covenants, the Company agrees to maintain the following minimum levels of the stated item:

�

Covenant	�	Minimum per Covenant	�	Current Actual	�	When Measured
Minimum level of working capital	�	$3,000,000	�	$15,858,000	�	Quarterly
Minimum debt service coverage ratio	�	1.5:1	�	n/a	�	Fiscal Year-end

�

�

All of the $6,000,000 unused portion of our line of credit is available without violating any of our debt covenants.

�

Inventory and Maintenance Inventory

�

�	�November 30, 2014		�May 31, 2014		Increase /(Decrease)
Raw materials	$�����339,000	�	�$�����571,000	�	�$������(232,000	)	�-41%
Work in process	����8,239,000	�	�����8,149,000	�	90,000	�	����1%
Finished goods	�������150,000	�	��������258,000	�	�(108,000	)	-42%
Inventory	����8,728,000	��92%	�����8,978,000	���91%	(250,000	)	���-3%
Maintenance and other inventory	�775,000	����8%	��������837,000	�����9%	(62,000	)	��- 7%
Total	$��9,503,000	100%	�$��9,815,000	100%	�$������(312,000	)	���-3%
�	�	�	�	�	�	�	�
Inventory turnover	2.0	�	1.5	�	�	�	�

�

NOTE: Inventory turnover is annualized for the six month period ended November 30, 2014.

�

Inventory, at $8,728,000 as of November 30, 2014, is $250,000, or 3%, lower than the prior year-end level of $8,978,000. Approximately 94% of the current inventory is work in process, 2% is finished goods, and 4% is 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 $90,000 for each of the six month periods ended November 30, 2014 and November 30, 2013. The Company continues to rework slow-moving inventory, where applicable, to convert it to product to be used on customer orders.

�

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

�

�	�November 30, 2014		�May 31, 2014		Increase /(Decrease)
Accounts receivable	�$��3,031,000	�	�$��2,894,000	�		$���137,000	�	����5%	�
CIEB	4,773,000	�	�����2,374,000	�		2,399,000	�	101%	�
Less: BIEC	2,430,000	�	��������851,000	�		�1,579,000	�	186%	�
Net	�$��5,374,000	�	�$��4,417,000	�		�$ ��957,000	�	��22%	�
�	�	�	�	�		�	�	�	�
Number of an average day’s sales outstanding in accounts receivable	41	�	49	�		�	�	�	�
�	�	�	�	�	�	�	�	�	�

�

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 $3,031,000 as of November 30, 2014 includes approximately $193,000 of amounts retained by customers on Projects. It also includes $10,000 of an allowance for doubtful accounts (“Allowance”). The accounts receivable balance as of May 31, 2014 of $2,894,000 included an Allowance of $10,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) decreased from 49 days at May 31, 2014 to 41 at November 30, 2014. It is expected that amounts retained by customers under contracts will be released in the normal course of the business in accordance with the related contracts. The Company expects to collect the net accounts receivable balance, including the retainage, 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, provisions such as this are often not possible. The $4,773,000 balance in this account at November 30, 2014 is slightly more than double the prior year-end balance. This increase is the result of normal flow of the projects through production with billings to the customers as permitted in the related contracts. The Company expects to bill the entire amount during the next twelve months. 40% of the CIEB balance as of the end of the last fiscal quarter, August 31, 2014, was billed to those customers in the current fiscal quarter ended November 30, 2014. 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:

�

�	�November 30, 2014		�May 31, 2014
Costs	�$���������5,478,000	�	�$���������3,055,000
Estimated Earnings	������������1,826,000	�	���������������929,000
Less: Billings to customers	������������2,531,000	�	������������1,610,000
CIEB	�$���������4,773,000	�	�$���������2,374,000
Number of Projects in progress	17	�	17

�

As noted above, BIEC represents billings to customers in excess of revenues recognized. The $2,430,000 balance in this account at November 30, 2014 is up significantly from the $851,000 balance at the end of the prior year. This increase is the result of normal flow of the projects through production with billings to the customers as permitted in the related contracts.

