UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM 10-K
  (Mark
One)
  x   ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
fiscal year ended March 31,
2009
  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: 0-19879
  Techprecision Corporation
 
  Delaware
                    
                    51-0539828(State
      or other jurisdiction of
                    
                    (I.R.S.
      Employerincorporation
      or organization)
                    
                    Identification
      No.)1 Bella Drive, Westminster,
      Massachusetts
                    
                    01473(Address
      of principal executive offices)
                    
                    (Zip
      Code)(978)
      874-0591Registrant’s
      telephone number, including area code:Securities
      registered under Section 12(b) of the Exchange Act:   None
  Securities
registered under Section 12(g) of the Exchange Act: Common Stock, par value $.0001 per
share
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. o  
Yes     x  No
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.    o 
Yes     x No
  Indicate
by check mark whether the registrant (1) 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.  x
Yes     o 
No
  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).   oYes   o
No
  Table of Contents
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer   o
              Accelerated
      filer   oNon-accelerated
      filer   o (Do not
      check if a smaller reporting company)
              Smaller
      reporting company   x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).      o 
Yes     x 
No
  The
aggregate market value of voting and non-voting common stock held by
non-affiliates of the Registrant as of September 30, 2008, the last business day
of the registrant’s most recently completed second fiscal quarter, was
approximately $10,800,000.
  The
number of shares outstanding of the registrant’s common stock as of May 22, 2009
is 13,907,513.
    Table of Contents
  
  TABLE OF
CONTENTS
  PagePART
      IItem 1. Description of
      Business
              1Item 1A. Risk Factors
              5Item IB. Unresolved Staff
      Comments
              5Item 2. Description of
      Property
              5Item 3. Legal
      Proceedings
              6Item 4. Submission of Matters to a
      Vote of Security Holders
              6PART
      IIItem 5. Market for Common Equity,
      Related Stockholder Matters
              7Item 6. Selected Financial
      Data
              7Item 7. Management’s Discussion and
      Analysis of Financial Condition and Results of
    Operations
              7Item 7A. Quantitative and
      Qualitative Disclosure About Market Risk
              15Item 8. Financial
      Statements
              15Item 9. Changes in and Disagreements
      with Accountants on Accounting and Financial
Disclosure
              15Item 9A(T). Controls and
      Procedures
              15Item 9B. Other Information
              16PART
      IIIItem 10. Directors, Executive
      Officers, Promoters and Control Persons; Compliance with Section 16(a) of
      the Exchange Act
              17Item 11. Executive
      Compensation
              19Item 12. Security Ownership of
      Certain Beneficial Owners and Management and Related Stockholder
      Matters
              22Item 13.  Certain Relationships
      and Related Transactions and Director Independence
              24Item 14. Principal Accountant Fees
      and Services
              24PART
      IVItem 15. Exhibits, Financial Statement
      Schedules
              26
  
    Table of Contents
 
 PART
I
  Item 1. Description of Business.
  Our
Business
  Through
our wholly-owned subsidiary, Ranor, Inc. (“Ranor”), we manufacture metal
fabricated and machined precision components and equipment. These products are
used in a variety of markets including alternative energy, medical, nuclear,
defense, industrial, and aerospace. Our goal is to be an end-to-end service
provider to our customers by furnishing customized and integrated “turn-key”
solutions for completed products requiring custom fabrication and machining,
assembly, inspection and testing.
  We work
with our customers to manufacture products in accordance with the customers’
drawings and specifications. Our work complies with specific national and
international codes and standards applicable to our industry. We believe that we
have earned our reputation through outstanding technical expertise, attention to
detail, and a total commitment to quality and excellence in customer
service.
  About Us
  We are a
Delaware corporation, organized in 2005 under the name Lounsberry Holdings II,
Inc. On February 24, 2006, we acquired all of the issued and outstanding capital
stock of Ranor, Inc., a Delaware corporation that, together with its
predecessors, has been in continuous operation since 1956. Since February 24,
2006, our sole business has been the business of Ranor. On March 6, 2006,
following the acquisition of Ranor, we changed our corporate name to
Techprecision Corporation. Our acquisition of Ranor is accounted for as a
reverse acquisition. As a result, our financial statements for periods prior to
February 24, 2006 reflect the financial condition and results of operations of
Ranor.
  Our
executive offices are located at 1 Bella Drive, Westminster, MA 01473, and our
telephone number is (978) 874-0591. Our website is www.techprecision.com.
Information on our website or any other website is not part of this annual
report.
  References
in this annual report to “we,” “us,” “our” and similar words refer to
Techprecision Corporation and its subsidiary, Ranor, unless the context
indicates otherwise.
  General
  Our
operations are situated on approximately 65 acres in North Central
Massachusetts. Our 125,000 square foot facility is the home for state-of-the-art
equipment which gives us the capability to manufacture products as large as 100
tons. We offer a full range of services required to transform raw material into
precise finished products. Our manufacturing capabilities include: fabrication
operations (cutting, press and roll forming, assembly, welding, heat treating,
blasting and painting) and machining operations (CNC (computer numerical
controlled) horizontal and vertical milling centers). We also provide support
services to our manufacturing capabilities: manufacturing engineering (planning,
fixture and tooling development, manufacturability), quality control (inspection
and testing), and production control (scheduling, project management and
expediting).
  All
manufacturing is done in accordance with our written quality assurance program,
which meets specific national and international codes, standards, and
specifications. Ranor holds several certificates of authorization issued by the
American Society of Mechanical Engineers and the National Board of Boiler and
Pressure Vessel Inspectors. The standards used are specific to the customer’s
needs, and we have implemented such standards into our manufacturing
operations.
  Products
  We
manufacture a wide variety of products pursuant to customer contracts and based
on their needs. We do not distribute products on the open market and we do not
market any typical product on an on-going basis. Although our focus is to
provide long-term integrated solutions to our customers on continuous production
programs, our activities include a variety of both custom-based and
production-based requirements. The custom-based work is typically either a
prototype or unique, one-of-a-kind product. The production-based work is repeat
work or a single product with multiple quantity releases. The products provided
are not designed by us, in general, and are manufactured according to
“build-to-print” requirements specified by the customer.
  1
 Table of Contents
  The
change in market demand can be wide and varied and requires our ability to adapt
to the needs of the customer and industry.  Understanding this dynamic
we have developed the capability to transform our workforce to manufacture
products for customers in different industries.
  We do not
own any proprietary marketed product, and we do not manufacture products in
anticipation of orders. Manufacturing operations do not commence on any project
before we receive a customer’s purchase order. All contracts cover specific
product within the capability of our resources.
  Examples
of the industries we serve and the products that we have manufactured during
recent years include, but are not limited to:
  Alternative
Energy:
  Customer
proprietary components used to manufacture solar panels
 Wind
turbine components
  Medical:
  Components
and major assemblies for proton beam accelerators for cancer
treatment
  Nuclear:
 Commercial
reactor internal components and temporary heads
 Spent
fuel storage and transportation canisters and casks
 Material
handling equipment
  Defense:
  Aircraft
carrier steam accumulator tanks
 DDX
destroyer prototype propulsion equipment, gun and weapons handling
equipment
 Submarine
sonar system components, primary shield tank heads and foundations
  Industrial:
  Vacuum
chambers
 Food
processing equipment
 Chemical
processing equipment
 Pressure
vessels
  Aerospace:
  Delta
rocket precision-machined fuel tank bulkheads
 F-15
special equipment pods
 Various
other components, fixtures and tooling
  Source
of Supply
  Manufacturing
operations are partly dependent on the availability of raw material. Raw
material requirements vary with each contract and are specified by the customer
requirements and specifications. We have established relationships with numerous
suppliers. We consistently seek to initiate new contacts in order to establish
alternate sources of material supply to reduce our dependency on any one
supplier. The purchase of raw material is subject to the customer’s purchase
order requirements, and not based on speculation or long-term contract awards.
Some contracts require the use of customer-supplied raw materials in the
manufacture of their product.
  2
 Table of Contents
  Our
projects include the manufacturing of product from various traditional, as well
as specialty metal alloys. These materials may include, but are not limited to:
inconel, titanium, stainless steel, high strength steel and other alloys.
Certain materials are subject to long-lead delivery schedules.
  During
the year ended March 31, 2009 the following suppliers accounted for 10% or more
of our purchased material in the fiscal year: Northland Stainless, Inc. that
provided stainless plates – 15%, North American Stainless, that provided
stainless plates, - 10% and Steel Industries Acquisition, Inc., that provided
forging, - 13%. No other suppliers provided 10% or more of purchased raw
material.
 
 The
Company’s net sales have increased by 19.7% and 66.6% for the years ending March
31, 2009 and March 31, 2008, respectively, reversing the 5.8% decline in net
sales for the year ended March 31, 2007.  The Company’s focus on the
alternative energy sector and sales from its largest customers were significant
contributors to this growth.   In addition to the growth in
revenue, the Company has improved its gross margin from 18.6% for the year ended
March 31, 2007 to 31.8% for the year ended March 31, 2009.  While we
have had significant customer concentration over the past three years, we are
engaged in the development of marketing initiatives to broaden our customer base
as well as the industries we serve.  Total operating expenses as a
percentage of net sales were 6.5% for the year ended March 31, 2009, 6.1% for
fiscal year 2008 and 11% for fiscal year 2007.  While the company has
generated significant sales growth and margin improvements over the past three
years, the recent economic downturn has caused the Company to experience a
decline in both net sales and gross margin during the second half of fiscal 2009
and early portion of the first quarter of fiscal
2010.
 
 Marketing
  We
maintain an active marketing and sales department and have plans to expand our
marketing and sales efforts in the near future. We market to our existing
customer base and we initiate contacts with new potential customers through
various sources such as personal contact, customer referrals, and trade show
participation. A portion of our business is the result of competitive bidding
processes while a significant portion is from contract negotiation. We believe
that the reputation we have earned from our current customers represents an
important aspect of our marketing effort.
  Requests
for quotations received from customers are reviewed to determine the specific
requirements and our capability to meet these requirements. Quotations are
prepared by estimating the material and labor costs and assessing our current
backlog to determine our delivery commitments. Competitive bid quotations are
submitted to the customer for review and award of contract. Negotiation bids
typically require the submission of additional information to substantiate the
quotation. The bidding process can range from several weeks for a competitive
bid, to several months for a negotiation bid before the customer awards a
contract.
  Principal
Customers
  A
significant portion of our business is generated by a small number of “major”
customers. The balance of our business consists of more discrete projects for
numerous other customers. As the industry and markets change, our major
customers may also change.
  Currently,
our largest customer, in the year ended March 31, 2009 and in the year ended
March 31, 2008 was GT Solar Inc. Their work generated 57% of our net sales for
the year ended March 31, 2009 as compared with 51% of total net sales for the
year ended March 31, 2008. Our business is dependent on the purchase orders
received from our customers for work, and at this time we do not have any
long-term contracts with any customer. Our customer base consists of many
businesses in the markets identified above.  For the year ended March
31, 2007, our largest customer was GT Solar and net sales to that customer
accounted for 18% of our annual net sales.  Sales to our top four
customers for the fiscal year ended March 31, 2007 accounted for 46% of total
net sales.
  The
following table sets forth the revenue, both in dollars and as a percentage of
total revenue, generated by each customer that accounted for 10% or more of our
revenue in either of the two past fiscal years (dollars in
thousands):
  3
 Table of Contents
 
 Year
      Ended March 31,2009
                        2008Customer
                        
                        Dollars
                        
                        Percent
                        Dollars
                        PercentGT
      Solar Inc.
                        
                        $
                        21,785
                        
                        57
                        %
                        $
                        16,143
                        51
                        %BAE
      Systems
                        
                        $
                        3,880
                        
                        10
                        %
                        $
                        5,434
                        17
                        %
 
 GT Solar,
Inc. is an alternative energy company that engaged us to provide a component for
its proprietary solar related product.
  BAE
Systems is a global defense, security and aerospace company that engaged us to
provide fabrication and machining services for military components constructed
of large exotic alloy forgings and ancillary equipment.
  For each
of these customers, the manufacturing of the product and the generation of
revenue is from the purchase orders issued to us for completion of the different
aspects of the projects.
  As of
March 31, 2009, we had a backlog of orders totaling approximately $38.6 million,
of which approximately $28.5 million represented orders from GT Solar. 
Subsequent to March 31, 2009, GT Solar provided notice of its intent to cancel a
portion of an open purchase order reducing the total purchase commitment by
approximately $16.8 million, reducing our total backlog to $21.8
million.  Post the cancellation, the remaining GT Solar backlog of
approximately $11.7 million includes approximately $3.4 million of open product
purchase orders and approximately $8.3 million of material
buyback.  The backlog also includes orders in excess of $1.0 million
from each of five customers totaling more than $8.3 million in addition to GT
Solar. We expect to deliver the backlog during the years ended March 31, 2010
and March 31, 2011.
  Competition
 
 In the
manufacture of metal fabricated and machined precision components and equipment
we face competition from both domestic and foreign manufacturers. As no one
company dominates the industry, we compete against companies that are both
larger and smaller in size and capacity. Some competitors may be better known,
with greater resources at their disposal, and some have lower production costs.
For certain products, being a domestic manufacturer may play a role in
determining whether we are awarded a certain contract. For other products, we
may be competing against foreign manufacturers who have a lower cost of
production. If a contracting party has a relationship with a vendor and is
required to place a contract for bids, the preferred vendor may provide or
assist in the development of the specification for the product which may be
tailored to that vendor’s products. In such event, we would be at a disadvantage
in seeking to obtain that contract. We believe that customers focus on such
factors as the quality of work, the reputation of the vendor, the perception of
the vendor’s ability to meet the required schedule, and the price in selecting a
vendor for their products.
  Government
Regulations
  Although
we have very few contracts with government agencies, a significant portion of
our manufacturing services are provided as a subcontractor to prime government
contractors. These prime contractors are subject to government procurement and
acquisition regulations, which give the government the right of termination for
the convenience of the government and certain renegotiation rights as well as a
right of inspection. As a result, any government action which affects our
customers would affect us. Some of the work we perform for our customers is part
of government appropriation packages, and therefore, subject to the Miller Act,
requiring the prime contractors (our customers) to pay all subcontractors under
contracted purchase agreements first. Because of the nature and use of our
products, we are subject to compliance with quality assurance programs, which
are a condition for our bidding on government contracts and subcontracts. We
believe we are in compliance with all of these programs.
  We are
also subject to laws applicable to any manufacturing company, such as federal
and state occupational health and safety laws, as well as environmental laws,
which are discussed in more detail under the heading “Environmental
Compliance.”
  4
 Table of Contents
  Environmental
Compliance
  We are
subject to compliance with federal, state and local environmental laws and
regulations that involve the use, disposal and cleanup of substances regulated
by those laws and the filing of reports with environmental agencies, and we are
subject to periodic inspections to monitor our compliance.
  Prior to
March 31, 2007, we had not been in full compliance with applicable environmental
regulations. Some failures of compliance resulted from the failure of Ranor to
perform necessary remediation prior to our acquisition of Ranor. Others resulted
from our failure to file required reports. We have completed the remediation and
we believe that we are in compliance with applicable environmental regulations.
As a result of our failure to initially comply with applicable environmental
laws and regulations, we incurred costs of  $106,000 in the year
ended March 31, 2008 and approximately $12,000 in the year ended March 31,
2009.  For the year ended March 31, 2007, environmental compliance
costs totaled $50,000.
 
 We
believe that we are currently in compliance with applicable environmental
regulations. As part of our normal business practice we are required to develop
and file reports and maintain logbooks that document all environmental issues
within our organization. In this connection, we may engage outside consultants
to assist us in keeping current on developments in environmental regulations. We
do not believe that our cost of compliance on an annual basis will exceed
$50,000.
 
 Intellectual
Property Rights
 
 Presently,
we have no patent rights and we do not believe that our business requires patent
or similar protection. In the course of our business we develop know-how for use
in the manufacturing process. Because of the nature of our business as a
contract manufacturer, we do not believe that lack of ownership of intellectual
property will adversely affect our operations.
 
 In the
course of our business, we develop know-how for use in the manufacturing
process.  Although we have non-disclosure policies, we cannot assure
you that we will be able to protect our intellectual property
rights.
  Research
and Development
  We did
not incur any research and development expenses, either on our own behalf or on
behalf of our customers, during the year ended March 31, 2009 or
2008.
  Personnel
  As of
March 31, 2009, we had approximately 131 employees, of whom 15 are
administrative, 9 are engineering and 107 are manufacturing personnel. All of
our employees are full time. None of our employees is represented by a labor
union, and we believe that our employee relations are good.
 
 Item
1A. Risk Factors.
  As a
smaller reporting company, we have elected not to provide the information
required by this Item.
 
 Item
1B. Unresolved Staff Comments.
 
 None.
  Item 2. Description of Property.
  We lease
from WM Realty Management LLC (“WM Realty”), which is an affiliated company, an
approximately 125,000-square foot office and manufacturing facility at 1 Bella
Drive, Westminster, Massachusetts 01473, pursuant to a 15-year lease that
expires February 28, 2021, at a current annual rental rate of $450,000, subject
to annual escalations based upon increases in the consumer price index. The
lease provides for two five-year extensions and a purchase option at appraised
value.
  5
 Table of Contents
  We also
leased approximately 12,720 square feet of manufacturingspace in Fitchburg,
Massachusetts from an unaffiliated party. The lease provided for an annual rent
of $50,112 with 3% annual increases. We had the option to purchase the property
at the appraised market value. The lease expired in February 2009, and it was
not renewed.
  Although
our current facilities are adequate for present requirements, we believe that we
may need to expand our manufacturing facilities in order for us to expand our
business. However, as of the date of this report, we have not entered into
agreements with respect to the expansion of our facilities.
 
 On
February 24, 2009, we entered a lease for 2,089 square feet of office space in
Centreville, Delaware.  The lease has a three-year term and provides
for initial rent of $2,500 per month, escalating to $3,220 per month in year two
and $3,395 per month in year three of the lease.
  Item
3. Legal Proceedings.
  We are
not a party to any material legal proceedings.
  Item 4. Submission of Matters to a Vote of Security
Holders.
 
 None.
   6
 Table of Contents
  PART
II
  Item 5. Market for
Common Equity and Related Stockholder Matters.
  Our
common stock is traded on the Over the Counter Bulletin Board under the symbol
TPCS. However, there is currently no regular market or trading in the Company’s
common stock, and we cannot give any assurance that such a market will develop.
The following table sets forth the high and low bid quotations per share of our
common stock as reported on the OTC Bulletin Board for the periods commencing
November 7, 2007, when trading in our stock commenced, through March 31, 2009.
The quarterly high and low bid quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.
  Fiscal
      year ended March 31, 2009
                      
                      High
                      
                      
                      Low4th
      Quarter (three months ended March 31, 2009)
                      $
                      1.01
                      
                      
                      0.303rd
      Quarter (three months ended December 31, 2008)
                      
                      2.00
                      
                      
                      0.652nd
      Quarter (three months ended September 30, 2008)
                      
                      2.85
                      
                      
                      1.351st
      Quarter (three months ended June 30, 2008)
                      
                      3.10
                      
                      
                      2.00Fiscal
      year ended March 31, 2008
                      
                      High
                      
                      
                      Low4th
      Quarter (three months ended March 31, 2008)
                      
                      $
                      3.85
                      
                      
                      $2.763rd
      Quarter (December 27, 2007 through and including December 31,
      2007)
                      
                      
                      3.75
                      
                      
                      3.36
  As of
March 31, 2009, we had approximately 82 record holders of our common
stock.
  We have
not paid dividends on our common stock, and the terms of certificate of
designation relating to the creation of the series A preferred stock prohibit us
from paying dividends. We plan to retain future earnings, if any, for use in our
business. We do not anticipate paying dividends on our common stock in the
foreseeable future.
 
 Item
6.  Selected Financial Data
 
 As a
smaller reporting company, we have elected not to provide the information
required by this Item.
 
