UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-KSB/A




(AMENDMENT
      NO. 2)




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




For
      the
      fiscal year ended March 31, 2007




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




For
      the
      transition period from __________ to ____________




Commission
      File No. 0-51378




Techprecision
      Corporation


(Name
      of
      small business issuer in its charter)





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





Bella
                Drive, Westminster, Massachusetts
            01473(Address
                of principal executive offices)
            (Zip
                Code)Issuer’s
                telephone number: (978)
                874-0591





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


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





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





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




Check
      here if there is no disclosure of delinquent filers in response to Item 405
      of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act. Yes o No x.




State
      issuer’s revenue for its most recent fiscal year: $19,086,209




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 10,049,000 shares of the Company’s common stock, $.0001 par value,
      outstanding as of June 25, 2007.




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




**DOCUMENTS
      INCORPORATED BY REFERENCE:** None









**EXPLANATORY
        NOTE**
  Techprecision
        Corporation (“the Company”) is filing this Amendment No. 2 to its Annual Report
        on Form 10-KSB for the fiscal year ended March 31, 2007 to include the audited
        financial statements inadvertently not included in the filing of Amendment
        No. 1
        to this Form 10-KSB.











**Item
      1. Business.**




**Our
      Business**




Through
      our wholly-owned subsidiary, Ranor, Inc., we produce large metal fabrications
      and perform precision machining operations for alternative energy, large
      military, commercial, nuclear, shipbuilding, industrial and aerospace
      applications. The alternative energy applications, includes the fabrication
      of
      equipment for use in the generation of solar and wind power. 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” purchase orders with our clients. However, we also help our
      customers to analyze and develop their projects for constructability by
      providing engineering services which are included in our charges to our
      customers pursuant to a purchase order covering such services.




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




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




**About
      Us**




We
      are a
      Delaware corporation, organized in 2005 under the name Lounsberry Holdings
      II,
      Inc. Our name was changed to Techprecision Corporation. 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. On March 6, 2006, following the acquisition of Ranor,
      we
      changed our corporate name to Techprecision Corporation. Prior to the
      acquisition of Ranor, Lounsberry was not engaged in any business activity and
      was considered a blank check company.




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 Standard
      Automotive Corporation through its subsidiary Critical Components Corporation.
      From June 1999 until August 2002, Ranor’s predecessor was operated by Critical
      Components. In December 2001, Standard filed for protection under the Bankruptcy
      Code, and Ranor’s predecessor operated under Chapter 11 until on or about the
      quarter ended June 30, 2002. Subsequently, all Standard’s holdings were sold.




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




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During
      2005, James G. Reindl and Andrew A. Levy negotiated with Ranor’s principal
      stockholders for the acquisition of all of the stock of Ranor, which included
      the payment or settlement of all of Ranor’s outstanding debt which was payable
      to Green Mountain Partners and Phoenix Life Insurance Company. In this
      connection, in April 2005, they formed Ranor Acquisition LLC, a Delaware limited
      liability company, for the purpose of acquiring Ranor. The control persons
      and
      principal members of Ranor Acquisition were James G. Reindl and Andrew A. Levy,
      and the founders of Ranor Acquisition LLC were Mr. Reindl, Mr. Levy and Mr.
      Daube. On August 17, 2005, Ranor Acquisition entered into an agreement to
      acquire all of the capital stock and warrants of Ranor for a purchase price
      equal to $9,250,000 plus the amount by which Ranor’s net cash amount exceeded
      $250,000, less a closing adjustment of $54,000 and less the amount of principal
      and interest on the debt held by Ranor’s two principal stockholders. These two
      stockholders also held Ranor’s preferred stock. Since Ranor’s net cash amount
      was $1,117,000, the amount due to the sellers was increased by $813,000, which
      resulted in total payments of $10,063,000. The agreement contained standard
      representations and warranties of the sellers concerning Ranor, and $925,000
      of
      the purchase price was placed in escrow to provide a fund against which any
      claims for breach of the representation and warranties under the agreement
      can
      be made. In February 2007, we settled our claims against the escrow fund for
      $500,000, which we received in February 2007. These claims related to breaches
      of the sellers' representations and warranties relating to environmental matters
      and breaches of other representations and warranties, principally relating
      to
      Ranor's ability to deliver good title to the real estate and expenses incurred
      in correcting these matters. These issues have been resolved and the conditions
      relating to these breaches do not have any effect upon our ongoing
      business.




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




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




The
      total
      payments were disbursed as follows:




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




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          -




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




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




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




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




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




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




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




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·
            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 5,610,000 shares of common stock at $.57 per share and
                5,610,000 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. As a result of our failure to meet
                targeted
                levels of EBITDA for the years ended March 31, 2006 and 2007, (i)
                the
                conversion price of the series A preferred stock was reduced from
                $.285 to
                $.218025, with the result that the series A convertible preferred
                stock
                became convertible into 10,090,586 shares of common stock, and (ii)
                the
                exercise prices of the warrants were reduced from $.57 to $.43605
                and from
                $.855 to $.654075, with no adjustment in the number of shares issuable
                upon exercise of the warrants.




·
            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 7,997,000 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, LLC for $3.0 million, and Ranor
                leased
                the real property on which its facilities are located from WM Realty
                pursuant to a net lease. WM Realty is an affiliate of the
                Company.




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




Our
      executive offices are located at Bella Drive, Westminster, MA 01473, telephone
      (978) 874-0591. Ranor’s website is www.ranor.com. Information on Ranor’s website
      or any other website is not part of this annual report on Form
      10-KSB.




References
      in this prospectus 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.




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**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 prospectus 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**




*We
      cannot assure you that we will be able to operate
      profitably.*




Although
      we generated modest net income for the year ended March 31, 2007, we incurred
      losses in the years ended March 31, 2006 and 2005, and we cannot assure you
      that
      we will be able to operate profitably in the future. Further, as a result of
      the
      reverse acquisition and our status as a reporting company, our ongoing expenses
      have increased significantly. 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
      we may require additional financing to expand our operations, our failure to
      obtain necessary financing may impair our operations.*




At
      March
      31, 2007, we had working capital of approximately $3,397,887. The only funding
      available to us, other than our cash flow from operations, is $500,000 capital
      equipment facility and a $2.0 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
      and
      to develop our business. 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. To the extent that we require financing, the absence of a public market
      for our common stock, the terms of our February 2006 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 business
      or
      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 price 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.




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




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          5
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We
      do not
      have long-term contracts with our customers, and major contracts with a small
      number of customers account for a significant percentage of our revenue. We
      must
      bid or negotiate each contract separately, and when we complete a contract,
      there is generally no continuing source of revenue under that contract. As
      a
      result, we cannot assure you that we have a continuing stream of revenue from
      any contract. 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, 2007, our three largest customers
      accounted for approximately 44% of our revenue, and each of these customer
      accounted for less than 10% of revenue during both the year ended March 31,
      2006
      and the year ended March 31, 2005. 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 and the year ended March 31, 2007. To the extent that
      we
      are unable to generate orders from new customers, we may have difficulty
      operating profitably.




*Because
      our customers include major defense contractors, our size and financial
      condition may place us at a competitive disadvantage in seeking
      business.*




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. 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 before the
      bid
      is issued. Since our customers include major defense customers, our failure
      to
      satisfy potential customers as to our financial health may prevent us from
      obtaining business.




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




A
      significant portion of our contracts result from 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 an RFP 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.




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*Because
      our revenue is generated pursuant to contracts that are limited to specific
      projects, 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. Furthermore, changes in contracts also affect the results of our
      operations on a period to period basis. 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.




*Because
        of the nature of our business, we are subject to environmental regulations,
        we
        have in the past failed to comply with these regulations, and our failure
        to
        comply with these regulations has in the past resulted in, and could in the
        future result in, increased costs as well as penalties for violation of these
        regulations.*
  As
        a
        manufacturing business, we must comply with federal and state environmental
        laws
        and regulations which relate to the manner in which we store and dispose
        of
        materials and the reports that we are required to file. In the past, we have
        not
        be in compliance with all environmental regulations and, consequently, we
        have
        experienced increased costs and penalties. Any future non-compliance could
        result in both significant costs to become compliant as well as penalties
        which
        we may be required to pay as a result of non-compliance. During the fiscal
        year
        ended March 31, 2006, we incurred expenses of approximately $87,000 to cure
        deficiencies which we discovered in connection with our purchase of Ranor
        in
        February 2006. In June 2007, the United States Environmental Protection Agency
        brought an administrative complaint against us alleging discharge of pollutants
        and the failure to file required reports in violation of the Clean Water
        Act and
        the Emergency Planning and Community Right-to-Know Act. We have entered into
        a
        consent agreement and final order with the Environmental Protection Agency
        pursuant to which we agreed to pay a penalty of $106,000 for these violations.
        We cannot assure you that we will not incur additional costs to maintain
        compliance with environmental laws and regulations or that we will not incur
        significant penalties for failure to be in compliance.




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




Although
      we perform manufacturing services pursuant to orders placed by our customers,
      we
      have in the past experienced delays in the scheduling and changes in the
      specification of the products. These changes may result from a number of
      factors, including a determination by the customer that the product
      specifications need to be changed after receipt of an initial product or
      prototype. As a result of these changes, we suffered a delay in the recognition
      of revenue from the projects. We cannot assure you that our revenue will not
      be
      affected in the future by delays or changes in specifications or that we will
      ever be able to recoup revenue which was lost as a result of the delays or
      changes. Our revenue in the six months ended September 30, 2006 was affected
      by
      the postponement of one contract after the delivery of the initial unit and
      a
      delay in delivery under a second contract that was postponed and restarted
      as a
      result of a change in the customer's drawings resulting in a decline in revenue
      on a period to period basis. Further, if we cannot allocate our personnel to
      a
      different project, we will continue to incur some expenses relating to the
      project, including labor and overhead. Our net income for the six months ended
      September 30, 2006 was impacted by our need to maintain staffing for the
      postponed projects, even though they were not fully utilized during this period.
      We cannot assure you that our income will not decline in future periods as
      a
      result of changes in customers' orders or their requirements for the products
      that they ordered.




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




Purchase
      orders from our customers require the precision manufacturing of products to
      very close tolerances which are required in the industries to which we market
      our services. Our failure to meet these tolerances 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.




*Because
      a significant portion of our business is as a government subcontractor, our
      failure or the failure of the prime contractor to comply with government
      procurement and other regulations could result in a loss of
      business.*




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.




*The
      bankruptcy of Ranor's predecessor may impair our ability to attract new
      business.*




In
      2002,
      Ranor's predecessor filed for protection under the Bankruptcy Code. As a result
      of that bankruptcy, the predecessor experienced a loss of business. We cannot
      assure you that our business will not be affected by the predecessor's
      bankruptcy or that the factors which caused the predecessor's bankruptcy,
      including the need to perform additional services without increasing the price,
      thereby reducing the gross margins, will not affect our business.




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




Although
      we have no present plans for any acquisitions, in the event that 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;




-
          8
          -




·
            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.




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 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 plans may dilute the value
      of
      existing stockholders and may affect the market price of our
      stock.*




-
          9
          -




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. 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 or preferred 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.




*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. Under
      the
      current SEC regulations, we will be required to include a management report
      on
      internal controls over financial reporting in our Form 10-KSB annual report
      for
      the year ended March 31, 2008, and we will be required to include an auditor’s
      report on internal controls over financial reporting for the year ended March
      31, 2009. 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. Further, at such time as we are required to comply with the internal
      controls requirements of Sarbanes Oxley, we may incur significant expenses
      in
      having our internal controls audited and in implementing any changes which
      are
      required.




-
          10
          -




*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 82 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 shares of our common
      stock; however, as of the date of this annual report, the registration statement
      has not been declared effective. 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.




*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.




*We
      are required to pay liquidated damages because the registration statement of
      which this prospectus is a part was not declared effective in a timely manner
      and we may be required to pay liquidated damages if we do not maintain a board
      consisting of a majority of independent directors.*




The
      registration rights agreement which we executed in connection with the February
      2006 private placement required us to file a registration statement by April
      25,
      2006 and to have the registration statement declared effective by the SEC by
      August 23, 2006. Since we failed to meet the required deadline for this
      registration statement to be declared effective, as a result of an amendment
      to
      the registration rights agreement, we are required to issue 33,212 shares of
      series A preferred stock to Barron Partners, which shares are recorded as
      outstanding at March 31, 2007. In addition, if the registration statement is
      not
      declared effective by October 15, 2007, liquidated damages will accrue at the
      rate of 531 shares of series A preferred stock for each day after October 15,
      2007 that the registration statement has not been declared
      effective.




The
      purchase agreement relating to the February 2006 private placement requires
      us
      to maintain a board of directors on which a majority of directors are
      independent directors and an audit committee composed solely of independent
      directors and the compensation committee with have a majority of independent
      directors. Although we presently meet these requirements, our failure to
      continue to meet these requirements could result in our payment of liquidated
      damages that could be payable in cash or by the issuance of additional shares
      of
      series A preferred stock, as the investors shall determine. Our maximum
      liability under this provision is $396,000.




-
          11
          -




*Because
      the holder of our warrants have cashless exercise rights, we may not receive
      proceeds from the exercise of the outstanding warrants if the underlying shares
      are not registered.*




The
      holders of our warrants have cashless exercise rights, which provide them with
      the ability to receive common stock with a value equal to the appreciation
      in
      the stock price over the exercise price of the warrants being exercised. This
      right is not exercisable if the underlying shares are subject to an effective
      registration statement, and accordingly, the holders have the cashless
      registration rights until the effective date of the registration statement
      and
      thereafter if the warrants are not subject to a current and effective
      registration statement. As of the date of this annual report, none of the shares
      of common stock issuable upon exercise of the warrants have been registered
      pursuant to the Securities Act of 1933, and, as a result, the holders of those
      warrants, which cover the right to purchase 11,220,000 shares of common stock,
      have cashless exercise rights with respect to the underlying shares. To the
      extent that the holders of the warrants exercise this right, we will not receive
      proceeds from such exercise.




*The
      issuance and sale of the common stock issuable upon conversion of the series
      A
      preferred stock and exercise of the warrants could result in a change of
      control.*




If
      we
      issue all of the shares of common stock issuable upon conversion of the series
      A
      preferred stock and exercise of the warrants, including those that are covered
      by this prospectus, the 20,301,527 shares of common stock so issuable would
      constitute approximately 67% 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 become upon conversion of the series A
      preferred stock pursuant to the anti-dilution and adjustment provisions and
      pursuant to the liquidated damages provision of the registration rights
      agreement. Any sale of all or a significant percentage of those shares to a
      person or group could result in a change of control.




**General**




We
      perform large metal fabrications and precision machining operations for large
      alternative energy, military, commercial, nuclear, shipbuilding, industrial
      and,
      aerospace applications. The alternative energy applications include
      the fabrication of equipment for use in the generation of solar and wind power.
      Our largest customer for the year ended March 31, 2007 was a company in the
      alternative energy industry that engaged us for fabrication of a component
      that
      was included as part of a very large industrial furnace. This customer accounted
      for 17.9% of our revenue for the year ended March 31, 2007. See “Business -
      Principal Customers.”. Our principal services are large metal fabrications,
      machining and engineering. Metal fabrication is the process of fitting and
      forming certain grades of metal alloys pursuant to the design drawings furnished
      to us by our customers. All processes we perform in this manner generally fall
      under the American Society of Mechanical Engineers standards and specification
      with respect to quality and conformance to the project documents. These
      fabrication procedures include welding, forming, bending, cutting and fitting
      of
      the materials pursuant to the drawings. On the other hand, machining operations
      involves employing CNC (computer numerically controlled) machine tools that
      can
      include horizontal and vertical milling, turning and machining operations of
      metals or plastics to the tolerances that are stipulated on our customer’s
      drawings.




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          12
          -




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




Part
      of
      our marketing effort is directed at projects which involve a bidding process.
      Approximately 73% of our revenue during the year ended March 31, 2007 and
      approximately 80% of our revenue for the year ended March 31, 2006 was derived
      from projects which we received through a bidding process. The balance of our
      revenue was generated by negotiations with the customers or potential customers.
      Generally, once a potential customer has a project that it wants to put out
      for
      bids, it issues an RFP. The request for a quote includes a description of the
      project as well as any specific requirements that the successful bidder must
      meet. As part of the contract solicitation and bid protocol, we must establish
      that we are a qualified contractor for a proposed contract. This substantiation
      includes evidence that we have previously performed similar or comparable work
      as well as information concerning our financial condition. The bid process
      can
      range from a couple of weeks to more than a year from the time between the
      bid
      submission date and the award of a contract. In preparing the bid, we must
      estimate both the cost of the project and the timing of the project. We do
      not
      submit a bid on any project unless we believe that we can generate a profit.
      If
      we do not correctly assess the costs of a project we may incur a loss on the
      contract if we are awarded the contract.




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




**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, and the products that we manufacture in one period may be entirely
      different from those that are manufactured in another period. 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.




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          13
          -




We
      produced the full-scale prototype of the first direct drive main propulsion
      engine that is being considered 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. These are components
      used
      in a nuclear submarine. Shield tanks guard the reactor and its core from
      exposure to the crew and equipment. Sonar pods and fairings are used in the
      nose
      of the submarine (forward looking) and on the aft tail section of the submarine
      (rear looking). With equipment in both the nose and tail of the craft, the
      sonar
      equipment allows the crew to develop a three dimensional picture of the
      underwater surroundings.




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 sheets which have a range
      of possible uses from garbage bags to covers for landfill projects. We fabricate
      components, and we machine large die sets for these machines.




**Source
      of Supply**




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




Our
      projects include metal fabrications and machining of various traditional and
      special alloys such as inconel, titanium and high tensile strength steels,
      and
      the customer frequently provides us with the raw material for a specific
      project. 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.




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          14
          -




During
      the year ended March 31, 2007, one supplier, Scott Forge, accounted for
      approximately 13% of our purchases during that period. No other supplier
      accounted for 10% or more of our purchases during the year ended March 31,
      2007
      or the fiscal year ended March 31, 2006. Scott Forge supplied us with metal
      forgings for some of our products. We do not have any contract with Scott Forge;
      we use its services when needed pursuant to purchase orders that relate to
      a
      specific project.




**Environmental
      Compliance**




We
      are
      subject to compliance with federal, state and local environmental laws and
      regulations that involve the use, disposal and cleanup of substances regulated
      by those laws and the filing of reports with environmental agencies, and we
      are
      subject to periodic inspections to monitor our compliance.




In
      May
      2004, an inspection by the Massachusetts Office of Environmental Affairs
      revealed that Ranor needed an air quality plan for the paint booths, operated
      unregistered fuel burning equipment, did not have the proper labeling of the
      waste oil accumulation areas and containers, and was discharging industrial
      wastewater (x-ray processor) to a sanitary tight tank. All issues were resolved
      and a fine of $7,800 was assessed and paid.




In
      2005,
      we engaged an environmental consultant as a part of the due diligence process
      prior to the acquisition of Ranor. That consultant identified potential
      contamination in the soil where chip bins are stored. Chips are the metal
      shavings removed during machining operations. They are stored outside in bins
      prior to sale to a scrap dealer. Because coolant is used during machining,
      the
      chips are coated with coolant. Investigation by our consultant revealed that
      over the years, rainwater had washed coolant from the chip bins into the upper
      layer of the soil under the bins. Our environmental consultant identified the
      extent of contamination, and monitored the removal the contaminated soil from
      our site. Work on the environmental conditions in the vicinity of the metal
      chip
      bins started in March 2006. A building was then constructed for chip bin storage
      to resolve this problem. All work relating to the metal chip bins has been
      completed, and we believe that the chip bins are in compliance with
      environmental regulations.




In
      April
      2006, officials from the federal Environmental Protection Agency (the “EPA”)
      visited Ranor and noted that Ranor had not applied for a Storm Water Runoff
      Permit and that Ranor had not been providing Tier II Toxic Chemical Release
      Inventory Reports as required by law. We worked with our environmental
      consultant to resolve both of these issues. We filed Tier II Emergency and
      Hazardous Chemical Inventory by July 2006, and submitted a Storm Water Runoff
      Permit Application by September 2006. From that point forward, we believe that
      we have been compliant on both of these issues. In addition, investigations
      performed by our environmental consultant revealed no evidence of the discharge
      of pollutants from our site.




The
      cost
      of environmental compliance was $86,975 for the year ended March 31, 2006 and
      $3,562 for the year ended March 31, 2005. The expense accrued at March 31,
      2006
      reflects the estimated expense relating to the compliance work. Much of the
      compliance work was performed subsequent to year end, and the actual cost was
      consistent with the estimate. As a result, there was no additional accrual
      for
      environmental compliance during the year ended March 31, 2007. As part of our
      environmental compliance, we constructed a chip bin building at a cost of
      $114,620, which was capitalized. We believe that we are currently in compliance
      with applicable environmental regulations and that our current ongoing
      obligations at its present facilities will not be material. A part of our normal
      business practice we must develop and file report, develop and keep log book
      covering all environmental issues that are a part of our operations. In this
      connection, we may engage outside consultants to assist us in keeping current
      on
      developments in environmental regulations. We do not believe that our cost
      of
      compliance on an annual basis will exceed $50,000.




