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What changed in TAYLOR DEVICES, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TAYLOR DEVICES, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+70 added−72 removedSource: 10-K (2025-08-15) vs 10-K (2024-08-15)

Top changes in TAYLOR DEVICES, INC.'s 2025 10-K

70 paragraphs added · 72 removed · 62 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDependence Upon Major Customers Sales to four customers approximated 40% (21%, 7%, 7%, and 5%, respectively) of net sales for 2024. The loss of any or all of these customers, unless the business is replaced by the Company, would have a material adverse effect on the Company.
Biggest changeThe loss of any or all of these customers, unless the business is replaced by the Company, would have a material adverse effect on the Company. Patents, Trademarks and Licenses The Company holds 24 patents expiring at different times until the year 2042.
The Company is subject to the Occupational Safety and Health Act ("OSHA") and the rules and regulations promulgated thereunder, which establish strict standards for the protection of employees, and impose fines for violations of such standards. The Company believes that it is in substantial compliance with OSHA.
The Company is subject to the Occupational Safety and Health Act ("OSHA") and the rules and regulations promulgated thereunder, which establish strict standards for the protection of employees, and impose fines for violations of such standards. The Company believes that it is in substantial compliance with OSHA and such rules and regulations promulgated thereunder.
Specialized technical sales in custom marketing activities outside the U.S. are serviced by these sales representatives under the direction and with the assistance of the Company's President and in-house technical sales staff.
Specialized technical sales in custom marketing activities outside the U.S. are serviced by these sales representatives under the direction and with the assistance of the Company's in-house technical sales staff.
For the industrial products group, two foreign companies and two U.S. companies are the Company’s main competitors in the production of crane buffers and industrial shock absorbers. The Company competes directly against two other firms supplying structural damping devices for use in the U.S.
For the industrial products group, several foreign companies and two U.S. companies are the Company’s main competitors in the production of crane buffers and industrial shock absorbers. The Company competes directly against three other firms supplying structural damping devices for use in the U.S.
For the years ended May 31, 2024 and 2023, customer-funded research and development totaled $477,000 and $285,000, respectively. Government Regulation Compliance with federal, state, and local laws and regulations regulating the discharge of materials into the environment has had no material effect on the Company, and the Company believes that it is in substantial compliance with these laws and regulations.
For the years ended May 31, 2025 and 2024, customer-funded research and development totaled $228,000 and $477,000, respectively. Government Regulation Compliance with federal, state, and local laws and regulations regulating the discharge of materials into the environment has had no material effect on the Company, and the Company believes that it is in substantial compliance with these laws and regulations.
The Company had no inventory out on consignment and there were no consignment sales for the years ended May 31, 2024 and 2023. No extended payment terms are offered. During the year ended May 31, 2024, delivery time after receipt of orders averaged 8 to 10 weeks for the Company's standard products.
Terms of Sale The Company had no inventory out on consignment and there were no consignment sales for the years ended May 31, 2025 and 2024. No extended payment terms are offered. During the year ended May 31, 2025, delivery time after receipt of orders averaged 8 to 10 weeks for the Company's standard industrial products.
Sales and Distribution The Company uses a technical sales force consisting of Company employees for sales in the United States. The Company uses the services of several non-employee sales representatives for sales throughout the rest of the world.
Sales and Distribution The Company uses a technical sales force consisting of Company employees for sales in the United States. From time to time, the Company uses the services of non-employee sales representatives for sales throughout the rest of the world.
The Company believes that it is in substantial compliance with these regulations. 5 Employees As of May 31, 2024, the Company had 128 total employees, consisting of 125 full-time employees and three part-time employees. The Company has good relations with its employees, and none of the Company’s employees are covered by a collective bargaining agreement.
The Company believes that it is in substantial compliance with these regulations. 5 Employees As of May 31, 2025, the Company had 137 total employees, consisting of 135 full-time employees and two part-time employees. The Company has good relations with its employees, and none of the Company’s employees are covered by a collective bargaining agreement.
The Company also engages in research testing of its products. For the fiscal years ended May 31, 2024 and 2023, the Company expended $388,000 and $1,097,000, respectively, on product research. For the years ended May 31, 2024 and 2023, government-funded research and development totaled $818,000 and $581,000, respectively.
The Company also engages in research testing of its products. For the years ended May 31, 2025 and 2024, the Company expended $444,000 and $388,000, respectively, on product research. For the years ended May 31, 2025 and 2024, government-funded research and development totaled $1,141,000 and $818,000, respectively.
Competition The Company faces some competition for hydraulic energy absorbers on mature aerospace and defense programs. Other competition in these sectors include the use of competing technologies, not necessarily of similar design as Taylor Devices’ products.