 Item
7. Management’s
Discussion and Analysisof Financial Condition and Results of Operations
  Statement
Regarding Forward Looking Disclosure
  The
following discussion of the results of our operations and financial condition
should be read in conjunction with our financial statements and the related
notes, which appear elsewhere in this annual report on Form 10K. This annual
report on Form 10-K, including this section entitled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” may contain
predictive or “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements that express our intentions, beliefs,
expectations, strategies, predictions or any other statements relating to our
future activities or other future events or conditions. These statements are
based on current expectations, estimates and projections about our business
based in part on assumptions made by management. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and
results may, and probably will, differ materially from what is expressed or
forecasted in the forward-looking statements due to numerous factors. Those
factors include those risks discussed in this Item 7 “Management’s Discussion
and Analysis” in this Form 10-K and those described in any other filings which
we make with the SEC. In addition, such statements could be affected by risks
and uncertainties related to our ability to generate business on an on-going
business, to obtain any required financing, to receive contract awards from the
competitive bidding process, maintain standards to enable us to manufacture
products to exacting specifications, enter new markets for our services, market
and customer acceptance, our reliance on a small number of customers for a
significant percentage of our business, competition, government regulations and
requirements, pricing and development difficulties, our ability to make
acquisitions and successfully integrate those acquisitions with our business, as
well as general industry and market conditions and growth rates, and general
economic conditions. Any forward-looking statements speak only as of the date on
which they are made, and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this report. Investors should evaluate any statements made by the Company in
light of these important factors.
  7
 Table of Contents
  Overview
  We offer
a full range of services required to transform raw material into precise
finished products. Our manufacturing capabilities include: fabrication
operations which include cutting, press and roll forming, assembly, welding,
heat treating, blasting and painting; and machining operations which include CNC
(computer numerical controlled) horizontal and vertical milling centers. We also
provide support services to our manufacturing capabilities: manufacturing
engineering (planning, fixture and tooling development, manufacturability),
quality control (inspection and testing), and production control (scheduling,
project management and expediting).
  All
manufacturing is done in accordance with our written quality assurance program,
which meets specific national and international codes, standards, and
specifications. Ranor holds several certificates of authorization issued by the
American Society of Mechanical Engineers and the National Board of Boiler and
Pressure Vessel Inspectors. The standards used are specific to the customers’
needs, and our manufacturing operations are conducted in accordance with these
standards.
  During
the last several years,  the demand for our services have been
relatively strong. However recent recessionary pressures have affected the
requirements of our customers.  GT Solar, which has been our largest
customer for each of the past three fiscal years, has slowed production
significantly and has announced its’ intention to cancel the majority of orders
included in its March 31, 2009 backlog.  Other customers have delayed
deliveries of existing orders and have delayed the placement of new
orders.
  A
significant portion of our revenue is generated by a small number of customers.
In the year ended March 31, 2009, our largest customer, GT Solar, accounted for
approximately 57% of our revenue, and our second largest customer, BAE Systems,
accounted for approximately 10% of our revenue. For the year ended March 31,
2008, our largest customer, GT Solar, accounted for 51% of our revenue and BAE
accounted for 16% of our revenue.  For the year ended March 31, 2007,
GT Solar account for 18% of annual revenue while two other customers accounted
for a combined 26% of total annual revenue.
  Our
contracts are generated both through negotiation with the customer and from bids
made pursuant to a request for proposal. Our ability to receive contract awards
is dependent upon the contracting party’s perception of such factors as our
ability to perform on time, our history of performance, our financial condition
and our ability to price our services competitively.  Although some of
our contracts contemplate the manufacture of one or a limited number of units,
we are seeking more long-term projects with a more predictable cost structure,
and whenever possible we are rejecting or not bidding on projects we do not
believe would generate an adequate gross margin. As a result of the
implementation of this strategy, in the year ended March 31, 2009, our sales and
net income were $38.1 million and $5.9 million respectively, as compared to
sales of $31.8 million and a net income of $3.5 million, respectively, for the
previous fiscal year. Our gross margin for the year ended March 31, 2009 was 32%
as compared to 26% in the year ended March 31, 2008.  Both net sales
and gross margin declined in the second half of fiscal 2009, reflecting the
effects of the global economic downturn on our customers and their
customers.
  Because
our revenues are derived from the sale of goods manufactured pursuant to a
contract, and we do not sell from inventory, it is necessary for us to
constantly seek new contracts. There may be a time lag between our completion of
one contract and commencement of work on another contract. During this period,
we will continue to incur our overhead expense but with lower revenue.
Furthermore, changes in either the scope of a contract or the delivery schedule
may impact the revenue we receive under the contract and the allocation of
manpower.
 
 8
 Table of Contents
 
 As of
March 31, 2009, we had a backlog of orders totaling approximately $38.6 million,
of which approximately $28.5 million represented orders from GT Solar. 
Subsequent to March 31, 2009, GT Solar provided notice of its intent to cancel a
portion of an open purchase order reducing the total purchase commitment by
approximately $16.8 million, reducing our total backlog to $21.8 millionPost the cancellation, the
remaining GT Solar backlog of approximately $11.7 million includes approximately
$3.4 million of open product purchase orders and approximately $8.3 million of
material buyback.  The backlog also includes orders in excess of $1.0
million from each of five customers totaling more than $8.3 million in addition
to GT Solar. We expect to deliver the backlog during the years ended March 31,
2010 and March 31, 2011.
 
 Although
we provide manufacturing services for large governmental programs, we usually do
not work directly for agencies of the United States government. Rather, we
perform our services for large governmental contractors and large utility
companies. However, our business is dependent in part on the continuation of
governmental programs which require the services we provide.
  Growth
Strategy
  Our
strategy is to leverage our core competence as a manufacturer of high-precision,
large-scale metal fabrications and machined components to expand our business
into areas which have shown increasing demand and which we believe could
generate higher margins.
 
 Diversifying
Our Core Industries
  We
believe that rising energy demands along with increasing environmental concerns
are likely to continue to drive demand in the alternative energy industry,
particularly the solar, wind and nuclear power industries. Because of our
capabilities and the nature of the equipment required by companies in the
alternative energy industries, we intend to focus our services in this
sector.  We also expect to market our services for medical device
applications where customer requirements demand strict tolerances and an ability
to manufacture complex heavy equipment.
  As a
result of both the increased prices of oil and gas and the resulting greenhouse
gas emissions, nuclear power may become an increasingly important source of
energy. Because of our manufacturing capabilities, our certification from the
American Society of Mechanical Engineers and our historic relationships with
suppliers in the nuclear power industry, we believe that we are well positioned
to benefit from any increased activity in the nuclear sector that may result.
However, revenues derived from the nuclear power industry were insignificant for
the year ended March 31, 2009 and currently do not constitute a significant
portion of our backlog that we expect to deliver by March 31, 2010. We cannot
assure you that we will be able to develop any significant business from the
nuclear industry.
  In
addition to the nuclear energy industry, we are also exploring potential
business applications focused on the medical industry.  These efforts
include the development and fabrication of medical isotopes storage solutions
and the development and fabrication of critical components for proton beam
therapy machines designed to be utilized in the treatment of
cancer.  Net sales from our proton beam therapy customer accounted for
9.7% of our total 2009 net sales while sales to our medical isotope customer
were not significant in fiscal 2009.
  Expansion
of Manufacturing Capabilities
 
 In
addition to the possible expansion of our existing manufacturing capabilities
through expansion of our existing facilities, we may, from time to time, pursue
opportunistic acquisitions to increase and strengthen our manufacturing,
marketing, and product development capabilities.  We do not have any
current plans for any acquisition, and we cannot give any assurance that we will
complete any acquisition.
 
 Impact of Recent
Legislation
 
 The
Congress has passed and the President has signed the $800 billion American
Recovery and Reinvestment Act of 2009 into law. Significant components of the
bill allow manufacturing concerns to apply various tax credits and apply for
government loan guarantees for the development of or the retooling of existing
facilities for using electricity derived from renewable and previously
underutilized sources.  The Company has historically derived
significant revenues from contracts with manufacturing concerns in these
alternative energy fields.  The American Recovery and Reinvestment Act
extended the 50% Bonus depreciation enacted as a part of the Economic Stimulus
Act of 2008.  Under the Act, 50% of the basis of the qualified
property may be deducted in the year the property is placed in service (i.e.
2008 and 2009).  The remaining 50% is recovered under otherwise
applicable depreciation rules. This significant tax incentive could drive
increased demand on the part of some customers.
 
 9
 Table of Contents
  Critical Accounting Policies
  The
preparation of the Company’s financial statements in conformity with generally
accepted accounting principles in the United States requires our management to
make assumptions, estimates and judgments that affect the amounts reported in
the financial statements, including all notes thereto, and related disclosures
of commitments and contingencies, if any. We rely on historical experience and
other assumptions we believe to be reasonable in making our estimates. Actual
financial results of the operations could differ materially from such estimates.
There have been no significant changes in the assumptions, estimates and
judgments used in the preparation of our audited 2009 financial statements from
the assumptions, estimates and judgments used in the preparation of our 2008
audited financial statements.
  Revenue
Recognition and Costs Incurred
  We derive
revenues from (i) the fabrication of large metal components for our customers;
(ii) the precision machining of such large metal components, including
incidental engineering services; and (iii) the installation of such components
at the customers’ locations when the scope of the project requires such
installations.
  Revenue
and costs are recognized on the units of delivery method. This method recognizes
as revenue the contract price of units of the product delivered during each
period and the costs allocable to the delivered units as the cost of earned
revenue. When the sales agreements provide for separate billing of engineering
services, the revenues for those services are recognized when the services are
completed. Costs allocable to undelivered units are reported in the balance
sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed
upon contract price for customer directed changes, constructive changes,
customer delays or other causes of additional contract costs are recognized in
contract value if it is probable that a claim for such amounts will result in
additional revenue and the amounts can be reasonably estimated. Revisions in
cost and profit estimates are reflected in the period in which the facts
requiring the revision become known and are estimable. The unit of delivery
method requires the existence of a contract to provide the persuasive evidence
of an arrangement and determinable seller’s price, delivery of the product
and reasonable collection prospects. The Company has written agreements with the
customers that specify contract prices and delivery terms. The Company
recognizes revenues only when the collection prospects are
reasonable.
  Adjustments
to cost estimates are made periodically, and losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined and are reflected as reductions of the carrying value of the costs
incurred on uncompleted contracts. Costs incurred on uncompleted contracts
consist of labor, overhead, and materials. Work in process is stated at the
lower of cost or market and reflects accrued losses, if required, on uncompleted
contracts.
  Variable
Interest Entity
  We have
consolidated WM Realty, a variable interest entity from which we lease our real
estate, to conform to FASB Interpretation No. 46, “Consolidation of Variable
Interest Entities” (FIN 46). We have also adopted the revision to FIN 46, FIN 46
(R), which clarified certain provisions of the original interpretation and
exempted certain entities from its requirements.
  10
 Table of Contents
  Income Taxes
  We
provide for federal and state income taxes currently payable, as well as those
deferred because of temporary differences between reporting income and expenses
for financial statement purposes versus tax purposes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recoverable. The effect of the change in the tax rates is
recognized as income or expense in the period of the change. A valuation
allowance is established, when necessary, to reduce deferred income taxes to the
amount that is more likely than not to be realized. As of March 31, 2009, we had
tax assets of approximately $.7 million from net operating loss carry-forwards
and sources. As a result of the change in ownership resulting for the
acquisition of Ranor in February 2006, our annual usage of the tax benefit of
the tax loss-carry-forward pursuant to Section 382 of the Internal Revenue Code,
related to losses incurred before our acquisition of Ranor, is limited to
approximately $35,000.  The American Recovery and Reinvestment Act
extended the 50% bonus depreciation enacted as a part of the Economic Stimulus
Act of 2008.  Under this Act, 50% of the basis of the qualified
property may be deducted in the year the property is placed in service (i.e.
2008 and 2009).  The remaining 50% is recovered under otherwise
applicable depreciation rules. As a consequence of the changes in the tax laws
and accelerated depreciation, we recognized additional deferred income tax
liability of approximately $.5 million in the year ended March 31,
2009.
 
 New
Accounting Pronouncements
  See Note
2, Significant Accounting Policies, in the Notes to the Consolidated Financial
Statements.
 
 Results of
Operations
  Years
Ended March 31, 2009 and 2008
 
 The
following table sets forth information from our statements of operations for the
years ended March 31, 2009 and 2008, in dollars and as a percentage of revenue
(dollars in thousands):
 
 (Dollars
      in thousands)
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            Changes
      Year
                                              Ended
      March 31,2009
                                            
                                            
                                            2008
                                            
                                            
                                            2009
      to 2008Amount
                                            
                                            
                                            Percent
                                            
                                            
                                            Amount
                                            
                                            
                                            Percent
                                            
                                            
                                            Amount
                                            
                                            
                                            PercentNet
      sales
                                            
                                            $
                                            38,088
                                            
                                            
                                            
                                            100
                                            %
                                            
                                            $
                                            31,805
                                            
                                            
                                            
                                            100
                                            %
                                            
                                            $
                                            6,283
                                            
                                            
                                            
                                            20
                                            
                                            %Cost
      of sales
                                            
                                            
                                            25,971
                                            
                                            
                                            
                                            68
                                            %
                                            
                                            
                                            23,473
                                            
                                            
                                            
                                            74
                                            %
                                            
                                            
                                            2,498
                                            
                                            
                                            
                                            11
                                            
                                            %Gross
      profit
                                            
                                            
                                            12,117
                                            
                                            
                                            
                                            32
                                            %
                                            
                                            
                                            8,332
                                            
                                            
                                            
                                            26
                                            %
                                            
                                            
                                            3,785
                                            
                                            
                                            
                                            45
                                            
                                            %Payroll
      and related costs
                                            
                                            
                                            1,472
                                            
                                            
                                            
                                            4
                                            %
                                            
                                            
                                            1,228
                                            
                                            
                                            
                                            4
                                            %
                                            
                                            
                                            244
                                            
                                            
                                            
                                            20
                                            
                                            %Professional
      expense
                                            
                                            
                                            333
                                            
                                            
                                            
                                            1
                                            %
                                            
                                            
                                            291
                                            
                                            
                                            
                                            1
                                            %
                                            
                                            
                                            41
                                            
                                            
                                            
                                            14
                                            
                                            %Selling,
      general and administrative
                                            
                                            
                                            656
                                            
                                            
                                            
                                            2
                                            %
                                            
                                            
                                            411
                                            
                                            
                                            
                                            1
                                            %
                                            
                                            
                                            246
                                            
                                            
                                            
                                            60
                                            
                                            %Total
      operating expenses
                                            
                                            
                                            2,461
                                            
                                            
                                            
                                            7
                                            %
                                            
                                            
                                            1,930
                                            
                                            
                                            
                                            6
                                            %
                                            
                                            
                                            531
                                            
                                            
                                            
                                            27
                                            
                                            %Income
      from operations
                                            
                                            
                                            9,656
                                            
                                            
                                            
                                            25
                                            %
                                            
                                            
                                            6,402
                                            
                                            
                                            
                                            20
                                            %
                                            
                                            
                                            3,254
                                            
                                            
                                            
                                            51
                                            
                                            %Interest
      expense, net
                                            
                                            
                                            (455
                                            )
                                            
                                            
                                            (1
                                            )%
                                            
                                            
                                            (512
                                            )
                                            
                                            
                                            (2
                                            )%
                                            
                                            
                                            57
                                            
                                            
                                            
                                            (11
                                            )
                                            %Finance
      costs
                                            
                                            
                                            (17
                                            )
                                            
                                            
                                            0
                                            %
                                            
                                            
                                            (17
                                            )
                                            
                                            
                                            0
                                            %
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (12
                                            )
                                            %Other
      income
                                            
                                            
                                            5
                                            
                                            
                                            
                                            0
                                            %
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            5Income
      before income taxes
                                            
                                            
                                            9,189
                                            
                                            
                                            
                                            24
                                            %
                                            
                                            
                                            5,873
                                            
                                            
                                            
                                            18
                                            %
                                            
                                            
                                            3,316
                                            
                                            
                                            
                                            56
                                            
                                            %Provision
      for income taxes, net
                                            
                                            
                                            (3,260
                                            )
                                            
                                            
                                            (9
                                            )%
                                            
                                            
                                            (2,358
                                            )
                                            
                                            
                                            (7
                                            )%
                                            
                                            
                                            (902
                                            )
                                            
                                            
                                            (38
                                            )
                                            %Net
      income
                                            
                                            $
                                            5,929
                                            
                                            
                                            
                                            16
                                            %
                                            
                                            
                                            3,515
                                            
                                            
                                            
                                            11
                                            %
                                            
                                            
                                            2,414
                                            
                                            
                                            
                                            69
                                            
                                            %
 
 Our
results of operations are affected by a number of external factors including the
availability of raw materials, commodity prices (particularly steel and graphite
prices), macro economic factors, including the availability of capital that may
be needed by our customers, and political, regulatory and legal conditions in
the United States and foreign markets.
 
 11
 Table of Contents
  Our
results of operations are also affected by a number of other factors including,
among other things, success in booking new contracts and when we are able to
recognize the related revenue, delays in customer acceptances of our products,
delays in deliveries of ordered products and our rate of progress in the
fulfillment of our obligations under our contracts. A delay in deliveries or
cancellations of orders would cause us to have inventories in excess of our
short-term needs, and may delay our ability to recognize, or prevent us from
recognizing, revenue on contracts in our order backlog.
 
 Recent
disruptions in the global capital markets have resulted in reduced availability
of funding worldwide and a higher level of uncertainty experienced by some
end-user solar cell module manufacturers. As a result, our customers have made
reductions in their direct labor workforce and reported decreases in their order
backlogs as well as adjustments to the procurement of materials in their
photovoltaic related production.  In response, we have been
negotiating extensions of the delivery schedules and other modifications under
some of our existing contracts. Subsequent to March 31, 2009, GT Solar provided
notice of its intent to cancel a portion of an open purchase order reducing the
total purchase commitment by approximately $16.8 million, reducing our total
backlog to $21.8 million.  Post the cancellation, the remaining GT
Solar backlog of approximately $11.7 million includes approximately $3.4 million
of open product purchase orders and approximately $8.3 million of material
buyback.
 
 Net
Sales
 
 Net sales
increased by $6.3 million, or 20%, from $31.8 million for the year ended March
31, 2008 to $38.1 million for the year ended March 31, 2009. A significant
portion of the increase resulted from an increase in sales to GT Solar. Although
our annual sales increased, the global economic downturn adversely impacted our
operations in the latter part of the fiscal year and much of the first quarter
of fiscal year 2009. As a result of the effects of the global economic downturn,
our net sales during the fiscal year ended March 31, 2009 declined from $25.3
million in the first half of the year to $12.8 million in the second half of the
year.  By comparison, sales increased from $12.9 million in the first
half of fiscal 2008 to $18.9 million in the second half of the
year.  The factors which resulted in the net sales during the second
half of 2009 have continued to affect our operations in the first quarter of
fiscal 2010.
 
 
 Cost of Sales and Gross
Margin
 
 Our cost
of sales for the year ended March 31, 2009 increased by $2.5 million, to $26.0
million, an increase of 11%, from $23.5 million for year ended March 31, 2008.
The increase in the cost of sales was principally due to the additional cost of
direct and indirect materials.  The cost of direct labor decreased
despite the increase in sales. The increase in cost of sales reflected the
increase in sales and gross margin, with the result that our gross margin
increased from 26% to 32%. With the increased orders from GT Solar and our
marketing efforts focused on long range contracts with more predictable cost
structures and avoiding projects that we believe are not likely to generate an
adequate margin we were able to significantly improve our gross margin. More
efficient manufacturing procedures additionally contributed to our increased
profitability.
 
 Operating
Expenses
  Our
payroll and related costs within our selling and administrative costs were $1.5
million for the year ended March 31, 2009 as compared to $1.2 million for the
year ended March 31, 2008. The $244,000 (20%) increase in payroll included a
$139,000 increase in officers’ salaries, a $42,000 increase in office salaries
and a $48,000 increase in employee health insurance and other
benefits.
  Professional
fees increased from $291,000 for the year ended March 31, 2008 to $333,000 for
the year ended March 31, 2009. This increase was primarily attributable to an
increase in legal and accounting costs related to regulatory filings and
corporate governance.
  12
 Table of Contents
  Selling,
administrative and other expenses for the year ended March 31, 2009 were
$656,000 as compared to $411,000 for year ended March 31, 2008, an increase of
$247,000 or 60%. Additional expenditures of $106,000 for investor relations and
$56,000 for consulting were principal components of the increase.
 
 Interest Expense
  Interest
expense for the year ended March 31, 2009 was $455,000 compared to $512,000 for
the year ended March 31, 2008. The decrease of $57,000 (11%) is a result of
lower principal balances of the Sovereign and Amalgamated bank loans outstanding
in the year ended March 31, 2009 as compared to the year ended March 31,
2008.
 
 Net
Income
  As a
result of the foregoing, our net income was $5.9 million ($0.43 per share basic
and $0.23 per share diluted) for the year ended March 31, 2009, as compared to
the net income of $3.5 million ($0.32 and $.12 per share basic and diluted,
respectively) for the year ended March 31, 2008.
  Liquidity
and Capital Resources
  At March
31, 2009, we had working capital of $11.1 million as compared with working
capital of $6.4 million at March 31, 2008, an increase of $4.8 million
reflecting our increased level of business. The following table sets forth
information as to the principal changes in the components of our working capital
(dollars in thousands).
  Category
                  
                  March
      31,
                    2009
                  
                  
                  March
      31,
                    2008
                  
                  
                  Change
                    Amount
                  
                  
                  Percentage
                    ChangeCash
      and cash equivalents
                  
                  $
                  10,463
                  
                  
                  $
                  2,853
                  
                  
                  $
                  7,610
                  
                  
                  
                  267
                  %Accounts
      receivable, net
                  
                  
                  1,419
                  
                  
                  
                  4,509
                  
                  
                  
                  (3,090
                  )
                  
                  
                  (69
                  )
      %Costs
      incurred on uncompleted contracts
                  
                  
                  3,661
                  
                  
                  
                  4,299
                  
                  
                  
                  (638
                  )
                  
                  
                  (15
                  )
      %Prepaid
      expenses
                  
                  
                  1,583
                  
                  
                  
                  1,039
                  
                  
                  
                  544
                  
                  
                  
                  52
                  %Accounts
      payable
                  
                  
                  951
                  
                  
                  
                  991
                  
                  
                  
                  (40
                  )
                  
                  
                  (4
                  )%
  The cash
flow from operations was $9.3 million for the year ended March 31, 2009 as
compared to $2.5 million in 2008. The increase in cash flows from operations of
$6.9 million, or 275%, was the net effect of an increase in the net profits,
reduction in accounts receivables, and decrease in costs incurred on uncompleted
contracts.  The lower level of accounts receivable reflected both
increased collections and a lower level of sales-generated receivables during
the second half of fiscal 2009.
 
