Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405]

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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, 2024

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

For the transition period from __________ to __________

Commission file number 000-3498

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)

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

Common Stock, $.025 par value per share

Preferred Stock Purchase Rights

TAYD

N/A

NASDAQ Stock Market LLC

NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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 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. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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, on November 30, 2023, the last business day of the registrant's most recently completed second fiscal quarter, is $81,769,000.

The number of shares outstanding of each of the registrant's classes of common stock as of August 15, 2024 is 3,118,627.

TAYLOR DEVICES, INC.

DOCUMENTS INCORPORATED BY REFERENCE

Documents	Form 10-K Reference

Portions of definitive Proxy Statement for Registrant’s 2024 Annual Meeting of Shareholders	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 1C.	Cybersecurity.	6
	Item 2.	Properties.	7
	Item 3.	Legal Proceedings.	7
	Item 4.	Mine Safety Disclosures.	7
PART II
	Item 5.	Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	8
	Item 6.	[Reserved].	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.	15
	Item 8.	Financial Statements and Supplementary Data.	15
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	15
	Item 9A.	Controls and Procedures.	15
	Item 9B.	Other Information.	16
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	16
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance.	16
	Item 11.	Executive Compensation.	16
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	16
	Item 13.	Certain Relationships and Related Transactions, and Director Independence.	16
	Item 14.	Principal Accountant Fees and Services.	16
PART IV
	Item 15.	Exhibits and Financial Statement Schedules.	17

	Item 16.	Form 10-K Summary.	19

SIGNATURES			20

PART I

Item 1. Business.

Taylor Devices, Inc. (referred to herein as the “Company,” “we,” “us” or “our”) 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 nine categories, namely, Seismic Dampers, Fluidicshoks®, Crane and Industrial Buffers, Self-Adjusting Shock Absorbers, Liquid Die Springs, Vibration Dampers, Machined Springs, Custom Shock and Vibration Isolators, 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 portion of the Company’s sales. 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 industries. Crane and Industrial Buffers are larger versions of the Fluidicshoks® with up to 10,890,000 inch-pound capacities, produced in more than 50 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 Shock and Vibration Isolators are comprised of various configurations including liquid springs, fluid dampers, elastomeric springs and Pumpkin™ Mounts. They are typically used for defense applications. 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.

Sales and Distribution

The Company uses a technical sales force consisting of Company employees for sales in the United States. The Company uses the services of several non-employee sales representatives for sales throughout the rest of the world. Specialized technical sales in custom marketing activities outside the U.S. 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 foreign distributors also have non-exclusive agreements with the Company to purchase the Company's products for resale purposes.

Competition

The Company faces some competition for hydraulic energy absorbers on mature aerospace and defense programs. Other competition in these sectors include the use of competing technologies, not necessarily of similar design as Taylor Devices’ products. For the industrial products group, two foreign companies and two U.S. companies are the Company’s main competitors in the production of crane buffers and industrial shock absorbers.

The Company competes directly against two other firms supplying structural damping devices for use in the U.S. For structural applications outside of the U.S., the Company competes directly with several other firms, particularly in Japan 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 suppliers would not have a material adverse effect on the Company.

Dependence Upon Major Customers

Sales to four customers approximated 40% (21%, 7%, 7%, and 5%, respectively) of net sales for 2024. The loss of any or all of these customers, unless the business is replaced by the Company, would have a material adverse effect on the Company.

Patents, Trademarks and Licenses

The Company holds ten patents expiring at different times until the year 2040.

Terms of Sale

The Company does not carry significant inventory for rapid delivery to customers, and goods are not normally sold with return rights such as are available for consignment sales. The Company had no inventory out on consignment and there were no consignment sales for the years ended May 31, 2024 and 2023. No extended payment terms are offered. During the year ended May 31, 2024, delivery time after receipt of orders averaged 8 to 10 weeks for the Company's standard products. Due to the volatility of structural and aerospace/defense programs, we usually require progress payments for larger projects where the Company supplies custom designed components.

Need for Government Approval of Principal Products or Services

Contracts between the Company and the federal government or its independent contractors are subject to termination at the election of the federal government. Contracts are generally entered into on a fixed price basis. If the federal government should limit defense spending, these contracts could be reduced or terminated, which management believes would have a materially adverse effect on the Company.

Research and Development

To accommodate growth and to maintain its presence in current markets, the Company engages in product research and development activities in connection with the design of its products. Occasionally, research and development for products in the aerospace and defense sectors is funded by customers or the federal government. The Company also engages in research testing of its products. For the fiscal years ended May 31, 2024 and 2023, the Company expended $388,000 and $1,097,000, respectively, on product research. For the years ended May 31, 2024 and 2023, government-funded research and development totaled $818,000 and $581,000, respectively. For the years ended May 31, 2024 and 2023, customer-funded research and development totaled $477,000 and $285,000, respectively.

Government Regulation

Compliance with federal, state, and local laws and regulations regulating the discharge of materials into the environment has had no material effect on the Company, and the Company believes that it is in substantial compliance with these laws and regulations.

The Company is subject to the Occupational Safety and Health Act ("OSHA") and the rules and regulations promulgated thereunder, which establish strict standards for the protection of employees, and impose fines for violations of such standards. The Company believes that it is in substantial compliance with OSHA.

The Company is also subject to regulations relating to production of products for the federal government. These regulations allow for frequent governmental audits of the Company's operations and extensive testing of Company products. The Company believes that it is in substantial compliance with these regulations.

Employees

As of May 31, 2024, the Company had 128 total employees, consisting of 125 full-time employees and three part-time employees. The Company has good relations with its employees, and none of the Company’s employees are covered by a collective bargaining agreement.

Item 1A. Risk Factors.

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

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity

Risk Management and Strategy

In connection with the operation of the Company’s business, we identify, assess and manage key risks that may affect the Company, including material risks from cybersecurity threats through our system security plan. Our system security plan is aligned with the 110 controls detailed in the NIST (SP) 800-171 and Department of Defense CMMC Level 2 guidelines for Cybersecurity . We have company-wide security policies, standards and controls that seek to incorporate best practices in security engineering, technology architecture and data protection. Our policies and controls include security measures designed to protect our systems against unauthorized access. We also maintain cybersecurity protection measures covering our information technology systems, including with respect to the protection of customer data, vendor data and employee information. We have also implemented specialized training and education programs to seek to guard against cybersecurity incidents, including company-wide communications and presentations, phishing simulations, focused training for specific roles and a general cybersecurity training program required for all employees.

We engage third parties to perform regular reviews of our security controls which includes 24x7x365 security incident and event management (SIEM) as well as vulnerability services and penetration testing. Our processes to identify, assess and manage material risks from cybersecurity threats include risks associated with our use of third-party service providers, including cloud-based platforms. We oversee and identify cybersecurity risks from our third-party service providers in a number of ways, including appropriate due diligence in connection with new third-party service provider onboarding, robust security terms and conditions in our third-party service provider contracts and ongoing risk-based monitoring to ensure compliance with our cybersecurity standards. We believe that these policies and controls provide us with an appropriate assessment of potential cybersecurity threats.

As of the date of this Annual Report on Form 10-K (this “Form 10-K”), we are not aware of any risks from any potential cybersecurity threat or from any previous cybersecurity incident that have materially affected or are likely to materially affect our business strategy, results of operations or financial condition. However, the preventative actions we have taken and continue to take to reduce the risk of cybersecurity threats and incidents may not successfully protect against these potential threats and incidents in the future.

Governance

The Company’s Board of Directors is responsible for overseeing management’s identification, assessment and management of key risks, including cybersecurity risks.

Our Director of Information Technology, Mitch Reszczenski, is primarily responsible for assessing and managing our cybersecurity risks. Mr. Reszczenski has over 28 years of extensive information technology experience in highly successful manufacturing, engineering and financial organizations. Mr. Reszczenski provides regular updates on cybersecurity risks and threats and key developments in Company policies, practices and related risk exposures to the Chief Executive Officer and Chief Financial Officer. Additionally, senior management provides an update to the Board of Directors on cybersecurity matters at least once a year, and more often as appropriate. The Board of Directors annually reviews and approves the capital and operating budgets, ultimately reviewing and approving the amount spent by the Company on cybersecurity measures.

Mr. Reszczenski works with senior management to implement and oversee processes for the regular monitoring of our information systems. If a cybersecurity incident involving the Company were to occur, Mr. Reszczenski would engage senior management to initially determine the potential materiality of the incident, the potential need for public disclosure, the timing and extent of the Company’s response and whether any future vulnerabilities are expected. As part of this evaluation, senior management would also identify immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future cybersecurity incidents. After an initial evaluation by senior management, the relevant information regarding the cybersecurity incident and its materiality would be promptly reported to the Company’s Board of Directors for further review and evaluation, including as to whether public disclosure would be required or advisable.

Item 2. Properties.

The Company's production facilities occupy approximately six acres on Tonawanda Island in North Tonawanda, New York and are comprised of four interconnected buildings and two adjacent buildings, each of which is owned by the Company. The production facilities consist of a small parts plant (approximately 4,400 square feet), a large parts plant (approximately 13,500 square feet), and include a facility of approximately 7,000 square feet comprised of a test facility, storage area, pump area and the Company's general offices. One adjacent building is a 27,000 square foot seismic assembly and test facility. This building contains overhead traveling cranes to allow dampers to be built up to 45 ft. in length. It is also the site of three long bed damper test machines where seismic dampers manufactured by the Company will be tested at maximum force to satisfy customer specifications. Another adjacent building (approximately 2,000 square feet) is used as a training facility. These facilities total more than 54,000 square feet. Adjacent to these facilities, the Company has a remote test facility used for shock testing. This state-of-the-art test facility is 1,200 square feet. The Company owns two additional industrial buildings on nine acres of land in the City of North Tonawanda located 1.4 miles from the Company’s headquarters on Tonawanda Island. Total area of the two buildings is 46,000 square feet. One building includes a machine shop containing custom-built machinery for boring, deep-hole drilling and turning of parts. Another is used for painting and packaging parts and completed units.

Item 3. Legal Proceedings.

Refer to Note 17, “Legal Proceedings,” to the Notes to Consolidated Financial Statements for additional information regarding the Company’s legal proceedings, which is incorporated by reference into this Item 3.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The Company's Common Stock trades on the Nasdaq Stock Market under the symbol TAYD.

Holders

As of August 1, 2024, the number of record holders of the Company's Common Stock was 381. A substantial number of shares of the Company's Common Stock are held in street name. The Company believes that the total number of beneficial owners of its Common Stock is approximately 3,300.

Dividends

The Company does not pay a cash dividend and plans to retain cash in the foreseeable future to fund working capital needs.

Item 6. [Reserved].

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-K 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," "assume" and "optimistic" constitute forward-looking statements and, as such, are not a guarantee of future performance. These statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others: fluctuations in general business cycles and changing economic conditions; variations in timing and amount of customer orders; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results. Except as required by law, the Company disclaims any obligation to release publicly any updates or revisions to the forward-looking statements herein to reflect any change in the Company's expectations with regard thereto, or any changes in events, conditions or circumstances on which any such statement is based.

Application of Critical Accounting Policies and Estimates

The Company's consolidated financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. The preparation of the Company's financial statements requires management to make estimates, assumptions and judgments that affect the amounts reported. These estimates, assumptions and judgments are affected by management's application of accounting policies, which are discussed in Note 1, "Summary of Significant Accounting Policies", and elsewhere in the accompanying consolidated financial statements. As discussed below, our financial position or results of operations may be materially affected when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. Management believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's financial statements.

Accounts Receivable

Our ability to collect outstanding receivables from our customers is critical to our operating performance and cash flows. Accounts receivable are stated at an amount management expects to collect from outstanding balances. Management provides for probable uncollectible accounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts after considering the age of each receivable and communications with the customers involved.

Balances that are collected, for which a credit to a valuation allowance had previously been recorded, result in a current-period reversal of the earlier transaction charging earnings and crediting a valuation allowance. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable in the current period. The actual amount of accounts written off over the five year period ended May 31, 2024 equaled 0.2% of sales for that period. The balance of the valuation allowance is unchanged at $29,000 at both May 31, 2024 and May 31, 2023. Management does not expect the valuation allowance to materially change in the next twelve months for the current accounts receivable balance.

Inventory

Inventory is stated at the lower of average cost or net realizable value. Average cost approximates first-in, first-out cost.

This inventory is particularly sensitive to technical 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. Therefore, management of the Company has recorded an allowance for potential inventory obsolescence. Based on certain assumptions and judgments made from the information available at that time, we determine the amount in the inventory allowance. If these estimates and related assumptions or the market changes, we may be required to record additional reserves. Historically, actual results have not varied materially from the Company's estimates. There was $791,000 and $322,000 of inventory disposed of during the years ended May 31, 2024 and 2023. The provision for potential inventory obsolescence was $386,000 and $295,000 for the years ended May 31, 2024 and 2023.

Revenue Recognition

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

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

For contracts with customers in which the Company satisfies a promise to the customer to provide a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time (generally less than one year), using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead. Total estimated costs for each of the contracts are estimated based on a combination of historical costs of manufacturing similar products and estimates or quotes from vendors for supplying parts or services towards the completion of the manufacturing process. Adjustments to cost and profit estimates are made periodically due to changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements. These changes may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. If total costs calculated upon completion of the manufacturing process in the current period for a contract are more than the estimated total costs at completion used to calculate revenue in a prior period, then the profits in the current period will be lower than if the estimated costs used in the prior period calculation were equal to the actual total costs upon completion. Historically, actual results have not varied materially from the Company's estimates. Other sales to customers are recognized upon shipment to the customer based on contract prices and terms. In the year ended May 31, 2024, 59% of revenue was recorded for contracts in which revenue was recognized over time while 41% was recognized at a point in time. In the year ended May 31, 2023, 61% of revenue was recorded for contracts in which revenue was recognized over time while 39% was recognized at a point in time.

