UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-KSB




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.)





One
                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 research and development services
      which are included in our charges to our customers.




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 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.




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, Ranor acquired the assets of its predecessor from the
      bankruptcy estate. 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.




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, the conversion rate was adjusted and the series
                A
                preferred stock is now convertible into 9,081,527 shares of common
                stock.
                The conversion rate is subject to further adjustment if our EBITDA
                is less
                than $.08568 per share for the year ended March 31,
                2007.




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          1
          -




·
            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.




Our
      executive offices are located at One 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.




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          2
          -




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
      all of our services are performed pursuant to special order contracts, we have
      no continuing source of revenue.*




We
      do not
      have long-term contracts with almost all of our customers, and major contracts
      with a small number of customers account for a significant percentage of our
      revenue. We must bid 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.*




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          3
          -




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.




*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.




*Our
      business may be impacted in the event of a default by an affiliate under a
      mortgage relating to the real property leased by us.*




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
      purchase and obtain financing for our real property. The purchase of the real
      property was financed by a six-month mortgage given to a non-affiliated third
      party. The mortgage note is due in August 2006 and, as of the date of this
      annual report, the mortgage has not been refinanced. Any default by the
      affiliated entity under its mortgage, including its failure to replace the
      current lender prior to the maturity date, could result in an increase in our
      rental as well as a foreclosure under the mortgage. Any foreclosure of the
      mortgage could impair our ability to obtain bank financing and could adversely
      affect our business and our credit. Further, since the affiliated entity’s
      operations are included in our consolidated financial statements, any default
      by
      the affiliate would be reflected as a default in our financial statements even
      though we do not control the affiliate.




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          4
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*We
      may not be able to continue to grow through acquisitions.*




An
      important part of our growth strategy is to expand our business and to acquire
      other businesses, which may or may not be related to our current businesses.
      Such acquisitions may be made with cash or our securities or a combination
      of
      cash and securities. If our stock price is less than the exercise price of
      the
      outstanding warrants, it is not likely that that warrants will be exercised.
      To
      the extent that we require cash, we may have to borrow the funds or sell equity
      securities. The issuance of equity, if available, would result in dilution
      to
      our stockholders. We have no commitments from any financing source and we may
      not be able to raise any cash necessary to complete an acquisition. If we fail
      to make any acquisitions, our future growth may be limited. As of the date
      of
      this annual report, we do not have any agreement or understanding, either formal
      or informal, as to any acquisition.




*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.




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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.




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*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.




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          7
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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.




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          8
          -




**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
      produce large metal fabrications and perform precision machining operations
      for
      large defense, aerospace, nuclear, industrial and shipbuilding customers. Our
      principal services are large metal fabrications, machining and engineering.
      Each
      of our contracts covers a specific product. 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. We
      are
      one of two companies currently capable of machining one-piece aluminum domes
      for
      Boeing’s Delta III and Delta IV rocket programs. We do not mass-produce any
      products or distribute such products on the open market.




We
      perform most of our service pursuant to “build to print” contracts, which means
      that we must manufacture products in accordance with very exacting
      specification. These contracts are generally awarded in a bidding process.
      Because of the nature of the products that we manufacture, there is a very
      low
      tolerance for error. We will also help our clients to develop their projects
      by
      providing engineering and research and development services. Periodically,
      we
      will also perform research and development services for our customers as part
      of
      a contract. However, the costs of such research and development work, is paid
      by
      the customer. Through this periodic development work we may develop the
      intellectual property to complete the project. In such cases when the work
      is
      complete, we will own this intellectual property. However, we do not possess
      any
      patents, trademarks, licenses, franchises, concessions or royalty
      agreements.




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          9
          -




**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. Rather, we purchase our
      raw
      materials pursuant to purchase orders that we place with our suppliers, based
      on
      the specific requirements for our contracts. We undertake projects that are
      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**




As
      a
      manufacturer, 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.
      In May 2004, we were 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. We signed a
      consent order in October 2004, paid a fine of $7,800 and proceeded to correct
      the deficiencies. 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. In addition,
      we need to
      construct a shed to store scrap materials in order to protect the surrounding
      soil from any seepage. We estimate the cost of this construction at
      approximately $100,000.




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          10
          -




In
      connection with the reverse acquisition, the former stockholders of Ranor made
      representations concerning, among other matters, Ranor’s compliance with
      environmental law and regulations, and agreed to indemnify us for breaches
      of
      representations under the agreement. The agreement provides for a $925,000
      escrow reserve to cover any damages that we may sustain as a result of breaches
      of the representations and warranties, including the representations relating
      to
      environmental compliance. We believe that the former stockholders have breached
      their representations and warranties with respect to the environmental matters
      and intend to make a claim against the escrow. However, we cannot assure you
      that we will prevail on any claim against the escrow.




