UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
        10-KSB/A


Amendment
        No. 1




x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      fiscal year ended March 31, 2006




o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      transition period from __________ to ____________





Commission
      File No. 0-51378




Techprecision
      Corporation


(Name
      of
      small business issuer in its charter)





Delaware
            
            51-0539828(State
                or other jurisdiction of incorporation)
            
            (I.R.S.
                Employer Identification No.)





Bella
                  Drive, Westminster, Massachusetts
              01473(Address
                  of principal executive offices)
              (Zip
                  Code)





Issuer’s
      telephone number: ( 978) 874-0591





Securities
      registered under Section 12(b) of the Exchange Act: None


Securities
      registered under Section 12(g) of the Exchange Act: Title of class: Common
      stock, par value $.0001 per share





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act: o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o




Check
      here if there is no disclosure of delinquent filers in response to Item 405
      of
      Regulation S-B contained in this form, and no disclosure will 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-KSB or any
      amendment to this Form 10-KSB. o




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act.


Yes o No x .




State
      issuer’s revenue for its most recent fiscal year: $20,266,402




The
      aggregate market value of the registrant’s common stock held by non-affiliates
      of the registrant is not determinable since there is no market for the common
      stock.




There
      were 10,054,000 shares of the Company’s common stock, $.0001 par value,
      outstanding as of July 31, 2006.




Transitional
      Small Business Disclosure Format (Check one): Yes o No x




**DOCUMENTS
      INCORPORATED BY REFERENCE:** None







**Item
      1. Business.**




We
        produce large metal fabrications and perform precision machining operations
        for
        large military, commercial, nuclear, shipbuilding, industrial and aerospace
        customers. Our principal services are metal fabrications, machining and
        engineering. Each of our contracts covers a specific product. We produce
        products for our customers, but do not distribute such products on the open
        market. We render our services under “build to print” contracts with our
        clients. However, we also help our customers to analyze and develop their
        projects for constructability by providing engineering services which are
        included in our charges to our customers pursuant to a purchase order covering
        such services.




We
      are
      one of a small number of large precision metal fabrication companies located
      in
      the United States. However, only a few others produce products in all industry
      sectors that we service. In recent years, the capital goods market experienced
      a
      slow-down due to the industry over-build of product in the late 1990’s.
      Additional contributions to the industry slow-down resulted from the events
      of
      September 11, 2001. However, based on recent project inquiries, recent projects
      awarded and current customer demands for our services, we believe the market
      has
      rebounded.




Although
      we provide manufacturing services to large governmental programs, we do not
      work
      directly for agencies of the United States government. Rather, we perform our
      services for large governmental contractors and large utility
      companies.




We
      are a
      Delaware corporation, organized in 2005 under the name Lounsberry Holdings
      II,
      Inc. Our name was changed to Techprecision Corporation on March 6, 2006. On
      February 24, 2006, we acquired all of the issued and outstanding capital stock
      of Ranor, Inc., a Delaware corporation, and, since February 24, 2006, our sole
      business has been the business of Ranor. Prior to our acquisition of Ranor,
      we
      were not engaged in any business activity and we were considered a blank check
      company. There was no relationship between Ranor and Lounsberry prior to the
      negotiation with Capital Markets Advisory Group, LLC. In December 2005,
      Lounsberry, through its counsel, was introduced to counsel for Ranor Acquisition
      LLC, which had an agreement with Ranor pursuant to which it would acquire all
      of
      the issued and outstanding stock of Ranor. It was a condition to the preferred
      stock purchase agreement that the investment would be made in a company that
      was
      a reporting company under the Securities Exchange Act of 1934, as amended.
      The
      parties agreed on a price of $200,000, which included the satisfaction of all
      of
      Lounsberry’s debt of $39,661, which was due to Capital Markets.




Our
      acquisition of Ranor is accounted for as a reverse acquisition. The accounting
      rules for reverse acquisitions require that beginning with the date of the
      merger, February 24, 2006, our balance sheet includes the assets and liabilities
      of Ranor and our equity accounts were recapitalized to reflect the net equity
      of
      Ranor. In addition, our historical operating results will be the operating
      results of Ranor.




Ranor,
      together with its predecessor, which was also named Ranor, has been in business
      since 1956. Ranor’s predecessor was sold by its founders in 1999 to Critical
      Components Corporation, a subsidiary of Standard Automotive Corporation. From
      June 1999 until August 2002, Ranor’s predecessor was operated by Critical
      Components Corporation. In December 2001, Standard filed for protection under
      the Bankruptcy Code and Ranor’s predecessor operated under Chapter 11 until on
      or about the quarter ended June 30, 2002. Subsequently, all Standard’s holdings
      were sold.





In
        2002,
        an investment group formed a Delaware corporation known as Rbran Acquisition,
        Inc. to acquire the assets of Ranor’s predecessor from the bankrupt estate. The
        principal investors were Green Mountain Partners III, LP and Phoenix Life
        Insurance Company, who held the debt, preferred stock and warrants. Rbran
        subsequently changed its corporate name to Ranor, Inc. In August 2005, these
        stockholders, together with the holders of the common stock, entered into
        the
        stock purchase agreement with Ranor Acquisition as described below, pursuant
        to
        which we acquired all of the capital stock of Ranor.




During
        2005, James G. Reindl and Andrew A. Levy negotiated with Ranor’s principal
        stockholders for the acquisition of all of the stock of Ranor, which included
        the payment or settlement of all of Ranor’s outstanding debt which was payable
        to Green Mountain Partners and Phoenix Life Insurance Company. In this
        connection, in April 2005, they formed Ranor Acquisition LLC, a Delaware
        limited
        liability company, for the purpose of acquiring Ranor. The control persons
        and
        principal members of Ranor Acquisition were James G. Reindl and Andrew A.
        Levy,
        and the founders of Ranor Acquisition LLC were Mr. Reindl, Mr. Levy and Mr.
        Daube. On August 17, 2005, Ranor Acquisition entered into an agreement to
        acquire all of the capital stock and warrants of Ranor for a purchase price
        equal to $9,250,000 plus the amount by which Ranor’s net cash amount exceeded
        $250,000, less a closing adjustment of $54,000 and less the amount of principal
        and interest on the debt held by Ranor’s two principal stockholders. These two
        stockholders also held Ranor’s preferred stock. Since Ranor’s net cash amount
        was $1,117,000, the amount due to the sellers was increased by $813,000,
        which
        resulted in total payments of $10,063,000. The agreement contained standard
        representations and warranties of the sellers concerning Ranor, and $925,000
        of
        the purchase price was placed in escrow to provide a fund against which any
        claims for breach of the representation and warranties under the agreement
        can
        be made.




After
        executing the purchase agreement, Ranor Acquisition sought to obtain the
        financing to make the payments. The purchase price was funded from the following
        sources:




1




Proceeds
                  from sale of real estate to a related party
              
              $
              3,000,000Net
                  proceeds from Sovereign term loan
              
              
              3,953,317Cash
                  due from Ranor
              
              
              813,000Cash
                  from the Ranor’s available cash
              
              
              240,000Cash
                  from proceeds of sale of equity
              
              
              2,056,683Total
              
              $
              10,063,000




The
        total
        payments were disbursed as follows:




Principal
                  of notes to preferred stockholders
              
              $
              8,000,000Interest
                  on notes
              
              
              975,000Payment
                  into escrow pursuant to purchase agreement
              
              
              925,000Expenses
                  of Ranor stockholders
              
              
              153,000Payment
                  to preferred stockholders
              
              
              6,500Payment
                  to common stockholders
              
              
              3,500Total
              
              $
              10,063,000




As
        noted
        in the preceding table, $925,000 of the purchase price was placed in escrow
        as
        security for the obligations of the former Ranor stockholders for indemnity
        for
        any breach of the sellers’ representations and warranties. In February 2007, we
        entered into a settlement agreement with the former Ranor stockholders pursuant
        to which we received $500,000 from the escrow fund in settlement for claims
        that
        we made for breach of representations and warranties, relating to environmental
        matters, and the balance of the escrow, together with accrued interest, was
        paid
        to Green Mountain Partners and Phoenix Life Insurance Company in respect
        of
        their preferred stock interest.




In
        connection with our purchase of Ranor, we raised a total of $2,700,000 as
        equity, of which $2,200,000 was provided by Barron Partners and $500,000
        was
        provided by a private investor. Barron Partners advised Ranor Acquisition
        that
        it was willing to make an investment, but would only invest in a company
        that
        was a reporting company under the Securities Exchange Act of 1934, as amended.
        In December 2005, Lounsberry, through, David Feldman, who was then counsel
        for
        Lounsberry, was introduced to counsel for Ranor Acquisition. Prior to December
        2005, neither Ranor Acquisition, Mr. Reindl, Mr. Levy, Green Mountain Partners
        nor Phoenix Life Insurance Company had any relationship with or knowledge
        of
        Lounsberry. During January and February, 2006, Ranor Acquisition negotiated
        agreements with Lounsberry pursuant to which:




·
              Lounsberry’s
                  then principal stockholder, Capital Markets Advisory Group, LLC,
                  would
                  sell to Lounsberry 928,000 shares, representing more than 90% of
                  Lounsberry’s then outstanding common stock, for $200,000, which was paid
                  to Capital Markets. Of this amount, $39,661 represented money advanced
                  by
                  Capital Markets to Lounsberry prior to February 2006 and $160,339
                  represented the purchase price of the stock. Capital Markets had
                  purchased
                  1,000,000 shares of common stock for $100 in connection with Lounsberry’s
                  organization in February 2005, and its cost of the 928,000 shares
                  that it
                  sold to Lounsberry was $92.80. The control person for Capital Markets
                  is
                  Steven Hicks.




·
              Lounsberry’s
                  sole officer and director resigned and Mr. Reindl was elected as
                  Lounsberry’s sole director contemporaneously with the acquisition of Ranor
                  and the financing of the
                  acquisition.




In
        order
        that Ranor could be acquired by a reporting company, we, then known as
        Lounsberry, entered into an exchange agreement with Ranor Acquisition and
        its
        members. Pursuant to that agreement, Ranor Acquisition assigned the agreement
        to
        acquire the Ranor stock to us, and we issued a total of 7,997,000 shares
        of
        common stock to the members of Ranor Acquisition and assumed Ranor Acquisition’s
        obligations to purchase the Ranor stock pursuant to the Ranor stock purchase
        agreement. Neither Ranor Acquisition nor any of the members received any
        monetary consideration for the assignment by Ranor Acquisition of the Ranor
        stock purchase agreement to us. The only consideration was our assumption
        of
        Ranor Acquisition’s obligations under the Ranor stock purchase agreement and the
        7,997,000 shares of our stock which were issued to Ranor Acquisition’s
        members.




Our
        acquisition of Ranor is accounted for as a reverse acquisition. The accounting
        rules for reverse acquisitions require that beginning with the date of the
        merger, February 24, 2006, our balance sheet includes the assets and liabilities
        of Ranor and our equity accounts were recapitalized to reflect the net equity
        of
        Ranor. In addition, our historical operating results will be the operating
        results of Ranor.










In
      connection with the acquisition of Ranor, on February 24, 2006:




·
              We
                  entered into a preferred stock purchase agreement with Barron Partners
                  LP,
                  pursuant to which we sold to Barron Partners, for $2,200,000, 7,719,250
                  shares of series A preferred stock, and warrants to purchase an
                  aggregate
                  of 11,220,000 shares of common stock. The series A preferred stock
                  was
                  initially convertible into 7,719,250 shares of common stock, subject
                  to
                  adjustment. Because our earnings before interest, taxes depreciation
                  and
                  amortization (EBITDA) for the year ended March 31, 2006 were less
                  than
                  $.04613 per share, (i) the conversion rate was adjusted and the
                  series A
                  preferred stock became convertible into 9,081,527 shares of common
                  stock
                  and (ii) the exercise prices of the warrants were reduced by 15%
                  -- from
                  $.57 to $.4845 and from $.855 tp $.7268. The conversion rate is
                  subject to
                  further adjustment if our EBITDA is less than $.08568 per share
                  for the
                  year ended March 31,
                  2007.


2




·
            We
                purchased 928,000 shares of common stock form Capital Markets Advisory
                Group, LLC, which was then our principal stockholder, for $160,339
                and
                paid $39,661 of debt to Capital Markets , using the proceeds from
                the sale
                of the preferred stock. The control person for Capital Markets is
                Steven
                Hicks.




·
            We
                issued 7,697,000 shares of common stock to the members of Ranor
                Acquisition LLC, which was the party to an August 17, 2005 agreement
                to
                purchase the stock of Ranor, for which Ranor Acquisition advanced
                funds on
                our behalf and assigned its rights under the Ranor stock purchase
                agreement, and we assumed Ranor Acquisition’s obligations under that
                agreement.




·
            We
                sold 1,700,000 shares of common stock to an investor for
                $500,000.




·
            Ranor
                entered into a loan and security agreement with Sovereign Bank pursuant
                to
                which Ranor borrowed $4.0 million, for which Ranor issued its term
                note,
                and Sovereign provided Ranor with a $1.0 million revolving credit
                arrangement.




·
            Ranor
                sold its real estate to WM Realty Management, LLC for $3.0 million,
                and
                Ranor leased the real property on which its facilities are located
                from WM
                Realty Management pursuant to a triple net lease. WM Realty Management
                is
                an affiliate of the Company.




Prior
        to
        the reverse acquisition and the assignment by Ranor Acquisition to us of
        the
        agreement to acquire Ranor, there were no relationships among Ranor Acquisition,
        us, Ranor and its predecessor, except that Mr. Reindl was president and chief
        executive officer of Critical Components from February 1999 until February
        2002,
        and Mr. Stanley Youtt, one of our directors and the chief executive officer
        of
        Ranor, was chief executive officer and a common stockholder of Ranor prior
        to
        our acquisition of Ranor.





Our
        executive offices are located at Bella Drive, Westminster, MA 01473, telephone
        (978) 874-0591. Ranor’s website is www.ranor.com. Information on Ranor’s 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, and, prior to the effectiveness of the reverse acquisition,
      these terms refer to Ranor.




**RISK
      FACTORS**




An
      investment in our securities involves a high degree of risk. In determining
      whether to purchase our securities, you should carefully consider all of the
      material risks described below, together with the other information contained
      in
      this annual report before making a decision to purchase our securities. You
      should only purchase our securities if you can afford to suffer the loss of
      your
      entire investment.




**RISKS
      RELATING TO OUR BUSINESS**




*Because
      we may require additional financing for our operations, our failure to obtain
      necessary financing may impair our operations.*




At
      March
      31, 2006, we had working capital of approximately $91,000. The only funding
      available to us, other than our cash flow from operations, is $1.0 million
      revolving credit line with a bank. We cannot assure you that this facility
      will
      be sufficient to provide us with the funds necessary to enable us to perform
      our
      obligations under our contracts. Our failure to obtain any required financing
      could impair our ability to both serve our existing clients base and develop
      new
      clients and could result in both a decrease in revenue and an increase in our
      loss.


3




To
      the
      extent that we require financing, the absence of a public market for our common
      stock, the terms of our recent private placement and the number of outstanding
      warrants and the exercise price and other terms on which we may issue common
      stock upon exercise of the warrants, it may be difficult for us to raise
      additional equity capital if required for our present businesses and for any
      planned expansion. We cannot assure you that we will be able to get additional
      financing on any terms, and, if we are able to raise funds, it may be necessary
      for us to sell our securities at a price which is at a significant discount
      from
      the market price and on other terms which may be disadvantageous to us. In
      connection with any such financing, we may be required to provide registration
      rights to the investors and pay damages to the investor in the event that the
      registration statement is not filed or declared effective by specified dates.
      The price and terms of any financing which would be available to us could result
      in both the issuance of a significant number of shares and significant downward
      pressure on our stock price and could result in a reduction of the conversion
      ratio of the series A preferred stock and exercise price of the warrants held
      by
      the Barron Partners. Further, since Barron Partners has a right of first refusal
      with respect to future financings, this right may affect our ability to obtain
      financing from other sources.




*Our
      losses are continuing and we may not be able to operate
      profitably.*




We
      have
      shown losses for the years ended March 31, 2006 and 2005, and we cannot assure
      you that we will be able to operate profitably. Further, As a result of the
      reverse acquisition and our status as a reporting company, our ongoing expenses
      have increased significantly, including compensation to Techprecision LLC,
      a
      management company which is affiliated with us, under its management agreement
      and ongoing public company expenses. Our failure to generate sufficient revenue,
      to reduce expenses or to obtain financing to cover our increased level of
      expenses could impair our ability to continue in business.




*Because
        our contracts are individual purchase orders and not long-term agreements,
        the
        results of our operations can vary significantly from quarter to
        quarter.*




We
        do not
        have long-term contracts with our customers, and major contracts with a small
        number of customers account for a significant percentage of our revenue.
        We must
        bid or negotiate each contract separately, and when we complete a contract,
        there is generally no continuing source of revenue under that contract. As
        a
        result, we cannot assure you that we have a continuing stream of revenue.
        Our
        failure to generate new business on an ongoing basis would materially impair
        our
        ability to operate profitably. Because a significant portion of our revenue
        is
        derived from services rendered from the defense, aerospace, nuclear, industrial
        and related industries, our operating results may suffer from conditions
        affecting these industries, including any budgeting, economic or other trends
        that have the effect of reducing the requirements for our services, including
        changes in federal budgeting which may reduce the budget of those agencies
        that
        either engage us directly or affect the contracts of private sector clients
        for
        whom we perform services as subcontractors under prime contracts with government
        agencies.




*Because
      of our dependence on a limited number of customers, our failure to generate
      major contracts from a small number of customers may impair our ability to
      operate profitably.*




We
      have
      in the past 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. For the year ended March 31, 2006, our two largest customers
      accounted for approximately 28% of our revenue, and each of these customers
      accounted for less than 10% of our revenue in the fiscal year ended March 31,
      2005. To the extent that we are unable to generate major orders from customers,
      we may have difficulty operating profitably.




*Because
      of the nature of our business, we may be at a competitive disadvantage in
      seeking business.*


4




There
      are
      a large number of domestic and foreign companies, some of which are considerably
      larger and better capitalized than we are, with which we compete for business.
      Foreign companies may have lower manufacturing costs than we have, which may
      give them a competitive advantage. Since much of our contracts are generated
      from a request for proposal (RFP) by a prime contractor under a government
      contract, to the extent that a competitor is able to design the specifications,
      that competitor may have a competitive advantage. We may also be at a
      competitive disadvantage to the extent that competitors have existing
      relationships with the prime contractor.




