UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  FORM
10-Q
  x
                QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the quarterly period ended December 31, 2008
 
 OR
  o
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the transition period from 
to
 Commission
File Number 0-51378
  TECHPRECISION
CORPORATION
 (Exact
name of registrant as specified in its charter)
  DELAWARE
                    
                    51-0539828(State
      or other jurisdiction of incorporation or organization)
                    
                    (I.R.S.
      Employer Identification No.)Bella Drive, Westminster, Massachusetts
      01473
                    
                    01473(Address
      of principal executive offices)
                    
                    (Zip
      Code)
 (978) 874-0591
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90
days.    Yes  x    No
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated
      filer
                o
                Accelerated
      filer                                      oNon-Accelerated
      Filer
                o
                Smaller
      reporting
      company                   x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes  o   No  x
 
 The
number of shares of the Registrant’s common stock, par value $.0001 per share,
issued and outstanding at February 3, 2009 was 13,907,513.
   
 Table
of Contents
 TECHPRECISION
CORPORATION
  PagePART
      I
                                      
                                      FINANCIAL INFORMATIONItem
      1.
                                      
                                      Financial
      Statements
                                      
                                      1Consolidated
      Balance Sheets at December 31, 2008 (unaudited) and March 31,
      2008
                                      
                                      1Consolidated
      Statements of Income for the Three and Nine Months Ended December 31, 2008
      and 2007 (unaudited)
                                      
                                      2Consolidated
      Statements of Cash Flows for the Nine Months Ended December 31, 2008 and
      2007 (unaudited)
                                      
                                      3 - 4Notes
      to Consolidated Financial Statements
                                      
                                      5Item
      2.
                                      
                                      Management’s Discussion and Analysis of
      Financial Condition and Results of Operations.
                                      
                                      16Item
      4.
                                      
                                      Controls
      and Procedures
                                      
                                      29PART
      II
                                      
                                      OTHER
      INFORMATIONItem
      6.
                                      
                                      Exhibits
                                      
                                      29SIGNATURES
                                      
                                      30
    
 
 TECHPRECISION
      CORPORATIONCONSOLIDATED
      BALANCE SHEETDecember
      31,
                                    
                                    
                                    March
      31,2008
                                      (unaudited)
                                    
                                    
                                    2008
                                      (audited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                                    
                                    $
                                    5,930,042
                                    
                                    
                                    $
                                    2,852,676Accounts
      receivable, less allowance for doubtful accounts of
$25,000
                                    
                                    
                                    8,026,277
                                    
                                    
                                    
                                    4,509,336Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                                    
                                    
                                    3,566,624
                                    
                                    
                                    
                                    4,298,683Inventories-
      raw materials
                                    
                                    
                                    347,279
                                    
                                    
                                    
                                    195,506Deferred
      Income taxes
                                    
                                    
                                    24,587
                                    
                                    
                                    
                                    -Prepaid
      expenses
                                    
                                    
                                    1,546,527
                                    
                                    
                                    
                                    1,039,117Total
      current assets
                                    
                                    
                                    19,441,336
                                    
                                    
                                    
                                    12,895,318Property,
      plant and equipment, net
                                    
                                    
                                    2,592,095
                                    
                                    
                                    
                                    2,810,981Deposit
      on fixed assets
                                    
                                    
                                    854,096
                                    
                                    
                                    
                                    240,000Deferred  loan
      cost, net
                                    
                                    
                                    109,354
                                    
                                    
                                    
                                    121,692Total
      Assets
                                    
                                    $
                                    22,996,881
                                    
                                    
                                    $
                                    16,067,991LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                                    
                                    $
                                    1,243,289
                                    
                                    
                                    $
                                    990,533Accrued
      expenses
                                    
                                    
                                    2,083,881
                                    
                                    
                                    
                                    1,480,507Progress
      billings in excess of cost of uncompleted contracts
                                    
                                    
                                    4,861,162
                                    
                                    
                                    
                                    3,418,898Current
      maturity of long-term debt
                                    
                                    
                                    612,991
                                    
                                    
                                    