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          15
          -




On
      June
      11, 2007, the EPA issued an administrative complaint against us relating to
      alleged violations of the Clean Water Act and the Emergency Planning and
      Community Right-to-Know Act, known as “EPCRA.” The complaint in the action, In
      the Matter of Ranor, Inc. and Techprecision Corporation, is with the Boston
      office of the EPA. In its complaint, the EPA alleged that storm water discharges
      at our facility have resulted in the discharge of pollutants into the navigable
      waters of the United States Because we did not obtain the necessary obtain
      the
      necessary storm water discharge permits under federal law for such discharges,
      the EPA alleged that we are in violation of the Clean Water Act. The EPA seeks
      a
      maximum penalty against us for these violations in the amount of $157,500..
      With
      regard to EPCRA claim, the EPA alleged that Ranor failed to file the required
      Toxic Chemical Release Inventory Reporting Forms in connection with its use
      of
      nickel, chromium and manganese during 2003 and 2004. The EPA seeks a maximum
      penalty of $162,500




In
        August
        2007, following our filing of an answer to the complaint, we entered into
        a
        consent agreement and final order with the EPA of all claims contained in
        the
        complaint. Pursuant to the settlement, we shall pay a total penalty of $105,635,
        of which $15,000 is in the form of a special environmental project by which
        we
        are to purchase specified emergency response equipment and donate the equipment
        to the Westminster, Massachusetts Firm Department. Our failure to complete
        the
        project in a timely manner could subject us to additional
        penalties.




We
      believe that we are in compliance with all applicable federal and state
      environmental laws and regulations.




**Marketing**




A
      significant portion of our contracts result from the competitive bidding
      process, which involves a complete estimate of all materials and labor
      components to complete a project, along with the engineering analysis concerning
      project constructability. Such bid processes are frequently limited to
      pre-qualified bidders. Many of our sales inquiries are from existing customers,
      but we bid a number of projects on a yearly basis from new inquiries. We have
      a
      marketing team of nine, including a sales engineering manager and five technical
      personnel, who market 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**




Although
      a significant portion of our business is generated from a small number of
      customers, we experience a significant change in major customers from one year
      to the next. As a result, on an ongoing basis, our business is not dependent
      upon any one customer or any small group of customers. Rather, our business
      is
      dependent upon our generating new contracts on an ongoing basis. Our work is
      performed pursuant to purchase orders, and we do not have long-term contracts
      with any customer. We do not believe that the loss of any customer would have
      a
      material effect upon our business since, in our business, once we complete
      a
      project for a customer there is not necessarily follow-up business. Our
      customers include many of the major domestic defense and aerospace companies.
      Different customers accounted for more than 10% of our revenue in the year
      ended
      March 31, 2007 and the year ended March 31, 2006. The following table sets
      forth
      information as to revenue derived from those customers who accounted for more
      than 10% of our revenue in the years ended March 31, 2007, and March 31, 2006
      (dollars in thousands).




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          16
          -




Year
                ended March 31,Customer
            
            2007
            
            2006Dollars
            
            Percent
            
            Dollars
            
            PercentGT
                Solar Inc.
            
            $
            3,407
            
            
            17.85
            %
            
            *
            
            
            *BAE
                Systems
            
            
            *
            
            
            *
            
            
            2,611
            
            
            12.90
            %General
                Dynamics Electric Boat
            
            
            2,587
            
            
            13.56
            %
            
            *
            
            
            *Essco/L3
                Communications
            
            
            2,415
            
            
            12.65
            %
            
            *
            
            
            *University
                of Rochester
            
            
            *
            
            
            *
            
            $
            2,967
            
            
            14.60
            %




*  Less
      than
      10% of revenue for the year.




GT
      Solar
      is a company in the alternative energy industry that engaged us to provide
      the
      complete fabrication, machining and assembly of a component that was included
      as
      part of very large industrial furnace.




BAE
      Systems is a major defense contractor that engaged us to provide fabrication
      and
      machining services for components that are constructed of large exotic alloy
      forgings and ancillary components.




General
      Dynamics Electric Boat is a major defense contractor that engaged us for the
      complete fabrication, machining and assembly for a number of components which
      are provided by the customer to the United States Navy as part of a classified
      project.




Essco/L3
      Communications is a company for which we manufacture a number of components
      used
      in the assembly of one of the national laboratory’s classified on-site projects.
      This project was substantially complete at March 31, 2007.




University
      of Rochester runs a national laboratory that engaged us to provide the complete
      fabrication, machining and assembly of several components and work platforms
      that are used in the customer’s classified projects. This project is complete,
      and there is no significant ongoing work on the project.




For
      each
      of these customers, the revenue is generally generated pursuant to a series
      of
      purchase orders for different aspects of a project.




As
      of
      March 31, 2007, we had a backlog of firm orders totaling approximately $16.7
      million, which included a backlog of more than $900,000 from each of six
      customers. We anticipate that approximately two thirds of the backlog at March
      31, 2007 will be shipped during the year ended March 31, 2008 and the balance
      during the year ended March 31, 2009.




**Competition**




-
          17
          -




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 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 or assist in the development
      of the specification for the product which may be tailored to that vendor’s
      products. In such event, we would be at a disadvantage in seeking to obtain
      that
      contract.




**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, the prime contractors subject to government procurement and acquisition
      regulations, which give the government the right of termination for the
      convenience of the government and certain renegotiation rights as well as a
      right of inspection. As a result, any government action which affects our
      customers would affect us. Some of the work we perform for our customers 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.




We
      are
      also subject to laws applicable to any manufacturing company, such as federal
      and state occupational health and safety laws, as well as environmental laws,
      which are discussed in under “Business - Environmental Compliance.”




**Intellectual
      Property Rights**




We
      have
      no patent rights. In the course of our business we develop know-how for use
      in
      the manufacturing process. Although we have non-disclosure policies, we cannot
      assure you that we will be able to protect our intellectual property rights.
      We
      do not believe that our business requires patent or similar protection. Because
      of the nature of our business as a contract manufacturer, we do not believe
      that
      lack of ownership of intellectual property will adversely affect our
      operations.




**Research
      and Development**




We
      did
      not incur any research and development expenses, either on our own behalf or
      on
      behalf of our customers, during the year ended March 31, 2007 or the years
      ended
      March 31, 2006 or 2005.




**Personnel**




As
      of
      June 15, 2007, we had 143 employees, of whom 19 are administrative, nine are
      engineering and 115 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.




-
          18
          -




**Annual
      Reports**




Commencing
      not later than the fiscal year ended March 31, 2008, we will send our
      stockholders an annual report which includes our audited financial
      statements.




**Item
      2. Description of Property.**




We
      lease
      from WM Realty, which is an affiliated company, an approximately 136,000-square
      foot office and manufacturing facility at Bella Drive, Westminster,
      Massachusetts 01473, pursuant to a 15-year lease that expires February 28,
      2021,
      at an current annual rental of $444,000, subject to annual escalations based
      upon increases in the consumer price index. The lease provides for two five-year
      extensions and a purchase option at appraised value. We sold the real estate
      to
      WM Realty contemporaneously with the reverse acquisition for $3.0
      million. See
“Item 12. Certain Relationships and Related Transactions.”




**Item
      3. Legal Proceedings.**




Except
      for the procedure commenced by the Environmental Protection Agency, and
      disclosed under “Environmental Compliance” in “Item 1. Business,” we are not a
      defendant in any material legal proceedings.




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




None.




**PART
      II**






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




There
      is
      no market for our common stock




As
      of May
      31, 2007, we had approximately 82 record holders of our common
      stock.




We
      have
      not paid dividends on our common stock, and the terms of certificate of
      designation relating to the creation of the series A preferred stock prohibit
      us
      from paying dividends. We plan to retain future earnings, if any, for use in
      our
      business. We do not anticipate paying dividends on our common stock in the
      foreseeable future.




As
      of May
      31, 2007, we had the following shares of common stock reserved for
      issuance:




·
            10,134,000
                shares issuable upon conversion of the series A preferred
                stock.




·
            11,220,000
                shares issuable upon exercise of the warrants held by 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, of which
                options
                to purchase 371,659****shares
                were outstanding on May 31, 2007.




-
          19
          -




The
      100,000 shares of common stock held by the former stockholder of Lounsberry
      may
      not be sold pursuant to Rule 144, regardless of how long they are held since
      the
      shares were purchased at a time when we were a blank-check shell. The SEC has
      taken the position, initially enunciated in the letter from Richard K. Wulff
      of
      the SEC to Ken Worm of NASD Regulation, Inc.




The
      10,134,000 shares of common stock issuable upon conversion of the series A
      preferred stock held by Barron Partners may be sold pursuant to Rule 144. Barron
      Partners has registration rights with respect to these shares.




The
      agreement pursuant to which we issued 7,997,000 shares of common stock, as
      described in “Item 12. Certain Relationships and Related Transactions and
      Director Independence,” provides that these stockholders may not sell these
      shares for a period of twelve months following the February 24, 2006 closing.
      Thereafter, none of these stockholders shall sell more than 10% of his or her
      shares in the public market in the twelve-month period following the expiration
      of the lock-up period or more than an additional 10% of his shares during the
      following twelve-month period. Commencing January 31, 2007, the holders have
      demand and piggyback registration rights. The Company is not subject to any
      liquidated damages in the event that Company fails to satisfy its obligations
      to
      register the shares. These shares may be sold pursuant to Rule 144.




Pursuant
      to a subscription agreement, we sold 1,700,000 shares of common stock to an
      accredited investor for $500,000 on February 24, 2006. Commencing January 31,
      2007, the investor has demand and piggyback registration rights. The Company
      is
      not subject to any liquidated damages in the event that Company fails to satisfy
      its obligations to register the shares. These shares may be sold pursuant to
      Rule 144.




Although
      stockholders have held their shares for more than one year, which permits sales
      of up to 1% of our outstanding common stock in any three month period, because
      there is no market for our stock, Rule 144 is not presently available for any
      of
      our stockholders.




**Equity
      Compensation Plan Information**




The
      following table summarizes the equity compensation plans under which our
      securities may be issued as of May 31, 2007.




Plan
                Category
            
            Number
                of securities to be issued upon exercise of outstanding optionsand
                warrants
            
            Weighted-average
              exercise
                price of
              outstanding
                options
              and
                warrants
            
            Number
                of securities remaining available for futureissuance
                under equitycompensation
                plansEquity
                compensation plans approved by security holders
            
            
            371,659
            
            $
            .285
            
            
            641,341Equity
                compensation plan not approved by security holders
            
            
            -0-
            
            
            --
            
            
            --





-
          20
          -




No
      unregistered securities were sold during the year ended March 31,
      2007.




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 prospectus.




**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 prospectus, 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 close tolerances, 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 prospectus.




-
          21
          -




**Overview**




We
      operate in one business segment - fabrication, precision machining and
      engineering of metal products up to 100 tons. Most of our 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
      in industries associated with the nuclear, aerospace, military and defense,
      commercial industries and national laboratories and alternative energy. Our
      largest customer for the year ended March 31, 2007 was a company in the
      alternative energy industry. 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.




As
      a
      manufacturing business, we must comply with federal and state environmental
      laws
      and regulations which relate to the manner in which we store and dispose of
      materials and the reports that we are required to file. Any non-compliance
      could
      result in both significant costs to become compliant as well as penalties which
      we may be required to pay as a result of non-compliance. During the fiscal
      year
      ended March 31, 2006, we incurred expenses of approximately $87,000 to cure
      deficiencies which we discovered in connection with our purchase of Ranor in
      February 2006. In June 2007, the United States Environmental Protection Agency
      brought an administrative complaint against us alleging discharge of pollutants
      and the failure to file required reports. In August 2007, we reached an informal
      settlement agreement with the Environmental Protection Agency pursuant to which
      he agreed to pay a penalty of $106,000, which will be reflected in our financial
      statements for the three and six months ended September 30, 2007. We cannot
      assure you that we will not incur additional costs to maintain compliance with
      environmental laws and regulations or that we will not incur significant
      penalties for failure to be in compliance.




Ranor,
      together with its predecessor, has been in business since 1956. Ranor's
      predecessor was sold by its founders in 1999 to Standard Automotive Corporation
      through its subsidiary Critical Components Corporation. From June 1999 until
      August 2002, Ranor's predecessor, which was also named Ranor, was operated
      by
      Critical Components. 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. See the discussion under œReverse Acquisition. As a result
      of the bankruptcy of Standard's subsidiary, 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, although not
      necessarily on a quarter to quarter basis.




-
          22 -




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 or commence
      new
      projects for other customers. In the year ended March 31, 2007, three customers
      accounted for approximately 44% of our revenue, and in the year ended March
      31,
      2006, two customers accounted for approximately 28% of our revenue. The three
      largest customers for the year ended March 31, 2007 were not 10% customers
      for
      the year ended March 31, 2006. 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, based on increased requests for quotations,
      that there is an increasing demand for services of the type which we
      perform.




We
      are
      changing the manner in which we treat potential business from the practices
      of
      our predecessor. Because of problems at the former parent company level, in
      order to obtain business, our predecessor had to perform additional work without
      increasing the amount it charged its’ customer. As a result, our predecessor
      operated on relative low margins. We are seeking more long-term projects with
      a
      more predictable cost structure, and rejecting or not bidding on projects which
      we do not believe would generate an adequate gross margin. Thus, although our
      sales decreased in the year ended March 31, 2007 from 2006, our gross margin
      increased from 13% to 19% and our income from operations increased from
      approximately $785,000 to $1.4 million. The effect of our change in our
      marketing efforts toward more long-term contracts is reflected in our backlog
      at
      March 31, 2007. At that date, we had a backlog of firm orders of approximately
      $16.7 million, of which we anticipate that we will deliver approximately two
      thirds during the year ended March 31, 2008 and the balance during the following
      year.




Because
      our revenues are derived from the sale of goods manufactured pursuant to a
      contract, and we do not sell from inventory, it is necessary for us to
      constantly seek new contracts. The products that we produce are generally for
      one or a limited number of units, and once we complete our work on a contract,
      we generally do not receive subsequent orders for the same product. We receive
      contracts both by negotiation and through bids. When we bid for a contract,
      we
      may not receive the contract award. Thus, there may be a time lag between our
      completion of one contract and commencement of work on another contract. During
      this period, we will continue to incur our overhead expense but with lower
      revenue. Furthermore, changes in the scope of a contract may impact the revenue
      we receive under the contract and the allocation of manpower.




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.




-
          23 -




We
      perform manufacturing services pursuant to orders placed by our customers.
      However, we have in the past experienced delays in the scheduling and changes
      in
      the specification of the products. These changes may result from a number of
      factors, including a determination by the customer that the product
      specifications need to be changed after receipt of an initial product or
      prototype. As a result of these changes, we suffered a delay in the recognition
      of revenue from the projects. We experienced such delays during the first and
      second quarters of the current fiscal year; however, by December 31, 2006,
      we
      had recognized substantially all of the revenue that was delayed under these
      orders. We cannot assure you that our revenue will not be affected in the future
      by delays or changes in specifications or that we will be able to recoup revenue
      which was lost as a result of the delays or changes. Further, if we cannot
      allocate our personnel to a different project, we will continue to incur some
      expenses relating to the project, including labor and overhead.




We
      lease
      our facilities from WM Realty, which is an affiliated entity, to whom we sold
      the real property in February 2006 for $3,000,000 contemporaneously with the
      reverse acquisition. WM Realty is an affiliate because of common ownership
      and
      management. The following table sets forth information as to the relative
      beneficial interest of our officers, directors and principal stockholders in
      both our company and their interest in WM Realty at the time WM Realty purchased
      the real estate.




Name
            
            Beneficial
                Ownership in us
            
            Ownership
                in WM RealtyAndrew
                A. Levy
            
            
            29.3
            %
            
            69.0
            %James
                G. Reindl
            
            
            29.6
            %
            
            10.0%1Howard
                Weingrow2
            
            
            18.6
            %
            
            15.0%2Martin
                M. Daube
            
            
            6.7
            %
            
            7.8
            %Larry
                Steinbrueck
            
            
            2.0
            %
            
            1.2
            %Michael
                Holly
            
            
            3
            
            
            3









1
            In
                October 2006, Mr. Reindl conveyed his interest in WM Realty to WM
                Realty
                for no consideration. Mr. Reindl currently has no equity interest
                in WM
                Realty.




2
            Mr.
                Weingrow’s beneficial ownership in our stock includes the stock owned by
                Stanoff Corporation, of which Mr. Weingrow is president. At the time
                of
                the refinancing, Mr. Weingrow made an additional investment in WM
                Realty
                and his interest in WM Realty increased from 15.0% to
                25.0%.




3
            Less
                than 1%.




In
      addition, Mr. Reindl, Mr. Levy and Mr. Daube were the sole members of
      Techprecision, LLC, which had a management agreement with us through December
      31, 2006 and is receiving payments through September 2007 pursuant to a
      termination agreement. Mr. Reindl is no longer a member of Techprecision LLC,
      and he has not received compensation through Techprecision LLC since December
      2006.




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




-
          24 -




Because
      WM Realty is an affiliated entity and our lease with WM Realty is the sole
      source of funding for WM Realty, under generally accepted accounting principles,
      the real estate is treated as being owned by us and WM Realty’s mortgage
      obligations are treated as our obligations. See “Variable Interest Entity.” Our
      financial condition, principally our working capital, is affected by the terms
      of WM Realty’s mortgage. Because of the terms of the mortgage, at March 31,
      2006, the mortgage loan was reflected as a short-term loan in the principal
      amount of the loan. As a result of the refinancing, the long-term portion of
      the
      mortgage is reflected as a long-term liability, with a result that our working
      capital improved from approximately $91,000 at March 31, 2006 to approximately
      $3.6 million at March 31, 2007. In connection with the refinancing, Mr. Levy
      gave his limited guarantee. Pursuant to the limited guaranty, Mr. Levy
      guaranteed the lender the payment of any loss resulting from (i) fraud or
      misrepresentation by WM Realty or any principal or member of WM Realty in
      connection with the loan documents, (ii) misapplication of rent received after
      the occurrence of a default, (iii) misappropriation of security deposits, rent,
      insurance proceeds and condemnation awards, (iv) failure to pay taxes and other
      charges that can result in a lien on the property, (v) removal of personal
      property by or on behalf of WM Realty and not replaced with equivalent property,
      (vi) any act of intentional waste by WM Realty or any principal or affiliate;
      (vii) any fees or commissions paid in violation of the loan
      documents.




In
      connection with our February 2006 private placement, we were required to have
      a
      registration statement covering shares of common stock issuable upon conversion
      of the series A preferred stock and exercise of the warrants effective by August
      23, 2006. The registration rights agreement, as amended, requires us to issue
      33,212 shares of series A preferred stock to Barron Partners. In addition,
      if
      the registration statement is not declared effective by October 15. 2007,
      liquidated damages will accrue at the rate of 531 shares of series A preferred
      stock for each day after October 15, 2007 that the registration statement has
      not been declared effective. At March 31, 2007, we had accrued an expense of
      $9,456 associated with the issuance of 33,212 shares of series A preferred
      stock.




**Critical
      Accounting Policies**




The
      SEC
      issued Financial Reporting Release No. 60, “Cautionary Advice Regarding
      Disclosure about Critical Accounting Policies” (“FRR 60”), suggesting companies
      provide additional disclosure and commentary on their most critical accounting
      policies. In FRR 60, the SEC defined the most critical accounting policies
      as
      the ones that are most important to the portrayal of a company’s financial
      condition and operating results, and requires management to make its most
      difficult and subjective judgments, often as a result of the need to make
      estimates of matters that are inherently uncertain. Based on this definition
      our
      most critical accounting policies involve revenue recognition, accounting for
      variable interest entity, convertible instruments, income taxes, and reverse
      acquisition. The methods, estimates and judgments we use in applying these
      accounting policy has a significant impact on the results we report in our
      financial statements.




-
          25 -




The
      preparation of our financial statements conforms 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 2007 financial statements
      from
      the assumptions, estimates and judgments used in the preparation of our 2006
      audited financial statements.




**Revenue
      Recognition and Costs Incurred**




We
      have
      one source of revenue, which includes the fabrication of large metal components
      for our customers, the precision machining of such large metal components,
      including incidental engineering services, and the installation, when required,
      of the components at the customers’ locations.




We
      recognize revenue under the units of delivery method, in accordance with the
      AICPA’s Statement of Position 81-1.22. We net the advanced billings against the
      construction in progress. The units of delivery 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
      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, and other losses incurred prior to the completion of the reverse
      acquisition, 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 carry-forwards.




-
          26 -




**Reverse
      Acquisition**




From
      June
      1999 until August 2002, Ranor’s predecessor was operated by Critical Components,
      a subsidiary of Standard Automotive. In December 2001, Standard Automotive
      filed
      for protection under the Bankruptcy Code, and operated the Ranor business under
      Chapter 11 until on or about the quarter ended June 30, 2002.




In
      2002,
      an investment group formed a Delaware corporation known as Rbran Acquisition,
      Inc. to acquire the assets of Ranor’s predecessor from the bankrupt estate. The
      principal investors were Green Mountain Partners III, LP and Phoenix Life
      Insurance Company, who held the debt, preferred stock and warrants. Rbran
      subsequently changed its corporate name to Ranor, Inc. On
      August 7, 2002, Rbran purchased substantially all of the assets and assumed
      certain operating liabilities of Ranor Inc. Until August 7, 2002, Rbran had
      no
      operations. The aggregate acquisition price, including transaction costs, of
      $8,213,842 was paid in cash. Following is a condensed balance sheet showing
      the
      fair value of the assets acquired and the liabilities assumed as of the date
      of
      acquisition:




Current
                  Assets, including cash of $2,594,680
              
              $
              5,322,060Property,
                  plant and equipment
              
              
              3,670,3608,992,420Current
                  Liabilities
              
              
              778,578Net
                  assets acquired
              
              $
              8,213,842




When
      the
      purchase transaction was completed, Rbran recognized the fair value of assets
      and the fair value of the liabilities on its books as required by generally
      accepted accounting principals for the asset acquisitions as restated in FASB’s *Statement
      of Financial Accounting Standards No. 141: Business
      Combinations* ,
      paragraphs 3-8. Rbran existed as a legally entity separate and apart from Ranor
      Inc. at the time of acquisition and was not subject to the bankruptcy relief
      and
      reorganization proceedings of Ranor, Inc.