A limited number of foreign sales representatives also have non-exclusive agreements with the Company to purchase the Company's products for resale purposes. Competition The Company faces some competition for hydraulic energy absorbers on mature aerospace and defense programs. Other competition in these sectors include the use of competing technologies, not necessarily of similar design as Taylor Devices’ products.
Sales representatives typically have non-exclusive agreements with the Company, which, in most instances, provide for payment of commissions on sales at 5% to 10% of the product's net aggregate selling price. A limited number of foreign distributors also have non-exclusive agreements with the Company to purchase the Company's products for resale purposes.
Sales representatives typically have non-exclusive agreements with the Company, which, in most instances, provide for payment of commissions on sales at 5% to 10% of the product's net aggregate selling price. The Company recorded zero and $77,000 of non-employee commission expense for the years ending May 31, 2025 and 2024 respectively.
Removed
Patents, Trademarks and Licenses The Company holds ten patents expiring at different times until the year 2040. Terms of Sale The Company does not carry significant inventory for rapid delivery to customers, and goods are not normally sold with return rights such as are available for consignment sales.
Added
Dependence Upon Major Customers Sales to three customers accounted for approximately 42% (21%, 15% and 6%, respectively) of our net sales for 2025. Sales to four customers accounted for approximately 40% (21%, 7%, 7% and 5%, respectively) of our net sales for 2024.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur policies and controls include security measures designed to protect our systems against unauthorized access. We also maintain cybersecurity protection measures covering our information technology systems, including with respect to the protection of customer data, vendor data and employee information.
Biggest changeOur policies and controls include security measures designed to protect our systems against unauthorized access. We also maintain cybersecurity protection measures covering our information technology systems, including the protection of customer data, vendor data and employee information.
We oversee and identify cybersecurity risks from our third-party service providers in a number of ways, including appropriate due diligence in connection with new third-party service provider onboarding, robust security terms and conditions in our third-party service provider contracts and ongoing risk-based monitoring to ensure compliance with our cybersecurity standards.
We oversee and identify cybersecurity risks from our third-party service providers in a number of ways, including appropriate due diligence in connection with service provider onboarding, robust security terms and conditions in our third-party service provider contracts and ongoing risk-based monitoring to ensure compliance with our cybersecurity standards.
We have also implemented specialized training and education programs to seek to guard against cybersecurity incidents, including company-wide communications and presentations, phishing simulations, focused training for specific roles and a general cybersecurity training program required for all employees.
We have also implemented specialized training and education programs to guard against cybersecurity incidents, including company-wide communications and presentations, phishing simulations, focused training for specific roles and a general cybersecurity training program required for all employees.
Our Director of Information Technology, Mitch Reszczenski, is primarily responsible for assessing and managing our cybersecurity risks. Mr. Reszczenski has over 28 years of extensive information technology experience in highly successful manufacturing, engineering and financial organizations. Mr.
Our Director of Information Technology, Mitch Reszczenski, is primarily responsible for assessing and managing our cybersecurity risks. Mr. Reszczenski has over 29 years of extensive information technology experience in highly successful manufacturing, engineering and financial organizations. Mr.
We engage third parties to perform regular reviews of our security controls which includes 24x7x365 security incident and event management (SIEM) as well as vulnerability services and penetration testing. Our processes to identify, assess and manage material risks from cybersecurity threats include risks associated with our use of third-party service providers, including cloud-based platforms.
We engage third parties to perform regular reviews of our security controls which includes 24/7/365 security incident and event management as well as vulnerability services and penetration testing. Our processes to identify, assess and manage material risks from cybersecurity threats include risks associated with our use of third-party service providers, including cloud-based platforms.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed4 unchanged
Biggest changeThis building contains overhead traveling cranes to allow dampers to be built up to 45 ft. in length. It is also the site of three long bed damper test machines where seismic dampers manufactured by the Company will be tested at maximum force to satisfy customer specifications. Another adjacent building (approximately 2,000 square feet) is used as a training facility.
Biggest changeThis building contains overhead traveling cranes to allow dampers to be built up to 45 feet in length. It is also the site of three long bed damper test machines where seismic dampers manufactured by the Company will be tested at maximum force to satisfy customer specifications. Another adjacent building (approximately 2,000 square feet) is used as a training facility.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The Company's Common Stock trades on the Nasdaq Stock Market under the symbol TAYD. Holders As of August 1, 2024, the number of record holders of the Company's Common Stock was 381.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information The Company's common stock, $.025 par value per share (the “Common Stock”), trades on the Nasdaq Stock Market under the symbol “TAYD.” Holders As of August 1, 2025, the number of record holders of the Company's Common Stock was 340.
A substantial number of shares of the Company's Common Stock are held in street name. The Company believes that the total number of beneficial owners of its Common Stock is approximately 3,300. Dividends The Company does not pay a cash dividend and plans to retain cash in the foreseeable future to fund working capital needs. Item 6. [Reserved].
