UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-3498
(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 No.) | |
90 Taylor Drive, North Tonawanda, New York | 14120-0748 | |
(Address of principal executive offices) | (Zip Code) |
716-694-0800
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
As of October 9, 2017, there were outstanding
shares of the registrant’s common stock, par value $.025 per share.TAYLOR DEVICES, INC.
Index to Form 10-Q
PART I | FINANCIAL INFORMATION | PAGE NO. | ||
Item 1. | Financial Statements | |||
Condensed Consolidated Balance Sheets as of August 31, 2017 and May 31, 2017 | 3 | |||
Condensed Consolidated Statements of Income for the three months ended August 31, 2017 and 2016 | 4 | |||
Condensed Consolidated Statements of Cash Flows for the three months ended August 31, 2017 and 2016 | 5 | |||
Notes to Condensed Consolidated Financial Statements | 6 | |||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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7 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
12
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Item 4. | Controls and Procedures | 12 | ||
PART II |
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Item 1. | Legal Proceedings | 13 | |
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Item 1A. | Risk Factors | 13 | |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 | |
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Item 3. | Defaults Upon Senior Securities | 13 | |
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Item 4. | Mine Safety Disclosures | 13 | |
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Item 5. | Other Information | 13 | |
Item 6. | Exhibits | 14 | ||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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15 | |||
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16 |
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TAYLOR DEVICES, INC. AND SUBSIDIARY | ||||||||
Condensed Consolidated Balance Sheets | (Unaudited) | |||||||
August 31, | May 31, | |||||||
2017 | 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Short-term investments | ||||||||
Accounts receivable, net | ||||||||
Inventory | ||||||||
Costs and estimated earnings in excess of billings | ||||||||
Other current assets | ||||||||
Total current assets | ||||||||
Maintenance and other inventory, net | ||||||||
Property and equipment, net | ||||||||
Other assets | ||||||||
Deferred income taxes | ||||||||
$ | $ | |||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued commissions | ||||||||
Billings in excess of costs and estimated earnings | ||||||||
Other current liabilities | ||||||||
Total current liabilities | ||||||||
Stockholders' Equity: | ||||||||
Common stock and additional paid-in capital | ||||||||
Retained earnings | ||||||||
Treasury stock - at cost | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
$ | $ | |||||||
See notes to condensed consolidated financial statements. |
-3-
TAYLOR DEVICES, INC. AND SUBSIDIARY | ||||||||
Condensed Consolidated Statements of Income | (Unaudited) | |||||||
August 31, | ||||||||
For the three months ended | 2017 | 2016 | ||||||
Sales, net | $ | $ | ||||||
Cost of goods sold | ||||||||
Gross profit | ||||||||
Selling, general and administrative expenses | ||||||||
Operating income | ||||||||
Other income, net | ||||||||
Income before provision for income taxes | ||||||||
Provision for income taxes | ||||||||
Net income | $ | $ | ||||||
Basic and diluted earnings per common share | $ | $ | ||||||
See notes to condensed consolidated financial statements.
|
-4-
TAYLOR DEVICES, INC. AND SUBSIDIARY | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
August 31, | ||||||||
For the three months ended | 2017 | 2016 | ||||||
Operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation | ||||||||
Stock options issued for services | ||||||||
Changes in other assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Inventory | ( | ) | ||||||
Costs and estimated earnings in excess of billings | ( | ) | ||||||
Other current assets | ( | ) | ||||||
Accounts payable | ( | ) | ||||||
Accrued commissions | ||||||||
Billings in excess of costs and estimated earnings | ( | ) | ( | ) | ||||
Other current liabilities | ( | ) | ( | ) | ||||
Net operating activities | ( | ) | ( | ) | ||||
Investing activities: | ||||||||
Acquisition of property and equipment | ( | ) | ( | ) | ||||
Other investing activities | ( | ) | ( | ) | ||||
Net investing activities | ( | ) | ( | ) | ||||
Financing activities: | ||||||||
Proceeds from issuance of common stock, net | ||||||||
Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents - beginning | ||||||||
Cash and cash equivalents - ending | $ | $ | ||||||
See notes to condensed consolidated financial statements. |
-5-
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-Q. 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, 2017 and May 31, 2017, the results of operations for the three months ended August 31, 2017 and 2016, and cash flows for the three months ended August 31, 2017 and 2016. 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, 2017. |