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

Income Taxes

The provision for income taxes provides for the tax effects of transactions reported in the financial statements regardless of when such taxes are payable. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax and financial statement basis of assets and liabilities. The deferred tax assets relate principally to asset valuation allowances such as inventory obsolescence reserves and bad debt reserves and also to liabilities including warranty reserves, accrued vacation, accrued commissions and others. The deferred tax liabilities relate primarily to differences between financial statement and tax depreciation. Deferred taxes are based on tax laws currently enacted with tax rates expected to be in effect when the taxes are actually paid or recovered.

Realization of the deferred tax assets is dependent on generating sufficient taxable income at the time temporary differences become deductible. The Company provides a valuation allowance to the extent that deferred tax assets may not be realized. A valuation allowance has not been recorded against the deferred tax assets since management believes it is more likely than not that the deferred tax assets are recoverable. The Company considers future taxable income and potential tax planning strategies in assessing the need for a potential valuation allowance. In future years the Company will need to generate approximately $10.4 million of taxable income in order to realize our deferred tax assets recorded as of May 31, 2024 of $2,176,000. This deferred tax asset balance is 38% ($594,000) higher than at the end of the prior year. The amount of the deferred tax assets considered realizable however, could be reduced in the near term if estimates of future taxable income are reduced. If actual results differ from estimated results or if the Company adjusts these assumptions, the Company may need to adjust its deferred tax assets or liabilities, which could impact its effective tax rate.

The Company's practice is to recognize interest related to income tax matters in interest income / expense and to recognize penalties in selling, general and administrative expenses.

The Company and its subsidiary file consolidated federal and state income tax returns. As of May 31, 2024, the Company had state investment tax credit carryforwards of approximately $470,000 expiring through May 2029.

Results of Operations

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

Summary comparison of the years ended May 31, 2024 and 2023
		Increase /
		(Decrease)
Sales, net		`$4,384,000`
Cost of goods sold		`$494,000`
Research and development costs		`$(708,000)`
Selling, general and administrative expenses		`$1,928,000`
Other income (expense)		`$745,000`
Income before provision for income taxes		`$3,415,000`
Provision for income taxes		`$704,000`
Net income		`$2,711,000`

For the year ended May 31, 2024 (All figures being discussed are for the year ended May 31, 2024 as compared to the year ended May 31, 2023.)

	Year ended May 31		Change
	2024	2023	Amount	Percent
Net Revenue	`$44,583,000`	`$40,199,000`	`$4,384,000`	11%
Cost of sales	`23,744,000`	`23,250,000`	`494,000`	2%
Gross profit	`$20,839,000`	`$16,949,000`	`$3,890,000`	23%
… as a percentage of net revenues	47%	42%

The Company's consolidated results of operations showed an 11% increase in net revenues and an increase in net income of 43%. Revenues recorded in the year ended May 31, 2024 for long-term projects (“Project(s)”) were 8% higher than the level recorded in the prior year. We had 39 Projects in process during the year ended May 31, 2024 compared with 52 during the same period last year. Revenues recorded in the year ended May 31, 2024 for other-than long-term projects (non-projects) were 15% higher than the level recorded in the prior year. The number of Projects in-process fluctuates from period to period. The changes from the prior year to the year ended May 31, 2024 are not necessarily representative of future results.

Sales of the Company's products are made to three general groups of customers: industrial, structural and aerospace / defense. The Company saw a 30% decrease from last year’s level in sales to structural customers who were seeking seismic / wind protection for either construction of new buildings and bridges or retrofitting existing buildings and bridges along with a 71% increase in sales to customers in aerospace / defense and a 12% decrease in sales to customers using our products in industrial applications.

A breakdown of sales to these three general groups of customers, as a percentage of total net revenue for fiscal years ended May 31, 2024 and 2023 is as follows:

	Year ended May 31
	2024	2023
Industrial	8%	10%
Structural	32%	51%
Aerospace / Defense	60%	39%

Total sales within the U.S. increased 18% from last year. Total sales to Asia decreased 55% from the prior year. Net revenue by geographic region, as a percentage of total net revenue for fiscal years ended May 31, 2024 and 2023 is as follows:

	Year ended May 31
	2024	2023
U.S.	86%	81%
Asia	4%	11%
Other	10%	8%

The gross profit as a percentage of net revenue of 47% in the year ended May 31, 2024 is five percentage points greater than the same period of the prior year (42%). The Company has been able to increase sales prices to recover more of the increased costs for materials and labor that were incurred during the year ended May 31, 2024. Management continues to work with suppliers to obtain more visibility of conditions affecting their respective markets. These actions combined with benefits from the Company’s continuous improvement initiatives and increased volume have helped to improve the gross margin as a percentage of revenue over the prior year.

At May 31, 2024, we had 134 open sales orders in our backlog with a total sales value of $33.1 million. At May 31, 2023, we had 134 open sales orders in our backlog with a total sales value of $32.5 million. $18.6 million of the current backlog is on Projects already in progress. $18.1 million of the $32.5 million sales order backlog at May 31, 2023 was in progress at that date. 72% of the sales value in the backlog is for aerospace / defense customers compared to 74% at the end of fiscal 2023. As a percentage of the total sales order backlog, orders from structural customers accounted for 22% at May 31, 2024 and 22% at May 31, 2023. The Company expects to recognize revenue for the majority of the backlog during the fiscal year ending May 31, 2025, with the remainder during the fiscal year ending May 31, 2026.

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

Research and Development Costs

	Years ended May 31		Change
	2024	2023	Amount	Percent
R & D	$ 388,000	$ 1,097,000	$ (709,000)	-65%
… as a percentage of net revenues	0.9%	2.7%

Research and development costs decreased 65% from the prior year. This decrease was driven by the completion of the Taylor Damped Moment Frame™ project.

Selling, General and Administrative Expenses

	Years ended May 31		Change
	2024	2023	Amount	Percent
S G & A	$ 10,971,000	$ 9,043,000	$ 1,928,000	21%
… as a percentage of net revenues	25%	22%

Selling, general and administrative expenses increased 21% from the prior year, primarily from increased personnel costs.

Operating Income

Operating income of $9,479,000 for the year ended May 31, 2024, showed significant improvement from the $6,809,000 operating income in the prior year. The increase in operating income was attributed to the decrease in research and development costs as well as improved gross margin performance.

Other Income (expense)

Other income increased 104% from the prior year due to increased interest income from higher levels of short-term investments during the course of the year.

Provision for Income Taxes

The Company's effective tax rate (ETR) is calculated based upon current assumptions relating to the year's operating results and various tax related items. The ETR for the fiscal year ended May 31, 2024 is 18%, compared to the ETR for the prior year of 16%.

A reconciliation of provision for income taxes at the statutory rate to income tax provision at the Company's effective rate is as follows:

	2024	2023
Computed tax provision at the expected statutory rate	`$2,293,000`	`$1,575,000`
Tax effect of permanent differences:
Research tax credits	`(408,000)`	`(284,000)`
Foreign-derived intangible income deduction	`(142,000)`	`(67,000)`
Stock option costs	`49,000`	`-`
Other permanent differences	`3,000`	`1,000`
Other	`127,000`	`(7,000)`
	`$1,922,000`	`$1,218,000`

The foreign-derived intangible income deduction is a tax deduction provided to corporations that sell goods or services to foreign customers. It became available through Public Law 115-97, known as the Tax Cuts and Jobs Act.

Liquidity and Capital Resources, Line of Credit and Long-Term Debt

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

Capital expenditures for the year ended May 31, 2024 were $1,149,000 compared to $3,359,000 in the prior year. The Company also acquired Pumpkin™ Mounts intellectual property during the year ended May 31, 2024 for $300,000. Current year capital expenditures included new manufacturing machinery, testing equipment, upgrades to technology equipment and assembly / test facility improvements. The Company has commitments to make capital expenditures of approximately $1,360,000 as of May 31, 2024. These capital expenditures will be primarily for new manufacturing and testing equipment.

On January 4, 2024, the Company entered into a redemption agreement to purchase 459,015 of the Company’s shares of the capital stock of the Company, which represented approximately 13% of all of the issued and outstanding shares of capital stock of the Company as of January 8, 2024 (the “Closing Date”), from the Ira Sochet Trust and the Ira Sochet Roth IRA. Each of the foregoing counterparties are non-affiliates of the Company. The agreed purchase price was $19.92 per share, which constituted 87.6% of the average price ($22.74) at which shares of the Company's common stock traded on the Closing Date.

The Company has a $10,000,000 demand line of credit with M&T Bank, with interest payable at the Company's option of 30, 60 or 90 day SOFR rate plus 2.365%. There is no outstanding balance at May 31, 2024. The line is secured by a negative pledge of the Company's real and personal property and is subject to renewal annually. The bank is not committed to make loans under this line of credit and no commitment fee is charged.

Management believes that the Company's cash on hand, cash flows from operations, and borrowing capacity under the bank line of credit will be sufficient to fund ongoing operations and capital improvements for the next twelve months.

Inventory and Maintenance Inventory

	May 31, 2024		May 31, 2023		Increase /(Decrease)
Raw materials	`$887,000`		`$674,000`		`$213,000`	32%
Work-in-process	`6,412,000`		`5,005,000`		`1,407,000`	28%
Finished goods	`213,000`		`262,000`		`(49,000)`	-19%
Inventory	`7,512,000`	83%	`5,941,000`	86%	`1,571,000`	26%
Maintenance and other inventory	`1,580,000`	17%	`1,003,000`	14%	`577,000`	58%
Total	`$9,092,000`	100%	`$6,944,000`	100%	`$2,148,000`	31%

Inventory turnover	3.0		3.5

Inventory, at $7,512,000 as of May 31, 2024, is 26 percent higher than at the prior year-end. Of this, approximately 85% is work in process, 3% is finished goods, and 12% is raw materials. All of the current inventory is expected to be consumed or sold within twelve months. The level of inventory will fluctuate from time to time due to the stage of completion of the non-project sales orders in progress at the time.

The Company disposed of approximately $791,000 and $322,000 of obsolete inventory during the years ended May 31, 2024 and 2023, respectively.

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

	May 31, 2024	May 31, 2023	Increase /(Decrease)
Accounts receivable	5,212,000	5,554,000	(342,000	)	-6%
CIEB	4,357,000	4,124,000	233,000		6%
Less: BIEC	5,601,000	1,992,000	3,609,000		181%
Net	$ 3,968,000	$ 7,686,000	$ (3,718,000	)	-48%

Number of an average day’s sales outstanding in accounts receivable (DSO)	39	47

The Company combines the totals of accounts receivable, the asset CIEB, and the 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 $5,212,000 as of May 31, 2024 includes no retainage by customers on long-term construction projects. The number of an average day's sales outstanding in accounts receivable (DSO) was 39 days at May 31, 2024 and 47 days at May 31, 2023. The Company expects to collect the net accounts receivable balance during the next twelve months.

The status of the projects in-progress at the end of the current and prior fiscal years have changed in the factors affecting the year-end balances in the asset CIEB, and the liability BIEC:

	2024	2023
Number of projects in progress at year-end	19	22
Aggregate percent complete at year-end	53%	33%
Average total value of projects in progress at year-end	$2,089,000	$1,285,000
Percentage of total value invoiced to customer	56%	29%

There are three less projects in-process at the end of the current fiscal year as compared with the prior year end and the average value of those projects has increased by 63% between those two dates.

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 $4,357,000 balance in this account at May 31, 2024 is a 6% increase from the prior year-end. This increase reflects the higher aggregate level of the percentage of completion of these Projects as of the current year end as compared with the Projects in process at the prior year end. Generally, if progress billings are permitted under the terms of a project sales agreement, then the more complete the project is, the more progress billings will be permitted. The Company expects to bill the entire amount during the next twelve months. 58% of the CIEB balance as of the end of the last fiscal quarter, February 29, 2024, was billed to those customers in the current fiscal quarter ended May 31, 2024. The remainder will be billed as the projects progress, in accordance with the terms specified in the various contracts.

The year-end balances in the CIEB account are comprised of the following components:

	May 31, 2024	May 31, 2023
Costs	$ 9,644,000	$ 3,006,000
Estimated earnings	9,782,000	2,648,000
Less: Billings to customers	15,069,000	1,530,000
CIEB	$ 4,357,000	$ 4,124,000
Number of projects in progress	14	12

As noted above, BIEC represents billings to customers in excess of revenues recognized. The $5,601,000 balance in this account at May 31, 2024 is in comparison to a $1,992,000 balance at the end of the prior year. The balance in this account fluctuates in the same manner and for the same reasons as the 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 year-end balances in this account are comprised of the following components:

	May 31, 2024	May 31, 2023
Billings to customers	`$7,211,000`	`$6,538,000`
Less: Costs	`933,000`	`2,343,000`
Less: Estimated earnings	`677,000`	`2,203,000`
BIEC	`$5,601,000`	`$1,992,000`
Number of projects in progress	`5`	`10`

Accounts payable, at $1,439,000 as of May 31, 2024, is 16% less than the prior year-end. This decrease is normal fluctuation of this account and is not considered to be unusual. The Company expects the current accounts payable amount to be paid during the next twelve months.

Accrued expenses of $4,664,000 increased 14% from the prior year level of $4,078,000. This change is due to increases in accrued incentive compensation resulting from increased earnings.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 8. Financial Statements and Supplementary Data.

