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 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
  Registrant's Telephone Number -
    716‐694‐0800
  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(2‐1/2
      cents par value)
    
    3,102,057
      TAYLOR DEVICES, INC.  Index to Form
10-QSB  PART I
    FINANCIAL
      INFORMATION
    PAGE
      NO.Item 1.
    Financial
      StatementsCondensed Consolidated
      Balance Sheets February 28, 2005 and May 31, 2004
    
    3Condensed Consolidated
      Statements of Income for the three and nine months ended February 28, 2005
      and February 29, 2004
    
    4Condensed Consolidated
      Statements of Cash Flows for the nine months ended February 28, 2005 and
      February 29, 2004
    
    5Notes to Condensed
      Consolidated Financial Statements
    
    6Item 2.
    Management's Discussion
      and Analysis or Plan of Operation
    
    7Item 3.
    Controls and Procedures
    
    13PART II
    OTHER
      INFORMATIONItem
      1.
    Legal
      Proceedings
    
    14Item 2.
    Unregistered Sales of
      Equity Securities and Use of Proceeds
    
    14Item 3.
    Defaults upon Senior
      Securities
    
    14Item 4.
    Submission of Matters
      to a Vote of Security Holders
    
    15Item 5.
    Other
      Information
    
    15Item 6.
    Exhibits
    
    16REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
    
    17SIGNATURES
    
    
    18
         TAYLOR DEVICES, INC. AND
      SUBSIDIARYCondensed
      Consolidated Balance Sheets
    (Unaudited)February
      28,2005
    May
      31,2004AssetsCurrent
      assets:Cash and cash
    equivalents
    $        
      32,283
    $        88,390Accounts receivable,
    net
    1,570,738
    1,440,054Inventory
    5,229,899
    4,560,755Costs and estimated earnings in
      excess of billings
    2,330,503
    1,537,999Other current assets
    948,307
    843,347Total current assets
    10,111,730
    8,470,545Maintenance and other inventory,
      net
    514,468
    464,985Property and equipment,
      net
    3,550,037
    3,679,831Investment in affiliate, at
      equity
    444,943
    435,321Intangible and other
      assets
    191,165
    173,434$ 14,812,343
    $
      13,224,116Liabilities and
      Stockholders' EquityCurrent
      liabilities:Short-term borrowings and current
      portion of long-term debt
    $   1,977,335
    $     364,054Payables - trade
    729,068
    904,179Accrued commissions
    473,675
    488,236Billings in excess of costs and
      estimated earnings
    319,666
    -Other current
    liabilities
    296,221
    464,247Total current liabilities
    3,795,965
    2,220,716Long-term liabilities
    1,041,267
    1,220,838Payables - affiliate
    599,952
    775,716Minority stockholder's
      interest
    441,968
    418,723Stockholders'
      Equity:Common stock and additional paid-in
      capital
    4,273,413
    3,972,887Retained earnings
    5,552,747
    5,508,2059,826,160
    9,481,092Treasury stock - at
    cost
    (892,969)
    (892,969)Total stockholders' equity
    8,933,191
    8,588,123$
      14,812,343
    $
      13,224,116   See notes to condensed consolidated
financial statements.     TAYLOR DEVICES, INC. AND
      SUBSIDIARYCondensed
      Consolidated 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,
      2004Sales, net
    $
      2,619,488
    $ 3,372,094
    $
      7,720,634
    $ 
    9,715,617Cost of goods sold
    1,937,083
    2,297,773
    5,387,173
    7,178,943Gross
      profit
    682,405
    1,074,321
    2,333,461
    2,536,674Selling, general and administrative
      expenses
    701,495
    926,928
    2,149,215
    2,938,929Operating income
      (loss)
    (19,090)
    147,393
    184,246
    (402,255)Other expense, net
    (35,719)
    (21,275)
    (104,781)
    (36,936)Income (loss) before provision for
      income taxes,equity in net income
      of affiliate andminority stockholder's
      interest
    (54,809)
    126,118
    79,465
    (439,191)Provision for income taxes
      (benefit)
    (16,700)
    71,000
    21,300
    (156,500)Income (loss) before equity in net
      income of affiliateand minority
      stockholder's interest
    (38,109)
    55,118
    58,165
    (282,691)Equity in net income of
      affiliate
    1,804
    5,738
    9,622
    33,212Income (loss) before minority
      stockholder's interest
    (36,305)
    60,856
    67,787
    (249,479)Minority stockholder's
      interest
    (6,240)
    (4,994)
    (23,245)
    (13,233)Net income
      (loss)
    $   (42,545)
    $     55,862
    $     44,542
    $  (262,712)Basic and diluted
      earnings (loss) per common share
    $       (0.01)
    $         0.02
    $          0.01
    $      
(0.09) See notes to condensed consolidated
financial statements.    TAYLOR DEVICES, INC. AND
      SUBSIDIARYCondensed
      Consolidated Statements of Cash Flows(Unaudited)For the nine months
    ended
    February
      28, 2005
    February 29,
      2004Cash flows from
      operating activities:Net income (loss)
    $     
      44,542
    $  
      (262,712)Adjustments to reconcile net income
      (loss) to net cash flows fromoperating
      activities:Depreciation and
      amortization
    266,292
    259,148Bad debts expense
    16,000
    -Equity in net income of
      affiliate
    (9,622)
    (33,212)Gain on settlement of officer life
      insurance policies
    -
    (53,720)
    