�

The balance in this account fluctuates in the same manner and for the same reasons as the account “costs and estimated earnings in excess of billings”, 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:

�

�	�November 30, 2014		�May 31, 2014
Billings to customers	�$���������4,524,000	�	�$���������2,236,000
Less: Costs	������������1,576,000	�	������������1,072,000
Less: Estimated Earnings	���������������518,000	�	���������������313,000
BIEC	�$���������2,430,000	�	�$������������851,000
Number of Projects in progress	11	�	8

�

�

Summary of factors affecting the balances in CIEB and BIEC:

�

�	�November 30, 2014		�May 31, 2014
Number of Projects in progress	28	�	25
Aggregate percent complete	42%	�	31%
Average total sales value of Projects in progress	$799,000	�	$710,000
Percentage of total value invoiced to customer	32%	�	22%

�

�

The Company's backlog of sales orders at November 30, 2014 is $27.1 million, up 10% from the $24.6 million at the end of the prior year. $13 million of the current backlog is on Projects already in progress.

�

�

Other Balance Sheet Items

�

Accounts payable, at $1,727,000 as of November 30, 2014, is 48% more than the prior year-end. Commission expense on applicable sales orders is recognized at the time revenue is recognized. The commission is paid following receipt of payment from the customers. Accrued commissions as of November 30, 2014 are $494,000, up 15% from the $430,000 accrued at the prior year-end. The Company expects the current accrued amount to be paid during the next twelve months. Other current liabilities decreased 37% from the prior year-end, to $846,000. This is primarily due to a decrease in customer prepayments during the current quarter. Shipments to customers for prepaid products will take place as scheduled within the next twelve months.

�

Management believes the Company's cash flows from operations and borrowing capacity under the bank line of credit are sufficient to fund ongoing operations, capital improvements and share repurchases (if any) for 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 principal executive officer and principal financial officer have evaluated the Company's disclosure controls and procedures as of November 30, 2014 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 Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’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 November 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.

�

�

Part II - Other Information

�

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, 2014 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, 2014
�	�	�	�		�		�	�	�
�	�	�	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, 2014 -		�		�	�	�
�	�	�	September �30, 2014		-		-	-	�
�	�	�	�		�		�	�	�
�	�	�	October 1, 2014 -		�		�	�	�
�	�	�	October 31, 2014		-		-	-	�
�	�	�	�		�		�	�	�
�	�	�	November 1, 2014 -		�		�	�	�
�	�	�	November 30, 2014		-		�	-	�
�	�	�	�		�		�	�	(1)
�	�	�	�Total		-		-	-	$419,815
�	�	�	� (1) On November 7, 2014, the Board of Directors of the Registrant voted unanimously to continue the share repurchase agreement, authorized by the Board in 2010, with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") under which the Company repurchases shares of its common stock. The Company has designated $419,815 of cash on hand as available for open-market purchases. Since Board authorization in 2010, a total of 15,600 shares have been purchased at an average price per share of $5.14. Repurchases are made by MLPF&S for the benefit of the Registrant.
�	�	�	�			�	�	�	�
�	�	(d)	Under the terms of the Company's credit arrangements with its primary lender, the Company is required to maintain net working capital of at least $3,000,000, as such term is defined in the credit documents.��On November 30, 2014, under such definition, the Company's net working capital was significantly in excess of such limit.��Additional information regarding the Company’s line of credit and restrictive covenants appears under the caption “Capital Resources, Line of Credit and Long-Term Debt” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.
�		�
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	�		�	�	�	�
�	�	20	News from Taylor Devices, Inc. Shareholder Letter, Winter 2014-2015
�	�	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.INS	XBRL Instance Document
�	�	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
�	�	�	�		�	�	�	�
�	�	�	�	�	�	�	�	�

�

�

�

�

Report of Independent Registered Public Accounting Firm

�

�

The Board of Directors and Stockholders

Taylor Devices, Inc.

�

�

�

We have reviewed the accompanying condensed consolidated balance sheet of Taylor Devices, Inc. and Subsidiary as of November 30, 2014, the related condensed consolidated statements of income for the three and six months ended November 30, 2014 and 2013 and cash flows for the six months ended November 30, 2014 and 2013. These interim financial statements are the responsibility of the Company's management.