The financial statements and supplementary data required pursuant to this Item 8 are included in this Form 10-K commencing on page F-1 and are incorporated into this Item 8 by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

The Company's chief executive officer (its principal executive officer) and chief financial officer (its principal financial officer) have evaluated the Company's disclosure controls and procedures as of May 31, 2024 and have concluded that, as of the evaluation date, the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and that information required to be disclosed in the reports the Company files or submits 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)Management's report on internal control over financial reporting.

The Company's management, with the participation of the Company's chief executive officer and chief financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's management has assessed the effectiveness of the Company's internal control over financial reporting as of May 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -- Integrated Framework, updated in 2013. Based on this assessment, management has concluded that, as of May 31, 2024, the Company's internal control over financial reporting is effective.

(c)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 May 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.

Item 9B. Other Information.

Trading Plans

During the three months ended May 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

PART III

The information required by Items 10, 11, 12, 13 and 14 of this part will be presented in the Company's Proxy Statement to be issued in connection with the Annual Meeting of Shareholders to be held on October 25, 2024, which information is hereby incorporated by reference into this Form 10-K. The proxy materials, including the Proxy Statement and form of proxy, will be filed within 120 days after the Company's fiscal year end.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

DOCUMENTS FILED AS PART OF THIS REPORT:
	Index to Financial Statements:
		(i)		Report of Independent Registered Public Accounting Firm
		(ii)		Consolidated Balance Sheets as of May 31, 2024 and 2023
		(iii)		Consolidated Statements of Income for the years ended May 31, 2024 and 2023
		(iv)		Consolidated Statements of Stockholders' Equity for the years ended May 31, 2024 and 2023
		(v)		Consolidated Statements of Cash Flows for the years ended May 31, 2024 and 2023
		(vi)		Notes to Consolidated Financial Statements - May 31, 2024 and 2023
EXHIBITS:
	3		Articles of incorporation and by-laws
			(i)		Restated Certificate of Incorporation, as amended.*
			(ii)		By-laws, incorporated by reference to Exhibit 3(v) to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2022, filed January 6, 2023.
	4		Instruments defining rights of security holders, including indentures
			(i) (ii)		Rights Agreement by and between the Registrant and Computershare Trust Company, N.A., incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018. Letter to Holders of the Registrant’s Common Stock, incorporated by reference to Exhibit 20 to the Registrant’s Registration Statement on Form 8-A, filed October 5, 2018.
			(iii)		Description of Registrant’s Securities, incorporated by reference to Exhibit 4(vi) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2019, filed August 2, 2019.

10	Material Contracts
	(i)	2012 Taylor Devices, Inc. Stock Option Plan, incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement for the 2012 annual meeting of shareholders, filed September 21, 2012.#
	(ii)	2015 Taylor Devices, Inc. Stock Option Plan, incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement for the 2015 annual meeting of shareholders, filed September 25, 2015.#
	(iii)	2018 Taylor Devices, Inc. Stock Option Plan, incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement for the 2018 annual meeting of shareholders, filed September 27, 2018.#

		(iv)	2022 Taylor Devices, Inc. Stock Option Plan, incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement for the 2022 annual meeting of shareholders, filed September 6, 2022.#
		(v)	The 2004 Taylor Devices, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8, File No. 333-114085, filed March 31, 2004.
		(vi)	Letter to 2004 Employee Stock Purchase Plan Participants, incorporated by reference to Exhibit 4.1 to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-8, File No. 333-114085, filed August 24, 2006.
		(vii)	Letter to Employees of the Registrant, incorporated by reference to Exhibit 4.2 to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-8, File No. 333-114085, filed August 24, 2006.
		(viii)	Form of Indemnification Agreement between the Registrant and its directors and executive officers, incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement for the 2007 annual meeting of shareholders, filed September 27, 2007.#
		(ix)	Management Bonus Policy, incorporated by reference to Exhibit 10(i) to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2011, filed April 14, 2011.#
		(x)	Line of Credit Agreement between the Registrant and M&T Bank, dated August 30, 2017.*
		(xi)	Amendment to Line of Credit Agreement, dated September 27, 2021.*
		(xii)	Employment Agreement dated as of June 14, 2018 between the Registrant and Alan R. Klembczyk, incorporated by reference to Exhibit 10(i) to the Registrant’s Current Report on Form 8-K, filed June 19, 2018.#
		(xiii) (xiv)	Employment Agreement dated as of August 9, 2021 between the Registrant and Timothy J. Sopko, incorporated by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K, filed August 13, 2021.# Employment Agreement dated as of September 11, 2023 between the Registrant and Paul M. Heary, incorporated by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K, filed September 11, 2023.#

21	Subsidiaries of the Registrant.*
	Tayco Realty Corporation is a New York corporation organized on September 8, 1977, owned by the Company.
23	Consent of Independent Registered Public Accounting Firm (appears on page 23 immediately preceding 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.

32	Officer Certifications**
	(i)	Section 1350 Certification of Chief Executive Officer.
	(ii)	Section 1350 Certification of Chief Financial Officer.
97	Policy Relating to Recovery of Erroneously Awarded Compensation.*
101	Inline XBRL Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
	101.SCH		Inline XBRL Taxonomy Extension Schema Document
	101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
	104		Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document and are contained within Exhibit 101

* Exhibit filed with this report.

**Exhibit furnished with this report.

# Management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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)

By:	/s/Timothy J. Sopko	Date:	August 15, 2024
	Timothy J. Sopko
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:

/s/Timothy J. Sopko

By:

/s/Paul Heary

Timothy J. Sopko

Chief Executive Officer and Director

(Principal Executive Officer)

August 15, 2024

Paul Heary

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

August 15, 2024

By:	/s/John Burgess	By:	/s/Robert M. Carey
	John Burgess, Director		Robert M. Carey, Director
	August 15, 2024		August 15, 2024

By:	/s/F. Eric Armenat	By:	/s/Alan R. Klembczyk
	F. Eric Armenat, Director		Alan R. Klembczyk, President and Director
	August 15, 2024		August 15, 2024

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors of

Taylor Devices, Inc.

Gentlemen:

We hereby consent to the incorporation by reference in this Annual Report on Form 10-K (Commission File Number 0-3498) of Taylor Devices, Inc. of our report dated August 15, 2024 and any reference thereto in the Annual Report to Shareholders for the fiscal year ended May 31, 2024.

We also consent to such incorporation by reference in Registration Statement Nos. 333-114085, 333-184809, 333-210660, 333-232121, and 333-268120 of Taylor Devices, Inc. on Form S-8 of our report dated August 15, 2024.

/s/Lumsden & McCormick, LLP

Lumsden & McCormick, LLP

PCOAB ID: 130

Buffalo, New York

August 15, 2024

TAYLOR DEVICES, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2024

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Taylor Devices, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Taylor Devices, Inc. and Subsidiary (the Company) as of May 31, 2024 and 2023, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial condition of the Company as of May 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Cost Estimates for Long-Term Contracts and Related Revenue Recognition

Description of the Matter

As more fully described in Note 1 to the consolidated financial statements, the Company recognizes revenue over time for long-term contracts as goods are produced. The Company uses costs incurred as the method to determine progress, and revenue is recognized based on costs incurred to date plus an estimate of margin at completion. The process of estimating margin at completion involves estimating the costs to complete production of goods and comparing those costs to the estimated final revenue amount. Long-term contracts are inherently uncertain in that revenue is fixed while the estimates of costs required to complete these contracts are subject to significant variability. Due to the technical performance requirements in many of these contracts, changes to cost estimates could occur, resulting in higher or lower margins when the contracts are completed.

Given the inherent uncertainty and significant judgments necessary to estimate future costs at completion, auditing these estimates involved a focused audit effort and a high degree of auditor judgment.

How We Addressed the Matter in Our Audit

Our auditing procedures related to the cost estimates for long-term contracts and related revenue recognition included the following, among others:

·We evaluated the appropriateness and consistency of management’s methods used to develop its estimates.

·We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key estimates.

·We selected a sample of executed contracts to understand the contract, perform an independent assessment of the appropriate timing of revenue recognition, and test the mathematical accuracy of revenue recognized based on costs incurred to date relative to total estimated costs at completion.

·We performed inquiries of the Company’s project managers and others directly involved with the contracts to evaluate project status and project challenges which may affect total estimated costs to complete. We also observed the project work site when key estimates related to tangible or physical progress of the project.

·We tested the accuracy and completeness of the data used to develop key estimates, including material, labor, overhead, and sub-contractor costs.

·We performed retrospective reviews of prior year long-term contracts, comparing actual performance to estimated performance and the related financial statement impact, when evaluating the thoroughness and precision of management’s estimation process in previous years.

Valuation of Inventory

Description of the Matter

As of May 31, 2024, the Company’s inventory balance was $7.5 million, net of a $59,000 allowance for obsolescence, its maintenance and other inventory balance was $1.6 million, net of an approximate $837,000 allowance for obsolescence. As discussed in Note 5, maintenance and other inventory represents certain items that are estimated to have a product life-cycle in excess of twelve months the Company is required to maintain for service of products sold and items that are generally subject to spontaneous ordering. The Company evaluates its inventory for obsolescence on an ongoing basis by considering historical usage as well as requirements for future orders.

Given the inherent uncertainty and significant judgments necessary to estimate potential inventory obsolescence, auditing management’s estimates involved a high degree of auditor judgment.

F-3

How We Addressed the Matter in Our Audit

Our auditing procedures related to valuation of inventory included the following, among others:

·We evaluated the appropriateness and consistency of management’s methods used to develop its estimates.

·We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key estimates.

·We inquired of management relative to write-offs of inventory during the year.

·We tested the completeness and accuracy of management’s schedule of inventory.

·We developed an independent expectation of the obsolescence reserve based on our knowledge of the Company’s inventory, including analysis of slow-moving items and historical usage and compared it to actual.

·We examined management’s lower of cost or net realizable value analysis and performed procedures to test its completeness and accuracy.

·We selected a sample of material purchases made during the year to ensure they were included in inventory at the proper value.

·During our physical inventory observation, we toured the Company’s warehouses and examined inventory on hand for any indications of obsolescence.

/s/Lumsden & McCormick, LLP

Lumsden & McCormick, LLP

PCOAB ID: 130

We have served as the Company’s auditor since 1998.

Buffalo, New York

August 15, 2024

F-4

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

May 31,			2024	2023

Assets
Current assets:
	Cash and cash equivalents		`$2,831,471`	`$3,575,219`
	Short-term investments		`28,131,279`	`24,514,757`
	Accounts and other receivables, net (Note 2)		`5,212,408`	`5,553,504`
	Inventory (Note 3)		`7,512,052`	`5,941,304`
	Prepaid expenses		`725,506`	`439,607`
	Prepaid income taxes		`-`	`228,947`
	Costs and estimated earnings in excess of billings (Note 4)		`4,356,565`	`4,124,182`
		Total current assets	`48,769,281`	`44,377,520`

Maintenance and other inventory, net (Note 5)			`1,579,829`	`1,003,140`
Property and equipment, net (Note 6)			`11,180,933`	`11,721,784`
Patents, net			`292,593`	`-`
Cash value of life insurance, net			`214,824`	`210,120`
Other assets			`27,343`	`-`
Deferred income taxes (Note 10)			`1,012,615`	`568,615`
			`$63,077,418`	`$57,881,179`
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		`$1,438,847`	`$1,717,657`
	Accrued expenses (Note 8)		`4,664,463`	`4,078,322`
	Billings in excess of costs and estimated earnings (Note 4)		`5,601,274`	`1,992,470`
	Accrued income taxes		`126,148`	`-`
		Total current liabilities	`11,830,732`	`7,788,449`


Stockholders' Equity:
	Common stock, $0.025 par value, authorized 8,000,000 shares, issued 4,165,315 and 4,088,193 shares		`104,056`	`102,127`
	Paid-in capital		`12,959,531`	`10,947,089`
	Retained earnings		`51,127,018`	`42,128,256`
			`64,190,605`	`53,177,472`
	Treasury stock – 1,046,742 and 567,751 shares at cost		`(12,943,919)`	`(3,084,742)`
		Total stockholders' equity	`51,246,686`	`50,092,730`
			`$63,077,418`	`$57,881,179`

See notes to consolidated financial statements.

F-5

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

For the years ended May 31,	2024	2023


Sales, net (Note 9)	`$44,582,807`	`$40,199,354`

Cost of goods sold	`23,743,554`	`23,250,039`

Gross profit	`20,839,253`	`16,949,315`
Research and development costs	`388,476`	`1,096,807`
Selling, general and administrative expenses	`10,971,358`	`9,043,442`

Operating income	`9,479,419`	`6,809,066`

Other income (expense)
Interest, net	`1,426,584`	`698,864`
Miscellaneous	`14,759`	`(2,572)`
Total other income, net	`1,441,343`	`696,292`

Income before provision for income taxes	`10,920,762`	`7,505,358`

Provision for income taxes (Note 10)	`1,922,000`	`1,218,000`

Net income	`$8,998,762`	`$6,287,358`

Basic earnings per common share (Note 11)	`$2.68`	`$1.79`
Diluted earnings per common share (Note 11)	`$2.58`	`$1.77`

See notes to consolidated financial statements.