*Because
      our contracts are generally awarded through a competitive bidding process,
      we
      cannot be assured of obtaining business.*




Our
      contracts are usually awarded through a competitive bidding process which
      entails risks not present in other circumstances. We may spend substantial
      sums
      analyzing and preparing a bid and not be awarded a contract. Furthermore, we
      may
      not be given the opportunity to comment on the proposed terms of the bid, and
      it
      is possible that a bid may be tailored to meet the specifications of a
      competitor. Our failure to receive contracts on which we bid could significantly
      impair our ability to continue in business.




*Because
      of the nature of our business, our operating results in future periods may
      vary
      from quarter to quarter, and, as a result, we may fail to meet the expectations
      of our investors and analysts, which may cause our stock price to fluctuate
      or
      decline.*




Because
      our business is based upon manufacturing products pursuant to purchase orders,
      we need to generate new business on a continuing basis. To the extent that
      we do
      not have new contracts in place when we complete our work pursuant to existing
      contracts, our revenue may decline until and unless we generate revenue from
      new
      contracts. As a result, our revenue and operating results have fluctuated from
      quarter to quarter significantly in the past, and such fluctuations may continue
      in the future. A substantial portion of our operating expenses is related to
      personnel costs, depreciation and rent which cannot be adjusted quickly and,
      therefore, cannot be easily reduced in response to lower revenue levels or
      changes in client requirements. Due to these factors and the other risks
      discussed in this annual report, you should not rely on period-to-period
      comparisons of our results of operations as an indication of future performance.
      These factors could cause the market price of our stock to fluctuate
      substantially.




*Changes
        in delivery schedules and order specifications may affect our revenue
        stream.*




Although
        we perform manufacturing services pursuant to orders placed by our customers,
        we
        have in the past experienced delays in the scheduling and changes in the
        specification of the products. These changes may result from a number of
        factors, including a determination by the customer that the product
        specifications need to be changed after receipt of an initial product or
        prototype. As a result of these changes, we suffered a delay in the recognition
        of revenue from the projects. We cannot assure you that our revenue will
        not be
        affected in the future by delays or changes in specifications or that we
        will
        ever be able to recoup revenue which was lost as a result of the delays or
        changes. Further, if we cannot allocate our personnel to a different project,
        we
        will continue to incur some expenses relating to the project, including labor
        and overhead.




*Our
      failure to meet our customers’ requirement could result in decreased revenue,
      increased costs and negative publicity.*




Our
      products require the precision manufacturing of products to very exacting
      specifications which are required in the industries to which we market our
      services. Our failure to meet these specifications could result in both cost
      overruns on a particular contract and a loss of our reputation, which would
      significantly impair our ability to generate contracts.




*As
      a government subcontractor we are subject to government procurement
      regulations.*




We
      must
      comply with complex procurement laws and regulations ,
      including the provisions of the procurement regulations that provide for
      renegotiation and termination for the convenience of the government. Since
      we
      are not a prime contractor, any termination or modification of the prime
      contract may result in a change in our contract with the prime
      contractor.


5




*If
      we make any acquisitions, they may disrupt or have a negative impact on our
      business.*




If
      we
      make acquisitions, we could have difficulty integrating the acquired companies’
personnel and operations with our own. In addition, the key personnel of the
      acquired business may not be willing to work for us. We cannot predict the
      affect expansion may have on our core business. Regardless of whether we are
      successful in making an acquisition, the negotiations could disrupt our ongoing
      business, distract our management and employees and increase our expenses.
      In
      addition to the risks described above, acquisitions are accompanied by a number
      of inherent risks, including, without limitation, the following:




·
            the
                difficulty of integrating acquired products, services or
                operations;




·
            the
                potential disruption of the ongoing businesses and distraction of
                our
                management and the management of acquired
                companies;




·
            the
                difficulty of incorporating acquired rights or products into our
                existing
                business;




·
            difficulties
                in disposing of the excess or idle facilities of an acquired company
                or
                business and expenses in maintaining such
                facilities;




·
            difficulties
                in maintaining uniform standards, controls, procedures and
                policies




·
            the
                potential impairment of relationships with employees and customers
                as a
                result of any integration of new management
                personnel;




·
            the
                potential inability or failure to achieve additional sales and enhance
                our
                customer base through cross-marketing of the products to new and
                existing
                customers;




·
            the
                effect of any government regulations which relate to the business
                acquired;




·
            potential
                unknown liabilities associated with acquired businesses or product
                lines,
                or the need to spend significant amounts to retool, reposition or
                modify
                the marketing and sales of acquired products or the defense of any
                litigation, whether of not successful, resulting from actions of
                the
                acquired company prior to our
                acquisition.




6




Our
      business could be severely impaired if and to the extent that we are unable
      to
      succeed in addressing any of these risks or other problems encountered in
      connection with these acquisitions, many of which cannot be presently
      identified, these risks and problems could disrupt our ongoing business,
      distract our management and employees, increase our expenses and adversely
      affect our results of operations.




**Risks
      Related to our Common Stock and the Market for our Common
      Stock.**




*The
      rights of the holders of common stock may be impaired by the potential issuance
      of preferred stock.*




Our
      certificate of incorporation gives our board of directors the right to create
      new series of preferred stock. As a result, the board of directors has and
      in
      the future may, without stockholder approval, issue preferred stock with voting,
      dividend, conversion, liquidation or other rights which could adversely affect
      the voting power and equity interest of the holders of common stock. Preferred
      stock, which could be issued with the right to more than one vote per share,
      could be utilized as a method of discouraging, delaying or preventing a change
      of control. The possible impact on takeover attempts could adversely affect
      the
      price of our common stock. Although we have no present intention to issue any
      additional shares of preferred stock or to create any new series of preferred
      stock and the certificate of designation relating to the series A preferred
      stock restricts our ability to issue additional series of preferred stock,
      we
      may issue such shares in the future. Without the consent of the holders of
      75%
      of the outstanding shares of series A preferred stock, we may not alter or
      change adversely the rights of the holders of the series A preferred stock
      or
      increase the number of authorized shares of series A preferred stock, create
      a
      class of stock which is senior to or on a parity with the series A preferred
      stock, amend our certificate of incorporation in breach of these provisions
      or
      agree to any of the foregoing.




*The
      issuance of shares through our stock compensation and incentive plans may dilute
      the value of existing stockholders.*




We
      may
      use stock options, stock grants and other equity-based incentives, to provide
      motivation and compensation to our officers, employees and key independent
      consultants. The award of any such incentives will result in an immediate and
      potentially substantial dilution to our existing stockholders and could result
      in a decline in the value of our stock price.




*Shares
      may be issued pursuant to our stock plans which may affect the market price
      of
      our common stock.*




We
      may
      issue stock upon the exercise of options or pursuant to stock grants covering
      a
      total of 1,000,000 shares of common stock pursuant to our 2006 long-term
      incentive plan. We also intend to issue 133,000 shares of restricted stock
      to
      certain key employees. The exercise of these options and the sale of the
      underlying shares of common stock and the sale of stock issued pursuant to
      stock
      grants may have an adverse effect upon the price of our stock.




*Because
      we are not subject to compliance with rules requiring the adoption of certain
      corporate governance measures, our stockholders have limited protections against
      interested director transactions, conflicts of interest and similar
      matters.*




The
      Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by
      the
      SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market
      as a
      result of Sarbanes-Oxley require the implementation of various measures relating
      to corporate governance. These measures are designed to enhance the integrity
      of
      corporate management and the securities markets and apply to securities which
      are listed on those exchanges or the Nasdaq Stock Market. Because we are not
      presently required to comply with many of the corporate governance provisions
      and because we chose to avoid incurring the substantial additional costs
      associated with such compliance any sooner than necessary, we have not yet
      adopted all of these measures. We are not in compliance with requirements
      relating to the distribution of annual and interim reports, the holding of
      stockholders meetings and solicitation of proxies for such meeting and
      requirements for stockholder approval for certain corporate actions, including
      the issuance of common stock. Thus, there is no restriction on our issuing
      common stock without the consent of the holders of our common stock. Until
      we
      comply with such corporate governance measures, regardless of whether such
      compliance is required, the absence of such standards of corporate governance
      may leave our stockholders without protections against interested director
      transactions, conflicts of interest and similar matters and investors may be
      reluctant to provide us with funds necessary to expand our
      operations.


7




*Failure
      to achieve and maintain effective internal controls in accordance with Section
      404 of the Sarbanes-Oxley Act could have a material adverse effect on our
      business and operating results and stockholders could lose confidence in our
      financial reporting.*




Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. If we cannot provide reliable financial reports
      or
      prevent fraud, our operating results could be harmed. We may be required to
      document and test our internal control procedures in order to satisfy the
      requirements of Section 404 of the Sarbanes-Oxley Act, which requires increased
      control over financial reporting requirements, including annual management
      assessments of the effectiveness of such internal controls and a report by
      our
      independent certified public accounting firm addressing these assessments.
      Failure to achieve and maintain an effective internal control environment,
      regardless of whether we are required to maintain such controls, could also
      cause investors to lose confidence in our reported financial information, which
      could have a material adverse effect on our stock price. Although we are not
      aware of anything that would impact our ability to maintain effective internal
      controls, we have not obtained an independent audit of our internal controls,
      and, as a result, we are not aware of any deficiencies which would result from
      such an audit.




*Because
      of our cash requirements and restrictions in our preferred stock purchase
      agreement, we may be unable to pay dividends*  *.*




In
      view
      of the cash requirements of our business, we expect to use any cash flow
      generated by our business to finance our operations and growth. Further, we
      are
      prohibited from paying dividends on our common stock while the series A
      preferred stock is outstanding.




*Because
      there is no public market for our common stock, you may have difficulty selling
      common stock that you own.*




Although
      we are registered pursuant to the Securities Exchange Act of 1934, we have
      approximately 55 stockholders and there is no public market for our common
      stock. None of the presently outstanding shares of common stock may be sold
      except pursuant to an effective registration statement. We have filed a
      registration statement to enable our stockholders to sell their shares. Neither
      the filing nor the effectiveness of the registration statement will assure
      a
      public market for our common stock. Accordingly we cannot assure you that there
      will be any public market for our common stock.




*Because
      we may be subject to the “penny stock” rules, you may have difficulty in selling
      our common stock.*




If
      a
      public market develops for our common stock and if our stock price is less
      than
      $5.00 per share, our stock would be subject to the SEC’s penny stock rules,
      which impose additional sales practice requirements and restrictions on
      broker-dealers that sell our stock to persons other than established customers
      and institutional accredited investors. These rules may affect the ability
      of
      broker-dealers to sell our common stock and may affect your ability to sell
      any
      common stock you may own.


8




According
      to the SEC, the market for penny stocks has suffered in recent years from
      patterns of fraud and abuse. Such patterns include:




·
            Control
                of the market for the security by one or a few broker-dealers that
                are
                often related to the promoter or
                issuer;




·
            Manipulation
                of prices through prearranged matching of purchases and sales and
                false
                and misleading press releases;




·
            “Boiler
                room” practices involving high pressure sales tactics and unrealistic
                price projections by inexperienced sales
                persons;




·
            Excessive
                and undisclosed bid-ask differentials and markups by selling
                broker-dealers; and




·
            The
                wholesale dumping of the same securities by promoters and broker-dealers
                after prices have been manipulated to a desired level, along with
                the
                inevitable collapse of those prices with consequent investor
                losses.




*As
      an issuer of “penny stock” the protection provided by the federal securities
      laws relating to forward looking statements does not apply to
      us.*




Although
      the federal securities laws provide a safe harbor for forward-looking statements
      made by a public company that files reports under the federal securities laws,
      this safe harbor is not available to issuers of penny stocks. As a result,
      we
      may not have the benefit of this safe harbor protection in the event of any
      claim that the material provided by us, including this annual report, contained
      a material misstatement of fact or was misleading in any material respect
      because of our failure to include any statements necessary to make the
      statements not misleading.




*Our
      stock price may be affected by our failure to meet projections and estimates
      of
      earnings developed either by us or by independent securities
      analysts.*




Although
      we do not make projections relating to our future operating results, our
      operating results may fall below the expectations of securities analysts and
      investors. In this event, the market price of our common stock would likely
      be
      materially adversely affected.




*The
      registration and potential sale by the selling stockholders of a significant
      number of shares could encourage short sales by third
      parties.*




The
      7,719,250 shares of common stock issuable on conversion of the series A
      preferred stock held by Barron Partners as well as the 11,220,000 shares of
      common stock issuable to Barron Partners upon exercise of its warrants, together
      with the 100,000 shares of common stock owned by our stockholders prior to
      the
      reverse acquisition could generate significant downward pressure on our stock
      price. If a market develops for our common stock, this downward pressure could
      allow short sellers an opportunity to take advantage of any decrease in the
      value of our stock. The presence of short sellers in our common stock may
      further depress the price of our common stock. Further,
      the potential sale of common stock by Barron Partners could make it difficult
      for us to raise funds from other sources if we require additional
      funds.




*The
      issuance and sale of the registered common stock could result in a change of
      control.*




If
      we
      issue all of the 18,939,250 shares issuable upon conversion of the series A
      preferred stock and exercise of the warrants, the 19,039,250 shares of common
      stock offered by the selling stockholders would constitute 65.9% of our then
      outstanding common stock. The percentage would increase to the extent that
      we
      are required to issue any additional shares of common stock upon conversion
      of
      the series A preferred stock pursuant to the anti-dilution and adjustment
      provisions. Any sale of all or a significant percentage of those shares to
      a
      person or group could result in a change of control.


9




**FORWARD-LOOKING
      STATEMENTS**




Statements
      in this annual report may be “forward-looking statements.” 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 are likely to, differ materially
      from what is expressed or forecasted in the forward-looking statements due
      to
      numerous factors, including those described above and those risks discussed
      from
      time to time in this annual report, including the risks described under “Risk
      Factors,” and “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” in this annual report and in other documents which we
      file with the Securities and Exchange Commission. In addition, such statements
      could be affected by risks and uncertainties related to our ability to generate
      business on an on-going business, 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 ability to raise any financing which we may require
      for our operations, 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 annual report.




**BUSINESS**




We
        perform large metal fabrications and precision machining operations for large
        defense, aerospace, nuclear, industrial and shipbuilding customers. Our
        principal services are large metal fabrications, machining and engineering.
        Metal fabrication is the process of fitting and forming certain grades of
        metal
        alloys pursuant to the design drawings furnished to us by our customers.
        All
        processes we perform in this manner generally fall under the American Society
        of
        Mechanical Engineers standards and specification with respect to quality
        and
        conformance to the project documents. These fabrication procedures include
        welding, forming, bending, cutting and fitting of the materials pursuant
        to the
        drawings. On the other hand, machining operations involves employing CNC
        (computer numerically controlled) machine tools that can include horizontal
        and
        vertical milling, turning and machining operations of metals or plastics
        to the
        tolerances that are stipulated on our customer’s drawings.




We
        perform most of our service pursuant to “build to print” contracts, which means
        that we must manufacture products in accordance with very close tolerances.
        Our
        customers provide us with design drawings, tolerances and specifications
        for the
        projects. We may perform a constructability review of the customer’s design
        drawings before we commence our manufacturing operations to determine whether
        the drawings they provided can actually be constructed or machined.
        Periodically, a customer’s drawings can not be turned into a desired product. In
        these cases, we will work with the customer to help produce the necessary
        drawings that will allow a product to be constructed as the customer had
        originally envisioned. These engineering services are included in the contract
        and are billed to and paid for by the customer.




Part
        of
        our marketing effort is directed at projects which involve a bidding process.
        Approximately 73% of our revenue during the nine months ended December 31,
        2006
        and approximately 80%of our revenue for the year ended March 31, 2006 was
        derived from projects which we received through a bidding process. The balance
        of our revenue was generated by negotiations with the customers or potential
        customers. Generally, once a potential customer has a project that it wants
        to
        put out for bids, it issues an RFP. The request for a quote includes a
        description of the project as well as any specific requirements that the
        successful bidder must meet. As part of the contract solicitation and bid
        protocol, we must establish that we are a qualified contractor for a proposed
        contract. This substantiation includes evidence that we have previously
        performed similar or comparable work as well as information concerning our
        financial condition. The bid process can range from a couple of weeks to
        more
        than a year from the time between the bid submission date and the award of
        a
        contract. In preparing the bid, we must estimate both the cost of the project
        and the timing of the project. We do not submit a bid on any project unless
        we
        believe that we can generate a profit. If we do not correctly assess the
        costs
        of a project we may incur a loss on the contract if we are awarded the contract.




We
        do not
        have any proprietary products and we do not manufacture any products in
        anticipation of orders. We do not commence manufacturing operations on any
        project until we have a purchase order for a customer. Each of our contracts
        covers a specific product, and we can manufacture almost any kind of products
        which requires large metal fabrications. For example, we fabricate nuclear
        grade
        steel casks, canisters and housings for the transportation and storage of
        radioactive materials; we produce large fabrications for Navy aircraft carriers,
        submarines and commercial vessels, and we manufactures pulp and paper machinery,
        gas turbine power generation equipment, oil refinery and utilities equipment
        and
        alternative energy products. We are one of two companies currently capable
        of
        machining one-piece aluminum domes to close tolerance


10




**Products**




All
      of
      our products are built pursuant to contracts. Because we have lifting capacity
      up to 100 tons, we have the ability to manufacture very large products that
      must
      be fabricated in a single piece. Because of the nature of our facility we can
      manufacture a wide range of products, and we do not have any typical products
      that we sell. The following are examples of recent manufacturing contracts
      and
      show the range of products that we have produced.




We
      manufactured, tested and installed a target chamber mirror structure
      installation for a national laboratory customer. This installation is used
      in
      the quest to understand nuclear fusion.




We
      produced the full-scale prototype of the first direct drive main propulsion
      engine that was selected for use on the DDX destroyer for one of our industrial
      customers.




We
      have
      been the sole source for a major defense contractor for the manufacture of
      housings for the defense contractor’s sonar system. This system is currently
      being retro-fitted onto the Navy’s fleet of nuclear submarines.




We
      presently provide fabricating and machining services to a division of another
      major defense contractor. We produce primary shield tank heads, sonar system
      pods and fairings, and a variety of other components.




One
      of
      our customers provides a complete nuclear waste storage system to commercial
      nuclear power plants. We manufacture lifting equipment for this company to
      use
      in the storage system.




Another
      customer is currently involved in a variety of commercial nuclear reactor repair
      and overhaul projects. We manufactured several components needed to support
      this
      work.




For
      a
      customer that manufactures machinery used to build solar panels for power
      generation, we manufacture critical components for this machinery.




Another
      customer manufactures machinery that produces plastic sheet that has a range
      of
      possible uses from garbage bags to covers for landfill projects. We fabricate
      components and we machine large die sets for these machines.