 The net
cash used in financing activities was $643,000 for the year ended March 31, 2009
as compared to $126,000 for the year ended March 31, 2008.  During
fiscal 2009, we made a principal payment of $571,000 on our loans from Sovereign
Bank and principal payments of $8,000 on other loans, which payments were offset
by $170,000 cash received from the exercise of warrants.  In addition,
WM Realty made principal payments on its mortgage of $32,000.  WM
Realty also made capital distributions to its members of
$187,000.  During the year ended March 31, 2008, WM Realty made
mortgage principal reduction payments totaling $34,000, repaid a $60,000 loan
from a member who is also a stockholder.  WM Realty also made capital
distributions to its members of $112,000, which is net of a capital contribution
of $18,000.
  Our
investing activities in the year ended March 31, 2009 consisted of purchases of
property, plant and equipment of $446,000 and equipment under construction of
$887,000.  For the year ended March 31, 2008 we invested $716,000 in
property, plant and equipment and paid a deposit on equipment of
$240,000.  This deposit was credited to our purchase price in fiscal
2009 when the equipment was received.  At March 31, 2009, the
installation of the equipment had not been fully completed.  As a
result it is reflected as equipment under construction.  Upon
completion it will be transferred to property, plant and equipment.
  The net
increase in cash was $7.6 million for the year ended March 31, 2009, as compared
to $1.4 million for the year ended March 31, 2008.
  13
 Table of Contents
  At March
31, 2009, WM Realty had an outstanding mortgage of $3.1 million on the real
property that it leases to us. The mortgage has a term of ten years, maturing
November 1, 2016, bears interest at 6.75% per annum, and provides for monthly
payments of principal and interest of $21,000. The monthly payments are based on
a thirty-year amortization schedule, with the unpaid principal being due in full
at maturity. WM Realty has the right to prepay the mortgage note upon payment of
a prepayment premium of 5% of the amount prepaid if the prepayment is made
during the first two years, and declining to 1% of the amount prepaid if the
prepayment is made during the ninth or tenth year.
 
 Debt
Facilities
  We have a loan and security agreement with Sovereign Bank, dated
February 24, 2006, pursuant to which we borrowed $4.0 million on a term loan
basis in connection with our acquisition of Ranor.  As a result of
amendments to the loan and security agreement, we currently have a $2.0 million
revolving credit facility which is available until June 30, 2009.  We
currently are in the process of renewing this facility with the expectation of
renewing it prior to its June 30, 2009 expiration.  We also have a
$3.0 million capital expenditure facility which is available until November 30,
2009.  Pursuant to the terms of the capital expenditure facility we
may request financing of capital equipment purchased through November 30, 2009,
at which time any amounts borrowed under the line are to be amortized over a
five year period. Pursuant to the agreement, Ranor is required to maintain a
ratio of earnings available for fixed charges to fixed charges of at least 1.2
to 1, and an interest coverage ratio of at least 2 to 1. At March 31, 2009, we
were in compliance with both of these ratios, with Ranor’s ratio of earnings
available for fixed charges to fixed charges being 5.2 to 1 and
Ranor’s interest coverage ratio being 21.2 to 1.
 
 The term
note issued on February 24, 2006 has a term of 7 years with an initial fixed
interest rate of 9%.  The interest rate on the term note converts from
a fixed rate of 9% to a variable rate on February 28, 2011.  From
February 28, 2011 until maturity the term note will bear interest at the prime
rate plus 1.5%, payable on a quarterly basis.   Principal is
payable in quarterly installments of $143,000 plus interest, with a final
payment due on March 1, 2013.
 
 The term
note is subject to various covenants that include the following: the loan
collateral comprises all personal property of Ranor, including cash, accounts
receivable inventories, equipment, financial and intangible
assets.  Ranor must also maintain a ratio of earnings available to
cover fixed charges of at least 120% of the fixed charges for the rolling four
quarters, tested at the end of each fiscal quarter.  Additionally,
Ranor must also maintain an interest coverage ratio of at least 2:1 at the end
of each fiscal quarter.   Ranor’s obligations under the notes to
the bank are guaranteed by Techprecision.  At March 31, 2009, there
were no borrowings under the revolving note and the maximum available under the
borrowing formula was $2.0 million.  We intend to renew this facility
before it expires on June 30, 2009.
 
 Under the
$3.0 million capital expenditures facility Ranor is able to borrow up to $3.0
million until November 30, 2009. We pay interest only on borrowings under the
capital expenditures line until November 30, 2009, at which time the principal
balance is amortized over five years, commencing December 31,
2009.  The interest on borrowings under the capital expenditure line
is either equal to the prime plus 1⁄2% or the LIBOR rate plus 3%, as the Company
may elect.  Any unpaid balance on the capital expenditures facility is
to be paid on November 30, 2014.  As of March 31, 2009 and March 31,
2008, there were no borrowings outstanding under either the revolving line or
the capital expenditure line.  We intend to borrow approximately
$880,000 to finance the purchase of equipment that is currently being installed
at its facility.
 
 The
securities purchase agreement pursuant to which we sold the series A preferred
stock and warrants to Barron Partners provides Barron Partners with a right of
first refusal on future equity financings, which may affect our ability to raise
funds from other sources if the need arises.
 
 We
believe that the $2.0 million revolving credit facility, which remained unused
as of March 31, 2009 and terminates in June 2009, and the $3.0 million capital
expenditure facility and our cash flow from operations should be sufficient to
enable us to satisfy our cash requirements at least through the end of fiscal
2010.  Nevertheless, it is possible that we may require additional
funds to the extent that we expand our manufacturing facilities. In the event
that we make an acquisition, we may require additional financing for the
acquisition. However, we do not have any current plans for any acquisition, and
we cannot give any assurance that we will complete any acquisition. We have no
commitment from any party for additional funds; however, the terms of our
agreement with Barron Partners, particularly Barron Partners’ right of first
refusal, may impair our ability to raise capital in the equity markets to the
extent that potential investors would be reluctant to negotiate a financing when
another party has a right to match the terms of the financing.
 
 14
 Table of Contents
  In
December 2007, Ranor acquired all the equipment of Vertex Tool and Die, Inc for
$140,000 and assumed Vertex’s real property lease obligation.  The
lease expired on February 28, 2009.
 
 The
following table set forth information as of March 31, 2009 as to our contractual
obligations (dollars in thousands).
  Payments
      due by periodContractual obligations
                      
                      Total
                      
                      
                      Less
      than 1 year
                      
                      
                      1-3
      years
                      
                      
                      3-5
      years
                      
                      
                      More
      than 5 yearsLong-term
      debt obligations
                      
                      $
                      5,406
                      
                      
                      $
                      612
                      
                      
                      $
                      1,229
                      
                      
                      $
                      671
                      
                      
                      $
                      2,894Capital
      lease obligations
                      
                      
                      44
                      
                      
                      
                      13
                      
                      
                      
                      29
                      
                      
                      
                      2
                      
                      
                      
                      0Operating
      lease obligations
                      
                      
                      5,922
                      
                      
                      
                      480
                      
                      
                      
                      979
                      
                      
                      
                      900
                      
                      
                      
                      3,563Purchase
      obligations
                      
                      
                      2,882
                      
                      
                      
                      2,882
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0Total
                      
                      
                      14,254
                      
                      
                      
                      3,987
                      
                      
                      
                      2,237
                      
                      
                      
                      1,573
                      
                      
                      
                      6,457
 
 We have
no off-balance sheet assets or liabilities
 
 Item
7A. Quantitative and Qualitative Disclosure About Market Risk.
 
 As a
smaller reporting company, we have elected not to provide the information
required by this Item.
 
 Item
8. Financial Statements.
  The
financial statements begin on Page
F-1.
  Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
  Not
Applicable.
  Item
9A(T).      Controls and
Procedures.
  Evaluation of Disclosure
Controls and Procedures.
 
 We
maintain “disclosure controls and procedures,” as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange
Act”), that are designed to ensure that information required to be disclosed by
us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating our disclosure
controls and procedures, management recognized that disclosure controls and
procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Additionally, in designing disclosure controls
and procedures, our management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible disclosure controls and
procedures. The design of any disclosure controls and procedures also is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
 
 15
 Table of Contents
  As of
March 31, 2009, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief  Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures were effective in ensuring that information required to be disclosed
by us in our periodic reports is recorded, processed, summarized and reported,
within the time periods specified for each report and that such information is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
 
 Management’s Report of
Internal Control over Financial Reporting.
  We are
responsible for establishing and maintaining adequate internal control over
financial reporting in accordance with Exchange Act Rule 13a-15.  With
the participation of our Chief Executive Officer and Chief Financial Officer,
our management conducted an evaluation of the effectiveness of our internal
control over financial reporting as of March 31, 2009 based on the criteria
established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based on this evaluation,
management concluded that our internal control over financial reporting was
effective as of March 31, 2009 based on those criteria.  A control
system, no matter how well conceived and operated, can provide only reasonable,
but not absolute, assurance that the objectives of the control system are
met.  Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within us have been detected.
  This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
  Changes in Internal
Controls.
  During
the three months ended March 31, 2009, there were no changes in our internal
control over financial reporting identified in connection with the evaluation
required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
  Item 9B. Other Information.
  Not
Applicable
 
 16
 Table of Contents
  PART III
  Item 10. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act
  Directors
and Executive Officers
  The
following table sets forth certain information concerning our directors and
executive officers.
  Name
              
              Age
              
              PositionJames
      G. Reindl (1)
              
              50
              
              Former
      Chairman and Chief Executive OfficerLouis
      Winoski (2)
      (4)
              
              51
              
              Director
      and Interim Chief Executive OfficerRichard
      F. Fitzgerald (3)
              
              45
              
              Chief
      Financial OfficerMary
      Desmond
              
              45
              
              Chief
      Financial Officer of RanorStanley
      A. Youtt
              
              62
              
              Director
      and Chief Executive Officer of RanorMichael
      R. Holly (4)
              
              63
              
              DirectorLarry
      Steinbrueck (4)
              
              57
              
              DirectorAndrew
      A. Levy(5)
              
              62
              
              Director
  (1)
              Mr.
      Reindl resigned as both Chairman of the Board and our Chief Executive
      Officer, effective as of March 31, 2009.(2)
              Mr.
      Winoski was appointed our Interim Chief Executive Officer, effective as of
      March 31, 2009(3)
              Mr.
      Fitzgerald was appointed our Chief Financial Officer, effective as of
      March 23, 2009(4)
              Member
      of the audit and compensation committees.(5)
              Mr.
      Levy was appointed to the Board on March 31,
  2009
  James G.
Reindl had been a director, Chairman and Chief Executive Officer since February
2006. Mr. Reindl resigned from all his positions with the company on March 31,
2009.  Mr. Reindl’s separation from the company is discussed in more
detail under the heading “Severance Agreement” below
 
 Louis A.
Winoski has been a director since March 2006. Since 2002, Mr. Winoski has been
managing partner of Homeric Partners, LLC, a management consulting business. Mr.
Winoski has a Bachelor of Science degree in industrial and systems management
engineering from Pennsylvania State University.  Effective March 31,
2009, Mr. Winoski assumed the role of Interim Chief Executive
Officer.  Mr. Winoski’s appointment as Interim Chief Executive Officer
is discussed in more detail under the heading “Executive Compensation”
below.   Previously, Mr. Winoski served as the Chief Operating
Officer of GCT Garner Inc., the US subsidiary of a Germany-based, aerospace
design engineering firm which list Boeing and Airbus among its major
customers.  He concurrently served as Executive Program Manager for
PFW Aerospace AG on the 787 Dreamliner Program.  Mr. Winoski began his
career as a US Army Officer, entering the aerospace industry in
1986.  Since then, he has held a succession of senior executive
management and consulting positions with a number of growth-oriented mid-size
hardware and service providers.  Mr. Winoski has a Bachelor of Science
degree in industrial and systems management engineering from The Pennsylvania
State University.
 
 Richard
Fitzgerald was hired to the position of Chief Financial Officer on March 23,
2009.  Prior to joining us as Chief Financial Officer, Mr. Fitzgerald
served as Vice President and Chief Financial Officer of Nucleonics, Inc. a
private venture capital backed, biotechnology company.  Before
becoming CFO at Nucleonics, Mr. Fitzgerald served in a variety of senior
financial roles during his tenure there, which extended from 2002 through
December 2008.  Prior to his employment with Nucleonics, Inc., Mr.
Fitzgerald served as Director, Corporate Development of Exelon Corporation and
PECO Energy Company from 1997 through 2002.  Mr. Fitzgerald began his
career with Coopers & Lybrand (now PricewaterhouseCoopers) in Philadelphia
and is a member of both the American and Pennsylvania Institutes of Certified
Public Accountants.  He holds a Bachelor of Science Degree in Business
Administration from Bucknell University.
 
 17
 Table of Contents
  Mary
Desmond has been the Chief Financial Officer of Ranor since 1998 and served as
our Chief Financial Officer from February 2006 through March 2009. Ms. Desmond
obtained her Bachelor of Science degree in accounting from Franklin Pierce
College and she received her Masters of Business (MBA) from Fitchburg State
College.
  Stanley
A. Youtt has been a director since February 2006, and he has been Chief
Executive Officer of Ranor since 2000. Mr. Youtt received a Bachelor of Science
degree in naval architecture and marine engineering from the University of
Michigan and Masters Degree in civil engineering (applied mechanics) from the
University of Connecticut.
  Michael
R. Holly has been a director since March 2006. Since 2004, Mr. Holly has been a
private investor and consultant. From 1996 until 2004, Mr. Holly was managing
director of Safeguard International Fund, L.P., a private equity fund of which
Mr. Holly is a founding partner. Mr. Holly has a Bachelor of Science degree in
economics from Mount St. Mary’s University.
  Larry R.
Steinbrueck has been a director since March 2006. Since 1991, Mr. Steinbrueck
has been president of MidWest Capital Group, an investment banking firm. Mr.
Steinbrueck has a Bachelor of Science degree in business and a Masters in
Business Administration from the University of Missouri.
 
 Andrew A.
Levy was appointed to fill the vacancy on the Techprecision Board left by the
resignation of Mr. Reindl.  Since 1978, Mr. Levy has served as CEO of
Redstone Capital, a small investment banking firm.  Mr. Levy received
his Bachelor in Engineering from Yale University, and received his Juris Doctor
from Harvard Law School.  Mr. Levy is also the manager of WM
Realty.
 
 Each of
our directors is elected for a term of one year, or until their successor is
duly elected and qualified. None of our officers and directors are
related.
  Board
Committees
  The board
of directors has two committees, the audit committee and the compensation
committee. Michael Holly, Larry Steinbrueck and Louis Winoski, each of whom was
an independent director for the fiscal year ended March 31, 2009, are the
members of both committees.  As of March 31, 2009, Mr. Winoski, who
continues to serve on both the audit committee and the compensation committee,
(of which he is the Chairman), is not independent due to his appointment as our
Interim Chief Financial Officer.   The Board has determined that
Mr. Holly, who is the chairman of the audit committee, is an audit committee
financial expert.  The board also determined that in view of the
interim nature of his position and the Company’s intention to elect a full-time
Chief Executive Officer, that it was in the best interest of the Company for Mr.
Winoski to continue serving on the audit and compensation
committees.  We apply the independence standards described in the
Nasdaq Listed Company Manual to determine the independence of our
directors.
 
 Code
of Ethics
  Our board
of directors has adopted a code of business conduct and ethics for its officers
and employees.
  Section
16(a) Compliance
  Section
16(a) of the Securities Exchange Act of 1934, requires our directors, executive
officers and persons who own more than 10% of our common stock to file with the
SEC initial reports of ownership and reports of changes in ownership of common
stock and other of our equity securities.   To our knowledge,
during the fiscal year ended March 31, 2009, all reports required to be filed
pursuant to Section 16(a) were filed on a timely basis, except for the
following:  (1) Mr. Winoski failed to timely file his Form 3 upon
becoming a director in March 2006 and has not filed any subsequent reports
regarding his beneficial ownership of our common stock or other related
securities; and ( 2) Mr. Fitzgerald failed to timely file his Form 4—filed on
April 3, 2009—upon becoming our Chief Financial Officer; (3) Mr. Holly failed to
timely file his Form 4 upon a grant of options to purchase the Company’s common
stock on or about October 1, 2008; and (4) Mr. Steinbrueck failed to timely file
his Form 4 upon a grant of options to purchase the Company’s common stock on or
about October 1, 2008.
  18
 Table of Contents
  Item 11. Executive Compensation.
  SUMMARY
COMPENSATION TABLE
  Set forth
below is information for the year ended March 31, 2009 and 2008 for our Chief
Executive Officer, the Chief Executive Officer of Ranor and our Chief Financial
Officer. No other officer received compensation of more than $100,000 for the
year ended March 31, 2009.
  Name
      and Position
              
              Fiscal
                Year
              
              Salary
              
              Bonus
              
              Stock
                Awards
              
              Option
                Awards
              
              All
      Other
                Compensation
              
              TotalJames
      G. Reindl,
                Former
      Chief Executive Officer
              
              
              2009
                2008
              
              $
              199,231
                160,000
              
              $
              44,000
                —
              
              $
              —
                —
              
              $
              —
                —
              
              $
              —
                —
              
              $
              243,231
                160,000Stanley
      A. Youtt,
                Chief
      Executive Officer – Ranor
              
              
              2009
                2008
              
              
              203,975
                198,016
              
              
              44,000
                —
              
              
              —
                —
              
              
              —
                —
              
              
              —
                —
              
              
              247,975
                198,016Mary
      Desmond,
                Former
      Chief Financial Officer
              
              
              2009
                2008
              
              
              117,875
                103,846
              
              
              15,000
                5,000
              
              
              855
              
              
              —
                —
              
              
              —
                —
              
              
              132,875
                109,701
  “Other
Compensation” for Mr. Reindl includes reimbursement for his travel expenses from
his home to our offices in Westminster, Massachusetts, which were
$29,182 for the year ended March 31, 2009 and $24,827 for the year ended
March 31, 2008.
  In April
2007, we granted Ms. Desmond 3,000 shares of common stock which was fully vested
on the date of grant.  Also in April 2007, the Company granted options
to purchase 211,660 shares of common stock at an exercise price of $.285
(representing the value at the date of grant, as discussed below) to certain
employees, including a grant of an option to purchase 25,000 shares of common
stock to Ms. Desmond.  The Company’s common stock did not trade in the
market at the date of grant.  Therefore, it was impossible to
reasonably estimate fair value at the grant date, and thus, in accordance with
SFAS 123(R), the options granted in April 2007, including Ms. Desmond’s option,
were priced based on intrinsic value rather than fair market value.
  Employment
Agreements, Severance Agreements, and Executive Consulting
Contracts
  We have
employment agreements with, Mr. Youtt, Ms. Desmond, and Mr. Fitzgerald, an
executive consulting agreement with Mr. Winoski and a severance agreement with
Mr. Reindl.
  Stanley
A. Youtt Employment Agreement
 
 In
February 2006, contemporaneously with our acquisition of Ranor, Ranor entered
into an employment agreement with Stanley A. Youtt pursuant to which he would
serve as Ranor’s Chief Executive Officer for a term of three years ending on
February 28, 2009. Pursuant to the agreement, we paid Mr. Youtt salary at the
annual rate of $200,000. Mr. Youtt is also eligible for performance bonuses
based on financial performance criteria set by the board. In the event that we
terminate Mr. Youtt’s employment without cause, we are required to make a
lump-sum payment to him equal to his base compensation for the balance of the
term and to provide the insurance coverage that we would provide if he remained
employed.  We and Mr. Youtt renewed his agreement at the annual rate
of $220,000 on terms comparable to the original agreement.
 