2. | The Company has evaluated events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued. |
3. | 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. |
4. | For the three month periods ended August 31, 2017 and 2016, the net
income was divided by and respectively, which is net of the Treasury shares, to calculate the net income per
share. |
5. | The results of operations for the three month periods ended August 31, 2017 are not necessarily indicative of the results to be expected for the full year. |
6. | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09, as amended, is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2017 (fiscal year 2019 for the Company). Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. The Company has not completely determined the potential effects of the adoption of ASU 2014-09 on its Consolidated Financial Statements, however it will likely require the Company to slow the recognition of revenue for some contracts currently accounted for under the percentage-of-completion method. |
Other recently issued Accounting Standards Codification (ASC) guidance has either been implemented or are not significant to the Company
7. | Inventory: |
August 31, 2017 | May 31, 2017 | |||||||
Raw materials | $ | $ | ||||||
Work-in-process | ||||||||
Finished goods | ||||||||
Less allowance for obsolescence | ||||||||
$ | $ |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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 of Financial Condition and Results of Operations," and elsewhere in this 10-Q and its Exhibits 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, reductions in capital budgets by our customers and potential customers; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products; the kind, frequency and intensity of natural disasters that affect demand for the Company’s products; and other factors, many or all of which are 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 condensed consolidated statements of income is shown below:
Summary comparison of the three months ended August 31, 2017 and 2016 | ||||
Increase / | ||||
(Decrease) | ||||
Sales, net | $ | 812,000 | ||
Cost of goods sold | $ | 642,000 | ||
Selling, general and administrative expenses | $ | 26,000 | ||
Income before provision for income taxes | $ | 138,000 | ||
Provision for income taxes | $ | 46,000 | ||
Net income | $ | 92,000 |
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.
-7-
For the three months ended August 31, 2017 (All figures discussed are for the three months ended August 31, 2017 as compared to the three months ended August 31, 2016).
Three months ended August 31 | Change | |||||||||||||||
2017 | 2016 | Amount | Percent | |||||||||||||
Net Revenue | $ | 6,568,000 | $ | 5,756,000 | $ | 812,000 | 14 | % | ||||||||
Cost of sales | 4,950,000 | 4,308,000 | 642,000 | 15 | % | |||||||||||
Gross profit | $ | 1,618,000 | $ | 1,448,000 | $ | 170,000 | 12 | % | ||||||||
… as a percentage of net revenues | 25 | % | 25 | % |
The Company's consolidated results of operations showed a 14% increase in net revenues and an increase in net income of 44%. Revenues recorded in the current period for long-term construction projects (“Project(s)”) were 35% more than the level recorded in the prior year. We had 34 Projects in process during the current period compared with 33 during the same period last year. Revenues recorded in the current period for other-than long-term construction projects (non-projects) were 11% less than the level recorded in the prior year. Total sales within the U.S. increased 11% from the same period last year. Total sales to Asia increased 30% from the same period of the prior year. Sales increases were recorded over the same period last year to customers involved in construction of buildings and bridges (22%), as well as to industrial customers (35%). There was a slight decrease in sales to customers in aerospace / defense (<1%). Please refer to the charts, below, which show the breakdown of sales. The gross profit as a percentage of net revenue of 25% in the current period is the same as during the same period of the prior year.
Sales of the Company’s products are made to three general groups of customers: industrial, construction and aerospace / defense. A breakdown of sales to the three general groups of customers is as follows:
Three months ended August 31 | ||||||||
2017 | 2016 | |||||||
Industrial | 9 | % | 8 | % | ||||
Construction | 57 | % | 53 | % | ||||
Aerospace / Defense | 34 | % | 39 | % | ||||
At August 31, 2016, the Company had 103 open sales orders in our backlog with a total sales value of $21.3 million. At August 31, 2017, the Company has 37% more open sales orders in our backlog (141 orders), and the total sales value is $21.6 million.
The Company's backlog, revenues, commission expense, gross margins, gross profits, and net income fluctuate from period to period. The changes in the current period, compared to the prior period, are not necessarily representative of future results.
