**SECURITIES ANDEXCHANGE COMMISSION WASHINGTON, DC20549
FORM 10-QSB 
QUARTERLY REPORTUNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 
For quarter ended November 30,2001

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 CodeRegistrant's        Telephone Number, Including Area Code -- 716-694-0800
Indicate by check mark whetherthe registrant (1) has filed all annual, quarterly, and otherreports required to be filed with all the Commission and (2) hasbeen subject to the filing requirements for at least the past 90days.
Yes              X  No          
Indicate the number of sharesoutstanding, of each of the Issuer's classes of common stock asof the close of the period covered by this report.
CLASS Outstanding at November 30,        2001Common Stock(2-1/2 cents par value) 2,826,791TAYLOR        DEVICES, INC.   **Index to Form 10-QSB**       PART I        FINANCIAL        INFORMATION
PAGE NO.
     Item 1.Financial        Statements       Condensed        Consolidated Balance Sheets as of November 30, 2001, and        May 31, 20013      Condensed        Consolidated Statements of Income for three months ended        November 30, 2001 and November 30, 2000, and six months        ended November 30, 2001 and November 30, 20004      Condensed        Consolidated Statements of Cash Flows for six months        ended November 30, 2001 and November 30, 20005      Notes        to Condensed Consolidated Financial Statements6     Item 2.Management's        Discussion and Analysis of the Financial Condition and        Results of Operations7    PART II        OTHER        INFORMATION  Item 1.Legal        Proceedings10 Item 2.Changes        in Securities10 Item 3.Defaults        upon Senior Securities10 Item 4.Submission        of Matters to Vote of Security Holders10 Item 5.Other        Information10 Item 6.Exhibits        and Reports on Form 8-K10    ACCOUNTANTS'        REVIEW REPORT11SIGNATURES 12TAYLOR        DEVICES, INC. AND SUBSIDIARY       **Condensed Consolidated Balance        Sheets** **(Unaudited)******  
**November 30,2001**

****
May 31, 2001   **Assets**  **Current assets:**   Cash and cash equivalents**$ 296,746**$ 59,847  Short-term investments **251,764**251,764  Accounts receivable**2,616,382**3,196,831  Inventory**5,755,592**3,784,824  Costs and estimated earnings in        excess of billings**4,904,911**3,096,325  Other current assets **381,348******541,186  **Total current assets** **14,206,743**10,930,777 Property and equipment, net**4,069,387**3,689,345 Investment in affiliate, at equity**359,200**335,585 Intangibles and other assets **370,067******377,291   **$19,005,397******$15,332,998**Liabilities and Stockholders' Equity**  **Current        liabilities:**   Short-term borrowings and current    portion of long-term debt**$ 3,828,555**$ 2,134,786  Payables - trade **1,137,400**1,525,432  Payables - affiliate **450,148**391,009  Billings in excess of costs and        estimated earnings**2,301,713**1,340,412**** Other current liabilities**1,313,358******1,041,917  **Total current liabilities** **9,031,174**6,433,556 Long-term liabilities **1,557,573**1,051,279****Minority stockholder's interest **353,957**346,233      **Stockholders' Equity:**    Common stock and additional        paid-in capital**3,248,692******3,012,071**** Retained earnings **5,445,719******4,883,104****   **8,694,411**7,895,175**** Treasury stock - at cost**(631,718)**(393,245)  **Total stockholders' equity** **8,062,693******7,501,930   **$19,005,397******$15,332,998****
*See notes tocondensed consolidated financial statements.*

 

 
TAYLOR        DEVICES, INC. AND SUBSIDIARY        **Condensed Consolidated        Statements of Income**
**(Unaudited)**