F-6

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Equity

For the years ended May 31,		2024	2023

Common Stock
	Beginning of period	`$102,127`	`$101,342`
	Issuance of shares for employee stock purchase plan	`10`	`22`
	Issuance of shares for employee stock option plan	`1,919`	`763`
	End of period	`104,056`	`102,127`

Paid-in Capital
	Beginning of period	`10,947,089`	`10,227,916`
	Issuance of shares for employee stock purchase plan	`9,904`	`10,854`
	Issuance of shares for employee stock option plan	`955,286`	`291,066`
	Stock options issued for services	`1,047,252`	`417,253`
	End of period	`12,959,531`	`10,947,089`

Retained Earnings
	Beginning of period	`42,128,256`	`35,840,898`
	Net income	`8,998,762`	`6,287,358`
	End of period	`51,127,018`	`42,128,256`

Treasury Stock
	Beginning of period	`(3,084,742)`	`(2,915,002)`
	Issuance of shares for employee stock option plan	`(715,599)`	`(169,740)`
	Repurchase of shares	`(9,143,578)`	`-`
	End of period	`(12,943,919)`	`(3,084,742)`

	Total stockholders' equity	`$51,246,686`	`$50,092,730`

See notes to consolidated financial statements

F-7

TAYLOR DEVICES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the years ended May 31,					2024	2023

Operating activities:
	Net income				`$8,998,762`	`$6,287,358`
	Adjustments to reconcile net income to net cash flows from operating activities:
		Depreciation			`1,690,239`	`1,472,455`
		Amortization			`7,407`	`-`
		Stock options issued for services			`1,047,252`	`417,253`
		Bad debt expense			`-`	`23,360`
		Loss on disposal of property and equipment			`-`	`20,015`
		Provision for inventory obsolescence			`385,744`	`295,014`
		Deferred income taxes			`(444,000)`	`(494,000)`
		Changes in other current assets and liabilities:
			Accounts and other receivables		`341,096`	`(1,110,178)`
			Inventory		`(2,533,181)`	`(277,214)`
			Prepaid expenses		`(285,899)`	`28,882`
			Prepaid income taxes		`228,947`	`7,000`
			Costs and estimated earnings in excess of billings		`(232,383)`	`(787,708)`
			Accounts payable		`(278,810)`	`290,827`
			Accrued expenses		`586,141`	`664,008`
			Billings in excess of costs and estimated earnings		`3,608,804`	`869,707`
			Accrued income taxes		`126,148`	`-`
			Other assets		`(27,343)`	`-`
				Net operating activities	`13,218,924`	`7,706,779`

Investing activities:
	Acquisition of property and equipment				`(1,149,388)`	`(3,359,495)`
	Patent expenditures				`(300,000)`	`-`
	Increase in short-term investments				`(3,616,522)`	`(23,417,307)`
	Increase in cash value of life insurance				`(4,704)`	`(4,761)`
				Net investing activities	`(5,070,614)`	`(26,781,563)`

Financing activities:
	Proceeds from issuance of common stock				`967,119`	`302,705`
	Acquisition of treasury stock				`(9,859,177)`	`(169,740)`
	Net financing activities				`(8,892,058)`	`132,965`

				Net change in cash and cash equivalents	`(743,748)`	`(18,941,819)`

Cash and cash equivalents - beginning					`3,575,219`	`22,517,038`
				Cash and cash equivalents - ending	`$2,831,471`	`$3,575,219`

See notes to consolidated financial statements.

F-8

TAYLOR DEVICES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies:

Nature of Operations:

Taylor Devices, Inc. (the Company) manufactures and sells a single group of very similar products that have many different applications for customers. These similar products are included in one of nine categories; namely, Seismic Dampers, Fluidicshoks®, Crane and Industrial Buffers, Self-Adjusting Shock Absorbers, Liquid Die Springs, Vibration Dampers, Machined Springs, Custom Shock and Vibration Isolators, and Custom Actuators for use in various types of machinery, equipment and structures, primarily to customers which are located throughout the United States and several foreign countries. The products are manufactured at the Company's sole operating facility in the United States where all of the Company's long-lived assets reside. Management does not track or otherwise account for sales broken down by these categories.

86% of the Company's 2024 revenue was generated from sales to customers in the United States and 4% was from sales to customers in Asia. Remaining sales were to customers in other countries in North America, Europe, Australia, and South America.

81% of the Company's 2023 revenue was generated from sales to customers in the United States and 11% was from sales to customers in Asia. Remaining sales were to customers in other countries in North America, Europe, Australia, and South America.

Principles of Consolidation:

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Tayco Realty Corporation (Realty). All inter-company transactions and balances have been eliminated in consolidation.

Subsequent Events:

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

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents:

The Company includes all highly liquid investments in money market funds in cash and cash equivalents on the accompanying balance sheets.

Cash and cash equivalents in financial institutions may exceed insured limits at various times during the year and subject the Company to concentrations of credit risk.

F-9

Short-Term Investments:

At times, the Company invests excess funds in liquid interest earning instruments. Short-term investments at May 31, 2024 and May 31, 2023 include money market funds, US treasury securities and corporate bonds stated at fair value, which approximates cost. The short-term investments (22) mature on various dates during the period June 2024 to December 2026. Unrealized holding gains and losses would be presented as a separate component of accumulated other comprehensive income, net of deferred income taxes. Realized gains and losses on the sale of investments are determined using the specific identification method.

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

Accounts and Other Receivables:

Accounts and other receivables are stated at an amount management expects to collect from outstanding balances. Management provides for probable uncollectible accounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to the receivable.

Inventory:

Inventory is stated at the lower of average cost or net realizable value. Average cost approximates first-in, first-out cost.

Property and Equipment:

Property and equipment is stated at cost net of accumulated depreciation. Depreciation is provided primarily using the straight-line method for financial reporting purposes and accelerated methods for income tax reporting purposes. Maintenance and repairs are charged to operations as incurred; significant improvements are capitalized.

Cash Value of Life Insurance:

Cash value of life insurance is stated at the surrender value of the contracts.

Revenue Recognition:

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

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

F-10

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

If applicable, the Company recognizes an asset for the incremental material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. As of May 31, 2024 and 2023, the Company does not have material incremental costs on any open contracts with an original expected duration of greater than one year, and therefore such costs are expensed as incurred. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer.

Shipping and Handling Costs:

Shipping and handling costs on incoming inventory items are classified as a component of cost of goods sold, while shipping and handling costs on outgoing shipments to customers are classified as a component of selling, general and administrative expenses. The amounts of these costs classified as a component of selling, general and administrative expenses were $190,939 and $366,763 for the years ended May 31, 2024 and 2023. Shipping and handling activities that occur after the customer has obtained control of the product are considered fulfillment activities, not performance obligations.

Income Taxes:

The Company's practice is to recognize interest related to income tax matters in interest income / expense and to recognize penalties in selling, general and administrative expenses. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at May 31, 2024 and 2023. The Company recorded no interest expense or penalties in its consolidated statements of income during the years ended May 31, 2024 and 2023.

The Company believes it is no longer subject to examination by federal and state taxing authorities for years prior to May 31, 2021.

Sales Taxes:

Certain jurisdictions impose a sales tax on Company sales to nonexempt customers. The Company collects these taxes from customers and remits the entire amount as required by the applicable law. The Company excludes from revenues and expenses the tax collected and remitted.

Stock-Based Compensation:

The Company measures compensation cost arising from the grant of share-based payments to employees at fair value and recognizes such cost in income over the period during which the employee is required to provide service in exchange for the award. The stock-based compensation expense for the years ended May 31, 2024 and 2023 was $1,047,252 and $417,253.

F-11

New Accounting Standards:

Any recently issued Accounting Standards Codification (ASC) guidance has either been implemented or is not significant to the Company.

Reclassifications:

The 2023 financial statements have been reclassified to conform with the presentation adopted for 2024.

2. Accounts and Other Receivables:

	2024	2023
Customers	`$5,241,874`	`$5,558,990`
Customers – retention	`-`	`23,980`
	`5,241,874`	`5,582,970`
Less allowance for doubtful accounts	`29,466`	`29,466`
	`$5,212,408`	`$5,553,504`

Retention receivable from customers represents amounts invoiced to customers where payments have been partially withheld pending completion of the project. All amounts are expected to be collected within the next fiscal year.

3. Inventory:

	2024	2023
Raw materials	`$886,947`	`$673,453`
Work-in-process	`6,412,497`	`5,005,416`
Finished goods	`271,608`	`330,435`
	`7,571,052`	`6,009,304`
Less allowance for obsolescence	`59,000`	`68,000`
	`$7,512,052`	`$5,941,304`

4. Costs and Estimated Earnings on Uncompleted Contracts:

	2024		2023
Costs incurred on uncompleted contracts	$ 10,576,401		$ 5,349,111
Estimated earnings	10,459,240		4,850,889
	21,035,641		10,200,000
Less billings to date	22,280,350		8,068,288
	$ (1,244,709	)	$ 2,131,712

Amounts are included in the accompanying balance sheets under the following captions:

	2024		2023
Costs and estimated earnings in excess of billings	$ 4,356,565		$ 4,124,182
Billings in excess of costs and estimated earnings	5,601,274		1,992,470
	$ (1,244,709	)	$ 2,131,712

F-12

The following summarizes the status of Projects in progress as of May 31, 2024 and 2023:

	2024	2023
Number of Projects in progress	19	22
Aggregate percent complete	53%	33%
Aggregate amount remaining	$17,405,603	$18,061,484
Percentage of total value invoiced to customer	56%	29%

The Company expects to recognize the majority of remaining revenue on all open projects during the May 31, 2025 fiscal year.

Revenue recognized during the years ended May 31, 2024 and 2023 for amounts included in billings in excess of costs and estimated earnings as of the beginning of the year amounted to $1,992,000, and $1,123,000.

5. Maintenance and Other Inventory:

	2024	2023
Maintenance and other inventory	$ 2,416,748	$ 2,236,106
Less allowance for obsolescence	836,919	1,232,966
	$ 1,579,829	$ 1,003,140

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 technical 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. Therefore, management of the Company has recorded an allowance for potential inventory obsolescence. $791,000 and $322,000 of inventory was disposed of during the years ended May 31, 2024 and 2023. The provision for potential inventory obsolescence was $386,000 and $295,000 for the years ended May 31, 2024 and 2023. The Company continues to rework slow-moving inventory, where applicable, to convert it to product to be used on customer orders.

6. Property and Equipment:

	2024	2023
Land	`$195,220`	`$195,220`
Buildings and improvements	`10,054,459`	`10,033,399`
Machinery and equipment	`15,956,076`	`15,278,928`
Office furniture and equipment	`3,113,921`	`2,840,980`
Autos and trucks	`24,818`	`24,818`
Land improvements	`662,168`	`483,929`
	`30,006,662`	`28,857,274`
Less accumulated depreciation	`18,825,729`	`17,135,490`
	`$11,180,933`	`$11,721,784`

Depreciation expense was $1,690,239 and $1,472,455 for the years ended May 31, 2024 and 2023.

The Company has commitments to make capital expenditures of approximately $1,360,000 as of May 31, 2024.

F-13

7. Short-Term Borrowings:

The Company has available a $10,000,000 bank demand line of credit from a bank, with interest payable at the Company's option of 30, 60 or 90 day SOFR rate plus 2.365%. The line is secured by a negative pledge of the Company's real and personal property and is subject to renewal annually.

There is no amount outstanding under the line of credit at May 31, 2024 or 2023.

The Company uses a cash management facility under which the bank draws against the available line of credit to cover checks presented for payment on a daily basis. Outstanding checks under this arrangement totaled $372,347 and $13,873 as of May 31, 2024 and 2023. These amounts are included in accounts payable.

8. Accrued Expenses:

	2024	2023
Customer deposits	`$285,689`	`$367,902`
Personnel costs	`3,763,777`	`3,023,501`
Other	`614,997`	`686,919`
	`$4,664,463`	`$4,078,322`

9. Sales:

The Company manufactures and sells a single group of very similar products that have many different applications for customers. These similar products are included in one of nine categories; namely, Seismic Dampers, Fluidicshoks®, Crane and Industrial Buffers, Self-Adjusting Shock Absorbers, Liquid Die Springs, Vibration Dampers, Machined Springs, Custom Shock and Vibration Isolators, and Custom Actuators. Management does not track or otherwise account for sales broken down by these categories. Sales of the Company's products are made to three general groups of customers: industrial, structural and aerospace / defense. A breakdown of sales to these three general groups of customers is as follows:

	2024	2023
Structural	$ 14,406,863	$ 20,642,326
Aerospace / Defense	26,675,321	15,568,695
Industrial	3,500,623	3,988,333
	$ 44,582,807	$ 40,199,354

Sales to a single customer approximated 21% of net sales for 2024.

10. Income Taxes:

	2024			2023
Current tax provision:
Federal		$ 2,365,000		$ 1,710,000
State		1,000		2,000
		2,366,000		1,712,000
Deferred tax provision (benefit):
Federal		(444,000	)	(494,000	)
State		-		-
		(444,000	)	(494,000	)
		$ 1,922,000		$ 1,218,000

F-14

A reconciliation of provision for income taxes at the statutory rate to income tax provision at the Company's effective rate is as follows:

	2024	2023
Computed tax provision at the expected statutory rate	`$2,293,400`	`$1,576,100`
State income tax - net of Federal tax benefit	`-`	`(1,600)`
Tax effect of permanent differences:
Research tax credits	`(407,675)`	`(283,600)`
Foreign-derived intangible income deduction	`(142,100)`	`(66,900)`
Stock option costs	`48,500`	`-`
Other permanent differences	`2,800`	`900`
Other	`127,075`	`(6,900)`
	`$1,922,000`	`$1,218,000`
Effective income tax rate	`17.6%`	`16.2%`

Significant components of the Company's deferred tax assets and liabilities consist of the following:

	2024	2023
Deferred tax assets:
Allowance for doubtful receivables	`$6,200`	`$6,200`
Tax inventory adjustment	`57,300`	`84,300`
Allowance for obsolete inventory	`188,100`	`273,200`
Accrued vacation	`163,000`	`136,600`
Accrued commissions	`-`	`9,800`
Warranty reserve	`100,700`	`62,700`
R&D tax credit	`-`	`-`
R&D capitalization	`1,479,800`	`678,500`
Stock options issued for services	`181,200`	`331,300`
	`2,176,300`	`1,582,600`
Deferred tax liabilities:
Excess tax depreciation	`(1,163,685)`	`(1,013,985)`
Net deferred tax assets	`$1,012,615`	`$568,615`

Realization of the deferred tax assets is dependent on generating sufficient taxable income at the time temporary differences become deductible. The Company provides a valuation allowance to the extent that deferred tax assets may not be realized. A valuation allowance has not been recorded against the deferred tax assets since management believes it is more likely than not that the deferred tax assets are recoverable. The Company considers future taxable income and potential tax planning strategies in assessing the need for a potential valuation allowance. The amount of the deferred tax assets considered realizable however, could be reduced in the near term if estimates of future taxable income are reduced. The Company will need to generate approximately $10.4 million in taxable income in future years in order to realize the deferred tax assets recorded as of May 31, 2024 of $2,176,300.