 Mary Desmond Employment
Agreement
 
 On June
19, 2007, we entered into an employment contract with Mary Desmond, our Chief
Financial Officer, dated retroactively to April 1, 2007. Pursuant to the terms
of this agreement, we employed Ms. Desmond for an initial term commencing April
1, 2007 and expiring March 31, 2009 and continuing on a year-to-year basis
thereafter unless terminated by either party on 90 days written notice prior to
the expiration of the initial term or any one-year extension. Ms. Desmond is to
receive an annual salary of $110,000 a year. Ms. Desmond is also entitled to
receive an increase to her base salary and receive certain bonus compensation,
stock options or other equity based incentives at the discretion of the
compensation committee of the board of directors. The agreement may be
terminated by us with or without cause or by Ms. Desmond’s resignation. If the
Company terminates the agreement without cause, the Company is to pay Ms.
Desmond severance pay equal to her salary for the balance of the term plus the
amount of her bonus received in the prior year. During the term of her
employment and for a period thereafter, Ms. Desmond will be subject to
non-competition and non-solicitation provisions, subject to standard
exceptions.
  19
 Table of Contents
  On April
1, 2009, Techprecision Corporation (the “Company”) announced that it had
accepted James Reindl’s resignation from his posts as Chairman of the Company’s
board of directors (the “Board”), director and as Chief Executive Officer of the
Company, as well as his positions at Ranor, Inc.  Louis A. Winoski,
one of the Company’s existing directors, has agreed to assume Mr. Reindl’s
duties as Chief Executive Officer of Techprecision on an interim
basis.   The Company will commence a search for a permanent Chief
Executive Officer.  The Board appointed Andrew A. Levy to fill the
vacancy on the Company’s Board created by the resignation of Mr.
Reindl.  The Company also announced the hiring of Richard F.
Fitzgerald to serve as the Chief Financial Officer of the Company and that Mary
Desmond would retain her role as Chief Financial Officer of Ranor.
  Louis
A. Winoski Executive Consulting Agreement
  On March
31, 2009, following the resignation of James Reindl as Chief Executive Officer
and director, we entered into an executive consulting agreement with Mr. Louis
A. Winoski pursuant to which Mr. Winoski agreed to provide executive management
and consulting services in the role of Interim Chief Executive Officer of the
Company.  Pursuant to this agreement, the Company will pay Mr. Winoski
consulting fees at a rate of Ten Thousand Dollars ($10,000.00) per
month.  The executive consulting agreement automatically terminates
after six (6) months, unless extended by the mutual written agreement of the
parties.  Either party may terminate the executive consulting
agreement at any time by giving the other party fifteen (15) days prior written
notice.  A party may also terminate the executive management agreement
for breach if the other party materially breaches any provision of the agreement
and fails to cure such breach within ten (10) days after written notice of the
breach.
  Richard
F. Fitzgerald Employment Agreement
 
 We
executed an employment agreement (the “CFO Employment Agreement”) on March 23,
2009, to hire Mr. Richard F. Fitzgerald for the position of Chief Financial
Officer (“CFO”). The terms of the CFO Employment Agreement provide that Mr.
Fitzgerald shall report directly to the Board and the Chief Executive Officer
and his duties include, but are not limited to, directing the preparation of
budgets, financial forecasts and strategic planning of the Company as well as
establishing major economic objectives and policies for the Company and ensuring
compliance with the Company’s SEC reporting obligations.
  Upon his
execution of the CFO Employment Agreement, Mr. Fitzgerald was entitled to a
signing bonus of $25,000.00.  Mr. Fitzgerald will receive an annual
base salary of $195,000 and options to purchase 150,000 shares of the Company’s
common stock, which vest in three equal parts over three years.  The
exercise price of the options will be the market price as of the grant
date.  Mr. Fitzgerald will also be eligible for an annual cash
performance bonus based upon the financial performance of the Company as
determined by the Board. Mr. Fitzgerald will be entitled to participate fully in
the Company’s employee benefit plans and programs.  Mr. Fitzgerald
will also be reimbursed for reasonable and necessary out-of-pocket expenses
incurred by him in the performance of his duties and responsibilities as
CFO.
 
 The
Company may terminate the CFO Employment Agreement at any time without cause, as
defined in the CFO Employment Agreement.  In the event of a
termination without cause, the Company will be required to pay Mr. Fitzgerald an
amount equal to one year of his base salary paid in equal installments in
accordance with the Company’s payroll policies.  The Company may
terminate the CFO Employment Agreement for cause at any time upon seven (7) days
written notice, during which period Mr. Fitzgerald may contest his termination
before the Board.
  Upon
termination of the CFO Employment Agreement, Mr. Fitzgerald will have the
obligation not to disclose the Company’s confidential information or trade
secrets to anyone following termination of the CFO Employment
Agreement.  Mr. Fitzgerald is also subject to a covenant not to
compete with the Company for a period of 12 months following termination of the
CFO Employment Agreement.
 
 20
 Table of Contents
  James
G. Reindl Employment Agreement
 
 On June
19, 2007, we entered into an employment agreement dated as of April 1, 2007 with
James G. Reindl, our former Chief Executive Officer. Pursuant to the terms of
the agreement, we agreed to employ Mr. Reindl for an initial term commencing
April 1, 2007 and expiring on March 31, 2009 and continuing on a year-to-year
basis thereafter unless terminated by either party on 90 days’ written notice
prior to the expiration of the initial term or any one-year extension. Mr.
Reindl received an annual base salary of $160,000 and was reimbursed for his
commuting expenses. Mr. Reindl was also entitled to receive an increase to his
base salary and receive certain bonus compensation, stock options or other
equity-based incentives at the discretion of the compensation committee of the
board of directors and reimbursement of his commuting expenses. The agreement
may be terminated by us with or without cause or by Mr. Reindl’s resignation. On
March 31, 2009, the Board of Directors accepted Mr. Reindl’s resignation, which
resignation terminated the employment agreement.  In connection with
his resignation, we entered into a Separation Agreement with Mr.
Reindl.  Please see the discussion of this Separation Agreement under
the heading “Resignation of James Reindl”.
 
 James
G. Reindl Severance Agreement
  Mr.
Reindl resigned from all of his offices and positions with the Company,
including his office as Chief Executive Officer of the Company, and his
positions as a director and Chairman of the Board, effective March 31, 2009 (the
“Resignation Date”). Upon his resignation, Mr. Reindl entered into a separation,
severance and release agreement with the Company (the “Severance Agreement”) to
provide for certain severance payments to Mr. Reindl, and to obtain his
assistance when and as needed during a transition period.  This
Severance Agreement had the effect of canceling and replacing Mr. Reindl’s
employment agreement.
  Under the
terms of the Severance Agreement, Mr. Reindl will be entitled to receive
severance payments for up to twelve (12) months (the “Severance Period”), which
will be at a gross monthly rate of $16,666.67 during the first six months of the
Severance Period, and which will be at a gross monthly rate of $10,416.67 for
the remainder of the Severance Period.  Aggregate gross severance
payments will equal $162,500.  Such payments will be made to Mr.
Reindl in accordance with the Company’s normal payroll practices, provided that
he complies with the Severance Agreement.  No additional compensation,
bonuses or benefits will be payable by the Company to Mr. Reindl under the
Severance Agreement.  The Severance Agreement also provides for
certain mutual releases by Mr. Reindl and the Company.
  The
Severance Agreement also provides that Mr. Reindl will make himself available to
provide transition services to the Company for a period of up to three (3)
months when and as needed.  During such period, Mr. Reindl will assist
the Company in transitioning his responsibilities to Mr. Winoski as the Interim
Chief Executive Officer and to other senior management.
  The
restrictive covenants regarding confidentiality, noncompetition and
non-solicitation to which Mr. Reindl previously agreed under his existing
employment agreement with the Company (the “Restrictive Covenants”) will
continue in full force after the Resignation Date.  The Severance
Agreement provides that Mr. Reindl’s continued compliance with the Restrictive
Covenants is a condition to the Company’s obligation to make severance payments
under the Severance Agreement.
  Directors’
Compensation
  Commencing
with the year ended March 31, 2007, we have paid our independent directors a fee
of $2,000 per meeting. In addition, our 2006 long-term incentive plan provides
for the grant of non-qualified options to purchase 50,000 shares, exercisable in
installments, to each newly elected independent director and annual grants of
options to purchase 5,000 shares of common stock commencing with the third year
of service as a director, as described under “2006 Long-Term Incentive Plan.”
The following table sets forth compensation paid to each person who was a
director during the year ended March 31, 2009, other than directors whose
compensation is set forth in the summary compensation table.
 
 21
 Table of Contents
 
 Name
                      Fees
      Earned or
                      Option
      Awards
                      Other
      Compensation
                      Total
      ($)James
      G Reindl (1)
                      --
                      --
                      --
                      --Louis
      Winoski (4)
                      $12,000
                      $3,375
                      --
                      $17,459Michael
      R. Holly (4)
                      $12,000
                      $4,500
                      $10,000
      (3)
                      $29,279Larry
      Steinbrueck (4)
                      $12,000
                      $2,250
                      --
                      $15,639Andrew
      A. Levy (2)
                      --
                      --
                      --
                      --
  (1)  We did not provide our
Former Chief Executive Officer and Chairman of the Board with any compensation
for attending Board meeting.
 (2) Mr. Levy was appointed as a
director on April 1, 2009.  Accordingly, he did not receive any
director compensation for the year ended March 31, 2009.
 (3) Mr. Holly was awarded $10,000 in
recognition of his service to the Board and the Corporation and as reimbursement
of his time and expenses incurred in connection with issues relating to the
resignation of Mr. Reindl.
 (4) On October 1, 2008, the Company’s
independent directors were granted stock options to acquire common shares at
$1.31 per share as follows: Mr. Winoski received 7,500 options; Mr. Holly
received 10,000 options; and Mr. Steinbrueck received 5,000
options.  The options vest in installments over three
years.
  2006
Long-Term Incentive Plan
  Under the
2006 long-term incentive plan, each newly elected independent director receives
at the time of his election, a five-year option to purchase 50,000 shares at an
exercise price equal to the fair market value on the date of his or her
election. The option vests 30,000 shares nine months from the date of grant and
10,000 shares on each of the first and second anniversaries of the grant date.
These directors will receive an annual option grant to purchase 5,000 shares of
common stock on the July 1st coincident with or following the third anniversary
of the date of his or her initial election.  Of the 1,000,000 shares
of common stock covered by the 2006 Plan, as of May 31, 2009, there were
outstanding options to purchase 544,159 shares of common stock, which amount
included options to purchase 172,500 shares of our common stock issued to our
independent directors and options to purchase 150,000 shares, with an exercise
price of $0.49 per share (the then fair market value on the date of grant of
common stock), granted on March 23, 2009 to Richard Fitzgerald in connection
with his employment as our Chief Financial Officer.
 
 Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
  The
following table provides information as to shares of common stock beneficially
owned as of June 15, 2009:
  o
              each
      director;
  o
              each
      officer named in the summary compensation
table;
  o
              each
      person owning of record or known by us, based on information provided to
      us by the persons named below, to own beneficially at least 5% of our
      common stock; and
  o
              all
      directors and officers as a group.
  22
 Table of Contents
  Name
              
              Shares
              
              PercentageJames
      G. Reindl
                One
      Bella Drive
                Westminster,
      MA 01473
              
              
              2,587,100
              
              
              18.6
              %Andrew
      A. Levy
                46
      Baldwin Farms North
                Greenwich,
      CT 06831
              
              
              2,337,100
              
              
              16.8
              %Howard
      Weingrow
                805
      Third Avenue
                New
      York, NY 10022
              
              
              1,850,000
              
              
              13.3
              %Stanoff
      Corporation
                805
      Third Avenue
                New
      York, NY 10022
              
              
              1,700,000
              
              
              12.2
              %Stanley
      A. Youtt
                One
      Bella Drive
                Westminster,
      MA 01473
              
              
              1,592,000
              
              
              11.4
              %Larry
      Steinbrueck
              
              
              254,000
              
              
              1.8
              %Barron
      Partners, LP
                730
      Fifth Avenue
                New
      York, NY 10019
              
              
              733,318
              
              
              5.3
              %Richard
      F. Fitzgerald
              
              
              0
              
              
              --Michael
      Holly
              
              
              135,000
              
              
              1.0
              %Louis
      A. Winoski
              
              
              50,000
              
              
              *Mary
      Desmond
              
              
              38,000
              
              
              *All
      officers and directors as a group (six individuals)
              
              
              4,368,100
              
              
              31.4
              %
  *
              Less
      than 1%
  Except as
otherwise indicated each person has the sole power to vote and dispose of all
shares of common stock listed opposite his name. Each person is deemed to own
beneficially shares of common stock which are issuable upon exercise of warrants
or options or upon conversion of convertible securities if they are exercisable
or convertible within 60 days of June 15, 2009.
  Howard
Weingrow, as president of Stanoff Corporation, has voting and dispositive
control over the shares owned by Stanoff Corporation. Because Mr. Weingrow has
voting and dispositive control over the shares owned by Stanoff, the shares
owned by Stanoff are deemed to be beneficially owned by Mr. Weingrow. Thus, the
number of shares beneficially owned by Mr. Weingrow includes the 1,700,000
shares owned by Stanoff Corporation and the 150,000 shares owned by Mr. Weingrow
individually.
  The
shares owned by Mr. Steinbrueck, Mr. Holly and Mr. Winoski include shares of
common stock issuable upon exercise of currently exercisable options to purchase
50,000 shares of common stock which are held by each of them. The shares owned
by Ms. Desmond include 25,000 shares issuable upon exercise of
options.
  In
addition to the shares of common stock reflected in this table, Barron Partners
owns shares of series A preferred stock and warrants which, if fully converted
or exercised, would result in ownership of more than 4.9% of our outstanding
common stock. However, the series A preferred stock may not be converted and the
warrants may not be exercised if such conversion would result in Barron Partners
owning more than 4.9% of our outstanding common stock. The applicable
instruments provide that this limitation may not be waived. Since Barron
Partners presently owns more than 5% of our common stock, it does not
beneficially own any of the 17,661,295 shares of common stock issuable upon
conversion of the Series A Convertible Preferred Stock or shares issuable upon
exercise of the warrants that Barron Partners owns.
  The following table summarizes the equity compensation plans under
which our securities may be issued as of March 31, 2009.
  23
 Table of Contents
 Plan
      Category
                    Number
      of securities to be issued upon exercise of outstanding options and
      warrants
                    
                    Weighted-average
      exercise price of outstanding options and warrants
                    
                    Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders
                    544,159
                    
                    $
                    0.3845
                    
                    455,841Equity
      compensation plan not approved by security holders
                    112,500
                    
                    $
                    1.40
                    
                    —
 No
unregistered securities were sold during the year ended March 31,
2009.
 
 Item
13. Certain Relationships and Related Transactions and Director
Independence
  We lease
our facilities in Westminster, Massachusetts from WM Realty, which is controlled
by Andrew A. Levy, a director and a principal stockholder. We currently pay an
annual rental of $450,000, which is subject to increase based on increases in
the cost of living index. We also have a right to purchase the property at fair
market value.
 
 All
transactions with related parties are subject to approval by the audit
committee.
  Item 14. Principal Accountant Fees and Services.
  The
following is a summary of fees for professional services rendered by Tabriztchi
& Co., CPA, P.C., our independent registered public accounting firm, for the
years ended March 31, 2009 and 2008 as follows:
  Year
      ended March 31,2009
                        
                        
                        2008Audit
      fees
                        
                        $
                        80,545
                        
                        
                        $
                        65,970Audit
      related fees
                        
                        
                        6,050
                        
                        
                        
                        -0-Tax
      fees
                        
                        
                        5,600
                        
                        
                        
                        -0-All
      other fees
                        
                        
                        -0-
                        
                        
                        
                        -0-Total
                        
                        $
                        92,195
                        
                        
                        $
                        65,970
  Audit
fees.    Audit fees represent fees for professional
services performed by Tabriztchi for the audit of our annual financial
statements and the review of our quarterly financial statements, as well as
services that are normally provided in connection with statutory and regulatory
filings or engagements.
  Audit-related
fees.    Audit-related fees represent fees for
assurance and related services performed by Tabriztchi that are reasonably
related to the performance of the audit or review of our financial statements.
These services include the review of our registration statement on Form S-1 and
communications with SEC regarding Forms 10-K and 10-Q.
  Tax Fees.Tax fees represent
fees for tax compliance services performed by Tabriztchi and Co. CPA,
P.C.
  All other
fees.    There were no other fees paid to Tabriztchi
and Co. CPA, P.C. for the year ended March 31, 2009.  We are seeking
to improve and refine our internal controls to better ensure compliance with the
SEC rules promulgated under Section 404 of Sarbanes-Oxley.  In
connection with this effort, we may incur increased audit costs for the year
ended March 31, 2010 as compared to the fiscal year ended March 31,
2009.
  Policy on Audit Committee
Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
  The audit
committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. The independent registered public accounting firm and management
are required to periodically report to the audit committee regarding the extent
of services provided by the independent registered public accounting firm in
accordance with this pre-approval, and the fees for the services performed to
date. The audit committee may also pre-approve particular services on a
case-by-case basis. All services were pre-approved by the audit
committee.
  24
 Table of Contents
  Part
IV
  Item 15.
Exhibits.
  3.1
                Certificate
      of Incorporation of the Registrant (Exhibit 3.1 to the Company’s
      registration statement on Form SB-2, filed with the Commission on August
      28, 2006 and incorporated herein by reference).3.2
                By-laws
      of the Registrant (Exhibit 3.2 to the Company’s registration statement on
      Form 10SB, filed with the Commission on June 23, 2005 and incorporated
      herein by reference).3.3
                Certificate
      of Designation for Series A Convertible Preferred Stock of the Registrant
      (Exhibit 3.1 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).4.1
                Loan
      and Security Agreement, dated February 24, 2006, between Ranor, Inc. and
      Sovereign Bank (Exhibit 4.1 to the Company’s current report on Form 8-K,
      filed with the Commission on March 3, 2006 and incorporated herein by
      reference).4.2
                Guaranty
      of the Registrant in favor of Sovereign Bank (Exhibit 4.2 to the Company’s
      current report on Form 8-K, filed with the Commission on March 3, 2006 and
      incorporated herein by reference).4.3
                Form
      of Warrant issued to Barron Partners LP (Exhibit 4.3 to the Company’s
      current report on Form 8-K, filed with the Commission on March 3, 2006 and
      incorporated herein by reference).4.4
                First
      Amendment, dated January 29, 2007, to Loan and Security Agreement, dated
      February 24, 2006, between Ranor, Inc. and Sovereign Bank (Exhibit 99.1 to
      the Company’s current report on Form 8-K, filed with the Commission on
      February 20, 2007 and incorporated herein by
reference).4.5
                Second
      Amendment, dated June 28, 2007 to Loan and Security Agreement dated
      February 24, 2006, between Ranor, Inc. and Sovereign Bank (Exhibit 4.5 to
      the Company’s annual report on Form 10-KSB, filed with the Commission on
      July 2, 2007 and incorporated herein by reference).4.6
                Mortgage
      Security Agreement and Fixture Filing, dated as of October 4, 2006,
      between WM Realty Management, LLC and Amalgamated Bank (Exhibit 4.6 to the
      Company’s annual report on Form 10-KSB, filed with the Commission on July
      2, 2007 and incorporated herein by reference).4.7
                Mortgage
      Note, dated October 4, 2006, made by WM Realty Management, LLC in favor of
      Amalgamated Bank (Exhibit 4.7 to the Company’s annual report on Form
      10-KSB, filed with the Commission on July 2, 2007 and incorporated herein
      by reference).10.1
                Preferred
      Stock Purchase Agreement, dated February 24, 2006, between the Registrant
      and Barron Partners LP (Exhibit 99.1 to the Company’s current report on
      Form 8-K, filed with the Commission on March 3, 2006 and incorporated
      herein by reference).10.2
                Registration
      Rights Agreement, dated February 24, 2006, between the Registrant and
      Barron Partners LP (Exhibit 99.2 to the Company’s current report on Form
      8-K, filed with the Commission on March 3, 2006 and incorporated herein by
      reference).10.3
                Agreement
      dated February 24, 2006, among the Registrant, Ranor Acquisition
      LLC  and the members of Ranor Acquisition LLC(Exhibit
      99.3 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).10.4
                Subscription
      Agreement, dated February 24, 2006, between the Registrant and certain
      purchasers of the Registrant’s Common Stock(Exhibit
      99.4 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).10.5
                Registration
      Rights Provisions, dated February 24, 2006, between the Registrant and
      certain purchasers of the Registrant’s Common Stock(Exhibit
      99.5 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).10.6
                Employment
      Agreement, dated February 24, 2006, between the Registrant and Stanley
      Youtt(Exhibit
      99.6 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).10.7
                Lease,
      dated February 24, 2006 between WM Realty Management, LLC and Ranor,
      Inc.(Exhibit
      99.8 to the Company’s current report on Form 8-K, filed with the
      Commission on March 3, 2006 and incorporated herein by
      reference).10.8
                2006
      Long-term Incentive Plan, as restated on July 27, 2008(Appendix
      A to the Company’s Information Statement on Schedule DEF 14C, filed with
      the Commission on January 23, 2007 and incorporated herein by
      reference).10.9
                Limited
      Guarantee, dated October 4, 2006, by Andrew Levy in favor of Amalgamated
      Bank (Exhibit 10.13 to the Company’s annual report on Form 10-KSB, filed
      with the Commission on July 2, 2007 and incorporated herein by
      reference).
  25
 Table of Contents
  10.10
                Amendment,
      dated May 31, 2007, to the Agreement between the Company and Barron
      Partners LP dated August 17, 2005(Exhibit
      10.14 to the Company’s annual report on Form 10-KSB, filed with the
      Commission on July 2, 2007 and incorporated herein by
      reference).10.11
                Employment
      Agreement, dated as of April 1, 2007, between the Company and James G.
      Reindl(Exhibit
      99.1 to the Company’s current report on Form 8-K, filed with the
      Commission on June 26, 2007 and incorporated herein by
      reference).10.12
                Purchase
      order from GT Solar Incorporated, dated January 22, 2007 (Filed Exhibit
      10.17 to the Company’s annual report on Form 10-KSB, filed with the
      Commission on July 2, 2007 and incorporated herein by
      reference).10.13
                Separation,
      Severance and Release Agreement, dated March 31, 2009, between the
      Registrant and James G. Reindl (Exhibit 10.1 to the Company’s current
      report on Form 8-K, filed with the Commission on April 2, 2009 and
      incorporated herein by reference).10.14
                Executive
      Consulting Agreement, dated March 31, 2009, between the Registrant and
      Louis A. Winoski (Exhibit 10.2 to the Company’s current report on Form
      8-K, filed with the Commission on April 2, 2009 and incorporated herein by
      reference).10.15
                Employment
      Agreement, dated March 23, 2009, between the Registrant and Richard F.
      Fitzgerald (Exhibit 10.3 to the Company’s current report on Form 8-K,
      filed with the Commission on April 2, 2009 and incorporated herein by
      reference).14.1
                Code
      of  Business Conduct and Ethics of Registrant(Exhibit
      14.1 to the Company’s annual report on Form 10-KSB, filed with the
      Commission on April 17, 2006 and incorporated herein by
      reference).21.1
                List
      of Subsidiaries (Exhibit 21.1 to the Company’s annual report on Form
      10-KSB, filed with the Commission on April 17, 2006 and incorporated
      herein by reference).23.1
                Consent
      of Independent Registered Public Accounting Firm31.1
                Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002
   26
 Table of Contents
 