During
      2005, James G. Reindl and Andrew A. Levy negotiated with Ranor’s principal
      stockholders (Green Mountain Partners and Phoenix Life Insurance Company) for
      the purchase of all of the stock of Ranor, which included the payment or
      settlement of all of Ranor’s outstanding which was payable to Green Mountain
      Partners and Phoenix Life Insurance Company. In this connection, in April 2005,
      Mr. Reindl, Mr. Levy and Martin M. Daube formed Ranor Acquisition LLC, a
      Delaware limited liability company, for the purpose of making the acquisition.
      On August 17, 2005, Ranor Acquisition entered into an agreement with Green
      Mountain Partners, Phoenix Life Insurance Company and five holders of Ranor’s
      common stock, including Mr. Youtt, to acquire all of the capital stock and
      warrants of Ranor for a purchase price equal to $9,250,000 plus the amount
      by
      which Ranor’s net cash amount exceeded $250,000, less a closing adjustment of
      $54,000 and less the amount of principal and interest on the debt held by
      Ranor’s two principal stockholders, Green Mountain Partners, Phoenix Life
      Insurance Company. These two stockholders also held Ranor’s preferred stock.
      Since Ranor’s net cash amount was $1,117,000, the amount due to the sellers was
      increased by $813,000, which resulted in total payments of $10,063,000. The
      agreement contained standard representations and warranties of the sellers
      concerning Ranor, and $925,000 of the purchase price was placed in escrow to
      provide a fund against which any claims for breach of representation can be
      made. In February 2007, we settled our claims for $500,000, and the balance
      of
      the escrow fund, including the accrued interest, was paid to Green Mountain
      Partners and Phoenix Life Insurance Company in respect of the purchase of their
      preferred stock.




-
          27 -




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




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




The
      total
      payments were disbursed as follows:




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




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




·
            Lounsberry’s
                principal stockholder, Capital Markets Advisory Group, LLC, would
                sell to
                Lounsberry 928,000 shares, representing more than 90% of Lounsberry’s then
                outstanding common stock, for $200,000, which was paid to Capital
                Markets.
                Of this amount, $39,661 represented money advanced by Capital Markets
                to
                Lounsberry and $160,339 was paid for the stock. Capital Markets had
                purchased 1,000,000 shares of common stock for $100 in connection
                with
                Lounsberry’s organization in February
                2005.




-
          28 -




·
            Lounsberry’s
                officers resigned and Mr. Reindl was elected as sole
                director.




In
      order
      that we could acquire Ranor through a reporting company, we, then known as
      Lounsberry, entered into an exchange agreement with Ranor Acquisition and its
      members. Pursuant to that agreement, Ranor Acquisition assigned the agreement
      to
      acquire the Ranor stock to us, and we issued a total of 7,997,000 shares of
      common stock to the members of Ranor Acquisition. Neither Ranor Acquisition
      nor
      any of the members received any consideration other than shares of our stock
      in
      consideration for the assignment of the Ranor purchase agreement to
      us.




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
      acquisition, February 24, 2006, our balance sheet includes the assets and
      liabilities of Ranor and our equity accounts were recapitalized to reflect
      the
      net equity of Ranor. In addition, our historical operating results will be
      the
      operating results of Ranor.




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




·
            We
                entered into a preferred stock purchase agreement with Barron Partners
                LP,
                pursuant to which we sold to Barron Partners, for $2,200,000, 7,719,250
                shares of series A preferred stock, and five-year warrants to purchase
                an
                aggregate of 5,610,000 shares of common stock at $.57 per share and
                5,610,000 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. As a result of our failure to meet
                targeted
                levels of EBITDA for the years ended March 31, 2006 and 2007, (i)
                the
                conversion price of the series A preferred stock was reduced from
                $.285 to
                $.218025, with the result that the series A convertible preferred
                stock
                became convertible into 10,090,586 shares of common stock, and (ii)
                the
                exercise prices of the warrants were reduced from $.57 to $.43605
                and from
                $.855 to $.654075, with no adjustment in the number of shares issuable
                upon exercise of the warrants.




·
            We
                purchased 928,000 shares of common stock form Capital Markets, 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 7,997,000 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, LLC for $3.0 million, and Ranor
                leased
                the real property on which its facilities are located from WM Realty
                pursuant to a net lease. WM Realty is an affiliate of the
                Company.




-
          29 -




Prior
      to
      the reverse acquisition and the assignment by Ranor Acquisition to us of the
      agreement to acquire Ranor, there were no relationships among Ranor Acquisition,
      us, Ranor and its predecessor, except that Mr. Reindl was president and chief
      executive officer of Critical Components from February 1999 until February
      2002,
      and Mr. Stanley Youtt, one of our directors and the chief executive officer
      of
      Ranor, was chief executive officer and a common stockholder of Ranor prior
      to
      our acquisition of Ranor. Pursuant to the purchase agreement, Mr. Youtt received
      $700 from the sale of his Ranor stock and has no right to any additional
      payment.




In
      determining that the transaction is a reverse acquisition, we considered the
      application of SFAS No. 141 (Paragraphs 15, 16, 17 and 18), which lists a number
      of issues, facts and circumstances to be considered in identifying the acquirer
      in a business combination. Based on these criteria, Ranor is the acquiring
      party
      for accounting purposes.




·
            *What
                are the relative voting rights in the combined entity?*Ranor Acquisition was formed to acquire the stock of Ranor, and assigned
                its right to acquire the Ranor stock to us in exchange for 7,997,000
                shares. In addition, we sold 1,700,000 shares to an investor who
                made the
                investment for the purpose of acquiring Ranor, and we issued an additional
                170,000 shares for services rendered in connection with the acquisition
                of
                Ranor. All these shares were issued based upon the business on Ranor.
                These stockholders acquired their shares in connection with the Ranor
                acquisition and their made their investment decision based on Ranor.
                One
                indicia of the acquirer in determining which group of owners retained
                or
                received the largest portion of the voting rights in the combined
                entity.
                Thus, in determining the relative voting rights, there are 9,867,000
                shares of common stock allocable to the Ranor business and 100,000
                shares
                relating to the Lounsberry business.




·
            *What
                are the relative equity interests in the combined entity?*The relative equity interest, specifically whether there is a large
                minority voting interest after the acquisition is also considered
                in
                determining the acquiring party. For the reasons set forth above,
                we
                believe that the Ranor investors constitute the largest blocks of
                stock,
                and that, applying this test, Ranor is the acquiring party. While
                the
                stockholders, including Barron Partners, may have technically purchased
                Lounsberry’s securities, they were not continuing Lounsberry stockholders.
                Rather, as noted above, they were really investors in Ranor and their
                investment was contingent upon the completion of the Ranor acquisition
                and
                was necessary for the Ranor acquisition to be
                consummated.




·
            *What
                is the composition of the governing body of the combined
                entity?*Prior to the acquisition of Ranor, the sole director of Ranor resigned
                and
                Mr. Reindl was elected as sole director. The present board was elected
                by
                Mr. Reindl and included, in addition to himself, Mr. Youtt, who was
                and is
                president of Ranor, and three independent directors. Thus, the board
                of
                directors consists solely of our chief executive officer, Ranor’s
                president and three independent directors who were elected by Mr.
                Reindl.




·
            *Is
                there a continuity of management?***No
                officer of Lounsberry has any involvement in our business. The president
                and chief financial officer of Ranor held those positions prior to
                the
                acquisition. Similarly, almost all key managers continued with their
                same
                responsibilities as before the acquisition. The continuity of management
                is another indication that Ranor is the acquiring
                party.




-
          30 -




·
            *Can
                either party be said to have paid a premium?*Footnote 9 of SFAS 141 states that the premium criteria only applies
                if
                the equity securities exchanged are publicly traded, and the stock
                of the
                neither Ranor nor Lounsberry was publicly traded. Therefore, this
                consideration is not relevant in determining the accounting treatment
                of
                the transaction.




·
            *Is
                the fair value of one of the combining entities significantly greater
                than
                the other?*If
                consideration is given to the relative size of each entity, then
                it is
                clear that Ranor is the acquiring party. Lounsberry was a blank-check
                company with no business or assets. Ranor was, and is, conducting
                an
                active business. It is clear that the value of Ranor is significantly
                greater than the value of
                Lounsberry.




Because
      the transaction is treated as a reverse acquisition, Ranor is treated as the
      accounting acquirer and the transaction being treated as a recapitalization.
      As
      a result, the costs of the acquisition are charged to capital.




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
      interest paid to the former Ranor noteholders was less than the interest accrued
      at the closing date. As a result interest of $222,944 to the former noteholders
      was cancelled. The cancellation is reflected as a credit to capital in excess
      of
      par value.




As
      discussed above, in connection with the reverse acquisition, Ranor sold its
      real
      estate to a related party. As a result, for accounting purposes, (i) we
      recognized no gain on the sale of the real property, (ii) the real property
      is
      treated as our property, (iii) the mortgage note issued by the related party
      is
      treated as our obligation, (iv) the interest paid on the mortgage and other
      charges relating to the mortgage, including payments relating to the extensions
      of the prior mortgage are treated as our expenses, and (v) there is no
      accounting effect with respect to the lease payment to the related party.
      Further, since the mortgage is a short-term obligation, it is reflected as
      our
      current liability which affects our working capital.




As
      a
      result of the reverse acquisition, the debt to the former stockholders in the
      amount of $8,000,000 and accrued interest of $1,197,944 was eliminated from
      our
      balance sheet and replaced with the $4,000,000 bank loan and the $3,300,000
      mortgage note reflecting the obligation of WM Realty which is treated for
      financial reporting purposes as our obligation.




**Convertible
      Preferred Stock and Warrants**




-
          31 -


In
      accordance with EITF 00-19 initially we measured the fair value of the series
      A
      preferred stocks by the amount of cash that was received for their issuance.
      We
      subsequently determined that the convertible preferred stock and the
      accompanying warrants were equity instruments under SFAS 150 and 133. Although
      we had unconditional obligation to issue additional shares of common stock
      upon
      conversion of the series A preferred stock if our fully-diluted EBITDA per
      share
      were below the targeted levels, the certificate of designation relating to
      the
      series A preferred stock did not provide that we must issue shares that are
      registered pursuant to the Securities Act of 1933, with the result, pursuant
      to
      the certificate of designation, the additional shares need not be registered
      shares. Our series A preferred stock also met all other conditions for the
      classification as equity instruments. We had a sufficient number of authorized
      shares, the agreement contained an explicit limit on the number of shares to
      be
      delivered on conversion of 1,400,000 shares of series A preferred stock, there
      is no required cash payment or net cash settlement requirement, and the holders
      of the series A preferred stock had no right higher than the holders of the
      common stock.




Our
      warrants were excluded from derivative accounting because they were indexed
      to
      our common stock and were classified in stockholders’ equity section according
      to SFAS 133 paragraph 11(a).




As
      of
      April 1, 2007, we were required to reduce the conversion price of the series
      A
      preferred sock to common stock of $0.285 by 15% because the fully-diluted EBITDA
      per share was below the targeted level of $0.06591 per share in the year ended
      March 31, 2006. On March 31, 2007, we were required to further reduce the
      conversion price by an additional 10% because the fully-diluted EBITDA per
      share
      was below the targeted level of $0.08568 per share in the year ended March
      31,
      2007. According to EITF 00-27, “Application of issue No. 98-5 to Certain
      Convertible Instruments,” we estimated the beneficial effect of the reductions
      in conversion price to be $675,813. The 2,371,336 additional shares of common
      stock into which the holders of the series A preferred stock could obtain,
      upon
      conversion, were valued at $0.285 per share, which represents the initial
      conversion price of the series A preferred stock and our estimate of the current
      value per share of the common stock.




In
      accordance with EITF 98-5 this amount ($675,813) is analogous to a deemed
      dividend and recognized as a return to the holders of the series A preferred
      stock and is included in our calculation of net loss applicable to common
      stockholders and basic and diluted net loss per share. The reductions in the
      exercise price of the warrants, because our fully-diluted EBITDA per share
      was
      less than the targeted amounts for in the years ended March 31, 2006 and 2007,
      did not result in any beneficial effect to the warrant holders because the
      warrants were not in the money prior or after the reductions.




We
      agreed
      to pay liquidated damages for our failure to achieve effective registration
      by
      August 24, 2006, by issuing 33,212 shares of series A preferred stock valued
      at
      $9,465, or $0.285 per share. There is no market for our common stock or series
      A
      preferred stock. According to the final FASB Staff Position in EITF 00-19-2,
      “Accounting for Registration Payment Arrangements,” issued on December 21, 2006,
      we recognized the amount of liquidated damages of $9,465 as an expense and
      credited to preferred stock. If the currently pending registration statement
      is
      not effective by October 15, 2007, liquidated damages shall accrue at the rate
      of 531 shares of series A preferred stock for each day after October 15, 2007,
      that the registration statement is not effective. Based on the current status
      of
      our registration statement, we consider this contingency not to be probable
      and
      no liability is required to be recognized under EITF 00-19-2 at March 31,
      2007.




We
      recorded the series A preferred stock to permanent equity in accordance with
      the
      terms of the Abstracts - Appendix D - Topic D-98: “Classification and
      Measurement of Redeemable Securities.”




**Non-GAAP
      Information**




-
          32 -




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, 2007 and 2006.




Year
                ended March 31,2007
            
            2006(dollars
                in thousands)Net
                income (loss)
            
            $
            290
            
            $
            (428
            )Plus
                interest (net)
            
            
            626
            
            
            1,098Plus
                taxes
            
            
            240
            
            
            42Plus
                non-recurring finance charge
            
            
            289
            
            
            59Plus
                loss on disposal of asset
            
            
            
            
            
            14Plus
                depreciation and amortization
            
            
            427
            
            
            413EBITDA
            
            $
            1,872
            
            $
            1,198




**New
      Accounting Pronouncements**




There
      are
      several new accounting pronouncements issued by the Financial Accounting
      Standards Board (“FASB”) which are not yet effective. Each of these
      pronouncements, as applicable, has been or will be adopted by us.




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 our financial
      statements.




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
      our financial statements.




In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Instruments - an Amendment of SFAS No. 140” (“SFAS 156”). This Statement amends
      SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities,” with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. This Statement is
      effective for fiscal years beginning after September 15, 2006. We do not expect
      the adoption of SFAS 156 will have a material impact on our consolidated
      financial position, results of operations or cash flows.




-
          33 -




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments - an amendment of FASB Statements No. 133 and 140,” to
      simplify and make more consistent the accounting for certain financial
      instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
      Instruments and Hedging Activities,” to permit fair value re-measurement for any
      hybrid financial instrument with an embedded derivative that otherwise would
      require bifurcation, provided that the whole instrument is accounted for on
      a
      fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
      Impairment or Disposal of Long-Lived Assets,” to allow a qualifying
      special-purpose entity to hold a derivative financial instrument that pertains
      to beneficial interest other than another derivative financial instrument.
      SFAS
      No. 155 applies to all financial instruments acquired or issued after the
      beginning of an entity’s first fiscal year that begins after September 15, 2006,
      with earlier application allowed. This standard is not expected to have a
      significant effect on our future reported financial position or results of
      operations.




In
      June
      2006, FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes,” was
      issued, which clarifies the accounting for uncertainty in income taxes
      recognized in an enterprise’s financial statements in accordance with FASB
      Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes
      a recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken in a
      tax return. This Interpretation also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. This Interpretation is effective for fiscal years
      beginning after December 15, 2006, and earlier application of the provisions
      of
      this Interpretation is encouraged if the enterprise has not yet issued financial
      statements, including interim financial statements, in the period this
      Interpretation is adopted. We have determined that the FASB Interpretation
      48
      does not have a material impact on our financial statements.




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157 (“SFAS 157”), “Fair Value Measurements,” which defines fair value,
      establishes guidelines for measuring fair value and expands disclosures
      regarding fair value measurements. SFAS 157 does not require any new fair value
      measurements but rather eliminates inconsistencies in guidance found in various
      prior accounting pronouncements. SFAS 157 is effective for fiscal years
      beginning after November 15, 2007. Earlier adoption is permitted, provided
      the
      company has not yet issued financial statements, including for interim periods,
      for that fiscal year. We do not expect the adoption of SFAS 157 will have a
      material impact on its consolidated financial position, results of operations
      or
      cash flows.




In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB
      108 provides interpretive guidance on how the effects of prior-year uncorrected
      misstatements should be considered when quantifying misstatements in the current
      year financial statements. SAB 108 requires registrants to quantify
      misstatements using both an income statement (“rollover”) and balance sheet
      (“iron curtain”) approach and evaluate whether either approach results in a
      misstatement that, when all relevant quantitative and qualitative factors are
      considered, is material. If prior year errors that had been previously
      considered immaterial now are considered material based on either approach,
      no
      restatement is required so long as management properly applied its previous
      approach and all relevant facts and circumstances were considered. If prior
      years are not restated, the cumulative effect adjustment is recorded in opening
      accumulated earnings as of the beginning of the fiscal year of adoption. SAB
      108
      is effective for fiscal years ending after November 15, 2006.  We have
      determined that there will be no impact to the financial statements upon the
      adoption of this bulletin.




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          34 -




On
      December 21, 2006, the FASB issued final FASB Staff Position (FSP) No. EITF
      00-19-2, Accounting for Registration Payment Arrangements, which addresses
      an
      issuer’s accounting for registration payment arrangements. This FSP requires
      that an entity should recognize and measure a registration payment arrangement
      as a separate unit of account from the financial instrument(s) subject to that
      arrangement. This FSP states that the contingent obligation to make future
      payments or otherwise transfer consideration under a registration payment
      arrangement should be separately recognized and measured in accordance with
      FASB
      Statement No. 5, Accounting for Contingencies. This FSP further specifies that
      a
      financial instrument subject to a registration payment arrangement should be
      recognized and measured in accordance with other applicable GAAP without regard
      to the contingent obligation to transfer consideration pursuant to the
      registration payment arrangement. This FSP is effective immediately for
      registration payment arrangements and the financial instruments subject to
      those
      arrangements that are entered into or modified subsequent to December 21, 2006.
      Otherwise, the guidance in the FSP is effective for financial statements issued
      for fiscal years beginning after December 15, 2006, and interim periods within
      those fiscal years. For registration payment arrangements and financial
      instruments subject to those arrangements that were entered into prior to
      December 21, 2006 and that continue to be outstanding at the beginning of the
      period of adoption, the FSP requires retrospective application. We adopted
      the
      FSP and accordingly recorded in the year ended March 31, 2006, liquidated
      damages in the amount of $9,465 for our failure to have the registration
      statement declared effective when required.




**Results
      of operations**




The
      following table sets forth information from our statements of operations for
      the
      years ended March 31, 2007 and 2006, in dollars and as a percentage of sales
      (dollars in thousands):




-
          35 -




Year
                Ended March 31,2007
            
            2006Net
                sales
            
            $
            19,086
            
            
            100.00
            %
            $
            20,266
            
            
            100.00
            %Cost
                of sales
            
            
            15,543
            
            
            81.44
            %
            
            17,633
            
            
            87.00
            %Gross
                profit
            
            
            3,543
            
            
            18.56
            %
            
            2,634
            
            
            13.00
            %Selling,
                general and administrative
            
            
            2,098
            
            
            10.99
            %
            
            1,849
            
            
            9.12
            %Income
                from operations
            
            
            1,445
            
            
            7.57
            %
            
            784
            
            
            3.87
            %Interest
                expense, net
            
            
            (626
            )
            
            (3.28
            %)
            
            (1,098
            )
            
            (5.42
            %)Finance
                costs
            
            
            (289
            )
            
            (1.51
            %)
            
            (58
            )
            
            (0.29
            %)Other
              Income
                (loss)
            
            
            0
            
            
            0
            %
            
            (14
            )
            
            (0.07
            %)Income
                (loss) before income taxes
            
            
            530
            
            
            2.78
            %
            
            (386
            )
            
            (1.90
            %)Provision
                for income taxes
            
            
            (240
            )
            
            (1.26
            %)
            
            42
            
            
            0.21
            %Net
                income (loss)
            
            
            290
            
            
            1.52
            %
            
            (428
            )
            
            (2.11
            %)Preferred
                stock deemed dividend
            
            
            (676
            )
            
            (3.52
            %)
            
            -
            
            
            -Net
                income (loss) to common stockholders
            
            
            (386
            )
            
            (2.02
            %)
            
            (428
            )
            
            (2.11
            %)




Sales
      in
      the year ended March 31, 2007 decreased $1,180,000, or 6%, to $19,086,000,
      compared to $20,266,000 for the year ended March 31, 2006. Our revenue was
      affected by our change of marketing focus. We are seeking more long-term
      projects with a more predictable cost structure, and rejecting or not bidding
      on
      projects that we do not believe would generate an adequate gross
      margin.




Our
      cost
      of sales for the year ended March 31, 2007 decreased $2,090,000, to $15,543,000,
      a decrease of 12%, from $17,633,000 for the year ended March 31, 2006. This
      decrease was greater than the decrease in sales, resulting in an improvement
      in
      the gross margin from 13.0% to 18.6%. In the year ended March 31, 2006, we
      carried more employees than we required under our then current contracts. We
      currently have a staff suitable to our current sales volume, which has enabled
      us to operate more efficiently




Selling,
      administrative and other expenses for the year ended March 31, 2007 were
      $2,098,000, compared to $1,849,000 for the year ended March 31, 2006, an
      increase of $249,000, or 13%. The following table sets forth information as
      to
      the different components of selling, general and administrative expenses
      (dollars in thousands).




ChangeCategory
            
            2007
            
            2006
            
            Amount
            
            PercentPayroll,
                including payroll taxes
            
            $
            1,209
            
            $
            1,402
            
            
            (193
            )
            
            (14
            %)Professional
                fees
            
            
            498
            
            
            80
            
            
            419
            
            
            525
            %Other
                selling, general and administrative
            
            
            390
            
            
            367
            
            
            23
            
            
            6
            %




The
      decrease in payroll expense resulted from a decrease in compensation for
      officers and sales staff. During the year ended March 31, 2006, our compensation
      to officers included compensation to former stockholders who were officers
      for
      almost eleven months of the year and whose services were not required by us.
      Our
      payroll expense for the year ended March 31, 2007 includes payments of $150,000
      under our management agreement with Techprecision. These expenses are included
      under payroll since the services performed are those that are performed by
      officers and other employees. The management agreement has been
      terminated.