**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 a national laboratory, from which we
      recognized revenue of approximately $3.0 million (14.6% of revenue), and a
      defense contractor, from which we recognized revenue of approximately $2.6
      million (12.9%). For the year ended March 31, 2005, we recognized revenue of
      approximately $2.7 million (18.8%) from a nuclear customer and approximately
      $1.6 million (11.0%) from a commercial customer.




**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.




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          11
          -




**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.




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          12
          -




**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 optionsand
                warrants
            
            Weighted-average
                exercise price of outstanding optionsand warrants
            
            Number
                of securities remaining available for future issuance under
                equitycompensation 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.”




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          13
          -




**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.




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          14
          -


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.




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          15
          -




**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.




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          16
          -




·
            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.




**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.




-
          17
          -




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
            %





-
          18
          -




**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 $1,907,746, compared
      to
      $1,664,848 for fiscal 2005, an increase of $242,898, or 15%. Significant
      components of selling, general and other expenses for fiscal 2006 include
      $1,402,059 of salaries and related payroll taxes, $64,099 of travel and
      entertainment expenses and $79,787 for legal and accounting fees, compared
      with
      $1,203,273 of salaries and related payroll taxes, $32,748 of travel and
      entertainment expenses and $61,607 for legal and accounting fees for fiscal
      2005.




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 $1,092,719. 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.




-
          19
          -




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.


-
          20
          -




**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.


-
          21
          -




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-




-
          22
          -




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.”


-
          23
          -




**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.


-
          24
          -




**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.


-
          25
          -




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




-
          26
          -




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 wasappraised
                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.


-
          27
          -




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 agreement13.1
            
            Certificate
                of incorporation23.2
            
            By-laws23.3
            
            Certificate
                of Designation for the Series A Convertible Preferred Stock14.1
            
            Loan
                and security agreement dated February 24, 2006, between Ranor and
                Sovereign Bank14.2
            
            Guaranty
                from the Registrant to Sovereign Bank14.3
            
            Form
                of warrant issued to Barron Partners LP110.1
            
            Preferred
                stock purchase agreement dated February 24, 2006, between the Registrant
                and Barron Partners, LP110.2
            
            Registration
                rights agreement dated February 24, 2006, between the Registrant
                and
                Barron Partners LP110.3
            
            Agreement
                dated February 24, 2006, among the Registrant, Ranor Acquisition
                LLC and
                the members of Ranor Acquisition LLC110.4
            
            Subscription
                Agreement dated February 24, 2006110.5
            
            Registration
                rights provisions pursuant to the agreements listed in Exhibits 10.3
                and
                10.4110.6
            
            Employment
                agreement between the Registrant and Stanley Youtt310.7
            
            Management
                agreement dated February 24, 2006, between Ranor and Techprecision
                LLC110.8
            
            Lease,
                dated February 24, 2006 between WM Realty Management, LLC and
                Ranor110.9
            
            2006
                Long-term incentive plan514.1
            
            Code
                of business conduct and ethics421.1
            
            List
                of Subsidiaries323.1
            
            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.




(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.


-
          28
          -




(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









(1)
      Fees
      billed in connection with MK’s audit of the financial statement from February
      10, 2005 to April 30, 2005 for the purpose of the registration statement on
      Form
      10-SB filed on June 23, 2005 and MK’s review of our interim financial statements
      for the quarters ended June 30, 2005 and September 30, 2005.




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.


-
          29 -


**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:
              August 1, 2006
            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. Each person whose signature
      appears below hereby authorizes James G. Reindl and Mary Desmond or either
      of
      them acting in the absence of the others, as his or her true and lawful
      attorney-in-fact and agent, with full power of substitution and resubstitution
      for him or her and in his or her name, place and stead, in any and all
      capacities to sign any and all amendments to this report, and to file the same,
      with all exhibits thereto and other documents in connection therewith, with
      the
      Securities and Exchange Commission.