 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 hereunto
duly authorized.
  TECHPRECISION
CORPORATION
 (Registrant)
 June 24,
2009
 
 /s/
      Louis WinoskiLouis
      Winoski
                Interim
      Chief Executive Officer
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated. Each person whose signature
appears below hereby authorizes Louis A. Winoski and Richard F. Fitzgerald or
either of them acting in the absence of the others, as his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
re-substitution for him or her and in his or her name, place and stead, in any
and all capacities to sign any and all amendments to this report, and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission.
  Signature
              
              Title
              
              Date/s/
      Louis Winoski
              
              Interim
      Chief Executive Officer and director (principal executive
      officer)
              
              June
      24, 2009Louis
      Winoski/s/
      Richard F. Fitzgerald
              
              Chief  Financial
      Officer (principal financial and accounting officer)
              
              June
      24, 2009Richard
      F. Fitzgerald/s/
      Michael R. Holly
              
              Director
              
              June
      24, 2009Michael
      R. Holly/s/
      Andrew A. Levy
              
              Director
              
              June
      24, 2009Andrew
      A. Levy/s/
      Larry Steinbreuck
              
              Director
              
              June
      24, 2009Larry
      Steinbreuck/s/
      Stanley A. Youtt
              
              Director
              
              June
      24, 2009Stanley
      A. Youtt
     27
 Table of Contents
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  FOR
THE YEARS ENDED MARCH 31, 2009 AND 2008
 
  Report
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Balance Sheets at March 31, 2009 and 2008
              F-3Consolidated
      Statements of Operations for the years ended March 31, 2009 and
      2008
              F-4Consolidated
      Statements of Stockholders’ Equity for the years ended March 31, 2009 and
      2008
              F-5Consolidated
      Statements of Cash Flows for the years ended March 31, 2009 and
      2008
              F-6Notes
      to Consolidated Financial Statements
              F-8
   
 F-1
 Table of Contents
  
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Board of Directors and
 Stockholders
of Techprecision Corporation
  We have
audited the accompanying consolidated balance sheets of Techprecision
Corporation as of March 31, 2009 and 2008, and the related consolidated
statements of operations, stockholders’ equity, and cash flows for each of the
two years in the period ended March 31, 2009. These consolidated financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
  We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Techprecision
Corporation as of March 31, 2009 and 2008, and the consolidated results of its
operations, changes in stockholders’ equity and cash flows for each of the two
years in the period ended March 31, 2009 in conformity with accounting
principles generally accepted in the United States of America.
  
  /s/
Tabriztchi & Co., CPA, P.C.
 Tabriztchi
& Co., CPA, P.C.
 Garden
City, New York
 June 24,
2009
  7 Twelfth
Street Garden City, NY 11530 o Tel: 516-746-4200 o Fax: 516-746-7900
 Email:Info@Tabrizcpa.com
o www.Tabrizcpa.com
  F-2
 Table of Contents
  TECHPRECISION
CORPORATION
 CONSOLIDATED BALANCE SHEETS
 MARCH
31, 2009 and 2008
  2009
                        
                        2008ASSETSCurrent
      assetsCash
      and cash equivalents
                        
                        $
                        10,462,737
                        
                        
                        $
                        2,852,676Accounts
      receivable, less allowance for doubtful accounts of
$25,000
                        
                        
                        1,418,830
                        
                        
                        
                        4,509,336Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                        
                        
                        3,660,802
                        
                        
                        
                        4,298,683Inventories-
      raw materials
                        
                        
                        351,356
                        
                        
                        
                        195,506Prepaid
      expenses
                        
                        
                        1,583,234
                        
                        
                        
                        1,039,117Other
      receivables
                        
                        
                        59,979
                        
                        
                        
                        --Total
      current assets
                        
                        
                        17,536,938
                        
                        
                        
                        12,895,318Property,
      plant and equipment, net
                        
                        
                        2,763,434
                        
                        
                        
                        2,810,981Equipment
      under construction
                        
                        
                        887,279
                        
                        
                        
                        --Deposit
      on equipment
                        
                        
                        --
                        
                        
                        
                        240,000Deferred
      loan cost, net
                        
                        
                        104,666
                        
                        
                        
                        121,692Total
      assets
                        
                        $
                        21,292,317
                        
                        
                        $
                        16,067,991LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesAccounts
      payable
                        
                        $
                        950,681
                        
                        
                        
                        990,533Accrued
      expenses
                        
                        
                        710,332
                        
                        
                        
                        581,146Accrued
      taxes
                        
                        
                        155,553
                        
                        
                        
                        899,361Deferred
      revenues
                        
                        
                        3,945,364
                        
                        
                        
                        3,418,898Current
      maturity of long-term debt
                        
                        
                        624,818
                        
                        
                        
                        613,832Total
      current liabilities
                        
                        
                        6,386,748
                        
                        
                        
                        6,503,770LONG-TERM
      DEBTNotes
      payable- noncurrent
                        
                        
                        4,824,453
                        
                        
                        
                        5,404,981STOCKHOLDERS’
      EQUITYPreferred
      stock- par value $.0001 per share, 10,000,000 sharesauthorized,
      of which 9,000,000 are designated as Series A PreferredStock,
      with 6,295,508 shares issued and outstanding at March
    31,2009and
      7,018,064 at March 31, 2008 (liquidation preference of $1,794,220 and
      $2,000,148 at March 31, 2009 and 2008, respectively.)
                        
                        
                        2,287,508
                        
                        
                        
                        2,542,643Common
      stock -par value $.0001 per share, authorized,90,000,000
      shares, issued and outstanding, 13,907,513shares
      at March 31, 2009 and 12,572,995 at March 31, 2008
                        
                        
                        1,392
                        
                        
                        
                        1,259Paid
      in capital
                        
                        
                        2,872,779
                        
                        
                        
                        2,624,892Retained
      earnings (deficit)
                        
                        
                        4,919,437
                        
                        
                        
                        (1,009,554
                        )Total
      stockholders’ equity
                        
                        
                        10,081,116
                        
                        
                        
                        4,159,240Total
      liabilities and stockholders' equity
                        
                        $
                        21,292,317
                        
                        
                        $
                        16,067,991
  The
accompanying notes are an integral part of the financial
statements.
   F-3
 Table of Contents
   TECHPRECISION
      CORPORATIONCONSOLIDATED STATEMENTS OF
  OPERATIONS
  Years
      ended March 31,2009
                        
                        
                        2008Net
      sales
                        
                        $
                        38,087,735
                        
                        
                        $
                        31,805,146Cost
      of sales
                        
                        
                        25,970,626
                        
                        
                        
                        23,472,922Gross
      profit
                        
                        
                        12,117,109
                        
                        
                        
                        8,332,224Operating
      expenses:Salaries
      and related expenses
                        
                        
                        1,471,881
                        
                        
                        
                        1,228,316Professional
      fees
                        
                        
                        332,807
                        
                        
                        
                        291,357Selling,
      general and administrative
                        
                        
                        656,414
                        
                        
                        
                        410,886Total
      operating expenses
                        
                        
                        2,461,102
                        
                        
                        
                        1,930,559Income
      from operations
                        
                        
                        9,656,007
                        
                        
                        
                        6,401,665Other
      income (expenses)Interest
      expense
                        
                        
                        (455,000
                        )
                        
                        
                        (511,615
                        )Interest
      income
                        
                        
                        --
                        
                        
                        
                        479Finance
      costs
                        
                        
                        (17,026
                        )
                        
                        
                        (17,026
                        )Other
      income
                        
                        
                        4,882
                        
                        
                        
                        --Total
      other income (expense)
                        
                        
                        (467,144
                        )
                        
                        
                        (528,162
                        )Income
      before income taxes
                        
                        
                        9,188,863
                        
                        
                        
                        5,873,503Provision
      for income taxes
                        
                        
                        (3,259,872
                        )
                        
                        
                        (2,357,568
                        )Net
      income
                        
                        $
                        5,928,991
                        
                        
                        $
                        3,515,935Net
      income per share of common stock (basic)
                        
                        $
                        0.43
                        
                        
                        $
                        0.32Net
      income per share (diluted)
                        
                        $
                        0.23
                        
                        
                        $
                        0.12Weighted
      average number of shares outstanding (basic)
                        
                        
                        13,640,397
                        
                        
                        
                        10,896,976Weighted
      average number of shares outstanding (diluted)
                        
                        
                        25,744,157
                        
                        
                        
                        28,380,980
 The
accompanying notes are an integral part of the financial
statements.
 F-4
 Table of Contents
   TECHPRECISION
CORPORATION
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(DEFICIT)
 YEARS
ENDED MARCH 31, 2009 AND 2008
    Preferred
      Stock
                                                        
                                                        Common
      Stock
                                                        
                                                        AdditionalPaid
      in
                                                        
                                                        Retained
      Earnings (AccumulatedShares
                                                        
                                                        
                                                        Amount
                                                        
                                                        
                                                        Shares
                                                        
                                                        
                                                        Amount
                                                        
                                                        Capital
                                                        
                                                        Deficit)
                                                        
                                                        TotalBalance,
      March 31, 2007
                                                        
                                                        
                                                        
                                                        7,752,462
                                                        
                                                        
                                                        $
                                                        2,835,278
                                                        
                                                        
                                                        10,049,000
                                                        
                                                        $
                                                        1,006
                                                        
                                                        $
                                                        1,766,423
                                                        
                                                        
                                                        $
                                                        (4,525,489
                                                        )
                                                        
                                                        $
                                                        77,218Distribution
      -  WM Realty
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (111,500
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (111,500
                                                        )Grant
      of options
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        11
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        11Shares
      issued for services
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        53,995
                                                        
                                                        
                                                        6
                                                        
                                                        
                                                        19,133
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        19,139Issuance
      of Common Stock on exercise of warrants
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (45,300
                                                        )
                                                        
                                                        1,510,000
                                                        
                                                        
                                                        151
                                                        
                                                        
                                                        703,586
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        658,437Conversion
      of preferred stock
                                                        
                                                        
                                                        
                                                        (734,398
                                                        )
                                                        
                                                        
                                                        (247,335
                                                        )
                                                        
                                                        960,000
                                                        
                                                        
                                                        96
                                                        
                                                        
                                                        247,239
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        --Net
      income
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        3,515,935
                                                        
                                                        
                                                        
                                                        3,515,935Balance,
      March 31, 2008
                                                        
                                                        
                                                        
                                                        7,018,064
                                                        
                                                        
                                                        $
                                                        2,542,643
                                                        
                                                        
                                                        12,572,995
                                                        
                                                        $
                                                        1,259
                                                        
                                                        $
                                                        2,624,892
                                                        
                                                        
                                                        $
                                                        (1,009,554
                                                        )
                                                        
                                                        $
                                                        4,159,240Distribution
      WM Realty
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (187,296
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (187,296
                                                        )Shares
      issued for warrants
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        390,000
                                                        
                                                        
                                                        39
                                                        
                                                        
                                                        170,021
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        170,060Options
      issued for services
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,121
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        10,121Conversion
      of preferred stock
                                                        
                                                        
                                                        
                                                        (722,556
                                                        )
                                                        
                                                        
                                                        (255,135
                                                        )
                                                        
                                                        944,518
                                                        
                                                        
                                                        94
                                                        
                                                        
                                                        255,041
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        --Net
      income
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        5,928,991
                                                        
                                                        
                                                        
                                                        5,928,991Balance,
      March 31, 2009
                                                        
                                                        
                                                        
                                                        6,295,508
                                                        
                                                        
                                                        $
                                                        2,287,508
                                                        
                                                        
                                                        13,907,513
                                                        
                                                        $
                                                        1,392
                                                        
                                                        $
                                                        2,872,779
                                                        
                                                        
                                                        $
                                                        4,919,437
                                                        
                                                        
                                                        $
                                                        10,081,116
 
 
 The
accompanying notes are an integral part of the financial
statements.
   F-5
 Table of Contents
   TECHPRECISION
      CORPORATIONCONSOLIDATED STATEMENT OF CASH
FLOWS
  Year
      Ended March 31,2009
                            
                            
                            2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income
                            
                            $
                            5,928,991
                            
                            
                            $
                            3,515,935Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                            
                            
                            566,836
                            
                            
                            
                            483,358Shares
      Issued for services
                            
                            
                            --
                            
                            
                            
                            19,139Options
      issued for services
                            
                            
                            10,121
                            
                            
                            
                            11Changes
      in operating assets and liabilities:Accounts
      receivable
                            
                            
                            3,090,506
                            
                            
                            
                            (1,807,630
                            )Inventory
                            
                            
                            (155,850
                            )
                            
                            
                            (12,007Costs
      incurred on uncompleted contracts
                            
                            
                            (2,108,355
                            )
                            
                            
                            (5,178,720
                            )Other
      receivables
                            
                            
                            (59,979
                            )
                            
                            
                            --Prepaid
      expenses
                            
                            
                            (544,117
                            )
                            
                            
                            (768,797
                            )Accounts
      payable and accrued expenses
                            
                            
                            (654,474
                            )
                            
                            
                            673,770Customer
      advances
                            
                            
                            3,272,701
                            
                            
                            
                            5,565,381Net
      cash provided by operating activities
                            
                            
                            9,346,380
                            
                            
                            
                            2,490,440CASH
      FLOW FROM INVESTING ACTIVITIESPurchases
      of property, plant and equipment
                            
                            
                            (446,021
                            )
                            
                            
                            (716,260
                            )Equipment
      under construction
                            
                            
                            (887,279
                            )
                            
                            
                            --Deposits
      on equipment
                            
                            
                            240,000
                            
                            
                            
                            (240,000
                            )Net
      cash used in investing activities
                            
                            
                            (1,093,300
                            )
                            
                            
                            (956,260
                            )CASH
      FLOWS FROM FINANCING ACTIVITIESCapital
      distribution of WMR equity
                            
                            
                            (187,296
                            )
                            
                            
                            (111,500
                            )Issuance
      of common stock on exercise of warrants
                            
                            
                            170,060
                            
                            
                            
                            658,437Payment
      of notes
                            
                            
                            (613,253
                            )
                            
                            
                            (612,439
                            )Payment
      of capital lease obligations
                            
                            
                            (12,530
                            )
                            
                            
                            --Repayment
      of loan by WM Realty to affiliate
                            
                            
                            --
                            
                            
                            
                            (60,000
                            )Net
      cash used in financing activities
                            
                            
                            (643,019
                            )
                            
                            
                            (125,502
                            )Net
      increase in cash and cash equivalents
                            
                            
                            7,610,061
                            
                            
                            
                            1,408,678Cash
      and cash equivalents, beginning of period
                            
                            
                            2,852,676
                            
                            
                            
                            1,443,998Cash
      and cash equivalents, end of period
                            
                            $
                            10,462,737
                            
                            
                            $
                            2,852,676
 The
accompanying notes are an integral part of the financial
statements.
 
 F-6
 Table of Contents
  TECHPRECISION
CORPORATION
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Continued)
  Years
      ended March 31,2009
                      
                      
                      2008SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATIONCash
      paid during the year for:Interest
      expense
                      
                      $
                      451,967
                      
                      
                      $
                      511,614Income
      taxes
                      
                      $
                      4,083,455
                      
                      
                      $
                      1,746,184
  SUPPLEMENTAL
INFORMATION – NONCASH TRANSACTIONS:
 
 Year Ended March 31,
2009
 
 During
the year ended March 31, 2009, the Company issued 944,518 shares of common stock
upon conversion of 722,556 shares of Series A convertible preferred stock, based
on a conversion ratio of 1.30719 shares of common stock for each share of Series
A convertible preferred stock.  The conversion price of each share of
common stock was computed at $.2180 and the total conversion price at
$255,040.
 
 During
the year ended March 31, 2009 the company capitalized $56,242 for an equipment
lease.
 
 Year Ended March 31,
2008
 
 During
the year ended March 31, 2008, the Company issued 960,000 shares of common stock
upon conversion of 734,398 shares of Series A convertible preferred stock, based
on a conversion ratio of 1.30719 shares of common stock for each share of Series
A convertible preferred stock.  The conversion price of each share of
common stock was computed at $.2180 and the total conversion price was
$247,239.
 
 The
accompanying notes are an integral part of the financial
statements.
  F-7
 Table of Contents
 
 TECHPRECISION
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 NOTE
1 - DESCRIPTION OF BUSINESS
  Techprecision
Corporation (“Techprecision”) is a Delaware corporation organized in February
2005 under the name Lounsberry Holdings II, Inc. The name was changed to
Techprecision Corporation on March 6, 2006. Techprecision is the parent company
of Ranor, Inc. (“Ranor”), a Delaware corporation. Techprecision and Ranor are
collectively referred to as the “Company.”
  The
Company manufactures metal fabricated and machined precision components and
equipment. These products are used in a variety of markets including the
alternative energy, medical, nuclear, defense, industrial, and aerospace
industries.
  NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
  Basis
of Presentation and Consolidation
  On
February 24, 2006, Techprecision acquired all stock of Ranor in a transaction
which is accounted for as a recapitalization (reverse acquisition), with Ranor
being treated as the acquiring company for accounting purposes.
  The
accompanying consolidated financial statements include the accounts of the
Company and Ranor as well as a variable interest entity. Intercompany
transactions and balances have been eliminated in consolidation.
  Use
of Estimates in the Preparation of Financial Statements
  In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from those
estimates.
  Fair
Values of Financial Instruments
  The
Company’s financial instruments consist primarily of cash, cash equivalents,
accounts receivable, and accounts payable. The carrying values of these
financial instruments approximate their fair values.
  The fair
value of a financial instrument is the amount that could be received upon the
sale of an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.  Financial assets are
marked to bid prices and financial liabilities are marked to offer prices. 
Fair value measurements do not include transaction costs.  The Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair
Value Measurements,” on April 1, 2008.  This statement defines fair
value, establishes a framework to measure fair value, and expands disclosures
about fair value measurements.  SFAS No. 157 establishes a fair value
hierarchy used to prioritize the quality and reliability of the information used
to determine fair values.  Categorization within the fair value hierarchy
is based on the lowest level of input that is significant to the fair value
measurement.  The fair value hierarchy is defined into the following three
categories:
  Level
      1:  Inputs based upon quoted market prices for identical assets or
      liabilities in active markets at the measurement
  date.
 Level
      2:  Observable inputs other than quoted prices included in Level 1,
      such as quoted prices for similar assets and liabilities in active
      markets; quoted prices for identical or similar assets and liabilities in
      markets that are not active; or other inputs that are observable or can be
      corroborated by observable market
data.
 Level
      3:  Inputs that are management’s best estimate of what market
      participants would use in pricing the asset or liability at the
      measurement date.  The inputs are unobservable in the market and
      significant to the instruments
valuation.
  F-8
 Table of Contents
  In
February 2008, the FASB issued Staff Position (“FSP”)
No. FAS 157-2, “Effective Date of FASB Statement No. 157,”which delays the
effective date of SFAS No. 157 for non-financial assets and
liabilities to fiscal years beginning after November 15, 2008.  The
Company is currently reviewing the requirements of FSP No. FAS 157-2, and
at this point in time, has not determined what impact, if any, FSP No. FAS
157-2 will have on its financial condition, results of operations, or cash
flows.
  In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the
Fair Value of a Financial Asset When the Market for That Asset is Not
Active.”  This statement clarifies that determining fair value in an
inactive or dislocated market depends on facts and circumstances and requires
significant management judgment.  This statement specifies that it is
acceptable to use inputs based on management estimates or assumptions, or for
management to make adjustments to observable inputs to determine fair value when
markets are not active and relevant observable inputs are not
available.  FSP 157-3 does not have an impact on the Company’s
financial statements.
 