**Source
      of Supply**




Our
        operations are partly dependent on the availability of raw materials. Since
        we
        manufacture products for our customers in accordance with their specific
        requirements, the raw materials we require vary from contract to contract.
        We
        have multi-year relationships with a number of our suppliers, but we do not
        have
        any long-term supply contracts with any suppliers, and we are not dependent
        upon
        any supplier. We did not have any supplier that accounted for 10% or more
        of our
        purchases for the year ended December 31, 2007. We purchase our raw materials
        pursuant to purchase orders that we place with our suppliers, based on the
        specific requirements for our contracts, and we believe that alternate sources
        are available to us on commercially reasonable terms. Since each contract
        requires different raw materials and components, once we have a contract
        with a
        customer we seek quotations from one or more suppliers and obtain the materials
        from one or more different suppliers. We do not have contracts with any
        suppliers. Rather we place purchase orders using standard forms of purchase
        orders when we require the raw materials. We have no continuing obligation
        to
        purchase products from any supplier and no supplier has any continuing
        obligation to provide us with product other than pursuant to specific purchase
        orders.





Our
        projects include metal fabrications and machining of various traditional
        and
        special alloys such as inconel, titanium and high tensile strength steels,
        and
        the customer frequently provides us with the raw material. We have worked
        with a
        number of different metal suppliers over the years to obtain these materials.
        Although some materials (due to their alloy compositions) require long lead
        times to obtain, we have never experienced a shortage of any of these materials. ****




**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 we are subject to periodic inspections to monitor our
        compliance. In May 2004, Ranor was requested to undertake a response and
        remedial action to cleanup environmental conditions discovered during an
        onsite
        inspection by the Commonwealth of Massachusetts Office of Environmental Affairs.
        Ranor signed a consent order in October 2004, paid a fine of $7,800 and
        proceeded to correct the deficiencies. The request for remedial action resulted
        from Ranor’s failure to file the required site environmental reports pursuant to
        the federal and Massachusetts environmental regulations. In addition, Ranor
        was
        required to create a storm water run-off plan for its operational facilities
        and
        a hazardous waste spill containment plan. Since we acquired Ranor in February
        2006, we have corrected all of these conditions, and we are now in compliance
        with all environmental matter. We have implemented a program internally which
        we
        believe will enable us to remain in compliance with all applicable environmental
        requirements.




11




The
        consent order required Ranor to clean up and remediate stained soils in the
        area
        of the chip bins that hold the chips from our machining operations. Although
        Ranor paid the fine prior to the reverse acquisition, it did not comply with
        the
        remediation obligations. In our machining operations, we cut metal to shape
        materials pursuant to the design plans of our customers. We lubricate the
        materials with a water-soluble lubricant while cutting to prevent burning
        and
        warping of the materials during the machining process and to enable us to
        provide a smooth finish of the finished product. When the chips are removed
        from
        the machining centers, these metal chips and shavings are transferred to
        large
        dumpster bins to be picked up by a scrap metal dealer. However, these chip
        bins
        had been placed out in the yard and left uncovered and exposed to the elements.
        When rain hit these chip bins it washed off the water-soluble coolant from
        the
        metal chips which leached into the surrounding soil. Over the years this
        washing
        of the lubricant from the metal chip bins has resulted in the staining of
        the
        soil. We have completed the necessary clean-up work, and we have constructed
        an
        approved chip bin building for all of the chip bins. We are now in compliance
        with all environmental matter.




The
        cost
        of environmental compliance was $86,975 for the year ended March 31, 2006
        and
        $3,562 for the year ended March 31, 2005. The expense accrued at March 31,
        2006
        reflects the estimated expense relating to the compliance work. Much of the
        compliance work was performed subsequent to year end, and the actual cost
        was
        consistent with the estimate. As part of our environmental compliance, we
        constructed a chip bin building at a cost of approximately $110,000, which
        was
        capitalized. We believe that we are currently in compliance with applicable
        environmental regulations and that our current ongoing obligations at its
        present facilities will not be material.




**Marketing**




A
      significant portion of our contracts result from the competitive bidding
      process, which are frequently limited to pre-qualified bidders. Most of our
      sales inquiries are from existing customers. We have a marketing team of six,
      including a sales manager and five technical personnel which markets our
      services as well as our qualifications to both existing and potential customers
      through personal contacts and trade shows. We also engage an independent sales
      representative.




**Principal
      Customers**




We
        do not
        have long-term contracts with any customer, and major contracts with a small
        number of customers account for a significant percentage of our revenue.
        Our
        customers include many of the major domestic defense and aerospace companies.
        Because our services are rendered pursuant to separate contracts for separate
        projects, our customer list changes significantly from year to year. Two
        different customers accounted for more than 10% of our revenue in each of
        the
        years ending March 31, 2006 and March 31, 2005. Our two largest customers
        for
        the year ended March 31, 2006 were the University of Rochester, from which
        we
        recognized revenue of approximately $3.0 million (14.6% of revenue), and
        a
        defense contractor, BAE Systems, from which we recognized revenue of
        approximately $2.6 million (12.9%). The University of Rochester was not a
        customer in the year ended March 31, 2005 and revenue from BAE Systems was
        less
        than 10% of our revenue in fiscal 2005.




**Competition**




We
      face
      competition from a number of domestic and foreign manufacturers. No one company
      dominates the industry, although many of our competitors are larger, better
      known and have greater resources then we. Since many of our contracts are
      awarded through a bidding process, our ability to win an award is dependent
      upon
      a number of factors, including the price and our ability or perceived ability
      to
      manufacture the products in accordance with specifications and the customer’s
      time requirements, for which our reputation as a quality manufacturer is
      crucial. For certain products, being a domestic manufacturer may be a factor.
      For other products, we may be undercut by 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
      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.


12




**Government
      Regulations**




Although
      we do not have any contracts with government agencies, some of our manufacturing
      services are provided as a subcontractor to a government contractor. As a
      result, we are subject to government procurement and acquisition regulations.
      Under these regulations, the government has the right of termination for the
      convenience of the government and certain renegotiation rights as well as a
      right of inspection. Some of the work we perform for our customers are 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 these programs.




**Intellectual
      Property Rights**




We
      have
      no patent rights. In the course of our business we develop proprietary 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. We do not believe that our business requires patent or similar
      protection.




**Research
      and Development**




In
      the
      course of our business we do not incur any significant research and development
      expenses. To the extent that our services for a customer include product design
      or development, the customer pays for such services.




**Personnel**




We
      currently employ 130 employees, of which 19 are administrative, eight are
      engineering and approximately 103 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
      2. Description of Property.**




We
      lease
      from WM Realty Management, LLC (which is an affiliated company) an approximately
      136,000-square foot office and manufacturing facility at One Bella Drive,
      Westminster, Massachusetts 01473, pursuant to a 15-year lease that expires
      February 28, 2021, at an annual rental of $438,000, subject to annual
      escalations. The lease provides for two five-year extension and a purchase
      option at appraised value. We sold the real estate to WM Realty Management
      contemporaneously with the reverse acquisition for $3.0 million. In connection
      with WM Realty Management’s financing of the real estate, we agreed to an
      increase in the rental in the event of a default by WM Realty Management under
      its mortgage.





**Item
      3. Legal Proceedings.**




We
      are
      not a defendant in any material legal proceedings.





**Item
      4. Submission of Matters to a Vote of Security Holders.**




No
      matters were submitted to our stockholders during the fourth quarter of the
      year
      ended March 31, 2006.


13





**PART
      II**





**Item
      5. Market for Common Equity and Related Stockholder
      Matters.**




There
      is
      no market for our common stock




As
      of
      June 30, 2006, we had approximately 55 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.




As
      of
      June 30, 2006, we had the following shares of common stock reserved for
      issuance:




·
            9,081,527
                shares issuable upon conversion of the series A preferred
                stock.




·
            11,220,000
                shares issuable upon exercise of the warrants issued to Barron
                Partners.




·
            1,000,000
                shares issuable upon exercise of stock options or other equity-based
                incentives pursuant to our 2006 long-term incentive plan, which is
                subject
                to stockholder approval.




·
            13,000
                shares to be issued as restricted stock grants to key
                employees.





**Equity
      Compensation Plan Information**




The
      following table summarizes the equity compensation plans under which our
      securities may be issued as of July 15, 2006.




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
            
            
            -0-
            
            
            —
            
            
            —Equity
                compensation plan not approved by security holders
            
            
            150,000
            
            $
            .285
            
            
            863,000




The
      2006
      long-term incentive plan was approved by the board of directors, subject to
      stockholder approval, and the outstanding options are subject to stockholder
      approval of the plan. The plan has not yet been submitted to the stockholders
      for their approval.




On
      February 24, 2006, we entered into an agreement with Capital Markets, which
      was
      then our principal stockholder, pursuant to which we purchased 928,000 shares
      of
      common stock from Capital Markets for $160,339, and paid $39,661 of debt to
      Capital Markets , using the proceeds from the sale of series A preferred stock.
      The purchase was made contemporaneously with the acquisition of Ranor.





**Item
      6. Management’s Discussion and Analysis or Plan of
      Operations.**




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. The following discussion
      includes predictive statements. For a discussion of important factors that
      could
      cause actual results to differ from results discussed in the predictive
      statements, see “Forward Looking Statements.”


14




**Overview**




We
      operate in one distinct business - fabrication, precision machining and
      engineering of metal products up to 100 tons. Most of the products are
      fabricated from raw metal plate or forgings. Materials used in the manufacturing
      of our products are either supplied by our customers or acquired from raw
      material suppliers we have worked with for many years. Our clients are generally
      nuclear, aerospace, commercial, defense and national laboratories. Payment
      terms
      associated with each project often include progress payments and occasionally
      include deposits. Generally, payment terms are 30 to 45 days from the invoice
      date. Some of the work we perform for our customers is a 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.




These
      products are manufactured for our clients under build-to-print agreements.
      Work
      is performed by our personnel under firm contracted purchase orders, for each
      project undertaken at the facility. Our work is contracted under terms that
      require down payments for the acquisition of materials. Additionally, depending
      on the length of a given project, some contracts require progress payments
      based
      on major milestones of work completed.




Ranor,
      together with its predecessor, has been in business since 1956, and was sold
      by
      its founders in 1999 to Critical Components Corporation, a subsidiary of
      Standard Automotive Corporation. From June 1999 until August 2002, Ranor’s
      predecessor, which was also named Ranor, was operated by Critical Components
      Corporation. In December 2001, Ranor’s predecessor filed for protection under
      the Bankruptcy Code and operated under Chapter 11 until on or about the quarter
      ended June 30, 2002. In 2002, Ranor, then known as Rbran Acquisition, Inc.,
      acquired the assets of Ranor’s predecessor from the bankruptcy estate. As a
      result of the bankruptcy of Standard’s subsidiary, which was also known as
      Ranor, customers were initially reluctant to use our services. In recent years,
      as both the market for our services has improved and we demonstrated to our
      customers that we have both the financial and manufacturing ability to meet
      their specifications and time requirements, we have been able to improve both
      our revenue and our gross margin.




In
      recent
      years, the capital goods market experienced a slow down due to both the industry
      over-build of product in the late 1990’s and the events of September 11, 2001.
      As noted in the preceding paragraph, the development of our business was further
      affected by the bankruptcy of Standard. However, based on recent project
      inquiries, recent projects awarded and current customer demands for our
      services, we believe the market has rebounded and that we are finding increased
      acceptance of our services.




A
        significant portion of our revenue is generated by a small number of customers
        who differ from period to period as we complete work on projects on commence
        new
        projects for other customers. In the year ended March 31, 2006, two customers
        accounted for approximately 28% of our revenue. Our contracts generally result
        from negotiation 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 and our financial condition. We believe that there is an increasing
        demand for our services and we see that demand increasing at least in the
        near
        term. We are changing the manner in which we treat potential business from
        the
        practices of our predecessor. Because of problems at its parent company level,
        in order to obtain business, our predecessor had to perform additional work
        without increasing the amount it charged it customer. As a result, our
        predecessor operated on relative low margins.  We
        are
        seeking more long-term projects with a more predictable cost structure, and
        rejecting or not bidding on projects we do not believe would generate an
        adequate gross margin.


15


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.




**Critical
      Accounting Policies**




The
      preparation of the Company’s financial statements conform to the generally
      accepted accounting principles in the United States and requires our management
      to make assumptions, estimates and judgments that effect 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 2006 financial statements
      from
      the assumptions, estimates and judgments used in the preparation of our 2005
      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 a given 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. Costs allocable to undelivered units are reported in the balance sheet
      as inventory. 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.




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.




**Variable
      Interest Entity**




We
      have
      has consolidated a variable interest entity that entered into a sale and
      leaseback contract with us to conform to FASB Interpretation No. 46,
“Consolidation of Variable Interest Entities” (FIN 46). We have also adopted the
      revision to FIN 46, FIN 46R, which clarified certain provisions of the original
      interpretation and exempted certain entities from its requirements. ****




**Income
      Taxes**




Our
      fiscal year ends on March 31st. 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 and or settled. 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, 2005, we had net operating loss carry-forwards approximating
      $3,470,000. Pursuant to Section 382 of the Internal Revenue Code, utilization
      of
      these losses may be limited in the event of a change in control, as defined
      in
      the Treasury Regulations. The change in ownership resulting from our acquisition
      of Ranor will limit our ability to use the loss carryforwards.


16




**Reverse
      Acquisition**




On
      February 24, 2006, we acquired all of the capital stock Ranor in a transaction
      which is accounted for as a reverse acquisition, with Ranor being treated as
      the
      acquiring company for accounting purposes and the transaction being treated
      as a
      recapitalization.  As a result, the costs of the acquisition are charged to
      capital. The results of operations and cash flow relating to periods prior
      to
      February 24, 2006 reflect the results of operations and cash flows of
      Ranor.




In
      connection with the reverse acquisition, on February 24, 2006:




·
            We
                entered into a preferred stock purchase agreement with Barron Partners
                LP,
                pursuant to which we sold to Barron Partners, for $2,200,000, 7,719,250
                shares of series A preferred stock, and five-year warrants to purchase
                an
                aggregate of 5,600,000 shares of common stock at $.57 per share and
                5,600,000 shares of commons stock at $.855 per share. The series
                A
                preferred stock was initially convertible into 7,719,250 shares of
                common
                stock, subject to adjustment. Because our EBITDA for the year ended
                March
                31, 2006 was less than $.04613 per share, (i) the conversion price
                of the
                series A preferred stock reduced from $.285 to $.24225, a 15% reduction,
                with the result that the series A convertible preferred stock became
                convertible into 9,081,527 shares of common stock, and (ii) the exercise
                prices of the warrants were reduced by 15% -- from $.57 to $.4245
                and from
                $.855 to $7.268. The conversion rate of the series A preferred stock
                and
                the exercise prices of the warrants are subject to further adjustment
                if
                the Company’s EBITDA per share, on a fully-diluted basis, is less than
                $.08568 per share for the year ended March 31, 2007, based on the
                percentage shortfall from $.08568 per share, up to a maximum reduction
                of
                15%. The adjustment could result in an increase in the maximum number
                of
                shares of common stock being issued upon conversion of the series
                A
                preferred stock from 9,081,527 to 10,684,150 shares of common stock
                and a
                further reduction in the exercise price of the warrants from $.4845
                to
                $.4118 and from $.7268 to $.6177 per
                share.




·
            We
                purchased 928,000 shares of common stock from Capital Markets, which
                was
                then our principal stockholder, for $160,339 and we paid a debt due
                to
                Capital Markets of $39,661, which was paid from the proceeds of the
                sales
                of the series A preferred stock and
                warrants.




·
            Pursuant
                to an agreement with Ranor Acquisition and its members, Ranor Acquisition
                assigned its obligations under the Ranor Agreement to us and we assumed
                the obligations of Ranor Acquisition under the Ranor Agreement and
                we
                issued 7,997,000 shares of common
                stock.




·
            Pursuant
                to an agreement with an investor, we sold 1,700,000 shares of common
                stock
                to the investor for $500,000.




·
            Pursuant
                to the agreement to acquire the stock of Ranor, we were to purchase
                the
                outstanding capital stock and warrants of Ranor for a purchase price
                equal
                to the amount by which $9,250,000, plus the amount by which Ranor’s cash
                in excess of $250,000 exceeded the payments to principal and interest
                on
                the notes held by the preferred stockholders. Ranor’s cash in excess of
                $250,000, net of a $54,000 closing adjustment, was $813,000. The
                total
                paid on account of the debt to the former Ranor stockholders was
                $8,000,000 principal and $975,000 interest. The total amount allocated
                to
                the capital stock was $163,000, of which $10,000 was paid to the
                stockholders and $153,000 was applied to the stockholder’s expenses. In
                addition, any money paid to the stockholders from the escrow will
                be
                allocated to purchase price of the preferred
                stock.


17




·
            Ranor
                entered into a loan and security agreement with Sovereign Bank pursuant
                to
                which Ranor borrowed $4.0 million, for which Ranor issued its term
                note,
                and Sovereign provided Ranor with a $1.0 million revolving credit
                arrangement.




·
            Ranor
                sold its real estate to WM Realty Management, LLC for $3.0 million,
                and
                Ranor leased the real property on which its facilities are located
                from WM
                Realty Management pursuant to a net lease. WM Realty Management is
                an
                affiliate of the Company.




·
            Ranor
                used the net proceeds of the Sovereign Bank loan, as discussed below,
                the
                net proceeds from the sale of the real estate, $240,000 of available
                cash
                and a portion of the proceeds from the sale of the preferred stock
                to pay
                principal ($8,000,000) and interest ($975,500) on notes to Ranor’s then
                principal stockholders. Although the payment was less than the principal
                and interest due on the note, the note holders released Ranor from
                any
                further obligation under the notes.




·
            The
                Company placed $925,000 of the purchase price into escrow. The escrow
                was
                to be the sole source of the former Ranor stockholders’ liability for
                breach of the representations and warranties under the Ranor
                Agreement.





The
        price
        at which we sold the real property, which was less than the appraised value
        of
        the property, was based largely upon the maximum amount that WM Realty
        Management could borrow, based on a percentage of appraised value, and reflected
        the fact that the use of the real estate as a manufacturing facility would
        not
        be considered the best use of the property. The purchase of the property
        was
        fully leveraged. The estimated market value of the property on October 18,
        2005,
        based on an appraisal by Avery Associates, was $4,750,000. We sold the property
        to WM Realty Associates for $3,000,000 to provide a portion of the funds
        that
        were due in connection with the acquisition of Ranor. We were not able to
        find a
        single lender to finance both the non-real estate assets and the real estate.
        The mortgagee for the real estate required individual limited guarantees
        by Mr.
        Levy and Mr. Reindl, as members of WM Realty Management, as a condition to
        making the loan to WM Realty Management. The guarantee of Mr. Reindl was
        released in connection with the refinancing of the property in October
        2006.