The Company and its subsidiary file consolidated Federal and State income tax returns. As of May 31, 2024, the Company had State investment tax credit carryforwards of approximately $424,000 expiring through May 2029.

F-15

11. Earnings Per Common Share:

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted-average common shares outstanding for the period. Diluted earnings per common share reflects the weighted-average common shares outstanding and dilutive potential common shares, such as stock options.

A reconciliation of weighted-average common shares outstanding to weighted-average common shares outstanding assuming dilution is as follows:

	2024	2023
Average common shares outstanding	3,353,077	3,506,474
Common shares issuable under stock option plans	135,711	45,020
Average common shares outstanding assuming dilution	3,488,788	3,551,494

12. Employee Stock Purchase Plan:

In March 2004, the Company reserved 295,000 shares of common stock for issuance pursuant to a non-qualified employee stock purchase plan. Participation in the employee stock purchase plan is voluntary for all eligible employees of the Company. Purchase of common shares can be made by employee contributions through payroll deductions and without brokers’ fees. At the end of each calendar quarter, the employee contributions will be applied to the purchase of common shares using a share value equal to the mean between the closing bid and ask prices of the stock on that date. These shares are distributed to the employees at the end of each calendar quarter or upon withdrawal from the plan. During the years ended May 31, 2024 and 2023, 372 ($21.70 to $48.89 price per share) and 922 ($8.65 to $19.96 price per share) common shares, respectively, were issued to employees. As of May 31, 2024, 215,993 shares were reserved for further issue.

13. Stock Option Plans:

In 2022, the Company adopted a stock option plan which permits the Company to grant both incentive stock options and non-qualified stock options. The incentive stock options qualify for preferential treatment under the Internal Revenue Code. Under this plan, 260,000 shares of common stock have been reserved for grant to key employees and directors of the Company and 144,000 shares have been granted as of May 31, 2024. Under the plan, the option price may not be less than the fair market value of the stock at the time the options are granted. Options vest immediately and expire ten years from the date of grant.

Using the Black-Scholes option pricing model, the weighted average estimated fair value of each option granted under the plan was $12.32 during 2024 and $4.91 during 2023. The pricing model uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company's stock. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life of options granted is derived from previous history of stock exercises from the grant date and represents the period of time that options granted are expected to be outstanding. The Company uses historical data to estimate option exercise and employee termination assumptions under the valuation model. The Company has never paid dividends on its common stock and does not anticipate doing so in the foreseeable future.

	2024	2023
Risk-free interest rate	4.00%	2.45%
Expected life in years	4.3	4.2
Expected volatility	37%	33%
Expected dividend yield	0%	0%

F-16

The following is a summary of stock option activity:

	Shares	Weighted Average Exercise Price	Intrinsic Value
Outstanding - May 31, 2022	283,000	`$11.43`	`$28,248`
Options granted	85,000	`$15.75`
Less: options exercised	30,500	`$9.57`
Less: options expired	4,500	`-`
Outstanding - May 31, 2023	333,000	`$12.70`	`$2,016,961`
Options granted	85,000	`$34.04`
Less: options exercised	76,750	`$12.54`
Less: options expired	750	`-`
Outstanding - May 31, 2024	340,500	`$18.07`	`$11,185,815`

We calculated intrinsic value for those options that had an exercise price lower than the market price of our common shares as of the balance sheet dates. The aggregate intrinsic value of outstanding options as of the end of each fiscal year is calculated as the difference between the exercise price of the underlying options and the market price of our common shares for the options that were in-the-money at that date (340,500 at May 31, 2024 and 279,500 at May 31, 2023). The Company's closing stock price was $50.92 and $18.55 as of May 31, 2024 and 2023. As of May 31, 2024, there are 116,000 options available for future grants under the 2022 stock option plan. $957,205 was received from the exercise of options during the fiscal year ended May 31, 2024. $291,829 was received from the exercise of options during the fiscal year ended May 31, 2023.

The following table summarizes information about stock options outstanding at May 31, 2024:

Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Years of Contractual Life	Weighted Average Exercise Price
$ 9.01-$10.00	55,000	7.0	$ 9.67
$10.01-$11.00	15,250	4.7	$10.21
$11.01-$12.00	106,250	6.5	$11.72
$12.01-$13.00	19,000	1.5	$12.36
$13.01-$14.00	10,000	2.9	$13.80
$16.01-$17.00	10,000	1.9	$16.40
$19.01-$20.00	47,500	8.3	$19.89
$20.01-$21.00	34,500	9.4	$20.78
$46.01-$47.00	43,000	9.9	$46.99
$ 9.01-$47.00	340,500	6.9	$18.07

The following table summarizes information about stock options outstanding at May 31, 2023:

Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Years of Contractual Life	Weighted Average Exercise Price
$ 8.01-$ 9.00	13,000	0.9	$ 8.87
$ 9.01-$10.00	55,000	8.0	$ 9.67
$10.01-$11.00	23,500	6.2	$10.16
$11.01-$12.00	140,000	7.5	$11.66
$12.01-$13.00	28,000	2.8	$12.39
$13.01-$14.00	10,000	3.9	$13.80
$16.01-$17.00	10,000	2.9	$16.40
$19.01-$20.00	53,500	8.6	$19.82
$ 8.01-$20.00	333,000	6.8	$12.70

F-17

14. Retirement Plan:

The Company maintains a retirement plan for essentially all employees pursuant to Section 401(k) of the Internal Revenue Code. The Company matches a percentage of employee voluntary salary deferrals subject to limitations. The Company may also make discretionary contributions as determined annually by the Company's Board of Directors. The amount expensed under the plan was $431,720 and $371,881 for the years ended May 31, 2024 and 2023.

15. Fair Value of Financial Instruments:

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments.

The fair values of short-term investments were determined as described in Note 1.

16. Cash Flows Information:

	2024	2023

Interest paid	None	None

Income taxes paid	$2,010,000	$1,705,000

17. Legal Proceedings:

The Company has been named as a third-party defendant in an action captioned Board of Managers of the 432 Park Condominium, et al. v. 56th and Park (NY) Owner LLC, et al. (the “Action”).

The Action was filed on or about September 23, 2021. In the Action, the Board of Managers of 432 Park Condominium (the “Owner”), a condominium association for a high-rise condominium building (the “Building”) located at 432 Park Avenue in New York, N.Y., asserts a claim against the condominium sponsor, 56th and Park (NY) Owner LLC (the “Sponsor”) for damages arising from construction and design defects to the residential and commercial units at the Building.

The Sponsor subsequently filed a third-party complaint against LendLease Construction (US) LMB (“LendLease”) and other parties involved in the Building’s design. As to LendLease, the third-party complaint alleges breach of a construction management contract between LendLease and the Sponsor and negligence arising from purported failure to perform under the contract, and seeks indemnification against any damages asserted against the Sponsor by the Owner.

LendLease subsequently initiated a third-party complaint seeking indemnification from entities with whom LendLease had contracted for the supply of materials and services in connection with construction of the Building. The third-party complaint also names the Company as a third-party defendant based upon a contract between the Company and LendLease to supply 16 Viscous Damping Devices that were incorporated into a Tuned Mass Damper system designed by a third party to limit accelerations of the Building during wind events. The Company has timely filed and served an answer denying the allegations in LendLease’s third party complaint.

The Action, and all of the related third-party actions, are pending in the Commercial Division of the Supreme Court, New York County.

On June 17, 2024, the Court entered a scheduling order directing that the parties complete discovery by July 31, 2025 and file dispositive motions by October 17, 2025.

In view of the limited discovery to date, it is not possible to determine the likelihood of an unfavorable outcome or to quantify a potential loss.

F-18

RESTATED CERTIFICATE OF INCORPORATION

TAYLOR DEVICES, INC.

Under §807 of the Business Corporation Law

The undersigned, Paul S. Taylor and Edward A. Ebert, being the President and Secretary of TAYLOR DEVICES, INC., hereby certify:

1.The name of the Corporation is TAYLOR DEVICES, INC.

2.The Certificate of Incorporation was filed by the New York Department of State on July 22, 1955.

3.The Certificate of Incorporation as now in full force and effect is hereby amended to effect the following amendments as authorized by §801 of the Business Corporation Law:

(a)To increase the number of common shares to 8,000,000 shares of the par value of $.025 each;

(b) To create a new class of 2,000,000 preferred shares in series of the par value of $.05 each;

(ii)To fix the designation of all classes of stock and permit the Board of Directors of the Company to establish the relative rights, privileges and limitations of the preferred shares in series;

(c)To eliminate present Articles “SIXTH”, “SEVENTH”, “EIGHTH”, “NINTH”, and “TENTH” in the Certificate of Incorporation relating to incorporators, original subscribers for shares, first directors, and provisions no longer required to be stated under the Business Corporation Law.

B.In order to effect the preceding amendments, paragraph “THIRD” of the Certificate of Incorporation is to read as follows:

“THIRD: (a) The aggregate number of shares which the Corporation shall have authority to issue is 10,000,000 shares consisting of 8,000,000 common shares of the par value of $.025 each and 2,000,000 preferred shares of the par value of $.05 each, which shares of preferred stock shall be issuable in one or more series.

(b)The preferred shares may be issued in series and each series shall be so designated as to distinguish the shares thereof from the shares of all other series. All preferred shares shall be identical except as to the relative rights, preferences and limitations which are to be fixed as follows:

I. Subject to any limitation prescribed by law, the number of shares in each series of preferred shares and the designation and relative rights, preferences and limitations of each series shall be fixed by the Board of Directors of the Corporation, provided that before any shares of a series of preferred shares are issued, a certificate of amendment to the certificate of incorporation shall be filed as required by the Business Corporation Law. The Board of Directors is specifically empowered to determine with respect to each series of preferred shares:

A. The dividend rights of such shares, including whether the dividends to which such shares are entitled shall be cumulative or non-cumulative and whether dividends on such shares shall have any preference over dividends payable on any other class or classes of stock;

B. Whether such shares shall be convertible into shares of common stock or, to the extent permitted by law, into shares of another series of preferred shares and, if so, upon what terms and conditions;

C. Whether such shares shall have voting rights in addition to those provided by law and, if so, to what extent and upon what terms and conditions;

D. Whether such shares shall be subject to redemption by the Corporation and, if so upon what terms and conditions;

E. Whether, if such shares are to be redeemable, a sinking fund or other fund shall be established for the purpose of redemption thereof and, if so, upon what terms and conditions; and

F. The rights of said shares in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, including whether such shares shall have a preferential claim against the assets of the Corporation and, if so, to what extent.

II. Except as otherwise provided by law or by the action of the Board of Directors in granting voting rights to any series of preferred shares, the entire voting power for the election of directors and for all other purposes shall be vested exclusively in the shares of common stock. Each share of common stock shall have one vote upon all matters.”

4.The Certificate of Incorporation is hereby restated to set forth its entire text as amended, to wit:

RESTATED CERTIFICATE

INCORPORATION

TAYLOR DEVICES, INC.

FIRST:The name of the Corporation is TAYLOR DEVICES, INC.

SECOND:The purposes for which it is to be formed are:

To manufacture, buy, sell, import, export, and generally deal in compressible material devices of all kinds, descriptions, and sizes and for any and every use or purpose, made from steel or any other metal or substance; to manufacture, buy, sell, import and export and generally deal in steel and other metals or substances from which compressible material devices may be made.

To acquire by purchase, lease or otherwise; to maintain, to operate and to dispose of all buildings and other real property, transportation equipment and other facilities and conveniences suitable for use in and about the prosecution of its business and the marketing of its products.

To manufacture, purchase, or otherwise acquire, own, mortgage, pledge, sell, assign and transfer, or otherwise dispose of; to invest, trade, deal in and deal with, goods wares and merchandise and real and personal property of every class and description.

To acquire, and pay for in cash, stocks or bonds of this Corporation or otherwise, the goodwill, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation engaged in the same or similar business.

To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage, or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and tradenames, relating to or useful in connection with any business of this Corporation.

To purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by any other corporation or corporations organized under the laws of this State or any other state, country, nation or government and, while the owner thereof, to exercise all the rights, powers and privileges of ownership.

To issue bonds, debentures or obligations of this Corporation from time to time for any of the objects of purposes of the Corporation, and to secure the same by mortgage, pledge, deed of trust, or otherwise.

To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law; and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly.

To have one or more offices to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own mortgage, sell, convey or otherwise dispose of real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country.

In general, to carry on any other similar business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of New York upon corporations formed under the act hereinbefore referred to, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do.

The foregoing clauses shall be construed both as objects and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this Corporation.

THIRD:(a) The aggregate number of shares which the Corporation shall have authority to issue is l0,000,000 shares consisting of 8,000,000 common shares of the par value of $.025 each and 2,000,000 preferred shares of the par

value of $.05 each, which shares of preferred stock shall be issuable in one or more series.