A substantial number of shares of the Company's Common Stock are held in street name. The Company believes that the total number of beneficial owners of its Common Stock is approximately 3,400. Dividends The Company does not pay a cash dividend and plans to retain cash in the foreseeable future to fund working capital needs. Item 6. [Reserved].

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

43 edited+7 added−9 removed29 unchanged
Biggest changeResults of Operations A summary of the period-to-period changes in the principal items included in the consolidated statements of income is shown below: Summary comparison of the years ended May 31, 2024 and 2023 Increase / (Decrease) Sales, net $ 4,384,000 Cost of goods sold $ 494,000 Research and development costs $ (708,000) Selling, general and administrative expenses $ 1,928,000 Other income (expense) $ 745,000 Income before provision for income taxes $ 3,415,000 Provision for income taxes $ 704,000 Net income $ 2,711,000 10 For the year ended May 31, 2024 (All figures being discussed are for the year ended May 31, 2024 as compared to the year ended May 31, 2023.) Year ended May 31 Change 2024 2023 Amount Percent Net Revenue $ 44,583,000 $ 40,199,000 $ 4,384,000 11% Cost of sales 23,744,000 23,250,000 494,000 2% Gross profit $ 20,839,000 $ 16,949,000 $ 3,890,000 23% … as a percentage of net revenues 47% 42% The Company's consolidated results of operations showed an 11% increase in net revenues and an increase in net income of 43%.
Biggest changeResults of Operations A summary of the period-to-period changes in the principal items included in the consolidated statements of income is shown below: Summary comparison of the years ended May 31, 2025 and 2024 Increase / (Decrease) Sales, net $ 1,710,000 Cost of goods sold $ 1,071,000 Research and development costs $ 56,000 Selling, general and administrative expenses $ 436,000 Other income $ (35,000) Income before provision for income taxes $ 112,000 Provision for income taxes $ (302,000) Net income $ 414,000 10 For the year ended May 31, 2025 (All figures being discussed are for the year ended May 31, 2025 as compared to the year ended May 31, 2024).
Management believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's financial statements. Accounts Receivable Our ability to collect outstanding receivables from our customers is critical to our operating performance and cash flows. Accounts receivable are stated at an amount management expects to collect from outstanding balances.
Management believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company's financial statements. 8 Accounts Receivable Our ability to collect outstanding receivables from our customers is critical to our operating performance and cash flows. Accounts receivable are stated at an amount management expects to collect from outstanding balances.
Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable in the current period. The actual amount of accounts written off over the five year period ended May 31, 2024 equaled 0.2% of sales for that period.
Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable in the current period. The actual amount of accounts written off over the five year period ended May 31, 2025 equaled 0.2% of sales for that period.
The Company expects to recognize revenue for the majority of the backlog during the fiscal year ending May 31, 2025, with the remainder during the fiscal year ending May 31, 2026. 11 The Company's backlog, revenues, commission expense, gross margins, gross profits, and net income fluctuate from period to period.
The Company expects to recognize revenue for the majority of the backlog during the fiscal year ending May 31, 2026, with the remainder during the fiscal year ending May 31, 2027. 11 The Company's backlog, revenues, commission expense, gross margins, gross profits, and net income fluctuate from period to period.
These estimates, assumptions and judgments are affected by management's application of accounting policies, which are discussed in Note 1, "Summary of Significant Accounting Policies", and elsewhere in the accompanying consolidated financial statements.
These estimates, assumptions and judgments are affected by management's application of accounting policies, which are discussed in Note 1, "Summary of Significant Accounting Policies," of the Notes to Consolidated Financial Statements and elsewhere in the accompanying consolidated financial statements.
Of this, approximately 85% is work in process, 3% is finished goods, and 12% is raw materials. All of the current inventory is expected to be consumed or sold within twelve months. The level of inventory will fluctuate from time to time due to the stage of completion of the non-project sales orders in progress at the time.
Of this, approximately 89% is work in process, 3% is finished goods, and 8% is raw materials. All of the current inventory is expected to be consumed or sold within twelve months. The level of inventory will fluctuate from time to time due to the stage of completion of the non-project sales orders in progress at the time.
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 $5,212,000 as of May 31, 2024 includes no retainage by customers on long-term construction projects.
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 $5,600,000 as of May 31, 2025 includes no retainage by customers on long-term construction projects.
This deferred tax asset balance is 38% ($594,000) higher than at the end of the prior year. The amount of the deferred tax assets considered realizable however, could be reduced in the near term if estimates of future taxable income are reduced.
This deferred tax asset balance is 31% ($671,000) higher than at the end of the prior year. The amount of the deferred tax assets considered realizable however, could be reduced in the near term if estimates of future taxable income are reduced.