Net revenue by geographic region, as a percentage of total net revenue for the three month periods ended August 31, 2017 and August 31, 2016 is as follows:
Three months ended August 31 | ||||||||||
2017 | 2016 | |||||||||
USA | 68 | % | 70 | % | ||||||
Asia | 28 | % | 24 | % | ||||||
Other | 4 | % | 6 | % |
-8-
Selling, General and Administrative Expenses
Three months ended August 31 | Change | |||||||||||||||
2017 | 2016 | Amount | Percent | |||||||||||||
Outside Commissions | $ | 281,000 | $ | 293,000 | $ | (12,000 | ) | -4 | % | |||||||
Other SG&A | 927,000 | 889,000 | 38,000 | 4 | % | |||||||||||
Total SG&A | $ | 1,208,000 | $ | 1,182,000 | $ | 26,000 | 2 | % | ||||||||
… as a percentage of net revenues | 18 | % | 21 | % |
Selling, general and administrative expenses increased by 2% from the prior year. Outside commission expense decreased by 4% from last year's level. Other selling, general and administrative expenses increased 4% from last year to this.
The above factors resulted in operating income of $410,000 for the three months ended August 31, 2017, 54% more than the $266,000 in the same period of the prior year.
Stock Options
The Company has a stock option plan which provides for the granting of nonqualified or incentive stock options to officers, key employees and non-employee directors. Options granted under the plan are exercisable over a ten year term. Options not exercised at the end of the term expire.
The Company expenses stock options using the fair value recognition provisions of the FASB ASC. The Company recognized $56,000 and $79,000 of compensation cost for the three month periods ended August 31, 2017 and 2016.
The fair value of each stock option grant has been determined using the Black-Scholes model. The model considers assumptions related to exercise price, expected volatility, risk-free interest rate, and the weighted average expected term of the stock option grants. Expected volatility assumptions used in the model were based on volatility of the Company's stock price for the thirty month period ending on the date of grant. The risk-free interest rate is derived from the U.S. treasury yield. The Company used a weighted average expected term.
The following assumptions were used in the Black-Scholes model to estimate the fair market value of the Company's stock option grants:
August 2017 | August 2016 | |||||||
Risk-free interest rate: | 2.250 | % | 1.625 | % | ||||
Expected life of the options: | 3.6 years | 3.4 years | ||||||
Expected share price volatility: | 28 | % | 26 | % | ||||
Expected dividends: | zero | zero | ||||||
These assumptions resulted in estimated fair-market value per stock option: | $ | 3.01 | $ | 4.04 |
The ultimate value of the options will depend on the future price of the Company's common stock, which cannot be forecast with reasonable accuracy.
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A summary of changes in the stock options outstanding during the three month period ended August 31, 2017 is presented below:
Weighted- | ||||||||
Number of | Average | |||||||
Options | Exercise Price | |||||||
Options outstanding and exercisable at May 31, 2017: | 253,500 | $ | 10.93 | |||||
Options granted: | 18,750 | $ | 12.28 | |||||
Options exercised: | 14,750 | $ | 7.66 | |||||
Options expired: | 750 | $ | 19.26 | |||||
Options outstanding and exercisable at August 31, 2017: | 256,750 | $ | 11.19 | |||||
Closing value per share on NASDAQ at August 31, 2017: | $ | 11.75 |
Capital Resources, Line of Credit and Long-Term Debt
The Company's primary liquidity is dependent upon the working capital needs. These are mainly inventory, accounts receivable, costs and estimated earnings in excess of billings, accounts payable, accrued commissions, and billings in excess of costs and estimated earnings. The Company's primary source of liquidity has been operations.
Capital expenditures for the three months ended August 31, 2017 were $621,000 compared to $673,000 in the same period of the prior year. As of August 31, 2017, the Company has commitments for capital expenditures totaling $250,000 during the next twelve months. These costs are primarily related to acquisition of new equipment used to test the function of products prior to shipment to customers.
The Company believes it is carrying adequate insurance coverage on its facilities and their contents.
Effective August 30, 2017, the Company replaced its bank credit facility with a $10,000,000 bank demand line of credit, with interest payable at the Company's option of 30, 60 or 90 day LIBOR rate plus 2.25%. There is no balance outstanding as of August 31, 2017 or as of May 31, 2017. The line is unsecured and includes a negative pledge of the Company’s real property. This line of credit is subject to the usual terms and conditions applied by the bank, is subject to renewal annually, and is not subject to an express requirement on the bank’s part to lend.