**Signature**
            ****
            **Title**
            ****
            **Date**/s/
                James G. Reindl
            
            Chairman
                of the board, chief
                executive officer and director
            
            August
                1, 2006James
                G. Reindl
            
            (Principal
                  Executive Officer)/s/
                Mary Desmond
            
            Chief
                financial officer
            
            August
                1, 2006Mary
                Desmond
            
            (Principal
                Financial and Accounting Officer)/s/
                Stanley A. Youtt
            
            Director
            
            August
                1, 2006Stanley
                A. Youtt/s/
                Michael Holly
            
            Director
            
            August
                1, 2006Michael
                Holly/s/
                Larry Steinbrueck
            
            Director
            
            August
                1, 2006Larry
                Steinbrueck/s/
            
            Director
            
            , 2006Louis
                A. Winoski




-
          30 -




**INDEX
      TO FINANCIAL STATEMENTS**




**TECHPRECISION
        CORPORATION**
 
 **MARCH
        31, 2006 AND 2005**
 
 **CONTENTS**
 
 **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**
  F-1
 
 BLOOM
                  & CO, LLP . 50 CLINTON STREET, SUITE 502 . HEMPSTEAD . NEW YORK 11550.
              TEL
                  : 516 - 486-5900CERTIFIED
                  PUBLIC ACCOUNTANTS
              FAX
                  : 516 - 486-5476
 
 STEVEN
                  BLOOM, CPA
              MEMBER
                  OFFREDERICK
                  PAUKER, CPA
              AMERICAN
                  INSTITUTE OFSIROUSSE
                  TABRIZTCHI, Ph.D. CPA
              CERTIFIED
                  PUBLIC ACCOUNTANTS
 
 **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
  F-2
 
 **TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  BALANCE SHEETS**
 
 **MARCH
                    31,****2006**
              
              **2005****CURRENT
                  ASSETS**Cash
                  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
              
              $
              8,131,858**CURRENT
                  LIABILITIES**Accounts
                  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
              
              
              1,823,839**LONG-TERM
                  DEBT**Mandatory
                  redeemable preferred stock
              
              
              —
              
              
              2,000,000Notes
                  payable- noncurrent
              
              
              3,442,467
              
              
              8,019,422**STOCKHOLDERS’
                  DEFICIT**Preferred
                  stock- parvalue
                  .0001 per share, 10,000,000 shares authorized,of
                  which 9,000,000 are designated as Series A Preferred Stock, with
                  7,719,250shares
                  issued and outstanding at March31, 2006
              
              
              2,150,000Common
                  stock -par value .0001 authorized 90,000,000, and9,967,000
                  and 8,089,000 issued and outstandingon
                  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
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
 
 **Years
                  ended March 31,****2006**
              
              **2005**Net
                  sales
              
              $
              20,266,402
              
              $
              14,269,982Cost
                  of sales
              
              
              17,632,576
              
              
              12,631,640Gross
                  profit
              
              
              2,633,826
              
              
              1,638,342Selling,
                  general and administrative
              
              
              1,907,746
              
              
              1,664,848Income/(loss)
                  from operations
              
              
              726,080
              
              
              (
                  26,506
              )Other
                  income (expenses)Interest
                  expense
              
              
              (1,107,902
              )
              
              (1,121,487
              )Interest
                  income
              
              
              10,135
              
              
              8,285Loss
                  on disposition of fixed assets
              
              
              (
                  14,273
              )(1,112,040
              )
              
              (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
              )Weighted
                  average number of shares outstanding
              
              
              8,270,156
              
              
              8,089,000Net
                  loss per common share
              
              
              (.05
              )
              
              (.14
              )
 The
          accompanying notes are an integral part of the financial
          statements.
 
 (a)
        The
        weighted average number of shares for March 31, 2005 reflects the
        recapitalization of Ranor as of April 1, 2004.
  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 sharesand
                  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 andWarrants
              
              
              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 ofcommon
                  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 uncompleted contracts
              
              
              1,779,515
              
              
              (
                  880,977
              )Prepaid
                  expenses
              
              
              (
                  269,565
              )
              
              (
                  10,843
              )Accounts
                  payable and accrued expenses
              
              
              (
                  565,431
              )
              
              491,376Customer
                  deposits
              
              
              (1,094,461
              )
              
              —Forgiveness
                  of interest
              
              
              222,944
              
              
              —Net
                  cash used in operating activities
              
              
              (
                  650,767
              )
              
              (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 ACTIVITIESSale
                  of preferred stock
              
              
              2,150,000
              
              
              —Sale
                  of common shares
              
              
              656,763
              
              
              —Retirement
                  of common shares
              
              
              (
                  210,000
              )
              
              —Payment
                  of notes
              
              
              (8,005,527
              )
              
              (5,692
              )Mortgage
                  loan
              
              
              3,300,000
              
              
              —Bank
                  loan
              
              
              4,000,000
              
              
              —Cost
                  of financing
              
              
              (
                  312,625
              )
              
              —Cost
                  of reorganization
              
              
              (627,139
              )
              