(b) The preferred shares may be issued in series and each series shall be so designated as to distinguish the shares thereof from the shares thereof from the shares of all other series. All preferred shares shall be identical except as to the relative rights, preferences and limitations which are to be fixed as follows:

I. Subject to any limitation prescribed by law, the number of shares in each series of preferences and limitations of each series shall be fixed by the Board of Directors of the Corporation, provided that before any shares of a series of preferred shares are issued, a certificate of amendment to the certificate of incorporation shall be filed as required by the Business Corporation Law. The Board of Directors is specifically empowered to determine with respect to each series of preferred shares:

C. Whether such shares shall have voting rights in addition to those provided by law and, if so, to what extent and upon what terms and conditions;

D. Whether such shares shall be subject to redemption by the Corporation and, if so upon what terms and conditions;

E. Whether, if such shares are to be redeemable, a sinking fund or other fund shall be established for the purpose of redemption thereof and, if so, upon what terms and conditions; and

F. The rights of said shares in the event of the voluntary or involuntary liquidation, dissolution or winding of the Corporation, including whether such shares shall have a preferential claim against the assets of the Corporation and, if so, to what extent.

II. Except as otherwise provided by law or the action of the Board of Directors in granting voting rights to any series of preferred shares, the entire voting power for the election of directors and for all other purposes shall be vested exclusively in the shares of common stock. Each share of common stock shall have one vote upon all matters.

FOURTH: No preemptive right to subscribe for shares or other securities of the Corporation shall exist with respect to any shares of any class of stock of the Corporation.

FIFTH: The office of the Corporation shall be located at 200 Michigan Avenue, North Tonawanda, New York, County of Niagara, State of New York.

The Secretary of State is designated as the agent of the corporation upon which process in any action or proceeding against the Corporation may be served. The address to which the Secretary of State shall mail a copy of process in any action or proceeding against the Corporation which may be served upon him is: c/o Moot & Sprague, 2300 Main Place, Buffalo, New York 14202.

5. The amendments to the Certificate of Incorporation and restatement thereof were authorized by holders of at least a majority of all outstanding shares entitled to vote thereon at the annual meeting of shareholders duly called and held on November 12, 1982.

IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate of Incorporation and affirm the truth of the statements therein set forth under penalty of perjury this third day of December, 1982.

TAYLOR DEVICES, INC.

By /s/ Paul A. Taylor

Paul A. Taylor, President

By /s/ Edward A. Ebert

Edward A. Ebert, Secretary

CERTIFICATE OF CHANGE

TAYLOR DEVICES, INC.

Under Section 805-A of the Business Corporation Law.

We, the undersigned, President and Secretary, respectively, of TAYLOR DEVICES, INC. (the “Corporation”) hereby certify:

1.The name of the Corporation is TAYLOR DEVICES, INC.

2.The Certificate of Incorporation of the Corporation was filed by the Department of State on July 22, 1955, with a Restated Certificate of Incorporation of Taylor Devices, Inc. filed with the Department of State on December 7, 1982.

3.The Certificate of Incorporation is hereby changed to change the address of the Corporation and to change the post office address to which the Secretary of State shall mail a copy of process against the Corporation served upon him.

4.To effect the changes referenced in Paragraph 3 of this Certificate, paragraph “Fifth” of the Corporation’s Certificate of Incorporation is hereby changed to read as follows:

FIFTH:The Secretary of State is designated as agent of the Corporation upon whom process against it may be served. The post office address to which the Secretary of State shall mail a copy of any process in any action or proceeding against the Corporation which may be served upon him is:

c/o Hiscock & Barclay

50 Fountain Plaza

Buffalo, New York 14202

5. The foregoing Certificate of Change was authorized pursuant to Section 708 of Business Corporation Law by an action of the Board of Directors of the Corporation without a meeting dated as of September 29, 1992.

IN WITNESS WHEREOF, the undersigned have executed this Certificate of Change to the Certificate of Incorporation and they affirm the truth of the statements herein set forth under penalties of perjury this sixth day of October, 1992.

/s/ Douglas P. Taylor

Douglas P. Taylor, President

/s/ Joseph P. Gastel

Joseph P. Gastel, Secretary

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

TAYLOR DEVICES, INC.

Under Section 805 of the Business Corporation Law.

We, the undersigned President and Secretary, respectively of Taylor Devices, Inc. (the “Corporation”) hereby certify:

1.The name of the Corporation is Taylor Devices, Inc.

3.The Certificate of Incorporation is hereby amended to add a new Paragraph “Sixth” eliminating or limiting the personal liability of Directors of the Corporation in accordance with Section 402(b) of the Business Corporation Law.

4.To effect the amendment referenced in paragraph 3 of this Certificate of Amendment, the Certificate of Incorporation is hereby amended to add a new Paragraph “Sixth” which shall read as follows:

SIXTH: No Director of the Corporation shall be personally liable to the Corporation or any of its shareholders for damages for any breach of duty as Director, except that this Paragraph shall not apply to the extent its effect is limited by law. Any repeal or modification of this Paragraph shall not adversely affect any right or protection of a Director of the Corporation existing at any time prior to such repeal or modification.

The foregoing amendment to the Certificate of Incorporation was authorized by a unanimous vote of the Board of Directors followed by the vote of the holders of a majority of all

outstanding common shares of the Corporation entitled to vote thereon at a meeting duly called and held November 16, 1992.

IN WITNESS WHEREOF, the undersigned have executed this Amendment to the Certificate of Incorporation and affirm the truth of the statement therein set forth under penalties of perjury this thirteenth day of November, 1992.

/s/ Douglas P. Taylor

Douglas P. Taylor, President

/s/ Joseph P. Gastel

Joseph P. Gastel, Secretary

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

TAYLOR DEVICES, INC.

under Section 805 of the Business Corporation Law

FIRST:The name of the corporation is TAYLOR DEVICES, INC. (the “Corporation”).

SECOND:The Certificate of Incorporation of the Corporation was filed by the Department of State on July 22, 1955.

THIRD:The Certificate of Incorporation is hereby amended by addition of a provision stating the number, designation, relative rights, preferences and limitations of Preferred Shares of a series of the par value $.05 each, as fixed by the Board of Directors before the issuance of such series, under authority contained in the Certificate of Incorporation.

Five thousand (5,000) authorized Preferred Shares of the par value of $.05 each, none of which has been issued, shall be issued in and as a series to be designated, “Series A Junior Participating Preferred Stock.” The term Preferred Shares, as used herein shall include all 2,000,000 of the Preferred Shares, $.05 par value, authorized by the Certificate of Incorporation of the Corporation, of which “Series A Junior Participating Preferred Stock” is the first series.

The designation, relative rights, preferences and limitations of all shares of Series A Junior Participating Preferred Stock, insofar as nor already fixed by the Certificate of Incorporation, shall, as fixed by the Corporation’s Board of Directors in the exercise of authority conferred by the Certificate of Incorporation, and as permitted by Section 302 of the Business Corporation Law, be, as follows:

Section 1.NUMBER AND DESIGNATION. There is hereby authorized for issuance as a series of the Corporation’s Preferred Shares, par value $.05 per share, five thousand (5,000) shares to be designated as “Series A Junior Participating Preferred Stock” (hereinafter, “Series A Preferred Stock”).

Section 2.DIVIDENDS, DISTRIBUTIONS.

(a)Subject to the prior and superior rights of the holders of shares of any other class of capital stock not by its terms ranking on a parity with, or junior to, the Series A Preferred Stock with respect to dividends, the holders of Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of the assets of the Corporation legally available therefor, quarterly dividends payable in cash in an amount per whole share of Series A Preferred Stock equal to the greater of (1) 25% of the Purchase Price (the “Purchase Price”), as adjusted, per unit of one two-thousandths (1/2000) of a share of Series A Preferred Stock, as set forth in the Rights Agreement (the “Rights Agreement”) between the Corporation and Regan & Associates, Inc., as Rights Agent, dated as of October 5, 1998 (so that, for example, if the Purchase Price, as adjusted, were $5.00, the quarterly dividend amount per whole share of Series A Preferred Stock would be $1.25, which would equal a quarterly dividend of $0.000625 per unit of one two-thousandths (1/2000) of a share of Series A Preferred Stock), and (2) dividends payable in cash on the payment date for each cash dividend (if any) declared on the Corporation’s Common Stock in an amount per whole share (rounded to the nearest cent) equal to the Formula Number then in effect times the cash dividends then to be paid on each outstanding share of Common Stock, payable on the date declared by the Board of Directors for the payment of quarterly dividends on each of the outstanding shares of Common Stock, but in no event later than the 15th day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date’), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or a fraction of a share of Series A Preferred Stock, since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a Share of Series A Preferred Stock. In addition, if the Corporation shall pay any dividend or make any distribution on its Common Stock payable in assets, securities or other forms of noncash validation (other than dividends or distributions payable solely in Common Stock), then, in

each such case, the Corporation shall simultaneously pay or make on each outstanding share of Series A Preferred Stock, a dividend or distribution in like kind, of the Formula Number then in effect times such dividend or distribution on each of the shares of Common Stock. As used herein, the “Formula Number” shall be 2,000; provided, however, that if at any time after October 5, 1998, the Corporation shall (i) declare or pay any dividend on its Common Stock payable in Common Stock or make any distribution on its Common Stock payable in Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding Common Stock into a larger number of shares of Common Stock or (iii) combine (by a reverse stock split or otherwise) the outstanding Common Stock into a smaller number of shares of Common Stock, then in each such event the Formula Number shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which is the number of shares that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided further that if at any time after October 5, 1998, the Corporation shall issue any shares of its capital stock in a reclassification or change of the outstanding Common Stock (including any such reclassification or change in connection with a merger in which the Corporation is the surviving corporation), then in such event the Formula Number shall be appropriately adjusted to reflect such reclassification or change.

(b)The Board of Directors shall declare a dividend or distribution on the Series A Preferred Stock as provided in Section 2(a) above immediately prior to or at the same time it declares a dividend or distribution on the Common Stock (other than a dividend or distribution payable solely is Common Stock). The Board of Directors may fix a record date for the determination of holders of Series A Preferred Stock entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock.

(c)Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from and after the Quarterly Dividend Payment Date next preceding the date of original issue of such Series A Preferred Stock; provided, however, that dividends on such shares which are originally issued after the record date for the determination of holders of Series A Preferred Stock entitled to receive a quarterly dividend and on or prior to the next succeeding Quarterly Dividend Payment Date shall begin to accrue and be cumulative front and after such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock which are originally issued prior to the record date for the first Quarterly Dividend Payment, shall be calculated as if cumulative from and after the date (if any) declared by the Board of Directors for the payment of the quarterly dividend on the outstanding Common Stock, but in no event later than the 15th day of March, June, September and December, as the case may be, next preceding the date of original issuance of such shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

(d)So long as any shares of Series A Preferred Stock are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Stock unless, in each case, the dividend required by this Section 2 to be declared on the shares of Series A Preferred Stock shall have been declared and paid or distributed.

(e)The holders of shares of Series A Preferred Stock shall not be entitled to receive any dividends or other distributions, except as provided herein.

(f)Nothing in this Certificate of Incorporation shall require the Corporation to pay any dividend on Common Stock.

Section 3.VOTING RIGHTS. The holders of shares of Series A Preferred Stock shall have the following voting rights:

(a)Each holder of a whole share of Series A Preferred Stock shall be entitled to a number of votes equal to the Formula Number then in effect for each share of Series A Preferred Stock held of record on all matters on which holders of the Common Stock or shareholders generally are entitled to vote. Each holder of a fraction of a whole share of Series A Preferred Stock shall be entitled to a number of votes equal to the numerator of the fraction of a whole share so owned (so that, for example, if the Formula Number is 2000 and a person holds 5 units of one two-thousandths of a share, that person would be entitled to cast 5 votes).

(b)Except as otherwise provided herein or by applicable law, the holders of shares of Series A Preferred Stock and the holders of Common Stock and any other class or series of voting stock shall vote together as one class for the election of directors of the Corporation and on all other matters submitted to a vote of shareholders of the Corporation.

(c)Except as provided herein, in Section 10 below or by applicable law, holders of shares of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock and any other class or series of voting stock as set forth herein) for authorizing or taking any corporate action.

Section 4.CERTAIN RESTRICTIONS.

(a)Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock, as provided in Section 2 above, are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(1)declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any

shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(2)declare or pay dividends on or make any other distributions on any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity shares on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(3)redeem or purchase or otherwise acquire for consideration any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire any of such parity shares in exchange for any shares of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(4)purchase or otherwise acquire for consideration any Series A Preferred Stock, or any shares ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(b)The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of the Corporation, unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5.LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up of the Corporation. whether voluntary or involuntary, no distribution shall be made (a) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received an amount equal to the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) 50% of the Purchase Price, as adjusted, per unit of one two-thousandths of a share of Series A Preferred Stock set forth in the Rights Agreement (so that if, for example, the Purchase Price is $5.00, the liquidation amount would be $2.50 per unit), or (2) an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Stock, or (b) to the holders of shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

Section 6.CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which its Common Stock is exchanged for or changed into other stock or securities, cash or any other property, then in any such case the then outstanding shares of Series A Preferred Stock shall at the same rime be similarly exchanged or changed in an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash or any other properly (payable in kind), as the case may be, into which or for which each of the shares of Common Stock is exchanged or changed.

Section 7.NO REDEMPTION; NO SINKING FUND.

(a)The shares of Series A Preferred Stock shall not be subject to redemption by the Corporation or at the option of any holder of Series A Preferred

Stock; provided, however, that the Corporation may purchase or otherwise acquire outstanding shares of Series A Preferred Stock in the open market or by offer so any holder or holders of shares of Series A Preferred Stock.