                                    613,832Total
      current liabilities
                                    
                                    
                                    8,801,323
                                    
                                    
                                    
                                    6,503,770Notes
      payable- noncurrent
                                    
                                    
                                    4,945,656
                                    
                                    
                                    
                                    5,404,981Total
      liabilities
                                    
                                    
                                    13,746,979
                                    
                                    
                                    
                                    11,908,751STOCKHOLDERS’
      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
      6,295,508 shares issued and outstanding at December 31, 2008 and7,018,064
      at March 31, 2008
                                    
                                    
                                    2,287,508
                                    
                                    
                                    
                                    2,542,643Common
      stock -par value $.0001 per share, authorized — 90,000,000
      shares,issued
      and outstanding —  13,907,513 shares at December 31, 2008and
      12,572,995 shares at March 31, 2008
                                    
                                    
                                    1,393
                                    
                                    
                                    
                                    1,259Paid
      in capital
                                    
                                    
                                    2,909,530
                                    
                                    
                                    
                                    2,624,892Retained
      earnings (accumulated deficit)
                                    
                                    
                                    4,051,471
                                    
                                    
                                    
                                    (1,009,554
                                    )Total
      stockholders’ equity
                                    
                                    
                                    9,249,902
                                    
                                    
                                    
                                    4,159,240Total
      liabilities and shareholders’ equity
                                    
                                    $
                                    22,996,881
                                    
                                    
                                    $
                                    16,067,991
 
 The
accompanying notes are an integral part of the financial
statements.
   -1-
  TECHPRECISION
      CORPORATIONCONSOLIDATED
      STATEMENTS OF OPERATIONS
                            (unaudited)Three
      months ended
                          
                          
                          Nine
      months endedDecember
      31,
                          
                          
                          December
      31,2008
                          
                          
                          2007
                          
                          
                          2008
                          
                          
                          2007Net
      sales
                          
                          $
                          8,554,978
                          
                          
                          $
                          9,609,926
                          
                          
                          $
                          33,814,122
                          
                          
                          $
                          22,533,872Cost
      of sales
                          
                          
                          5,932,505
                          
                          
                          
                          7,029,905
                          
                          
                          
                          22,798,518
                          
                          
                          
                          16,779,229Gross
      profit
                          
                          
                          2,622,473
                          
                          
                          
                          2,580,021
                          
                          
                          
                          11,015,604
                          
                          
                          
                          5,754,643Operating
      expenses:Salaries
      and related expenses
                          
                          
                          330,701
                          
                          
                          
                          293,752
                          
                          
                          
                          1,087,831
                          
                          
                          
                          885,536Professional
      fees
                          
                          
                          63,847
                          
                          
                          
                          73,737
                          
                          
                          
                          184,316
                          
                          
                          
                          303,105Selling,
      general and administrative
                          
                          
                          144,825
                          
                          
                          
                          134,812
                          
                          
                          
                          433,959
                          
                          
                          
                          285,601Total
      operating expenses
                          
                          
                          539,373
                          
                          
                          
                          502,301
                          
                          
                          
                          1,706,106
                          
                          
                          
                          1,474,242Income
      from operations
                          
                          
                          2,083,100
                          
                          
                          
                          2,077,720
                          
                          
                          
                          9,309,498
                          
                          
                          
                          4,280,401Other
      income (expenses)Interest
      expense
                          
                          
                          (111,052
                          )
                          
                          
                          (124,356
                          )
                          
                          
                          (344,923
                          )
                          
                          
                          (390,017
                          )Interest
      income
                          
                          
                          -
                          
                          
                          
                          11
                          
                          
                          
                          -
                          
                          
                          
                          (12,770
                          )Finance
      costs
                          
                          
                          (4,257
                          )
                          
                          
                          (7,591
                          )
                          
                          
                          (12,770
                          )
                          
                          
                          477Total
      other income (expense)
                          
                          
                          (115,309
                          )
                          
                          
                          (131,936
                          )
                          
                          
                          (357,693
                          )
                          