Inventory and Maintenance Inventory |
August 31, 2017 | May 31, 2017 | Increase /(Decrease) | ||||||||||||||||||||||
Raw materials | $ | 703,000 | $ | 710,000 | $ | (7,000 | ) | -1 | % | |||||||||||||||
Work-in-process | 9,817,000 | 10,071,000 | (254,000 | ) | -3 | % | ||||||||||||||||||
Finished goods | 732,000 | 708,000 | 24,000 | 3 | % | |||||||||||||||||||
Inventory | 11,252,000 | 93 | % | 11,489,000 | 93 | % | (237,000 | ) | -2 | % | ||||||||||||||
Maintenance and other inventory | 817,000 | 7 | % | 879,000 | 7 | % | (62,000 | ) | -7 | % | ||||||||||||||
Total | $ | 12,069,000 | 100 | % | $ | 12,368,000 | 100 | % | $ | (299,000 | ) | -2 | % | |||||||||||
Inventory turnover | 1.6 | 1.5 |
NOTE: Inventory turnover is annualized for the three month period ended August 31, 2017.
Inventory, at $11,252,000 as of August 31, 2017, is $237,000, or 2%, less than the prior year-end level of $11,489,000. Approximately 87% of the current inventory 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 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 technological 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 each of the three month
periods ended August 31, 2017 and 2016. The Company continues to rework slow-moving inventory, where applicable, to convert it
to product to be used on customer orders.
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Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB"), and Billings in Excess of Costs and Estimated Earnings ("BIEC")
August 31, 2017 | May 31, 2017 | Increase /(Decrease) | ||||||||||||||
Accounts receivable | $ | 3,292,000 | $ | 2,546,000 | $ | 746,000 | 29 | % | ||||||||
CIEB | 8,386,000 | 6,868,000 | 1,518,000 | 22 | % | |||||||||||
Less: BIEC | 1,265,000 | 1,296,000 | (31,000 | ) | -2 | % | ||||||||||
Net | $ | 10,413,000 | $ | 8,118,000 | $ | 2,295,000 | 28 | % | ||||||||
Number of an average day’s sales outstanding in accounts receivable | 45 | 36 | ||||||||||||||
The Company combines the totals of accounts receivable, the current asset, CIEB, and the current liability, BIEC, 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 $3,292,000 as of August 31, 2017 includes approximately $689,000 of amounts retained by customers on Projects. It also includes $110,000 of an allowance for doubtful accounts (“Allowance”). The accounts receivable balance as of May 31, 2017 of $2,546,000 included an Allowance of $110,000. The number of an average day's sales outstanding in accounts receivable (“DSO”) increased slightly from 36 days at May 31, 2017 to 45 at August 31, 2017. It is expected that amounts retained by customers under contracts will be released in the normal course of the business in accordance with the related contracts. The Company expects to collect the net accounts receivable balance, including the retainage, during the next twelve months.
As noted above, CIEB 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, such provisions are often not possible. The $8,386,000 balance in this account at August 31, 2017 is 22% more than the prior year-end balance. This increase is the result of normal flow of the projects through production with billings to the customers as permitted in the related contracts. The Company expects to bill the entire amount during the next twelve months. 15% of the CIEB balance as of the end of the last fiscal quarter, May 31, 2017, was billed to those customers in the current fiscal quarter ended August 31, 2017. The remainder will be billed as the Projects progress, in accordance with the terms specified in the various contracts.
The balances in this account are comprised of the following components:
August 31, 2017 | May 31, 2017 | |||||||
Costs | $ | 11,559,000 | $ | 9,675,000 | ||||
Estimated Earnings | 4,101,000 | 3,757,000 | ||||||
Less: Billings to customers | 7,274,000 | 6,564,000 | ||||||
CIEB | $ | 8,386,000 | $ | 6,868,000 | ||||
Number of Projects in progress | 28 | 21 |
As noted above, BIEC represents billings to customers in excess of revenues recognized. The $1,265,000 balance in this account at August 31, 2017 is down 2% from the $1,296,000 balance at the end of the prior year.
The balance in this account fluctuates in the same manner and for the same reasons as the account “costs and estimated earnings in excess of billings”, discussed above. Final delivery of product under these contracts is expected to occur during the next twelve months.