 The
Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets
and Financial Liabilities,” effective March 1, 2008, and elected not to
establish a fair value for its financial instruments and certain other items
under this statement.  Therefore, the Company’s adoption of this statement
did not impact its consolidated financial statements during the year ended
March 31, 2009.
 
 The
carrying amount of trade accounts receivable, accounts payable, prepaid and
accrued expenses, and notes payable, as presented in the balance sheet,
approximates fair value.
 
 Cash
and cash equivalents
  Holdings
of highly liquid investments with maturities of three months or less, when
purchased, are considered to be cash equivalents. The carrying amount reported
in the balance sheet for cash and cash equivalents approximates its fair value.
The deposits are maintained in a large regional bank and the amount of federally
insured cash deposits was $250,000 as of March 31, 2009 and $100,000 as of March
31, 2008.
 
 Accounts
receivable
  Trade
accounts receivable are stated at the amount the Company expects to collect. The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments.
Management considers the following factors when determining the collectability
of specific customer accounts: customer credit-worthiness, past transaction
history with the customer, current economic industry trends, and changes in
customer payment terms. If the financial condition of the Company’s customers
were to deteriorate, adversely affecting their ability to make payments,
additional allowances would be required. Based on management’s assessment, the
Company provides for estimated uncollectible amounts through a charge to
earnings and a credit to a valuation allowance. Balances that remain outstanding
after the Company has used reasonable collection efforts are written off through
a charge to the valuation allowance and a credit to accounts receivable. Current
earnings are also charged with an allowance for sales returns based on
historical experience. There was no bad debt expense for the years ended March
31, 2009 and 2008.
  Inventories
  Inventories
- raw materials is stated at the lower of cost or market determined principally
by the first-in, first-out method.
  Notes
Payable
  The
Company accounts for all note liabilities that are due and payable in one year
as short-term liabilities.
 
 Long-lived
Assets
  Property,
plant and equipment are recorded at cost less accumulated depreciation and
amortization. Depreciation and amortization are accounted for on the
straight-line method based on estimated useful lives. The amortization of
leasehold improvements is based on the shorter of the lease term or the useful
life of the improvement. Betterments and large renewals, which extend the life
of the asset, are capitalized whereas maintenance and repairs and small renewals
are expensed as incurred. The estimated useful lives are: machinery and
equipment, 7-15 years; buildings, up to 30 years; and leasehold improvements,
10-20 years.
  F-9
 Table of Contents
  We
account for the impairment or disposal of long-lived assets in accordance with
the provisions of the Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets(SFAS 144). SFAS 144 requires an assessment
of the recoverability of our investment in long-lived assets to be held and used
in operations whenever events or circumstances indicate that their carrying
amounts may not be recoverable. Such assessment requires that the future cash
flows associated with the long-lived assets be estimated over their remaining
useful lives. An impairment loss may be required when the future cash flows are
less than the carrying value of such assets
  Major
maintenance activities
  The
Company incurs maintenance costs on all of its major equipment. Costs that
extend the life of the asset, materially add to its value, or adapt the asset to
a new or different use are separately capitalized in property, plant and
equipment and are depreciated over their estimated useful lives. All other
repair and maintenance costs are expensed as incurred.
 
 Leases
  Operating
leases are charged to operations as paid. Capital leases are capitalized and
depreciated over the term of the lease.  A lease is considered a
capital lease if the lease contains an option to purchase the property for less
than fair market value.
  Convertible
Preferred Stock and Warrants
  In
accordance with EITF 00-19, the Company initially measured the fair value of the
series A preferred stock by the amount of cash that was received for their
issuance. The Company subsequently determined that the convertible preferred
shares and the accompanying warrants were equity instruments under SFAS 150 and
133. Although the Company had an unconditional obligation to issue additional
shares of common stock upon conversion of the series A preferred stock if EBITDA
per share was below the targeted amount, the certificate of designation relating
to the series A preferred stock does not require us to issue shares that are
registered pursuant to the Securities Act of 1933, and as a result, the
additional shares issuable upon conversion of the Series A preferred stock need
not be registered shares. Our preferred stock also met all other conditions for
the classification as equity instruments. The Company had a sufficient number of
authorized shares, there is no required cash payment or net cash settlement
requirement and the holders of the series A preferred stock had no right higher
than the common stockholders other than the liquidation preference in the event
of liquidation of the Company.
  The
Company’s warrants were excluded from derivative accounting because they were
indexed to the Company’s own unregistered common stock and were classified in
stockholders’ equity section according to SFAS 133 paragraph 11(a), under
preferred stock.
 
 The
Company recorded the series A preferred stock to permanent equity in accordance
with the terms of the Abstracts - Appendix D - Topic D-98: “Classification and Measurement of
Redeemable Securities.”
  Shipping
Costs
  Shipping
and handling costs are included in cost of sales in the accompanying
Consolidated Statements of Operations for all periods presented.
  Selling,
General, and Administrative
  Selling
expenses include items such business travel and advertising costs. Advertising
costs are expensed as incurred. General and administrative expenses include
items for Company’s administrative functions and include costs for items such as
office supplies, insurance, telephone and payroll services.
  F-10
 Table of Contents
  Stock
Based Compensation
  Stock-based
compensation represents the cost related to stock-based awards granted to
employees. The Company measures stock-based compensation cost at grant date,
based on the estimated fair value of the award and recognizes the cost as
expense on a straight-line basis (net of estimated forfeitures) over the
employee requisite service period. The Company estimates the fair value of stock
options using a Black-Scholes valuation model.
 
 Earnings
per Share of Common Stock
  Basic net
income per common share is computed by dividing net income or loss by the
weighted average number of shares outstanding during the year. Diluted net
income per common share is calculated using net income divided by diluted
weighted-average shares. Diluted weighted-average shares include
weighted-average shares outstanding plus the dilutive effect of convertible
preferred stock, preferred shareholders and other warrants and share-based
compensation were calculated using the treasury stock method.
  Revenue
Recognition and Costs Incurred
  Revenue
and costs are recognized on the units of delivery method. This method recognizes
as revenue the contract price of units of the product delivered during each
period and the costs allocable to the delivered units as the cost of earned
revenue. When the sales agreements provide for separate billing of engineering
services, the revenues for those services are recognized when the services are
completed. Costs allocable to undelivered units are reported in the balance
sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed
upon contract price for customer directed changes, constructive changes,
customer delays or other causes of additional contract costs are recognized in
contract value if it is probable that a claim for such amounts will result in
additional revenue and the amounts can be reasonably estimated. Revisions in
cost and profit estimates are reflected in the period in which the facts
requiring the revision become known and are estimable. The unit of delivery
method requires the existence of a contract to provide the persuasive evidence
of an arrangement and determinable seller’s price, delivery of the product
and reasonable collection prospects. The Company has written agreements with the
customers that specify contract prices and delivery terms. The Company
recognizes revenues only when the collection prospects are
reasonable.
  Adjustments
to cost estimates are made periodically, and losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined and are reflected as reductions of the carrying value of the costs
incurred on uncompleted contracts. Costs incurred on uncompleted contracts
consist of labor, overhead, and materials. Work in process is stated at the
lower of cost or market and reflect accrued losses, if required, on uncompleted
contracts.
  Advertising
Expenses
  Advertising
costs are charged to operations when incurred. Advertising expenses were $18,407
and $19,000 for the fiscal years ended March 31, 2009 and 2008,
respectively.
  Income
Taxes
  The
Company uses the asset and liability method of financial accounting and
reporting for income taxes required by statement of Financial Accounting
Standards No. 109 (“FAS 109”), “Accounting for Income Taxes.”
Under FAS 109, deferred income taxes reflect the tax impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax
purposes.
  Temporary
differences giving rise to deferred income taxes consist primarily of the
reporting of losses on uncompleted contracts, the excess of depreciation for tax
purposes over the amount for financial reporting purposes, and accrued expenses
accounted for differently for financial reporting and tax purposes, and net
operating loss carry-forwards.
 
 Interest
and penalties are included in general and administrative expenses.
 
 F-11
 Table of Contents
  Variable
Interest Entity
  The
Company has consolidated WM Realty, a variable interest entity that entered into
a sale and leaseback contract with the Company, in 2006, to conform to FASB
Interpretation No. 46, “Consolidation of Variable Interest
Entities” (FIN 46). The Company has also adopted the revision to FIN 46,
FIN 46R, which clarified certain provisions of the original interpretation and
exempted certain entities from its requirements.  The creditors of WM
Realty do not have recourse to the general credit of Techprecision or
Ranor.
  Recent
Accounting Pronouncements
  FASB
Statement of Financial Accounting Standards 141(R), “Business Combinations”
(SFAS 141(R))
  In
December 2007, the FASB issued SFAS No. 141(R), "Business Combinations,"
("SFAS 141(R)"). SFAS 141(R) requires the companies to follow the guidance in
SFAS 141 for certain aspects of business combinations, with additional guidance
provided defining the acquirer, recognizing and measuring the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree, assets and liabilities arising from contingencies, defining a
bargain purchase and recognizing and measuring goodwill or a gain from a bargain
purchase. In addition, certain transaction costs previously capitalized as part
of the purchase price will be expensed as incurred. Also, under SFAS 141(R)
adjustments associated with changes in tax contingencies that occur after the
one year measurement period are recorded as adjustments to income. This
statement is effective for all business combinations for which the acquisition
date is on or after the beginning of an entity's first fiscal year that begins
after December 15, 2008; however, the guidance in this standard regarding the
treatment of income tax contingencies is retrospective to business combinations
completed prior to January 1, 2009. We have adopted SFAS 141(R) for any business
combinations occurring at or subsequent to January 1, 2009. The Company believes
the adoption of SFAS 141(R) does not have an effect on the Company's
consolidated financial position.
  FASB
Statement of Financial Accounting Standards 160, “Non-Controlling Interests in
Consolidated Financial Statements” (SFAS 160)
  In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51"
("SFAS 160"). This statement is effective for fiscal years beginning on or after
December 15, 2008, with earlier adoption prohibited. This statement requires the
recognition of a non-controlling interest (minority interest) as equity in the
consolidated financial statements and separate from the Company's equity. The
amount of net income attributable to the non-controlling interest will be
included in the consolidated net income on the face of the consolidated income
statement. It also amends certain of ARB No. 51's consolidation procedures for
consistency with the requirements of SFAS 141-R. This statement also includes
expanded disclosure requirements regarding the interests of the parent and its
non-controlling interest. The Statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. The standard should be applied prospectively. Presentation and disclosure
requirements should be applied retrospectively for all periods presented. Early
adoption is prohibited. The Company believes the adoption of SFAS 160 will not
have an effect on the Company's consolidated financial position or results of
operations as there are no non-controlling interests.
 
 FASB
Statement of Financial Accounting Standards 161, “Disclosures about Derivative
Instruments and Hedging Activities, and Amendment of FASB Statement 133” (SFAS
161)
  In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement No.
133" , which requires additional disclosures about the objectives of the
derivative instruments and hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related interpretations, and a tabular
disclosure of the effects of such instruments and related hedged items on our
consolidated financial position, financial performance and cash flows. SFAS No.
161 is effective beginning January 1, 2009. The Company does not have any
derivative instruments or utilize any hedging activities and therefore, SFAS No.
161 is not applicable to the Company at this time.
 
 FASB
Statement of Financial Accounting Standards 162, “The Hierarchy of Generally
Accepted Accounting Principles” (SFAS 162)
  F-12
 Table of Contents
  In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles." ("SFAS 162") SFAS 162 is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
Auditing amendments to AU Section, 411 "The Meaning of 'Present Fairly in
Conformity with Generally Accepted Accounting Principles'". SFAS 162 is intended
to improve financial reporting by identifying a consistent hierarchy for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with accounting principles generally accepted
in the United States of America ("GAAP"). The statement is effective November
15, 2008. The adoption of SFAS 162 is not expected to have a material impact on
the Company's consolidated financial position and results of
operations.
 
 FASB
EITF 07-5
  In June
2008, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 07-5,
“Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock,”
(“EITF 07-5”). EITF 07-5 provides guidance for determining whether an
equity-linked financial instrument, or embedded feature, is indexed to an
entity’s own stock. EITF 07-5 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years and will
be adopted by the Company in the first quarter of fiscal year 2010. The Company
is assessing the potential impact, if any, of the adoption of EITF 07-5 on its
consolidated results of operations and financial condition.
  FASB
EITF 08-1
  In
November 2008, the FASB issued EITF 08-1, "Revenue Arrangements with Multiple
Deliverables" ("EITF 08-1"). EITF 08-1 is effective for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after December 31, 2009 and shall be applied on a prospective basis. Earlier
application is permitted as of the beginning of a fiscal year. EITF 08-1
addresses some aspects of the accounting by a vendor for arrangements under
which it will perform multiple revenue-generating activities. We plan to adopt
EITF 08-1 on April 1, 2010, and we do not expect it to have a material impact on
our consolidated financial statements.
 
 FASB
EITF 08-4
  In June
2008, FASB issued EITF 08-4, "Transition Guidance for Conforming
Changes to Issue No. 98-5". The objective of EITF 08-4 is to provide
transition guidance for conforming changes made to EITF 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios", that result from EITF 00-27 "Application of Issue
No. 98-5 to Certain Convertible Instruments", and FAS 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity". This Issue is effective for financial statements issued for fiscal
years ending after December 15, 2008. Early application is
permitted.   Techprecision does not expect that the adoption of
SFAS 163 will have a material impact on our financial statements.
 
 FASB
EITF 08-6
  In
November 2008, the FASB ratified EITF Issue No. 08-6, “Equity Method Investment Accounting
Considerations,” (“EITF 08-6”). EITF 08-6 clarifies that the initial
carrying value of an equity method investment should be determined in accordance
with SFAS No. 141(R). Other-than-temporary impairment of an equity method
investment should be recognized in accordance with FSP No. APB 18-1, “Accounting
by an Investor for Its Proportionate Share of Accumulated Other Comprehensive
Income of an Investee Accounted for under the Equity Method in Accordance with
APB Opinion No. 18 upon a Loss of Significant Influence.” EITF 08-6 is
effective on a prospective basis in fiscal years beginning on or after
December 15, 2008 and interim periods within those fiscal years, and will
be adopted by the Company in the first quarter of fiscal year 2010. The Company
is assessing the potential impact, if any, of the adoption of EITF 08-6 on its
consolidated results of operations and financial condition.
 
 FASB
EITF 08-7
  In
November 2008, the FASB ratified EITF Issue No. 08-7, “Accounting for Defensive Intangible
Assets,” (“EITF 08-7”). EITF 08-7 applies to defensive assets, which are
acquired intangible assets which the acquirer does not intend to actively use,
but intends to hold to prevent its competitors from obtaining access to the
asset. EITF 08-7 clarifies that defensive intangible assets are separately
identifiable and should be accounted for as a separate unit of accounting in
accordance with SFAS No. 141(R) and SFAS No. 157, “Fair Value
Measurements” (“SFAS No. 157”). EITF 08-7 is effective for intangible
assets acquired in fiscal years beginning on or after December 15, 2008 and
will be adopted by the Company in the first quarter of fiscal year 2010. The
Company is assessing the potential impact, if any, of the adoption of EITF 08-7
on its consolidated results of operations and financial condition.
 
 F-13
 Table of Contents
  FASB
EITF 08-8
  In
November 2008, the FASB ratified EITF Issue No. 08-8, “Accounting for an Instrument (or an
Embedded Feature) with a Settlement Amount That Is Based on the Stock of an
Entity’s Consolidated Subsidiary” (“EITF 08-8”). EITF 08-8 clarifies
whether a financial instrument for which the payoff to the counterparty is
based, in whole or in part, on the stock of an entity’s consolidated subsidiary
is indexed to the reporting entity’s own stock and therefore should not be
precluded from qualifying for the first part of the scope exception in paragraph
11 (a) of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (“SFAS No. 133”) or from being
within the scope of EITF No. 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and, Potentially Settled in, a Company’s Own
Stock.” EITF 08-8 is effective for fiscal years beginning on or after
December 15, 2008, and interim periods within those fiscal years and will
be adopted by the Company in the first quarter of fiscal year 2010. The Company
is assessing the potential impact, if any, of the adoption of EITF 08-8 on its
consolidated results of operations and financial condition.
 FASB
EITF 99-20-1
  In
January 2009, the FASB issued FSP EITF 99-20-1, "Amendments to the Impairment
Guidance of EITF Issue No. 99-20, and EITF Issue No. 99-20, Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets"("FSP EITF 99-20-1"). FSP EITF 99-20-1
changes the impairment model included within EITF 99-20 to be more consistent
with the impairment model of SFAS No. 115. FSP EITF 99-20-1 achieves this by
amending the impairment model in EITF 99-20 to remove its exclusive reliance on
"market participant" estimates of future cash flows used in determining fair
value. Changing the cash flows used to analyze other-than-temporary impairment
from the "market participant" view to a holder's estimate of whether there has
been a "probable" adverse change in estimated cash flows allows companies to
apply reasonable judgment in assessing whether an other-than-temporary
impairment has occurred. The adoption of FSP EITF 99-20-1 will not have a
material impact on our consolidated financial statements.
 
 FASB
Staff Position FAS 132(R)-1, “Employers’ Disclosures about Post-retirement
Benefit Plan Assets” (FSP FAS 132(R)
  In
December 2008, the FASB issued FSP FAS No. 132(R)-1, “Employers' Disclosures about
Postretirement Benefit Plan Assets("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
amends FASB Statement No. 132 (revised 2003), Employers' Disclosures about
Pensions and Other Postretirement Benefits, ("FAS 132(R)"), to provide guidance
on an employer's disclosures about plan assets of a defined benefit pension or
other postretirement plan. The additional disclosure requirements under this FSP
include expanded disclosure about an entity's investment policies and
strategies, the categories of plan assets, concentration of credit risk and fair
value measurements of plan assets. This pronouncement is effective for fiscal
years ending after December 15, 2009. The Company does not expect the adoption
of FSP FAS 132(R)-1 to have a material impact on its consolidated financial
statements.
 
 FASB
Staff Position FAS No. 140-3, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities” (FSP FAS 140-3)
  On
February 20, 2008, the FASB issued Staff Position FAS No. 140-3, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.” FSP
FAS 140-3 requires an initial transfer of a financial asset and a repurchase
financing that was entered into contemporaneously or in contemplation of the
initial transfer to be evaluated as a linked transaction under FAS 140 unless
certain criteria are met, including that the transferred asset must be readily
obtainable in the marketplace. The provisions of this FSP are effective
beginning on January 1, 2009, and shall be applied prospectively to initial
transfers and repurchase financings for which the initial transfer is executed
on or after this date. Early application is prohibited. The Company believes the
adoption of FAS No. 140-3 will not have an effect on the Company's consolidated
financial position or results of operations as there are no non-controlling
interests.
 
 FASB
Staff Position FAS 141R-1, “Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination that Arise from Contingencies” (FSP FAS
141R-1)
  F-14
 Table of Contents
  In April
2009, the FASB issued FSP FAS 141R-1, "Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies." This FSP requires that assets acquired and liabilities
assumed in a business combination that arise from contingencies be recognized at
fair value if fair value can be reasonably estimated. If fair value cannot be
reasonably estimated, the asset or liability would generally be recognized in
accordance with FAS No. 5, "Accounting for
Contingencies," and FASB Interpretation No. 14, "Reasonable Estimation of the Amount
of a Loss." Further, the FASB removed the subsequent accounting guidance
for assets and liabilities arising from contingencies from FAS 141R-1. The
requirements of this FSP carry forward without significant revision the guidance
on contingencies of FAS 141, "Business Combinations", which
was superseded by FAS 141R. The FSP also eliminates the requirement to disclose
an estimate of the range of possible outcomes of recognized contingencies at the
acquisition date. For unrecognized contingencies, the FASB requires that
entities include only the disclosures required by FAS No. 5. This FSP was
adopted effective January 1, 2009. There was no impact upon adoption, and its
effects on future periods will depend on the nature and significance of business
combinations subject to this statement.  The FSP is effective for
business combinations whose acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.
 
 FASB
Staff Position FAS No. 142-3, “Determination of Useful Life of Intangible
Assets” (FSP FAS 142-3)
  In April
2008, the FASB issued FASB Staff Position FAS 142-3, "Determination of Useful Life of
Intangible Assets”. FSP FAS 142-3 amends the factors that should be
considered in developing the renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS 142, "Goodwill and
Other Intangible Assets." FSP FAS 142-3 also requires expanded disclosure
related to the determination of intangible asset useful lives. FSP FAS 142-3 is
effective for fiscal years beginning after December 15, 2008. Earlier adoption
is not permitted. The adoption of FSP FAS 142-3 did not have a material impact
on its consolidated financial statements.
 
 FASB
Staff Position FAS 157-3, “Determining the Fair Value of a Financial Asset When
the Market for that Asset is Not Active” (FAS FSP 157-3)
  On
October 10, 2008, the FASB issued FASB Staff Position No. FAS 157-3, "Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active," which
clarifies the application of FAS 157 in a market that is not active and provides
an example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active. FSP
157-3 became effective on October 10, 2008, and its adoption will not have a
material impact on the Company's financial position or results of
operation.
 