    Minority stockholder's
      interest
    23,245
    13,233
  Changes in other assets and
      liabilities:Accounts receivable
    (146,684)
    1,909,413Inventory
    (718,627)
    631,508Costs and estimated earnings in
      excess of billings
    (792,504)
    2,702,145Other current assets
    (112,406)
    (336,294)Payables - trade
    (175,111)
    (518,430)Accrued commissions
    (14,561)
    (1,066,609)Billings in excess of costs and
      estimated earnings
    319,666
    (126,730)Other current
    liabilities
    (168,026)
    (519,077)Net cash flows from
      (for) operating activities
    (1,467,796)
    2,598,663Cash flows from
      investing activities:Acquisition of property and
      equipment
    (130,198)
    (58,671)Proceeds from settlement of officer
      life insurance policies
    -
    263,398Other investing
      activities
    (16,585)
    157,506Net cash flows from
      (for) investing activities
    (146,783)
    362,233Cash flows from
      financing activities:Net short-term borrowings and
      repaymentson long-term debt
    1,433,710
    (3,771,012)Payables - affiliate
    (175,764)
    297,464Proceeds from issuance of common
      stock
    300,526
    178,805Acquisition of treasury
      stock
    -
    (11,586)Net cash flows from
      (for) financing activities
    1,558,472
    (3,306,329)Net decrease in cash and cash
      equivalents
    (56,107)
    (345,433)Cash and cash equivalents -
      beginning
    88,390
    417,166Cash and cash equivalents -
      ending
    $     
      32,283
    $      71,733 See notes to condensed consolidated
financial statements.    TAYLOR DEVICES, INC. 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 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 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.
    For the three and nine
      month period ended February 28, 2005, the net income or loss was divided
      by 3,033,761, which is net of the Treasury shares, to calculate the net
      income per share.  For the three and nine month period ended February
      29, 2004, the loss was divided by 2,939,923, which is net of the Treasury
      shares, to calculate the loss per share.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
      Investee: The Company owns approximately a 23% equity investment in Tayco
      Developments, Inc. (Developments).  For the nine months ended
      February 28, 2005, Tayco Developments, Inc. had revenues of $332,000 and
      net income of $50,000.  For the nine months ended February 29, 2004,
      Tayco Developments, Inc. had revenues of $443,000 and net income of
      $74,000.  The carrying amount of the investment in Tayco
      Developments, Inc. as of February 28, 2005 and May 31, 2004 was $445,000
      and $435,000.6.
    The May 31, 2004
      financial statements have been reclassified to conform with the
      presentation adopted for the February 28, 2005 financial
      statements.
        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 release publicly any updates or revisions to the
forward-looking statements herein to reflect any change in the Company's
expectations with regard thereto, or any changes in events, conditions or
circumstances on which any such statement is based. Results of
Operations A summary of the period to
period changes in the principal items included in the consolidated statements of
income is shown below:  Comparison of the nine months
      ended February 28, 2005 and February 29, 2004Increase
    /(Decrease)Sales,
net
    