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The balances in this account are comprised of the following components:
August 31, 2017 | May 31, 2017 | |||||||
Billings to customers | $ | 8,571,000 | $ | 8,133,000 | ||||
Less: Costs | 4,799,000 | 4,522,000 | ||||||
Less: Estimated Earnings | 2,507,000 | 2,315,000 | ||||||
BIEC | $ | 1,265,000 | $ | 1,296,000 | ||||
Number of Projects in progress | 3 | 3 |
Summary of factors affecting the balances in CIEB and BIEC:
August 31, 2017 | May 31, 2017 | |||||||
Number of Projects in progress | 31 | 24 | ||||||
Aggregate percent complete | 73 | % | 66 | % | ||||
Average total sales value of Projects in progress | $ | 1,023,000 | $ | 1,289,000 | ||||
Percentage of total value invoiced to customer | 50 | % | 47 | % |
The Company's backlog of sales orders at August 31, 2017 is $21.6 million, the same as the $21.6 million at the end of the prior year. $8.7 million of the current backlog is on Projects already in progress.
Other Balance Sheet Items
Accounts payable, at $1,559,000 as of August 31, 2017, is 17% more than the prior year-end. 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, 2017 are $907,000, up 7% from the $847,000 accrued at the prior year-end. Other current liabilities decreased slightly from the prior year-end, to $826,000. The Company expects the current accrued amounts to be paid during the next twelve months.
Management believes the Company's cash flows from operations and borrowing capacity under the bank line of credit are sufficient to fund ongoing operations and capital improvements for the next twelve months.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information called for by this item.
Item 4. 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, 2017 and have concluded that as of the evaluation date, the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting.
There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended August 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company's control over financial reporting.
-12-
Part II - Other Information
ITEM 1 | Legal Proceedings | |||||||||||
There are no other legal proceedings except for routine litigation incidental to the business. | ||||||||||||
ITEM 1A | Risk Factors | |||||||||||
Smaller reporting companies are not required to provide the information called for by this item. | ||||||||||||
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, 2017 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 – Quarter Ended August 31, 2017 | |||||||||||
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, 2017 - | ||||||||||||
June 30, 2017 | - | - | - | - | ||||||||
July 1, 2017 - | ||||||||||||
July 31, 2017 | - | - | - | - | ||||||||
August 1, 2017 - | ||||||||||||
August 31, 2017 | - | - | - | - | ||||||||
Total | - | - | - | - | ||||||||
ITEM 3 | Defaults Upon Senior Securities | |||||||||||
None | ||||||||||||
ITEM 4 | Mine Safety Disclosures | |||||||||||
Not applicable | ||||||||||||
ITEM 5 | Other Information | |||||||||||
(a) | Information required to be disclosed in a Report on Form 8-K, but not reported | |||||||||||
None | ||||||||||||
(b) | Material changes to the procedures by which Security Holders may recommend nominees to the Registrant's Board of Directors | |||||||||||
None | ||||||||||||
-13-
ITEM 6 | Exhibits | ||||||
10 (xiv) | Negative Pledge Agreement dated August 30, 2017 by the Registrant in favor of M&T Bank | ||||||
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 Officer. | ||||||
32(ii) | Section 1350 Certification of Chief Financial Officer. | ||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||
-14-
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Taylor Devices, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Taylor Devices, Inc. and Subsidiary as of August 31, 2017, and the related condensed consolidated statements of income for the three months ended August 31, 2017 and 2016 and cash flows for the three months ended August 31, 2017 and 2016. These interim financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with the 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 the standards of the Public Company Accounting Oversight Board (United States), 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 the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of May 31, 2017, 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, 2017, 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, 2017 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.
Lumsden & McCormick, LLP
Buffalo, New York
October 12, 2017
-15-
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) |
Date: | October 12, 2017 | /s/Douglas P. Taylor | ||
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Douglas P. Taylor President Chairman of the Board of Directors (Principal Executive Officer) |
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Date: | October 12, 2017 | /s/Mark V. McDonough | ||
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Mark V. McDonough Chief Financial Officer |
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark V. McDonough, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: October 12, 2017 | /s/ Mark V. McDonough |
Mark V. McDonough Chief Financial Officer
|
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a - 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas P. Taylor, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Taylor Devices, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 12, 2017 | /s/ Douglas P. Taylor |
Douglas P. Taylor Chief Executive Officer
|
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connect with the quarterly report of Taylor Devices, Inc. (the "Company") on Form 10-Q for the quarter ended August 31, 2017 to be filed with Securities and Exchange Commission on or about the date hereof (the "Report"), I, Mark V. McDonough, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
Date: October 12, 2017 | By: | /s/ Mark V. McDonough |
Mark V. McDonough, Chief Financial Officer
|
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connect with the quarterly
report of Taylor Devices, Inc. ("the Company") on Form 10-Q for the quarter ended August 31, 2017 to be filed with Securities
and Exchange Commission on or about the date hereof (the
"Report"), I, Douglas P. Taylor, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
Date: October 12, 2017 | By: | /s/ Douglas P. Taylor |
Douglas P. Taylor, Chief Executive Officer
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NEGATIVE PLEDGE AGREEMENT
This Negative Pledge Agreement dated 30th day of August, 2017 (this “Agreement”) is entered into by TAYLOR DEVICES, INC., a corporation organized under the laws of New York, with its chief executive office 90 Taylor Drive, North Tonawanda, NY 14120 (“Pledgor”), to M&T BANK, a New York banking corporation with its banking offices at One M&T Plaza, Buffalo, NY 14203 (“Lender”).