As a percentage of the total sales order backlog, orders from structural customers accounted for 22% at May 31, 2024 and 22% at May 31, 2023.
As a percentage of the total sales order backlog, orders from structural customers accounted for 19% at May 31, 2025 and 22% at May 31, 2024.
Historically, actual results have not varied materially from the Company's estimates. Other sales to customers are recognized upon shipment to the customer based on contract prices and terms. In the year ended May 31, 2024, 59% of revenue was recorded for contracts in which revenue was recognized over time while 41% was recognized at a point in time.
Historically, actual results have not varied materially from the Company's estimates. Other sales to customers are recognized upon shipment to the customer based on contract 9 prices and terms. In the year ended May 31, 2025, 68% of revenue was recorded for contracts in which revenue was recognized over time while 32% was recognized at a point in time.
The Company saw a 30% decrease from last year’s level in sales to structural customers who were seeking seismic / wind protection for either construction of new buildings and bridges or retrofitting existing buildings and bridges along with a 71% increase in sales to customers in aerospace / defense and a 12% decrease in sales to customers using our products in industrial applications.
The Company saw a 3% increase from last year’s level in sales to structural customers who were seeking seismic / wind protection for either construction of new buildings and bridges or retrofitting existing buildings and bridges along with a 2% increase in sales to customers in aerospace / defense and a 24% increase in sales to customers using our products in industrial applications.
The $5,601,000 balance in this account at May 31, 2024 is in comparison to a $1,992,000 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.
The $4,382,000 balance in this account at May 31, 2025 is in comparison to a $5,601,000 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.
Revenues recorded in the year ended May 31, 2024 for other-than long-term projects (non-projects) were 15% higher than the level recorded in the prior year. The number of Projects in-process fluctuates from period to period. The changes from the prior year to the year ended May 31, 2024 are not necessarily representative of future results.
Revenues recorded in the year ended May 31, 2025 for other-than long-term projects (non-projects) were 18% lower than the level recorded in the prior year. The number of Projects in-process fluctuates from period to period. The changes from the prior year to the year ended May 31, 2025 are not necessarily representative of future results.
In the year ended May 31, 2023, 61% of revenue was recorded for contracts in which revenue was recognized over time while 39% was recognized at a point in time. 9 For financial statement presentation purposes, the Company nets progress billings against the total costs incurred and estimated earnings on uncompleted contracts.
In the year ended May 31, 2024, 59% of revenue was recorded for contracts in which revenue was recognized over time while 41% was recognized at a point in time. For financial statement presentation purposes, the Company nets progress billings against the total costs incurred and estimated earnings on uncompleted contracts.
At May 31, 2023, we had 134 open sales orders in our backlog with a total sales value of $32.5 million. $18.6 million of the current backlog is on Projects already in progress. $18.1 million of the $32.5 million sales order backlog at May 31, 2023 was in progress at that date. 72% of the sales value in the backlog is for aerospace / defense customers compared to 74% at the end of fiscal 2023.
At May 31, 2024, we had 134 open sales orders in our backlog with a total sales value of $33.1 million. $13.1 million of the current backlog is on Projects already in progress. $18.6 million of the $33.1 million sales order backlog at May 31, 2024 was in progress at that date. 75% of the sales value in the backlog is for aerospace / defense customers compared to 72% at the end of fiscal 2024.
Revenues recorded in the year ended May 31, 2024 for long-term projects (“Project(s)”) were 8% higher than the level recorded in the prior year. We had 39 Projects in process during the year ended May 31, 2024 compared with 52 during the same period last year.
Revenues recorded in the year ended May 31, 2025 for long-term projects (“Project(s)”) were 19% higher than the level recorded in the prior year. We had 37 Projects in process during the year ended May 31, 2025 compared with 39 during the same period last year.
The Company expects to bill the entire amount during the next twelve months. 58% of the CIEB balance as of the end of the last fiscal quarter, February 29, 2024, was billed to those customers in the current fiscal quarter ended May 31, 2024.
The Company expects to bill the entire amount during the next twelve months. 38% of the CIEB balance as of the end of the last fiscal quarter, February 28, 2025, was billed to those customers in the current fiscal quarter ended May 31, 2025.
The Company considers future taxable income and potential tax planning strategies in assessing the need for a potential valuation allowance. In future years the Company will need to generate approximately $10.4 million of taxable income in order to realize our deferred tax assets recorded as of May 31, 2024 of $2,176,000.
The Company considers future taxable income and potential tax planning strategies in assessing the need for a potential valuation allowance. In future years the Company will need to generate approximately $13.6 million of taxable income in order to realize our deferred tax assets recorded as of May 31, 2025 of $2,848,000.