                          
                          (402,310
                          )Income
      before income taxes
                          
                          
                          1,967,791
                          
                          
                          
                          1,945,784
                          
                          
                          
                          8,951,805
                          
                          
                          
                          3,878,091Provision
      for income taxes
                          
                          
                          (954,562
                          )
                          
                          
                          (568,754
                          )
                          
                          
                          (3,890,780
                          )
                          
                          
                          (1,214,988
                          )Net
      income
                          
                          $
                          1,013,229
                          
                          
                          $
                          1,377,030
                          
                          
                          $
                          5,061,025
                          
                          
                          $
                          2,663,103Net
      income per share of common stock (basic)
                          
                          $
                          0.07
                          
                          
                          $
                          0.12
                          
                          
                          $
                          0.37
                          
                          
                          $
                          0.26Net
      income per share (fully diluted)
                          
                          $
                          0.04
                          
                          
                          $
                          0.05
                          
                          
                          $
                          0.19
                          
                          
                          $
                          0.10Weighted
      average number of shares outstanding (basic)
                          
                          
                          13,907,094
                          
                          
                          
                          11,139,305
                          
                          
                          
                          13,569,513
                          
                          
                          
                          10,415,546Weighted
      average number of shares outstanding (fully diluted)
                          
                          
                          24,418,115
                          
                          
                          
                          28,623,308
                          
                          
                          
                          26,335,421
                          
                          
                          
                          27,899,549
  The
accompanying notes are an integral part of the financial
statements.
  -2-
 
 TECHPRECISION
      CORPORATIONCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      NINE MONTHS ENDED DECEMBER 31,
                          (unaudited)2008
                        
                        
                        2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income
                        
                        $
                        5,061,025
                        
                        
                        $
                        2,663,103Non
      cash items included in net income:Depreciation
      and amortization
                        
                        
                        415,127
                        
                        
                        
                        366,021Shares
      issued for services
                        
                        
                        -
                        
                        
                        
                        731Increase
      in deferred tax asset
                        
                        
                        (24,587
                        )
                        
                        
                        -Changes
      in operating assets and liabilities:Accounts
      receivable
                        
                        
                        (3,516,941
                        )
                        
                        
                        (2,429,603
                        )Inventory
                        
                        
                        (151,773
                        )
                        
                        
                        (4,805
                        )Costs
      incurred on uncompleted contracts
                        
                        
                        (1,543,141
                        )
                        
                        
                        (4,317,223
                        )Prepaid
      expenses
                        
                        
                        (507,410
                        )
                        
                        
                        (679,845
                        )Accounts
      payable and accrued expenses
                        
                        
                        856,128
                        
                        
                        
                        1,589,241Customer
      advances
                        
                        
                        3,717,463
                        
                        
                        
                        3,568,498Net
      cash provided by operating activities
                        
                        
                        4,305,891
                        
                        
                        
                        756,118CASH
      FLOWS USED IN INVESTING ACTIVITIESPurchases
      of property, plant and equipment
                        
                        
                        (183,901
                        )
                        
                        
                        (344,810
                        )Deposits
      on equipment
                        
                        
                        (614,096
                        )
                        
                        
                        (346,316
                        )Net
      cash used in investing activities
                        
                        
                        (797,997
                        )
                        
                        
                        (691,126
                        )CASH
      FLOWS FROM FINANCING ACTIVITIESDistribution
      of WM Realty equity
                        
                        
                        (140,422
                        )
                        
                        
                        (64,625
                        )Exercise
      of warrants
                        
                        
                        170,060
                        
                        
                        
                        658,436Payment
      of notes
                        
                        
                        (460,166
                        )
                        
                        
                        (458,829
                        )Loan
      from member of WM Realty
                        
                        
                        -
                        
                        
                        
                        (60,000
                        )Net
      cash provided by (used in) financing activities
                        
                        
                        (430,528
                        )
                        
                        
                        74,982Net
      increase in cash and cash equivalents
                        
                        
                        3,077,366
                        
                        
                        
