SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, DC 20549 FORM 10‐QSB QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 For quarter ended February 28,
2005 Commission File Number 2-15966  TAYCO DEVELOPMENTS,
      INC.(EXACT NAME OF
      REGISTRANT AS SPECIFIED IN ITS
CHARTER)
   NEW YORK
    
    16-0835557(State or other Jurisdiction of
      incorporation or organization)
    
    (I.R.S. Employer
      Identification Number)
  100 TAYLOR DRIVE,
      NORTH TONAWANDA, NEW YORK, 14120-0748Address of Principal
      Executive Offices
  Registrant's
      telephone number ‐ 716‐694‐0877
  Check whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the last 12 months and (2) has been subject to the filing
requirements for the past 90 days. Yes
    X
    
    No State the number of shares outstanding of
each of the Issuer's classes of common equity as of the latest practicable
date.  CLASS
    
    Outstanding at
      April 13, 2005Common Stock(5
      cents par value)
    
    987,928
      TAYCO DEVELOPMENTS,
INC.  Index to Form
10-QSB  PART I -
    FINANCIAL
      INFORMATION
    
    PAGEItem 1.
    Financial
      StatementsCondensed Balance
      Sheets February 28, 2005 and May 31, 2004
    3Condensed Statements of
      Income for the three and nine months ended February 28, 2005 and February
      29, 2004
    4Condensed Statements of
      Cash Flows for the nine months ended February 28, 2005 and February 29,
      2004
    5Notes to Condensed
      Financial Statements
    6Item 2.
    Management's Discussion
      and Analysis or Plan of Operation
    7Item 3.
    Controls and
      Procedures
    9PART II -
    OTHER
      INFORMATIONItem 1.
    Legal
      Proceedings
    10Item 2.
    Unregistered Sales of
      Equity Securities and Use of Proceeds
    10Item 3.
    Defaults Upon Senior
      Securities
    10Item 4.
    Submission of Matters
      to a Vote of Security Holders
    11Item 5.
    Other
      Information
    11Item 6.
    Exhibits
    11REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
    12SIGNATURES
    
    13
      TAYCO DEVELOPMENTS, INC.  Condensed Balance
      Sheets
    
    
    
    (Unaudited)February
      28, 2005
    May
      31,2004AssetsCurrent
      assets:Cash
    
    
    
    
    
    $   
      303,629
    $   
      106,055Prepaid expenses
    
    
    
    
    15,640
    15,135Total current assets
    
    
    
    319,269
    121,190Investments in affiliates, at
      equity
    
    
    2,438,597
    2,407,008Receivable -
affiliate
    
    
    
    599,952
    775,716Patents, net
    
    
    
    
    
    102,208
    114,358$
      3,460,026
    $ 3,418,272Liabilities and
      Stockholders' EquityCurrent Liabilities
    
    
    
    
    $       
      6,144
    $      14,368Stockholders'
      equity:Common stock and additional paid-in
      capital
    
    720,301
    720,301Retained earnings
    
    
    
    
    2,745,036
    2,695,0583,465,337
    3,415,359Treasury stock - at
    cost
    
    
    
    (11,455)
    (11,455)Total stockholders'
      equity
    
    
    3,453,882
    3,403,904$
      3,460,026
    $
      3,418,272 See notes to condensed
      financial statements.    TAYCO DEVELOPMENTS, INC. Condensed Statements
      of Income
    
    
    (Unaudited)
    (Unaudited)For the three months
      ended
    For the nine months
      endedFebruary
      28, 2005
    February 29,
      2004
    February
      28, 2005
    February 29,
      2004Revenues:Royalties
    
    
    
    
    
    $    30,393
    $    
      44,159
    $
      122,439
    $ 
  203,944Research and
    development
    
    
    
    49,020
    92,900
    209,860
    239,221Total
      revenues
    
    
    
    
    79,413
    137,059
    332,299
    443,165Operating expenses:Research and
    development
    
    
    
    28,904
    51,595
    127,092
    156,891Selling, general and
      administrative
    
    
    52,202
    55,147
    197,933
    164,570Depreciation and
      amortization
    
    
    
    4,050
    4,200
    12,150
    12,600Total operating
      expenses
    
    
    
    85,156
    110,942
    337,175
    334,061Operating income
      (loss)
    
    
    
    
    (5,743)
    26,117
    (4,876)
    109,104Other income
    
    
    
    
    
    8,305
    716
    27,265
    55,687Income before income taxes and
      equity in netincome (loss) of affiliates
    
    
    2,562
    26,833
    22,389
    164,791Provision for income
      taxes
    
    
    
