SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, DC 20549 FORM
10‐QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE        SECURITIES EXCHANGE ACT OF
1934 For quarter ended August 31,
2004 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
    
    Zip
Code
  Registrant's telephone number, including area code ‐
      716‐694‐0877
  Indicate by check mark whether the
registrant (1) has filed all annual, quarterly, and other reports required to be
filed with all the Commission and (2) has been subject to the filing
requirements for at least 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
      October 13, 2004Common Stock(5
      cents par value)
    
    987,928


129:
  TAYCO DEVELOPMENTS,
    INC.Index to Form
      10-QSB   PART I -
    FINANCIAL
      INFORMATION
    
    PAGEItem 1.
    Financial
      StatementsCondensed Balance
      Sheets August 31, 2004 and May 31, 2004
    3Condensed Statements of
      Income for the three months ended August 31, 2004 and August 31,
      2003
    4Condensed Statements of
      Cash Flows for the three months ended August 31, 2004 and August 31,
      2003
    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
    10Item 5.
    Other
      Information
    11Item 6.
    Exhibits
    11REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
    12SIGNATURES
    
    13




TAYCO DEVELOPMENTS,
    INC.Condensed Balance
      Sheets
    
    
    
    (Unaudited)August
      31, 2004
    May
      31,2004AssetsCurrent
      assets:Cash
    
    
    
    
    $  
      104,440
    $    
      46,092Short-term
investments
    
    
    
    60,705
    59,963Receivable - other
    
    
    
    -
    -Prepaid expenses
    
    
    
    28,766
    15,135Total current assets
    
    
    193,911
    121,190Investments in affiliates, at
      equity
    
    2,430,640
    2,407,008Receivable - affiliate,
      net
    
    
    
    718,370
    775,716Cash value of life
      insurance
    
    
    -
    -Patents, net
    
    
    
    
    110,308
    114,358$3,453,229
    $ 3,418,272Liabilities and
      Stockholders' EquityCurrent liabilities
    
    
    
    $     16,547
    $    
      14,368Stockholders'
      equity:Common stock and additional paid-in
      capital
    720,301
    720,301Retained earnings
    
    
    
    2,727,836
    2,695,0583,448,137
    3,415,359Treasury stock - at
    cost
    
    
    (11,455)
    (11,455)Total stockholders'
      equity
    
    3,436,682
    3,403,904$3,453,229
    $ 3,418,272See notes to condensed financial
      statements.    TAYCO DEVELOPMENTS,
    INC.Condensed Statements
      of Income
    
    
    
    (Unaudited)For the three months
      ended August 31,2004
    2003Revenues:Royalties
    
    
    
    
    
    $  
      36,386
    $    
      68,615Research and
    development
    
    
    
    89,970
    78,641Total
      revenues
    
    
    
    
    126,356
    147,256Operating expenses:Research and
    development
    
    
    
    46,368
    53,541Selling, general and
      administrative
    
    
    73,936
    53,245Depreciation and
      amortization
    
    
    
    4,050
    4,200Total operating
      expenses
    
    
    
    124,354
    110,986Operating
      income
    
    
    
    
    2,002
    36,270Other income
    
    
    
    
    
    10,144
    54,259Income before income
      taxes and equity in net income (loss) of affiliates
    
    
    12,146
    90,529Provision for income
      taxes
    
    
    
    
    3,000
    15,000Income before equity
      in net income (loss) of affiliates
    9,146
    75,529Equity in net income (loss) of
      affiliates
    
    
    23,632
    (47,015)Net
      income
    
    
    
    
    
    $  
      32,778
    $   
      28,514Basic earnings per common
      share
    
    
    $       0.03
    $        0.03See notes to condensed financial
      statements.     TAYCO DEVELOPMENTS,
    INC.Condensed Statements
      of Cash Flows
    
    
    
    
    (Unaudited)For the
      three months endedAugust 31,2004
    2003Cash flows from
      operating activities:Net income
    
    
    
    
    
    $  
      32,778
    $  
      28,513Adjustments to reconcile net income
      to net cash flows fromoperating
      activities:Depreciation and
      amortization
    
    
    
    
    4,050
    4,200Equity in net (income) loss of
      affiliates
    
    
    
    (23,632)
    47,015Gain on settlement of officer life
      insurance policies
    
    
    
    -
    (53,552)Changes in other assets and
      liabilities:Prepaid expenses
    
    
    
    
    
    (13,631)
    (11,147)Current liabilities
    
    
    
    
    
    2,179
    915Net cash flows from
      operating activities
    
    
    1,744
    15,944Cash flows from
      investing activities:Increase in short-term
      investments
    
    
    
    
    (742)
    (706)Receivable - affiliate,
      net
    
    
    
    
    
    57,346
    (172,621)Proceeds from settlement of officer
      life insurance policies
    
    -
    158,610Acquisition of
patents
    
    
    
    
    
    -
    (1,325)Net cash flows from
      (for) investing activities
    
    56,604
    (16,042)Net increase (decrease) in
      cash
    
    
    