**(Unaudited)**
 
For the three months ended        November 30, 

For the six months ended        November 30, 
  
**2001**

2000 
**2001**2000      Sales, net**$3,690,875**$2,676,857 **$7,630,938**$5,290,273       Cost of sales**2,077,204**1,613,795        **4,323,167**3,159,685       **Gross        profit****1,613,671**1,063,062 **3,307,771**2,130,588       Selling, general and        administrative expenses**1,324,811**822,884 **2,380,143**1,625,106       **Operating        income****288,860**240,178 **927,628**505,482      Other expense, net**50,329**51,082 **97,904**73,359       Income before provision for income        taxes, equityin net income of affiliate and        minoritystockholder's        interest**238,531**189,096        **829,724**432,123              Provision for        income taxes**77,400**70,300 **283,000**152,300        Income        before equity in net income of affiliateand        minority stockholder's interest**161,131**118,796 **546,724**279,823       Equity in net income of affiliate**13,725**1,761 **23,615**5,861        Income        before minority stockholder's interest**174,856**120,557 **570,339**285,684       Minority stockholder's interest**(3,171)**(4,305)**(7,724)**(11,046)       **Net        income****$ 171,685**$        116,252 **$ 562,615**$        274,638       Basic        and diluted earnings per common share**$ 0.06******$ 0.04 **$ 0.20******$ 0.10  ** ** ** ** ** *See notes        to condensed consolidated financial statements.*        
 

 
TAYLOR DEVICES, INC. AND        SUBSIDIARY **Condensed        Consolidated Statements of Cash Flows**       
**(Unaudited)**
 For the six months ended November        30,
**2001**

2000 
 **Cash flows from        operating activities:**   Net income**$        562,615**$ 274,638  Adjustments to reconcile net        income to net cash flows from   operating activities:    Depreciation and amortization**137,522**135,534   Provision for losses on accounts        receivable**(10,000)**- 0 -   Equity in net income of affiliate**(23,615)**(5,861)  Minority stockholder's interest**7,724**11,046   Changes in other current assets        and current liabilities:     Accounts receivable**590,449**78,330    Inventory**(1,970,768)**(506,806)   Costs and estimated earnings in        excess of billings**(1,808,586)**267,644    Other current assets**68,643**42,008    Payables - trade**(388,032)**(169,444)   Payables - affiliate**59,139**(103,648)   Billings in excess of costs and        estimated earnings**961,301**-0-    Other current liabilities**271,441******(248,224)    **Net cash flows for operating activities****(****1,542,167)**(224,783)       **Cash flows from investing activities:**   Acquisition of property and        equipment**(510,340)**(161,073) Other investing activities**91,195******75,938    **Net cash flows for investing activities****(419,145)**(85,135)       **Cash flows from financing activities:**   Net short-term borrowings and        repayments   on long-term debt**1,693,769**456,741  Proceeds from long-term debt**506,294**- 0 -  Proceeds from issuance of common        stock**236,621**60,847  Acquisition of treasury stock**(238,473)**(66,405)    **Net cash flows from financing activities****2,198,211******451,183           Net increase in cash and cash        equivalents**236,899**141,265        Cash and cash equivalents -        beginning**59,847******552,804           Cash and cash equivalents - ending**$ 296,746******$        694,069       *See notes        to condensed consolidated financial statements.* 
 

 
TAYLOR        DEVICES, INC. AND SUBSIDIARY **Notes 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 November 30, 2001 and 2000        and the results of operations and cash flows for the        three and six months then ended. 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, 2001.  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 six        month period ended November 30, 2001, the profit was        divided by 2,826,791 shares, which is net of the Treasury        shares, to calculate the earnings per share. For the six        month period ended November 30, 2000, the profit was        divided by 2,773,535 shares to calculate the earnings per        share, which is net of the Treasury shares.  4.The results        of operations for the six month period ended November 30,        2001 are not necessarily indicative of the results to be        expected for the full year.
 
TAYLOR        DEVICES, INC. **Management's Discussion        and Analysis of the Financial Condition********and        Results of Operations**  
**Cautionary Statement**

The Private Securities LitigationReform Act of 1995 provides a "safe harbor" forforward-looking statements. Certain matters discussed in thissection and elsewhere in this report, which are not historicalfacts, are forward-looking statements. Words such as"expects," "intends," "believes,""anticipates," "estimates,""assumes," and analogous expressions are intended toidentify forward-looking statements. As such, these statementsinvolve risks and uncertainties including, but not limited to,economic conditions, product demand and industry capacity,competition, pricing pressures, the need for the Company to keeppace with customer needs and technological developments, andother factors, many or all of which may be beyond the control ofthe Company. The following is management's discussion andanalysis of certain significant factors which have affected theCompany's earnings during the periods included in theaccompanying condensed consolidated statements of income. 

