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 0‐3498  TAYLOR DEVICES,
      INC.(EXACT NAME OF
      REGISTRANT AS SPECIFIED IN ITS
CHARTER)
  NEW
      YORK
    
    16‐0797789(State or other Jurisdiction of
      incorporation or organization)
    
    (I.R.S. Employer
      Identification Number)
  90 TAYLOR DRIVE, NORTH
      TONAWANDA, NEW YORK
    
    14120--0748Address of principal executive
      offices
    
    Zip
Code
  Registrant's Telephone Number, Including Area Code --
      716‐694‐0800
  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(2‐1/2
      cents par value)
    
    3,022,003
    TAYLOR DEVICES, INC.Index to Form 10-QSB    PART I
    FINANCIAL
      INFORMATION                                                                                                                   
      PAGE NO.Item
    1.
    Financial
      StatementsCondensed Consolidated
      Balance Sheets August 31, 2004 and May 31, 2004
    3Condensed Consolidated
      Statements of Income for the three months ended August 31, 2004 and August
      31, 2003
    4Condensed Consolidated
      Statements of Cash Flows for the three months ended August 31, 2004 and
      August 31, 2003
    5Notes to Condensed
      Consolidated Financial Statements
    6Item 2.
    Management's Discussion
      and Analysis or Plan of Operation
    7Item 3.
    Controls and
      Procedures
    12PART II
    OTHER
      INFORMATIONItem 1.
    Legal
      Proceedings
    13Item 2.
    Unregistered Sales of
      Equity Securities and Use of Proceeds
    13Item 3.
    Defaults upon Senior
      Securities
    13Item 4.
    Submission of Matters
      to a Vote of Security Holders
    14Item 5.
    Other
      Information
    14Item 6.
    Exhibits
    14REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
    15SIGNATURES
    
    16
              TAYLOR
      DEVICES, INC. AND SUBSIDIARYPart I  - Item 1.  Financial
      StatementsCondensed Consolidated Balance
    Sheets
    
    (Unaudited)August 31,2004
    May 31,2004AssetsCurrent
      assets:Cash and cash
      equivalents
    $     468,103
    $       88,390Accounts receivable,
      net
    1,962,504
    1,440,054Inventory
    4,755,603
    4,560,755Costs and estimated
      earnings in excess of billings
    1,399,643
    1,537,999Other current
      assets
    
    1,074,438
    769,252Total current
      assets
    
    9,660,291
    8,396,450Maintenance and other
      inventory, net
    526,807
    464,985Property and equipment,
      net
    3,662,735
    3,679,831Investment in
      affiliate, at equity
    439,168
    435,321Intangibles and other
      assets
    171,021
    173,434$14,460,022
    $13,150,021Liabilities and
      Stockholders' EquityCurrent
      liabilities:Short-term borrowings
      and current portion of long-term debt
    $
      1,686,764
    $ 364,054Payables -
      trade
    
    731,946
    904,179Accrued
      commissions
    436,258
    488,236Billings in excess of
      costs and estimated earnings
    241,520
    -Other current
      liabilities
    
    362,173
    390,152Total current
      liabilities
    
    3,458,661
    2,146,621Long-term
      liabilities
    
    1,141,694
    1,220,838Payables -
      affiliate
    718,370
    775,716Minority stockholder's
      interest
    
    426,224
    418,723Stockholders'
      Equity:Common stock and
      additional paid-in capital
    4,026,188
    3,972,887Retained
      earnings
    
    5,581,854
    5,508,2059,608,042
    9,481,092Treasury stock - at
      cost
    (892,969)
    (892,969)Total stockholders'
      equity
    
    8,715,073
    8,588,123$14,460,022
    $13,150,021        See notes to condensed
consolidated financial statements.    TAYLOR DEVICES, INC. AND
      SUBSIDIARYCondensed
      Consolidated Statements of Income
    
    (Unaudited)For the three months
      ended August 31,2004
    2003Sales, net
    
    
    
    $ 
      2,451,419
    $ 2,989,261Cost of goods sold
    
    
    
    1,595,625
    2,398,048Gross
      profit
    
    
    
    855,794
    591,213Selling, general and administrative
      expenses
    692,962
    943,121Operating income
      (loss)
    
    
    162,832
    (351,908)Other income (expense),
      net
    
    
    (34,729)
    12,504Income (loss) before
      provision for income taxes, equity in netincome
      of affiliate and minority stockholder's interest
    128,103
    (339,404)Provision for income taxes
      (benefit)
    