**Non-GAAP
      Information**




We
      refer
      to EBITDA, which is a non-GAAP performance measure, because our agreement with
      Barron Partners uses EBITDA as a measure for determining whether there is an
      adjustment in the conversion price of the series A preferred stock or the
      exercise price of the warrants. EBITDA is determined by adding to net income
      the
      amount deducted for interest, taxes, depreciation and amortization. The
      following table shows the relationship between net income and EBITDA for the
      years ended March 31, 2006 and 2005 (dollars in thousands).




**Year
                ended March 31,****2006**
            
            **2005**Net
                (loss)
            
            
            (428
            )
            
            (1,144
            )Plus
                interest (net)
            
            
            1,098
            
            
            1,113Plus
                taxes
            
            
            42
            
            
            4Plus
                depreciation and amortization
            
            
            472
            
            
            408EBITDA
            
            
            1,184
            
            
            381




**New
      Accounting Pronouncements**




In
      November 2004, the FASB issued SFAS No. 151 “Inventory Costs, an amendment of
      Accounting Research Bulletin (“ARB”) No. 43, Chapter 4.” The amendments made by
      Statement 151 clarify that, abnormal amounts of idle facility expense, freight,
      handling costs and wasted materials (spoilage) should be recognized as
      current-period charges and require the allocation of fixed production overheads
      to inventory based on the normal capacity of the production facilities. The
      guidance is effective for inventory costs incurred during the fiscal years
      beginning after June 15, 2005.




In
      December 2004, The FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,
      an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions”
(“SFAS 153”). The amendments made by SFAS 153 as based on the principle that
      exchanges of nonmonetary assets should be measured based on the fair value
      of
      the assets exchanged. Further, the amendments eliminate the narrow exception
      for
      nonmonetary exchanges of similar productive assets and replace it with a broader
      exception for exchanges of nonmonetary assets that do not have commercial
      substance. Previously, Opinion 29 required that the accounting for an exchange
      of a productive asset should be based on the recorded amount of the asset
      relinquished. Opinion 29 provided for an exception to its basic measurement
      principle (fair value) for exchanges of similar productive assets. The Board
      believes that exception required that some nonmonetary exchanges, although
      commercially substantive, be recorded on a carry over basis. By focusing the
      exception on exchanges that lack commercial substance, the Board believes this
      Statement produces financial reporting that more faithfully represents the
      economics of the transaction. The Statement is effective for nonmonetary asset
      exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
      application is permitted for nonmonetary asset exchanges occurring in fiscal
      periods beginning after the date of issuance. The provision of this statement
      shall be applied prospectively.


18




In
      December 2004, the FASB issued SFAS No.123 (revised 2004), “Share-Based
      Payment.” Statement 123R will provide investors and other users of financial
      statements with more complete financial information by requiring that the
      compensation cost relating to share-based payment transactions be recognized
      in
      financial statements. That cost will be measured based on the fair value of
      the
      equity or liability instruments issued. Statement 123R covers a wide range
      of
      share-based compensation arrangements including stock options, restricted stock
      plans, performance-based awards, stock appreciation rights, and employee stock
      purchase plans. Statement 123R replaces FASB Statement No. 123, Accounting
      for
      Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
      Stock Issued to Employees. Statement 123, as originally issued in 1995,
      established as preferable a fair-value-based method of accounting for
      share-based payment transactions with employees. However, that statement
      permitted entities the option of continuing to apply the guidance in Opinion
      25,
      as long as the footnotes to financial statements disclosed what net income
      would
      have been had the preferable fair-value-based method been used. Public entities
      that are small business issuers will be required to apply Statement 123R as
      of
      the first interim or annual reporting period of the first fiscal year that
      begins after December 15, 2005. Prior to the reverse acquisition, we did not
      grant any options or equity-based incentives. To the extent that we grant such
      options or other equity-based incentives, the value thereof will be included
      an
      a general and administrative expense.




We
      expect
      that the adoption of the foregoing new statements will not have a significant
      impact on our financial statements.




**Results
      of operations**




The
      following table sets forth information from our statements of operations for
      the
      years ended March 31, 2006 and 2005, as a percentage of revenue (dollars in
      thousands):





******Year
                Ended March 31,****2006**
            
            ******2005****Dollars**
            
            **Percentage**
            
            **Dollars**
            
            **Percentage**Net
                sales
            
            $
            20,266
            
            
            100.00
            %
            $
            14,270
            
            
            100.00
            %Cost
                of sales
            
            
            17,633
            
            
            87.00
            %
            
            12,632
            
            
            88.52
            %Gross
                Profit
            
            
            2,634
            
            
            13.00
            %
            
            1,634
            
            
            11.48
            %Selling,
                general and administrative
            
            
            1,905
            
            
            9.41
            %
            
            1,665
            
            
            11.67
            %Income/(loss)
                from operations
            
            
            726
            
            
            3.58
            %
            
            (27
            )
            
            -0.19
            %Interest
                Expense
            
            
            (1,108
            )
            
            5.47
            %
            
            (1,121
            )
            
            -7.86
            %Other
                income(loss)
            
            
            (4
            )
            
            0.02
            %
            
            8
            
            
            0.06
            %Loss
                before income taxes
            
            
            (386
            )
            
            -1.90
            %
            
            (1,140
            )
            
            -7.99
            %Provision
                for income taxes
            
            
            42
            
            
            0.21
            %
            
            4
            
            
            0.03
            %Net
                loss
            
            
            (428
            )
            
            -2.11
            %
            
            (1,144
            )
            
            -8.02
            %


19




**Years
      Ended March 31, 2006 and 2005**




Sales
      in
      the year ended March 31, 2006 (“fiscal 2006”) increased $5,996,420, or 42%, to
      $20,266,402, compared to $14,269,982 for the year ended March 31, 2005 (“fiscal
      2005”). This increase reflected both an improvement in the market for our
      services following a downturn in this market in response to the events of
      September 11, 2001 and a continued acceptance of us as a supplier following
      the
      bankruptcy of Standard Automotive.




Our
      cost
      of sales for the fiscal 2006 increased $5,000,936, to $17,632,576, an increase
      of 40%, from $12,631,640 for fiscal 2005. This increase was less than the
      increase in sales, resulting in an improvement in the gross margin from 11.4%
      to
      13%. The increase resulted from more efficient operations. In fiscal 2005,
      we
      were not able to utilize our manufacturing personnel efficiently. We were
      staffed to manufacture more products than we had orders but retained the skilled
      workforce and had them work on indirect projects. As a result of our better
      utilization of our manufacturing personnel in fiscal 2006, our indirect labor,
      as a percentage of sales, decreased from 13.1% to 10.3%.




Selling,
        administrative and other expenses for fiscal 2006 were $1,908,000, compared
        to
        $1,665,000 for fiscal 2005, an increase of $243,000, or 15%. The following
        table
        sets forth information as to the different components of selling, general
        and
        administrative expenses.




ChangeCategory
              
              Fiscal
                  2006
              
              Fiscal
                  2005
              
              Dollars
              
              PercentPayroll,
                  including payroll taxes
              
              $
              1,402,000
              
              $
              1,203,000
              
              $
              206,000
              
              
              17
              %Professional
                  fees
              
              
              80,000
              
              
              62,000
              
              
              18,000
              
              
              29
              %Travel
                  and entertainment
              
              
              64,000
              
              
              33,000
              
              
              31,000
              
              
              94
              %Other
                  selling, general and administrative
              
              
              362,000
              
              
              367,000
              
              
              (5,000
              )
              
              (1
              %)




Since
        the
        reverse acquisition occurred on February 24, 2006, all but five weeks of
        the
        fiscal year reflect the operations of Ranor under the former management.
        Our
        payroll expense for fiscal 2006 includes payments of approximately $19,000
        under
        our management agreement with Techprecision LLC. These expenses are included
        under payroll since the services performed are those that are performed by
        officers and other employees. The increase in payroll from fiscal 2005 to
        2006
        reflects principally the addition in 2006 of one of the former Ranor
        stockholders as an officer at an annual salary of $150,000.




The
        increase in professional fees reflected additional legal and accounting fees
        resulting from our status as a reporting company under the Securities Exchange
        Act of 1934, including the reports that we filed with the SEC following
        completion of the reverse acquisition.




The
        increase in travel and entertainment expenses from fiscal 2005 to fiscal
        2006
        reflects additional travel expense which we incurred in expanding our marketing
        efforts.




Other
        selling, general and administrative expenses reflect declined modestly from
        fiscal 2005 to fiscal 2006. Since our rent is paid to WM Realty, which is
        a
        special purpose entity that is consolidated with us, our rent is not reflected
        as an expense. Prior to the reverse acquisition, we owned the real estate
        in
        which our manufacturing facilities are located and, accordingly, we had no
        rental expenses prior to the reverse acquisition.




Interest
      expense during fiscal 2006 was $1,107,902 compared to $1,121,487 for fiscal
      2005. The decrease in interest expense reflects a decrease in debt as a result
      of the payment of debt to related parties, which was paid on February 24, 2006.
      The outstanding debt to the related parties was approximately $8,000,000
      throughout fiscal 2005 and during fiscal 2006 through February 24, 2006. The
      interest charge for fiscal 2006 includes interest of $222,944 payable on debt
      to
      the former preferred stockholders which was cancelled in connection with the
      reverse acquisition. At March 31, 2006, our debt was $7,319,401.




As
      a
      result of the foregoing, our net loss for fiscal 2006 period was $428,148,
      or
      $.05 per share (basic and diluted), as compared to a loss of $1,143,800, or
      $.14
      per share (basic and diluted), for fiscal 2005.





**Liquidity
      and Capital Resources**




At
      March
      31, 2006, we had working capital of $91,264, including $492,801of cash. Our
      cash
      position as of June 30, 2006, was $679,845. Our working capital reflects a
      $3,300,000 current liability relating to the mortgage on the real estate on
      which our facilities are located. In connection with the reverse acquisition,
      we
      sold our real estate to WM Realty Management LLC, an affiliated entity which
      is
      a special purpose entity formed to acquire and finance the real estate and
      lease
      the real estate to us pursuant to a net lease. This mortgage is due in August
      2006. Pursuant to FASB Interpretation No. 46, we are required to include the
      real property that we sold to WM Realty Management at our historical cost and
      record the liability as a current liability on our balance sheet. We understand
      that WM Realty Management is seeking to refinance the mortgage. If the mortgage
      is refinanced pursuant to a long term mortgage, the long-term portion of the
      mortgage will be treated as a long-term liability which will result in an
      improvement in our working capital.




On
      February 2006, in connection with the reverse acquisition, the purchase price
      we
      paid was $9.25 million plus an amount equal to Ranor’s cash position in excess
      of $250,000, which was $813,000, less a closing adjustment of $54,000, less
      the
      principal and interest on notes held by Ranor’s preferred stockholders, which
      was paid at closing. We also used $240,000 of Ranor’s remaining cash as part of
      the amount due to the former stockholders/noteholders. These payments were
      made
      by Ranor, which reduced its cash balance to $10,000. The total payments due
      with
      respect to the notes and capital stock was $10,063,000, of which $8,000,000
      was
      paid on account of the principal of the notes and $975,000 on account of
      interest on the notes. We also deposited $925,000 as an escrow reserve for
      any
      potential liability that the sellers may have for breach of their representation
      and warranties. The total amount allocated to the capital stock was $163,000,
      of
      which $10,000 was paid to the stockholders and $153,000 was applied to the
      stockholder’s expenses. In addition, any money paid to the stockholders from the
      escrow will be allocated to purchase price of the preferred
      stock.


20




Although
      we incurred $4,000,000 in bank debt and, pursuant to FIN 46, the $3,300,000
      in
      mortgage debt which is owed by a related party special purpose entity, the
      former debt to the related parties in the amount of approximately $10.0 million
      was settled for payments totaling $8,975,000 of which $8,000,000 was principal
      and $975,500 was interest. In addition, interest of $222,944 to the former
      stockholders was cancelled. The cancellation is reflected as a credit to capital
      in excess of par value. The outstanding debt prior to the reverse acquisition
      included $2,000,000 of mandatory redeemable preferred stock which is reflected
      as debt at March 31, 2005.





The
      loan
      and security agreement with Sovereign Bank, pursuant to which we borrowed
      $4,000,000 on a term loan basis and have a $1,000,000 revolving credit facility,
      requires Ranor to maintain a ratio of earnings available for fixed charges
      to
      fixed charges of at least 1.2 to 1, commencing June 30, 2006, and an interest
      coverage ratio of at least 2:1. The interest coverage ratio is the ratio of
      earnings before interest and taxes to current interest payments. The agreement
      also limits our capital expenditures to $500,000 per year. The note is payable
      in 28 quarterly installments of $142,847. The note bears interest at 9% per
      annum through December 31, 2010 and at prime plus 11⁄2% thereafter. The revolving
      note bears interest at prime plus 11⁄2%. At March 31, 2006 and June 30, 2006,
      there were no borrowings under the revolving note.




In
      fiscal
      2006, we had negative cash flow from operations of $678,505, which is a
      significant improvement from a negative cash flow from operations of $900,595
      for fiscal 2005. We attribute this improvement to our ability to increase both
      our revenue and gross margin in fiscal 2006 period as described under “Results
      of Operations.” However, as a result of the reverse acquisition, we have
      additional expenses, including $200,000 pursuant to a management agreement
      with
      Techprecision, as well as additional expenses which we are incurring as a public
      company. Offsetting these cost increases is the elimination of compensation
      that
      was paid to the former stockholders of Ranor.




In
      the
      normal course of our business, we require funds to enable us to complete our
      contracts. We generally receive customer progress payments to purchase raw
      materials required for the contract, and fund our operations from working
      capital. Contemporaneously with the reverse acquisition, we entered into an
      agreement with Sovereign Bank pursuant to which we borrowed $4,000,000 on a
      term
      loan basis, and we obtained a $1,000,000 revolving credit facility. We used
      the
      net proceeds from the $4,000,000 term loan to pay a portion of our obligations
      to the former Ranor stockholders under the Ranor stock purchase agreement.
      While
      we believe that the $1,000,000 revolving credit facility, which remained unused
      as of March 31, 2006, and our cash flow from our operations should be sufficient
      to enable us to satisfy our cash requirements at least through the end of fiscal
      2007, it is possible that we may require additional funds. We have no commitment
      from any party for additional funds; however, the terms of our agreement with
      Barron Partners may impair our ability to raise capital in the equity markets.
      Our agreement with Barron Partners provides that, for two years after the
      closing, which is the period from February 25, 2006 until February 24, 2008,
      we
      will not incur indebtedness equal to more than three times EBITDA for the
      preceding four quarters.





**Item
      7. Financial Statements.**




The
      financial statements begin on Page F-1.


21





**Item
      8. Changes in and Disagreements With Accountants on Accounting and Financial
      Disclosure.**




There
      were no reportable events or disagreements with our independent accounting
      during or subsequent to the year ended December 31, 2005.





**Item
      8A. Controls and Procedures.**




As
      of the
      end of the period covered by this report, our chief executive officer and chief
      financial officer evaluated the effectiveness of our disclosure controls and
      procedures. Based on their evaluation, the chief executive officer and chief
      financial officer concluded that our disclosure controls and procedures are
      effective in alerting them to material information that is required to be
      included in the reports that we file or submit under the Securities Exchange
      Act
      of 1934.




Our
      principal executive officer and principal financial officer have concluded
      that
      there were no significant changes in our internal controls or in other factors
      that could significantly affect these controls during the fourth quarter ended
      March 31, 2006.





**Item
      8B. Other Information.**




Not
      Applicable





**PART
      III**





**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      with
      Section 16(a) of the Exchange Act.**





**Directors
      and Executive Officers**




**Name**
            
            **Age**
            
            **Position**James
                G. Reindl
            
            47
            
            Chairman
                and chief executive officerMary
                Desmond
            
            42
            
            Chief
                financial officer and secretaryStanley
                A. Youtt
            
            59
            
            Director
                and chief executive officer of RanorMichael
                Holly1
            
            60
            
            DirectorLarry
                Steinbrueck1
            
            54
            
            DirectorLouis
                A. Winoski1
            
            48
            
            Director




1
      Member of the audit and compensation committees.




James
      G.
      Reindl has been a director, chairman and chief executive officer since February
      2006. Mr. Reindl is president of Techprecision, LLC, a company that was formed
      in 2002 to acquire, manage and develop smaller to mid-sized companies in the
      aerospace, military and precision manufacturing industry sectors. Techprecision,
      LLC has a management agreement with us, and Mr. Reindl devotes substantially
      all
      of his business time and attention to our business. From February 1999 until
      February 2002, Mr. Reindl was president and chief executive officer of Critical
      Components Corporation, an aerospace subsidiary of Standard Automotive
      Corporation. During that period, Ranor was a wholly-owned subsidiary of Critical
      Components. Mr. Reindl received his Bachelor of Science degree in mechanical
      aerospace engineering from the University of Delaware.




Mary
      Desmond has been our chief financial officer since February 2006, and she has
      been the chief financial officer of Ranor since 1998. 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.


22




Michael
      Holly has been a director since February 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 College.




Larry
      Steinbrueck has been a director since February 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.




Louis
      A.
      Winoski has been a director since February 2006. Since January 2006, Mr. Winoski
      has been chief operating officer of GCT Garner Inc., an aerospace
      engineering and design services company.  Mr. Winoski is also 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.




Our
      directors are elected for a term of one year.




**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
      is
      an independent director, are the members of both committees. Mr. Holly is the
      audit committee financial expert.




**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 calendar
      year ended December 31, 2005, the Forms 3 filed on March 14, 2006 by James
      G. Reindl and Stanley Youtt, on April 5, 2006 by Andrew Levy and on July 26,
      2006 by Mary Desmond , and the Form 3 and Form 4 filed on August 2, 2006 by
      Mr.
      Holly were filed late. Mr. Steinbrueck and Mr. Winoski are also delinquent
      in
      filing Forms 3 and 4.





**Item
      10. Executive Compensation.**





**SUMMARY
      COMPENSATION TABLE**




Set
      forth
      below is information for the fiscal year ended March 31, 2006 and 2005 for
      Ranor’s chief executive officer and for Ranor’s other executive officers whose
      salary for the year ended March 31, 2006 was at least $100,000.




**Name
                and Position**
            
            **Year**
            
            **Salary**
            
            **Other
                Compensation**James
                G. Reindl, chief executive officer
            
            
            2006
            
            
            -0-
            
            $
            7,500Stanley
                A. Youtt, chief executive officer or Ranor
            
            
            2006
              2005
            
            $
            198,016
              198,016
            
            
            -0-
              -0-William
                Rose, vice president of Ranor
            
            
            2006
            
            
            153,085
            
            
            -0-Jeffrey
                Lippincott, secretary of Ranor
            
            
            2006
              2005
            
            
            138,577
              150,000
            
            
            -0-
              -0-Daniel
                Justicz, treasurer of Ranor
            
            
            2006
              2005
            
            
            135,577
              150,000
            
            
            -0-
              -0-




23




Mr.
      Rose,
      Mr. Lippincott and Mr. Justicz are former stockholders of Ranor and are no
      longer employed by us.