A summary of the period to periodchanges in the principal items included in the consolidatedstatements of income is shown below:
 
Comparison of the six months ended                November        30, 2001 and November 30, 2000 
   
Increase (Decrease)
Net        sales 2,340,665  Cost of        sales 1,163,482  Selling,        general and administrative expenses 755,037  Other        expense, net 24,545  Income        before tax and minority stockholder's interest 397,601  Provision        for income taxes 130,700  Income        before equity in net income of affiliate 266,901  Equity        in net income of affiliates 17,754  Minority        stockholder's interest (3,322) Net        income 287,977  
TAYLOR DEVICES, INC.
 **Management's Discussion        (Continued)**  
The Company's recent trend ofproducing new period and quarterly record financial figurescontinued for the six months and quarter ending November 30,2001. Revenues and Net Income were at record levels for bothperiods being reported.

**For the six months endedNovember 30, 2001** (all figures being compared are forsix months y-t-d FY2002 vs. six months y-t-d FY2001)

Net Sales for the first sixmonths of Fiscal Year 2002 were a six month year-to-date recordhigh $7,630,938, representing a 44.2% increase over the prioryear's figure $5,290,273. The improvement was due primarily toincreased progress billings against large seismic productsorders. In the current period, Gross Margin was recorded at$3,307,771 and 43.3% of sales, improving on FY01's Gross Marginof $2,130,588 and 40.3% of sales. In both periods, the grossmargin figure represents the composite of costs calculated fordiscrete OEM shipments, interim estimates for in-progressprojects and final adjustments for completed projects. Theimprovement in the gross margin performance can be attributed toan extended period of high labor utilization rates resulting inimproved internal overhead rates, and the initial progressbillings against certain high-margin seismic product orders.

Selling, General andAdministrative Expenses were $2,380,143 and 31.2% of sales in thecurrent period compared to $1,625,106 and 30.7% in the prioryear. Of the $755,037 increase in SGA expense, approximately$646,000 was generated by sales/marketing related items such ascommissions, royalties, advertising and consultant fees. NetOther Expense increased to $97,904 from $73,359 due primarily toan increased usage of the Line of Credit to fund certain projectswhich do not contain progress payment provisions and totemporarily fund the increase in inventory as discussedsubsequently in this report.

Net Income improved to a recordhigh $562,615 and $0.20 earnings per share, a 104.9 % increaseover last year's figure of $274,638 and $0.10 earnings per share.

**For the three monthsended November 30, 2001** (all figures being compared arefor the three months ended 11/30/01 vs. the three months ended11/30/00)

Net Sales in the current periodreached a record-high $3,690,875, a 37.9% increase over the$2,676,857 figure recorded in the second quarter of last year.Gross Margin improved to $1,613,671 and 43.7% of sales versuslast year's figures of $1,063,062 and 39.7% of sales. Asdiscussed previously, the improvement in revenues and grossmargin performance was generated primarily by increased progressbillings against seismic product orders.

SGA expenses totaled $1,324,811representing 35.9% of sales compared to $822,884 and 30.7% ofsales for FY2001 with the changes from period to periodattributable primarily, as discussed above, to variable sales-related expenses such as commissions, royalties and consultingfees. Net Other Expense remained stable between the two periods,$50,329 in FY02 versus $51,082 in FY01 as increased interestexpense was offset by insurance refunds and miscellaneous income.

Net Income figures for the periodwere $171,685 and $.06 earnings per share, producing a 47.7%improvement over the results of $116,252 and $.04 per share forFY01.

The Company's Balance sheetreflects the Company's commitment to maintaining its position inthe seismic products market. Over the past year there has been aconcerted effort to identify and design a series of products thatwould constitute the basis of a standard product line. In thepast six months, the company has been purchasing andmanufacturing the components of these standard lines, asreflected in the increased inventory figure. At this time,management anticipates that it can begin to relieve the inventoryand generate progress billings for these standard lines in theupcoming quarter. 

The development phases of the twoaerospace/defense projects that have been in-house for the pasttwo years have been essentially completed and are in the testingstage. Management is currently pursuing another large-scaledevelopment order in the aerospace/defense market. 

The Company's upgrade/expansioneffort undertaken in Fiscal Year 2001 is almost complete.Equipment that will improve production efficiency has beenordered and should be in place by the end of FY 2002.

The Company's backlog at 11/30/01was approximately $14,100,000. This figure includes the Company'sfirst order from Indonesia, a contract in excess of $900,000.This order is the result of efforts by the Company to increaseits presence in Asian civil engineering markets not previouslyconsidered part of its marketing area.