-
          36 -




The
      increase in professional fees reflected additional legal and accounting fees
      resulting from our status as a reporting company under the Securities Exchange
      Act of 1934.




WM
      Realty
      is a special purpose entity which is consolidated with us. Costs relating to
      WM
      Realty that are included in the consolidated statement operations interest
      expense of $286,000 on WM Realty’s mortgage obligation, $280,000 finance costs
      of the mortgage loans, $40,000 of professional fees and $4,000 of general and
      administrative expenses. WM Realty’s rental income and depreciations expense for
      the building it had purchased from Ranor were eliminated as intercompany
      accounts.




Other
      selling, general and administrative expenses reflect sales development expenses,
      travel expenses and officers and directors’ liability insurance, as well as
      $15,000 of expense of equity-based compensation relating to the stock issued
      and
      grant of options to our staff. Since our rent is paid to WM Realty, our rent
      is
      not reflected as an expense.




Net
      interest expense for the year ended March 31, 2007 was $626,000 compared with
      $1,098,000 for the year ended March 31, 2006. The decrease in interest expense
      reflects both a decrease in debt as a result of the payment of debt to related
      parties, which was paid on February 24, 2006, and a lower interest rate. The
      outstanding debt to the related parties was approximately $8,000,000 throughout
      fiscal 2005 and during fiscal 2006 through February 24, 2006. At March 31,
      2007,
      our debt was $6,631,000, including the $3,189,000 mortgage debt of WM Realty.
      The average interest rate was 9% for the year ended March 31, 2007 as compared
      with 14% for the year ended March 31, 2006.




Income
      taxes were $240,000 for the year ended March 31, 2007, compared with $42,000
      for
      the prior year. As a result of the change of stock ownership of Ranor in
      February 2006, the ability of Ranor to use its tax loss carryforward to reduce
      taxes for the year ended March 31, 2007 was limited to $164,000.




As
      a
      result of the foregoing, we generated net income for the year ended March 31,
      2007 of $290,000. However, as a result of a deemed dividend to the holders
      of
      the series A preferred stock in the amount of $676,000, the net loss allocable
      to the holders of the common stock was $386,000, or $0.04 per share (basic
      and
      diluted), as compared to a net loss of $428,000, or $0.05 per share (basic
      and
      diluted), for the ended March 31, 2006. The deemed dividend resulted from a
      reduction during the year ended March 31, 2007 in the conversion price of the
      series A preferred stock from $.285 to $.218025, which resulted the potential
      issuance of 2,371,336 additional shares of common stock upon conversion of
      the
      series A preferred stock.




**Liquidity
      and Capital Resources**




At
      March
      31, 2007, we had working capital of $3,398,000, as compared with working capital
      of $91,000 at March 31, 2006. Our cash position was $1,444,000 at March 31,
      2007. Pursuant to FASB Interpretation No. 46, we are required to include the
      real property that we sold to WM Realty at our historical cost and record the
      liability as a liability on our balance sheet. In October 2006, WM Realty
      refinanced its real estate mortgage with a ten-year mortgage with interest
      at
      6.75%. As a result, our short term liability with respect to this mortgage
      reflects only current amortization. The cost of refinancing, which was
      approximately $104,000, is being amortized over the term of the loan. Further,
      WM Realty used the proceeds of the mortgage loan to pay us the money we advanced
      to WM Realty at the time of its initial purchase of the real estate from us
      in
      February 2006.




-
          37 -




As
      part
      of the October 2006 refinancing of the mortgage given by WM Realty on the
      property leased by us, a new mortgage of $3.2 million was placed on the property
      and the existing mortgage of $3.1 million was paid off. The new mortgage has
      a
      term of ten years, bears interest at 6.75% per annum, and provides for monthly
      payments of principal and interest of $21,000. The monthly payments are based
      on
      a thirty-year amortization schedule, with the unpaid principal being due in
      full
      on November 1, 2016. WM Realty has the right to prepay the mortgage note upon
      payment of a prepayment premium of 5% of the amount prepaid if the prepayment
      is
      made during the first two years, and declining to 1% of the amount prepaid
      if
      the prepayment is made during the ninth or tenth year.




The
      loan
      and security agreement with Sovereign Bank, pursuant to which we borrowed
      $4,000,000 on a term loan basis in connection with the acquisition of Ranor,
      and
      have a $2,000,000 revolving credit facility and a $500,000 capital expenditure
      facility, requires Ranor to maintain a ratio of earnings available for fixed
      charges to fixed charges of at least 1.2 to 1, and an interest coverage ratio
      of
      at least 2:1. 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
      term
      note is due on March 1, 2013, and is payable in 28 quarterly installments of
      $143,000. The note bears interest at 9% per annum through December 31, 2010
      and
      at prime plus 11⁄2% thereafter. At March 31, 2007 the principal balance due on our
      term loan to Sovereign Bank was approximately $3.4 million.




The
      revolving note bears interest at prime plus 1⁄2%, and we have the right to borrow
      at a LIBOR rate plus 300 basis points. We may borrow, subject to the borrowing
      formula at any time prior to June 30, 2009. Any advances under the revolving
      note become due on June 30, 2009. The maximum borrowing under the revolving
      note
      is the lesser of (i) $2,000,000 or (ii) the sum of 70% of eligible accounts
      receivable and 40% of eligible inventory. At March 31, 2007 and June 15, 2007,
      the maximum available under the borrowing formula was $2,000,000. At March
      31,
      2007 and June 15, 2007, there were no borrowings under the revolving
      note.




Under
      our
      capital expenditures facility, we may borrow up to $500,000 until the February
      1, 2008, with interest only payable through February 1, 2008 and the principal
      to be amortized over a five-year term commencing March 1, 2008. As of March
      31,
      2007, we had not borrowed any money under this facility.




The
      securities purchase agreement pursuant to which we sold the series A preferred
      stock and warrants to Barron Partners provides that, for two years after the
      closing, which is the period ending February 24, 2008, we will not incur
      indebtedness equal to more than three times EBITDA for the preceding four
      quarters. The agreement also gives Barron Partners a right of first refusal
      on
      future equity financings, which may affect our ability to raise funds from
      other
      sources if the need arises.




For
      the
      year ended March 31, 2007, we had cash flow from operations of $1,738,000,
      which
      is an improvement from the year ended March 31, 2006, in which we had negative
      cash flow from operations of ($873,000). We attribute this improvement to our
      ability to operate more efficiently, which is reflected in our improved gross
      margin in the year ended March 31, 2007 notwithstanding a decline in revenue.
      However, as a result of the reverse acquisition, we have additional expenses
      resulting from being a public company.




-
          38 -




While
      we
      believe that the $2,000,000 revolving credit facility, our $500,000 capital
      expenditure facility 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
      2008, it is possible that we may require additional funds. In the event that
      we
      make an acquisition, we may require additional financing for the acquisition.
      However, we do not have any current plans for any acquisition, and we cannot
      give any assurance that we will make any acquisition. We have no commitment
      from
      any party for additional funds; however, the terms of our agreement with Barron
      Partners, particularly Barron Partners’ right of first refusal, may impair our
      ability to raise capital in the equity markets since potential investors are
      often reluctant to negotiate a financing when another party has a right to
      match
      the terms of the financing.




**Item
      7. Financial Statements.**




The
      financial statements begin on Page F-1.




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




Not
      Applicable.




**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, 2007




**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**




-
          39 -




The
      following table sets forth certain information concerning our directors and
      executive officers.




Name
            Age
            PositionJames
                G. Reindl
            48
            Chairman
                and chief executive officerMary
                Desmond
            43
            Chief
                financial officer and secretaryStanley
                A. Youtt
            61
            Director
                and chief executive officer of RanorMichael
                R. Holly1
            61
            DirectorLarry
                Steinbrueck1
            55
            DirectorLouis
                A. Winoski1
            49
            Director


(1)
      Member of the audit and compensation committees.




James
      G.
      Reindl has been a director, chairman and chief executive officer since February
      2006. From 2002 until January 2007, Mr. Reindl was 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. From February 2006 until December 2006, Techprecision, LLC
      had
      a management agreement with us. 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, an aerospace subsidiary of Standard Automotive. In March 2002,
      in
      connection with its bankruptcy filing, Standard Automotive included Critical
      Components as part of its bankruptcy petition. During that period, Ranor’s
      predecessor 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.




Michael
      Holly has been a director since March 2006. Since 2004, Mr. Holly has been
      a
      private investor and consultant. From 1996 until 2004, Mr. Holly was managing
      director of Safeguard International Fund, L.P., a private equity fund of which
      Mr. Holly is a founding partner. Mr. Holly has a Bachelor of Science degree
      in
      economics from Mount St. Mary’s College.




Larry
      Steinbrueck has been a director since March 2006. Since 1991, Mr. Steinbrueck
      has been president of MidWest Capital Group, an investment banking firm. Mr.
      Steinbrueck has a Bachelor of Science degree in business and a Masters in
      Business Administration from the University of Missouri.




Louis
      A.
      Winoski has been a director since March 2006. Since August 2005, Mr. Winoski
      has
      been a consultant to Garner CAD Technic GmbH, an aerospace engineering and
      design services company. From August 2004 to August 2005, Mr. Winoski was
      managing director, chairman of the board and member of the holding company
      board
      for RSM Fabrications Ltd., a fabricator of aerospace products. From March 2002
      until July 2004, Mr. Winoski was a consultant and director of global marketing
      for PFW GmbH, a producer of components for commercial aircraft. From December
      1999 to February 2002, Mr. Winoski was president and chief executive officer
      of
      Tubetronics Inc., a producer of spare parts for Boeing commercial aircraft
      and
      other aerospace products. 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.




-
          40 -




Our
      dire ctors
      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 and chairman of the audit committee, and Mr.
      Winoski is chairman of the compensation committee.




**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 year
      ended March 31, 2007, the Forms 3 filed on April 5, 2006 by Andrew Levy, on
      July 26, 2006 by Mary Desmond, on August 2, 2006 by Mr. Holly and on August
      11,
      by Mr. Steinbrueck were filed late. Mr. Winoski is also delinquent in filing
      Forms 3 and 4.




**Item
      10. Executive Compensation.**




**SUMMARY
      COMPENSATION TABLE**




Set
      forth
      below is information for the year ended March 31, 2007 and 2006 for our chief
      executive officer and for one individual who was chief executive officer of
      our
      operating subsidiary, Ranor, Inc. No other officer received compensation of
      more
      than $100,000 for the year ended March 31, 2007.




Name
                and Position
            
            Year
            
            Salary
            
            Bonus
            
            Stock
              Options
            
            Stock
                Awards
            
            Other
                Compensation
            
            TotalJames
                G. Reindl, chief executive officer
            
            
            2007
              2006
            
            $
            24,615
              -0-
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            $
            75,000
              7,500
            
            $
            99,615
              7,500Stanley
                A. Youtt, chief executive officer of Ranor
            
            
            2007
              2006
            
            
            198,016
              198,016
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            
            198,016
              198,016Mary
                Desmond, chief financial officer
            
            
            2007
              2006
            
            
            89,870
              83,691
            
            
            -0-
              -0-
            
            
            -0-
              -0-
            
            
            -0-
              $
                2,850
            
            
            -0-
              -0-
            
            
            89,870
              86,541




-
          41 -




Mr.
      Reindl became our chief executive officer on February 24, 2006. Through December
      31, 2006, Mr. Reindl was a member of Techprecision LLC, and he received his
      compensation through our management agreement with Techprecision LLC, which
      we
      entered into on February 24, 2006 and terminated as of December 31, 2006. All
      of
      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 years ended March 31, 2007 and 2006. Our total
      payments to Techprecision LLC pursuant to the management agreement were $185,000
      for the year ended March 31, 2007 and $16,667 for the year ended March 31,
      2006.
      During that period, Techprecision LLC had three members, Andrew A. Levy, who
      had
      a 45% interest, James G. Reindl, who had a 45% interest, and Martin M. Daube,
      who had a 10% interest. Accordingly, $7,500, which is 45% of the $16,667 total
      payments, has been allocated to Mr. Reindl. We also reimburse Mr. Reindl for
      his
      travel expenses from his home to our offices in Westminster, Massachusetts,
      which were $29,390 for the year ended March 31, 2007 and $1,625 for the year
      ended March 31, 2006.




The
      stock
      awards for Ms. Desmond represent the value of the 10,000 shares of common stock
      that were granted to Ms. Desmond at the time of the reverse acquisition in
      February 2006. In April 2007, we granted Ms. Desmond 3,000 shares of common
      stock and an option to purchase 25,000 shares of common stock at $.285, being
      the fair value on the date of grant.




Except
      for employment agreements with Mr. Reindl and Mr. Youtt, we have no agreement
      with any of the officers named in the summary compensation table. We are
      negotiating an employment agreement with Ms. Desmond.




**Employment
      Agreements**




In
      February 2006, Ranor entered into an employment agreement with Stanley A. Youtt
      pursuant to which he would serve as our 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.




On
      June
      19, 2007, we entered into an employment agreement dated as of April 1, 2007
      with
      James G. Reindl, our chief executive officer. Pursuant to the terms of the
      agreement, we are employing Mr. Reindl for an initial term commencing April
      1,
      2007 and expiring on March 31, 2008 and continuing on a year-to-year basis
      thereafter unless terminated by either party on 90 days’ written notice prior to
      the expiration of the initial term or any one-year extension. Mr. Reindl is
      to
      receive an annual base salary of $160,000 a year. Mr. Reindl is also entitled
      to
      receive an increase to his base salary and receive certain bonus compensation,
      stock options or other equity-based incentives at the discretion of the
      compensation committee of the board of directors and reimbursement of his
      commuting expenses. The agreement may be terminated by us with or without cause
      or by Mr. Reindl’s resignation. If we terminate the agreement without cause, we
      are to pay Mr. Reindl severance pay equal to his salary for the balance of
      the
      term plus the amount of his bonus for the prior year. During the term of his
      employment and for a period thereafter, Mr. Reindl will be subject to
      non-competition and non-solicitation provisions, subject to standard
      exceptions.




**Management
      Agreement**




-
          42 -




Contemporaneously
      with the reverse acquisition on February 24, 2006, we engaged Techprecision
      LLC
      to manage our business through March 31, 2009 pursuant to a management
      agreement. The agreement provided 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 was president and Mr. Andrew
      A. Levy was chairman of Techprecision LLC, and they and Martin M. Daube were
      the
      members of Techprecision LLC. The agreement provided that Techprecision LLC
      would 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.
      Mr. Reindl works for us on a full time basis. Neither Mr. Levy nor Mr. Daube
      devoted any significant time to our business. None of the members of
      Techprecision LLC received any additional compensation from us during the period
      that the contract was in effect, and the annual fee and any performance bonus
      which may be awarded is allocated among the three members in accordance with
      their interests in Techprecision LLC, which is 45% for each of Mr. Reindl and
      Mr. Levy and 10% with respect to Mr. Daube.




On
      January 29, 2007, the management agreement with Techprecision LLC was terminated
      as of December 31, 2006. In connection with the termination, we made a payment
      of $16,667 on or about January 15, 2007 and we agreed to make eight monthly
      payments of $9,167 to Techprecision LLC, commencing February 15, 2007 and ending
      on September 15, 2007. Mr. Reindl has not been a member of Techprecision LLC
      since December 31, 2006. As a result of the termination of the management
      agreement, Mr. Reindl no longer receives compensation through Techprecision
      LLC,
      and we are paying Mr. Reindl salary of $160,000 per annum pursuant to his
      employment agreement. See “Management - Employment Agreements.”. We also
      reimburse Mr. Reindl for his travel expenses to our offices in Westminster,
      Massachusetts.




**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.”




**2006
      Long-Term Incentive Plan**




-
          43 -




In
      February 2006, our board of directors adopted, and in July 2006 it amended,
      and
      in October 2006, our stockholders approved, 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 nine
      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
      1st 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. On April 1, 2006, we granted
      incentive stock options to purchase a total of 221,659 shares of common stock
      to
      our key employees, including Mary Desmond, our chief financial officer, who
      received an option to purchase 25,000 shares. The options are immediately
      exercisable at an exercise price of $.285 per share, which the compensation
      committee determined to be the fair market value on the date of grant. This
      valuation of $.285 per share represents the initial conversion price of the
      series A preferred stock and our estimate of the current fair value per share
      of
      the common stock. No other officer received an option grant. By the terms of
      the
      option grants, the options can only be exercised if the underlying shares are
      covered by an S-8 registration statement.




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.




-
          44 -




As
      of May
      31, 2007, there were outstanding options to purchase 150,000 shares which we
      issued to our independent directors pursuant to provision of the 2006 Plan
      that
      provide for the automatic grant of options to independent directors, and
      outstanding options to purchase 211,660 shares of common stock which were
      granted to employees on April 1, 2007, of which options to purchase 25,000
      shares were granted to Ms. Desmond. Except for the options granted to Ms.
      Desmond on April 1, 2007, no options were granted to any of the individuals
      named in the summary compensation table. All
      outstanding options have an exercise price of $.285, which was determined to
      be
      the fair market value on the date of grant.




At
      fiscal
      year end, no person named in the summary compensation table held any options
      or
      stock appreciation rights.




**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 May 31, 2007 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.




Name
            
            Shares
            
            PercentageJames
                G. Reindl
              One
                Bella Drive
              Westminster,
                MA 01473
            
            
            2,587,100
            
            
            25.7
            %Andrew
                A. Levy
              46
                Baldwin Farms North
              Greenwich,
                CT 06831
            
            
            2,567,100
            
            
            25.5
            %Howard
                Weingrow
              805
                Third Avenue
              New
                York, NY 10022
            
            
            1,850,000
            
            
            18.4
            %Stanoff
                Corporation
              805
                Third Avenue
              New
                York, NY 10022
            
            
            1,700,000
            
            
            16.9
            %Stanley
                A. Youtt
              One
                Bella Drive
              Westminster,
                MA 01473
            
            
            1,592,000
            
            
            15.8
            %Martin
                M. Daube
              20
                West 64thStreet
              New
                York, NY 10023
            
            
            551,800
            
            
            5.5
            %Larry
                Steinbrueck
            
            
            244,000
            
            
            2.4
            %Michael
                Holly
            
            
            125,000
            
            
            1.2
            %Louis
                A. Winoski
            
            
            40,000
            
            
            *Mary
                Desmond
            
            
            38,000
            
            
            *All
                officers and directors as a group (six individuals)
            
            
            4,626,100
            
            
            45.4
            %


*
      Less
      than 1%




-
          45 -




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 May 31, 2007.




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,
      1,850,000 shares beneficially owned by Mr. Weingrow includes the 1,700,000
      shares owned by Stanoff Corporation and the 150,000 shares owned by Mr. Weingrow
      individually.




The
      shares owned by Mr. Steinbrueck,
      Mr. Holly and Mr. Winoski include shares of common stock issuable upon exercise
      of currently exercisable options to purchase 40,000 shares of common stock
      which
      are held by each of them.




Barron
      Partners owns shares of series A preferred stock and warrants which, if fully
      converted or exercised, would result in ownership of more than 4.9% of our
      outstanding common stock. However, the series A preferred stock may not be
      converted and the warrants may not be exercised if such conversion would result
      in Barron Partners owning more than 4.9% of our outstanding common stock. The
      applicable instruments provide that this limitation may not be waived. As a
      result, Barron Partners does not beneficially own 5% or more of our common
      stock.




On
        February 24, 2006, Mr. Reindl, Mr. Levy, Mr. Daube and Mr. Youtt entered
        into an
        agreement pursant to which Mr. Levy, Mr. Reindl and Mr. Daube agreed to transfer
        to Mr. Youtt an aggregate of 796,000 shares of common stock in the event
        that we
        do not make an acquisition meeting certain agreed-upon criteria by February
        24,
        2007, which was one year after we acquired Ranor. Pursuant to this agreement,
        on
        March 20, 2007, Mr. Reindl and Mr. Levy each transferred 358,200 shares of
        common stock to Mr. Youtt and Mr. Daube transferred 79,600 shares to Mr.
        Youtt,
        resulting in the transfer of 796,000 shares of common stock to Mr. Youtt.
        The
        shares transferred by Mr. Levy represent 250,000 shares of common stock
        transferred by Redstone Capital Corporation, of which Mr. Levy is president
        and
        he and his wife are the sole stockholders, and 108,200 shares transferred
        by Mr.
        Levy. Redstone Capital no longer owns any shares of our common
        stock.




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




Mr.
      Reindl, Mr. Levy and Mr. Daube may be deemed to be our founders.




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 on February 24, 2006,
      we sold the real estate to WM Realty for $3.0 million. WM Realty is an
      affiliated company controlled by Andrew A. Levy, one of our principal
      stockholders. WM Realty financed the purchase through a $3.3 million mortgage
      which was due on August 1, 2006. The outstanding balance of $3,200,000 was
      due
      on August 1, 2006. In August 2006, WM Realty obtained a one-month extension
      and
      the right to extend the maturity date for two one-month periods. The interest
      rate for the extension was 11.5% per annum plus .75% of the principal balance
      for each month’s extension. This mortgage was refinanced in October 2006.
      Expenses of obtaining the initial mortgage were $192,455 and were amortized
      over
      the stated term of the mortgage. In connection with the mortgage, we paid
      certain of WM Realty’s legal and closing costs of approximately $226,808, which
      WM Realty paid, net of obligations we had to WM Realty, following the
      refinancing its mortgage.