It became available through Public Law 115-97, known as the Tax Cuts and Jobs Act. 12 Liquidity and Capital Resources, Line of Credit and Long-Term Debt The Company's primary liquidity requirements depend on its working capital and capital expenditure needs.
It became available through the Tax Cuts and Jobs Act of 2017. 12 Liquidity and Capital Resources, Line of Credit and Long-Term Debt The Company's primary liquidity requirements depend on its working capital and capital expenditure needs.
The Company and its subsidiary file consolidated federal and state income tax returns. As of May 31, 2024, the Company had state investment tax credit carryforwards of approximately $470,000 expiring through May 2029.
The Company and its subsidiary file consolidated federal and state income tax returns. As of May 31, 2025, the Company had state investment tax credit carryforwards of approximately $493,000 expiring through May 2030.
This decrease is normal fluctuation of this account and is not considered to be unusual. The Company expects the current accounts payable amount to be paid during the next twelve months. Accrued expenses of $4,664,000 increased 14% from the prior year level of $4,078,000. This change is due to increases in accrued incentive compensation resulting from increased earnings.
This decrease is normal fluctuation of this account and is not considered to be unusual. The Company expects the current accounts payable amount to be paid during the next twelve months. Accrued expenses of $4,072,000 decreased 13% from the prior year level of $4,664,000. This change is due to decreases in accrued incentive compensation.
The $4,357,000 balance in this account at May 31, 2024 is a 6% increase from the prior year-end. This increase reflects the higher aggregate level of the percentage of completion of these Projects as of the current year end as compared with the Projects in process at the prior year end.
The $5,360,000 balance in this account at May 31, 2025 is a 23% increase from the prior year end. This increase reflects the higher aggregate level of the percentage of completion of these Projects as of the current year end as compared with the Projects in process at the prior year end.
A reconciliation of provision for income taxes at the statutory rate to income tax provision at the Company's effective rate is as follows: 2024 2023 Computed tax provision at the expected statutory rate $ 2,293,000 $ 1,575,000 Tax effect of permanent differences: Research tax credits (408,000) (284,000) Foreign-derived intangible income deduction (142,000) (67,000) Stock option costs 49,000 - Other permanent differences 3,000 1,000 Other 127,000 (7,000) $ 1,922,000 $ 1,218,000 The foreign-derived intangible income deduction is a tax deduction provided to corporations that sell goods or services to foreign customers.
A reconciliation of provision for income taxes at the statutory rate to income tax provision at the Company's effective rate is as follows: 2025 2024 Computed tax provision at the expected statutory rate $ 2,317,000 $ 2,293,000 Tax effect of permanent differences: Research tax credits (489,000) (408,000) Foreign-derived intangible income deduction (225,000) (142,000) Stock option costs (12,000) 49,000 Other permanent differences 24,000 3,000 Other 5,000 127,000 $ 1,620,000 $ 1,922,000 The foreign-derived intangible income deduction is a tax deduction provided to corporations that sell goods or services to foreign customers.
A breakdown of sales to these three general groups of customers, as a percentage of total net revenue for fiscal years ended May 31, 2024 and 2023 is as follows: Year ended May 31 2024 2023 Industrial 8% 10% Structural 32% 51% Aerospace / Defense 60% 39% Total sales within the U.S. increased 18% from last year.
A breakdown of sales to these three general groups of customers, as a percentage of total net revenue for fiscal years ended May 31, 2025 and 2024 is as follows: Year ended May 31 2025 2024 Industrial 9% 8% Structural 32% 32% Aerospace / Defense 59% 60% Total sales within the U.S. decreased 5% from last year.
The status of the projects in-progress at the end of the current and prior fiscal years have changed in the factors affecting the year-end balances in the asset CIEB, and the liability BIEC: 2024 2023 Number of projects in progress at year-end 19 22 Aggregate percent complete at year-end 53% 33% Average total value of projects in progress at year-end $2,089,000 $1,285,000 Percentage of total value invoiced to customer 56% 29% There are three less projects in-process at the end of the current fiscal year as compared with the prior year end and the average value of those projects has increased by 63% between those two dates.
The status of the projects in-progress at the end of the current and prior fiscal years have changed in the factors affecting the year-end balances in the asset CIEB, and the liability BIEC: 2025 2024 Number of projects in progress at year-end 21 19 Aggregate percent complete at year-end 65% 53% Average total value of projects in progress at year-end $1,846,000 $2,089,000 Percentage of total value invoiced to customer 64% 56% There are two more projects in-process at the end of the current fiscal year as compared with the prior year end and the average value of those projects has decreased by 12% between those two dates.
The bank is not committed to make loans under this line of credit and no commitment fee is charged. Management believes that the Company's cash on hand, cash flows from operations, and borrowing capacity under the bank line of credit will be sufficient to fund ongoing operations and capital improvements for the next twelve months.