�

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

�

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

�

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of May 31, 2014, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated August 21, 2014, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2014 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

�

Lumsden & McCormick, LLP

Buffalo, New York

January 13, 2015

�

�

�

�

�

�

�

�

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:	January 13, 2015	�	�	/s/Douglas P. Taylor�����������
�	� � � � �	�	�	Douglas P. Taylor President Chairman of the Board of Directors (Principal Executive Officer)

�

� �	� � � �	� �	� �	� �
� �	� �	� �	� �	� �

�

Date:	January 13, 2015	�	�	/s/Mark V. McDonough
�	� � �	�	�	Mark V. McDonough Chief Financial Officer

�

�

�

�

�

�

�

NEWS FROM TAYLOR DEVICES, INC.

SHAREHOLDER LETTER, WINTER 2014 - 2015

�

�

�

THIS NEWSLETTER IS DIRECTED TO ALL SHAREHOLDERS OF TAYLOR DEVICES. WE HOPE THAT IT WILL GENERATE INTEREST IN THE COMPANY, PLUS PROVIDE CURRENT FINANCIAL AND PROJECT INFORMATION. COPIES OF THIS NEWSLETTER WILL ALSO BE CIRCULATED TO SHAREHOLDERS WHO HAVE SHARES IN BROKERAGE ACCOUNTS.

�

�

ITEM: FINANCIAL RESULTS

�

Taylor Devices completed the second quarter of its fiscal year on November 30, 2014. Comparative financial results for the first quarter, second quarter and six month periods are as follows:

�

� FIRST QUARTER (8-31-14)	� F/Y 14-15	� �	� F/Y 13-14
� SALES	$6,551,382	� �	$5,296,666
� NET EARNINGS	$392,306	� �	$201,263
� AVERAGE NUMBER OF SHARES OUTSTANDING	3,342,934	� �	3,318,602
EARNINGS PER SHARE	$0.12	�	$0.06
� SECOND QUARTER (11-30-14)	� F/Y 14-15	� �	� F/Y 13-14
� SALES	$6,705,095	� �	$4,600,452
� NET EARNINGS	$504,313	� �	$306,423
� AVERAGE NUMBER OF SHARES OUTSTANDING	3,343,137	� �	3,322,424
� EARNINGS PER SHARE	$0.15	� �	$0.09
�	�	�	�
� SIX MONTHS (11-30-14)	� F/Y 14-15	� �	� F/Y 13-14
� SALES	$13,256,477	� �	$9,897,118
� NET EARNINGS	$896,619	� �	$507,686
� AVERAGE NUMBER OF SHARES OUTSTANDING	3,343,340	� �	3,326,245
� EARNINGS PER SHARE	$0.27	� �	$0.15

�

�

Fiscal year 2014-2015 is progressing very well for the Company. Taylor Devices’ shipments have increased substantially in the first and second quarters while the order backlog has again increased significantly to $27.1 million. The influx of new orders are coming from both seismic and the aerospace and defense market sectors.

�

ITEM: ANNUAL MEETING SHAREHOLDER VOTING RESULTS

�

Our Annual Meeting of Shareholders was held on November 7, 2014. The total number of outstanding shares of Taylor Devices’ stock on the meeting record date was 3,343,289. A total of 3,081,210 shares were present in person or by proxy at the meeting, representing 92% shareholder turnout.

�

Results Matters Submitted to a Vote of Security Holders:

The shareholders of Taylor Devices, Inc. common stock elected Reginald B. Newman II as a Class 1 director, to serve a three-year term expiring in 2017.

1,670,811 votes were cast for Mr. Newman and 57,285 votes were withheld. Broker non-votes were 1,345,061.

The second matter voted upon at the meeting was the ratification of the appointment of Lumsden & McCormick, LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2015.

3,060,871 votes were cast for Lumsden & McCormick, LLP, and 9,647 votes were cast against. A total of 10,692 votes abstained.