Recitals
A. Lender is or will be making available to Pledgor a certain demand line of credit loan in the maximum amount of $10,000,000.00 (collectively, as such loan may be amended, supplemented or otherwise modified, the “Credit Facility”).
B. Lender has requested and Pledgor has agreed to enter into, execute and deliver this Agreement as a condition precedent to making the Credit Facility available, understanding that Lender is relying on this Agreement in extending the Credit Facility and acknowledging that Pledgor is deriving a substantial benefit from the Credit Facility.
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor, intending to be legally bound, hereby agrees as follows:
1. Warranty of Title. Pledgor warrants and represents to Lender that, upon information and belief, it is the owner of all of its personal property including, without limitation, all personal property wherever located, whether now existing or owned or hereafter arising or acquired, whether or not subject to the Uniform Commercial Code, as the same may be in effect in the State of New York, as amended from time to time, and whether or not affixed to any realty including, without limitation: (i) all accounts, chattel paper, investment property, deposit accounts, documents, equipment, farm products, general intangibles (including trademarks, service marks, trade names, patents, copyrights, licenses and franchises), instruments, inventory, money, letter of credit rights, causes of action (including tort claims) and other personal property (including agreements and instruments not constituting chattel paper or a document, general intangible or instrument); (ii) all additions, accessions to, substitutions for, or replacements of the foregoing; (iii) all proceeds and products of the foregoing including insurance proceeds; and (iv) all business records and information relating to any of the foregoing and any software or other programs for accessing and manipulating such information (collectively referred to herein as the “Collateral”) and Pledgor holds the Collateral free and clear of any and all liens or claims or encumbrances of any nature whatsoever.
2. Negative Pledge. So long as the Credit Facility shall remain outstanding, Pledgor will not, without the prior written consent of Lender:
(a) sell, transfer, assign or lease the Collateral or any part thereof.
(b) create, incur, assume or suffer to exist any Lien on any of the Collateral. As used herein, “Lien” means any interest in property securing an obligation whether such interest is based on the common law, statute or contract, and including but not limited to a security interest arising from a security agreement, an encumbrance, pledge, conditional pledge or mortgage, or a lease, consignment or bailment for security purposes.
(c) enter into any agreement with any person other than Lender, which prohibits or limits the ability of Pledgor to create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien or other encumbrance upon the Collateral.
3. Representations and Warranties.
(a) Pledgor is a corporation: (i) duly formed, validly existing and in good standing under the laws of the State of New York; and (ii) has the power and authority to own and use its assets and conduct its business and operations as now conducted, and as anticipated that its business and operations will hereafter be, conducted.
(b) The execution, delivery and performance by Pledgor of this Agreement have been duly authorized by all necessary action and will not (i) contravene any of Pledgor’s organizational documents, (ii) violate any law, rule or regulation, order, writ, judgment, injunction, decree, determination or award, and (iii) conflict with or result in the breach of, or constitute a default under, any material contract, loan agreement or other material instrument or agreement binding on Pledgor or any of Pledgor’s properties, or result in or require the creation or imposition of any lien upon or with respect to any of Pledgor’s properties.
4. Governing Law. This Agreement and the relations of the parties hereby shall be governed by and construed in accordance with the internal laws of the State of New York without regard to principles of conflict of laws.