Management believes that the Company's cash on hand, cash flows from operations, and borrowing capacity under the bank line of credit will be sufficient to fund ongoing operations and capital improvements for the next twelve months.
The Company disposed of approximately $791,000 and $322,000 of obsolete inventory during the years ended May 31, 2024 and 2023, respectively. 13 Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB”) and Billings in Excess of Costs and Estimated Earnings (“BIEC”) May 31, 2024 May 31, 2023 Increase /(Decrease) Accounts receivable 5,212,000 5,554,000 (342,000 ) -6% CIEB 4,357,000 4,124,000 233,000 6% Less: BIEC 5,601,000 1,992,000 3,609,000 181% Net $ 3,968,000 $ 7,686,000 $ (3,718,000 ) -48% Number of an average day’s sales outstanding in accounts receivable (DSO) 39 47 The Company combines the totals of accounts receivable, the asset CIEB, and the liability BIEC, to determine how much cash the Company will eventually realize from revenue recorded to date.
The Company disposed of approximately $107,000 and $791,000 of obsolete inventory during the years ended May 31, 2025 and 2024, respectively. 13 Accounts Receivable, Costs and Estimated Earnings in Excess of Billings (“CIEB”) and Billings in Excess of Costs and Estimated Earnings (“BIEC”) May 31, 2025 May 31, 2024 Increase /(Decrease) Accounts receivable 5,600,000 5,212,000 388,000 7% CIEB 5,360,000 4,357,000 1,003,000 23% Less: BIEC 4,382,000 5,601,000 (1,219,000) -22% Net $ 6,578,000 $ 3,968,000 $ 2,610,000 66% Number of an average day’s sales outstanding in accounts receivable (DSO) 32 39 The Company combines the totals of accounts receivable, the asset CIEB, and the liability BIEC, to determine how much cash the Company will eventually realize from revenue recorded to date.
Net revenue by geographic region, as a percentage of total net revenue for fiscal years ended May 31, 2024 and 2023 is as follows: Year ended May 31 2024 2023 U.S. 86% 81% Asia 4% 11% Other 10% 8% The gross profit as a percentage of net revenue of 47% in the year ended May 31, 2024 is five percentage points greater than the same period of the prior year (42%).
Net revenue by geographic region, as a percentage of total net revenue for fiscal years ended May 31, 2025 and 2024 is as follows: Year ended May 31 2025 2024 U.S. 79% 86% Asia 15% 4% Other 6% 10% The gross profit as a percentage of net revenue of 46% in the year ended May 31, 2025 is in line with the same period of the prior year.
The year-end balances in this account are comprised of the following components: May 31, 2024 May 31, 2023 Billings to customers $ 7,211,000 $ 6,538,000 Less: Costs 933,000 2,343,000 Less: Estimated earnings 677,000 2,203,000 BIEC $ 5,601,000 $ 1,992,000 Number of projects in progress 5 10 Accounts payable, at $1,439,000 as of May 31, 2024, is 16% less than the prior year-end.
The year-end balances in this account are comprised of the following components: May 31, 2025 May 31, 2024 Billings to customers $ 12,253,000 $ 7,211,000 Less: Costs 3,985,000 933,000 Less: Estimated earnings 3,886,000 677,000 BIEC $ 4,382,000 $ 5,601,000 Number of projects in progress 7 5 Accounts payable, at $1,119,000 as of May 31, 2025, is 22% less than the prior year end.
Based on certain assumptions and judgments made from the information available at that time, we determine the amount in the inventory allowance. If these estimates and related assumptions or the market changes, we may be required to record additional reserves. Historically, actual results have not varied materially from the Company's estimates.
Therefore, management of the Company has recorded an allowance for potential inventory obsolescence. Based on certain assumptions and judgments made from the information available at that time, we determine the amount in the inventory allowance. If these estimates and related assumptions or the market changes, we may be required to record additional reserves.
Selling, General and Administrative Expenses Years ended May 31 Change 2024 2023 Amount Percent S G & A $ 10,971,000 $ 9,043,000 $ 1,928,000 21% … as a percentage of net revenues 25% 22% Selling, general and administrative expenses increased 21% from the prior year, primarily from increased personnel costs.
Selling, General and Administrative Expenses Years ended May 31 Change 2025 2024 Amount Percent S G & A $ 11,407,000 $ 10,971,000 $ 436,000 4% … as a percentage of net revenues 25% 25% Selling, general and administrative expenses increased 4% from the prior year, primarily from increased credit loss expense.
The year-end balances in the CIEB account are comprised of the following components: May 31, 2024 May 31, 2023 Costs $ 9,644,000 $ 3,006,000 Estimated earnings 9,782,000 2,648,000 Less: Billings to customers 15,069,000 1,530,000 CIEB $ 4,357,000 $ 4,124,000 Number of projects in progress 14 12 14 As noted above, BIEC represents billings to customers in excess of revenues recognized.