              —Net
                  cash provided by (used in) financing activities
              
              
              951,472
              
              
              (5,692
              )Net
                  increase (decrease) in cash and cash equivalents
              
              $
              216,771
              
              $
              (
                  972,175
              )CASH
                  AND CASH EQUIVALENTS, beginning of period
              
              
              1,226,030
              
              
              2,198,205CASH
                  AND CASH EQUIVALENTS, end of period
              
              $
              1,442,801
              
              $
              1,226,030
 
 The
        accompanying notes are an integral part of the financial
        statements.
  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 preferred shareholders.
                      The Company
                      reduced the cost of the redeemable preferred stock and warrants
                      by
                      $2,000,000, increased the additional paid in capital 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 indemnification
                      due to previous
                      shareholders for escrow obligation was reduced and the additional
                      paid in
                      capital was increased by $81,400. The former stockholders 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.
 
 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
 **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 common stock. 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 the year ended March 31, 2006 on a fully-diluted basis,
                  as
                  defined, the conversion rate was adjusted and the series A preferred
                  stock
                  became convertible into 9,081,527 shares of common stock. The warrants
                  were initially exercisable at an average exercise price of $.7125.
                  As a
                  result of 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
                  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.
 
 ·
              During
                  the period from inception in February 2005 through the completion
                  of the
                  reverse acquisition on February 24, 2006, Capital Markets had advanced
                  $39,661 to Techprecision (Lounsberry) to pay its expenses. On February
                  24,
                  2006, Techprecision paid $200,000 to Capital Markets to repurchase
                  and
                  cancel 928,000 shares of common stock and to reimburse $39,661
                  of
                  advances.
  ·
              The
                  Company issued 7,697,000 shares of common stock to the members
                  of Ranor
                  Acquisition LLC, which was a party to an August 17, 2005 agreement
                  to
                  purchase the stock of Ranor (the “Ranor Agreement”), for which Ranor
                  Acquisition advanced funds on our behalf and assigned its rights
                  under the
                  Ranor stock purchase agreement. The Company assumed Ranor Acquisition’s
                  obligations to purchase the Ranor capital stock 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 term note, 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 are located
                  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 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.
  F-
            12
  **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 uponconversionof
                  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 comprised 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-
            13
  **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.
 
 **NOTE
        4. COSTS INCURRED ON UNCOMPLETED CONTRACTS**
  The
        Company recognizes revenues based upon the units-of-delivery method (see
        Note
        1).
  Contracts
        in process consisted of the following at March 31:
 **2006**
                
                **2005**Costs
                    incurred on uncompleted contracts, net of allowance for
                    loss
                
                
                2,889,650
                
                
                4,669,165Less:
                    Advance billings and deposits
                
                
                (1,583,061
                )
                
                (2,677,522
                )$
                1,306,589
                
                $
                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-
            14
 **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 :__
                
                $
                2,000,000·Preferred
                    Stock - 2,000 shares, $.001 par value, authorized, issued and
                    outstanding
                    2,000 and redeemable on August 7, 2012.·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-
              15
  **TECHPRECISION
          CORPORATION**
 **NOTES
          TO FINANCIAL STATEMENTS**
  **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 unrepaid 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, 2006**Income
                      tax provision at statutory rate of 39%
                  
                  $
                  (
                      588,500
                  )Tax
                      benefit before net operating loss carry forward
                  
                  
                  546,300Net
                      tax provision
                  
                  $
                  42,200
 
 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:
  F-
            16
  **TECHPRECISION
          CORPORATION**
 **NOTES
          TO FINANCIAL STATEMENTS**
 **NOTE
        8.  INCOME TAXES (Continued)**
 
 **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
  F-
            17
  **TECHPRECISION
          CORPORATION**
 **NOTES
          TO FINANCIAL STATEMENTS**
  March
        31,
        2006 balance sheet as a reduction in the amount due to the former stockholders
        and an increase in additional paid in capital.
  **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-
            18
  **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 greater of (i) the minimum rent payable under the lease
        immediately prior to either the expiration date, or the expiration of the
        preceding option term, or (ii) the fair market rent for the leased premises.
        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 31**
              ****
              **Amount**2007
              
              $
              438,0002008
              
              
              438,0002009
              
              
              438,0002010
              
              
              438,0002011-2015
              
              
              2,190,0002016-2021
              
              
              2,190,0002022
              
              
              438,000Total
              
              $
              6,570,000
 
  F-
            19
  **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-
            20
 **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-
            21
 
 **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-
            22
 
 **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.
  F-
            23