                        139,974CASH
      AND CASH EQUIVALENTS, beginning of period
                        
                        
                        2,852,676
                        
                        
                        
                        1,446,998CASH
      AND CASH EQUIVALENTS, end of period
                        
                        $
                        5,930,042
                        
                        
                        $
                        1,586,972
 
 The
accompanying notes are an integral part of the financial
statements.
   -3-
   TECHPRECISION
CORPORATION
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
NINE MONTHS ENDED DECEMBER 31,
 (Continued)
 
 Years
      ended December 31,2008
                          
                          2007SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATIONCash
      paid during the nine months ended December 31, 2008 for:Interest
      expense
                          
                          $
                          344,310
                          
                          
                          $
                          390,017Income
      taxes
                          
                          $
                          3,093,195
                          
                          
                          $
                          250,000
 
 SUPPLEMENTAL
INFORMATION - NONCASH TRANSACTIONS:
 
 Nine months ended December
31, 2008
 
 1.
              During
      the nine months ended December 31, 2008, the Company issued 944,518 shares
      of common stock upon conversion of 722,556 shares of series A convertible
      preferred stock, based on a conversion ratio of 1.3072 shares of common
      stock for each share of series A preferred stock. The conversion price of
      each share of common stock was computed at
  $0.2180.
 
 2.
              During
      the nine months ended December 31, 2008, the Company issued 390,000 shares
      of common stock upon exercise of warrants having an exercise price of
      $.43605 per share.
  The
accompanying notes are an integral part of the financial
statements.
  -4-
    TECHPRECISION
CORPORATION
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 NOTE 1.
DESCRIPTION OF BUSINESS
 
 Techprecision
Corporation (“Techprecision”, the “Company”) is a Delaware corporation organized
in February 2005 under the name Lounsberry Holdings II, Inc. The name was
changed to Techprecision Corporation on March 6, 2006. Techprecision is the
parent company of Ranor, Inc. (“Ranor”), a Delaware corporation. Techprecision
and Ranor are collectively referred to as the “Company.”
 
 The
Company manufactures metal fabricated and machined precision components and
equipment. These products are used in a variety of markets including the
alternative energy, medical, nuclear, defense, industrial, and aerospace
industries.
 
 NOTE 2.
SIGNIFICANT ACCOUNTING POLICIES
 
 Basis
of Presentation
  The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included.  Operating results for the nine month period ended December
31, 2008 are not necessarily indicative of the results that may be expected for
the year ended March 31, 2009.
 
 For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company’s annual report on form 10-KSB for the
year ended March 31, 2008.
 
 Consolidation
  On
February 24, 2006, Techprecision acquired all stock of Ranor in a transaction
which is accounted for as a recapitalization (reverse acquisition), with Ranor
being treated as the acquiring company for accounting purposes.
 
 The
accompanying consolidated financial statements include the accounts of the
Company as well as a variable interest entity.  Intercompany
transactions and balances have been eliminated in consolidation.
 
 -5-
 
 
 Variable
Interest Entity
  The
Company has consolidated WM Realty Management LLC (“WM Realty”), a variable
interest entity that entered into a sale and leaseback contract with the Company
in 2006, to conform to FASB Interpretation No. 46, “Consolidation of Variable
Interest Entities” (FIN 46). The Company has also adopted the revision to FIN
46, FIN 46R, which clarified certain provisions of the original interpretation
and exempted certain entities from its requirements.
 
 Segment
Information
  In
accordance with SFAS No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (SFAS 131), and based on the nature
of the Company’s products, technology, manufacturing processes, customers and
regulatory environment, the Company operates in one industry segment – metal
fabrication and precision machining.  All of the Company’s operations,
assets and customers are located in the United States.
 
 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.
 
 New
Accounting Pronouncements
  In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141(R), “Business
Combinations”(“SFAS 141(R)”). SFAS No. 141(R) establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree and recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase.
SFAS No. 141(R) also sets forth the disclosures required to be made in the
financial statements to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) is effective for fiscal years
beginning after December 15, 2008. The effects of the adoption of this
standard in 2009 will be prospective, commencing with the fiscal year ending
March 31, 2010.
 