The remainder will be billed as the projects progress, in accordance with the terms specified in the various contracts. 14 The year-end balances in the CIEB account are comprised of the following components: May 31, 2025 May 31, 2024 Costs $ 8,514,000 $ 9,644,000 Estimated earnings 9,289,000 9,782,000 Less: Billings to customers 12,443,000 15,069,000 CIEB $ 5,360,000 $ 4,357,000 Number of projects in progress 14 14 As noted above, BIEC represents billings to customers in excess of revenues recognized.
The Company has a $10,000,000 demand line of credit with M&T Bank, with interest payable at the Company's option of 30, 60 or 90 day SOFR rate plus 2.365%. There is no outstanding balance at May 31, 2024. The line is secured by a negative pledge of the Company's real and personal property and is subject to renewal annually.
These capital expenditures will be primarily for new manufacturing and testing equipment. The Company has a $10,000,000 demand line of credit with M&T Bank, with interest payable at the Company's option of 30, 60 or 90 day SOFR rate plus 2.365%. There is no outstanding balance at May 31, 2025.
Capital expenditures for the year ended May 31, 2024 were $1,149,000 compared to $3,359,000 in the prior year. The Company also acquired Pumpkin™ Mounts intellectual property during the year ended May 31, 2024 for $300,000. Current year capital expenditures included new manufacturing machinery, testing equipment, upgrades to technology equipment and assembly / test facility improvements.
Capital expenditures for the year ended May 31, 2025 were $2,602,000 compared to $1,149,000 in the prior year. Current year capital expenditures included new manufacturing machinery, testing equipment, upgrades to technology equipment and assembly / test facility improvements. The Company has commitments to make capital expenditures of approximately $1,853,000 as of May 31, 2025.
The number of an average day's sales outstanding in accounts receivable (DSO) was 39 days at May 31, 2024 and 47 days at May 31, 2023. The Company expects to collect the net accounts receivable balance during the next twelve months.
The number of an average day's sales outstanding in accounts receivable (DSO) was 32 days at May 31, 2025 and 39 days at May 31, 2024.
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. Therefore, management of the Company has recorded an allowance for potential inventory obsolescence.
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 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.
Other Income (expense) Other income increased 104% from the prior year due to increased interest income from higher levels of short-term investments during the course of the year. Provision for Income Taxes The Company's effective tax rate (ETR) is calculated based upon current assumptions relating to the year's operating results and various tax related items.
Provision for Income Taxes The Company's effective tax rate (ETR) is calculated based upon current assumptions relating to the year's operating results and various tax related items. The ETR for the fiscal year ended May 31, 2025 is 15%, compared to the ETR for the prior year of 18%.
Research and Development Costs Years ended May 31 Change 2024 2023 Amount Percent R & D $ 388,000 $ 1,097,000 $ (709,000) -65% … as a percentage of net revenues 0.9% 2.7% Research and development costs decreased 65% from the prior year. This decrease was driven by the completion of the Taylor Damped Moment Frame™ project.
Research and Development Costs Years ended May 31 Change 2025 2024 Amount Percent R & D $ 444,000 $ 388,000 $ 56,000 14% … as a percentage of net revenues 1.0% 0.9% Research and development costs increased 14% from the prior year.
Management provides for probable uncollectible accounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts after considering the age of each receivable and communications with the customers involved. 8 Balances that are collected, for which a credit to a valuation allowance had previously been recorded, result in a current-period reversal of the earlier transaction charging earnings and crediting a valuation allowance.
Management provides for estimated credit losses through a charge to expense and a credit to a valuation allowance based on its assessment of the current status of individual accounts after considering the age of each receivable and communications with the customers involved.
There was $791,000 and $322,000 of inventory disposed of during the years ended May 31, 2024 and 2023. The provision for potential inventory obsolescence was $386,000 and $295,000 for the years ended May 31, 2024 and 2023.
Historically, actual results have not varied materially from the Company's estimates. There was $107,000 and $791,000 of inventory disposed of during the years ended May 31, 2025 and 2024, respectively. The provision for potential inventory obsolescence was zero and $386,000 for the years ended May 31, 2025 and 2024, respectively.
Inventory and Maintenance Inventory May 31, 2024 May 31, 2023 Increase /(Decrease) Raw materials $ 887,000 $ 674,000 $ 213,000 32% Work-in-process 6,412,000 5,005,000 1,407,000 28% Finished goods 213,000 262,000 (49,000) -19% Inventory 7,512,000 83% 5,941,000 86% 1,571,000 26% Maintenance and other inventory 1,580,000 17% 1,003,000 14% 577,000 58% Total $ 9,092,000 100% $ 6,944,000 100% $ 2,148,000 31% Inventory turnover 3.0 3.5 Inventory, at $7,512,000 as of May 31, 2024, is 26 percent higher than at the prior year-end.