    $ (1,995,000)Cost of goods
      sold
    
    $ (1,792,000)Selling, general and
      administrative expenses
    
    $   
      (790,000)Other expense,
      net
    
    $       68,000Income (loss) before
      provision for income taxes, equity in net income of affiliate and minority
      stockholder's interest
    
    $    
      519,000Provision (benefit) for
      income taxes
    
    $    
      178,000Income (loss) before
      equity in net income of affiliate and minority stockholder's
      interest
    
    $    
      341,000Equity in net income of
      affiliate
    
    $     
      (24,000)Net income
      (loss)
    
    $    
      307,000
 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 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.) Nine months ended
    ChangeFebruary 28, 2005
    February 29, 2004
    Increase / (Decrease)
    Percent ChangeNet
      Revenue
    $7,721,000
    $9,716,000
    $(1,995,000)
    -21%Cost of
      sales
    5,387,000
    7,179,000
    (1,792,000)
    -25%Gross
      profit
    $2,334,000
    $2,537,000
    $   (203,000)
    -8%...as a percentage of net revenues
    30%
    26% The Company's
consolidated results of operations showed a 21% decrease in net revenues with an
increase in net income to $45,000 from a net loss of $263,000. Gross profit
decreased by 8%.  Revenues recorded in the current period for long-term
construction projects dropped by 28% of the level recorded in the prior
year.  However, the current year's projects contributed a gross profit
margin of 30% as compared to 21% in the prior year's period.  The overall
gross profit as a percentage of net revenues for the period was 30% as compared
to 26% 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 Nine months ended
    Change February 28, 2005
    February 29, 2004
    Increase / (Decrease)
    Percent ChangeOutside
      Commissions
    $   305,000
    $   695,000
    $(390,000)
    -56%Royalties
    122,000
    205,000
    (83,000)
    -40%Other
      SG&A
    1,722,000
    2,039,000
    (317,000)
    -16%Total
      SG&A
    $2,149,000
    $2,939,000
    $(790,000)
    -27%...as a percentage of net revenues
    28%
    30% 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 year. These reductions, combined with
decreases in expenses for personnel by $151,000, consulting by $93,000,
insurance by $39,000 and advertising by $26,000, contributed to the savings over
the prior year. The above
factors resulted in operating income of $184,000 for the nine months ended
February 28, 2005 as compared to an operating loss of $402,000 in the same
period of the prior year. Interest
expense increased by $20,000 from the same period of the prior year. 
Included in this year's interest expense is $25,000 on an
unsecured promissory note payable to Developments. The average level of use of the Company's operating line of
credit remained the same when comparing this year to last; however, the interest
rates on the line increased from 3.75% to 5.25% between the periods.  The
line of credit is used primarily to fund the production of larger projects that
do not allow for advance payments or progress payments.  Interest rates on
some of the long-term debt has similarly increased.  The principal balance
on this debt has reduced during the periods, as scheduled. Other expense,
net of $105,000 in the current year is primarily interest expense.  Other
expense, net of $37,000 in the prior year period includes interest expense of
$98,000 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. 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.) Three months ended
    ChangeFebruary 28, 2005
    February 29, 2004
    Increase / (Decrease)
    Percent ChangeNet
      Revenue
    $2,619,000
    $3,372,000
    $  
      (753,000)
    -22%Cost of
      sales
    1,937,000
    2,298,000
    (361,000)
    -16%Gross
      profit
    $   682,000
    $1,074,000
    $   (392,000)
    -36%...as a percentage of net
      revenues
    26%
    32% The Company's
consolidated results of operations showed a 22% decrease in net revenues with a
decrease in net income from $56,000 to a net loss of $43,000. Gross profit
decreased by 36%.  Revenues recorded in the current period for long-term
construction projects dropped by 13% of the level recorded in the prior
year.  These current year's projects contributed a gross profit margin of
24% as compared to 34% in the prior year's period.  The overall gross
profit as a percentage of net revenues for the quarter was 26% as compared to
32% for the same period in the prior year. The Company
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.   The level of sales during that last three quarters
has been consistently lower than the comparative quarters in the prior fiscal
year. As discussed below, the Company's backlog of sales orders is up 15% over
the prior year-end.   Management is optimistic that this will have a
positive impact on the level of sales in the fourth quarter. Selling, General and
      Administrative Expenses Three months ended
    ChangeFebruary 28, 2005
    February 29, 2004
    Increase / (Decrease)
    Percent ChangeOutside
      Commissions
    $   124,000
    $   227,000
    $
      (103,000)
    -45%Royalties
    30,000
    44,000
    (14,000)
    -32%Other
      SG&A
    547,000
    656,000
    (109,000)
    -17%Total
      SG&A
    $   701,000
    $   927,000
    $
      (226,000)
    -24%...as a percentage of net revenues
    27%
    27% Selling,
general and administrative expenses decreased by approximately 24% 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 32% less than 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
decreases in expenses for personnel by $56,000 and consulting by $18,000,
contributed to the savings over the prior year. The above
factors resulted in an operating loss of $19,000 for the three months ended
February 28, 2005 as compared to operating income of $147,000 in the same period
of the prior year. Due to higher
interest rates, a higher level of use of the Company's operating line of credit
during the quarter and interest on an unsecured promissory
note payable to Developments, interest expense
increased by approximately $21,000 from the same period of the prior
year.   The line of credit is used primarily to fund the production of
larger projects that do not allow for advance payments or progress
payments.  Interest expense is included in other income (expense),
net.  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 nine months ended February 28, 2005 were $130,000 compared
to $59,000 in the same period of the prior year.  Approximately $90,000 of
the current year expenditures was for production, assembly and testing equipment
and improvements; approximately $30,000 was for engineering software and
hardware upgrades. There are no material commitments for capital expenditures as
of February 28, 2005. The Company has
reduced the amount of its line of credit from $7,500,000 to $5,000,000 during
the year as the excess amount was not being utilized.  There is a
$1,749,000 balance outstanding as of February 28, 2005.  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 - $49,000; 2006 - $231,000; 2007
- $241,000; 2008 - $232,000; 2009 - $138,000; and 2010 - $72,000. Inventory and
      Maintenance Inventory February 28, 2005
    May 31, 2004
    Increase Raw
      Materials
    $  
      485,000
    