 S.E.C
Staff Accounting Bulletin 110 (SAB110)
  In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 ("SAB 110"). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of "plain vanilla" options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company's consolidated financial
statements.
 
 S.E.C.
Staff Accounting Bulletin No. 111, “Other Than Temporary Impairment of Certain
Investments in Debt and Equity Securities” (SAB 111)
  In April
2009, the SEC issued Staff Accounting Bulletin ("SAB") No. 111, "Other Than Temporary Impairment of
Certain Investments in Debt and Equity Securities" ("SAB 111"). SAB 111
amends SAB Topic 5M to reflect the guidance in FSP 115-2 and 124-2. SAB 111
maintains the prior staff views related to equity securities but amends SAB
Topic 5M to exclude debt securities from its scope. The Company does not expect
the adoption of SAB 111 will have a material impact on the Company's
consolidated financial statements.
  F-15
 Table of Contents
  NOTE
3 - PROPERTY, PLANT AND EQUIPMENT
  As of
March 31, 2009 and 2008 property, plant and equipment consisted of the
following:
  2009
                        
                        
                        2008Land
                        
                        $
                        110,113
                        
                        
                        $
                        110,113Building
      and improvements
                        
                        
                        1,542,591
                        
                        
                        
                        1,412,730Machinery
      equipment, furniture and fixtures
                        
                        
                        4,006,235
                        
                        
                        
                        3,633,833Total
      property, plant and equipment
                        
                        
                        5,658,939
                        
                        
                        
                        5,156,676Less:
      accumulated depreciation
                        
                        
                        (2,895,505
                        ),
                        
                        
                        (2,345,695
                        )Total
      property, plant and equipment, net
                        
                        $
                        2,763,434
                        
                        
                        $
                        2,810,981
 
 Depreciation
expense for the years ended March 31, 2009 and 2008 were $549,810 and $466,332,
respectively. Land and buildings (which are owned by WM Realty - a consolidated
entity under Fin 46 (R)) are collateral for the $3,200,000 Mortgage Loan. Other
fixed assets of the Company together with its other personal properties, are
collateral for the Sovereign Bank $4,000,000 secured loan and line of
credit.
 
 The
Company is in process of installing $887,279 of equipment it had ordered in 2008
and received in January 2009.  The new equipment expands the Company’s
fabrication capacity and is planning to commence operations in the first quarter
of the next fiscal year ending March 31, 2010.
  NOTE
4 - COSTS INCURRED ON UNCOMPLETED CONTRACTS
  The
Company recognizes revenues based upon the units-of-delivery method (see Note
2). The advance billing and deposits includes down payments for acquisition
of materials and progress payments on contracts. The agreements with the buyers
of the Company’s products allow the Company to offset the progress payments
against the costs incurred.  The following table sets forth information as
to costs incurred on uncompleted contracts as of March 31, 2009 and
2008:
 2009
                    
                    
                    2008Cost
      incurred on uncompleted contracts, beginning balance
                    
                    $
                    10,633,862
                    
                    
                    $
                    5,455,142Total
      cost incurred on contracts during the year
                    
                    
                    28,078,982
                    
                    
                    
                    28,651,712Less
      cost of sales, during the year
                    
                    
                    (25,970,626
                    )
                    
                    
                    (23,472,992
                    )Cost
      incurred on uncompleted contracts, ending balance
                    
                    $
                    12,742,218
                    
                    
                    $
                    10,633,862Billings
      on uncompleted contracts, beginning balance
                    
                    $
                    6,335,179
                    
                    
                    $
                    4,188,697Plus:
      Total billings incurred on contracts, during the year
                    
                    
                    40,833,972
                    
                    
                    
                    19,956,718Less:
      Contracts recognized as revenue, during the year
                    
                    
                    (38,087,735
                    )
                    
                    
                    (17,810,236
                    )Billings
      on uncompleted contracts, ending balance
                    
                    $
                    9,081,416
                    
                    
                    $
                    6,335,179Cost
      incurred on uncompleted contracts, ending balance
                    
                    $
                    12,742,218
                    
                    
                    $
                    10,633,862Billings
      on uncompleted contracts, ending balance
                    
                    
                    (9,081,416
                    )
                    
                    
                    (6,335,179
                    )Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                    
                    $
                    3,660,802
                    
                    
                    $
                    4,298,683
  As of
March 31, 2009 and 2008, the Company had deferred revenues totaling $3,945,364
and $3,418,898, respectively. Deferred revenues represent the customer
prepayments on their contracts.
 
 On March
31, 2009 and 2008, $-0-and $151,195 of allowance for losses on uncompleted
contracts were recognized, respectively.
 
 F-16
 Table of Contents
  NOTE
5 - PREPAID EXPENSES
  As of
March 31, 2009 and 2008, the prepaid expenses included the
following:
 2009
                      
                      
                      2008Insurance
                      
                      $
                      140,237
                      
                      
                      $
                      145,338Prepayments
      on material purchases
                      
                      
                      1,418,510
                      
                      
                      
                      882,739Other
                      
                      
                      24,487
                      
                      
                      
                      11,040Total
                      
                      $
                      1,583,234
                      
                      
                      $
                      1,039,117
 
 NOTE
6 - DEFERRED CHARGES
  Deferred
charges represent the capitalization of costs incurred in connection with
obtaining the bank loan and building mortgage. These costs are being amortized
on a straight-line basis over the term of the related debt obligation.
Amortization charged to operations in 2009 and 2008 were $17,026 and $17,026,
respectively. As of March 31, 2009 and 2008, deferred charges were as
follows:
 2009
                  
                  
                  2008Deferred
      loan costs
                  
                  $
                  150,259
                  
                  
                  $
                  150,259Accumulated
      amortization
                  
                  
                  (45,593
                  )
                  
                  
                  (28,567
                  )Deferred
      loan costs, net
                  
                  $
                  104,666
                  
                  
                  $
                  121,692
  The
aggregate amortization expense for the next successive five years will be
$17,026 per year.
 
 NOTE
7 – LONG-TERM DEBT
 
 The
following debt obligations were outstanding on March 31, 2009 and
2008:
 
 2009
                  
                  
                  2008Sovereign
      Bank Secured Term Note Payable
                  
                  $
                  2,285,715
                  
                  
                  $
                  2,857,142Amalgamated
      Bank Mortgage Loan
                  
                  
                  3,118,747
                  
                  
                  
                  3,154,171Ford
      Motor Credit Vehicle Loan
                  
                  
                  1,098
                  
                  
                  
                  7,500Total
      long-term debt
                  
                  
                  5,405,560
                  
                  
                  
                  6,018,813Principal
      payments due within one year
                  
                  
                  (611,362
                  )
                  
                  
                  (613,832
                  )Principal
      payments due after one year
                  
                  $
                  4,794,198
                  
                  
                  $
                  5,404,981
 
 On
February 24, 2006, Ranor entered into a loan and security agreement with
Sovereign Bank.  Pursuant to the agreement, the bank provided Ranor
with a secured term loan of $4,000,000 (“Term Note”) and also extended to Ranor
a revolving line of credit of up $1,000,000 the (“Revolving
Note”).  On January 29, 2007, the loan and security agreement was
amended, adding a capital expenditure line of credit facility to the earlier two
debt facilities the (“CapEx Note”).
 
 Significant
terms associated with the Sovereign debt facilities are summarized
below.
 
 Term
Note:
 
 The Term
Note issued on February 24, 2006 has a term of 7 years with an initial fixed
interest rate of 9%.  The interest rate on the Term Note converts from
a fixed rate of 9% to a variable rate on February 28, 2011.  From
February 28, 2011 until maturity the Term Note will bear interest at the Prime
Rate plus 1.5%, payable on a quarterly basis.   Principal is
payable in quarterly installments of $142,857, plus interest, with a final
payment due on March 1, 2013.
  F-17
 Table of Contents
  The Term
Note is subject to various covenants that include the following: the loan
collateral comprises all personal property of Ranor, including cash, accounts
receivable inventories, equipment, financial and intangible
assets.  The company must also maintain a ratio of earnings available
to cover fixed charges of at least 120% of the fixed charges for the rolling
four quarters, tested at the end of each fiscal quarter.  Additionally
the Company must also maintain an interest coverage ratio of at least 2:1 at the
end of each fiscal quarter.   Ranor’s obligations under the notes
to the bank are guaranteed by Techprecision.
 
 Revolving
Note:
 
 The
Revolving Note bears interest at a variable rate determined as the Prime Rate,
plus 1.5% annually on any outstanding balance.   The borrowing
limit on the Revolving Note has been limited to the sum of 70% of the Company’s
eligible accounts receivable plus 40% of eligible inventory up to a maximum
borrowing limit of $1,000,000.   The agreement has been amended
several times with the effect of increasing the maximum available borrowing
limit to $2,000,000 as of March 31, 2009.  There were no borrowings
outstanding under this facility as of March 31, 2009 and 2008.  The
Company pays and unused credit line fee .25% on the average unused credit line
amount in the previous month.
 
 Capital
Expenditure Note:
 
 The
initial borrowing limit under the Capital Expenditure Note was $500,000 and has
been amended several times resulting in a borrowing limit of $3,000,000
available under the facility as of March 31, 2009.  The facility is
open for renewal on an annual basis.  Under the facility, the Company
may borrow 80% of the original purchase cost of qualifying capital
equipment.  The interest rate is LIBOR, plus 3%.  The
Company is obligated to make interest only payments monthly on any borrowings
through November 30, 2009 and on December 1, 2009 any outstanding borrowings and
interest will be due and payable monthly on a five year amortization
schedule.  There were no amounts outstanding under this facility as of
March 31, 2009 and 2008.   The Company does however, have an
intention to finance approximately $1.1 million of qualifying equipment
purchased as of March 31, 2009 under the facility and would expect to draw down
these borrowings in July 2009.
 
 Mortgage
Loan:
 
 The
mortgage loan is an obligation of WM Realty.  The mortgage has a term
of 10 years, maturing October 1, 2016, and carries an annual interest rate of
6.7% with monthly interest and principal payments of $20,955.  The
amortization is based on a 30 year term.  WM Realty has the right to
repay the mortgage note upon payment of a prepayment premium of 5% of the amount
prepaid if the prepayment is made during the first two years, and declining to
1% of the amount prepaid if the prepayment is made during the ninth or tenth
year.
 
 In
connection with the mortgage financing of the real estate owned by WM Realty,
Mr. Andrew Levy executed a limited guaranty.  Pursuant
to the limited guaranty, Mr. Levy personally guaranteed the lender the
payment of any loss resulting from WM Realty’s fraud or misrepresentation in
connection with the loan documents, misapplication of rent and insurance
proceeds, failure to pay taxes and other defaults resulting from his or WM
Realty’s misconduct.
  As of
March 31, 2009, the maturities of long-term debt were as follows:
  Year
ending March 31,
 2010
                      
                      $
                      611,5152011
                      
                      
                      613,1742012
                      
                      
                      616,1262013
                      
                      
                      619,2862014
                      
                      
                      51,242Due
      after 2014
                      
                      
                      2,894,217Total
                      
                      $
                      5,405,560
   F-18
 Table of Contents
  In
addition to $5,405,560, the total long term long-term debt of $5,449,271
includes $43,712 of capitalized lease obligations (see Note 10).
 
 NOTE
8 - INCOME TAXES
  A
reconciliation of the statutory income tax rates for fiscal years ended
March 31, 2009 and 2008 of 36% and 40%, respectively, to the effective
income tax rates applied to the net income reported in the Consolidated
Statements of Operations is as follows:
 2009
                      
                      
                      2008Federal
      income tax at statutory rate
                      34
                      %
                      
                      
                      35
                      %State
      income taxes, net of federal benefit
                      6
                      %
                      
                      
                      6
                      %Deduction
      for domestic production
                      (2)
                      %
                      
                      
                      (2)
                      %Other
                      (2)
                      %
                      
                      
                      1
                      %Total
      income tax provision (benefit)
                      36
                      %
                      
                      
                      40
                      %
 
 As of
March 31, 2009 and 2008, the tax effect of temporary differences and net
operating loss carry forward that give rise to the Company’s deferred tax assets
and liabilities are as follows:
 
 March
      31, 2009
                  
                  
                  March
      31, 2008Deferred
      Tax Assets:Compensation
      accrual
                  
                  $
                  100,000
                  
                  
                  $
                  96,000Allowance
      for doubtful accounts
                  
                  
                  10,000
                  
                  
                  
                  10,000Loss
      on uncompleted contracts
                  
                  
                  --
                  
                  
                  
                  62,000Net
      operating loss carry-forward
                  
                  
                  729,000
                  
                  
                  
                  762,000Total
      deferred tax assets
                  
                  
                  839,000
                  
                  
                  
                  930,000Deferred
      Tax Liabilities:Depreciation
                  
                  
                  551,000
                  
                  
                  
                  (48,000
                  )Net
      deferred tax asset
                  
                  
                  288,000
                  
                  
                  
                  882,000Valuation
      allowance
                  
                  
                  (288,000
                  )
                  
                  
                  (882,000
                  )Net
      Deferred Tax Asset Balance
                  
                  $
                  —
                  
                  
                  $
                  —
  In the
year ended March 31, 2009, the $594,000 decrease in the allowance was the net
result of a $503,000 increase in tax liability for depreciation, $62,000 loss on
uncompleted contracts and a $4,000 additional tax asset from accrued
compensation and the application of $33,000 of net operating loss
carryforward.   The valuation allowance increased by $125,000
during the year ended March 31, 2008.   The increase was a result
of a $158,000 deferred tax liability arising from temporary differences in
depreciation, a $16,000 reduction in the deferred tax asset arising from accrued
compensation and a $16,000 loss on uncompleted contracts.
 
 At March
31, 2009 and 2008, the Company provided a full valuation allowance for its net
deferred tax assets. The Company believes sufficient uncertainty exists
regarding the realization of the deferred tax assets.
  As of
March 31, 2009, the Company’s federal net operating loss carry-forward was
approximately $1,869,300. If not utilized, the federal net operating loss
carry-forward of Ranor and Techprecision will expire in 2025 and 2027,
respectively. Furthermore, because of over fifty percent change in ownership as
a consequence of the reverse acquisition in February 2006, as a result of the
application of Section 382 of the Internal Revenue Code, the amount of net
operating loss carry forward used in any one year in the future is substantially
limited.
  As of
March 31, 2009, the company had Federal tax refund receivable totaling $59,979
included in other receivables.
 
 F-19
 Table of Contents
  NOTE
9 - RELATED PARTY TRANSACTIONS
  Loans
from Related Parties
  The
principal equity owner of WM Realty made loans to WM Realty in the year ended
March 31, 2007. The loan balance was $60,000 on March 31, 2007 and was paid off
during the year ended March 31, 2008. Interest of $4,735 was paid during the
year ended March 31, 2008on the loan
  Sale
and Lease Agreement and Intra-company Receivable
  On
February 24, 2006, WM Realty borrowed $3,300,000 to finance the purchase of
Ranor’s real property. WM Realty purchased the real property for $3,000,000 and
leased the property on which Ranor’s facilities are located pursuant to a net
lease agreement. The property was appraised on October 31, 2005 at $4,750,000.
The Company advanced $226,808 to WM Realty to pay closing costs, which advance
was repaid when WM Realty refinanced the mortgage in October 2006. WM Realty was
formed solely for this purpose; its partners are stockholders of the Company.
The Company considers WM Realty a variable interest entity as defined by FIN 46
(R), and therefore has consolidated its operations into the
Company.
  On
October 4, 2006, WM Realty placed a new mortgage of $3.2 million on the property
and the then existing mortgage of $3.1 million was paid off. The new mortgage
has a term of ten years, bears interest at 6.75% per annum, and provides for
monthly payments of principal and interest of $20,595 (See Note 8). In
connection with the new mortgage, Andrew Levy, the managing member of WM Realty,
executed a limited guarantee. pursuant to which Mr. Levy guaranteed the lender
the payment of any loss resulting from WM Realty’s fraud or misrepresentation in
connection with the loan documents, misapplication of rent and insurance
proceeds, failure to pay taxes and other defaults resulting from his or WM
Realty’s misconduct.
  The only
assets of WM Realty available to settle its obligations are $77,167 of cash and
real property acquired from Ranor, Inc. at a cost of $3,000,000 less $276,869 of
accumulated depreciation.  The real property has a carrying cost of
$1,151,275 on Techprecision’s consolidated balance sheet.
 
 The only
liability of WM Realty is the mortgage payable to Amalgamated bank with the
carrying cost of $3,117,999. Amalgamated Bank, the sole creditor of WM realty,
has no recourse to the general credit of Techprecision.
 
 Distribution
to WM Realty Members
  WM Realty
had a deficit equity balance of $277,404 on March 31, 2009. During the year
ended March 31, 2009, WM Realty had a net income of $133,110 and capital
distributions of $187,296.
 
 NOTE
10 - LEASES
  Ranor,
Inc. has leased its manufacturing, warehouse and office facilities in
Westminster (Westminster Lease), Massachusetts from WM Realty, a variable
interest entity, for a term of 15 years, commencing February 24, 2006. For the
years ended March 31, 2009 and 2008, the Company’s annual rent expense was
$502,047 and $444,500, respectively. Since the Company consolidated the
operations of WM Realty pursuant to FIN 46, the rental expense is eliminated in
consolidation, the building is carried at cost and depreciation is expensed. The
annual rent is subject to an annual increase based on the increase in the
consumer price index.
  The
Company has an option to purchase the real property at fair value and an option
to extend the term of the lease for two additional terms of five years, upon the
same terms. The minimum rent payable for each option term will be the greater of
(i) the minimum rent payable under the lease immediately prior to either the
expiration date, or the expiration of the preceding option term, or (ii) the
fair market rent for the leased premises.
 The
Company previously leased approximately 12,720 square feet of manufacturingspace in Fitchburg,
Massachusetts from an unaffiliated lessor. The rent expense for the Fitchburg
facility was $53,548 in 2009 and $17,625 in 2008.  The lease provided
for rent at the annual rate of $50,112 with 3% annual increases, starting 2004.
The lease expired in February 2009 and was not renewed.
 
 F-20
 Table of Contents
  On
February 24, 2009, we entered into a lease for 2,089 square feet of office space
in Centreville, Delaware.  The lease has a three-year term and
provides for initial rent of $2,500 per month, escalating to $3,220 per month in
year two and $3,395 per month in year three of the lease.  The Company
has the option to renew this lease for a period of three years at the end of the
lease term.
 
 During
2007, the Company also leased certain office equipment under a non-cancelable
capital lease. This lease will expire in 2011. Lease payments for capital lease
obligations in 2009 totaled $15,564.
  Future
minimum lease payments required under operating and capital leases as of March
31, 2009, are as follows:
  Year
                  
                  Capital Leases
                  
                  
                  Operating Leases2010
                  
                  $
                  15,564
                  
                  
                  $
                  480,0002011
                  
                  
                  15,564
                  
                  
                  
                  486,6402012
                  
                  
                  15,564
                  
                  
                  
                  490,7402013
                  
                  
                  --
                  
                  
                  
                  450,0002014
                  
                  
                  --
                  
                  
                  
                  450,000Thereafter
                  
                  
                  --
                  
                  
                  
                  3,562,500Total
      minimum payments required
                  
                  
                  46,692
                  
                  
                  $
                  5,919,880Less
      amount representing interest
                  
                  
                  2,980Present
      value of future minimum lease payments
                  
                  
                  43,712Less
      current obligations under capital leases
                  
                  
                  13,303Long-term
      obligations under capital leases
                  
                  $
                  30,409
  NOTE
11 - PROFIT SHARING PLAN
  Ranor has
a 401(k) profit sharing plan that covers substantially all employees who have
completed 90 days of service. Ranor retains the option to match employee
contributions. The Company’s contributions were $ 17,935 and
$15,573 for the years ended March 31, 2009 and 2008,
respectively.
  NOTE
12 - CAPITAL STOCK
  Preferred
Stock
  The
Company has 10,000,000 authorized shares of preferred stock and the board of
directors has broad power to create one or more series of preferred stock and to
designate the rights, preferences, privileges and limitation of the holders of
such series. The board of directors has created one series of preferred stock -
the series A convertible preferred stock (“series A preferred
stock”).
  Each
share of series A convertible preferred stock was initially convertible into one
share of common stock. As a result of the failure of the Company to meet the
levels of earnings before interest, taxes, depreciation and amortization for the
years ended March 31, 2006 and 2007, the conversion rate changed, and, at March
31, 2009, each share of series A preferred stock was convertible into 1,3072
shares of common stock, with an effective conversion price of
$.2180.
  The
shares of series A preferred stock and warrants to purchase a total of
11,220,000 shares of common stock were issued pursuant to a securities purchase
agreement dated February 24, 2006. Contemporaneously with the securities
purchase agreement, the Company entered into a registration rights agreement
with the investor, pursuant to which it agreed to register the shares of common
stock underlying the securities in accordance with a schedule. The registration
statement was not declared effective in accordance with the original schedule,
and the Company issued 33,212 shares of series A preferred stock to the investor
as liquidated damages.
 