    
    1,000
    7,000
    4,000
    34,000Income before equity in net income
      (loss) of affiliates
    1,562
    19,833
    18,389
    130,791Equity in net income (loss) of
      affiliates
    
    
    (3,733)
    16,753
    31,589
    (57,249)Net income
      (loss)
    
    
    
    
    
    $     (2,171)
    $     36,586
    $  49,978
    $    73,542Basic earnings per common
      share
    
    
    $            
      -
    $        0.04
    $       0.05
    $        0.07 See notes to condensed financial
      statements.     TAYCO DEVELOPMENTS, INC. Condensed Statements
      of Cash Flows(Unaudited)For the nine months ended February 28,
      February 29,2005
    2004Cash flows from
      operating activities:Net income
    
    
    
    
    
    $    49,978
    $    
      73,542Adjustments to reconcile net income
      to net cash flows fromoperating
      activities:Depreciation and
      amortization
    
    
    
    
    12,150
    12,600Equity in net (income) loss of
      affiliates
    
    
    
    (31,589)
    57,249Net proceeds on life insurance
      settlement
    
    
    
    -
    (53,552)Changes in other assets and
      liabilities:Prepaid expenses
    
    
    
    
    
    (505)
    30,235Current liabilities
    
    
    
    
    
    (8,224)
    6,385Net cash flows from
      operating activities
    
    
    21,810
    126,459Cash flows from
      investing activities:Receivable - affiliate,
      net
    
    
    
    
    
    175,764
    (297,464)Proceeds from settlement of officer
      life insurance policies
    
    -
    158,611Acquisition of
patents
    
    
    
    
    
    -
    (1,325)Net cash flows from
      (for) investing activities
    
    175,764
    (140,178)Cash flows for
      financing activities:Acquisition of treasury
      stock
    
    
    
    
    -
    (5,826)Net increase (decrease) in
      cash
    
    
    
    
    197,574
    (19,545)Cash - beginning
    
    
    
    
    
    106,055
    81,906Cash -
    ending
    
    
    
    
    
    $  303,629
    $   62,361 See notes to condensed financial
      statements.     TAYCO DEVELOPMENTS, INC. Notes to Condensed
Financial Statements 1.
    The accompanying
      unaudited condensed financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of
      America for interim financial information and with the instructions to
      Form 10-QSB and Regulation S-B.  Accordingly, they do not include all
      of the information and footnotes required by accounting principles
      generally accepted in the United States of America for complete financial
      statements. In the opinion of the Company, the accompanying unaudited
      condensed financial statements contain all adjustments (consisting of only
      normal recurring accruals) necessary to present fairly the financial
      position as of February 28, 2005 and May 31, 2004, the results of
      operations for the three and nine months ended February 28, 2005 and
      February 29, 2004, and the cash flows for the nine months ended February
      28, 2005 and February 29, 2004.  These financial statements should be
      read in conjunction with the audited financial statements and notes
      thereto contained in the Company's Annual Report to Shareholders for the
      year ended May 31, 2004.2.
    There is no provision
      nor shall there be any provisions for profit sharing, dividends, or any
      other benefits of any nature at any time for this fiscal
      year.3.
    To calculate the
      earnings per share for the three and nine month periods ended February 28,
      2005, the net income (loss) was divided by the outstanding shares of
      987,928.  To calculate the earnings per share for the three and nine
      month periods ended February 29, 2004, the net income was divided by the
      outstanding shares of 987,928.4.
    The results of
      operations for the nine month period ended February 28, 2005 are not
      necessarily indicative of the results to be expected for the full
      year.5.
    Significant Equity
      Investees: The Company owns approximately a 22% equity investment in
      Taylor Devices, Inc.  For the nine months ended February 28, 2005,
      Taylor Devices, Inc. had sales of $7,721,000, gross profit of $2,333,000,
      and net income of $45,000.  For the nine months ended February 29,
      2004, Taylor Devices, Inc. had sales of $9,716,000, gross profit of
      $2,537,000, and net loss of $263,000.  The carrying amount of the
      investment in Taylor Devices, Inc. as of February 28, 2005 and May 31,
      2004 was $1,997,000 and $1,988,000.  The Company also owns 42% of an
      affiliate, Tayco Realty Corporation.  The carrying amount of this
      investment as of February 28, 2005 and May 31, 2004 was $442,000 and
      $419,000, respectively.6.
    The May 31, 2004 and
      February 29, 2004 financial statements have been reclassified to conform
      with the presentation adopted for the February 28, 2005 financial
      statements.
        TAYCO DEVELOPMENTS, INC. Item 2.  Management's
Discussion and Analysis or Plan of Operation Cautionary
Statement The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements.  Information in this Item 2, "Management's
Discussion and Analysis or Plan of Operation," and elsewhere in this 10-QSB 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 analogous expressions are intended to identify
forward-looking statements, and as such, are not a guarantee of future
performance.  The statements involve factors, risks and uncertainties, the
impact or occurrence of which can cause actual results to differ materially from
the expected results described in such statements.  Risks and uncertainties
can include, among others, fluctuations in general business cycles and changing
economic conditions; 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.  These forward- looking statements speak only as of the date of
this report. The Company disclaims any obligation  to release publicly any
updates or revisions to the forward-looking statements herein to reflect any
changes in the Company's expectations with regard thereto, or any changes in
events, conditions or circumstances on which any such statement is
based.  Results of
Operations A summary of the period to
period changes in the principal items included in the condensed statements of
income is shown below: Comparison of the nine months
      ended February 28, 2005 and February 29, 2004Increase
      /(Decrease)Royalties
      revenue
    