�

�

ITEM: ANNUAL MEETING OF THE SHAREHOLDERS

�

The Company’s Annual Meeting of Shareholders was held on November 7, 2014, at the Buffalo Niagara Marriott located in Amherst, NY. Reports were given at the meeting by members of the executive and management staff. A brief summary of these reports follows:

�

�

Douglas P. Taylor, President, discussed current projects and outlined what management anticipates for the coming year 2015. Mr. Taylor’s presentation indicated reduced sales of $20,011,228 for the year ending May 30, 2014, which is down 19% from 2013. Net income was reduced to $1,131,212. He noted that sales and income for fiscal 2014 reflect lost production hours from the start-up of Taylor Devices new facility during this fiscal year. He stated that the U.S. construction markets are improving and the Company is experiencing new opportunities on soft-story and wood frame buildings in California. Mr. Taylor also stated that 2014 aerospace and defense market sales are up by 9.2% over that of the previous year with many new programs awaiting funding. He announced several new projects and introduced NASA’s manned space vehicle programs as a present and future source of income.

�

�

Mr. Taylor gave a PowerPoint presentation on the X-47B Drone Aircraft project as featured on the front cover of the 2014 Annual Report. He compared manned and unmanned aircraft and explained where the Taylor products are applied. The landing gears for two drone programs are in production and landing gears for two new drones are currently in flight testing. Two future programs are pending and the X-47B is one of these.

�

�

Mr. Taylor indicated that the Company is looking forward to continued growth and success in 2015. He concluded his program and introduced the sales staff for their reports.

�

�

Paul Tuttobene, the Company’s Aerospace and Defense Products Sales Manager, reported on market sector sales that increased 9.2% in 2014, accounting for 44% of Taylor Devices total sales. Mr. Tuttobene presented the shareholders with charts and graphs for his discussion regarding the 2013 U.S. Government’s Sequestration (the Budget Control Act of 2011) and how it has impacted sales for the Company. He informed shareholders of the balanced combinations of reorders for mature programs and current evolving designs, along with potential future work with new and existing customers.

�

�

Alan Klembczyk, newly appointed Vice President of Sales and Engineering, introduced mature Aerospace and Defense Programs and current evolving designs. He displayed views of the new U.S. Navy Zumwalt Class Destroyer’s Missile Magazine Isolators that are now in production, new Air Force refueling boom absorbers, helicopter gear box and bearing components, and NASA space vehicle crew capsule components that are under development with a newly received production contract in place. He also discussed the Company’s successful drone aircraft programs and future potential programs for landing gear components that are now in the development phase.

�

�

Robert Schneider and Craig Winters, Industrial and Seismic Sales Managers, gave visual presentations of the Company’s commercial and seismic products as they are used on several projects, including a new high-rise building at 432 Park Avenue in New York City. This will be the tallest residential tower in the Western Hemisphere where condominium prices range from $8 million to $95 million. They also demonstrated the use of Taylor products planned for the Kentucky Lake Bridge in Aurora, Kentucky. Other projects discussed were a railway bridge in China, a mixed-use building in Japan and a courthouse in San Diego, California, They stated that the Industrial Products backlog has tripled from the end of fiscal 2014 to the end of fiscal 2015 and sales through October are already 62% of the total for fiscal 2014.

�

�

Richard Hill, Vice President of Production, reported on the new, fully operational manufacturing facility at Taylor Devices’ Buffalo Bolt campus as well as a discussion about the production side of Company sales. He stated that having the new facility enables the Company to produce both more and much larger damper products for jobs that are being quoted today with adequate space to support an increasing customer base.

�

�

Mark McDonough, Chief Financial Officer, reported on the financial status of the Company and presented several in-depth financial charts and graphs. Some of these indicated percentages of customer mix of the Seismic/Industrial sales and Aerospace/Defense sales. He also presented charts representing sales volume across the globe. Mr. McDonough presented graphs regarding sales and gross profit, G&A expenses, operating income, net income, and sales order backlog. Further detailed financial information is available in the Company’s 2014 Annual Report.