 In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 160, “Non-controlling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51” (“SFAS No. 160”). SFAS No. 160 establishes
accounting and reporting standards that require that the ownership interests in
subsidiaries held by parties other than the parent be clearly identified,
labeled, and presented in the consolidated statement of financial position
within equity, but separate from the parent’s equity; the amount of consolidated
net income attributable to the parent and to the non-controlling interest be
clearly identified and presented on the face of the consolidated statement of
income; and changes in a parent’s ownership interest while the parent retains
its controlling financial interest in its subsidiary be accounted for
consistently. SFAS No. 160 also requires that any retained non-controlling
equity investment in the former subsidiary be initially measured at fair value
when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the
disclosure requirements to identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. SFAS No. 160 is
effective for fiscal years beginning after December 15, 2008. The adoption
of SFAS 160 does not have a material effect on the Company’s consolidated
financial statements.
   -6-
 
 In March
2008, the FASB issued Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 requires
enhanced disclosures about an entity's derivative and hedging activities and is
effective for fiscal years and interim periods beginning after November 15,
2008, with early application encouraged. We do not expect the adoption of SFAS
161 to have a material effect on our consolidated financial
statements.
 
 In
April 2008, the FASB issued FSP FAS 142-3, “Determination of Useful Life of
Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors
that should be considered in developing the renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FAS
142, “Goodwill and Other Intangible Assets.” FSP FAS 142-3 also requires
expanded disclosure related to the determination of intangible asset useful
lives. FSP FAS 142-3 is effective for fiscal years beginning after
December 15, 2008. Earlier adoption is not permitted. We do not expect the
adoption of this FSP to have a material effect on our consolidated financial
statements.
 
 In May
2008, the FASB issued Staff Position No. APB 14-1, "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" (the "FSP"), which clarifies the accounting for convertible
debt instruments that may be settled in cash (including partial cash settlement)
upon conversion. The FSP requires issuers to account separately for the
liability and equity components of certain convertible debt instruments in a
manner that reflects the issuer's nonconvertible debt (unsecured debt) borrowing
rate when interest cost is recognized. The FSP requires bifurcation of a
component of the debt, classification of that component in equity and the
accretion of the resulting discount on the debt to be recognized as part of
interest expense in our consolidated statement of operations. The FSP requires
retrospective application to the terms of instruments as they existed for all
periods presented. This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. We do not expect the adoption of this FSP to have a material
effect on our consolidated financial statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP in the United States (the GAAP hierarchy). The
Company believes that this Statement will not have any impact on the Company’s
consolidated financial statements.
  -7-
  In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60.” The
scope of this Statement is limited to financial guarantee insurance (and
reinsurance) contracts, as described in this Statement, issued by enterprises
included within the scope of Statement 60. Accordingly, this Statement does not
apply to financial guarantee contracts issued by enterprises excluded from the
scope of Statement 60 or to some insurance contracts that seem similar to
financial guarantee insurance contracts issued by insurance enterprises (such as
mortgage guaranty insurance or credit insurance on trade receivables). This
Statement also does not apply to financial guarantee insurance contracts that
are derivative instruments included within the scope of FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” The Company
believes that this Statement will not have any impact on the Company’s
consolidated financial statements.
 
 In June
2008, the FASB issued Emerging Issues Task Force Issue 07-5 “Determining whether an Instrument
(or Embedded Feature) is indexed to an Entity’s Own Stock” (“EITF No.
07-5”). This Issue is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. Early application is not permitted. Paragraph 11(a) of Statement of
Financial Accounting Standard No 133 “Accounting for Derivatives and Hedging
Activities” (“SFAS 133”) specifies that a contract that would otherwise meet the
definition of a derivative but is both (a) indexed to the Company’s own
stock and (b) classified in stockholders’ equity in the statement of
financial position would not be considered a derivative financial instrument.
EITF No.07-5 provides a new two-step model to be applied in determining whether
a financial instrument or an embedded feature is indexed to an issuer’s own
stock and thus able to qualify for the SFAS 133 paragraph 11(a) scope exception.
Management is currently evaluating the impact of adoption of EITF No. 07-5 on
the Company’s consolidated financial statements.
 