    $   291,000
    
    $ 
      194,000
    67%Work in
      process
    4,357,000
    
    3,946,000
    
    411,000
    10%Finished
      goods
    389,000
    
    324,000
    
    65,000
    20%Inventory
    5,231,000
    91%
    4,561,000
    91%
    670,000
    15%Maintenance
      and other inventory
    514,000
    9%
    465,000
    9%
    49,000
    11%Total
    $5,745,000
    100%
    $5,026,000
    100%
    $ 719,000
    14%Inventory turnover
    1.3
    
    1.8
 NOTE: Inventory
      turnover is annualized for the nine-month period ending February 28,
      2005. Inventory, at
$5,231,000 as of February 28, 2005, is higher by approximately 15% over the
prior year-end.  Of this, approximately 83% is work in process, 8% is
finished goods, and 9% 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 $42,000 for the nine-month
period ended February 28, 2005 and $135,000 for the same period last year. 
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 February 28,
      2005
    May 31, 2004
    Increase /(Decrease) Accounts
      receivable
    $1,571,000
    
    $1,440,000
    
    $  131,000
    9% Costs and
      estimated earnings in excess of billings
    2,331,000
    
    1,538,000
    
    793,000
    52% Less:
      Billings in excess of costs and estimated earnings
    320,000
    