(b)The Series A Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.

Section 8.FRACTIONAL SHARES. The Series A Preferred Stock shall be issuable upon exercise of the Rights issued pursuant to the Rights Agreement in whole shares or in any fraction of a share that is one two-thousandths (1/2000th) of a share or any integral multiple of such fraction. At the election of the Corporation prior to the first issuance of a share or a fraction of a share of Series A Preferred Stock, either (1) certificates may be issued to evidence any such authorized fraction of a share of Series A Preferred Stock, or (2) any such authorized fraction of a share of Series A Preferred Stock may be evidenced by depositary receipts pursuant to an appropriate agreement between the Corporation and a depositary selected by the Corporation provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of shares of Series A Preferred Stock.

Section 9.REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Shares, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors pursuant to the provisions of the Certificate of Incorporation.

Section 10. AMENDMENT. None of the relative rights, preferences and limitations of the Series A Preferred Stock as provided in Sections 1 through 9 above and in this Section 10 or elsewhere in this Certificate of Incorporation shall be amended in any manner which would alter or change the relative rights,

preferences and limitations of the holders of shares of Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Series A Preferred Stock, voting as though such series were a separate class.

FOURTH: This Amendment to the Certificate of Incorporation of the Corporation was authorized by the Board of Directors of the Corporation at a meeting duly called and held.

IN WITNESS WHEREOF, this Amendment to the Certificate of Incorporation of the Corporation has been subscribed by the undersigned this fifth day of October, 1998.

/s/ Douglas P. Taylor

Douglas P. Taylor, President and

Chief Executive Officer

CERTIFICATE OF CHANGE

TAYLOR DEVICES, INC.

Under §805-A of the Business Corporation Law

The undersigned, Sandra S. O’Loughlin, a member of the firm of Hiscock & Barclay, LLP, as agent for service of process (the “Agent”) for Taylor Devices, Inc., hereby certifies that:

1.The name of the Corporation is Taylor Devices, Inc. (the “Corporation”).

2.The Certificate of Incorporation for the Corporation was filed by the New York Department of State on July 22, 1955.

3.The provision to be effected by this Certificate of Change is, as follows:

Paragraph FIFTH shall be deleted in its entirety and the following shall be substituted in its place and stead:

The Secretary of State of the State of New York is hereby designated as the agent of the Corporation upon whom any process in any action or proceeding against it may be served. The post office address to which the Secretary of State shall mail a copy of process in any action or proceedings against the Corporation which may be served upon him as agent is:

Hiscock & Barclay, LLP

1100 M&T Center

Three Fountain Plaza

Buffalo, New York 14203-1486

4.(a) A notice of the above change was mailed to the Corporation by the Agent not less than 30 days prior to the date of delivery of this Certificate of Change to the Department of State of the State of New York; and

(b) The undersigned Agent is the agent of the Corporation to whose address the Secretary of State is required to mail copies of process.

IN WITNESS WHEREOF, this Certificate of Change has been subscribed this first day of December, 2002, by the undersigned who affirms that the statements made herein are true penalties of perjury.

/s/ Sandra S. O’Loughlin

Sandra S. O’Loughlin, as Agent

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

TAYLOR DEVICES, INC.

under Section 805 of the Business Corporation Law

FIRST:The name of the corporation is TAYLOR DEVICES, INC. (the “Corporation”).

SECOND:The Certificate of Incorporation of the Corporation was filed by the Department of State on July 22, 1955.

THIRD:None of the authorized shares of the preferred shares in series comprised of five thousand (5,000) shares of the par value of $.05, designated as “Series A Junior Participating Preferred Stock” created by Certificate of Amendment dated October 5th, 1998 and filed with the New York Department of State on October 9, 1998, are outstanding and none will be issued subject to the Certificate of Incorporation of the Corporation.

FOURTH: The Certificate of Incorporation is hereby amended, as follows:

(A) To eliminate and re-designate the entire Series A Junior Participating Preferred Stock in accordance with Section 502(e) of the Business Corporation Law; and

(B) To add a provision stating the number, designation, relative rights, preferences and limitations of a new series of preferred shares of a series of the par value $.05 each, as fixed by the Board of Directors before the issuance of such series, under authority contained in the Certificate of Incorporation, to wit:

Five thousand (5,000) authorized Preferred Shares of the par value of $.05 each, none of which has been issued, shall be issued as a series to be designated, “Series 2008 Junior Participating Preferred Stock.” “Preferred Shares,” as used herein, includes all 2,000,000 of the Preferred Shares, $.05 par value, issuable in one or more series, authorized by the Certificate of Incorporation of the Corporation. Upon the filing of this Certificate of Amendment, the “Series 2008

Junior Participating Preferred Stock” shall be the only series authorized to be issued. The designation, relative rights, preferences, and limitations of all shares of Series 2008 Junior Participating Preferred Stock, insofar as not already fixed by the Certificate of Incorporation, shall, as fixed by the Corporation’s Board of Directors in the exercise of authority conferred by the Certificate of Incorporation, and as permitted by Section 502 of the Business Corporation Law, be, as follows:

Section 1.NUMBER AND DESIGNATION. There is hereby authorized for issuance as a series of the Corporation’s Preferred Shares, par value $.05 per share, thousand (5,000) shares to be designated as “Series 2008 Junior Participating Preferred Stock” (hereinafter, the “Series 2008 Preferred Stock”).

Section 2.DIVIDENDS, DISTRIBUTIONS.

(a)Subject to the prior and superior rights of the holders of shares of any other class of capital stock not by its terms ranking on a parity with, or junior to, the Series 2008 Preferred Stock with respect to dividends, the holders of Series 2008 Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of the assets of the Corporation legally available therefor, quarterly dividends payable in cash in an amount per whole share of Series 2008 Preferred Stock equal to the greater of (1) 25% of the Purchase Price (the “Purchase Price”), as adjusted, per unit of one two-thousandths (1/2000) of a share of Series 2008 Preferred Stock, as set forth in the Rights Agreement (the “Rights Agreement”) between the Corporation and Regan & Associates, Inc., as Rights Agent, dated as of October 5, 2008 (so that, for example, if the Purchase Price, as adjusted, were $5.00, the quarterly dividend amount per whole share of Series 2008 Preferred Stock would be $1.25, which would equal a quarterly dividend of $0.000625 per unit of one two-thousandths (1/2000) of a share of Series 2008 Preferred Stock), and (2) dividends payable in cash on the payment date for each cash dividend (if any) declared on the Corporation’s Common Stock in an amount per whole share (rounded to the nearest cent) equal to the Formula Number then in effect times the cash dividends then to be paid on each outstanding share of Common Stock, payable on the date declared by the Board of Directors for the payment of quarterly dividends on each of the outstanding shares of Common Stock. The Board of Directors shall declare a dividend on the Series 2008 Preferred Stock no later than the

15th day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or a fraction of a share of Series 2008 Preferred Stock, since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series 2008 Preferred Stock. In addition, if the Corporation shall pay any dividend or make any distribution on its Common Stock payable in assets, securities or other forms of noncash consideration (other than dividends or distributions payable solely in Common Stock), then, in each such case, the Corporation shall simultaneously pay or make on each outstanding share of Series 2008 Preferred Stock, a dividend or distribution in like kind, of the Formula Number then in effect times such dividend or distribution on each of the shares of Common Stock. As used herein, the “Formula Number” shall be 2,000; provided, however, that if at any time after October 3, 2008, the Corporation shall (i) declare or pay any dividend on its Common Stock payable in Common Stock or make any distribution on its Common Stock payable in Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding Common Stock into a larger number of shares of Common Stock or (iii) combine (by a reverse stock split or otherwise) the outstanding Common Stock into a smaller number of shares of Common Stock, then in each such event the Formula Number shall he adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which is the number of shares that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided further that if at any time after October 3, 2008, the Corporation shall issue any shares of its capital stock in a reclassification or change of the outstanding Common Stock (including any such reclassification or change in connection with a merger in which the Corporation is the surviving corporation), then in such event the Formula Number shall be appropriately adjusted to reflect such reclassification or change.

(b)The Board of Directors shall declare a dividend or distribution on the Series 2008 Preferred Stock as provided in Section 2(a) above immediately prior to or at the same time it declares a dividend or distribution on the Common Stock (other than a dividend or distribution payable solely in Common Stock). The Board of Directors may fix a record date for the

determination of holders of Series 2008 Preferred Stock entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock.

(c)Dividends shall begin to accrue and be cumulative on outstanding shares of Series 2008 Preferred Stock from and after the Quarterly Dividend Payment Date next preceding the date of original issue of such Series 2008 Preferred Stock; provided, however, that dividends on such shares which are originally issued after the record date for the determination of holders of Series 2008 Preferred Stock entitled to receive a quarterly dividend and on or prior to the next succeeding Quarterly Dividend Payment Date shall begin to accrue and be cumulative from and after such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on shares of Series 2008 Preferred Stock which are originally issued prior to the record date for the first Quarterly Dividend Payment, shall be calculated as if cumulative from and after the date (if any) declared by the Board of Directors for the payment of the quarterly dividend on the outstanding Common Stock, but in no event later than the 15th day of March, June, September and December, as the case may be, next preceding the date of original issuance of such shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the Series 2008 Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

(d)So long as any shares of the Series 2008 Preferred Stock are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Stock unless, in each case, the dividend required by this Section 2 to be declared on the shares of Series 2008 Preferred Stock shall have been declared and paid or distributed.

(e)The holders of shares of Series 2008 Preferred Stock shall not be entitled to receive any dividends or other distributions, except as provided herein.

(f)Nothing in this Certificate of Incorporation shall require the Corporation to pay any dividend on Common Stock.

Section 3.VOTING RIGHTS. The holders of shares of Series 2008 Preferred Stock shall have the following voting rights:

(a)Each holder of a whole share of Series 2008 Preferred Stock shall be entitled to a number of votes equal to the Formula Number then in effect for each share of Series 2008 Preferred Stock held of record on all matters on which holders of the Common Stock or shareholders generally are entitled to vote. Each holder of a fraction of a whole share of Series 2008 Preferred Stock shall be entitled to a number of votes equal to the numerator of the fraction of a whole share so owned (so that, for example, if the Formula Number is 2000 and a person holds 5 units of one two-thousandths of a share, that person would be entitled to cast 5 votes).

(b)Except as otherwise provided herein or by applicable law, the holders of shares of Series 2008 Preferred Stock and the holders of Common Stock and any other class or series of voting stock shall vote together as one class for the election of directors of the Corporation and on all other matters submitted to a vote of shareholders of the Corporation.

(c)Except as provided herein, in Section 10 below or by applicable law, holders of shares of Series 2008 Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock and any other class or series of voting stock as set forth herein) for authorizing or taking any corporate action.

Section 4.CERTAIN RESTRICTIONS.

(a)Whenever quarterly dividends or other dividends or distributions payable on the Series 2008 Preferred Stock, as provided in Section 2 above, are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of the Series 2008 Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(1) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series 2008 Preferred Stock;

(2) declare or pay dividends on or make any other distributions on any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 2008 Preferred Stock, except dividends paid ratably on the Series 2008 Preferred Stock and all such parity shares on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(3) redeem or purchase or otherwise acquire for consideration any shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 2008 Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire any of such parity shares in exchange for any shares of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series 2008 Preferred Stock; or

(4)purchase or otherwise acquire for consideration any Series 2008 Preferred Stock, or any shares ranking on a parity with the Series 2008 Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

Section 5.LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, no distribution shall be made (a) to the holders of shares ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series 2008 Preferred Stook unless, prior thereto, the holders of shares of Series 2008 Preferred Stock shall have received an amount equal to the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an amount equal to the greater of (1) 50% of the Purchase Price, as adjusted, per unit of one two-

thousandths of a share of Series 2008 Preferred Stock set forth in the Rights Agreement (so that if, for example, the Purchase Price is $5.00, the liquidation amount would be $2.50 per unit), or (2) an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Stock, or (b) to the holders of shares ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series 2008 Preferred Stock, except distributions made ratably on the Series 2008 Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

Section 6.CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which its Common Stock is exchanged for or changed into other stock or securities, cash or any other property, then in any such case the then outstanding shares of Series 2008 Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash or any other property (payable in kind), as the case may be, into which or for which each of the shares of Common Stock is exchanged or changed.

Section 7.NO REDEMPTION; NO SINKING FUND.

(a)The shares of Series 2008 Preferred Stock shall not be subject to redemption by the Corporation or at the option of any holder of Series 2008 Preferred Stock; provided, however, that the Corporation may purchase or otherwise acquire outstanding shares of Series 2008 Preferred Stock in the open market or by offer to any holder or holders of shares of Series 2008 Preferred Stock.

(h)The Series 2008 Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.

Section 8.FRACTIONAL SHARES. The Series 2008 Preferred Stock shall be issuable upon exercise of the Rights issued pursuant to the Rights Agreement in whole shares or in any fraction of a share that is one two-thousandths (1/2000th) of a share or any integral multiple of such fraction. At the election of the Corporation prior to the first issuance of a share

or a fraction of a share of Series 2008 Preferred Stock, either (1) certificates may be issued to evidence any such authorized fraction of a share of Series 2008 Preferred Stock, or (2) any such authorized fraction of a share of Series 2008 Preferred Stock may be evidenced by depositary receipts pursuant to an appropriate agreement between the Corporation and a depositary selected by the Corporation provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of shares of Series 2008 Preferred Stock.

Section 9.REACQUIRED SHARES. Any shares of Series 2008 Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Shares, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors pursuant to the provisions of the Certificate of Incorporation.