 In June
2008, FASB issued EITF Issue No. 08-4, “Transition Guidance for Conforming
Changes to Issue No. 98-5 (“EITF No. 08-4”)”. The objective of EITF
No.08-4 is to provide transition guidance for conforming changes made to EITF
No. 98-5, “Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios”, that result from EITF
No. 00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments”,
and SFAS No. 150, “Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity”. This Issue is effective for
financial statements issued for fiscal years ending after December 15, 2008.
Early application is permitted. Management is currently evaluating the
impact of adoption of EITF No. 08-45, on the Company’s consolidated financial
statements.
 
 NOTE 3.
COSTS INCURRED ON UNCOMPLETED CONTRACTS
 
 The
Company recognizes revenues based upon the units-of-delivery method. The
advance billing and deposits include down payments for acquisition of materials
and progress payments on contracts. The agreements with the buyers of the
Company’s products allow the Company to offset the progress payments against the
costs incurred.  The following table sets forth the reconciliation between
costs incurred on uncompleted contracts and billings on uncompleted contracts at
December 31, 2008:
 
  -8-
 
 December 31, 2008Cost
      incurred on uncompleted contracts, beginning balance
                                    
                                    $
                                    10,633,862Total
      cost incurred on contracts during the period
                                    
                                    
                                    24,262,284Less
      cost of sales on completed contracts, during the period
                                    
                                    
                                    (22,719,143
                                    )Cost
      incurred on uncompleted contracts, ending balance
                                    
                                    $
                                    12,177,003Billings
      on uncompleted contracts, beginning balance
                                    
                                    $
                                    6,335,179Plus:
      Total billings incurred on contracts in progress
                                    
                                    
                                    36,089,322Less:
      Completed contracts recognized as revenues, during the
    period
                                    
                                    
                                    (33,814,122
                                    )Billings
      on uncompleted contracts, ending balance
                                    
                                    $
                                    8,610,379Cost
      incurred on uncompleted contracts, ending balance
                                    
                                    $
                                    12,177,003Billings
      on uncompleted contracts, net of deferred revenue
                                    
                                    
                                    8,610,379Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                                    
                                    $
                                    3,566,624
 
 As of
December 31, 2008, the Company had progress billings in excess of cost of
uncompleted contracts (i.e. customer prepayments and deferred revenues) totaling
$ 4,861,162.
 
 NOTE 4.
PREPAID EXPENSES
  As of
December 31, 2008 and March 31, 2008, the prepaid expenses included the
following:
 December
      31, 2008
                              
                              
                              March
      31,
                                2008Prepayments
      on materials
                              
                              $
                              1,414,428
                              
                              
                              $
                              882,739Insurance
                              
                              
                              98,868
                              
                              
                              
                              145,338Equipment
      maintenance
                              
                              
                              12,825
                              
                              
                              
                              6,602Miscellaneous
                              
                              
                              16,345
                              
                              
                              
                              -Real
      estate taxes
                              
                              
                              4,061
                              
                              
                              
                              4,438Total
                              
                              $
                              1,546,527
                              
                              
                              $
                              1,039,117
  The
increase in prepayments on materials reflects cash payments to vendors for steel
to be used in current contracts.
 
 NOTE 5.
LONG-TERM DEBT
 
 The
following debt obligations, outstanding on December 31, 2008 and March 31,
2008:
 
  -9-
  
 December
      31,
                                    2008
                                  
                                  
                                  March
      31,
                                    20081.
      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
                                  
                                  $
                                  2,428,571
                                  
                                  
                                  $
                                  2,857,1422.
      Long-term mortgage loan issued on October 4, 2006:Amalgamated Bank mortgage loan to
      WM Realty- 10 years, annual interest rate 6.75%, monthly interest and
      principal payment $20,955. The amortization is based on a 30- year term.
      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.
                                  