    50,800
    (125,000)Income (loss) before
      equity in net income of affiliate andminority
      stockholder's interest
    
    77,303
    (214,404)Equity in net income of
      affiliate
    
    
    3,847
    18,647Income (loss) before
      minority stockholder's interest
    81,150
    (195,757)Minority stockholder's
      interest
    
    
    (7,501)
    (5,372)Net income
      (loss)
    
    
    
    $       73,649
    $ 
    (201,129)Basic and diluted earnings (loss)
      per common share
    $          
      0.02
    $       
(0.07)                See notes to condensed consolidated
financial statements.    TAYLOR DEVICES, INC. AND
      SUBSIDIARYCondensed
      Consolidated Statements of Cash Flows
    
    
    (Unaudited)For the
      three months endedAugust 31,2004
    2003Cash flows from
      operating activities:Net income (loss)
    
    
    
    
    $    
      73,649
    $  
      (201,129)Adjustments to reconcile net income
      (loss) to net cash flows fromoperating
      activities:Depreciation and
      amortization
    
    
    
    87,368
    85,770Gain on sale of
    equipment
    
    
    
    -
    -Bad debts expense
    
    
    
    
    -
    -Equity in net income of
      affiliate
    
    
    
    (3,847)
    (18,647)Gain on settlement of officer life
      insurance policies
    
    
    -
    (53,719)Deferred income taxes
    
    
    
    -
    -Minority stockholder's
      interest
    
    
    
    7,501
    5,372Changes in other assets and
      liabilities:Accounts receivable
    
    
    
    (522,450)
    (256,881)Inventory
    
    
    
    
    (256,670)
    352,834Costs and estimated earnings in
      excess of billings
    138,356
    2,708,910Other current assets
    
    
    
    (77,684)
    (213,662)Payables - trade
    
    
    
    
    (172,233)
    (41,013)Accrued commissions
    
    
    
    (51,978)
    (362,782)Billings in excess of costs and
      estimated earnings
    
    241,520
    184,033Other current
    liabilities
    
    
    
    (27,979)
    23,823Net cash flows from
      (for) operating activities
    (564,447)
    2,212,909Cash flows from
      investing activities:Acquisition of property and
      equipment
    
    
    
    (68,172)
    (13,185)Proceeds from settlement of officer
      life insurance policies
    -
    -Other investing
      activities
    
    
    
    (227,189)
    18,019Net cash flows from
      (for) investing activities
    (295,361)
    4,834Cash flows from
      financing activities:Net short-term borrowings and
      repaymentson long-term debt
    
    
    
    
    1,243,566
    (2,570,969)Payables - affiliate,
    net
    
    
    
    
    (57,346)
    14,009Proceeds from long-term
      debt
    
    
    
    -
    -Proceeds from issuance of common
      stock
    
    
    
    53,301
    55,805Acquisition of treasury
      stock
    
    
    
    -
    (11,310)Net cash flows from
      (for) financing activities
    1,239,521
    (2,512,465)Net increase (decrease) in cash and
      cash equivalents
    379,713
    (294,722)Cash and cash equivalents -
      beginning
    
    
    
    88,390
    417,166Cash and cash equivalents -
      ending
    
    
    $      
    468,103
    $      122,444See notes to condensed
      consolidated financial statements.




TAYLOR DEVICES, INC.
      AND SUBSIDIARYNotes to Condensed Consolidated Financial
      Statements
   1.
    The accompanying
      unaudited condensed consolidated financial statements have been prepared
      in accordance with accounting principles generally accepted in the United
      States of America for interim financial information and with the
      instructions to Form 10-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 consolidated 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 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.
    For the three month
      period ended August 31, 2004, the net income was divided by 3,000,413,
      which is net of the Treasury shares, to calculate the net income per
      share.  For the three month period ended August 31, 2003, the profit
      was divided by 2,913,739, which is net of the Treasury shares, to
      calculate the earnings per share.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 Investee: The
      Company owns approximately a 23% equity investment in Tayco Developments,
      Inc. (Developments).  For the three months ended August 31, 2004,
      Tayco Developments, Inc. had revenues of $126,000 and net income of
      $33,000.  For the three months ended August 31, 2003, Tayco
      Developments, Inc. had revenues of $147,000 and net income of
      $29,000.  The carrying amount of the investment in Tayco
      Developments, Inc. as of August 31, 2004 and May 31, 2004 was $439,000 and
      $435,000.
 TAYLOR
      DEVICES, 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 consolidated statements of
income is shown below:  Comparison of the three months
      ended August 31, 2004 and 2003Increase
    /(Decrease)Sales,
net
    