Mr.
      Reindl became our chief executive officer on February 24, 2006. Mr. Reindl
      is a
      member of Techprecision LLC, and he received his compensation through our
      management agreement with Techprecision LLC. The amount shown as “Other
      Compensation” for Mr. Reindl reflects the amount of the payments under the
      management agreement that were allocated to him by Techprecision LLC for the
      year ended March 31, 2006. Our total payments to Techprecision LLC pursuant
      to
      the management agreement during the year ended March 31, 2006 were
      $16,667.




Except
      for an employment agreement with Mr. Youtt, we have no agreement with any of
      the
      officers named in the summary compensation table.




**Employment
      Agreement**




In
      February 2006, 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 year term ending on February 28, 2009. Pursuant to the agreement,
      we
      pay 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.




**Management
      Agreement**




Pursuant
      to a management agreement with Techprecision LLC, we engaged Techprecision
      LLC
      to manage our business through March 31, 2009. The agreement provides that
      we
      pay Techprecision LLC an annual management fee of $200,000 and a performance
      bonus based on criteria determined by the compensation committee. Mr. James
      G.
      Reindl is president and Mr. Andrew A. Levy is chairman of Techprecision LLC,
      and
      they and Martin M. Daube are the members of Techprecision LLC. The agreement
      provides that Techprecision LLC will provide the services of Mr. Reindl at
      chairman, Mr. Levy for marketing support and analysis of long-term contracts
      and
      Mr. Daube for marketing support. None of the members of Techprecision LLC
      receive any additional compensation from us, and the annual fee and any
      performance bonus which may be awarded is allocated among the three
      members.




**Directors’
      Compensation**




We
      did
      not pay our director any cash compensation during the year ended March 31,
      2006.
      Commencing with the year ending March 31, 2007, we pay 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 with year of service as a director, as described under “2006
      Long-Term Incentive Plan.”


24




**2006
      Long-Term Incentive Plan**




In
      February 2006, we adopted, and in July 2006 we amended, subject to stockholder
      approval, the 2006 long-term incentive 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 2006 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. As initially adopted, each newly elected independent
      director received at the time of his election, a five-year option to purchase
      25,000 shares of common stock at the market price on the date of his or her
      election. Pursuant to the amendment to the plan, the number of shares subject
      to
      the initial option grant was increased to 50,000 shares, with the option being
      exercisable as to 30,000 shares in July 2006 and as to 10,000 shares in each
      of
      February 2007 and 2008. 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. For each independent director who is elected after
      July
      31, 2006, the director will receive an 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 will vest as to 30,000 shares six months from the date
      of
      grant and as 10,000 shares on each of the first and second anniversaries of
      the
      date of grant. These directors will receive an annual grant of an option to
      purchase 5,000 shares of common stock on the July 1 st coincident with or following the third anniversary of the date of his or her
      first election. Pursuant to the plan, we granted non-qualified stock options
      to
      our three independent directors - Michael Holly, Larry Steinbrueck and Louis
      Winoski - at an exercise price of $.285 per share, which was determined to
      be
      the fair market value on the date of grant. The options are subject to
      stockholder approval of the 2006 Plan.




Options
      intended to be incentive stock options must be granted at an exercise price
      per
      share which is not less than the fair market value of the common stock on the
      date of grant and may have a term which is not longer than ten years. If the
      option holder holds 10% of our common stock, the exercise price must be at
      least
      110% of the fair market value on the date of grant and the term of the option
      cannot exceed five years.




Option
      holders do not recognize taxable income upon the grant of such either incentive
      or non-qualified stock options. When employees exercise incentive stock options,
      they will not recognize taxable income upon exercise of the option, although
      the
      difference between the exercise price and the fair market value of the common
      stock on the date of exercise is included in income for purposes of computing
      their alternative minimum tax liability, if any. If certain holding period
      requirements are met, their gain or loss on a subsequent sale of the stock
      will
      be taxed at capital gain rates. Generally, long-term capital gains rates will
      apply to their full gain at the time of the sale of the stock, provided that
      they do not dispose of the stock made within two years from the date of grant
      of
      the option or within one year after your acquisition of such stock, and the
      option is exercised while they are employed by us or within three months of
      the
      termination of their employment or one year in the event of death or disability,
      as defined in the Internal Revenue Code.




In
      general, upon the exercise of a non-qualified option, the option holder will
      recognize ordinary income in an amount equal to the difference between the
      exercise price of the option and the fair market value of the shares on the
      date
      they exercise the option. Subject to certain limitations, we may deduct that
      amount an expense for federal income tax purposes. In general, when the holders
      of shares issued on exercise of a nonqualified stock option sell their shares,
      any profit or loss is short-term or long-term capital gain or loss, depending
      upon the holding period for the shares and their basis in the shares will be
      the
      fair market value on the date of exercise.




As
      of
      July 27, 2006, there were outstanding options to purchase 150,000 shares which
      were issued to our independent directors pursuant to provision of the 2006
      Plan
      that provide for the automatic grant of options to independent directors. No
      options were granted to any of the individuals named in the summary compensation
      table.


25


**Item
      11. 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 30, 2006 by:




·
            each
                director;




·
            each
                officer named in the summary compensation
                table;




·
            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




·
            all
                directors and officers as a group.





James
                G. Reindl
              One
                Bella Drive
              Westminster,
                MA 01473
            
            
            2,945,300
            
            
            29.6
            %Andrew
                A. Levy
              46
                Baldwin Farms North
              Greenwich,
                CT 06831
            
            
            2,925,300
            
            
            29.3
            %Howard
                Weingrow
              805
                Third Avenue
              New
                York, NY 10022
            
            
            1,850,000
            
            
            18.6
            %Stanoff
                Corporation
              805
                Third Avenue
              New
                York, NY 10022
            
            
            1,700,000
            
            
            17.1
            %Stanley
                A. Youtt
              One
                Bella Drive
              Westminster,
                MA 01473
            
            
            796,000
            
            
            8.0
            %Martin
                M. Daube
              20
                West 64thStreet
              New
                York, NY 10023
            
            
            671,400
            
            
            6.7
            %Larry
                Steinbrueck
            
            
            204,000
            
            
            2.0
            %Michael
                Holly
            
            
            85,000
            
            
            *Mary
                Desmond
            
            
            10,000
            
            
            *Louis
                A. Winoski
            
            
            -0-
            
            
            -0-All
                officers and directors as a group (five individuals owning
                stock)
            
            
            4,040,300
            
            
            40.5
            %




*
      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 or warrants
      or options or upon conversion of convertible securities if they are exercisable
      or convertible within 60 days of June 30, 2006.




The
      shares owned by Andrew A. Levy represent 2,675,300 shares of common stock owned
      by him and 250,000 shares of common stock owned by Redstone Capital Corporation,
      of which Mr. Levy is president and he and his wife are the sole
      stockholders.




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.


26


Barron
      Partners owns shares of series A preferred stock and warrants which, if fully
      converted or exercised, would result in ownership of more than 5% 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. As a
      result, Barron Partners does not beneficially own 5% or more of our common
      stock.





**Item
      12. Certain Relationships and Related Transactions.**




Mr.
      Levy,
      Mr. Reindl and Mr. Daube may be deemed to be our founders. Transactions between
      us and Mr. Levy, Mr. Reindl and Mr. Daube are described below.




On
      February 24, 2006, we acquired the stock of Ranor pursuant to a stock purchase
      agreement dated as of August 17, 2005 among Ranor Acquisition LLC, Ranor and
      its
      stockholders. In connection with the acquisition of Ranor pursuant to the Ranor
      Agreement:




·
            We
                entered into a preferred stock purchase agreement with Barron Partners,
                pursuant to which Barron Partners invested $2,200,000 for which we
                issued
                7,719,250 shares of a newly-created series of preferred stock, designated
                as the series A preferred stock, and warrants to purchase an aggregate
                of
                5,610,000 shares of common stock at an exercise price of $.57 per
                share
                and 5,610,000 shares of common stock at an exercise price of $.855
                per
                shares. The series A preferred stock were initially convertible into
                7,719,250 shares of common stock, subject to adjustment. Because
                our
                EBITDA for the year ended March 31, 2006 was less than $.04613 per
                share,
                (i) the conversion price of the series A preferred stock reduced
                by
                15%adjusted from $.285 to $.24225, with the result that the series
                A
                convertible preferred stock is convertible into 9,081,527 shares
                of common
                stock, and (ii) the exercise prices of the warrants were reduced
                by 15% --
                from $.57 to $.4245 and from $.855 to $.7268. The conversion rate
                of the
                series A preferred stock and the exercise prices of the warrants
                are
                subject to further adjustment if the Company’s EBITDA per share, on a
                fully-diluted basis, is less than $.08568 per share for the year
                ended
                March 31, 2007, based on the percentage shortfall from $.08568 per
                share,
                up to a maximum reduction of 15%. The adjustment could result in
                an
                increase in the maximum number of shares of common stock being issued
                upon
                conversion of the series A preferred stock from 9,081,527 to 10,684,150
                shares of common stock and a further reduction in the exercise price
                of
                the warrants from $.4845 to $.4118 and from $.7268 to $.6177 per
                share.




·
            We
                purchased 928,000 shares of common stock from Capital Markets Advisory
                Group, which was then our principal stockholder, for $160,339, using
                the
                proceeds from the sale of the series A preferred stock and warrants.
                Prior
                to the reverse acquisition, Capital Markets made advances to Lounsberry
                to
                cover its expenses in the amount of $39,661. These advances were
                paid in
                connection with the reverse acquisition from the proceeds of the
                sales of
                the series A preferred stock and warrants. No other party related
                to
                Lounsberry received any other compensation in connection with the
                reverse
                acquisition.




·
            Pursuant
                to an agreement with Ranor Acquisition and its members, Ranor Acquisition
                assigned its obligations under the Ranor Agreement to us and we assumed
                the obligations of Ranor Acquisition under the Ranor Agreement and
                we
                issued 7,997,000 shares of common stock to the following
                stockholders.





**Name**
            
            **No.
                Shares**James
                G. Reindl
            
            
            3,095,300Andrew
                A. Levy
            
            
            2,825,300Redstone
                Capital Corporation
            
            
            250,000Stanley
                Youtt
            
            
            796,000Martin
                Daube
            
            
            741,400Larry
                Steinbrueck
            
            
            204,000Michael
                Holly
            
            
            85,000Total
            
            
            7,997,000


27




Each
      of
      the individuals named in the foregoing table was a member of Ranor Acquisition
      and received shares in that capacity in consideration of the assignment by
      Ranor
      Acquisition of its rights under the Ranor Agreement. Mr. Levy is president
      of
      Redstone Capital Corporation and all of the stock of Redstone is owned by Mr.
      Levy and his wife. There is no other relationship between the parties listed
      above, although Mr. Reindl, Mr. Levy and Mr. Daube are the members of
      Techprecision LLC, which has a management agreement with us.




·
            We
                sold 1,700,000 shares of common stock to Stanoff Corporation for
                $500,000.




·
            Ranor
                entered into a loan and security agreement with Sovereign Bank pursuant
                to
                which Ranor borrowed $4.0 million, for which Ranor issued its term
                note,
                and Sovereign provided Ranor with a $1.0 million revolving credit
                arrangement. As of the date of this annual report, the revolving
                credit
                arrangement was unused.




·
            Ranor
                entered into a management agreement with Techprecision LLC, pursuant
                to
                which Techprecision LLC would provide management services to Ranor.
                The
                management agreement is described under “Management - Management
                Agreement.” The management fee of $200,000 is allocated by Techprecision
                LLC among its members - Mr. Levy, Mr. Reindl and Mr.
                Daube.




·
            Ranor
                sold the real property on which its facilities are located to WM
                Realty
                Management for $3.0 million. WM Realty Management is a special purpose
                entity which was created in order to acquire the real estate. WM
                Realty
                Management is beneficially owned by Newvision Westminster LLC, of
                which
                Andrew A. Levy, a principal stockholder and a member of Techprecision
                LLC,
                is the manager and a 69% beneficial owner. Mr. James G. Reindl, our
                chairman, chief executive officer and a director, is a 10% beneficial
                owner of Newvision. Larry Steinbrueck and Michael Holly, who are
                directors, are beneficial owners of 1.2% and 0.5%, respectively,
                of
                Newvision. Other principal stockholders who are members of Newvision
                are
                Stanoff Corporation (10%) and Martin Daube (7.8%). The property that
                we
                sold includes the real estate on which our facilities are located
                and
                three potential residential lots, which are presently vacant. We
                lease the
                real estate on which our facilities are located (and not the potential
                residential lots) pursuant to a net lease at an current annual rental
                of
                $438,000, subject to escalation. See “Business-Property” for information
                relating to this lease. Although we believe that the terms of the
                sale and
                the lease are fair to us, the purchase price is less than the appraised
                value of the property and the terms of neither the sale nor the lease
                were
                negotiated at arms length. The property was appraised on October
                31, 2005
                at $4,750,000. The purchase price was based largely upon the maximum
                amount that WM Realty Management could borrow and reflected the fact
                that
                the use of the real estate as a manufacturing facility would not
                be
                considered the best use of the property. Further, the sale to WM
                Realty
                Management also resulted from the requirement by the mortgagee of
                individual guarantees by two of the members of WM Realty
                Management.




In
      connection with the mortgage on the real estate, Mr. Levy and Mr. Reindl gave
      the mortgagee their personal limited guarantee and an environmental guaranty.
      The limited guaranty is triggered by certain defaults by WM Realty Management
      under its mortgage.




In
      connection with the mortgage, we paid certain of WM Realty Management’s legal
      and closing costs of approximately $226,808, which WM Realty Management agreed
      to pay upon refinancing its mortgage.


28




Prior
      to
      the completion of the reverse acquisition, Techprecision LLC advanced us
      $120,000 for expenses relating to the reverse acquisition. We reimbursed
      Techprecision LLC for these expenses in February 2006.




Mr.
      Stanley A. Youtt was a common stockholder of Ranor. Pursuant to the Ranor
      Agreement, he, along with the other former Ranor stockholders, sold his Ranor
      stock to us. Since the consideration paid was used to pay debt and the
      preference on the preferred stockholders, the total amount paid, net of
      allocable expenses, to Mr. Youtt was $700.




No
      finders’ fee was paid by us in connection with the acquisition of Ranor or
      related equity and debt financing.




**Item
      13. Exhibits.**




2.1
            
            Stock
                purchase agreement 13.1
            
            Certificate
                of incorporation 23.2
            
            By-laws
                23.3
            
            Certificate
                of Designation for the Series A Convertible Preferred Stock
                14.1
            
            Loan
                and security agreement dated February 24, 2006, between Ranor and
                Sovereign Bank 14.2
            
            Guaranty
                from the Registrant to Sovereign Bank 14.3
            
            Form
                of warrant issued to Barron Partners LP 110.1
            
            Preferred
                stock purchase agreement dated February 24, 2006, between the Registrant
                and Barron Partners, LP 110.2
            
            Registration
                rights agreement dated February 24, 2006, between the Registrant
                and
                Barron Partners LP 110.3
            
            Agreement
                dated February 24, 2006, among the Registrant, Ranor Acquisition
                LLC and
                the members of Ranor Acquisition LLC 110.4
            
            Subscription
                Agreement dated February 24, 2006 110.5
            
            Registration
                rights provisions pursuant to the agreements listed in Exhibits 10.3
                and
                10.4 110.6
            
            Employment
                agreement between the Registrant and Stanley Youtt
                310.7
            
            Management
                agreement dated February 24, 2006, between Ranor and Techprecision
                LLC
                110.8
            
            Lease,
                dated February 24, 2006 between WM Realty Management, LLC and Ranor
                110.9
            
            2006
                Long-term incentive plan 514.1
            
            Code
                of business conduct and ethics 421.1
            
            List
                of Subsidiaries 323.1
            
            Consent
                of Bloom & Co. LLP31.1
            
            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




(1)
      Filed
      as an exhibit to the Company’s current report on Form 8-K which was filed with
      the Commission on March 3, 2006, and incorporated herein by
      reference.




(2)
      Filed
      as an exhibit to the Company’s registration statement on Form 10-SB, which was
      filed with the Commission on June 23, 2005 and incorporated herein by
      reference.




29




(3)
      Filed
      as an exhibit to the Company’s registration statement on Form SB-2, File No.
      333-133509, which was filed with the Commission on June 24, 2006 and
      incorporated herein by reference.




(4)
      Filed
      as an exhibit to the Company’s annual report on Form 10-KSB for the year ended
      December 31, 2005 and incorporated herein by reference.


30




(5)
      Filed
      herewith.





**Item
      14. Principal Accountant Fees and Services.**




The
      following lists fees paid to Marcum & Kliegman, LLP (“MK”), our former
      independent public accounting firm, during the year ended December 31,
      2005:




**From
                February 10, 2005 (inception) through December 31,
                2005**Audit
                Fees
            
            $
            12,500
            (1)Audit
                Related Fees
            
            
            NoneTax
                Fees
            
            
            NoneAll
                Other Fees
            
            
            None









We
      engaged Bloom & Co., LLP (“Bloom”) as our independent certified public
      accounting firm on March 7, 2006. Bloom was the independent certified public
      accounting firm for Ranor and audited its financial statements at March 31,
      2005
      and for the two years in the period then ending. We did not pay any audit fees
      to Bloom in during 2005. The following lists fees paid to Bloom during the
      year
      ended March 31, 2006:





Audit
                Fees
            
            $
            35,039Audit
                Related Fees
            
            
            NoneTax
                Fees
            
            
            NoneAll
                Other Fees
            
            
            None




Prior
      to
      our acquisition of Ranor, neither we nor Ranor had an audit committee. We
      appointed an audit committee in February 2006, following the acquisition of
      Ranor. It is the policy of the audit committee to review the nature of the
      non-audit work and approve such services in advance. In making its review the
      audit committee determines whether, in its opinion, the performance of such
      services does not impair the independence of our independent public accounting
      firm.


31




**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)Dated:
                  June 13, 2007
              By:
              /s/ James
                  G.
                  ReindlJames
                  G. Reindl, 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.