Inventory and Maintenance Inventory May 31, 2025 May 31, 2024 Increase /(Decrease) Raw materials $ 627,000 $ 887,000 $ (260,000) -29% Work-in-process 7,223,000 6,412,000 811,000 13% Finished goods 263,000 213,000 50,000 23% Inventory 8,113,000 88% 7,512,000 83% 601,000 8% Maintenance and other inventory 1,108,000 12% 1,580,000 17% (472,000) -30% Total $ 9,221,000 100% $ 9,092,000 100% $ 129,000 1% Inventory turnover 2.7 3.0 Inventory, at $8,113,000 as of May 31, 2025, is eight percent higher than at the prior year-end.
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.
Inventory Inventory is stated at the lower of average cost or net realizable value. Average cost approximates first-in, first-out cost. Maintenance and other inventory represent stock that is estimated to have a product life-cycle in excess of twelve-months.
These actions combined with benefits from the Company’s continuous improvement initiatives and increased volume have helped to improve the gross margin as a percentage of revenue over the prior year. At May 31, 2024, we had 134 open sales orders in our backlog with a total sales value of $33.1 million.
At May 31, 2025, we had 142 open sales orders in our backlog with a total sales value of $27.1 million.
Removed
The balance of the valuation allowance is unchanged at $29,000 at both May 31, 2024 and May 31, 2023. Management does not expect the valuation allowance to materially change in the next twelve months for the current accounts receivable balance. Inventory Inventory is stated at the lower of average cost or net realizable value. Average cost approximates first-in, first-out cost.
Added
Balances that are collected, for which a credit to a valuation allowance had previously been recorded, result in a current-period reversal of the earlier transaction charging expense and crediting a valuation allowance.
Removed
Total sales to Asia decreased 55% from the prior year.
Added
The balance of the valuation allowance has increased to $564,000 at May 31, 2025 from $29,000 at May 31, 2024 due to the uncertainty of collecting a $751,000 balance overdue on a structural project. The Company is in discussions with the customer regarding payment of this balance.
Removed
The Company has been able to increase sales prices to recover more of the increased costs for materials and labor that were incurred during the year ended May 31, 2024. Management continues to work with suppliers to obtain more visibility of conditions affecting their respective markets.
Added
Year ended May 31 Change 2025 2024 Amount Percent Net Revenue $ 46,293,000 $ 44,583,000 $ 1,710,000 4% Cost of sales 24,815,000 23,744,000 1,071,000 5% Gross profit $ 21,478,000 $ 20,839,000 $ 639,000 3% … as a percentage of net revenues 46% 47% The Company's consolidated results of operations showed a 4% increase in net revenues and an increase in net income of 5%.
Removed
Operating Income Operating income of $9,479,000 for the year ended May 31, 2024, showed significant improvement from the $6,809,000 operating income in the prior year. The increase in operating income was attributed to the decrease in research and development costs as well as improved gross margin performance.
Added
Total sales to Asia increased to $7.0 million from $2.0 million last year. The shift in domestic and international sales concentration from the prior year is attributable to normal changes in structural project activity.
Removed
The ETR for the fiscal year ended May 31, 2024 is 18%, compared to the ETR for the prior year of 16%.
Added
Operating Income Operating income of $9,627,000 for the year ended May 31, 2025 increased 2% from the prior year, primarily from increased revenue. Other Income Other income decreased 2% from the prior year. The decrease was driven by short-term investment interest income.
Removed
The Company has commitments to make capital expenditures of approximately $1,360,000 as of May 31, 2024. These capital expenditures will be primarily for new manufacturing and testing equipment.
Added
The line is secured by a negative pledge of the Company's real and personal property and is subject to renewal annually. The bank is not committed to make loans under this line of credit and no commitment fee is charged.
Removed
On January 4, 2024, the Company entered into a redemption agreement to purchase 459,015 of the Company’s shares of the capital stock of the Company, which represented approximately 13% of all of the issued and outstanding shares of capital stock of the Company as of January 8, 2024 (the “Closing Date”), from the Ira Sochet Trust and the Ira Sochet Roth IRA.
Added
The Company increased its allowance for estimated credit losses to $564,000 at May 31, 2025 from $29,000 at May 31, 2024 due to the uncertainty of collecting a $751,000 overdue balance on a structural project.
Removed
Each of the foregoing counterparties are non-affiliates of the Company. The agreed purchase price was $19.92 per share, which constituted 87.6% of the average price ($22.74) at which shares of the Company's common stock traded on the Closing Date.
Removed
The remainder will be billed as the projects progress, in accordance with the terms specified in the various contracts.

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