 F-21
 Table of Contents
  During
the years ended March 31, 2009 and 2008, 722,556 and 734,398 shares of series A
preferred stock were converted into 944,518 and 960,000 shares of common stock,
respectively.
  The
Company had 6,295,508 and 7,018,064 shares of series A preferred stock
outstanding at March 31, 2009 and 2008, respectively.
  In
addition to the conversion rights described above, the certificate of
designation for the series A preferred stock provides that the holder of the
series A preferred stock or its affiliates will not be entitled to convert the
series A preferred stock into shares of common stock or exercise warrants to the
extent that such conversion or exercise would result in beneficial ownership by
the investor and its affiliates of more than 4.9% of the shares of common stock
outstanding after such exercise or conversion. This provision cannot be
amended.
  No
dividends are payable with respect to the series A preferred stock and no
dividends are payable on common stock while series A preferred stock is
outstanding. The common stock will not be redeemed while preferred stock is
outstanding.
  The
holders of the series A preferred stock have no voting rights. However, so long
as any shares of series A preferred stock are outstanding, the Company shall
not, without the affirmative approval of the holders of 75% of the outstanding
shares of series A preferred stock then outstanding, (a) alter or change
adversely the powers, preferences or rights given to the series A preferred
stock, (b) authorize or create any class of stock ranking as to dividends or
distribution of assets upon liquidation senior to or otherwise pari passu with
the series A preferred stock, or any of preferred stock possessing greater
voting rights or the right to convert at a more favorable price than the series
A preferred stock, (c) amend its certificate of incorporation or other charter
documents in breach of any of the provisions hereof, (d) increase the authorized
number of shares of series A preferred stock, or (e) enter into any agreement
with respect to the foregoing.
  Upon any
liquidation the Company is required to pay $.285 for each share of Series A
preferred stock. The payment will be made before any payment to holders of any
junior securities and after payment to holders of securities that are senior to
the series A preferred stock.
 
 Pursuant
to the securities purchase agreement relating to the issuance of the series A
preferred stock and warrants, the Company agreed not to issue any additional
preferred stock until the earlier of (a) three years from the Closing or (b) the
date that the investor transfers and/or converts not less than 90% of the shares
of series A preferred stock and sells the underlying shares of common
stock.  This provision expired on February 24, 2009.
  Under the
terms of the purchase agreement, the investor has the right of first refusal in
the event that the Company seeks to raise additional funds through a private
placement of securities, other than exempt issuances. The percentage of shares
that investor may acquire is based on the ratio of shares held by the investor
plus the number of shares issuable upon conversion of series A preferred stock
owned by the investor to the total of such shares.
  The
purchase agreement also required the Company to maintain a board of directors on
which a majority of directors are independent directors; to maintain an audit
committee comprised solely of independent directors; and to maintain a
compensation committee with a majority of members being independent
directors.  These provisions expired three years from the Closing,
which expiration occurred on February 24, 2009.
 
 Common
Stock Purchase Warrants
  In
February 2006, we issued to the investor warrants to purchase 11,220,000 shares
of common stock in connection with its purchase of the series A preferred stock.
These warrants are exercisable, in part or full, at any time from February 24,
2006 until February 24, 2011. If the shares of common stock are not registered
pursuant to the Securities Act of 1933, the holders of the warrants have
cashless exercise rights which will enable them to receive the value of the
appreciation in the common stock through the issuance of additional shares of
common stock. These warrants had initial exercise prices of $0.57 as to
5,610,000 shares and $0.855 as to 5,610,000 shares. As a result of the Company’s
failure to meet the EBITDA per share targets for the years ended March 31, 2006
and 2007, the exercise prices per share of the warrants were reduced from $0.57
to $.43605 and from $0.855 to $.654075, respectively.
  F-22
 Table of Contents
  If,
during the period ending February 24, 2009, the Company issued common stock at a
price, or options, warrants or other convertible securities with a conversion or
exercise price less than the applicable exercise prices, with certain specified
exceptions, the exercise price of the warrants would be reduced to reflect an
exercise price equal to the lower price. This adjustment would not affect the
number of shares of common stock issuable upon exercise of the warrants. No
adjustment was required pursuant to this provision, which expired on February
24, 2009.
 
 On
September 1, 2007, the Company entered into a contract with an investor
relations firm pursuant to which the Company issued three-year warrants to
purchase 112,500 shares of common stock at an exercise price of $1.40 per
share.   Using the Black-Scholes options pricing formula assuming a
risk free rate of 5%, volatility of 28.5%, a term of three years, and the price
of the common stock on September 1, 2007 of $0.285 per share, the value of the
warrant was calculated at $0.0001 per share issuable upon exercise of the
warrant, or a total of $11. Since the warrant permits the Company to deliver
unregistered shares, the Company has the control in settling the contract by
issuing equity. The cost of warrants was added as additional paid in
capital.
  Common
Stock
  The
Company had 90,000,000 authorized common shares at March 31, 2009 and
2008.  The Company had 13,907,513 shares of common stock outstanding
at March 31, 2009 and 12,572,995 shares of common stock outstanding at March 31,
2008.
 
 During
the year ended March 31, 2009, the Company issued 390,000 shares upon exercise
of warrants and 944,518 shares of common stock upon conversion of series A
convertible preferred stock.  During the year ended March 31, 2008,
the Company issued 1,510,000 shares of common stock upon exercise of warrants,
960,000 shares of common stock upon conversion of series A preferred stock, and
53,995 shares for services.
  NOTE
13 - STOCK BASED COMPENSATION
  In 2006,
the directors adopted, and the stockholders approved, the 2006 long-term
incentive plan (the “Plan”) covering 1,000,000 shares of common stock. The Plan
provides for the grant of incentive and non-qualified options, stock grants,
stock appreciation rights and other equity-based incentives to employees,
including officers, and consultants. The Plan is to be administered by a
committee of not less than two directors each of whom is to be an independent
director. In the absence of a committee, the plan is administered by the board
of directors. Independent directors are not eligible for discretionary options.
Pursuant to the Plan, each newly elected independent director received at the
time of his election, a five-year option to purchase 50,000 shares of common
stock at the market price on the date of his or her election.  In
addition, the plan provides for the annual grant of an option to purchase 5,000
shares of common stock on July 1st of each year, commencing July 1, 2009, with
respect to directors in office in July 2006 and commencing on July 1st
coincident with or following the third anniversary of the date of his or her
first election.  These options are exercisable in
installments.  Pursuant to the Plan, in July 2006, the Company granted
non-qualified stock options to purchase an aggregate of 150,000 shares of common
stock at an exercise price of $.285 per share, which was determined to be the
fair market value on the date of grant, to the three independent
directors.
 
 On April
1, 2007, the Company granted options to purchase 211,660 shares of common stock
at an exercise price of $.285 to the employees. The company shares did not trade
in the market and had no intrinsic value at the date of grant.  It was
not possible to reasonably estimate fair market value at their grant date, fair
value, and thus according to SFAS 123(R) they were measured at intrinsic value.
 
 On
October 1, 2008, the Company granted options to purchase 22,500 shares of common
stock at an exercise price of $1.31 per share to its independent
directors.  The options provided for vesting as follows: 13,500 were
immediately vested on the date of grant and the remaining 9,000 options vest in
two installments of 4,500 each on the first and second anniversary of the grant
date.  The options are not covered under the plan.
 
 F-23
 Table of Contents
  On March
23, 2009, the Company entered into an employment agreement with the Company’s
CFO, pursuant to which, he was granted an option to purchase 150,000 shares of
common stock options at an exercise price of $0.49 per share, being the fair
market value on the date of grant.  The options will vest in equal
amounts of 50,000 over three years on the anniversary of the date of this
agreement.  Pursuant to the terms of the employment agreement, the
option exercise price was determined based upon the market price of the
Company’s common stock as of the date of grant. Any future option grants will be
in the sole discretion of the Board.
 
 At March
31, 2009, 455,841 shares of common stock were available for grant under the
Plan.
 
 The
status of the Company stock options and stock awards are summarized as
follows:
 
 Number
      Of
                  Options
                
                
                Weighted
      Average
                  Exercise
      Price
                
                
                Aggregate
                  Intrinsic
      ValueOutstanding
      at March 31, 2007
                
                
                150,000
                
                
                $
                0.285
                
                $
                35,250Granted
                
                
                221,659
                
                
                
                0.285
                
                
                52,090Outstanding
      at March 31, 2008
                
                
                371,659
                
                
                $
                0.285
                
                $
                87,240Granted
                
                
                172,500
                
                
                $
                0.600
                
                
                -Outstanding
      at March 31, 2009
                
                
                544,159
                
                
                $
                0.384
                
                $
                87,240
 
 The
following table summarizes information about our options outstanding at March
31, 2009:
 
 Weighted
      Average Remaining
                    
                    
                    Weighted
                    
                    
                    Exercisable
      OptionsExercise
                      Price
                    
                    
                    Number
                      Outstanding
                    
                    
                    Contractual
                      Life
      (in years)
                    
                    
                    Average
                      Exercise
      Price
                    
                    
                    Number
                      Outstanding
                    
                    
                    Exercise
                      Price0.285
                    
                    
                    
                    371,659
                    
                    
                    
                    2-3
                    
                    
                    
                    0.285
                    
                    
                    
                    371,659
                    
                    
                    
                    0.2850.49
                    
                    
                    
                    150,000
                    
                    
                    
                    5
                    
                    
                    
                    0.490
                    
                    
                    
                    -
                    
                    
                    
                    -1.31
                    
                    
                    
                    22,500
                    
                    
                    
                    4.5
                    
                    
                    
                    1.310
                    
                    
                    
                    13,500
                    
                    
                    
                    1.310544,159
                    
                    
                    
                    3.8
                    
                    
                    
                    0.384
                    
                    
                    
                    395,159
                    
                    
                    
                    0.344
 
 As of
March 31, 2009 there was $67,300, respectively, of total unrecognized
compensation cost related to non vested stock options. These costs are expected
to be recognized over three years. The total fair value of shares fully
vested during the year ended March 31, 2009 was $10,125.
  The fair
value was estimated using the Black-Scholes option-pricing model based on the
closing stock prices at the grant date and the weighted average assumptions
specific to the underlying options. Expected volatility assumptions are based on
the historical volatility of our common stock. The risk-free interest rate was
selected based upon yields of five year US Treasury issues. The expected life of
the option was estimated at one half of the contractual term of the option and
the vesting period. The assumptions utilized for option grants during the
periods presented are as follows:
  March 31,2009Volatility
                      
                      
                      29.8
                      %Risk-Free
      Interest Rate
                      
                      
                      2.7
                      %Expected
      Life of Options
                      
                      
                      5
      yrs.
 The fair
value of options granted during 2009 was $16,875.
 
 NOTE
14 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
  The
Company maintains bank account balances, which, at times, may exceed insured
limits. The Company has not experienced any losses with these accounts and
believes that it is not exposed to any significant credit risk on
cash.
  F-24
 Table of Contents
  The
Company has been dependent in each year on a small number of customers who
generate a significant portion of our business, and these customers change from
year to year. To the extent that the Company is unable to generate orders from
new customers, it may have difficulty operating profitably.
  The
following table sets forth information as to revenue derived from those
customers who accounted for more than 10% of our revenue in the years ended
March 31, 2009 and 2008:
  Year
      Ended March 31,2009
                        
                        
                        2008Customer
                        
                        
                        Dollars
                        
                        
                        Percent
                        
                        
                        Dollars
                        
                        
                        PercentA
                        
                        
                        $
                        21,784,802
                        
                        
                        
                        57
                        %
                        
                        $
                        16,143,078
                        
                        
                        
                        51
                        %B
                        
                        
                        
                        3,879,514
                        
                        
                        
                        10
                        %
                        
                        
                        5,434,054
                        
                        
                        
                        17
                        %
  NOTE
15 - EMPLOYMENT AND COMPENSATION AGREEMENTS
 
 Agreement
with Interim Chief Executive Officer
 
 On March
31, 2009, we entered into an executive consulting agreement with Mr. Louis A.
Winoski pursuant to which Mr. Winoski agreed to provide executive management and
consulting services in the role of Interim Chief Executive Officer of the
Company.  The executive consulting agreement provides that in exchange
for his services as Interim Chief Executive Officer, the Company will pay Mr.
Winoski consulting fees at a rate of Ten Thousand Dollars ($10,000.00) per
month.  The executive consulting agreement automatically terminates
after six (6) months, unless extended by the mutual written agreement of the
parties.  Either party may terminate the executive consulting
agreement at any time by giving the other party fifteen (15) days prior written
notice.  A party may also terminate the executive management agreement
for breach if the other party materially breaches any provision of the agreement
and fails to cure such breach within ten (10) days after written notice of the
breach.
  Agreement
with Chief Financial Officer
  The
Company executed an Employment Agreement (the “CFO Employment Agreement”) on
March 23, 2009, to hire Mr. Richard F. Fitzgerald for the position of Chief
Financial Officer (“CFO”). The terms of the CFO Employment Agreement provide
that Mr. Fitzgerald shall report directly to the Board and the Chief Executive
Officer and his duties include, but are not limited to, directing the
preparation of budgets, financial forecasts and strategic planning of the
Company as well as establishing major economic objectives and policies for the
Company and ensuring compliance with the Company’s SEC reporting
obligations.
  Upon his
execution of the CFO Employment Agreement, Mr. Fitzgerald was entitled to a
signing bonus of $25,000.00.  Mr. Fitzgerald will receive an annual
base salary of $195,000 and options to purchase 150,000 shares of the Company’s
common stock, which vest in three equal parts over three years.  The
exercise price of the options will be the market price as of the grant
date.  Mr. Fitzgerald will also be eligible for an annual cash
performance bonus based upon the financial performance of the Company as
determined by the Board. Mr. Fitzgerald will be entitled to participate fully in
the Company’s employee benefit plans and programs.  Mr. Fitzgerald
will also be reimbursed for reasonable and necessary out-of-pocket expenses
incurred by him in the performance of his duties and responsibilities as
CFO.
 
 The
Company may terminate the CFO Employment Agreement at any time without cause, as
defined in the CFO Employment Agreement.  In the event of a
termination without cause, the Company will be required to pay Mr. Fitzgerald an
amount equal to one year of his base salary paid in equal installments in
accordance with the Company’s payroll policies.  The Company may
terminate the CFO Employment Agreement for cause at any time upon seven (7) days
written notice, during which period Mr. Fitzgerald may contest his termination
before the Board.
  In
connection with the future termination of the CFO Employment Agreement, Mr.
Fitzgerald will have the obligation not to disclose the Company’s confidential
information or trade secrets to anyone following termination of the CFO
Employment Agreement.  Mr. Fitzgerald is also subject to a covenant
not to compete with the Company for a period of 12 months following termination
of the CFO Employment Agreement.
  F-25
 Table of Contents
  Severance
Agreement with James Reindl
  Mr.
Reindl resigned from all of his offices and positions with the Company and
Ranor, including his office as Chief Executive Officer of the Company, and his
positions as a director and Chairman of the Board, effective March 31, 2009 (the
“Resignation Date”). Upon his resignation, Mr. Reindl entered into a separation,
severance and release agreement with the Company (the “Severance Agreement”) to
provide for certain severance payments to Mr. Reindl, and to obtain his
assistance when and as needed during a transition period.
  Under the
terms of the Severance Agreement, Mr. Reindl will be entitled to receive
severance payments for up to twelve (12) months (the “Severance Period”), which
will be at a gross monthly rate of $16,666.67 during the first six months of the
Severance Period, and which will be at a gross monthly rate of $10,416.67 for
the remainder of the Severance Period.  Aggregate gross severance
payments will equal $162,500.  Such payments will be made to Mr.
Reindl in accordance with the Company’s normal payroll practices, provided that
he complies with the Severance Agreement.  No additional compensation,
bonuses or benefits will be payable by the Company to Mr. Reindl under the
Severance Agreement.  The Severance Agreement also provides for
certain mutual releases by Mr. Reindl and the Company.
  The
Severance Agreement also provides that Mr. Reindl will make himself available to
provide transition services to the Company for a period of up to three (3)
months when and as needed.  During such period, Mr. Reindl will assist
the Company in transitioning his responsibilities to Mr. Winoski as the Interim
Chief Executive Officer and to other senior management.
  The
restrictive covenants regarding confidentiality, noncompetition and
non-solicitation to which Mr. Reindl previously agreed under his existing
employment agreement with the Company (the “Restrictive Covenants”) will
continue in full force after the Resignation Date.  The Severance
Agreement provides that Mr. Reindl’s continued compliance with the Restrictive
Covenants is a condition to the Company’s obligation to make severance payments
under the Severance Agreement.
  
 NOTE
16 EARNINGS PER SHARE (“EPS”)
 
 Basic EPS
is computed by dividing reported earnings available to stockholders by the
weighted average shares outstanding. Diluted EPS also includes the effect of
dilutive potential common shares. The following table provides a reconciliation
of the numerators and denominators reflected in the basic and diluted earnings
per share computations, as required by SFAS No. 128, “Earnings Per
Share,” (“EPS”).
 
 March 31,
                  
                  
                  March 31,2009
                  
                  
                  2008Basic
      EPSNet
      income
                  
                  $
                  5,928,991
                  
                  
                  $
                  3,515,935Weighted
      average shares
                  
                  
                  13,640,397
                  
                  
                  
                  10,896,976Basic
      income per share
                  
                  $
                  0.43
                  
                  
                  $
                  0.32Diluted
      EPSNet
      income
                  
                  $
                  5,928,99113,640,397
                  
                  
                  $
                  3,515,93510,896,976Basic
      weighted average sharesDilutive
      effect of Convertible preferred stock, warrant and stock
      options
                  
                  
                  12,103,760
                  
                  
                  
                  17,484,004Diluted
      weighted average shares
                  
                  
                  25,744,157
                  
                  
                  
                  28,380,980Diluted
      income per share
                  
                  $
                  0.23
                  
                  
                  $
                  0.12
  F-26
 Table of Contents
  During
the years ended March 31, 2009 and 2008 there were no potentially anti-dilutive
options, warrants, or convertible preferred stock.
 
 NOTE
17 - SELECTED QUARTERLY INFORMATION (UNAUDITED)
 
 The
following table sets forth certain unaudited quarterly data for each of the four
quarters in the years ended March 31, 2009 and 2008. The data has been
derived from the Company's unaudited consolidated financial statements that, in
management's opinion, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such information when read in
conjunction with the Consolidated Financial Statements and Notes
thereto.  The results of operations for any quarter are not
necessarily indicative of the results of operations for any future
period.
 First
                    Quarter
                  
                  
                  Second
                    Quarter
                  
                  
                  Third
                    Quarter
                  
                  
                  Fourth
                    QuarterYear
      ended March 31, 2009Net
      sales
                  
                  
                  11,658
                  
                  
                  
                  13,601
                  
                  
                  
                  8,555
                  
                  
                  
                  4,274Gross
      profit
                  
                  
                  3,380
                  
                  
                  
                  5,013
                  
                  
                  
                  2,622
                  
                  
                  
                  1,102Net
      income
                  
                  
                  1,572
                  
                  
                  
                  2,476
                  
                  
                  
                  1,013
                  
                  
                  
                  868Basic
      earnings per share
                  
                  
                  0.12
                  
                  
                  
                  0.18
                  
                  
                  
                  0.07
                  
                  
                  
                  0.06Diluted
      earnings per share (1)
                  
                  
                  0.06
                  
                  
                  
                  0.09
                  
                  
                  
                  0.04
                  
                  
                  
                  0.04Year
      ended March 31, 2008Net
      sales
                  
                  
                  6,553
                  
                  
                  
                  6,371
                  
                  
                  
                  9,610
                  
                  
                  
                  9,271Gross
      profit
                  
                  
                  1,676
                  
                  
                  
                  1,499
                  
                  
                  
                  2,078
                  
                  
                  
                  2,557Net
      income
                  
                  
                  685
                  
                  
                  
                  601
                  
                  
                  
                  1,377
                  
                  
                  
                  852Basic
      earnings per share
                  
                  
                  0.06
                  
                  
                  
                  0.06
                  
                  
                  
                  0.12
                  
                  
                  
                  0.08Diluted
      earnings per share (1)
                  
                  
                  0.04
                  
                  
                  
                  0.03
                  
                  
                  
                  0.05
                  
                  
                  
                  0.03(1)
      Quarterly income (loss) per share may not equal the annual reported
      amounts
 
 NOTE
18 - SEGMENT INFORMATION
 
 We
operate in one industry segment - metal fabrication and precision machining. All
of our operations, assets and customers are located in the United
States.
 
 NOTE
19 – SUBSEQUENT EVENT
 
 During
April 2009, the Company’s largest customer, GT Solar, provided notice of its
intent to cancel a portion of an open purchase order reducing the total purchase
commitment by approximately $16.8 million.  As a result, the Company’s
backlog of $38.6 million at March 31, 2009 will be reduced by approximately
$16.8 million to $21.8 million.  Post the cancellation, the remaining
GT Solar backlog of approximately $11.7 million includes approximately $3.4
million of open product purchase orders and approximately $8.3 million of
material buyback.