Based on the continuing highbacklog balance, the projected overall profitability of theorders within that backlog, and the full usage of the upgradedmanufacturing facilities, Management believes that the upcomingquarter and full year financial results should continue to behighly favorable. For the full year, results are anticipated toequal or exceed the record results of Fiscal Year 2001.

At this time Management does notanticipate that the Company will require any additional sourcesof outside funding to finance its operations or expansions.

 
TAYLOR        DEVICES, INC. **Part II - Other        Information**    ITEM 1Legal        Proceedings: The        Company is not currently engaged in any litigation.ITEM 2Changes        in Securities: NoneITEM 3Defaults        Upon Senior Securities:NoneITEM 4Submission        of Matters to Vote of Securities Holders:   The        Annual Meeting of Shareholders was held on November 2,        2001. The total outstanding number of shares on the        meeting record date of September 21, 2001 was 2,805,140.        A total of 2,152,580 shares were present in person or by        proxy at the meeting. The following are the election        results for the slate of directors presented by        management:   A.Class 3        Directors of the Company were elected to serve a three        year term expiring in 2004.   Douglas P.        Taylor - 2,148,762 shares voted *for* and 2,962        shares *withheld*.   Randall L.        Clark - 2,149,627 shares voted *for*and 2,097        shares *withheld.***           B.The        Shareholders approved the adoption of the 2001 Taylor        Devices, Inc. Stock Option Plan and the reservation of        135,000 shares of the Company's common stock for grant of        options under the Plan.   ITEM 5Other        Information:          For        the period 09/01/01 to 11/30/01, changes in the Company's        outstanding shares are as follows:           A.An increase        of 11,301 shares for purchases of Company stock by        employees from the Employee's Stock Purchase Plan.           B.An increase        in Treasury shares of 25,150, which were returned to the        treasury from open market purchases by the Company for        the period of 09/01/01 to 11/30/01.            C.An increase        in Treasury shares of 19,500, which were returned to the        treasury by directors and key personnel for options        exercised during the period of 09/01/01 to 11/30/01.        Treasury shares at 11/30/01 are 183,538.           D.55,000        shares were purchased by Directors and key employees        through the 1998 Stock Option Plan during the period of        09/01/01 to 11/30/01.            ITEM 6Exhibits        and Reports on Form 8-K: 
None

 

 
  **Accountants' Review Report**  
The Board of Directors andStockholdersTaylor Devices, Inc.

We have reviewed the condensedconsolidated balance sheet of Taylor Devices, Inc. and Subsidiaryas of November 30, 2001, and the related condensed consolidatedstatements of income and cash flows for the three and six monthsended November 30, 2001 and 2000. These financial statements arethe responsibility of the Company's management.

We conducted our review inaccordance with standards established by the American Instituteof Certified Public Accountants. A review of interim financialinformation consists principally of applying analyticalprocedures to financial data and making inquiries of personsresponsible for financial and accounting matters. It issubstantially less in scope than an audit conducted in accordancewith auditing standards generally accepted in the United Statesof America, the objective of which is the expression of anopinion regarding the financial statements taken as a whole.Accordingly, we do not express such an opinion.

Based on our review, we are notaware of any material modifications that should be made to thecondensed consolidated financial statements referred to above forthem to be in conformity with accounting principles generallyaccepted in the United States of America.

We have previously audited, inaccordance with auditing standards generally accepted in theUnited States of America, the consolidated balance sheet as ofMay 31, 2001, and the related consolidated statements of income,changes in stockholders' equity, and cash flows for the year thenended (not presented herein); and in our report dated August 2,2001, we expressed an unqualified opinion on those financialstatements. In our opinion, the information set forth in theaccompanying condensed consolidated balance sheet as of May 31,2001 is fairly stated, in all material respects, in relation tothe balance sheet from which it has been derived.

Lumsden & McCormick, LLPBuffalo, New YorkJanuary 7, 2002
 
TAYLOR        DEVICES, INC. **Signatures**  
Pursuant to the requirements ofthe Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersignedthereunto duly authorized.
TAYLOR        DEVICES, INC.(Registrant)By/s/Douglas        P. Taylor  DateJanuary        14, 2002 Douglas P.        TaylorPresident        Chairman of the Board of        Directors        (Principal Executive        Officer)    AND        By/s/Kenneth        G. Bernstein  DateJanuary        14, 2002 Kenneth G.        BernsteinTreasurer(Principal Financial and        Accounting Officer)   

**