**Signature**
              
              **Title**
              
              **Date**/s/
                  James G. Reindl*
              
              Chairman
                  of the board, chief executive officer and director
              
              June
                  13, 2007James
                  G. Reindl
              
              (Principal
                  Executive Officer)/s/
                  Mary Desmond*
              
              Chief
                  financial officer
              
              June
                  13, 2007Mary
                  Desmond
              
              (Principal
                  Financial and Accounting Officer)/s/
                  Stanley A. Youtt*
              
              Director
              
              June
                  13, 2007Stanley
                  A. Youtt/s/
                  Michael Holly*
              
              Director
              
              June
                  13, 2007Michael
                  Holly/s/
                  Larry Steinbrueck*
              
              Director
              
              June
                  13, 2007Larry
                  Steinbrueck/s/
              
              Director
              
              ,
                  2006Louis
                  A. Winoski*By:
              /s/
                James G.
                Reindl
              
              
              
              June
                  13, 2007James
                  G. Reindl, Attorney in fact




32





**INDEX
      TO FINANCIAL STATEMENTS**




**TECHPRECISION
      CORPORATION**





**Pages****REPORT
                OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS**
            
            
            **F-2****FINANCIAL
                STATEMENTS****BALANCE
                SHEETS**
            
            
            **F-3****STATEMENTS
                OF OPERATIONS**
            
            
            **F-4****STATEMENTS
                OF STOCKHOLDERS’ DEFICIT**
            
            
            **F-5****STATEMENTS
                OF CASH****FLOWS**
            
            
            **F-6****NOTES
                TO FINANCIAL STATEMENTS**
            
            
            **F-8**










**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, 2006 and 2005, and the related consolidated
      statements of operations, stockholders' equity, and cash flows for the years
      then ended. These financial statements are the responsibility of the
      Company's management. Our responsibility is to express an opinion on these
      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, 2006 and 2005, and the consolidated results of its operations
      and its cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United States of
      America.





/s/Bloom
      and Company LLP


Hempstead,
      New York


July
        26,
        2006, except Notes 1 and 17 as to which the date is March 20,
        2007





F-2





**TECHPRECISION
      CORPORATION**


**CONSOLIDATED
      BALANCE SHEETS**


**MARCH
                  31,****2006**
              
              **2005**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              492,801
              
              $
              1,226,030Restricted
                  cash-indemnification obligation escrow
              
              
              950,000
              
              
              —Accounts
                  receivable, less allowance for doubtful accounts of $25,000 and
                  March 31,
                  2006 and 2005
              
              
              2,481,619
              
              
              1,810,664Other
                  receivables
              
              
              25,665
              
              
              29,561Costs
                  incurred on uncompleted contracts, net of allowance for loss and
                  progress
                  billings
              
              
              1,306,589
              
              
              1,991,643Inventories-
                  raw materials
              
              
              214,148
              
              
              86,703Prepaid
                  expenses
              
              
              386,475
              
              
              116,910Deferred
                  loan costs, net
              
              
              207,402
              
              
              —Total
                  current assets
              
              
              6,064,699
              
              
              5,261,511Property,
                  plant and equipment, net
              
              
              2,556,994
              
              
              2,870,347Other
                  assets deferred loan cost, net
              
              
              46,127
              
              
              —Total
                  Assets
              
              $
              8,667,820
              
              $
              8,131,858CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              691,054
              
              $
              928,170Accrued
                  expenses
              
              
              561,848
              
              
              890,163Due
                  to prior shareholders under escrow obligation
              
              
              843,600Current
                  maturity of long-term debt
              
              
              576,934
              
              
              5,506Mortgage
                  payable
              
              
              3,300,000Total
                  current liabilities
              
              
              5,973,436
              
              
              1,823,839LONG-TERM
                  DEBTMandatory
                  redeemable preferred stock
              
              
              —
              
              
              2,000,000Notes
                  payable- noncurrent
              
              
              3,442,467
              
              
              8,019,422STOCKHOLDERS'
                  DEFICITPreferred
                  stock- par value .0001 per share, 10,000,000 shares authorized,
                  of which
                  9,000,000 are designated as Series A Preferred Stock, with 7,719,250
                  shares issued and outstanding at March 31, 2006
              
              
              2,150,000Common
                  stock -par value .0001 authorized 90,000,000, and 9,967,000 and
                  8,089,000
                  issued and outstanding on March 31, 2006 and 2005,
                  respectively
              
              
              997
              
              
              350Paid
                  in capital
              
              
              1,240,821Accumulated
                  deficit
              
              
              (4,139,901
              )
              
              (3,711,753
              )Total
                  Stockholders' (Deficit) Equity
              
              
              (748,083
              )
              
              (3,711,403
              )$
              8,667,820
              
              $
              8,131,858
  The
        accompanying notes are an integral part of the financial statements.
  F-3


TECHPRECISION
                  CORPORATIONCONSOLIDATED
                  STATEMENTS OF OPERATIONS




Years
                  ended March 31,2006
              
              2005Net
                  sales
              
              
              20,266,402
              
              
              14,269,982Cost
                  of sales
              
              
              17,632,576
              
              
              12,631,640Gross
                  profit
              
              
              2,633,826
              
              
              1,638,342Salaries
                  and related expenses
              
              
              1,000,335
              
              
              1,289,700Professional
                  fees
              
              
              79,787
              
              
              61,608Selling,
                  general and administrative
              
              
              769,083
              
              
              313,540Total
                  operating expenses
              
              
              1,849,205
              
              
              1,664,848Income/(loss)
                  from operations
              
              
              784,621
              
              
              (26,506
              )Other
                  income (expenses)Interest
                  expense
              
              
              (1,107,902
              )
              
              (1,121,487
              )Interest
                  income
              
              
              10,135
              
              
              8,285Closing
                  costs -amortization
              
              
              (58,541
              )Loss
                  on disposition of fixed assets
              
              
              (14,273
              )(1,170,581
              )
              
              (1,113,202
              )Loss
                  before income taxes
              
              
              (385,960
              )
              
              (1,139,708
              )Provision
                  for income taxes
              
              
              (42,188
              )
              
              (4,092
              )Net
                  (loss)
              
              
              ($428,148
              )
              
              ($1,143,800
              )Net
                  loss per share of common stock
              
              
              (0.05
              )
              
              (0.14
              )Weighted
                  average number of shares outstanding
              
              
              8,270,156
              
              
              8,089,000





F-4





**TECHPRECISION
      CORPORATION**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' DEFICIT**


**YEARS
      ENDED MARCH 31, 2006 AND 2005**


**Warrants
                  Preferred Stock**
              
              **Common
                  Stock**
              
              **Paid
                  in**
              
              **Accumulated****Outstanding**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total**Balance,
                  April 1, 2004
              
              
              650,000
              
              
              
              
              
              
              
              
              350,000
              
              $
              350
              
              
              
              
              $
              (2,567,953
              )
              $
              (2,567,603
              )Recapitalization
                  Acquisition of Ranor's shares
              
              
              
              
              
              
              
              
              
              
              
              (350,000
              )
              
              (350
              )
              
              (9,650
              )
              
              
              
              
              (10,000
              )Sale
                  of common shares
              
              
              
              
              
              
              
              
              
              
              
              1,020,000
              
              
              102
              
              
              39,661
              
              
              
              
              
              39,763Purchased
                  and retired shares
              
              
              
              
              
              
              
              
              
              
              
              (928,000
              )
              
              (93
              )
              
              (199,907
              )
              
              
              
              
              (200,000
              )Sale
                  of common shares
              
              
              
              
              
              
              
              
              
              
              
              7,997,000
              
              
              800
              
              
              114,200
              
              
              
              
              
              115,000Retirement
                  of preferred shares and warrants
              
              
              (650,000
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,075,000
              
              
              
              
              
              1,075,000Cost
                  of reverse merger
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (627,139
              )
              
              
              
              
              (627,139
              )Net
                  loss for the year
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,143,800
              )
              
              (1,143,800
              )Balance,
                  March 31, 2005
              
              
              
              
              
              
              
              
              
              
              
              8,089,000
              
              $
              809
              
              
              392,165
              
              $
              (3,711,753
              )
              $
              3,318,779
              )Sale
                  of preferred stock and Warrants
              
              
              11,220,000
              
              
              7,719,250
              
              $
              2,150,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,150,000Sale
                  of common stock
              
              
              
              
              
              
              
              
              
              
              
              1,708,000
              
              
              171
              
              
              501,829
              
              
              
              
              
              502,000Issuance
                    of shares of common stock for services
              
              
              
              
              
              
              
              
              
              
              
              170,000
              
              
              17
              
              
              42,483
              
              
              
              
              
              42,500Contributed
                  Capital
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              304,344
              
              
              
              
              
              304,344Loss
                  for period
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (428,148
              )
              
              (428,148
              )Balance,
                  March 31, 2006
              
              
              11,220,000
              
              
              7,719,250
              
              $
              2,150,000
              
              
              9,967,000
              
              $
              997
              
              $
              1,240,821
              
              $
              (4,139,901
              )
              $
              (748,083
              )





The
      accompanying notes are an integral part of the financial
      statements.





F-5




**TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF CASH
                  FLOWS**




**Years
                  ended****March
                  31,****2006**
              
              **2005****DECREASE
                  IN CASH AND CASH EQUIVALENTS****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss for the period
              
              $
              (
                  428,148
              )
              $
              (1,143,800
              )Noncash
                  items included in net loss:Depreciation
                  and amortization
              
              
              456,383
              
              
              407,706Shares
                  issued for services
              
              
              42,500
              
              
              —Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (
                  667,059
              )
              
              255,989Inventory
              
              
              (
                  127,445
              )
              
              (
                  20,046
              )Costs
                  on uncompletedcontracts
              
              
              1,779,515
              
              
              (
                  880,977
              )Prepaid
                  expenses
              
              
              (
                  269,565
              )
              
              (
                  10,843
              )Accounts
                  payable and accrued expenses
              
              
              (
                  565,431
              )
              
              491,376Customer
                  deposits
              
              
              (1,094,461
              )
              
              ——Net
                  cash used in operating activities
              
              
              (
                  873.711
              )
              
              (900,595
              )CASH
                  FLOWS USED IN INVESTING ACTIVITIESPurchases
                  of property, plant and equipment
              
              
              (
                  83,934
              )
              
              (65,888
              )Net
                  cash used in investing activities
              
              
              (
                  83,934
              )
              
              (
                  65,888
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESMortgage
                  loan
              
              
              3,300,000
              
              
              —Bank
                  loan
              
              
              4,000,000
              
              
              —Sale
                  of common shares
              
              
              656,763
              
              
              —Retirement
                  of common shares
              
              
              (
                  210,000
              )
              
              —Sale
                  of preferred stock
              
              
              2,150,000
              
              
              —Retirement
                  of preferred stock
              
              
              (2,000,000
              )Contributed
                  capital
              
              
              1,379,344Payment
                  of notes
              
              
              (8,005,527
              )
              
              (5,692Increase
                  in restricted cash
              
              
              (950,000
              )Due
                  to former shareholders
              
              
              843,600Cost
                  of reorganization
              
              
              (627,139
              )
              
              —Cost
                  of financing
              
              
              (
                  312,625
              )
              
              —Net
                  cash provided by (used in) financing activities
              
              
              224,416
              
              
              (5,692
              )Net
                  increase (decrease) in cash and cash equivalents
              
              $
              (733,229
              )
              $
              (
                  972,175
              )CASH
                  AND CASH EQUIVALENTS, beginning of period
              
              
              1,226,030
              
              
              2,198,205CASH
                  AND CASH EQUIVALENTS, end of period
              
              $
              492,801
              
              $
              1,226,030





F-6





**TECHPRECISION
      CORPORATION**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Continued)**


**Years
                  ended March 31,****2006**
              
              **2005**Supplemental
                  Disclosures of Cash Flows InformationCash
                  paid during the year for:Interest
                  expense
              
              $
              747,764
              
              $
              934,821Income
                  taxes
              
              $
              3,100
              
              $
              1,181





SUPPLEMENTAL
      INFORMATION-NONCASH TRANSACTIONS:




1.
            On
                February 24, 2006 the Company issued 170,000 shares, valued at $.25
                per
                share, to consultants for services
                rendered.





2.
            On
                February 24, 2006, as a part of restructuring the Company's financing,
                2000 shares of redeemable preferred stock and 650,000 warrants'attached
                to them were retired and $925,000 was placed in an escrow account
                for the
                payment of contingent indemnification obligation costs.The
                balance of the escrow funds, after the payment of all indemnification
                obligation costs, if any, is to be paid to the previous preferredshareholders.
                The Company reduced the cost of the redeemable preferred stock and
                warrants by $2,000,000, increased the additional paid incapital
                by $1,075,000 and recorded a liability of $925,000 that was placed
                in
                escrow.





3.
            To
                date, the amount of environmental remediation costs have been determined
                to be $81,400. Consequently, the amount of indemnificationdue
                to previous shareholders for escrow obligation was reduced and the
                additional paid in capital was increased by $81,400. The formerstockholders
                have the right to dispute the claim and there is no assurance that
                the
                Company will recover such amount, if
                anything.





The
      accompanying notes are an integral part of the financial
      statements.





F-7




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**





NOTE
      1.
      SIGNIFICANT ACCOUNTING POLICIES





Basis
      of
      Presentation and Consolidation





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, 2008. Techprecision is the
      parent company of Ranor, Inc. ("Ranor"), a Delaware corporation.
      Ranor is a Delaware corporation, founded in May 2002 under the name Rbran
      Acquisition, Inc. and changed its name to Ranor, Inc. in August
      2002.





Ranor
      has
      been in business since 1956, and was sold by its founders in 1999 to Critical
      Components Corporation, a subsidiary of Standard Automotive Corporation.
      From June 1999 until August 2002, Ranor was operated by Critical Components
      Corporation. In December 2001, Standard filed for protection
      under the Bankruptcy Code and operated under Chapter 11 until on or about the
      quarter ended June 30, 2002. Subsequently, all Standard's holdings
      were sold. In 2003, Ranor, then known as Rbran Acquisition, Inc., acquired
      the
      Ranor assets from the bankruptcy estate.





Techprecision
      and Ranor are collectively referred to as the "Company."





On
      February 24, 2006, Techprecision acquired all stock of Ranor in a transaction
      which is accounted for as a reverse acquisition, with Ranor being treated
      as the acquiring company for accounting purposes and the transaction being
      treated as a recapitalization. As a result, the costs of the acquisition are
      charged to capital. See Note 2. The financial statements for periods prior
      to
      February 24, 2006 reflect the financial position, results of operations and
      cash
      flows of Ranor. Techprecision changed its fiscal year to the fiscal year ended
      March 31, which was the fiscal year of Ranor prior to the reverse
      acquisition.





The
      accompanying consolidated financial statements include the accounts of the
      Company and all of its wholly owned subsidiary as well as a special purpose
      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





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 values. The amount of federally insured
      cash deposits was $100,000 as of March 31, 2006 and March 31, 2005. 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.





F-8




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**





NOTE
      1.
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





Accounts
      receivable





Trade
      accounts receivable are stated at the amount Ranor expects to collect. Ranor
      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 Ranor's
      customers were to deteriorate, adversely affecting their ability to make payments,
      additional allowances would be required. Based on management's assessment,
      Ranor
      provides for estimated uncollectible amounts through a charge
      to
      earnings and a credit to a valuation allowance. Balances that remain outstanding
      after Ranor 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 were no bad debt expenses for the years
      ended March 31, 2006 and 2005.





Inventories-work
      in process.





Inventories
      consist of raw materials and work in progress which includes labor and factory
      overhead and are stated at the lower of cost or market. Cost is
      determined principally by the first-in, first-out method for materials
      inventory.





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- these assets are recorded at cost less 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 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.





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 there is a favorable buy out clause that would be an inducement for
      us
      to own the asset.





Earnings
      per share (loss)





Loss
      per
      share was computed by dividing the net loss by the number of weighted average
      shares outstanding for the year of the loss. The outstanding convertible
      preferred shares of 7,719,250 and warrants of 11,220,000 were not considered
      for
      a fully diluted calculation because a loss is considered anti-dilutive.





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.





F-9




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**





NOTE
      1.
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





Revenue
      Recognition and Costs Incurred (Continued)





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 $18,210
      in 2006 and $14,060 in 2005.





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 carryforwards.





Variable
      Interest Entity





The
      Company has consolidated a variable interest entity that entered into a sale
      and
      leaseback contract with the Company 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.





Mandatory
      Redeemable Preferred Stock





The
      FASB
      has issued Statement No. 150, Accounting for Certain Financial Instruments
      with
      Characteristics of both Liabilities and Equity. Statement No.
      150
      requires that certain freestanding financial instruments be reported as
      liabilities in the balance sheet. Depending on the type of financial instrument,
      it will be accounted for at either fair value or the present value of future
      cash flows determined at each balance sheet date with the change in
      that
      value reported as interest expense in the income statement. Prior to the
      application of Statement No. 150, either those financial instruments were not
      required to be recognized, or if recognized were reported in the balance sheet
      as equity and changes in the value of those instruments were normally
      not recognized in net earnings.





In
      the
      year ended March 31, 2005, the Company adopted the Statement No. 150 and
      reclassified the carrying value of the redeemable preferred stock from
      stockholders' deficiency to a long-term liability. The effect of the
      reclassification was to increase stockholders' deficiency and
      increaseliabilities.





Recent
      Accounting Pronouncements





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections-a
      replacement of the APB Opinion No. 20 and FASB Statement
      No. 3". SFAS No. 154 changes the requirements for the accounting for and
      reporting of a change in accounting principle, retrospective application
      of previous periods financial statements of changes in accounting principle,
      unless it is impractical to determine either the period specific effect
      of
      the cumulative effect of the change. The statement applies to all voluntary
      changes in accounting principles. It also applies to changes required by
      an
      accounting pronouncement in the unusual instances that the pronouncement does
      not include specific transition provisions. SFAS No. 154 does not
      currently have an effect on the Company's financial statements.





F-10




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**





NOTE
      1.
      SIGNIFICANT ACCOUNTING POLICIES (Continued)





Recent
      Accounting Pronouncements (Continued)





In
      March
      2005, the FASB issued FIN 47, "Accounting for Conditional Asset Retirement
      Obligations-an interpretation of FASB Statement No. 143". FIN
      47
      clarifies that an entity is required to recognize a liability for the fair
      value
      of a conditional asset retirement obligation when incurred if the liability's
      fair value can be reasonably estimated. FIN 47 does not currently have an effect
      on the Company's financial statements.





In
      December 2004, the FASB issued SFAS No. 123 (revised 2005), "Share-Based
      Payment" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting
      for Stock-Based Compensation" ("SFAS 123") and supersedes APB Opinion No. 25,
      "Accounting for Stock Issued to Employees". SFAS 123R
      requires that all share-based payments to employees, including grants of
      employee stock options, be recognized in the financial statements based on
      their
      fair values, beginning with the first interim or annual period after June 15,
      2005, with early adoption encouraged. The pro forma disclosures previously
      permitted under SFAS 123, no longer will be an alternative to financial
      statement recognition.