    
    58,348
    (98)Cash - beginning
    
    
    
    
    
    46,092
    24,806Cash - ending
    
    
    
    
    
    $ 
      104,440
    $    24,708See 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 August 31, 2004 and May 31, 2004, the results of operations
      for the three months ended August 31, 2004 and August 31, 2003, and the
      cash flows for the three months ended August 31, 2004 and August 31,
      2003.  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 month period ended August 31, 2004, the
      net income was divided by the outstanding shares of 987,928.  To
      calculate the earnings per share for the three month period ended August
      31, 2003, the net income was divided by the outstanding shares of
      990,213.4.
    The results of
      operations for the three month period ended August 31, 2004 are not
      necessarily indicative of the results to be expected for the full
      year.5.
    Significant Equity
      Investees: The Company owns approximately a 23% equity investment in
      Taylor Devices, Inc.  For the three months ended August 31, 2004,
      Taylor Devices, Inc. had sales of $2,451,000, gross profit of $856,000,
      and net income of $74,000.  For the three months ended August 31,
      2003, Taylor Devices, Inc. had sales of $2,989,000, gross profit of
      $591,000, and net loss of $201,000.  The carrying amount of the
      investment in Taylor Devices, Inc. as of August 31, 2004 and May 31, 2004
      was $2,004,000 and $1,988,000.  The Company also owns 42% of an
      affiliate, Tayco Realty Corporation.  The carrying amount of this
      investment as of August 31, 2004 and May 31, 2004 was $426,000 and
      $419,000.


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," and "assume" constitute forward-looking statements, and as such, are
not a guarantee of future performance.  The statements involve factors,
risks and uncertainties, the impact or occurrence of which can cause actual
results to differ materially from the expected results described in such
statements.  Risks and uncertainties can include, among others,
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.  The Company
disclaims any obligation to update the forward-looking statements in this
report. 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 three months
      ended August 31, 2004 and 2003Increase
      /(Decrease)Royalties
      revenue
    
    $      (32,000)Research &
      development revenue
    
    $       11,000Research &
      development expense
    
    $        (7,000)Selling, general and
      administrative expenses
    
    $       21,000Other
    income
    
    $     
      (44,000)Income before provision
      for income taxes and equity in net income (loss) of
    affiliates
    
    $      (78,000)Equity in net income
      (loss) of affiliates
    
    $       71,000Net
income
    
    $        
  4,000
  For the three months
ended August 31, 2004(All figures being discussed are for the three months ended August
31, 2004 as compared to the three months ended August 31, 2003.) The Company's
results of operations showed an approximate 14% decrease in net revenues with an
increase in net income of approximately 15%. The decrease in revenue is
attributable to a $32,000 reduction in royalties received as a result of
Devices' decreased sales of Tension / Compression Liquid Spring Isolators which
use the Company's patented technology.  Mitigating the decrease from
royalties was a 14% increase of research & development revenue resulting
from higher 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. Other income in
the current year of $10,000 is primarily interest earned on the note receivable
from Devices.  Other income in the prior year of $54,000 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 $24,000.  This compares to a loss of $47,000
for the same period in the prior year. Net income was
$33,000 or $0.03 per share.  This is up slightly from the prior year's
level of $29,000 or $0.03 per share. This is a result of the aforementioned
items. In addition to
working on product development and bid projects on behalf of Devices, Tayco's
engineers are working on new military applications for the Seating Isolation
System as well as expanded aerospace applications for the Cargo Isolation
Systems.  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 August 31, 2004 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 August 31, 2004
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 has materially affected,
or is 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 August 31, 2004 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
      orProgramsJune 1,
      2004 -  June 30, 2004
    -
    -
    -July 1,
      2004 -  July 31, 2004
    -
    -
    -August 1,
      2004 -  August 31, 2004
    -
    -
    -Total
    -
    -
    -
    -ITEM 3
    Defaults Upon Senior
      Securities:
      NoneITEM 4
    Submission of Matters
      to a Vote of Securities Holders:
      None
 ITEM 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
    ExhibitsExhibits31(i)      Rule 15d-14(a) Certification of
      Chief Executive Officer.31(ii)     Rule 15d-14(a) Certification of
      Chief Financial Officer.32(i)      Certification of Chief
      Executive Officer pursuant to 18 U.S.C. Section
    1350.32(ii)      Certification of Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350.


.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 August 31, 2004, and the related condensed statements of income and cash
flows for the three months ended August 31, 2004 and August 31, 2003. 
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
review, 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 YorkOctober 1, 2004


TAYCO DEVELOPMENTS,
      INC.Signatures
  Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.  TAYCO DEVELOPMENTS, INC.(Registrant)  By:
    s/Douglas P.
      Taylor
    
    Date:
    October 13,
      2004Douglas P.
      TaylorPresidentChairman of the Board of Directors(Principal
      Executive Officer)
  AND  By:
    s/Mark V.
      McDonough
    
    Date:
    October 13,
      2004Mark V.
      McDonoughChief Financial Officer