    $   
      (82,000)Research &
      development revenue
    
    $   
      (29,000)Research &
      development expense
    
    $   
      (30,000)Selling, general and
      administrative expenses
    
    $    
      33,000Other
    income
    
    $  
  (28,000)Income before provision
      for income taxes and equity in net income (loss) of
    affiliates
    
    $ (142,000)Equity in net income
      (loss) of affiliates
    
    $   
      89,000Net
income
    
    $  
  (24,000)
  For the
nine months ended February 28, 2005 (All figures being
discussed are for the nine months ended February 28, 2005 as compared to the
nine months ended February 29, 2004.) The Company's
results of operations showed a 25% decrease in net revenues with a decrease in
net income of 32%. The decrease in revenue is primarily attributable to an
$82,000 reduction in royalties earned as a result of Devices' decreased sales of
Tension / Compression Liquid Spring Isolators which use the Company's patented
technology.  Management is optimistic that an increased sales order backlog
at Devices will result in an increase in royalty revenue for the Company during
the fourth quarter.  There was also a $29,000 decrease of research &
development revenue resulting from lower levels of billable engineering hours on
projects for Devices. Management is
focused on continued development of new applications for existing technology
that will lead to high volume production and increased royalty income.  The
primary markets targeted are military and aerospace. Operating
expenses increased 1% to $337,000 this year.  Although there was a decrease
in research and development expense of $30,000 due to personnel reductions,
there was an increase in general and administrative expenses of $33,000. This
increase in general and administrative expenses was primarily because the Company was charged for
shared facility, clerical and management expenses by Devices in the current
year.  Only building rental charges of $9,000 were recorded in the prior
year.  Certain other general and administrative expenses were recorded in
the fourth quarter of the prior year. Other income in
the current year of $27,000 is primarily interest earned on the note receivable
from Devices.  Other income in the prior year of $56,000 is primarily the
amount of proceeds from the life insurance policies on the Company's founder,
Paul H. Taylor, in excess of the net of the cash surrender value of the policies
and loans against the policies. Equity in the
net income of affiliates was $32,000.  This compares to a loss of $57,000
for the same period in the prior year. Net income was
$50,000 or $0.05 per share, down slightly from the prior year's level of $74,000
or $0.07 per share. This is a result of the aforementioned items. For the three months
ended February 28, 2005 (All figures being discussed are for the
three months ended February 28, 2005 as compared to the three months ended
February 29, 2004.) The Company's
results of operations showed a 42% decrease in net revenues with a decrease in
net income of $39,000. The decrease in revenue is attributable to a $14,000
reduction in royalties income as a result of Devices' decreased sales of Tension
/ Compression Liquid Spring Isolators which use the Company's patented
technology.  There was also a $44,000 decrease of research &
development revenue resulting from lower levels of billable engineering hours on
projects for Devices. Operating
expenses decreased 23% to $85,000 this year for the same reason as noted above
for the nine-month period. Other income in
the current year of $8,000 is primarily interest earned on the note receivable
from Devices. Equity in the
net income (loss) of affiliates was a loss of $4,000, compared to income of
$17,000 for the same period in the prior year. Net loss was
$2,000 or nil per share, down from the prior year's level of $37,000 or $0.04
per share.  This is a result of the aforementioned items. Management
believes that if the U.S. defense department increases expenditures on new
development programs, royalty revenue may increase as new applications using the
Company's technology are marketed. The balance
sheet as of February 28, 2005 is comparable to that of the prior year-end and
management believes that it is likely to remain so throughout the fiscal
year. Management
believes that the Company's internally generated cash will be sufficient to fund
ongoing operations for the fiscal year ended May 31, 2005.      TAYCO DEVELOPMENTS, INC. Item 3.  Controls and
Procedures  (a)
          Evaluation of
disclosure controls and procedures. The
Company's principal executive officer and principal financial officer have
evaluated the Company's disclosure controls and procedures as of February 28,
2005 and have concluded that as of the evaluation date, the disclosure controls
and procedures were adequate to ensure that material information relating to the
Company was made known to the officers by others within the
Company.  (b)           Changes in
internal
controls. There
have been no changes in the Company's internal controls over financial reporting
that occurred during the fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company's control over financial
reporting.    TAYCO DEVELOPMENTS, INC. Part II - Other
Information  ITEM 1
    Legal
      Proceedings:The Company is not
      currently engaged in any litigation.ITEM 2
    Unregistered Sales of
      Equity Securities and Use of Proceeds:(a)
    The Company sold no
      equity securities during the fiscal quarter ended February 28, 2005 that
      were not registered under the Securities Act.(b)
    Use of proceeds
      following effectiveness of initial
registration:Not
      Applicable(c)
    Repurchases of Equity SecuritiesPeriod
    (a) Total  Number
      ofSharesPurchased
    (b)AveragePrice PaidPer
      Share
    (
      c) Total Numberof SharesPurchasedas Part
      ofPubliclyAnnounced Plansor Programs
    (d)
      MaximumNumber (orApproximate DollarValue) of Shares 
      that May YetBe Purchased Underthe Plans
      orProgramsDecember 1,
      2004 -  December 31, 2004
    -
    -
    -January 1,
      2005 -  January 31, 2005
    -
    -
    -February 1,
      2005 -  February 28, 2005
    -
    -
    -Total
    -
    -
    -
    -ITEM 3
    Defaults Upon Senior
      Securities:
      NoneITEM  4
    Submission of Matters
      to a Vote of Securities Holders:
      NoneITEM 5
    Other Information:(a)
    None(b)
    Material changes to the
      procedures by which security holders may recommend nominees to the
      Registrant's Board of Directors:
      NoneITEM 6
    