The
      Company is required to adopt SFAS 123R in the three months ending March 31,
      2006. Under SFAS 123R, the Company must determine the appropriate
      fair value model to be used in valuing share-based payments, the amortization
      method for compensation cost and the transition method to be
      used
      at the date of adoption. Upon adoption, the Company may choose from two
      transition methods: the modified-prospective transition approach or the
      modified-retroactive transition approach. Under the modified-prospective
      transition approach the Company would be required to recognize compensation
      cost for awards that were granted prior to, but not vested as of the date of
      adoption. Prior periods remain unchanged and pro forma disclosures
      previously required by SFAS No. 123 continue to be required. Under the
      modified-retrospective transition method, the Company would be required
      to restate prior periods by recognizing compensation cost in the amounts
      previously reported in the pro forma disclosure under SFAS No. 123. Under
      this method, the Company would be permitted to apply this presentation to all
      periods presented or to the start of the fiscal year in which SFAS No.
      123R
      is adopted. The Company would also be required to follow the same guidelines
      as
      in the modified-prospective transition method for awards granted
      subsequent to adoption and those that were granted and not yet
      vested.





The
      Company is currently evaluating the requirements of SFAS 123R and its impact
      on
      our results of operations and earnings per share. The Company has
      not
      yet determined the method of adoption or the effect of adopting SFAS
      123R.




In
      December 2004, the FASB issued Staff Position ("FSP") No. 109-2, "Accounting
      and
      Disclosure Guidance for the Foreign Earnings Repatriation Provision
      within the American Jobs Creation Act of 2004" ("FSP 109-2"). This position
      provides guidance under FASB Statement No. 109 ("SFAS 109"),
      "Accounting for Income Taxes", with respect to recording the potential impact
      of
      the repatriation provisions of the American Jobs Creation Act of
      2004
      (the "Jobs Act") on enterprises' income tax expense and deferred tax liability.
      The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that
      an
      enterprise is allowed time beyond the financial reporting period of enactment
      to
      evaluate the effect of the Jobs Act on its plan for reinvestment or
      repatriation of foreign earnings for purposes of applying SFAS 109.





In
      November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment
      of
      ARB Opinion No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends
      the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs, and wasted material (spoilage). Among other provisions, the new rule
      requires that items such as idle facility expense, excessive spoilage,
      double freight, and rehandling costs be recognized as current period charges
      regardless of whether they meet the criterion of "so abnormal" as stated
      in
      ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed
      production overheads to the costs of conversion be based on the normal
      capacity of the production facilities. SFAS 151 is effective for fiscal years
      beginning after June 15, 2005. The Company has considered SFAS 151
      and
      has determined that this pronouncement will not materially impact its
      consolidated results of operations.





F-11




RECLASSIFICATION
      AND RESTATEMENT





The
      Company reclassified expenses to provide additional information in the statement
      of operations and reclassified and restated the restricted cash in the statement
      of cash flow. Additional footnote explanations were provided regarding revenue
      recognition, environmental preservation, and cost incurred on uncompleted
      contracts net of advance billing amounts collected. ****




F-12




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**


NOTE
        2.
        REVERSE ACQUISITION





In
      connection with the reverse acquisition, on February 24, 2006:





·
            Techprecision
                entered into a preferred stock purchase agreement with Barron Partners
                LP,
                pursuant to which it sold to Barron Partners, for$2,200,000,
                7,719,250 shares of series A preferred stock, and five-year warrants
                to
                purchase an aggregate of 11,220,000 shares of commonstock.
                The series A preferred stock was initially convertible into 7,719,250
                shares of common stock, subject to adjustment.Because
                the Company did not achieve earnings before interest, taxes, depreciation
                and amortization (EBITDA) of $.04613 per share for theyear
                ended March 31, 2006 on a fully-diluted basis, as defined, the conversion
                rate was adjusted and the series A preferred stock becameconvertible
                into 9,081,527 shares of common stock. The warrants were initially
                exercisable at an average exercise price of $.7125. As a resultof
                the Company's failure to meet the EBITDA target for the year ended
                March
                31, 2006, the average exercise price decreased by 15% to$.6056
                per share. The conversion rate of the series A preferred stock and
                the
                exercise price of the warrants are subject to further adjustment
                ifthe
                Company's EBITDA per share, on a fully-diluted basis, is less than
                $.08568
                per share for the year ended March 31,
                2007.





·
            During
                the period from inception in February 2005 through the completion
                of the
                reverse acquisition on February 24, 2006, Capital Marketshad
                advanced $39,661 to Techprecision (Lounsberry) to pay its expenses.
                On
                February 24, 2006, Techprecision paid $200,000 to CapitalMarkets
                to repurchase and cancel 928,000 shares of common stock and to reimburse
                $39,661 of advances.





·
            The
                Company issued7,997,000shares of common stock to the members of Ranor Acquisition LLC, which
                was
                a party to an August 17, 2005agreement
                to purchase the stock of Ranor (the "Ranor Agreement"), for which
                Ranor
                Acquisition advanced funds on our behalf and assignedits
                rights under the Ranor stock purchase agreement. The Company assumed
                Ranor
                Acquisition's obligations to purchase the Ranor capitalstock
                pursuant to that agreement.





·
            The
                Company sold 1,700,000 shares of common stock to an investor for
                $500,000.





·
            Ranor
                entered into a loan and security agreement with Sovereign Bank pursuant
                to
                which Ranor borrowed $4.0 million, by issuing its termnote,
                and in addition Sovereign provided Ranor with a $1.0 million revolving
                credit arrangement.





·
            Ranor
                sold its real estate to WM Realty Management, LLC for $3.0 million,
                and
                Ranor leased the real property on which its facilities arelocated
                from WM Realty Management, LLC pursuant to a net lease.WM
                Realty Management, LLC is an affiliate of the Company which is a
                variable
                interest entity. As a result, the financial statements do not reflect
                the sale of the real estate, but do show the $3,300,000 mortgage
                obligation, which is due in August 2006, as a current liability of
                the
                Company.




·
            Ranor
                used the net proceeds of the Sovereign Bank loan, as discussed below,
                the
                net proceeds from the sale of the real estate, $240,000 ofavailable
                cash and a portion of the proceeds from the sale of the preferred
                stock to
                pay principal ($8,000,000) and interest ($975,500) on notesto
                Ranor's then principal stockholders. Although the payment was less
                than
                the principal and interest due on the note, the note holders releasedRanor
                from any further obligation under the
                notes.





·
            The
                Company placed $925,000 of the purchase price into escrow. The escrow
                was
                to be the sole source of the former Ranor stockholders'liability
                for breach of the representations and warranties under the Ranor
                Agreement.





F-13





**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      2.
      REVERSE ACQUISITION Continued)




The
      payments were made from the following funds:




1.
              Sale
                  of Ranor's land and building. The property and building held by
                  Ranor was
                  sold to WM Realty Management, LLC for $3 million. To pay the purchase
                  price WM Realty Management, LLC simultaneously placed a $3.3 million
                  11%
                  mortgage on the property. The mortgage is due on August 1, 2006.
                  WM Realty
                  Management, LLC is owned by the controlling persons of Techprecision
                  and
                  was formed for the specific purpose of purchasing and financing
                  the
                  property. Costs associated with this mortgage financing were $265,943.
                  WM
                  Realty Management, LLC was considered a special purpose entity
                  and was
                  consolidated into Techprecision.




2.
            Bank
                Loan. Ranor, Inc. borrowed $4,000,000 from Sovereign Bank, for which
                it
                issued its 72 month term note with quarterly principal payments of
                $142,857 plus interest. The interest on the term loan remains at
                9%
                through December 31, 2010 and will be at prime plus 1.5% thereafter.
                The
                bank also extended a line of credit of $1 million which was unused
                at
                March 31, 2006. The revolving note bears interest at prime plus 1.5%.
                The
                term loan is and the line credit as utilized will be secured by all
                assets
                of Ranor. The costs of the transaction were $46,682.




3.
            Capital
                contribution. Techprecision sold for a purchase price of $2,200,000,
                7,719,250 shares of series A preferred stock and warrants to purchase
                11,220,000 shares of common stock. In connection with this sale,
                Techprecision paid Barron Partners a due diligence fee of $50,000
                Techprecision has an obligation to register the shares of common
                stock
                issuable upon conversion of the series A preferred stock and the
                warrants,
                pursuant to the Securities Act of 1933. If Techprecision fails to
                register
                such shares as required by the agreement, it is required to issue
                2,540
                shares of series A preferred stock for each day that Techprecision
                is
                late. Techprecision filed the registration statement on time. However,
                it
                will be required to issue the shares if the registration statement
                is not
                declared effective when required or if, having been declared effective,
                ceases to be current and effective, with certain limited exceptions.
                In
                addition, if a majority of Techprecision's directors are not independent
                directors or the audit and compensation committees are not omprised
                of a
                majority of independent directors, beyond a grace period, Techprecision
                would be required to pay liquidated damages for each day that this
                requirement is not met at the rate of 12% per annum, with a maximum
                of
                18%, of Barron's investment.




4.
            Techprecision
                also sold 1,700,000 common shares for $500,000 at $.29 per share
                and
                issued 170,000 shares for services at $.25 per share.




**Description
      of Business**




The
      Company produces large metal fabrications and perform precision machining
      operations for large military, commercial, nuclear, aerospace, shipbuilding
      and
      industrial customers. Its principal services are large metal fabrications,
      machining and engineering. Each of the Company's contracts covers a specific
      product. The Company does not mass-produce any products or distribute such
      products on the open market. The Company renders our services under "build
      to
      print" contracts with contractors. However, the Company also helps its customers
      to analyze and develop their projects for constructability by providing
      engineering and research and development services, for which it bills its
      customers.




Although
      the Company provides manufacturing services to large governmental programs,
      the
      Company usually does not work directly for agencies of the United States
      government. Rather, the Company performs its services for large governmental
      contractors and large utility companies.





F-14





**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      3.
      PROPERTY, PLANT AND EQUIPMENT




As
      of
      March 31, 2006 and 2005 property, plant and equipment consisted of the
      following:








**2006**
            
            **2005**Land
            
            $
            110,113
            
            $
            110,113Building
                and improvements
            
            
            1,290,072
            
            
            1,223,054Machinery
                equipment, furniture and fixtures
            
            
            2,609,698
            
            
            2,592,7824,009,883
            
            
            3,925,949Less:
                accumulated depreciation
            
            
            1,452,889
            
            
            1,055,602$
            2,556,994
            
            $
            2,870,347




Depreciation
      expense for the years ended March 31, 2006 and 2005 were $412,988 and $407,707,
      respectively. Land and buildings (which are owned by WM Realty Management,
      LLC-
      a consolidated entity under Fin 46 R) are collateral for the $3,300,000 Mortgage
      Loan and 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.





F-15




**TECHPRECISION
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**




NOTE
      4.
      COSTS INCURRED ON UNCOMPLETED CONTRACTS




The
      Company recognizes revenues based upon the units-of-delivery method (see Note
      1).  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 products allows the Company to offset the progress payments against
      the
      costs incurred.




2006
                
                2005Cost
                    incurred on uncompleted contracts, beginning balance
                
                $
                4,669,165
                
                $
                2,719,391Total
                    cost incurred on contracts, during the year
                
                
                15,853,060
                
                
                14,581,417Less
                    cost of sales, during the year
                
                
                (17,632,576
                )
                
                (12,631,643
                )Cost
                    incurred on uncompleted contracts, ending balance
                
                $
                2,889,649
                
                $
                4,669,165Billings
                    on uncompleted contracts, beginning balance
                
                $
                2,677,522
                
                $
                1,608,725Plus:
                    Total billings incurred on contracts, during the year
                
                
                6,760,524
                
                
                5,360,266Less:
                    Contracts recognized as revenue, during the year
                
                
                (7,854,985
                )
                
                (4,291,469
                )Billings
                    on uncompleted contracts, ending balance
                
                $
                1,583,061
                
                $
                2,677,522Cost
                    incurred on uncompleted contracts, ending balance
                
                $
                2,889,649
                
                $
                4,669,165Billings
                    on uncompleted contracts, ending balance
                
                
                1,583,061
                
                
                2,677,522Cost
                    incurred on uncompleted contracts, ending balance, net
                
                $
                1,306,588
                
                $
                1,991,643


On
      March
      31, 2006 and 2005, $86,141 and $26,436 of allowance for losses on uncompleted
      contracts were recognized, respectively. All inventories are collateral for
      Sovereign Bank loan and constitute a part of the computation of the maximum
      loan
      amount under the agreement.




NOTE
      5.
      PREPAID EXPENSES




As
      of
      March 31, 2006 and 2005, the prepaid expenses included the following:




**2006**
              
              **2005**Insurance
              
              $
              173,152
              
              $
              99,619Interest
              
              
              122,001
              
              
              —Mortgage
                  payment
              
              
              36,500
              
              
              —Real
                  estate taxes
              
              
              34,921
              
              
              11,269Mortgage
                  servicing fee
              
              
              3,529
              
              
              —Equipment
                  maintenance
              
              
              6,022
              
              
              6,022Quality
                  control audit fees
              
              
              10,350
              
              
              —Total
              
              $
              386,475
              
              $
              116,910





F-16


**TECHPRECISION
        CORPORATION**
 **NOTES
        TO FINANCIAL STATEMENTS**


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
      over the term of the related debt obligation, 5 months to 72 months.
      Amortization charged to operations in 2006 and 2005 were $59,096 and $-0-,
      respectively. As of March 31, deferred charges were as follows:


**2006**
              
              **2005**Deferred
                  costs expiring in one year or less:Deferred
                  mortgage costs
              
              $
              265,943Less:
                  accumulated amortization
              
              
              (58,541
              )
              
              —$
              207,402
              
              $
              -0-Deferred
                  costs expiring after one year:Deferred
                  loan costs
              
              $
              46,852Accumulated
                  amortization
              
              
              (655
              )
              
              —$
              46,127
              
              $
              -0-




NOTE
      7.
      LONG-TERM DEBT




The
      following debt obligations, outstanding on March 31:


**2006**
              
              **2005**1.
                  Long-term debt paid off on February 24, 2006:·Preferred
                  Stock - 2,000 shares, $.001 par value, authorized, issued and outstanding
                  2,000 andredeemable
                  on August 7, 2012
              
              
              —
              
              $
              2,000,000· Green
                      Mountain Partners III,
                      L.P. - Unsecured note payable - with semi-annual interest installments
                      at
                      14%, due in February and August. Principal payments of $800,000
                      due
                      annually commencing on August 7, 2006 through August 7, 2011,
                      and
                      $1,600,000 balance due on August 7, 2012. The note was subject
                      to various
                      covenants including a restriction on the incurrence of additional
                      debt or
                      commitments
              
              
              —
              
              
              6,400,000·Phoenix
                  Life Insurance Company -Unsecured note payable- with semi-annual
                  interest
                  installments at
                  14%, due in February and August. Principal payments of $200,000
                  due
                  annually commencing on August
                  7, 2006 through August 2011, and $400,000 balance due on August
                  7, 2012.
                  The note was subject
                  to various covenants including a restriction on the incurrence
                  of
                  additional debt
              
              
              —
              
              
              1,600,0002.
                  Long-term debt issued on February 24, 2006:·Sovereign
                  Bank-Secured Term note payable- 72 month 9% variable term note
                  with
                  quarterly principal
                  payments of $142,857 plus interest. Final payment due on March
                  1,
                  2013
              
              $
              4,000,000
              
              
              —3.
                  Automobile Loan·Ford
                  Motor Credit Company-Note payable secured by a vehicle - payable
                  in
                  monthly installments of $552
                  including interest of 4.9%, commencing July 20, 2003 through June
                  20,
                  2009
              
              
              19,401
              
              
              24,9284,019,401
              
              
              10,024,928Principal
                  payments due within one year
              
              
              576,934
              
              
              5,506Principal
                  payments due after one year
              
              $
              3,442,467
              
              $
              10,019,422




F-17




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENT** S




NOTE
      7.
      LONG-TERM DEBT (Continued)




On
      February 24, 2006, Ranor entered into a loan and security agreement with
      Sovereign Bank, West Hartford, Ct. as part of the agreement the bank has granted
      the Company a term loan of $4,000,000 and extended the Company a line of credit
      of $1,000,000, initial interest at 9%. The interest on the line of credit is
      variable. At March 31, 2006 the amount due on the line of credit was zero.




The
        note
        is subject to various covenants that include the following: the loan collateral
        comprises all personal property of the Company, including cash, accounts
        receivable, inventories, equipment, financial and intangible assets owned
        when
        the loan is contracted or acquired thereafter; the amount of loan outstanding
        at
        all times is limited to a borrowing base amount of the Company's qualified
        accounts receivable and inventory; there are prepayment penalties of 3%,
        2% and
        1% of the outstanding principal, in the first, second and third years following
        the issuance date, respectively. There is no prepayment penalty thereafter;
        the
        Company is prohibited from issuing any additional equity interest (except
        to
        existing holders), or redeem, retire, purchase or otherwise acquire for value
        any equity interests; unused credit line fee is 0.25% of the average unused
        credit line amount in previous month; earnings available to cover fixed charges
        are required not to be less than 120% of fixed charges for the quarter ending
        June 30, 2006 building to a rolling four (4) quarter basis, tested at the
        end of
        each fiscal quarter; interest coverage ratio is required to be not less than
        2:1
        as at the end of each fiscal quarter.




As
      of
      March 31, 2006, the maturities of long-term debt were as follows:








**Years
                ending March 31,**
            
            **Amount**2007
            
            $
            576,9342008
            
            
            577,5262009
            
            
            577,8322010
            
            
            572,8252011
            
            
            571,428Due
                after 2011
            
            
            1,142,856Total
            
            $
            4,019,401




NOTE
      8.
      INCOME TAXES




The
      provision for income taxes differs from the amount computed by applying the
      statutory federal income tax rate to the net income or loss from operations.
      The
      sources and tax effects of the differences are as follows:


March
                  31, 2006Income
                  tax provision at statutory rate of 39%
              
              $
              (588,500
              )Tax
                  benefit before net operating loss carry forward
              
              
              546,300Net
                  tax provision
              
              $
              42,200
  F-18


NOTE
      8.
      INCOME TAXES (Continued)




As
      of March 31, 2006 and 2005, 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:





**2006**
            
            **2005**Deferred
                Tax Assets:CurrentCompensation
                accrual
            
            $
            73,000
            
            $
            127,600Bad
                debt allowance
            
            
            9,800
            
            
            9,800Inventory
                allowance
            
            
            —
            
            
            26,900Loss
                on uncompleted contracts
            
            
            33,600
            
            
            113,900Net
                operating loss carry-forward
            
            
            —
            
            
            588,500Non-CurrentNet
                operating loss carry-forward
            
            
            760,800
            
            
            764,700Total
                deferred tax assets
            
            
            877,200
            
            
            1,631,400Deferred
                Tax liabilities:Non-CurrentDepreciation
            
            
            197,600
            
            
            191,400Net
                deferred tax asset
            
            
            679,600
            
            
            1,440,000Valuation
                allowance
            
            
            (679,600
            )
            
            (1,440,000
            )Net
                Deferred Tax Asset Balance
            
            $
            —
            
            $
            —




At
      March
      31, 2006 and 2005, the Company provided a full valuation allowance for its
      net
      deferred tax assets. The Company believes sufficient uncertainty exists
      regarding the realizability of the deferred tax assets. The net change in the
      valuation allowance during the years ended March 31, 2006 and 2005 was
      $(588,500) and $372,989, respectively. The sale and leaseback of the Company's
      land and building for $3,000,000 to a special purpose entity, WM Realty
      Management, LLC, resulted in a gain of 1,734,700. The reduction in the deferred
      tax asset of $588,500 represents the realized tax benefit of the loss
      carryforward.