-
          46 -




On
      October 4, 2006, WM Realty placed a new mortgage of $3.2 million on the property
      and the existing mortgage of $3.1 million was paid off. The new mortgage has
      a
      term of ten years, bears interest at 6.75% per annum, and provides for monthly
      payments of principal and interest of $20,595. The amortization is based on
      a
      thirty-year payout. WM Realty has the right to prepay the mortgage note upon
      payment of a prepayment premium of 5% of the amount prepaid if the prepayment
      is
      made during the first two years, and declining to 1% of the amount prepaid
      if
      the prepayment is made during the ninth or tenth year. In connection with the
      refinancing, Mr. Levy executed a limited guarantee. Pursuant to the limited
      guaranty, Mr. Levy guaranteed the lender the payment of any loss resulting
      from
      WM Realty’s fraud or misrepresentation by WM Realty or any principal or member
      of WM Realty in connection with the loan documents, (ii) misapplication of
      rent
      received after the occurrence of a default, (iii) misappropriation of security
      deposits, rent,insurance proceeds, and condemnation awards, (iv) failure to
      pay
      taxes and other charges that can result in a lien on the property, (v) removal
      of personal property by or on behalf of WM Realty and not replaced with
      equivalent property, (vi) any act of intentional waste by WM Realty or any
      principal or affiliate; (vii) any fees or commissions paid in violation of
      the
      loan documents.




**Item
      13. Exhibits.**




2.1
            Stock
                purchase agreement dated August 17, 2005, by and among Ranor Acquisition,
                LLC, the stockholders of Ranor and Ranor, Inc.13.1
            Certificate
                of incorporation33.2
            By-laws23.3
            Certificate
                of Designation for the Series A Convertible Preferred Stock44.1
            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 LP14.4
            First
                amendment dated January 29, 2007 to loan and security agreement dated
                February 24, 2006, between Ranor, Inc. and Sovereign Bank and forms
                of
                notes64.5
            Second
                amendment dated June , 2007 to loan and security agreement dated
                February
                24, 2006, between Ranor, Inc. and Sovereign Bank and forms of revolving
                note34.6
            Mortgage
                security agreement and fixture filing dated October 4, 2006, from
                WM
                Realty Management, LLC to Amalgamated Bank34.7
            Mortgage
                note dated October 4, 2006310.1
            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 LLC1




-
          47 -




10.4
            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 Youtt110.7
            Management
                agreement dated February 24, 2006, between Ranor and Techprecision
                LLC410.8
            Lease,
                dated February 24, 2006 between WM Realty Management, LLC and
                Ranor110.9
            2006
                Long-term incentive plan410.10
            Letter
                agreement from WM Realty Management, LLC110.11
            Settlement
                agreement and general release dated February 13, 2007, among the
                Company,
                Green Mountain Partners III, L.P.610.12
            Letter
                agreement dated January , 2007 between Techprecision Corporation
                and
                Techprecision LLC710.13
            Limited
                guarantee dated October 4, 2006 from Andrew Levy to Amalgamated
                Bank310.14
            Agreement
                dated May 31, 2007 between the Company and Barron Partners LP dated
                August
                17, 2005310.15
            Employment
                agreement dated as of April 1, 2007 between the Company and James
                G.
                Reindl810.16
            Purchase
                order from Electric Boat Corporation dated November 9, 2006310.17
            Purchase
                order from GT Solar Incorporated dated January 22, 20073,910.18
            Purchase
                order from L3 Communications ESSCO dated March 29, 2006310.19
            Agreement,
              dated
              February 24, 2006, among James B Reindl, Andrew A. Lvey, Martin M.
              Daube
              and Stanky Youtt1°10.20
            Advice from
              Barron
              Partners concerning cashless exercise of warrants.1°14.1
            Code
                of business conduct and ethics421.1
            List
                of Subsidiaries331.1
            Certification
                of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002331.2
            Certification
                of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002332.1
            Certification
                of chief executive officer and chief financial officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 20023




1  Filed
      as
      an exhibit to the Company’s registration statement on Form SB-2, File No.
      333-133509, and incorporated hereby 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
      herewith.




4  Filed
      as
      an appendix to the Company’s information statement of Schedule 14-C, and
      incorporated herein by reference.




5   Filed
      as
      an exhibit to the Company’s annual report on Form 10-KSB for the year ended
      December 31, 2005 and incorporated hereby reference.




6   Filed
      as
      an exhibit to the Company’s current report on Form 8-K, which was filed with the
      commission on February 20, 2007.




7  Filed
      as
      an exhibit to the Company’s current report on Form 8-K, which was filed with the
      commission on February 8, 2007.




8  Filed
      as
      an exhibit to the Company’s current report on Form 8-K, which was filed with the
      commission on June 26, 2007.




-
          48 -




9  Certain
      portions of this exhibit have been omitted based on a request for confidential
      treatment and the non-public information has been filed with the
      Commission.




1o
      Filed as an
      exhibit to the Company's Amendment No. 5 to form SB-2, File No. 333-133509,
      and
      incorporated here in by reference.




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




The
      following is a summary of fees for professional services rendered by Tabriztchi
      & Co., CPA, P.C., formerly known as Bloom & Co., LLP (“Tabriztchi”), our
      independent registered public accounting firm, for the years ended March 31,
      2007 and 2006 as follows:




Year
                ended March 31,2007
            
            2006Audit
                fees
            
            $
            75,088
            
            $
            35,039Audit
                related fees
            
            
            8,062
            
            
            -0-Tax
                fees
            
            
            1,800
            
            
            -0-All
                other fees
            
            
            -0-
            
            
            -0-Total
            
            $
            84,950
            
            $
            35,039




*Audit
      fees.* Audit
      fees represent fees for professional services performed by Tabriztchi for the
      audit of our annual financial statements and the review of our quarterly
      financial statements, as well as services that are normally provided in
      connection with statutory and regulatory filings or engagements. **




*Audit-related
      fees.* Audit-related
      fees represent fees for assurance and related services performed by Tabriztchi
      that are reasonably related to the performance of the audit or review of our
      financial statements. These services include the review of our registration
      statement of Form SB-2 and communications with SEC regarding 10-KSB and 10-QSB
      forms filed in 2006.




*Tax
      Fees.* Tax
      fees
      represent fees for tax compliance services performed by Tabriztchi.




*All
      other fees.* There
      were no other fees paid to Tabriztchi.




Policy
      on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
      of
      Independent  Auditors




The
      audit
      committee’s policy is to pre-approve all audit and permissible non-audit
      services provided by the independent registered public accounting firm. These
      services may include audit services, audit-related services, tax services and
      other services. The independent registered public accounting firm and management
      are required to periodically report to the audit committee regarding the extent
      of services provided by the independent registered public accounting firm in
      accordance with this pre-approval, and the fees for the services performed
      to
      date. The audit committee may also pre-approve particular services on a
      case-by-case basis. All services were pre-approved by the audit
      committee.




-
          49 -


**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: September 20, 2007
            
            /s/ James
              G.
              ReindlJames G. Reindl, Chief Executive
              Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      report has been signed by the following persons on behalf of the Registrant
      and
      in the capacities and on the dates indicated.




Signature
            Title
            Date/s/
                James G.
                Reindl
            Chairman
              of the
              board, chief executive
            September 20, 2007James
                G. Reindl
            officer
                and director
              (Principal Executive Officer)/s/
                Mary Desmond
            Chief financial officer
            September 20, 2007Mary
                Desmond
            (Principal
              Financial and Accounting Officer)*/s/
                Stanley A. Youtt
            Director
            September 20, 2007Stanley
                A. Youtt*/s/
                Michael Holly
            Director
            September 20, 2007Michael
                Holly*/s/
                Larry Steinbrueck
            Director
            September 20, 2007Larry
                Steinbrueck*/s/
                Louis A. Winoski
            Director
            September 20, 2007Louis
                A. Winoski




*
      By
/s/ James G. Reindl, authorized under Power of Attorney filed with Form
      10-KSB for the fiscal year ended March 31, 2007, filed with the Securities
      and
      Exchange Commission on July 2, 2007.




- 50
          -


**INDEX
        TO FINANCIAL STATEMENTS**
  PageReport
                  of Independent Registered Accounting Firm
              
              
              F-2Consolidated
                  Balance Sheet at March 31, 2007
              
              
              F-3Consolidated
                  Statement of Operations for the years ended March 31, 2007 and
                  2006
              
              
              F-4Consolidated
                  Statements of Stockholders’ Equity (Deficit) for the years ended March 31,
                  2007 and 2006
              
              
              F-5Consolidated
                  Statements of Cash Flows for the years ended March 31, 2007 and
                  2006
              
              
              F-6Notes
                  to Consolidated Financial Statements
              
              
              F-8Consolidated
                  Balance Sheet at June 30, 2007 (unaudited)
              
              
              F-24Consolidated
                  Statement of Operations for the three months ended June 30, 2007
                  and 2006
                  (unaudited)
              
              
              F-25Consolidated
                  Statements of Stockholders’ Equity (Deficit) for the three months ended
                  June 30, 2007 (unaudited)
              
              
              F-26Consolidated
                  Statements of Cash Flows for the three months ended June 30, 2007
                  and 2006
                  (unaudited)
              
              
              F-27Notes
                  to Consolidated Financial Statements (unaudited)
              
              
              F-28
 
 F-1
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To
        the
        Board of Directors
 and
        Stockholders of
 Techprecision
        Corporation
 
 We
        have
        audited the accompanying consolidated balance sheet of Techprecision Corporation
        as of March 31, 2007, and the related consolidated statements of operations,
        stockholders’ equity, and cash flows for each of the two years in the period
        ended March 31, 2007. 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, 2007, and the consolidated results of its
        operations, changes in stockholders’ equity and cash flows for each of the two
        years then in the period ended March 31, 2007 in conformity with accounting
        principles generally accepted in the United States of America.
  /s/
        Tabriztchi & Co., CPA, P.C.
 
 Tabriztchi
        & Co., CPA, P.C.
 (Formerly
        Bloom & Co., LLP)
 Garden
        City, New York
 June
        22,
        2007
  F-2
  **TECHPRECISION
        CORPORATION**
 **CONSOLIDATED
        BALANCE SHEET**
 MARCH
        31,
        2007
  CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              1,443,998—A
                  Accounts receivable, less allowance for doubtful accounts of $25,000
              
              
              2,684,970Other
                  receivables
              
              
              16,737Costs
                  incurred on uncompleted contracts, net of allowance for loss and
                  progress
                  billings
              
              
              1,266,445Inventories-
                  raw materials
              
              
              183,498Prepaid
                  expenses
              
              
              270,321Total
                  current assets
              
              
              5,865,969Property,
                  plant and equipment, net
              
              
              2,561,054Other
                  assets deferred loan cost, net
              
              
              138,718Total
                  Assets
              
              $
              8,565,741CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              1,298,643Accrued
                  expenses
              
              
              498,626—Loan
                  from stockholder
              
              
              60,000Current
                  maturity of long-term debt
              
              
              610,814Mortgage
                  payable
              
              
              —Total
                  current liabilities
              
              
              2,468,083LONG-TERM
                  DEBTNotes
                  payable- noncurrent
              
              
              6,020,440STOCKHOLDERS’
                  EQUITYPreferred
                  stock- par value $.0001 per share, 10,000,000 shares authorized,
                  of which
                  9,000,000 are designated as Series A Preferred Stock, with 7,752,462
                  shares issued and outstanding at March 31, 2006
              
              
              2,835,278Common
                  stock -par value $.0001 per share, authorized —
                  90,000,000 shares, issued and outstanding —
                  10,049,000 shares
              
              
              1,006Paid
                  in capital
              
              
              1,766,423Accumulated
                  deficit
              
              
              (4,525,489
              )Total
                  Stockholders’ Equity
              
              
              77,218Total
                  liabilities and stockholders equity
              
              $
              8,565,741
  The
        accompanying notes are an integral part of the financial statements.
  F-3
 
 **TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
 
 Years
                  ended March 31,2007
              
              2006Net
                  sales
              
              
              19,086,206
              
              
              20,266,402Cost
                  of sales
              
              
              15,543,055
              
              
              17,632,576Gross
                  profit
              
              
              3,543,151
              
              
              2,633,826Operating
                  expenses:Salaries
                  and related expenses
              
              
              1,208,920
              
              
              1,402,000Professional
                  fees
              
              
              498,349
              
              
              79,787Selling,
                  general and administrative
              
              
              390,290
              
              
              367,418Total
                  operating expenses
              
              
              2,097,559
              
              
              1,849,205Income
                  from operations
              
              
              1,445,592
              
              
              784,621
              )Other
                  income (expenses)Interest
                  expense
              
              
              (628,412
              )
              
              (1,107,902
              )Interest
                  income
              
              
              2,453
              
              
              10,135Finance
                  costs
              
              
              (289,308
              )
              
              (58,541
              )—
              
              
              (14,273
              )(915,267
              )
              
              (1,170,581
              )Income
                  (loss) before income taxes
              
              
              530,325
              
              
              (385,960
              )Provision
                  for income taxes
              
              
              (240,100
              )
              
              (42,188
              )Net
                  income (loss)
              
              
              290,225
              
              
              ($428,148
              )Deemed
                  dividend to preferred stockholders
              
              
              (675,813
              )Loss
                  to common stockholders
              
              
              (385,588
              )
              
              ($428,148
              )Net
                  loss per share of common stock (basic and diluted)
              
              
              (0.04
              )
              
              (0.05
              )Weighted
                  average number of shares outstanding (basic and diluted)
              
              
              10,008,463
              
              
              8,270,156
 
 The
        accompanying notes are an integral part of the financial statements.
  F-4
  **TECHPRECISION
        CORPORATION**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**
 **YEARS
        ENDED MARCH 31, 2007 AND 2006**
 
 Warrants
                  Preferred Stock
              
              Common
                  Stock
              
              Paid
                  in
              
              AccumulatedOutstanding
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Deficit
              
              TotalBalance,
                  March 31, 2005
              
              
              
              
              
              
              
              
              
              
              
              8,089,000
              
              $
              809
              
              
              392,165
              
              $
              (3,711,753
              )
              $
              (3,318,779
              )Sale
                  of preferred stock and Warrants
              
              
              11,220,000
              
              
              7,719,250
              
              $
              2,150,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,150,000Sale
                  of common stock
              
              
              
              
              
              
              
              
              
              
              
              1,708,000
              
              
              171
              
              
              501,829
              
              
              
              
              
              502,000Issuance
                  of shares of common stock for services
              
              
              
              
              
              
              
              
              
              
              
              170,000
              
              
              17
              
              
              42,483
              
              
              
              
              
              42,500Contributed
                  Capital
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              304,344
              
              
              
              
              
              304,344Loss
                  for period
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (428,148
              )
              
              (428,148
              )Balance,
                  March 31, 2006
              
              
              11,220,000
              
              
              7,719,250
              
              $
              2,150,000
              
              
              9,967,000
              
              $
              997
              
              $
              1,240,821
              
              $
              (4,139,901
              )
              $
              (748,083
              )Contributed
                  capital
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              497,350
              
              
              
              
              
              497,350Shares
                  issued for services
              
              
              
              
              
              
              
              
              
              
              
              82,000
              
              $
              9
              
              
              14,752
              
              
              
              
              
              14,761Directors’
                  stock options
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              13,500
              
              
              
              
              
              13,500Liquidated
                  damages to preferred stockholders
              
              
              
              
              
              33,212
              
              
              9,465
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              9,465Deemed
                  dividend to preferred stockholders
              
              
              
              
              
              
              
              
              675,813
              
              
              
              
              
              
              
              
              
              
              
              (675,813
              )Income
                  for period
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              290,225
              
              
              290,225Balance,
                  March 31, 2007
              
              
              11,220,000
              
              
              7,752,462
              
              $
              2,835,278
              
              
              10,049,000
              
              $
              1,006
              
              $
              1,766,423
              
              $
              (4,525,489
              )
              $
              77,218
 
 The
        accompanying notes are an integral part of the financial
        statements.
  F-5
 
 **TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
  2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  income (loss)
              
              $
              290,225
              
              $
              (
                  428,148
              )Noncash
                  items included in net loss:Depreciation
                  and amortization
              
              
              873,320
              
              
              456,383Shares
                  issued for services
              
              
              14,761
              
              
              42,500Directors’
                  options
              
              
              13,500Liquidated
                  damages
              
              
              9,466Changes
                  in assets and liabilities:(Increase)
                  in accounts receivable
              
              
              (
                  194,423
              )
              
              (
                  667,059
              )Decrease
                  (increase) in inventory
              
              
              30,649
              
              
              (
                  127,445
              )(Increase)
                  decrease in costs on uncompleted contracts
              
              
              (2,565,492
              )
              
              1,779,515Decrease
                  (increase) in prepaid expenses
              
              
              116,154
              
              
              (
                  269,565
              )Increase
                  (decrease) in accounts payable and accrued expenses
              
              
              544,369
              
              
              (
                  565,431
              )Increase
                  (decrease) in customer advances
              
              
              2,605,636
              
              
              (1,094,461
              )Net
                  cash provided (used) in operating activities
              
              
              1,738,165
              
              
              (
                  873.711
              )CASH
                  FLOWS USED IN INVESTING ACTIVITIESPurchases
                  of property, plant and equipment
              
              
              (
                  430,534
              )
              
              (
                  83,934
              )Net
                  cash used in investing activities
              
              
              (
                  430,534
              )
              
              (
                  83,934
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESMortgage
                  loan
              
              
              3,200,000
              
              
              3,300,000Bank
                  loan
              
              
              —
              
              
              4,000,000Sale
                  of common shares
              
              
              —
              
              
              656,763Retirement
                  of common stock
              
              
              —
              
              
              (
                  210,000
              )Sale
                  of preferred stock
              
              
              —
              
              
              2,150,000Retirement
                  of preferred stock
              
              
              —
              
              
              (2,000,000
              )Contributed
                  capital
              
              
              497,350
              
              
              1,379,344Payment
                  of notes
              
              
              (3,888,148
              )
              
              (8,005,527
              )Increase
                  (decrease) in restricted cash
              
              
              950,000
              
              
              (950,000
              )Increase
                  ( decrease) due to former stockholders
              
              
              (843,600
              )
              
              843,600Cost
                  of reorganization
              
              
              —
              
              
              (627,139
              )Cost
                  of financing
              
              
              (
                  332,036
              )
              
              (
                  312,625
              )Loan from stockholder
              
              
              60,000
              
              
              —Net
                  cash provided by (used in) financing activities
              
              
              (356,434
              )
              
              224,416Net
                  increase (decrease) in cash and cash equivalents
              
              $
              951,197
              
              $
              (733,229
              )CASH
                  AND CASH EQUIVALENTS, beginning of period
              
              
              492,801
              
              
              1,226,030CASH
                  AND CASH EQUIVALENTS, end of period
              
              $
              1,443,998
              
              $
              492,801
 
 The
        accompanying notes are an integral part of the financial statements.
  F-6
  **TECHPRECISION
        CORPORATION**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(Continued)**
 
 Years
                  ended March 31,2007
              
              2006SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOWS INFORMATIONCash
                  paid during the year for:Interest
                  expense
              
              $
              637,793
              
              $
              747,764Income
                  taxes
              
              $
              4,229
              
              $
              3,100
 
 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 stockholders.
                  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.
                During
                    the year ended March 31, 2006, the amount of environmental remediation
                    costs were determined to be $81,400. Consequently, the amount
                    of
                    indemnification due to previous stockholders for escrow obligation
                    was
                    reduced and the additional paid in capital was increased by $81,400.
                    In
                    February 2007, we entered into a settlement agreement with the
                    previous
                    stockholders pursuant to which we received $500,000 from the
                    escrow fund
                    in settlement for claims that we made for breach of representations
                    and
                    warranties including the $81,400 for remediation. The balance
                    of the
                    escrow, together with accrued interest was paid to the former
                    preferred
                    stockholders, Green Mountain Partners and Phoenix life Insurance
                    Company.
 4.
                The
                    Company recorded deemed dividends of $388,233 and $287,580 to
                    preferred
                    stockholders in the year ended March 31, 2007 because of a reduction
                    in
                    the conversion price of the series A preferred stock from $.285
                    to $.24225
                    resulting from the Company’s failure to attain a specified level of fully
                    diluted EBITDA per share for the years ended March 31, 2006 and
                    a further
                    reduction from $.24225 to $.218025 resulting from our failure
                    to attain a
                    specified level of fully-diluted EBITDA for the year ended March
                    31, 2007.
                    The deemed dividends increased the preferred stockholders’ equity and
                    reduced the income available to common stockholders by total
                    amount of
                    $675,813.
 The
        accompanying notes are an integral part of the financial
        statements.
  F-7
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED 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, 2006. 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. Techprecision and Ranor are
        collectively referred to as the “Company.”
 
 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.
 
 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, 2007 and March 31, 2006. 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.
 
 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, 2007 and 2006.
  F-8
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 Inventories
 
 Cost
        of
        the inventories of raw materials is determined principally by the first-in,
        first-out method .
 
 Notes
        Payable
 
 The
        Company accounts for all note liabilities that are due and payable in one
        year
        as short-term liabilities.
 
 Long-lived
        Assets
 
 Property,
        plant and equipment- these assets are recorded at cost less accumulated
        depreciation and amortization. Depreciation and amortization are accounted
        for
        on the straight-line method based on estimated useful lives. The amortization
        of
        leasehold improvements is based on the shorter of the lease term or the 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.
  Convertible
        Preferred Stock and Warrants
 
 In
        accordance with EITF 00-19, the Company initially measured the fair value
        of the
        series A preferred stocks by the amount of cash that was received for their
        issuance. The Company subsequently determined that the convertible preferred
        shares and the accompanying warrants were equity instruments under SFAS 150
        and
        133. Although the Company had unconditional obligation to issue additional
        shares of common stock upon conversion of the series A preferred stock if
        EBITDA
        per share were below the targeted amount, the certificate of designation
        relating to the series A preferred stock did not provide that we must issue
        shares that are registered pursuant to the Securities Act of 1933, with the
        result, pursuant to the certificate of designation, the additional shares
        need
        not be registered shares. Our preferred stock also met all other conditions
        for
        the classification as equity instruments. The Company had sufficient number
        of
        authorized shares, the agreement contained an explicit limit on the number
        of
        shares to be delivered on conversion, which was 1,400,000 shares of series
        A
        preferred stock, there is no required cash payment or net cash settlement
        requirement and the holders of the series A preferred stock had no right
        higher
        than the common stockholders.
 