    $    
      (538,000)Cost of goods
      sold
    
    $    
      (802,000)Selling, general and
      administrative expenses
    
    $    
      (250,000)Other income (expense),
      net
    
    $       (47,000)Income (loss) before
      provision for income taxes, equity in net income of affiliate and minority
      stockholder's interest
    
    $      468,000Provision (benefit) for
      income taxes
    
    $      176,000Income (loss) before
      equity in net income of affiliate and minority stockholder's
      interest
    
    $      292,000Equity in net income of
      affiliate
    
    $       (15,000)Net income
      (loss)
    
    $     
275,000
  Sales under
certain fixed-price contracts, requiring substantial performance over several
periods prior to commencement of deliveries, are accounted for under the
percentage-of-completion method of accounting whereby revenues are recognized
based on estimates of completion prepared on a ratio of cost to total estimated
cost basis.  Costs include all material and direct and indirect charges
related to specific contracts. Adjustments to
cost estimates are made periodically and any losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined.  However, any profits expected on contracts in progress are
recognized over the life of the contract. 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. 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.) Three months ended
    Change August 31, 2004
    August 31, 2003
    Increase / (Decrease)
    Percent ChangeNet
      Revenue
    $2,451,000
    $ 
      2,989,000
    $  
      (538,000)
    -18%Cost of
      sales
    1,596,000
    2,398,000
    (802,000)
    -33%Gross
      profit
    $   855,000
    $     591,000
    $    264,000
    45%1⁄4as a percentage of net
      revenues
    35%
    20% The Company's
consolidated results of operations showed a 18% decrease in net revenues with an
increase in net income to $74,000 from a net loss of $201,000. Gross profit
increased by 45%.  Revenues recorded in the current period for long-term
construction projects dropped to almost half of the level recorded in the prior
year.  However, the current year's projects contributed a gross profit
margin of 39% as compared to 8% in the prior year's period.  The overall
gross profit as a percentage of net revenues for the quarter was 35% as compared
to 20% for the same period in the prior year. Management
continues to reduce spending on the overhead portion of cost-of-sales, as the
level of sales has decreased, in its effort to improve profitability. Selling, General and
      Administrative Expenses Three months ended
    Change August 31, 2004
    August 31, 2003
    Increase / (Decrease)
    Percent ChangeOutside
      Commissions
    $   104,000
    $   217,000
    $(113,000)
    -52%Royalties
    36,000
    69,000
    (33,000)
    -48%Other
      SG&A
    553,000
    657,000
    (104,000)
    -16%Total
      SG&A
    $   693,000
    $   943,000
    $(250,000)
    -27%1⁄4as a percentage of net
      revenues
    28%
    32% Selling,
general and administrative expenses decreased by approximately 27% from the
prior year primarily due to lower levels of commission expense, which is
directly related to the level of sales for the period.  Commission expense
was also higher in the prior year period due to higher commission rates on a few
of the large, long-term construction projects in production at that time. 
Royalty expense is just over half of the amount recorded in the prior year
period.  There were fewer long-term construction projects that are subject
to the royalty during the current quarter. These reductions, combined with a
decrease in advertising expense and professional expenses contributed to the
savings over the prior year. The above
factors resulted in operating income of $163,000 for the three months ended
August 31, 2004 as compared to an operating loss of $352,000 in the same period
of the prior year. In spite of
slightly higher interest rates, interest expense decreased by approximately 17%
from the same period of the prior year due to a lower level of use of the
Company's operating line of credit.   The line of credit is used
primarily to fund the production of larger projects that do not allow for
advance payments or progress payments.  Included in this year's interest
expense is $9,000 on an unsecured promissory note payable to
Developments. Other income
(expense), net of $35,000 in the current year is primarily interest
expense.  The $13,000 income in the prior year period includes interest
expense of $45,000 and income of $54,000 for the excess of proceeds from the
life insurance policies on the Company's founder, Paul H. Taylor, over the net
of the cash surrender value of the policies and loans against the
policies.  Capital
Resources, Line of Credit and Long-Term Debt  The Company's
primary liquidity relates to the working capital needs.  These are
primarily inventory, accounts receivable, costs and estimated earnings in excess
of billings, accounts payable, accrued commissions, billings in excess of costs
and estimated earnings, and debt service.  The Company's primary sources of
liquidity have been from operations and from bank financing. Capital
expenditures for the three months ended August 31, 2004 were $68,000 compared to
$13,000 in the same period of the prior year.  There are no material
commitments for capital expenditures as of August 31, 2004. The Company has
a $7,500,000 line of credit on which there is a $1,464,000 balance outstanding
as of August 31, 2004.  This is up from the $144,000 balance outstanding as
of May 31, 2004.  The outstanding balance on the line of credit will
fluctuate as the Company's various long-term projects progress. Principal
maturities of long-term debt for the remainder of the current fiscal year and
the subsequent five years are as follows: 2005 - $144,000; 2006 - $231,000; 2007
- $241,000; 2008 - $232,000; 2009 - $138,000; and 2010 - $72,000. Inventory and Maintenance Inventory August 31, 2004
    May 31, 2004
    Increase Raw
      Materials
    $   294,000
    