As
      of
      March 31, 2006, the Company's U.S. federal net operating loss carryforward
      was
      approximately $1,950,800 for income tax purposes. If not utilized, the federal
      net operating loss carryforward will expire in 2025. Furthermore, because of
      over fifty percent changes in ownership, as a consequence of the reverse merger,
      as defined by Section 382 of the IRC, the amount of net operating loss carry
      forward used in any one year in the future is substantially limited.




NOTE
      9.
      RESTRICTED CASH - INDEMNIFICATION OBLIGATION ESCROW




In
      May
      2004, The Company was requested to undertake a response and remedial action
      to
      cleanup environmental issues discovered during an onsite inspection by the
      Commonwealth of Massachusetts Office of Environmental Affairs. The Company
      signed a consent order in October 2004, paid a fine of $7,800 and proceeded
      to
      correct the deficiencies.




The
      stock
      purchase agreement, pursuant to which the Company purchased the outstanding
      securities of Ranor, provided for the parties to establish an escrow account
      into which $925,000 of the purchase price of the securities was placed. If
      the
      sellers had breached any of their representations and warranties under the
      stock
      purchase agreement, the Company's sole recourse is against the escrow account.
      To the extent that there is no claim against the escrow by one year from the
      closing, the escrow account is paid to Ranor's former stockholders. The Company
      is entitled to recover from the escrow an amount equal to its damages sustained
      as a result of a breach by the selling stockholders of their representations
      and
      warranties. The Company has recorded an expense and a claim against the escrow
      account in the amount of $81,400. The claim is for the former stockholders'
      breach of their representations and warranties relating to environmental
      matters. The Company reflects the recovery of this amount on its March 31,
      2006
      balance sheet as a reduction in the amount due to the former stockholders and
      an
      increase in additional paid in capital.





F-19




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      10.
      RELATED PARTY TRANSACTIONS




Management
      Fees




Until
      February 24, 2006, Ranor had to pay management fees totaling $200,000 per year
      to four shareholders under agreements that expire in August 2006.




On
      February 24, 2006 the prior management agreement was canceled any balance due
      was forgiven and the Company entered into a new management and consulting
      agreement with Techprecision Management, LLC a Company composed of shareholders
      of Techprecision. The Agreement ends on March 31, 2009.




During
      the Consulting Period, manager shall serve as a consultant to the Company and
      each of its existing and future Subsidiaries. The consultation will include
      assistance with the determination of the goals, general policies and direction
      of the Company and its subsidiaries, financings, manufacturing, sales,
      distribution and customer relations.




Manager's
      consulting fee will be initially set at $200,000 per annum, payable semi-monthly
      commencing March 1, 2006. In addition to the Management
      Fee, the manager shall be entitled to a performance bonus determined as follows;
      The compensation committee of the Board of Directors will set performance
      objectives for the fiscal year. If the performance objectives are attained
      or
      exceeded, the Company will pay the manager a performance bonus equal to two
      and
      one-half percent of the Company's cash flow from operations for the fiscal
      year.
      In the event that the Company makes
      an
      acquisition or dispose of a business segment during a fiscal year, the
      performance objectives may be revised by the compensation committee to
      reflect such transaction.




Loan
      from
      Related Parties




Ranor
      had
      long-term debt payable to Green Mountain Partners III, L.P. and Phoenix Life
      Insurance Company (see Note 7), which held the outstanding preferred
      stock, a portion of the common stock and common stock warrants. Interest expense
      charged to operations under this related party debt was $1,073,466 and
      $1,120,000 in 2006 and 2005, respectively. On February 24, 2006 Green Mountain
      and Phoenix forgave interest of $222,944 which was a capital contribution.




Sale
      and
      Lease Agreement and Intra-company Receivable




On
      February 24, 2006 WM Realty Management, LLC borrowed $3,300,000 to purchase
      from
      Ranor, Inc. its real property for $3,000,000 which was appraised on October
      31,
      2005 at $4,750,000 and leased the building an a part of the land to Ranor,
      Inc.
      Techprecision advanced $226,808 to pay closing costs and has a receivable of
      that amount from WM Realty Management, LLC. WM Realty Management, LLC was formed
      solely for this purpose; its partners are shareholders of Techprecision. The
      Company has considered WM Realty Management, LLC a special purpose entity as
      defined by FIN 46, and therefore has consolidated its operations into
      Techprecision.




The
      WM
      Realty Management, LLC mortgage bears interest at 11% that is paid monthly
      with
      principal of $25,000. The balance of $3,300,000 is due on August 1, 2006.
      Expenses of obtaining the mortgage were $192,455 and are being amortized over
      approximately a 5 month period.




NOTE
      11.
      OPERATING LEASE




Ranor
      leases office equipment under operating lease agreements expiring through
      November 2008. Total rent expense charged to operations was $16,700 and $19,900
      in the years ended March 31, 2006 and 2005, respectively.




F-20




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      11.
      OPERATING LEASE (Continued)




Future
      minimum lease payments under noncancellable portions of the leases as of March
      31, 2006, are as follows:




**Years
                ending March 31,**
            
            
            **Amount**2006
            
            $
            16,6782007
            
            
            16,6782008
            
            
            15,288Total
                minimum lease payments
            
            $
            48,644




NOTE
      12.
      SALE AND LEASE




On
      February 24, 2006 Ranor, Inc. entered into a sale and lease back arrangement
      with WM Realty Management, LLC, a special purpose entity. The sale of the
      building was for $3,000,000. The term of the Lease is for a period of fifteen
      years commencing on February 24, 2006. For the year ended March 31, 2006 rent
      expense paid by the Company was $36,500. This amount was eliminated in
      consolidation and the interest and depreciation were expensed.




The
      Company has 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 grreater 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.
      Minimum rental for the base year of the lease is $438,000. Effective as of
      January of each year subsequent to the base year, during the contract and any
      subsequent extension, a cost of living adjustment will be made to the minimum
      rental, based on the Consumer Price Index.




The
      Company has the option to repurchase the property at any time beginning after
      one year from the date of the agreement, at the appraised market value.




The
      minimum future lease payments are as follows:




**Year
                Ended March 3,**
            
            **Amount**2007
            
            $
            438,0002008
            
            
            438,0002009
            
            
            438,0002010
            
            
            438,0002011-2015
            
            
            2,190,0002016-2021
            
            
            2,190,0002022
            
            
            438,000Total
            
            $
            6,570,000





F-21




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      13.
      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. There were no employer-matched contributions charged to
      operations in the years ended March 31, 2006 and 2005, respectively.




NOTE
      14.
      CAPITAL STOCK




Preferred
      stock




On
      March
      31, 2005, the Company had 2,000 shares of preferred stock outstanding. The
      preferred stock were classified as Series A and carried a mandatory redemption
      provision. Under the August 7, 2002 Stockholders Agreement, all unexercised
      warrants issued in conjunction with preferred stock expired and Ranor was
      required to redeem all the outstanding shares at $1,000, per share, on August
      7,
      2012. The preferred stock and related freestanding warrants on the shares that
      were puttable were classified as a liability in accordance with FASB statement
      150. Ranor had the option to redeem any or all the shares prior to that date.
      The preferred shares carried no voting or dividend rights. The preferred shares
      carried a preference of $1,000 per share in the event of liquidation.




The
      stockholder agreements contained a provision whereby, effective August 2009,
      any
      preferred stockholder could have, upon written notice, require Ranor to
      repurchase their shares at a price as defined in that agreement. On February
      24,
      2006, all of the preferred stock and related warrants were acquired by
      Techprecision in connection with the reverse acquisition and were cancelled.




On
      February 24, 2006, Barron Partners LP purchased 7,719,250 shares of series
      A
      preferred stock, par value $0.0001 per share for $2,150,000, net of a $50,000
      due diligence fee payable to Barron Partners. Initially, Series A Preferred
      Stock are convertible into common stock at a conversion rate of one share of
      Common Stock, for each share of Series A Preferred Stock. In addition, pursuant
      to the preferred stock purchase agreement, Techprecision issued to Barron
      Partners common stock purchase warrants to purchase up to 5,610,000 of Common
      Stock at $0.57 per share and 5,610,000 shares of Common Stock at $0.855 per
      share.




Because
      the Company did not attain EBITDA of $.04613 per share for the year ended March
      31, 2006 on a fully-diluted basis, as defined, the conversion rate was adjusted
      (0.85 shares of preferred stock for one share of common stock, a reduction
      in
      rate of 15%) and the series A preferred stock became convertible into 9,081,527
      shares of common stock. As a result of the Company's failure to meet the EBITDA
      target for the year ended March 31, 2006, the exercise price of the warrants
      decreased by 15%, from $.57 to $.4845 and from $.855 to $.7268 per share.




The
      conversion rate of the series A preferred stock and the exercise price of the
      warrants are subject to further adjustment if the Company's EBITDA per share,
      on
      a fully-diluted basis, is less than $.08568 per share for the year ended March
      31, 2007, based on the percentage shortfall from $.08568 per share, from zero
      up
      to a maximum adjustment of 15%. The adjustment could result in an increase
      in
      the maximum number of shares of common stock being issued upon conversion of
      the
      series A preferred stock from 9,081,527 to 10,684,150 shares of common stock
      and
      a further reduction in the exercise price of the warrants from $.4845 to $.4118
      and from $.7268 to $.6177 per share.




EBITDA
      per share is earnings from recurring operation before any charges relating
      to
      the transactions involved in February 24, 2006 agreement and any other non
      recurring items, including warrants, but excluding options or stock grants
      issued to management and key employee. The per share figures are computed on
      a
      fully-diluted basis. Fully diluted EBITDA is based on the number of outstanding
      shares of Common Stock plus all shares of Common Stock issuable upon conversion
      of all outstanding convertible securities and upon exercise of all outstanding
      warrants, options and rights, regardless of whether (i) such shares would be
      included in determining diluted earnings per share and (ii) such convertible
      securities are subject to a restriction or limitation on exercise. Thus, for
      purpose of determining fully-diluted Pre-Tax Income Per Share, the 4.9%
      limitation shall be disregarded. In determining the EBITDA any shares of Common
      Stock issuable as a result of an adjustment to the Conversion Prices will be
      excluded.





F-22





**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      14.
      CAPITAL STOCK (Continued)




Preferred
      stock (Continued)




The
      Investor 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% ("4.9% Limitation") of the then
      outstanding number of shares of Common Stock. The agreement provides that this
      provision cannot be amended.




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 transfer
      and/or converts not less than 90% of the preferred shares and sells the
      underlying shares of common stock and for two years after Closing not to enter
      into any new borrowing of more than three times the sum of the earnings before
      interest, tax, depreciation and amortization (EBITDA) from recurring operations
      over the trailing four quarters.




The
      preferred shareholders have 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 preferred
      shareholders 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.




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 shall not be redeemed while preferred stock is
      outstanding.




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.




The
      Series A Preferred Shareholders do not have voting rights. However, the approval
      of the holders of 75% of the outstanding preferred shares is required to amend
      the certificate of incorporation, change the provisions of the preferred stock
      purchase agreement, to authorize additional Series A Preferred Shares in
      addition to the 9 million maximum authorized, or to authorize any class of
      stock
      that ranks senior with respect to voting rights, dividends or liquidations.




Stock
      warrants




At
      March
      31, 2005, the Ranor preferred shareholders and debt holders had warrants to
      acquire 650,000 shares of common stock at a price of $.001 per share. The
      warrants were immediately exercisable and would have expired on August 7, 2012.
      The stockholder agreements contained a provision whereby, effective August
      2009,
      any holders of stock warrants could have, upon written notice, require Ranor
      to
      repurchase the warrants or any shares issued under the warrant agreement at
      a
      price as defined in the agreement. At March 31, 2005, these warrants had no
      determinable value. The warrants carried repurchase provisions and 650,000
      shares of common stock had been reserved for the issuance of these warrants.
      The
      warrants were cancelled on February 24, 2006.




On
      March
      31, 2006 there were 11,220,000 warrants attached to convertible preferred
      shares. These warrants are exercisable, in part or full, at any time from
      February 24, 2006 to expiration time, February 24, 2011. The number of shares
      to
      be received upon exercise of the warrant is determined by multiplying the total
      number shares with respect to which this Warrant is then being exercised with
      the percentage difference between the last reported sales and exercise price
      of
      the stock. The exercise price is further adjusted considering the amount of
      EBITDA similar to the conversion price.




Common
      stock




Techprecision
      common shares, $.0001 par value, outstanding on March 31, 2006 were 9,967,000.
      During the recapitalization, 350,000 outstanding shares of Ranor were exchanged
      for 7,997,000 shares of Techprecision. Shares of Techprecision were sold or
      purchased, by Techprecision between $.25 and $.29 per share for the year ending
      March 31, 2006.





F-23





**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




NOTE
      15.
      2006 LONG-TERM INCENTIVE PLAN




In
      February 2006 the directors adopted, subject to stockholder approval, the 2006
      long-term incentive plan. The purpose of the Company's 2006 Long- Term Incentive
      Plan ("the Plan") is to attract, retain and reward officers and other key
      employees, directors, consultants and independent contractors of the Company.
      The Plan will be administered by a committee of the Company's independent
      directors. They will determine to what extent incentive stock options,
      non-qualified stock options, stock appreciation rights, restricted stock,
      deferred stock, stock purchase rights and/or other stock-based awards, of them,
      are to be granted pursuant to the Plan, to one or more eligible persons. The
      total number of shares of Stock reserved and available for distribution under
      the Plan is 1,000,000 shares of common stock.




Stock
      Options granted under the Plan may be of two types: (i) incentive stock options
      and (ii) non-qualified stock options. The option price, term and exercise
      conditions will be determined by the Committee at the time of grant. But no
      Stock Option will be exercisable more than ten (10) years after the date the
      Option is granted.




On
      July
      first of each year, commencing in 2007, each independent director will be
      granted a non-qualified stock option to purchase five thousand shares of stock
      (or such lesser number of shares of stock as remain available). The stock
      options will be exercisable at a price per share equal to the greater of the
      fair market value on the date of grant or the par value of one share of stock.
      The non-qualified stock options granted will become exercisable cumulatively
      as
      to fifty percent of the shares subject six months from the date of grant and
      as
      to the remaining fifty percent eighteen months from the date of grant. The
      options will expire on the earlier of five years from the date of grant, or
      seven months from the date such independent director ceases to be a director.




The
      independent director, when first elected to the Board, will automatically
      receive a non-qualified stock option to purchase 25,000 shares of common stock
      (or such lesser number of shares of Stock as remains available). The Stock
      Options will be exercisable at a price per share equal to the greater of the
      Fair Market Value on the date of grant or the par value of one share of Stock.




NOTE
      16.
      CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS




Ranor
      maintains bank account balances, which, at times, may exceed insured limits.
      Ranor has not experienced any losses with these accounts. Management believes
      Ranor is not exposed to any significant credit risk on cash.




In
      2006,
      Ranor sold a substantial portion of its products to two different customers
      in
      each of the last two years. Sales for the years ended March 31, 2006 and 2005,
      to these customers were approximately $3.0 million (15%), and $2.6 million
      (13%)
      in 2006 and approximately $2.7 million (19%), and $1.6 million (11%) in 2005.
      At
      March 31, 2006, amounts due from these customers, included in trade accounts
      receivable, were $519,667 and $38,777, respectively and at March 31, 2005
      $286,696 and $248,604, respectively.




NOTE
      17.
      CONTINGENT LIABILITIES




Officer
      employment contract




On
      February 24, 2006 the Company entered into a new employment agreement with
      Mr.
      Stanley Youtt to be chief executive officer of Ranor, Inc. (subsidiary company)
      until January 31, 2009. Mr. Youtt has been the chief executive officer for
      the
      past 3 years. As compensation for services and in consideration of his agreement
      not to compete the Company agreed to pay him an annual base salary of $200,000
      that may be increased by the Board of Directors. The CEO is eligible for an
      annual cash performance bonus based upon the Company's financial performance
      as
      set forth in a resolution of the Board within the first three months of each
      year. CEO is eligible for any Stock Option Plan, as the Board shall in its
      sole
      discretion institute from time to time.





F-24





**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**




Warranties




Products
      are designed and inspected during the building process by customers before
      they
      leave the factory. Once the customer has signed off that he has inspected the
      final product then the Company no longer has any responsibility or warrants
      the
      functionality of that product. Because the Company does not warrant our products
      the Company has not set up a set up a reserve for product warranties.




Environmental
      Preservation- Subsequent Event




In
      the
      fiscal year ended March 31, 2007 the Company plans to construct a shed to store
      scrap materials and make a claim for construction costs under the escrow
      agreement, based on a breach of the seller's representations and warranties
      relating to environmental compliance. The purpose of the shed is to protect
      the
      surrounding soil from any seepage. The estimated cost of constructing the shed
      is approximately $100,000.




In
      the
      quarter ended June 30, 2006, the Company hired an engineer and constructed
      an
      appropriate shed to store scrap materials and protect the surrounding soil
      from
      any potential seepage. The Company planned to make a claim for construction
      costs under the escrow agreement, based on a breach of the former shareholders’
(sellers’) representations and warranties relating to environmental compliance.
      The construction work was completed at a cost of $81,400. On March 31, 2006,
      the
      Company charged the $81,400 remediation-construction obligation to the amount
      due to sellers and included it in accrued expenses. In February 2007, pursuant
      to an agreement with the sellers, the Company received $500,000 from the funds
      established under the escrow agreement. The construction cost of $81,400 was
      reimbursed from these funds. The cost of environmental compliance was $86,975
      for the year ended March 31, 2006. The cost of the chip bin construction was
      approximately $110,000. We believe that we are currently in compliance with
      applicable environmental regulations and that our current ongoing obligations
      at
      its present facilities will not be material. **





F-25