 The
        Company’s warrants were excluded from derivative accounting because they were
        indexed to the Company’s own common stock and were classified in stockholders’
equity section according to SFAS 133 paragraph 11(a).
  As
        of
        April 1, 2006, the Company was required to reduce the conversion price of
        the
        preferred to common stock of $0.285 by 15% because the EBITDA per share was
        below the targeted level of $0.06591 per share for the year ended March 31,
        2006. On March 31, 2007, the Company was required to further reduce the
        conversion price by an additional 10% because the fully-diluted EBITDA per
        share
        was below the targeted level of $0.08568 per share in the year ended March
        31,
        2007. According to EITF number 00-27, “Application of issue No. 98-5 to Certain
        Convertible Instruments,” (EITF 00-27) we estimated the beneficial effect of the
        reductions in conversion price to be $675,813. The 2,371,336 additional shares
        of common stock into which the holders of the series A preferred stock could
        obtain, upon conversion of their shares, were valued at $0.285 per share,
        which
        represents the initial conversion price of the series A preferred stock and
        the
        Company’s. estimate of the current fair value per share of the common
        stock.
  In
        accordance with EITF 98-5, this amount ($675,813) is analogous to a deemed
        dividend and recognized as a return to holders of the series A preferred
        stock
        and is included in the calculation of net loss applicable to common stockholders
        and basic and diluted net loss per share of common stock.
  The
        reductions in the exercise price of the warrants, because of the Company’s fully
        diluted EBITDA per share was lower than the targeted amounts for the years
        ended
        March 31, 2006 and 2007, did not result in any beneficial effect to the warrant
        holders because the warrants were not in the money prior or after the
        reductions.
  The
        Company agreed and paid liquidated damages for its failure to achieve effective
        registration by August 24, 2006, by issuing 33,212 shares of series A preferred
        stock valued at $9,465, or $0.285 per share. The shares of preferred shares
        for
        liquidated damages were valued at the last cash price paid for those shares,
        which was $.285 per share in February 2006, determined without allocating
        any
        value to the warrants that were issued with the series A preferred stock.
        There
        is no market for the Company’s common stock or series A preferred stock.
        According to the final FASB Staff Position (FSP) No. EITF 00-19-2, “Accounting
        for Registration Payment Arrangements,” issued on December 21, 2006, the Company
        recognized the amount of liquidated damages of $9,465 as an expense and credited
        to preferred stock. If the currently pending registration statement is not
        effective by October 15, 2007, liquidated damages shall accrue at the rate
        of
        531 shares of series A preferred stock for each day after October 15, 2007
        that
        the registration statement is not effective. Based on the current status
        of our
        registration statement, the Company considers this contingency not to be
        probable and no liability is required to be recognized under FSP No. EITF
        00-19-2 at March 31, 2007.
  F-9
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 The
        Company recorded the series A preferred stocks to permanent equity in accordance
        with the terms of the Abstracts - Appendix D - Topic D-98: Classification
        and
        Measurement of redeemable Securities.”
  Stock
        Based Compensation
 
 Stock-based
        compensation represents the cost related to stock-based awards granted to
        employees. The Company measures stock-based compensation cost at grant date,
        based on the estimated fair value of the award and recognizes the cost as
        expense on a straight-line basis (net of estimated forfeitures) over the
        employee requisite service period. The Company estimates the fair value of
        stock
        options using a Black-Scholes valuation model. The 150,000 options granted
        to
        the company directors were evaluated using Black Scholes model assuming average
        volatility of 25%, exercise and stock price of $0.285, risk free rate of
        5% and
        the term of 5 years.
 
 Loss
        per
        share of common stock
 
 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 shares of common stock issuable
        upon conversion of the series A preferred stock and upon exercise of outstanding
        warrants and options were not considered since they would be considered
        anti-dilutive.
 
 Revenue
        Recognition and Costs Incurred
 
 Revenue
        and costs are recognized on the units of delivery method. This method recognizes
        as revenue the contract price of units of the product delivered during each
        period and the costs allocable to the delivered units as the cost of earned
        revenue. When the sales agreements provide for separate billing of engineering
        services, the revenues for those services are recognized when the services
        are
        completed. Costs allocable to undelivered units are reported in the balance
        sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed
        upon contract price for customer directed changes, constructive changes,
        customer delays or other causes of additional contract costs are recognized
        in
        contract value if it is probable that a claim for such amounts will result
        in
        additional revenue and the amounts can be reasonably estimated. Revisions
        in
        cost and profit estimates are reflected in the period in which the facts
        requiring the revision become known and are estimable. The unit of delivery
        method requires the existence of a contract to provide the persuasive evidence
        of an arrangement and determinable seller’s price, delivery of the product
        and reasonable collection prospects. The Company has written agreements with
        the
        customers that specify contract prices and delivery terms. The Company
        recognizes revenues only when the collection prospects are reasonable.
 
 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
        $10,832
        and $18,210 in 2007 and 2006, respectively.
  F-10
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 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.
 
 Reclassification
 
 The
        Company has reclassified certain expenses for the year ended March 31, 2006
        to
        conform to the current year’s presentation.
 
 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.
 
 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
        March
        2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
        Instruments - an Amendment of SFAS No. 140” (“SFAS 156”). This Statement amends
        SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
        Extinguishments of Liabilities” *,* with
        respect to the accounting for separately recognized servicing assets and
        servicing liabilities. This Statement is effective for fiscal years beginning
        after September 15, 2006. The Company does not expect the adoption of SFAS
        156
        will have a material impact on its consolidated financial position, results
        of
        operations or cash flows.
  In
        February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Instruments - an amendment of FASB Statements No. 133 and 140”, to
        simplify and make more consistent the accounting for certain financial
        instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
        Instruments and Hedging Activities”, to permit fair value re-measurement for any
        hybrid financial instrument with an embedded derivative that otherwise would
        require bifurcation, provided that the whole instrument is accounted for
        on a
        fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
        Impairment or Disposal of Long-Lived Assets”, to allow a qualifying
        special-purpose entity to hold a derivative financial instrument that pertains
        to beneficial interest other than another derivative financial instrument.
        SFAS
        No. 155 applies to all financial instruments acquired or issued after the
        beginning of an entity’s first fiscal year that begins after September 15, 2006,
        with earlier application allowed. This standard is not expected to have a
        significant effect on the Company’s future reported financial position or
        results of operations.
  In
        June
        2006, FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes”, was
        issued, which clarifies the accounting for uncertainty in income taxes
        recognized in an enterprise’s financial statements in accordance with FASB
        Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes
        a recognition threshold and measurement attribute for the financial statement
        recognition and measurement of a tax position taken or expected to be taken
        in a
        tax return. This Interpretation also provides guidance on derecognition,
        classification, interest and penalties, accounting in interim periods,
        disclosure, and transition.
  F-11
 **TECHPRECISION
            CORPORATION**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 This
        Interpretation is effective for fiscal years beginning after December 15,
        2006,
        and earlier application of the provisions of this Interpretation is encouraged
        if the enterprise has not yet issued financial statements, including interim
        financial statements, in the period this Interpretation is adopted. The Company
        has determined that the FASB Interpretation 48 does not have a material impact
        on its financial statements..
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        No.
        157 (“SFAS 157”), “Fair Value Measurements,” which defines fair value,
        establishes guidelines for measuring fair value and expands disclosures
        regarding fair value measurements. SFAS 157 does not require any new fair
        value
        measurements but rather eliminates inconsistencies in guidance found in various
        prior accounting pronouncements. SFAS 157 is effective for fiscal years
        beginning after November 15, 2007. Earlier adoption is permitted, provided
        the
        company has not yet issued financial statements, including for interim periods,
        for that fiscal year. The Company does not expect the adoption of SFAS 157
        will
        have a material impact on its consolidated financial position, results of
        operations or cash flows.
 
 In
        September 2006, the Securities and Exchange Commission issued Staff Accounting
        Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
        Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB
        108 provides interpretive guidance on how the effects of prior-year uncorrected
        misstatements should be considered when quantifying misstatements in the
        current
        year financial statements. SAB 108 requires registrants to quantify
        misstatements using both an income statement (“rollover”) and balance sheet
        (“iron curtain”) approach and evaluate whether either approach results in a
        misstatement that, when all relevant quantitative and qualitative factors
        are
        considered, is material. If prior year errors that had been previously
        considered immaterial now are considered material based on either approach,
        no
        restatement is required so long as management properly applied its previous
        approach and all relevant facts and circumstances were considered. If prior
        years are not restated, the cumulative effect adjustment is recorded in opening
        accumulated earnings as of the beginning of the fiscal year of adoption.
        SAB 108
        is effective for fiscal years ending after November 15, 2006.  The Company
        has determined that there will be no impact to the financial statements upon
        the
        adoption of this bulletin.
 
 On
        December 21, 2006, the FASB issued final FASB Staff Position (FSP) No. EITF
        00-19-2, Accounting for Registration Payment Arrangements, which addresses
        an
        issuer’s accounting for registration payment arrangements. This FSP requires
        that an entity should recognize and measure a registration payment arrangement
        as a separate unit of account from the financial instrument (s) subject to
        that
        arrangement. This FSP states that the contingent obligation to make future
        payments or otherwise transfer consideration under a registration payment
        arrangement should be separately recognized and measured in accordance with
        FASB
        Statement No. 5, Accounting for Contingencies. This FSP further specifies
        that a
        financial instrument subject to a registration payment arrangement should
        be
        recognized and measured in accordance with other applicable GAAP without
        regard
        to the contingent obligation to transfer consideration pursuant to the
        registration payment arrangement.
 
 This
        FSP
        is effective immediately for registration payment arrangements and the financial
        instruments subject to those arrangements that are entered into or modified
        subsequent to December 21, 2006. Otherwise, the guidance in the FSP is effective
        for financial statements issued for fiscal years beginning after December
        15,
        2006, and interim periods within those fiscal years. For registration payment
        arrangements and financial instruments subject to those arrangements that
        were
        entered into prior to December 21, 2006 and that continue to be outstanding
        at
        the beginning of the period of adoption, the FSP requires retrospective
        application. The Company adopted the FSP and accordingly recorded liquidated
        damages in the amount of $9,465.
  F-12
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 NOTE
        2.
        REVERSE ACQUISITION
 
 In
        connection with the reverse acquisition, on February 24, 2006:
 
 ·
              The
                  Company 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.
 
 ·
              During
                  the period from inception in February 2005 through the completion
                  of the
                  reverse acquisition on February 24, 2006, the Company’s then principal
                  stockholder, Capital Markets Advisory Group,LLC, had advanced $39,661
                  to
                  the Company, then known as Lounsberry Holdings II, Inc. to pay
                  its
                  expenses. On February 24, 2006, the Company paid $160,339 to Capital
                  Markets to repurchase 928,000 shares of common stock, which were
                  cancelled, and to reimburse the $39,661 of
                  advances.
 
 ·
              The
                  Company issued 7,997,000 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 the Company’s 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. 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. The mortgage
                  was
                  refinance in October 2006. See Note
                  7.
  ·
              Ranor
                  used the net proceeds of the Sovereign Bank loan (see Note 7),
                  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, and to purchase the equity in Ranor. 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
                  the sole source of the former Ranor preferred stockholders’ liability for
                  breach of the representations and warranties under the Ranor Agreement.
                  The Company made claims against the escrow account and, in February
                  2007,
                  the Company and the former Ranor preferred stockholders entered
                  into a
                  settlement agreement pursuant to which the Company received $500,000
                  from
                  the escrow funds and the escrow agent paid the balance, including
                  accrued
                  interest, to the former Ranor preferred stockholders, and the parties
                  exchanged general releases.
  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.
  F-13
 **TECHPRECISION
            CORPORATION**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  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.
 
 NOTE
        3.
        PROPERTY, PLANT AND EQUIPMENT
  As
        of
        March 31, 2007 and 2006 property, plant and equipment consisted of the
        following:
 2007
                
                2006Land
                
                $
                110,113
                
                $
                110,113Building
                    and improvements
                
                
                1,290,072
                
                
                1,290,072Machinery
                    equipment, furniture and fixtures
                
                
                3,040,232
                
                
                2,609,698Total
                    property, plant and equipment
                
                
                4,440,417
                
                
                4,009,883Less:
                    accumulated depreciation
                
                
                (1,879,363
                )
                
                (1,452,889
                )$
                2,561,054
                
                $
                2,556,994
  Depreciation
        expense for the years ended March 31, 2007 and 2006 were $426,474 and $412,988,
        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). The advance billing and deposits includes down payments for acquisition
        of materials and progress payments on contracts. The agreements with the
        buyers
        of the Company’s products allow the Company to offset the progress payments
        against the costs incurred.  As of March 31, 2007 and 2006.
 
 2007
              
              2006Cost
                  incurred on uncompleted contracts, beginning balance
              
              $
              2,889,649
              
              $
              4,669,165Total
                  cost incurred on contracts, during the year
              
              
              18,108,550
              
              
              15,853,060Less
                  cost of sales, during the year
              
              
              (15,543,057
              )
              
              (17,632,576
              )Cost
                  incurred on uncompleted contracts, ending balance
              
              $
              5,455,142
              
              $
              2,889,649Billings
                  on uncompleted contracts, beginning balance
              
              $
              1,583,061
              
              $
              2,677,522Plus:
                  Total billings incurred on contracts, during the year
              
              
              9,236,613
              
              
              6,760,524Less:
                  Contracts recognized as revenue, during the year
              
              
              (6,630,977
              )
              
              (7,854,985
              )Billings
                  on uncompleted contracts, ending balance
              
              $
              4,188,697
              
              $
              1,583,061Cost
                  incurred on uncompleted contracts, ending balance
              
              $
              5,455,142
              
              $
              2,889,649Billings
                  on uncompleted contracts, ending balance
              
              
              (4,188,697
              )
              
              1,583,061Cost
                  incurred on uncompleted contracts, ending balance, net
              
              $
              1,266,445
              
              $
              1,306,588
   F-14
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 On
          March
          31, 2007 and 2006, $116,755 and $86,141 of allowance for losses on uncompleted
          contracts were recognized, respectively.
 NOTE
        5.
        PREPAID EXPENSES
  As
                  of March 31, 2007 and 2006, the prepaid expenses included the following:
  2007
              
              
              2006Insurance
              
              $
              137,484
              
              $
              173,152Interest
              
              
              0
              
              
              122,001Mortgage
                  payment
              
              
              0
              
              
              36,500Real
                  estate taxes
              
              
              4,387
              
              
              34,921Pre-Pay
                  on purchases
              
              
              121,720Mortgage
                  servicing fee
              
              
              0
              
              
              3,529Equipment
                  maintenance
              
              
              6,730
              
              
              6,022Quality
                  control audit fees
              
              
              0
              
              
              10,350Total
              
              $
              270,321
              
              $
              386,475
  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. Amortization charged to operations
        in 2007 and 2006 were $295,978 and $59,096, respectively. As of March 31,
        2007
        and 2006, deferred charges were as follows:
 
 2007
              
              2006Deferred
                  costs expiring in one year or less:Deferred
                  mortgage costs
              
              $
              207,402
              
              
              265,943Less:
                  accumulated amortization
              
              
              (207,402
              )
              
              (58,541
              )$
              0
              
              $
              207,402Deferred
                  costs expiring after one year:Deferred
                  loan costs
              
              $
              150,259
              
              
              46,852Accumulated
                  amortization
              
              
              (11,541
              )
              
              (655
              )$
              138,718
              
              $
              46,127
 
 NOTE
        7.
        LONG-TERM DEBT
  The
        following debt obligations, outstanding on March 31, 2007 and 2006:
 
 2007
              
              20061.
                  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
              
              $
              3,428,571
              
              
              4,000,0002.
                  long-term mortgage loan issued on October 4, 2006Amalgamated
                  Bank mortgage loan to WM Realty- 10 years, annual interest rate
                  6.75%,
                  monthly interest and principal payment $20,955. The amortization
                  is basedA
                  thirty year term. WM realty has the WM Realty Management has the
                  right to
                  prepay the mortgage note upon payment of a prepayment premium of
                  5% of the
                  amount prepaid if the prepayment is made during the first two years,
                  and
                  declining to 1% of the amount prepaid if the prepayment is made
                  during the
                  ninth or tenth year.
              
              $
              3,189,0873.
                  Automobile Loanཉ 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
              
              
              13,596
              
              
              19,4016,631,254
              
              
              4,019,401Principal
                  payments due within one year
              
              
              610,814
              
              
              576,934Principal
                  payments due after one year
              
              $
              6,020,440
              
              $
              3,442,467
  F-15
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 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, 2007 the amount due on the line of credit was zero.
        In
        February 2007, the Company entered into an agreement with the bank which
        (i)
        reduced the interest rate on its revolving credit line from prime plus 1
        1/2% to
        prime plus 1% and (ii) provided for the Company to borrow up to $500,000
        at
        prime plus 1% in order to financing capital expenditures. Under this capital
        expenditures facility, the Company may borrow up to $500,000 until the February
        1, 2008, with interest only payable through February 1, 2008 and the principal
        to be amortized over a five-year term commencing March 1, 2008. As of March
        31,
        2007, the Company had not borrowed any money under the capital expenditures
        facility.
  The
        note
        is subject to various covenants that include the following: the loan collateral
        comprises all personal property of the Company, including cash, accounts
        receivable, inventories, equipment, financial and intangible assets owned
        when
        the loan is contracted or acquired thereafter; the amount of loan outstanding
        at
        all times is limited to a borrowing base amount of the Company’s qualified
        accounts receivable and inventory; there are prepayment penalties of 3%,
        2% and
        1% of the outstanding principal, in the first, second and third years following
        the issuance date, respectively. There is no prepayment penalty thereafter;
        the
        Company is prohibited from issuing any additional equity interest (except
        to
        existing holders), or redeem, retire, purchase or otherwise acquire for value
        any equity interests; the Company pays an unused credit line fee of 0.25%
        of the
        average unused credit line amount in previous month; the earnings available
        to
        cover fixed charges are required not to be less than 120% of fixed charges
        for
        the rolling four quarters, tested at the end of each fiscal quarter; and
        interest coverage ratio is required to be not less than 2:1 as at the end
        of
        each fiscal quarter.
 
 In
        connection with the Amalgamated Bank mortgage financing, Mr. Andrew Levy
        executed a limited guarantee. Pursuant to the limited guaranty, Mr. Levy
        guaranteed the lender the payment of any loss resulting from WM Realty
        Management’s fraud or misrepresentation in connection with the loan documents,
        misapplication of rent and insurance proceeds, failure to pay taxes and other
        defaults resulting from his or WM Realty’s misconduct.
  As
        of
        March 31, 2007, the maturities of long-term debt were as follows:
 **Year
          ending March 31,**
  2008
                
                $
                609,7342009
                
                
                612,7522010
                
                
                612,4352011
                
                
                612,6412012
                
                
                615,628Due
                    after 2011
                
                
                3,568,064Total
                
                $
                6,631,254
  F-16
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 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.
        As
        of March 31, 2007 and 2006, the sources and tax effects of the differences
        are
        as follows:
 2007
                
                2006Income
                    tax provision at statutory rate of 34%
                
                **$**
                (400,600
                )
                $
                (588,500
                )Tax
                    benefit before net operating loss carry forward (11%)
                
                
                160,500
                
                
                546,300Net
                    tax provision (23%)
                
                
                (240,100
                )
                $
                (42,200
                )
  As
        of
        March 31, 2007 and 2006, 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:
 2007
                
                2006Deferred
                    Tax Assets:Current:Compensation
                    accrual
                
                $
                112,000
                
                $
                73,000Bad
                    debt allowance
                
                
                9,800
                
                
                9,800Loss
                    on uncompleted contracts
                
                
                45,600
                
                
                33,600Non-Current:Net
                    operating loss carry-forward
                
                
                584,900
                
                
                760,800Total
                    deferred tax assets
                
                
                752,300
                
                
                877,200Deferred
                    Tax Liabilities:Non-Current:Depreciation
                
                
                206,000
                
                
                197,600Net
                    deferred tax asset
                
                
                546,300
                
                
                679,600Valuation
                    allowance
                
                
                (546,300
                )
                
                (679,600
                )Net
                    Deferred Tax Asset Balance
                
                $
                —
                
                $
                —
 
 At
        March
        31, 2007 and 2006, 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 changes in
        the
        valuation allowances during the years ended March 31, 2007 and 2006 were
        $(123,300) and $(588,500) respectively. The Company applied $164, 500 of
        the tax
        benefit of loss carryforward to offset the provision for income taxes, in
        the
        year ended March 31, 2007. In the year ended March 31, 2006, 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, 2007, the Company’s federal net operating loss carryforwards was
        approximately $1,499,600. If not utilized, the federal net operating loss
        carryforward of Ranor and Techprecision will expire in 2025 and 2027,
        respectively. 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.
  F-17
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 NOTE
        9.
        RESTRICTED CASH - INDEMNIFICATION OBLIGATION ESCROW
  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. The
        Company made a claim against the escrow account and, in February 2007, the
        Company entered into a settlement agreement with the former Ranor preferred
        stockholders pursuant to which we received $500,000 from the escrow fund
        in
        settlement for claims that we made for breach of representations and warranties
        relating to environmental matters, and the balance of the escrow, together
        with
        accrued interest, was paid to Green Mountain Partners and Phoenix Life Insurance
        Company in respect of their sale of the preferred stock in February 2006,
        and
        the parties exchanged mutual releases.
  NOTE
        10.
        RELATED PARTY TRANSACTIONS
  Management
        Fees
  Contemporaneously
        with the reverse acquisition on February 24, 2006, we engaged Techprecision
        LLC
        to manage our business through March 31, 2009 pursuant to a management
        agreement. The agreement provided 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 was president and Mr.
        Andrew
        A. Levy was chairman of Techprecision LLC, and they and Martin M. Daube were
        the
        members of Techprecision LLC. The agreement provided that Techprecision LLC
        would 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.
        Mr. Reindl works for us on a full time basis. Neither Mr. Levy nor Mr. Daube
        devoted any significant time to the Company’s business. None of the members of
        Techprecision LLC receive any additional compensation from us during the
        period
        that the contract was in effect, and the annual fee and any performance bonus
        which may be awarded is allocated among the three members in accordance with
        their interests in Techprecision LLC, which is 45% for each of Mr. Reindl
        and
        Mr. Levy and 10% with respect to Mr. Daube. No performance bonus was
        awarded.
 