    $   291,000
    
    $      3,000
    1%Work in
      process
    4,123,000
    
    3,946,000
    
    177,000
    4%Finished
      goods
    339,000
    
    324,000
    
    15,000
    5%Inventory
    4,756,000
    90%
    4,561,000
    91%
    195,000
    4%Maintenance
      inventory
    527,000
    10%
    465,000
    9%
    62,000
    13%Total
    $5,283,000
    100%
    $5,026,000
    100%
    $  257,000
    5% Inventory
      turnover
    1.2
    
    1.8NOTE: Inventory
      turnover is annualized for the three-month period ending August 31,
      2004. Inventory, at
$4,756,000 as of August 31, 2004, is higher by approximately 4% over the prior
year-end.  Of this, approximately 87% is work in process, 7% is finished
goods, and 6% is raw materials. Maintenance and
other inventory represent stock that is estimated to have a product life cycle
in excess of twelve months. This stock represents certain items that 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.  Management
of the Company has recorded an allowance for potential inventory obsolescence.
The provision for potential inventory obsolescence was $45,000 for the
three-month period ended August 31, 2004 as it was for the same period last
year.  However, the Company continues to rework slow-moving inventory,
where applicable, to convert it to product to be used on customer
orders. Accounts Receivable,
      Costs and Estimated Earnings in Excess of Billings,and Billings in
      Excess of Costs and Estimated Earnings August 31,
      2004
    May 31, 2004
    Increase /(Decrease) Accounts
      receivable
    $1,963,000
    
    $1,440,000
    
    $  523,000
    36%Costs and
      estimated earnings in excess of billings
    1,400,000
    
    1,538,000
    
    (138,000)
    -9%Less:
      Billings in excess of costs and estimated earnings
    242,000
    
    -
    
    242,000 Net
    $3,121,000
    
    $2,978,000
    
    $  143,000
    5% The Company
combines the totals of accounts receivable, the asset "costs and estimated
earnings in excess of billings", and the liability, "billings in excess of costs
and estimated earnings", 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 $1,963,000 as of August 31, 2004 includes approximately $243,000
of amounts retained by customers on long-term construction projects. The
increase in accounts receivable over the prior year-end by approximately
$523,000 is due to: (1) a combination of higher billings for non-project sales
in August as compared to May, along with (2) increased billings on certain
long-term projects during August as compared to May.  The Company expects
to collect all of these amounts, including the retainage, during the next twelve
months. As noted above,
the current asset, "costs and estimated earnings in excess of billings,"
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
in certain governmental contracts and contracts with foreign customers. 
The $1,400,000 balance in this account at August 31, 2004 is a 9% decrease from
the prior year-end.  This decrease results from increased billings to
customers as many of the long-term projects have been completed or were at an
advanced stage of completion at August 31, 2004.  The Company expects to
bill the entire amount during the next twelve months. As noted above,
the current liability, "billings in excess of costs and estimated earnings",
represents billings to customers in excess of revenues recognized.  The
$242,000 balance in this account at August 31, 2004 is an increase from the zero
balance at the end of the prior year.  This increase is primarily due to
advance payments received on two long-term construction projects that are in
very early stages of production. Final delivery of product under these contracts
is expected to occur during the next twelve months. The Company's
backlog of sales orders at August 31, 2004 is $6.6 million, up from the backlog
at the end of the prior year of $6.5 million.  $0.7 million of the current
backlog is on projects already in progress. $0.9
million of the current backlog is for a long-term project that was also included
in the backlog at May 31, 2004.  Work on this project has not started as
the customer has not obtained the necessary letter of credit to assure payment
for the project. The Company has submitted
several bids, that are still pending, to work on long-term construction projects
around the world.  If the Company is successful in its efforts to win the
bids, it will have a positive impact on the sales order backlog. Accounts
payable, at $732,000 as of August 31, 2004, is approximately $172,000 less than
the prior year-end.  This reduction is primarily due to three factors: 1)
less purchasing volume -- due to lower sales volume; 2) increased efforts to cut
costs; and 3) increased emphasis on taking advantage of early payment discounts
negotiated with suppliers. Commission
expense on applicable sales orders is recognized at the time revenue is
recognized.  The commission is paid following receipt of payment from the
customers.  Accrued commissions as of August 31, 2004 are $436,000. 
This is slightly less than the $488,000 accrued at the prior year-end.  The
Company expects the current accrued amount to be paid during the next twelve
months.  Other accrued expenses decreased only slightly from the prior
year-end to $362,000. The Company
paid $84,000 to Developments during the three months ended August 31, 2004 to
reduce the principal balance on the note payable. Goodwill
represents the excess of purchase price paid over fair value of net assets
acquired.  In accordance with Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets", the Company stopped amortizing
goodwill effective June 1, 2002. The Company assesses for the potential
impairment of goodwill at least annually by determining whether its carrying
amount exceeds its implied fair value.  The Company completed its
assessment of goodwill for the year ended May 31, 2004 and determined that an
impairment charge was not warranted. Management
believes that the Company's cash flows from operations and borrowing capacity
under the bank line of credit will be sufficient to fund ongoing operations,
capital improvements and share repurchases for the next twelve
months.