�

ITEM: NEW ORDERS, SEISMIC AND WIND

�

The following new orders for Seismic and Wind Control Dampers were announced at the 2014 Annual Meeting of Shareholders:

�

�

Boeing 3-390 Hanger – Seattle, WA

�

U.S. Navy Medical Center – San Diego, CA

�

Nashua Street Residences – Boston, MA

�

Twenty Nine Palms Naval Hospital – Twenty Nine Palms, CA

�

181 Fremont Building – San Francisco, CA

�

Academia Sinica Building – Taiwan, ROC

�

SFKH Financial Building – Taiwan, ROC

�

Futsang Building – Taiwan, ROC

�

Farglory H-99 – Taiwan, ROC

�

Xinyi Building – Taiwan, ROC

�

Shiji Railway – China

�

NEW ORDERS, SEISMIC AND WIND, CONTINUED

�

�

12 Moorehouse Avenue – Christchurch, New Zealand

�

Banco de la Nacion – Lima, Peru

�

Pacifico Insurance Building – Lima, Peru

�

�

ITEM: NEW ORDERS, AEROSPACE AND DEFENSE

�

Major new contracts received in this reporting period are:

�

�

Drone Aircraft Landing Gears – The Company has received a 2015 production contract for more than 100 shipsets of nose and main landing gear struts for a U.S. military drone. In addition, a substantial follow-on contract was received for development and qualification testing of the landing gears for a “next generation” military drone program.

�

�

Fin-Control Dampers – A follow-on contract was received from a European government for 600+ sets of fin-control dampers used on an air-dropped “smart bomb.”

�

�

Space Vehicle Products – The Company has now received a low-rate production contract for control actuators to be used on a commercially launched manned space vehicle. The products have been in development for the past two years, fully funded by a government prime contractor. In addition, the Company has received two development contracts from NASA, related to the next generation long-range manned space vehicle. One contract is for development of components for an in-flight launch abort system for the crew module of the vehicle. The second is for development of umbilical and fuel line control actuators for the launch gantry.

�

�

�

�

�

�

�

�

By:

Douglas P. Taylor

President

�

Exhibit 32(ii)

�

�

�

�

�

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

�

In connect with the quarterly report of Taylor Devices, Inc. (the "Company") on Form 10-Q for the quarter ended November 30, 2014 to be filed with Securities and Exchange Commission on or about the date hereof (the "Report"), I, Mark V. McDonough, Chief Financial Officer of the Company, certify, pursuant to Section�906 of the Sarbanes-Oxley Act of 2002, 18�U.S.C. Section 1350, that:

�

(1) The Report fully complies with the requirements of Section�13(a) or 15(d) of the Securities Exchange Act of 1934; and

�

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

�

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.

�

�

�

Date: January 13, 2015	By:	/s/ Mark V. McDonough������
�	�	Mark V. McDonough, Chief Financial Officer �

�

Exhibit 31(ii)

�

�

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

�

I, Mark V. McDonough, certify that:

�

1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;

�

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

�

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

�

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

�

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

�

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

�

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

�

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

�

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

�

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

�

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

�

Date: January 13, 2015	/s/ Mark V. McDonough
�	Mark V. McDonough Chief Financial Officer �

�

Exhibit 32(i)

�

�

�

�

�

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

�

In connect with the quarterly report of Taylor Devices, Inc. ("the Company") on Form 10-Q for the quarter ended November 30, 2014 to be filed with Securities and Exchange Commission on or about the date hereof (the
"Report"), I, Douglas P. Taylor, Chief Executive Officer of the Company, certify, pursuant to Section�906 of the Sarbanes-Oxley Act of 2002, 18�U.S.C. Section 1350, that:

�

(1) The Report fully complies with the requirements of Section�13(a) or 15(d) of the Securities Exchange Act of 1934; and

�

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

�

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.

�

�

�

Date: January 13, 2015	By:	/s/ Douglas P. Taylor������
�	�	Douglas P. Taylor, Chief Executive Officer �

�

�

Exhibit 31(i)

�

�

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

�

I, Douglas P. Taylor, certify that:

�

1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;

�

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

�

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

�

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

�

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

�

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

�

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

�

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

�

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

�

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

�

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

�

Date: January 13, 2015	/s/ Douglas P. Taylor�������
�	Douglas P. Taylor Chief Executive Officer �

�

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