    Exhibits:20
    News from Tayco Developments, Inc. Shareholders'
      Newsletter, Spring 2005.31(i)
    Rule 15d-14(a) Certification of Chief Executive
      Officer.31(ii)
    Rule 15d-14(a) Certification of Chief Financial
      Officer.32(i)
    Section 1350 Certification of Chief Executive
      Officer.32(ii)
    Section 1350 Certification of Chief Financial
      Officer.
       Report of Independent
Registered Public Accounting Firm  The Board of Directors and
StockholdersTayco Developments, Inc. We have reviewed the
accompanying condensed balance sheet of Tayco Developments, Inc. as of February
28, 2005, the related condensed statements of income for the three and nine
months ended February 28, 2005 and February 29, 2004, and cash flows for the
nine months ended February 28, 2005 and February 29, 2004.  These interim
financial statements are the responsibility of the Company's
management. We conducted our review in
accordance with standards of the Public Company Accounting Oversight Board
(United States).  A review of interim financial information consists
principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters.  It is substantially less
in scope than an audit conducted in accordance with standards of the Public
Company Accounting Oversight Board, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole. 
Accordingly, we do not express such an opinion. Based on our reviews, we are
not aware of any material modifications that should be made to the accompanying
interim condensed financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States of
America. We have previously audited,
in accordance with standards of the Public Company Accounting Oversight Board
(United States), the balance sheet as of May 31, 2004, and the related
statements of income, changes in stockholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated August 4, 2004,
we expressed an unqualified opinion on those financial statements.  In our
opinion, the information set forth in the accompanying condensed balance sheet
as of May 31, 2004 is fairly stated, in all material respects, in relation to
the balance sheet from which it has been derived. Lumsden & McCormick,
LLPBuffalo, New YorkMarch 25, 2005           TAYCO DEVELOPMENTS, INC. Signatures In accordance with the
requirements of the Securities Exchange Act, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.  TAYCO DEVELOPMENTS, INC.(Registrant)     By:
    s/Douglas P.
      Taylor
    
    Date:
    April 13,
      2005Douglas P.
      TaylorPresidentChairman of the Board of Directors(Principal
      Executive Officer)
   AND   By:
    s/Mark V.
      McDonough
    
    Date:
    April 13,
      2005Mark V.
      McDonoughChief Financial Officer