TAYLOR DEVICES,
      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.






TAYLOR DEVICES,
      INC.Part II - Other Information
  ITEM 1
    Legal
      ProceedingsNone except for routine
      litigation incidental to the Company's business.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
statement:Not
      Applicable(c)
    Repurchases of Equity Securities
 Period
    (a) Total*Number of**Shares**Purchased*
    (b)*Average**Price
      Paid**Per Share*
    (c) Total Number*of
      Shares**Purchased**as Part of**Publicly**Announced Plans**or
      Programs*
    *(d) Maximum**Number (or**Approximate Dollar**Value) of Shares**that May
      Yet**Be Purchased Under**the Plans or**Programs*June 1, 2004 -June 30, 2004
    -
    -
    -July 1, 2004 -July 31, 2004
    -
    -
    -August 1, 2004 -August 31, 2004
    -
    -
    -Total
    -
    -
    -
    $160,802 (1) (1) In 1998, the
      Company initiated a plan to purchase shares of its outstanding common
      stock through open market purchases, with an initial deposit to the
      program of $225,000.  Additional deposits of $435,000 have been made
      to the plan, with expenditures of $499,198.  To date, a total of
      164,696 shares have been purchased at an average price per share of
      $3.03.(d)
    Under the
      terms of the Company's credit arrangements with its major lender, the
      Company is prohibited from issuing cash dividends.  In addition, the
      credit arrangements requires the Company to maintain net working capital
      of at least $2,000,000 and tangible net worth of at last $6,000,000, as
      such terms are defined in the credit documents.  On August 31, 2004,
      under such definitions the Company's net working capital and tangible net
      worth were significantly in excess of such limits.ITEM 3
    Defaults Upon Senior
      Securities
      NoneITEM 4
    Submission of Matters
      to Vote of Securities Holders
      NoneITEM 5
    Other
      Information(a)
    The total
      number of shares of the Company outstanding during the quarter increased
      by 23,473 because of purchases of Company stock by employees under the
      2004 Taylor Devices, Inc. Employee Stock Purchase Plan.(b)
    Material changes to the
      procedures by which Security Holders may recommend nominees to the
      Registrant's Board of DirectorsNone


ITEM 6
    ExhibitsExhibits31(i)
    Rule 13a-14(a)
      Certification of Chief Executive Officer.31(ii)
    Rule 13a-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
StockholdersTaylor Devices, Inc. We have
reviewed the accompanying condensed consolidated balance sheet of Taylor
Devices, Inc. and Subsidiary as of August 31, 2004, and the related condensed
consolidated 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 consolidated financial statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America. We have
previously audited, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet as of
May 31, 2004, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated August 4, 2004, we expressed an unqualified
opinion on those financial statements.  In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of May 31,
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


TAYLOR DEVICES,
      INC.Signatures
  Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.  TAYLOR DEVICES,
      INC.(Registrant)   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