 On
        January 29, 2007, the management agreement with Techprecision LLC was terminated
        as of December 31, 2006. In connection with the termination, we made a payment
        of $16,667 on or about January 15, 2007 and we agreed to make eight monthly
        payments of $9,167 to Techprecision LLC, commencing February 15, 2007 and
        ending
        on September 15, 2007. Mr. Reindl is no longer a member of Techprecision
        LLC,
        and he has no interest in the continuing payments to Techprecision LLC. As
        a
        result of the termination of the management agreement, Mr. Reindl no longer
        receives compensation through Techprecision LLC, and we are paying Mr. Reindl
        salary of $160,000 per annum. We also reimburse Mr. Reindl for his travel
        expenses to our offices in Westminster, Massachusetts. Mr. Reindl has negotiated
        an employment agreement with our compensation committee. (See Note
        18.)
  Loans
        from Related Parties
  Ranor
        had
        long-term debt payable to former preferred stockholders and warrant holders,
        Green Mountain Partners III, L.P. and Phoenix Life Insurance Company (see
        Note
        7). 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,
        in connection with the reverse acquisition (see Note 2), Green Mountain and
        Phoenix forgave interest of $222,944 which was a capital contribution.
 
 The
        principal stockholder of WM Realty made loans to WM Realty in the year ended
        March 31, 2007. The outstanding balance of the loans was $60,000 as of March
        31,
        2007 and is reflected on the Company’s balance sheet as a loan from stockholder.
  Sale
        and
        Lease Agreement and Intra-company Receivable
  On
        February 24, 2006, WM Realty Management, LLC borrowed $3,300,000 to finance
        the
        purchase of Ranor’s real property. WM Realty Management purchased the real
        property for $3,000,000 and leased the property on which Ranor’s facilities are
        located pursuant to a net lease. The property was appraised on October 31,
        2005
        at $4,750,000. The Company advanced $226,808 to pay closing costs, which
        advance
        was repaid when WM Realty Management refinanced the mortgage in October 2006.
        WM
        Realty Management, LLC was formed solely for this purpose; its partners are
        stockholders of the Company. The Company considers WM Realty Management a
        special purpose entity as defined by FIN 46, and therefore has consolidated
        its
        operations into the Company.
  F-18
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 On
        October 4, 2006, WM Realty Management placed a new mortgage of $3.2 million
        on
        the property and the existing mortgage of $3.1 million was paid off. The
        new
        mortgage has a term of ten years, bears interest at 6.75% per annum, and
        provides for monthly payments of principal and interest of $20,595. The
        amortization is based on a thirty-year payout. WM Realty Management has the
        right to prepay the mortgage note upon payment of a prepayment premium of
        5% of
        the amount prepaid if the prepayment is made during the first two years,
        and
        declining to 1% of the amount prepaid if the prepayment is made during the
        ninth
        or tenth year. In connection with the refinancing, Mr. Levy, the principal
        stockholder of WM Realty, executed a limited guarantee. Pursuant to the limited
        guaranty, Mr. Levy guaranteed the lender the payment of any loss resulting
        from
        WM Realty Management’s fraud or misrepresentation in connection with the loan
        documents, misapplication of rent and insurance proceeds, failure to pay
        taxes
        and other defaults resulting from his or WM Realty’s
        misconduct.
  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.
  Future
        minimum lease payments under noncancellable portions of the leases as of
        March
        31, 2006, are as follows:
  Years
                  ending March 31,
              
              **Amount**2008
              
              
              15,288Total
                  minimum lease payments
              
              $
              15,288
  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 has a term of fifteen
        years
        commencing February 24, 2006. For the years ended March 31, 2007 the Company’s
        annual rent expense was $438,500. This amount was eliminated in consolidation
        and the interest and depreciation were expensed. The current annual rent
        is
        $444,000, and the rent is subject to an annual increase based on the increase
        in
        the consumer price index.
  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.
  The
        Company has the option to purchase the property at the appraised market value.
  The
        minimum future lease payments are as follows:
 Year
                    Ended March 31,
                
                Amount2008
                
                
                444,0002009
                
                
                444,0002010
                
                
                444,0002011
                
                
                444,0002012-2016
                
                
                2,220,0002017-2022
                
                
                2,220,000Total
                
                $
                6,216,000
  F-19
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED 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, Ranor had 2,000 shares of preferred stock outstanding. The preferred
        stock carried a mandatory redemption provision. The Company acquired these
        shares as part of the reverse acquisition and the shares were cancelled on
        February 24, 2006.
 
 On
        February 24, 2006, Barron Partners LP purchased 7,719,250 shares of series
        A
        preferred stock, par value $0.0001 per share for $2,200,000. The securities
        purchase agreement provided that the Company pay Barron Partners a due diligence
        fee of $50,000 at the closing. Initially, series A preferred stock were
        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, the Company 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.
 
 As
        of
        April 1, 2006, the Company was required to reduce the conversion price of
        the
        series A preferred stock to common stock of $0.285 by 15% because the
        fully-diluted EBITDA per share was below the targeted level of $0.06591 per
        share in the year ended March 31, 2006. On March 31, 2007, we were required
        to
        further reduce the conversion price by an additional 10% because the
        fully-diluted EBITDA per share was below the targeted level of $0.08568 per
        share in the year ended March 31, 2007. As a result, at March 31, 2007, the
        shares of series A preferred stock issued pursuant to the securities purchase
        agreement were convertible into 10,090,586.
 
 At
        March
        31, 2007, we had also issued 33,212 shares of series A preferred stock to
        Barron
        Partners as a result of our failure to have a registration statement effective
        in August 2006. These shares of series A preferred stock are convertible
        into
        43.414 shares of common stock.
  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% of the shares of common stock
        outstanding after such exercise or conversion. The agreement, the certificate
        of
        designation relating to the series A preferred stock and the warrants all
        provide 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 shares of series A preferred stock
        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 EBITDA from
        recurring operations over the trailing four quarters.
  Barron
        Partners has the right of first refusal in the event that the Company seeks
        to
        raise additional funds through a private placement of securities, other than
        exempt issuances. The percentage of shares that Barron Partners 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.
  F-20
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 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
        holders of the series A preferred stock do not have voting rights. However,
        the
        approval of the holders of 75% of the outstanding shares of series A preferred
        stock is required to amend the certificate of incorporation, change the
        provisions of the preferred stock purchase agreement, to authorize additional
        series A preferred stock in addition to the 9,000,000 authorized, or to
        authorize any class of stock that ranks senior with respect to voting rights,
        dividends or liquidations.
  Stock
        warrants
  Warrants
        to purchase 650,000 shares of common stock that were outstanding on March
        31,
        2005 were acquired by the Company in connection with the reverse acquisition
        and
        cancelled on February 24. 2006
  In
        February 2006, we issued to Barron Partners 11,220,000 warrants in connection
        with its purchase of the series A preferred stock. These warrants are
        exercisable, in part or full, at any time from February 24, 2006 to expiration
        time, February 24, 2011. If the shares of common stock are not registered
        pursuant to the Securities Act of 1933, the holders of the warrants have
        cashless exercise rights which will enable them to receive the value of the
        appreciation in the common stock through the issuance of additional shares
        of
        common stock. These warrants had initial execise prices of $0.57 as to 5,610,000
        shares and $0.855 as to 5,610,000 shares. As a result of the Company’s failure
        to meet the EBITDA per share targets for the years ended March 31, 2006 and
        2007, the exercise prices per share of the warrants were reduced from $0.57
        to
        $.43605 and from $0.855 to $.654075.
  Common
        Stock
  At
        March
        31, 2006, the Company has 9,967,000 shares of common stock outstanding and
        at
        March 31, 2007 it had 10,049,000. During the year ended March 31, 2007, the
        Company issued an aggregate of 82,000 shares of common stock to key employees
        pursuant to its stock grant program.
 
 NOTE
        15.
        2006 LONG-TERM INCENTIVE PLAN
  In
        February 2006, our board of directors adopted, and in July 2006 the board
        amended, and in October 2006, the stockholders approved, the 2006 long-term
        incentive plan (the “Plan”) covering 1,000,000 shares of common stock. The
        purpose of the Plan is to attract, retain and reward officers and other key
        employees, directors, consultants and independent contractors of the Company.
        The Plan provides for the grant of incentive and non-qualified options, stock
        grants, stock appreciation rights and other equity-based incentives to
        employees, including officers, and consultants. The Plan is to be administered
        by a committee of not less than two directors each of whom is to be an
        independent director. In the absence of a committee, the plan is administered
        by
        the board of directors. Independent directors are not eligible for discretionary
        options. 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,
        with
        respect to the then current independent directors 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 nine 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 1st coincident with or following the third anniversary of the date
        of
        his or her first election. Pursuant to the plan, the Company granted
        non-qualified stock options to purchase an aggregate of 150,000 shares of
        common
        stock at an exercise price of $.285 per share, which was determined to be
        the
        fair market value on the date of grant, to the three independent directors.
  F-21
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 NOTE
        16.
        CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
  The
        Company maintains bank account balances, which, at times, may exceed insured
        limits. The Company has not experienced any losses with these accounts and
        believes that it is not exposed to any significant credit risk on cash.
  The
        Company has been dependent in each year on a small number of customers who
        generate a significant portion of our business, and these customers change
        from
        year to year. For the year ended March 31, 2007, our three largest customers
        accounted for approximately 44% of our revenue, and each of these customer
        accounted for less than 10% of revenue during both the year ended March 31,
        2006
        and the year ended March 31, 2005. 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 and the year ended March 31, 2004. To the extent that
        we
        are unable to generate orders from new customers, we may have difficulty
        operating profitably.
  The
        following table sets forth information as to revenue derived from those
        customers who accounted for more than 10% of our revenue in the years ended
        March 31, 2007, and 2006:
 2007
                
                2006Customer
                
                Dollars
                
                Percent
                
                Dollars
                
                Percent(Dollars
                    in thousands).GT
                    Solar Inc.
                
                $
                3,407
                
                
                17.85
                %
                
                *
                
                
                *General
                    Dynamics Electric Boat
                
                
                2,587
                
                
                13.56
                %
                
                *
                
                
                *Essco/L3
                    Communications
                
                
                2,415
                
                
                12.65
                %
                
                *
                
                
                *University
                    of Rochester
                
                
                *
                
                
                *
                
                $
                2,967
                
                
                14.60
                %BAE
                    Systems
                
                
                *
                
                
                *
                
                
                2,611
                
                
                12.90
                %
  *
        Less
        than 10% of revenue for the year.
 
 NOTE
        17.
        EMPLOYMENT AGREEMENT
 
 In
        February 2006, Ranor entered into an employment agreement with Stanley A.
        Youtt
        pursuant to which he would serve as our 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.
  NOTE
        18.
        SUBSEQUENT EVENTS
 
 Incentive
        stock options and stock grants
 
 On
        April
        1, 2007, we granted incentive stock options to purchase a total of 221,659
        shares of common stock to our key employees, including Mary Desmond, our
        chief
        financial officer, who received an option to purchase 25,000 shares. The
        options
        are immediately exercisable at an exercise price of $.285 per share, which
        the
        compensation committee determined to be the fair market value on the date
        of
        grant. No other officer received an option grant. By the terms of the option
        grants, the options can only be exercised if the underlying shares are covered
        by an S-8 registration statement.
  On
        April
        1, 2007, we granted 15,000 shares of common stock to our key employees, of
        which
        3,000 shares were granted to Ms. Desmond. Except for the shares issued to
        Ms.
        Desmond, which vested immediately, the remaining 12,000 shares vest in
        installments, with 4,000 shares vesting immediately.
  F-22
  **TECHPRECISION
        CORPORATION**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 Environmental
        matters
  In
        June
        2007, the federal Environmental Protection Agency (the “EPA”) issued an
        administrative complaint against Ranor and the Company alleging violations
        of
        the Clean Water Act and the Emergency Planning and Community Right-to-Know
        Act,
        known as “EPCRA.” The action, In the Matter of Ranor, Inc. and Techprecision
        Corporation, is pending before the Boston, Massachusetts regional office
        of the
        EPA. The complaint states that storm water discharges at Ranor’s facility
        resulted in the discharge of pollutants into navigable waters of the United
        States without a permit and that Ranor violated the Clean Water Act by failing
        to obtain the necessary storm water discharge permits. The EPA is seeking
        a
        maximum penalty of $157,500. The Company intends to vigorously defend against
        these claims.
  With
        respect to the EPCRA claims, the EPA alleges that in 2003 and 2004, Ranor
        failed
        to file required toxic chemical release inventory reporting forms in connection
        with its use of nickel, chromium and manganese in its operations and seeks
        a
        maximum penalty of $162,500. Ranor, while admitting that Ranor failed to
        file
        certain reports, asserts that the alleged penalty is excessive, based on
        the
        EPA’s own guidelines, and will vigorously contest the claimed penalty. Ranor
        does not believe that any such remaining liabilities, either individually
        or in
        the aggregate, will have a material adverse effect on the
        Company 's
        business, financial condition or results of operations.
  Employment
        agreement.
 
 On
        June
        19, 2007, the Company entered into an employment agreement dated as of April
        1,
        2007 with James G. Reindl, its chief executive officer. Pursuant to the terms
        of
        the agreement, the Company will employ Mr. Reindl for an initial term commencing
        April 1, 2007 and expiring on March 31, 2008 and continuing on a year-to-year
        basis thereafter unless terminated by either party on 90 days’ written notice
        prior to the expiration of the initial term or any one-year extension. Mr.
        Reindl is to receive an annual base salary of $160,000 a year. Mr. Reindl
        is
        also entitled to receive an increase to his base salary and receive certain
        bonus compensation, stock options or other equity-based incentives at the
        discretion of the compensation committee of the board of directors and
        reimbursement of his commuting expenses. The agreement may be terminated
        by the
        Company with or without cause or by Mr. Reindl’s resignation. If the Company
        terminates the agreement without cause, it is to pay Mr. Reindl severance
        pay
        equal to his salary for the balance of the term plus the amount of his bonus
        for
        the prior year. During the term of his employment and for a period thereafter,
        Mr. Reindl will be subject to non-competition and non-solicitation provisions,
        subject to standard exceptions.
  F-23
    **TECHPRECISION
        CORPORATION**
 **CONSOLIDATED
        BALANCE SHEETS**
 **(unaudited)**
  **JUNE
                  30,**
              
              **MARCH
                  31****2007**
              
              **2007****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              1,231,265
              
              $
              1,443,998Accounts
                  receivable, less allowance for doubtfulaccounts
                  of $25,000 at June 30 and March 31, 2007
              
              
              3,372,823
              
              
              2,684,970Other
                  receivables
              
              
              15,712
              
              
              16,737Costs
                  incurred on uncompleted contracts,net
                  of allowance for loss and progress billings
              
              
              2,236,139
              
              
              1,266,445Inventories-
                  raw materials
              
              
              196,152
              
              
              183,498Prepaid
                  expenses
              
              
              157,035
              
              
              270,321Total
                  current assets
              
              
              7,209,126
              
              
              5,865,969Property,
                  plant and equipment, net
              
              
              2,511,488
              
              
              2,561,054Deferred
                  loan costs, net
              
              
              134,462
              
              
              138,718Total
                  assets
              
              $
              9,855,076
              
              $
              8,565,741**CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              2,102,309
              
              $
              1,298,643Accrued
                  expenses
              
              
              491,950
              
              
              498,626Current
                  maturity of long-term debt
              
              
              610,623
              
              
              610,814Loan
                  from stockholder
              
              
              30,000
              
              
              60,000Total
                  current liabilities
              
              
              3,234,882
              
              
              2,468,083**LONG-TERM
                  DEBT**Notes
                  payable- noncurrent
              
              
              5,867,929
              
              
              6,020,440**STOCKHOLDERS’
                  EQUITY**Preferred
                  stock- par value $.0001 per share, 9,000,000 shares authorized,
                  ofwhich
                  9,000,000 are designated as Series A Preferred Stock, with
                  7,752,462shares
                  issued and outstanding at June 30 and March 31, 2007
              
              
              2,835,278
              
              
              2,835,278Common
                  stock - par value $.0001, authorized 90,000,000, 10,053,000
                  and10,049,000
                  issued and outstanding on June 30, and March 31, 2007,
                  respectively.
              
              
              1,006
              
              
              1,006Paid
                  in capital
              
              
              1,756,643
              
              
              1,766,423Accumulated
                  deficit
              
              
              (3,840,662
              )
              
              (4,525,489
              )Total
                  stockholders’ equity
              
              
              752,265
              
              
              77,218$
              9,855,076
              
              $
              8,565,741
  The
        accompanying notes are an integral part of the financial
        statements.
  F-24
 **TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****FORTHE
                  THREE MONTHS ENDED JUNE 30, 2007 AND
                  2006**
 **(unaudited)**
  **Three
                  months ended June 30,****2007**
              
              **2006**Net
                  sales
              
              $
              6,553,112
              
              $
              4,198,530Cost
                  of sales
              
              
              4,877,572
              
              
              3,410,005Gross
                  profit
              
              
              1,675,540
              
              
              788,525Operating
                  expenses:Salaries
                  and benefits
              
              
              344,291
              
              
              292,454Professional
                  fees
              
              
              44,045
              
              
              99,908Selling,
                  general and administrative
              
              
              70,620
              
              
              138,087Total
                  operating expenses
              
              
              458,956
              
              
              530,449Income
                  from operations
              
              
              1,216,584
              
              
              258,076Other
                  income (expenses)Interest
                  expense
              
              
              (
                  132,438
              )
              
              (
                  183,239
              )Finance
                  cost
              
              
              (2,589
              )
              
              (150,477
              )Interest
                  income
              
              
              275
              
              
              212Total
                  other income
              
              
              (134,752
              )
              
              (333,504
              )Income
                  (loss) before income taxes
              
              
              1,081,832
              
              
              (
                  75,428
              )Provision
                  for income taxes
              
              
              (397,005
              )
              
              --Net
                  Income (loss)
              
              $
              684,827
              
              $
              (
                  75,428
              )Preferred
                  stock deemed dividend
              
              
              --
              
              
              (388,233
              )Net
                  Income (loss) to common stockholders
              
              
              684,827
              
              
              (463,661
              )Net
                  income (loss) per share of common stock-basic
              
              
              .07
              
              
              (.05
              )Net
                  income (loss) per share of common stock-diluted
              
              
              .04
              
              
              (.05
              )Weighted
                  average number of shares of common stock outstanding
                  -Basic
              
              
              10,051,000
              
              
              9,991,462Weighted
                  average number of shares of common stock outstanding
                  -Diluted
              
              
              19,313,683
              
              
              9,991,462
 
 The
        accompanying notes are an integral part of the financial
        statements.
 F-25
 
 **TECHPRECISION
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS’ DEFICIT****FOR
                  THE THREE MONTHS ENDED JUNE 30, 2007****(unaudited)**
 
 Warrants
              
              Preferred
                  Stock
              
              Common
                  Stock
              
              Paid
                  in
              
              AccumulatedOutstanding
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Deficit
              
              TotalBalance,
                  March 31, 2007
              
              
              11,220,000
              
              
              7,752,462
              
              
              2,835,278
              
              
              10,049,000
              
              
              1,006
              
              
              1,766,423
              
              
              (4,525,489
              )
              
              77,218Distribution
                  of capital - WM Realty
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (10,500
              )
              
              
              
              
              (10,500
              )Issuance
                  of shares for services
              
              
              
              
              
              
              
              
              
              
              
              4,000
              
              
              
              
              
              720
              
              
              
              
              
              720Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              684,827
              
              
              684,827Balance
                  June 30, 2007
              
              
              11,220,000
              
              
              7,752,462
              
              
              2,835,278
              
              
              10,053,000
              
              
              1,006
              
              
              1,756,643
              
              
              (3,840,662
              )
              
              752,265
  The
        accompanying notes are an integral part of the financial
        statements.
  F-26
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **Three
                  months ended,**
                  **June
                    30****2007**
              
              **2006****DECREASE
                  IN CASH AND CASH EQUIVALENTS CASH FLOWS****FROM
                  OPERATING ACTIVITIES**Net
                  income (loss) for the period
              
              
              684,827
              
              
              (75,432
              )Noncash
                  items included in net loss:Depreciation
                  and amortization
              
              
              117,295
              
              
              256,030Shares
                  issued for services
              
              
              720
              
              
              7,561Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (686,828
              )
              
              (270,460
              )Inventory
              
              
              (12,654
              )
              
              (
                  7,149
              )Costs
                  on uncompleted contracts
              
              
              (969,695
              )
              
              198,126Prepaid
                  expenses
              
              
              113,286
              
              
              166,013Accounts
                  payable and accrued expenses
              
              
              796,989
              
              
              176,263Net
                  cash used in operating activities
              
              
              43,940
              
              
              450,952CASH
                  FLOWS USED IN INVESTING ACTIVITIESPurchases
                  of property, plant and equipment
              
              
              (63,472
              )
              
              (19,626
              )Net
                  cash used in investing activities
              
              
              (63,472
              )
              
              (19,626
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESPayment
                  of notes
              
              
              (152,701
              )
              
              (144,282
              )Payment
                  of mortgage note
              
              
              (30,000
              )
              
              (100,000Additional
                  paid-in capital
              
              
              (10,500
              )
              
              --Net
                  cash provided by (used in) financing activities
              
              
              (193,201
              )
              
              (244,282
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              (212,733
              )
              
              187,044CASH
                  AND CASH EQUIVALENTS, beginning of period
              
              
              1,443,998
              
              
              492,801CASH
                  AND CASH EQUIVALENTS, end of period
              
              $
              1,231,265
              
              $
              679,845Supplemental
                  Disclosures of Cash Flows InformationCash
                  paid during the period for:Interest
                  expense
              
              $
              132,438
              
              $
              186,972Income
                  taxes
              
              $
              2,985
              
              $
              3,100
  The
        accompanying notes are an integral part of the financial
        statements.
 