    -
    
    320,000 Net
    $3,582,000
    
    $2,978,000
    
    $  604,000
    20% 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 $1,571,000 as of February 28, 2005 includes approximately $160,000
of amounts retained by customers on long-term construction projects.  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 $2,331,000 balance in this account at February 28, 2005 is a 52% increase
from the prior year-end.  This increase results from work commencing on
several long-term construction projects that were not in process at May 31,
2004.  There are no progress billings to the customer permitted on some of
these projects. 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
$320,000 balance in this account at February 28, 2005 is an increase from the
zero balance at the end of the prior year.  This increase is due to advance
payments received on three 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 February 28, 2005 is $7.5 million, up from the
backlog at the end of the prior year of $6.5 million.  $1.9 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, which 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 $729,000 as of February 28, 2005, is approximately $175,000 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 February 28, 2005 are $474,000. 
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 by $168,000 from the prior
year-end to $296,000, primarily because of the Company's annual remittance in
January of sales tax collected on sales to customers within the State of
California. The Company
paid $204,000 to Developments during the nine months ended February 28, 2005 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 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.    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 February 28, 2005 that
      were not registered under the Securities Act.(b)
    Use of proceeds
      following effectiveness of initial registration
statement:Not
      Applicable(c)
    Repurchases of Equity SecuritiesPeriod
    (a) Total  Number
      ofSharesPurchased
    (b)AveragePrice PaidPer
      Share
    (c)
      Total Numberof Shares Purchasedas 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
    -
    -
    -
    $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 require 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
      February 28, 2005, 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
      SecuritiesNoneITEM 4
    Submission of Matters to Vote
      of Securities HoldersNoneITEM 5
    (a)
    The total number of shares of the Company outstanding during
      the quarter increased by 80,054 due to the exercise of stock options by
      Directors and key employees under the 2001 Taylor Devices, Inc. Stock
      Option Plan.(b)
    Material
      changes to the procedures by which Security Holders may recommend nominees
      to the Registrant's Board of Directors
      On February 9, 2005,
      the Board of Directors of the Company established a standing Nominating
      Committee comprised of three Directors, Messrs. Randall L. Clark, Donald
      B. Hofmar, Chairman, and Joseph P. Gastel, all of whom are independent
      within the meaning of the applicable NASD rules. The Nominating Committee
      is responsible for recommending candidates to fill any vacancy, or newly
      created directorship on the Board, and for recommending the slate of
      nominees to stand for election by shareholders at each annual meeting. The
      Board also adopted a Nominating Committee Charter ("Charter") to guide the
      Nominating Committee in its deliberations and its selection of qualified
      nominees, including any candidates proposed by shareholders. The
      Nominating Committee is required to meet as a body when and as needed to
      discharge its function under the Charter, and to report and make
      recommendations to the entire Board as to proposed nominees.  The
      report, at minimum, must include the name of each candidate, his or her
      qualifications, and the reasons for selection.
      The Charter requires
      that in order to be considered by the Nominating Committee as a nominee,
      every candidate, including any candidate proposed by shareholders, must
      meet certain qualification criteria, including, among other things,
      financial literacy, "independence" within the meaning of the NASD rules,
      satisfactory business experience, and the highest level of integrity and
      ethical character.  Recommendations must be supported by a detailed
      background of the suggested candidate, demonstrating how the individual
      meets the criteria for selection.  A full description of the
      independence standard and other director qualification criteria are set
      forth in the Charter attached to this Report as an Exhibit.
      Shareholders desiring
      to propose candidates for election to the Board should carefully review
      the requirements set forth in the Charter and direct their communications
      and supporting information to:
      Taylor Devices, Inc.Corporate Secretary90 Taylor
      DrivePO Box 748North Tonawanda, New York 14120-0748
      The Corporate
      Secretary's Office will forward any recommendation as to a director
      nominee, together with supporting documentation, to the Chairman of the
      Nominating Committee.ITEM 6
    Exhibits20
    News from Taylor Devices, Inc. Shareholder Letter, Spring
      2005.31(i)
    Rule 13a-14(a) Certification of Chief Executive
  Officer.31(ii)
    Rule
      13a-14(a) Certification of Chief Financial Officer.32(i)
    Section 1350 Certification of Chief Executive Officer32(ii)
    Section 1350 Certification of Chief Financial Officer99
    Nominating Committee Charter       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 February 28, 2005, the related condensed
consolidated 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 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 YorkMarch 25, 2005          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:
    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