5. Consents and Waivers Relating to Legal Proceedings.
(a) PLEDGOR KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (i) CONSENTS IN EACH ACTION AND OTHER LEGAL PROCEEDING COMMENCED BY LENDER AND ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT TO THE NONEXCLUSIVE PERSONAL JURISDICTION OF ANY COURT THAT IS EITHER A COURT OF RECORD OF THE STATE OF NEW YORK, ERIE COUNTY, OR A COURT OF THE UNITED STATES LOCATED IN THE STATE OF NEW YORK, ERIE COUNTY, (ii) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR OTHER LEGAL PROCEEDING, (iii) WAIVES PERSONAL SERVICE OF PROCESS IN EACH SUCH ACTION AND OTHER LEGAL PROCEEDING, AND (iv) CONSENTS TO THE MAKING OF SERVICE OF PROCESS IN EACH SUCH ACTION AND OTHER LEGAL PROCEEDING BY REGISTERED MAIL DIRECTED TO PLEDGOR AT THE LAST ADDRESS OF PLEDGOR SHOWN IN THE RECORDS RELATING TO THIS AGREEMENT MAINTAINED BY LENDER, WITH SUCH SERVICE OF PROCESS TO BE DEEMED COMPLETED FIVE DAYS AFTER THE MAILING THEREOF.
(b) PLEDGOR KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT PLEDGOR MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO, AND EACH RIGHT TO ASSERT ANY CLAIM FOR DAMAGES (INCLUDING, BUT NOT LIMITED TO, PUNITIVE DAMAGES) IN ANY ACTION OR OTHER LEGAL PROCEEDING OF ANY NATURE, RELATING TO (i) THIS AGREEMENT, (ii) ANY TRANSACTION RELATING TO THIS AGREEMENT, OR (iii) ANY NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT. PLEDGOR CERTIFIES THAT NEITHER LENDER NOR ANY REPRESENTATIVE OF LENDER HAS REPRESENTED TO PLEDGOR THAT LENDER WILL NOT SEEK TO ENFORCE THE WAIVER MADE BY PLEDGOR IN THIS PARAGRAPH. PLEDGOR ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL AS NECESSARY AND APPROPRIATE.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.
PLEDGOR:
TAYLOR DEVICES, INC.
By: /s/Douglas P. Taylor
Name: Douglas P. Taylor
Title: President
STATE OF NEW YORK )
: SS.
COUNTY OF NIAGARA )
On the 30th day of August in the year 2017, before me, the undersigned, a Notary Public in and for said State, personally appeared Douglas P. Taylor, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
/s/Krystal Marie Kreger
Notary Public
KRYSTAL MARIE KREGER
NOTARY PUBLIC, STATE OF NEW YORK
QUALIFIED IN NIAGARA COUNTY
My Commission Expires July 25, 2019
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Aug. 31, 2017 |
Oct. 09, 2017 |
|
Document And Entity Information | ||
Entity Registrant Name | TAYLOR DEVICES INC | |
Entity Central Index Key | 0000096536 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 3,455,358 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Statements of Income - USD ($) |
3 Months Ended | |
---|---|---|
Aug. 31, 2017 |
Aug. 31, 2016 |
|
Income Statement [Abstract] | ||
Sales, net | $ 6,567,720 | $ 5,755,713 |
Cost of goods sold | 4,950,068 | 4,307,589 |
Gross profit | 1,617,652 | 1,448,124 |
Selling, general and administrative expenses | 1,207,568 | 1,181,974 |
Operating income | 410,084 | 266,150 |
Other income, net | 3,663 | 9,684 |
Income before provision for income taxes | 413,747 | 275,834 |
Provision for income taxes | 112,000 | 66,000 |
Net income | $ 301,747 | $ 209,834 |
Basic and diluted earnings per common share | $ 0.09 | $ 0.06 |
Notes to Condensed Consolidated Financial Statements |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Condensed Consolidated Financial Statements | Notes to Condensed Consolidated Financial Statements
Other recently issued Accounting Standards Codification (ASC) guidance has either been implemented or are not significant to the Company
|
Notes to Condensed Consolidated Financial Statements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
|
Notes to Condensed Consolidated Financial Statements (Details Narrative) - shares |
3 Months Ended | |
---|---|---|
Aug. 31, 2017 |
Aug. 31, 2016 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 3,443,475 | 3,412,858 |
Inventory - USD ($) |
Aug. 31, 2017 |
May 31, 2017 |
---|---|---|
Inventory, net | ||
Raw materials | $ 702,916 | $ 709,174 |
Work-in-process | 9,817,267 | 10,071,179 |
Finished goods | 831,589 | 808,257 |
Gross inventory | 11,351,772 | 11,588,610 |
Less allowance for obsolescence | 100,000 | 100,000 |
Net inventory | $ 11,251,772 | $ 11,488,610 |
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