 SUPPLEMENTAL
                  INFORMATION - NONCASH TRANSACTIONS
  The
                  beneficial effect of the reduction in conversion price of preferred
                  stock
                  to common stock from $.285 to $.24225 was $.04275 per share for
                  a total of
                  $388,233 for 9,081,471 shares and is reflected as a preferred stock
                  deemed
                  dividend.
  F-27
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 In
                  the three month period ended June 30, 2006, the Company issued
                  42,000
                  shares to employees of the Company. The shares were valued at $.18
                  per
                  share, or a total of $7,561. The 42,000 shares are part of a total
                  grant
                  of 126,000, of which 8,000 shares were cancelled.  These shares
                  vested immediately as to the remaining 78,000 shares, 40,000 shares
                  vested
                  at- February 24, 2007. These shares were valued at $.18 per share,
                  or
                  total of $7,200. The balance of shares will vest on February 24,
                  2008.
                  None of these shares were issued to officers or directorsIn
                  the three month period ended June 30, 2007, the Company issued
 7,000
                  shares to employees of the Company, of which 3,000 shares were
                  issued to
                  the Company’s chief financial officer. The shares were valued at $.18 per
                  share, or a total of $ 1,260. The 7,000 shares are part of a total
                  grant
                  of 15,000 shares, of which 7,000 shares, including the 3,000 shares
                  granted to the chief financial officer, vested immediately and the
                  remaining 8,000 shares vest in two annual installments-February
                  24, 2008
                  and February 24, 2009.
  **NOTE
        1. INTERIM FINANCIAL INFORMATION**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with accounting principles generally accepted in the
        United States of America for interim financial information and with the
        instructions to Form 10-QSB and Item 310 of Regulation S-B. In the opinion
        of
        management, the condensed consolidated financial statements reflect all
        adjustments (consisting of normal recurring adjustments) considered necessary
        for a fair presentation of the results Techprecision Corporation and its
        subsidiaries for the periods presented. Operating results for interim periods
        are not necessarily indicative of results that may be expected for the fiscal
        year as a whole. The preparation of the financial statements in conformity
        with
        accounting principles generally accepted in the U.S. requires management
        to make
        estimates and assumptions that affect the reported amounts of assets,
        liabilities, revenues, expenses, and the related disclosures at the date
        of the
        financial statements and during the reporting period. Actual results could
        materially differ from these estimates. For further information, refer to
        the
        consolidated financial statements and notes thereto included in the Company’s
        Annual Report on Form 10-KSB for the year ended March 31, 2007. Certain prior
        quarter amounts may have been reclassified to conform to the presentation
        used
        in 2007.
 
 **NOTE
        2. NEW ACCOUNTING PRONOUNCEMENTS**
  In
        July
        2006, FASB issued Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes,” which is effective for fiscal years beginning after
        December 15, 2006. The Interpretation prescribes a recognition threshold
        and measurement attribute for the financial statement recognition and
        measurement of a tax position taken or expected to be taken in a tax return.
        The
        Interpretation also provides guidance on derecognition, classification, interest
        and penalties, accounting for interim periods, disclosure, and transition.
        The
        Company will adopt the Interpretation on January 1, 2007. The Company is in
        the process of determining the impact of the interpretation on our financial
        position and results of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
        No. 157”). SFAS No. 157 provides a framework for measuring fair value in
        accordance with GAAP, and expands disclosures regarding fair value measurements
        and the effect on earnings. SFAS No. 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. The Company is in the process of evaluating the
        impact SFAS No. 157 will have on its financial position and results of
        operations.
 
 In
        September 2006, the U.S. Securities and Exchange Commission (“SEC”) released
        Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
        Misstatements when Quantifying Misstatements in Current Year Financial
        Statements,” (“SAB No. 108”), which provides interpretive guidance on the SEC’s
        views regarding the process of quantifying the materiality of financial
        statement misstatements. SAB No. 108 is effective for years ending after
        November 15, 2006. The application of SAB No. 108 is not expected
        to have a material effect on the Company’s financial position and results
        of operations.
  F-28
  **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 In
        February 2007, the FASB issued SFAS No. 159, " *The
        Fair Value Option for Financial Assets and Financial
        Liabilities* "
        ("SFAS
        159"). SFAS 159 provides reporting entities an option to report selected
        financial assets, including investment securities designated as available
        for
        sale, and liabilities, including most insurance contracts, at fair value.
        SFAS
        159 establishes presentation and disclosure requirements designed to facilitate
        comparisons between companies that choose different measurement attributes
        for
        similar types of assets and liabilities. The standard also requires additional
        information to aid financial statement users' understanding of a reporting
        entity's choice to use fair value on its earnings and also requires entities
        to
        display on the face of the balance sheet the fair value of those assets and
        liabilities for which the reporting entity has chosen to measure at fair
        value.
        SFAS 159 is effective as of the beginning of a reporting entity's first fiscal
        year beginning after November 15, 2007. Early adoption is permitted as of
        the
        beginning of the previous fiscal year provided the entity makes that choice
        in
        the first 120 days of that fiscal year and also elects to apply the provisions
        of SFAS 157. The Company is currently evaluating the effect, if any, the
        adoption of SFAS 159 will have on our financial condition, results of operations
        and cash flow.
  **NOTE
        3. PROPERTY, PLANT AND EQUIPMENT**
  As
        of
        June 30, 2007 and March 31, 2007 property, plant and equipment consisted
        of the
        following:
  June
                  30, 2007
              
              March
                  31, 2007Land
              
              
              110,113
              
              
              110,113Building
                  and improvements
              
              
              1,290,072
              
              
              1,290,072Machinery
                equipment, furniture and
                fixtures
              
              
              3,103,704
              
              
              3,040,232Total
                  property, plant and equipment
              
              
              4,503,889
              
              
              4,440,417Less:
                  accumulated depreciation
              
              
              (1,992,401
              )
              
              (1,879,363
              )$
              2,511,488
              
              $
              2,561,054
 
 Depreciation
        expense for the three months ended June 30, 2007 and June 30, 2006 were $113,038
        and $103,785, 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 property, are collateral for the Sovereign Bank $4,000,000
        secured loan and credit facilities.
 
 **NOTE
        4. COSTS INCURRED ON UNCOMPLETED CONTRACTS**
  The
        Company recognizes revenues based upon the units-of-delivery method  The
        advance billing and deposits includes down payments for acquisition of materials
        and progress payments on contracts. The agreements with the buyers of the
        Company’s products allow the Company to offset the progress payments against the
        costs incurred.  As of June 30, 2007 and March 31, 2007:
 
 June
                  30, 2007
              
              March
                  31, 2007Cost
                  incurred on uncompleted contracts, beginning balance
              
              $
              5,455,142
              
              $
              2,889,649Total
                  cost incurred on contracts, during the year
              
              
              5,931,516
              
              
              18,108,550Less
                  cost of sales, during the year
              
              
              (4,877,383
              )
              
              (15,543,057
              )Cost
                  incurred on uncompleted contracts, ending balance
              
              $
              6,509,275
              
              $
              5,455,142Billings
                  on uncompleted contracts, beginning balance
              
              $
              4,188,697
              
              $
              1,583,061Plus:
                  Total billings incurred on contracts, during the year
              
              
              4,308,663
              
              
              9,236,613Less:
                Contracts recognized as revenue, during the
                year
              
              
              (4,224,224
              )
              
              (6,630,977
              )Billings
                  on uncompleted contracts, ending balance
              
              $
              4,273,136
              
              $
              4,188,697Cost
                  incurred on uncompleted contracts, ending balance
              
              $
              6,509,275
              
              $
              5,455,142Billings
                  on uncompleted contracts, ending balance
              
              
              (4,273,136
              )
              
              (4,188,697
              )Cost
                  incurred on uncompleted contracts, ending balance, net
              
              $
              2,236,139
              
              $
              1,266,445
  F-29
  **TECHPRECISION
            CORPORATION**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 For
        the
        three months ended June 30, 2007 and 2006, $100,000 and $29,051 of allowance
        for
        losses on uncompleted contracts were recognized, respectively.
 
 **NOTE
        5. PREPAID EXPENSES**
  As
                  of June 30, 2007 and March 31, 2007, the prepaid expenses included
                  the
                  following:
  June
                  30,2007
              
              March
                  31, 2007Insurance
              
              $
              80,883
              
              $
              137,484Real
                  estate taxes
              
              
              4,176
              
              
              4,387Prepayments
                  on purchases
              
              
              45,567
              
              
              121,720Equipment
                  maintenance
              
              
              26,409
              
              
              6,730Total
              
              $
              157,035
              
              $
              270,321
  **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. Amortization charged to operations
        in the three months ended June 30, 2007 and June 30, 2006 were $4,257 and
        $152,314, respectively. As of June 30, 2007 and March 31, 2007, deferred
        charges
        were as follows:
  June
                  30,2007
              
              March
                  31, 2007Deferred
                  costs expiring after one year:Deferred
                  loan costs
              
              $
              150,259
              
              $
              150,259Accumulated
                  amortization
              
              
              (15,797
              )
              
              (11,541
              )$
              134,462
              
              $
              138,718
  **NOTE
        7. LONG-TERM DEBT**
  The
        following debt obligations, outstanding on June 30, 2007 and March 31, 2007:
  June
                  30,
              
              March
                  31,1.
                  Long-term debt issued on February 24, 2006:Sovereign
                  Bank-Secured Term note payable- 72 month 9% variable term
                  notewith
                  quarterly principal payments of $142,857 plus interest. Final payment
                  dueon
                  March 1, 2013
              
              $
              3,285,715
              
              $
              3,428,5712.
                  Long-term mortgage loan issued on October 4, 2006Amalgamated
                  Bank mortgage loan to WM Realty- 10 years, annual interest
                  rateof
                  6.75%, monthly interest and principal payment $20,955. The amortization
                  isbased
                  on a thirty-year amortization schedule. WM Realty
                  Managementhas
                  the right to prepay the mortgage note upon payment of a
                  prepaymentpremium
                  of 5% of the amount prepaid if the prepayment is made during
                  thefirst
                  two years, and declining to 1% of the amount prepaid if the prepayment
                  ismade
                  during the ninth or tenth year.
              
              $
              3,180,738
              
              $
              3,189,0873.
                  Automobile LoanFord
                  Motor Credit Company-Note payable secured by a vehicle - payable
                  inmonthly
                  installments of $552 including interest of 4.9%, commencing July
                  20,2003
                  through June 20, 2009
              
              
              12,099
              
              
              13,596Total
              
              
              6,478,552
              
              
              6,631,254Principal
                  payments due within one year
              
              
              610,623
              
              
              610,814Principal
                  payments due after one year
              
              $
              5,867,929
              
              $
              6,020,440
  F-30
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 On
        February 24, 2006, Ranor entered into a loan and security agreement with
        Sovereign Bank, West Hartford, Ct. Pursuant to the agreement, the bank has
        made
        a term loan of $4,000,000 to the Company 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. In February 2007, the Company entered into an agreement with
        the
        bank which (i) reduced the interest rate on its revolving credit line from
        prime
        plus 1 1/2% to prime plus 1% and (ii) provided for the Company to borrow
        up to
        $500,000 at prime plus 1% in order to financing capital expenditures. Under
        this
        capital expenditures facility, the Company may borrow up to $500,000 until
        the
        February 1, 2008, with interest only payable through February 1, 2008 and
        the
        principal to be amortized over a five-year term commencing March 1, 2008.
        On
        June 28, 2007, the Company increased its line of credit with Sovereign Bank
        from
        $1,000,000 to $2,000,000. As of June 30, 2007, the Company had not borrowed
        any
        money under the capital expenditures facility or line of credit.
  The
        note
        is subject to various covenants that include the following: the loan collateral
        comprises all personal property of the Company, including cash, accounts
        receivable, inventories, equipment, financial and intangible assets owned
        when
        the loan is contracted or acquired thereafter; the amount of loan outstanding
        at
        all times is limited to a borrowing base amount of the Company’s qualified
        accounts receivable and inventory; there are prepayment penalties of 3%,
        2% and
        1% of the outstanding principal, in the first, second and third years following
        the issuance date, respectively. There is no prepayment penalty thereafter;
        the
        Company’s subsidiary, Ranor, Inc., is prohibited from issuing any additional
        equity interest (except to the Company), or redeem, retire, purchase or
        otherwise acquire for value any equity interests; the Company pays an unused
        credit line fee of 0.25% of the average unused credit line amount in previous
        month; the earnings available to cover fixed charges are required not to
        be less
        than 120% of fixed charges for the rolling four quarters, tested at the end
        of
        each fiscal quarter; and interest coverage ratio is required to be not less
        than
        2:1 as at the end of each fiscal quarter.
 
 In
        connection with the Amalgamated Bank mortgage financing, Mr. Andrew Levy,
        the
        principal equity owner of WM Realty Management and a principal stockholder
        of
        the Company, executed a limited guarantee. Pursuant to the limited guaranty,
        Mr.
        Levy guaranteed the lender the payment of any loss resulting from WM Realty
        Management’s fraud or misrepresentation in connection with the loan documents,
        misapplication of rent and insurance proceeds, failure to pay taxes and other
        defaults resulting from his or WM Realty’s misconduct.
  As
        of
        June 30, 2007, the maturities of long-term debt were as follows:
 **Year
                    ending March 31,**2008
                
                $
                457,0322009
                
                
                612,7522010
                
                
                612,4352011
                
                
                612,6412012
                
                
                615,628Due
                    after 2011
                
                
                3,568,064Total
                
                $
                6,478,552
 
 F-31
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  **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.
        As
        of June 30, 2007 and March 31, 2007, the sources and tax effects of the
        differences are as follows:
 June
                    30, 2007
                
                March
                    31, 2007Income
                    tax provision at statutory rate
                
                $
                (421,857
                )
                $
                (400,600
                )Tax
                    benefit before net operating loss carry forward
                
                
                24,852
                
                
                160,500Net
                    tax provision
                
                $
                (397,005
                )
                
                (240,100
                )
  As
        of
        March 31, 2007 and 2006, 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:
 June
                    30, 2007
                
                March
                    31, 2007Deferred
                    Tax Assets:Current:Compensation
                    accrual
                
                $
                116,278
                
                $
                112,000Bad
                    debt allowance
                
                
                9,800
                
                
                9,800Loss
                    on uncompleted contracts
                
                
                39,000
                
                
                45,600Non-Current:Net
                    operating loss carry-forward
                
                
                560,048
                
                
                584,900Total
                    deferred tax assets
                
                
                725,126
                
                
                752,300Deferred
                    Tax Liabilities:Non-Current:Depreciation
                
                
                208,200
                
                
                206,000Net
                    deferred tax asset
                
                
                516,926
                
                
                546,300Valuation
                    allowance
                
                
                (516,926
                )
                
                (546,300
                )Net
                    Deferred Tax Asset Balance
                
                $
                --
                
                $
                --
  At
          June
          30, 2007 and March 31, 2007, 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. Because of over
          50%
          change in ownership of Ranor, Inc, that company’s net operating loss
          carryforward is subject to IRC § 382,
          which limits the amount of the tax loss carryforward that can be used in
          any
          year. The amount of net operating loss carryforward that may be used annually
          is
          equal to a percentage of the company’s value at the date of ownership. The
          percentage is the highest federal long-term federal tax exempt rate for
          the
          month during which the ownership occurred, February 2006, and the preceding
          two
          months. The Federal long term tax exempt rate is determined by the Internal
          Revenue Service.
 
 As
        of
        June 30, 2007, the Company’s federal net operating loss carryforwards was
        approximately $1,435,878. If not utilized, the federal net operating loss
        carryforward of Ranor and Techprecision will expire in 2025 and 2027,
        respectively
 
 **NOTE
        9. RELATED PARTY TRANSACTIONS**
  *Management
        Fees*
  Contemporaneously
        with the reverse acquisition on February 24, 2006, the Company engaged
        Techprecision LLC to manage its business through March 31, 2009 pursuant
        to a
        management agreement. The agreement provided that the Company 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 was
        president and Mr. Andrew A. Levy was chairman of Techprecision LLC, and they
        and
        Martin M. Daube were the members of Techprecision LLC. The agreement provided
        that Techprecision LLC would 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. Mr. Reindl works for us on a full time basis. Neither
        Mr.
        Levy nor Mr. Daube devoted any significant time to the Company’s business. None
        of the members of Techprecision LLC received any additional compensation
        from us
        during the period that the contract was in effect, and the annual fee and
        any
        performance bonus which may be awarded is allocated among the three members
        in
        accordance with their interests in Techprecision LLC, which is 45% for each
        of
        Mr. Reindl and Mr. Levy and 10% with respect to Mr. Daube. No performance
        bonus
        was awarded.
  F-32
 **TECHPRECISION
          CORPORATION**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 On
        January 29, 2007, the management agreement with Techprecision LLC was terminated
        as of December 31, 2006. In connection with the termination, we made a payment
        of $16,667 on or about January 15, 2007 and we agreed to make eight monthly
        payments of $9,167 to Techprecision LLC, commencing February 15, 2007 and
        ending
        on September 15, 2007. Mr. Reindl is no longer a member of Techprecision
        LLC,
        and he has no interest in the continuing payments to Techprecision LLC. As
        a
        result of the termination of the management agreement, Mr. Reindl no longer
        receives compensation through Techprecision LLC, and we are paying Mr. Reindl
        salary of $160,000 per annum. We also reimburse Mr. Reindl for his travel
        expenses to our offices in Westminster, Massachusetts. Mr. Reindl has a one-year
        employment agreement with the Company commencing April 1, 2007.
  *Loans
        from Related Parties*
  The
        principal equity owner of WM Realty made loans to WM Realty in the year ended
        March 31, 2007. The outstanding balance of the loans was $30,000 as of June
        30,
        2007 and $60,000 as of March 31, 2007 and is reflected on the Company’s balance
        sheet as a loan from stockholder.
  *Sale
        and Lease Agreement and Intra-company Receivable*
  On
        February 24, 2006, WM Realty Management, LLC borrowed $3,300,000 to finance
        the
        purchase of Ranor’s real property. WM Realty Management purchased the real
        property for $3,000,000 and leased the property on which Ranor’s facilities are
        located pursuant to a net lease. The property was appraised on October 31,
        2005
        at $4,750,000. The Company advanced $226,808 to pay closing costs, which
        advance
        was repaid when WM Realty Management refinanced the mortgage in October 2006.
        WM
        Realty Management, LLC was formed solely for this purpose; its partners are
        stockholders of the Company. The Company considers WM Realty Management a
        special purpose entity as defined by FIN 46, and therefore has consolidated
        its
        operations into the Company.
  On
        October 4, 2006, WM Realty Management placed a new mortgage of $3.2 million
        on
        the property and the existing mortgage of $3.1 million was paid off. The
        new
        mortgage has a term of ten years, bears interest at 6.75% per annum, and
        provides for monthly payments of principal and interest of $20,595. The payments
        are based on a thirty-year amortization schedule. WM Realty Management has
        the
        right to prepay the mortgage note upon payment of a prepayment premium of
        5% of
        the amount prepaid if the prepayment is made during the first two years,
        and
        declining to 1% of the amount prepaid if the prepayment is made during the
        ninth
        or tenth year. In connection with the refinancing, Mr. Levy, the principal
        stockholder of WM Realty, executed a limited guarantee. Pursuant to the limited
        guaranty, Mr. Levy guaranteed the lender the payment of any loss resulting
        from
        WM Realty Management’s fraud or misrepresentation in connection with the loan
        documents, misapplication of rent and insurance proceeds, failure to pay
        taxes
        and other defaults resulting from his or WM Realty’s
        misconduct.
 
 **NOTE
        11. OPERATING LEASE**
  Ranor
        leases office equipment under operating lease agreements expiring through
        November 2008. Total rent expense charged to operations was $4,281 for the
        three
        months ended June 30, 2007 and $16,700 in the years ended March 31, 2007.
        Future
        minimum lease payments under noncancellable portions of the leases as of
        March
        31, 2007, are as follows:
 
 Years
                  ending March 31,
              
              **Amount**2008
              
              $
              11,466Total
                  minimum lease payments
              
              $
              11,466
  F-33
  **TECHPRECISION
        CORPORATION**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        12. SALE AND LEASE**
  On
        February 24, 2006 Ranor, Inc. sold its real property to WM Realty Management,
        LLC, a special purpose entity. for $3,000,000, and leased the real property
        occupied by Ranor pursuant to a fifteen year lease commencing February 24,
        2006.
        For the years ended March 31, 2007 the Company’s annual rent expense was
        $438,500. This amount was eliminated in consolidation and the interest and
        depreciation were expensed. The current annual rent is $444,000, and the
        rent is
        subject to an annual increase based on the increase in the consumer price
        index.
  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.
  The
        Company has the option to purchase the property at the appraised market value.
  The
        minimum future lease payments are as follows:
  Year
                    Ended March 31,
                
                Amount2008
                
                
                333,0002011
                
                
                444,0002010
                
                
                444,0002011
                
                
                444,0002012-2016
                
                
                2,220,0002017-2022
                
                
                2,220,000Total
                
                $
                6,105,000
 F-34