Section 10.AMENDMENT. None of the relative rights, preferences and limitations of the Series 2008 Preferred Stock as provided in Sections 1 through 9 above and in this Section 10 or elsewhere in this Certificate of Incorporation shall be amended in any manner which would alter or change the relative rights, preferences and limitations of the holders of shares of Series 2008 Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of Series 2008 Preferred Stock, voting as though such series were a separate class.

FIFTH:This Amendment to the Certificate of Incorporation of the Corporation was authorized by the unanimous approval of the Board of Directors of the Corporation at a meeting duly called and held on September 15, 2008.

IN WITNESS WHEREOF, this Amendment to the Certificate of Incorporation of the Corporation has been subscribed by the undersigned this fifteenth day of September, 2008.

/s/ Douglas P. Taylor

Douglas P. Taylor, President and

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, Timothy J. Sopko, certify that:

1. I have reviewed this annual report on Form 10-K 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: August 15, 2024

/s/ Timothy J. Sopko

Timothy J. Sopko

Chief Executive 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, Paul Heary, certify that:

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

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:

(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: August 15, 2024

/s/ Paul Heary

Paul Heary

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 connection with the annual report of Taylor Devices, Inc. (the “Company”) on Form 10-K for the fiscal year ended May 31, 2024 to be filed with Securities and Exchange Commission on or about the date hereof (the "Report"), I, Timothy J. Sopko, 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 (the “Exchange Act”); 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 Exchange Act.

Date: August 15, 2024

By:

/s/ Timothy J. Sopko

Timothy J. Sopko

Chief Executive Officer

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 connection with the annual report of Taylor Devices, Inc. (the "Company") on Form 10-K for the fiscal year ended May 31, 2024 to be filed with Securities and Exchange Commission on or about the date hereof (the "Report"), I, Paul Heary, 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 (the “Exchange Act”); and

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

Date: August 15, 2024

By:

/s/ Paul Heary

Paul Heary

Chief Financial Officer

RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION POLICY

(a) Definitions.

In this Policy, the following definitions apply:

Executive Officer. An executive officer is the Company’s Chief Executive Officer, President, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Executive officers of the Company’s parent(s) or subsidiaries are deemed executive officers of the Company if they perform such policy making functions for the Company. Policy-making function is not intended to include policy-making functions that are not significant. Identification of an executive officer for purposes of this Policy includes at a minimum executive officers identified pursuant to 17 CFR 229.401(b).

Financial Reporting Measures. Financial reporting measures are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return are also financial reporting measures. A financial reporting measure need not be presented within the financial statements or included in a filing with the U.S. Securities and Exchange Commission (the “Commission”).

Incentive-Based Compensation. Incentive-based compensation is any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure.

Received. Incentive-based compensation is deemed received in the Company’s fiscal period during which the financial reporting measure specified in the incentive-based compensation award is attained, even if the payment or grant of the incentive-based compensation occurs after the end of that period.

(b) Recovery of Erroneously Awarded Compensation.

(1) The Company will recover reasonably promptly the amount of erroneously awarded incentive-based compensation in the event that the Company is required to prepare an accounting restatement due to the

material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

(i) The Policy applies to all incentive-based compensation received by a person:

(A) After beginning service as an executive officer;

(B) Who served as an executive officer at any time during the performance period for that incentive-based compensation;

(C) While the Company has a class of securities listed on a national securities exchange or a national securities association; and

(D) During the three completed fiscal years immediately preceding the date that the Company is required to prepare an accounting restatement as described in paragraph (b)(1) of this Policy. In addition to these last three completed fiscal years, this Policy applies to any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years. However, a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months is deemed a completed fiscal year. The Company’s obligation to recover erroneously awarded compensation is not dependent on if or when the restated financial statements are filed.

(ii) For purposes of determining the relevant recovery period, the date that the Company is required to prepare an accounting restatement as described in paragraph (b)(1) of this Policy is the earlier to occur of:

(A) The date the Company’s board of directors, a committee of the board of directors, or the officer or officers of the Company authorized to take such action if board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement as described in paragraph (b)(1) of this Policy; or

(B) The date a court, regulator, or other legally authorized body directs the Company to prepare an accounting restatement as described in paragraph (b)(1) of this Policy.

(iii) The amount of incentive-based compensation subject to this Policy (“erroneously awarded compensation”) is the amount of incentive-

2

based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts, and will be computed without regard to any taxes paid. For incentive-based compensation based on stock price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in an accounting restatement:

(A) The amount will be based on a reasonable estimate of the effect of the accounting restatement on the stock price or total shareholder return upon which the incentive-based compensation was received; and

(B) The Company will maintain documentation of the determination of that reasonable estimate and provide such documentation to Nasdaq.

(iv) The Company will recover erroneously awarded compensation in compliance with this Policy except to the extent that the conditions of paragraphs (b)(1)(iv)(A) or (B) of this Policy are met, and the Company’s Compensation Committee, or in the absence of such a committee, a majority of the independent directors serving on the board, has made a determination that recovery would be impracticable.

(A) The direct expense paid to a third party to assist in enforcing the policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount of erroneously awarded compensation based on expense of enforcement, the Company will make a reasonable attempt to recover such erroneously awarded compensation, document such reasonable attempt(s) to recover, and provide that documentation to Nasdaq.

(B) Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

(v) The Company will not indemnify any executive officer or former executive officer against the loss of erroneously awarded compensation.

(2) The Company will file all disclosures with respect to such recovery policy in accordance with the requirements of the Federal securities laws, including the disclosure required by the applicable Commission filings.

(c) Effective Date. This Policy applies to all incentive-based compensation received by executive officers on or after October 2, 2023. The Company will provide the disclosures required by Nasdaq Rule 5608

3

and in the applicable Commission filings from and after the adoption by the Board of Directors of this Policy.

4

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	May 31, 2024	Aug. 15, 2024	Nov. 30, 2023
Registrant CIK	0000096536
Fiscal Year End	--05-31
Document Type	10-K
Document Annual Report	true
Document Period End Date	May 31, 2024
Document Transition Report	false
Securities Act File Number	000-3498
Entity Registrant Name	TAYLOR DEVICES INC
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	16-0797789
Entity Address, Address Line One	90 Taylor Drive
Entity Address, City or Town	North Tonawanda
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14120
Entity Address, Address Description	Address of principal executive offices
Phone Fax Number Description	Registrant's telephone number, including area code
City Area Code	716
Local Phone Number	694-0800
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction	false
Entity Shell Company	false
Entity Public Float			$ 81,769,000
Entity Common Stock, Shares Outstanding		3,118,627
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	FY
Auditor Name	Lumsden & McCormick, LLP
Auditor Firm ID	130
Auditor Location	Buffalo, New York
Common Class A
Title of 12(b) Security	Common Stock, $.025 par value per share
Trading Symbol	TAYD
Security Exchange Name	NASDAQ
Series A Preferred Stock
Title of 12(b) Security	Preferred Stock Purchase Rights

Consolidated Balance Sheets - Parenthetical - $ / shares	May 31, 2024	May 31, 2023
Consolidated Balance Sheets
Common Stock, Par or Stated Value Per Share	$ 0.025	$ 0.025
Common Stock, Shares Authorized	8,000,000	8,000,000
Common Stock, Shares, Issued	4,165,315	4,088,193
Common Stock, Shares, Outstanding	4,165,315	4,088,193
Treasury Stock, Common, Shares	1,046,742	567,751

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock, Common
Equity, Attributable to Parent, Beginning Balance at May. 31, 2022		$ 101,342	$ 10,227,916	$ 35,840,898	$ (2,915,002)
Issuance of shares for employee stock purchase plan		22	10,854
Issuance of shares for employee stock option plan		763	291,066		(169,740)
Equity, Attributable to Parent, Ending Balance at May. 31, 2023	$ 50,092,730	102,127	10,947,089	42,128,256	(3,084,742)
Stock options issued for services			417,253
Net income	6,287,358			6,287,358
Repurchase of shares					0
Issuance of shares for employee stock purchase plan		10	9,904
Issuance of shares for employee stock option plan		1,919	955,286		(715,599)
Equity, Attributable to Parent, Ending Balance at May. 31, 2024	51,246,686	$ 104,056	12,959,531	51,127,018	(12,943,919)
Stock options issued for services			$ 1,047,252
Net income	$ 8,998,762			$ 8,998,762
Repurchase of shares					$ (9,143,578)

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	May 31, 2024	May 31, 2023
Operating activities
Net income	$ 8,998,762	$ 6,287,358
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation	1,690,239	1,472,455
Amortization	7,407	0
Stock options issued for services	1,047,252	417,253
Bad debt expense	0	23,360
Loss on disposal of property and equipment	0	20,015
Provision for inventory obsolescence	385,744	295,014
Deferred income taxes	(444,000)	(494,000)
Changes in other current assets and liabilities
Accounts and other receivables	341,096	(1,110,178)
Inventory	(2,533,181)	(277,214)
Prepaid expenses	(285,899)	28,882
Prepaid income taxes	228,947	7,000
Costs and estimated earnings in excess of billings	(232,383)	(787,708)
Accounts payable	(278,810)	290,827
Accrued expenses	586,141	664,008
Billings in excess of costs and estimated earnings	3,608,804	869,707
Accrued income taxes	126,148	0
Other assets	(27,343)	0
Net operating activities	13,218,924	7,706,779
Investing activities
Acquisition of property and equipment	(1,149,388)	(3,359,495)
Patent expenditures	(300,000)	0
Increase in short-term investments	(3,616,522)	(23,417,307)
Increase in cash value of life insurance	(4,704)	(4,761)
Net investing activities	(5,070,614)	(26,781,563)
Financing activities
Proceeds from issuance of common stock	967,119	302,705
Acquisition of treasury stock	(9,859,177)	(169,740)
Net financing activities	(8,892,058)	132,965
Net change in cash and cash equivalents	(743,748)	(18,941,819)
Cash and cash equivalents - beginning	3,575,219	22,517,038
Cash and cash equivalents - ending	$ 2,831,471	$ 3,575,219

1. Summary of Significant Accounting Policies: Stock-Based Compensation (Details) - USD ($)	12 Months Ended
	May 31, 2024	May 31, 2023
Details
Stock options issued for services	$ 1,047,252	$ 417,253

3. Inventory: Schedule of Inventory (Details) - USD ($)	May 31, 2024	May 31, 2023
Inventory, Gross	$ 7,571,052	$ 6,009,304
Less allowance for obsolescence	59,000	68,000
Inventory, Net	7,512,052	5,941,304
Raw Materials
Inventory, Gross	886,947	673,453
Work-in-process
Inventory, Gross	6,412,497	5,005,416
Finished goods
Inventory, Gross	$ 271,608	$ 330,435

5. Maintenance and Other Inventory: Schedule of Maintenance and Other Inventory (Details) - USD ($)	May 31, 2024	May 31, 2023
Details
Maintenance and other inventory, Gross	$ 2,416,748	$ 2,236,106
Maintenance and other inventory, allowance for obsolescence	836,919	1,232,966
Maintenance and other inventory, Net	$ 1,579,829	$ 1,003,140

5. Maintenance and Other Inventory (Details) - USD ($)	12 Months Ended
5. Maintenance and Other Inventory (Details) - USD ($)	May 31, 2024	May 31, 2023
Details
Inventory disposed of	$ 791,000	$ 322,000
Provision for potential inventory obsolescence	$ 386,000	$ 295,000

6. Property and Equipment (Details) - USD ($)	12 Months Ended
6. Property and Equipment (Details) - USD ($)	May 31, 2024	May 31, 2023
Details
Depreciation, Depletion and Amortization	$ 1,690,239	$ 1,472,455
Commitments to make capital expenditures	$ 1,360,000

7. Short-Term Borrowings (Details) - USD ($)	12 Months Ended
7. Short-Term Borrowings (Details) - USD ($)	May 31, 2023	May 31, 2024
Details
Long-Term Line of Credit		$ 10,000,000
Line of Credit Facility, Average Outstanding Amount	$ 0
Outstanding checks	$ 13,873	$ 372,347

10. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	May 31, 2024	May 31, 2023
Deferred tax assets
Allowance for doubtful receivables	$ 6,200	$ 6,200
Tax inventory adjustment	57,300	84,300
Allowance for obsolete inventory	188,100	273,200
Accrued vacation	163,000	136,600
Accrued commissions	0	9,800
Warranty reserve	100,700	62,700
R&D tax credit	0	0
R&D capitalization	1,479,800	678,500
Stock options issued for services	181,200	331,300
Deferred Tax Assets, Gross	2,176,300	1,582,600
Deferred tax liabilities
Excess tax depreciation	(1,163,685)	(1,013,985)
Net deferred tax assets	$ 1,012,615	$ 568,615

12. Employee Stock Purchase Plan (Details) - shares	12 Months Ended
12. Employee Stock Purchase Plan (Details) - shares	May 31, 2024	May 31, 2023
Details
Common shares issued to employees	372	922
Shares reserved for further issue	215,993

14. Retirement Plan (Details) - USD ($)	12 Months Ended
14. Retirement Plan (Details) - USD ($)	May 31, 2024	May 31, 2023
Details
Pension and Other Postretirement Benefits Cost (Reversal of Cost)	$ 431,720	$ 371,881

17. Legal Proceedings (Details)	12 Months Ended
17. Legal Proceedings (Details)	May 31, 2024
Details
Loss Contingency, Parties Jointly and Severally Liable in Litigation	The Company has been named as a third-party defendant
Loss Contingency, Name of Plaintiff	Board of Managers of the 432 Park Condominium, et al.
Loss Contingency, Lawsuit Filing Date	Sep. 23, 2021
Loss Contingency, Allegations	design defects to the residential and commercial units at the Building

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