                                  
                                  3,127,348
                                  
                                  
                                  
                                  3,154,1713.
      Automobile Loan:Ford
      Motor Credit Company-Note payable secured by a vehicle - payable in
      monthly installments of $552 including interest of 4.9%, commencing July
      20, 2003 through June 20, 2009
                                  
                                  
                                  2,728
                                  
                                  
                                  
                                  7,500Total
      long-term debt
                                  
                                  
                                  5,558,647
                                  
                                  
                                  
                                  6,018,813Principal
      payments due within one year
                                  
                                  
                                  612,991
                                  
                                  
                                  
                                  613,832Principal
      payments due after one year
                                  
                                  $
                                  4,945,656
                                  
                                  
                                  $
                                  5,404,981
 
 On
February 24, 2006, Ranor entered into a loan and security agreement with
Sovereign Bank.  Pursuant to the agreement, the bank has granted Ranor
a term loan of $4,000,000 (“Term Note”) and extended Ranor a line of credit of
$1,000,000, with an initial interest rate of 9%. Ranor and the bank entered into
amendments which (i) reduced the interest rate from prime plus 11⁄2% to prime plus
1% and increased the revolving credit line to $2,000,000 (“Revolving Note”) and
(ii) provided Ranor with a capital expenditures facility of $3,000,000. Under
this capital expenditures facility, Ranor is able to borrow up to $3,000,000
until November 30, 2009. The Company pays interest only on borrowings under the
capital expenditures line until November 30, 2009, at which time the principal
balance is amortized over five years, commencing December 31,
2009.  The interest on borrowings under the capital expenditure line
is either equal to the prime plus 1⁄2% or the LIBOR rate plus 3%, as the Company
may elect.  Any unpaid balance on the capital expenditures facility is
to be paid on November 30, 2014.  As of December 31, 2008 and March
31, 2008, there were no borrowings outstanding under either the revolving line
or the capital expenditure line.
 
  -10-
  The Term
Note is subject to covenants that include the following: the loan collateral
comprises all personal property of Ranor, 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 Ranor’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 are no prepayment penalties
thereafter.  Since the Term Note was issued in February 2006, the
prepayment penalty is currently 1% and will continue at that rate until February
24, 2009, at which time there will no longer be a prepayment
penalty.  Ranor is prohibited from issuing any additional equity
interest (except to Techprecision), or redeem, retire, purchase or otherwise
acquire for value any equity interests; Ranor 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 at the end of
each fiscal quarter. Ranor’s obligations under the notes to the bank are
guaranteed by Techprecision.
 
 In
connection with the Amalgamated Bank mortgage financing of the real estate owned
by WM Realty Management LLC, Mr. Andrew Levy, the principal equity owner and
manager of WM Realty and a major stockholder of Techprecision, 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 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 Management’s misconduct.
 
 As of
December 31, 2008, the maturities of long-term debt were as
follows:
 
 Year
ending December 31,
 
 2009
                              
                              $
                              612,9912010
                              
                              
                              613,0062011
                              
                              
                              615,9432012
                              
                              
                              619,087Due
      after 2012
                              
                              
                              3,097,620Total
                              
                              $
                              5,558,647
  NOTE 6.
CAPITAL STOCK
 
 The
Company had 13,907,513 shares of common stock outstanding at December 31, 2008
and 12,572,995 shares of common stock outstanding at March 31,
2008.
 
 Series A
Convertible Preferred Stock and Common Stock Purchase Warrants
 
 In
February 2006, the Company sold to an investor, for $2,200,000, (a) 7,719,250
shares of series A convertible preferred stock and (b) warrants to purchase
11,220,000 shares of common stock.
 
 The
Company had 6,295,508 and 7,018,064 shares of series A preferred stock
outstanding at December 31, 2008 and March 31, 2008.  Each share of
preferred stock is convertible into 1.3072 shares of common stock, subject to
adjustment.  During the nine months ended December 31, 2008, 722,556
shares of series A preferred stock were converted into 944,518 shares of common
stock.
   -11-
 
 The
warrants are exercisable, in part or full, at any time from February 24, 2006
until February 24, 2011.
 
 If, prior
to February 24, 2009, the Company issues common stock at a price, or options,
warrants or other convertible securities with a conversion or exercise price
less than the conversion price of the Series A Preferred Stock or the applicable
exercise prices of the warrants, with certain specified exceptions, the
conversion price of the Series A Preferred Stock and the exercise price of the
warrants is reduced to reflect an exercise price equal to the lower
price.  This adjustment does not affect the number of shares of common
stock issuable upon exercise of the warrants.
 
 During
the nine months ended December 31, 2008, the Company issued 390,000 shares of
common stock upon exercise of warrants having an exercise price of $.43605 per
share.  At December 31, 2008, there were outstanding warrants to
purchase 9,320,000 shares of common stock.
 
 Stock
options
 
 During
the nine months ended December 31, 2008, no stock options were granted and no
stock options were exercised.  As of December 31, 2008 and March 31,
2008, stock options to purchase 484,159 shares of common stock were
outstanding.
 
 NOTE 7.
EARNINGS PER SHARE OF COMMON STOCK
 
 Basic net income per share of common
stock is computed by dividing net income by the weighted average number of
shares outstanding during the year. Diluted net income per share of common stock
is computed on the basis of the weighted-average number of common shares
outstanding plus the effect of convertible preferred stock, preferred
shareholders and other warrants and share-based compensation using the treasury
stock method.
   -12-
 
 Three
      months ended
                        
                        
                        Nine
      months endedDecember
      31,
                        
                        
                        December
      31,2008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007Net
      income
                        
                        $
                        1,013,229
                        
                        
                        $
                        1,377,030
                        
                        
                        $
                        5,061,025
                        
                        
                        $
                        2,663,103Weighted
      average number of shares outstanding (basic)
                        
                        
                        13,907,094
                        
                        
                        
                        11,139,305
                        
                        
                        
                        13,569,513
                        
                        
                        
                        10,415,546Effect
      of dilutive stock options, warrants and preferred stock
                        
                        
                        10,511,021
                        
                        
                        
                        17,415,159
                        
                        
                        
                        12,765,907
                        
                        
                        
                        17,484,003Weighted
      average number of shares outstanding (fully diluted)
                        
                        
                        24,418,115
                        
                        
                        
                        28,554,464
                        
                        
                        
                        26,335,421
                        
                        
                        
                        27,899,549Net
      income per share of common stock (basic)
                        
                        $
                        0.07
                        
                        
                        $
                        0.12
                        
                        
                        $
                        0.37
                        
                        
                        $
                        0.26Net
      income per share (fully diluted)
                        
                        $
                        0.04
                        
                        
                        $
                        0.05
                        
                        
                        $
                        0.19
                        
                        
                        $
                        0.10
 
 NOTE 8.
INCOME TAXES
 
 The
Company uses the asset and liability method of financial accounting and
reporting for income taxes required by statement of Financial Accounting
Standards No. 109 (“FAS 109”), “Accounting for Income Taxes.”
Under FAS 109, deferred income taxes reflect the tax impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax purposes.
Temporary differences giving rise to deferred income taxes consist primarily of
the reporting of losses on uncompleted contracts, the excess of depreciation for
tax purposes over the amount for financial reporting purposes, and accrued
expenses accounted for differently for financial reporting and tax purposes and
net operating loss carry forwards.
 
 We
estimate whether recoverability of our deferred tax assets is “more likely than
not” based on forecasts of taxable income in the related tax
jurisdictions.  In this estimate, we use historical results, projected
future operating results based upon approved business plans, eligible carry
forward periods, tax planning opportunities and other relevant
considerations.  We review the likelihood that we will be able to
realize the benefit of our deferred tax assets on a quarterly basis or whenever
events indicate that a review is required.
 
 We
reviewed the likelihood that we would be able to realize the benefit of our U.S.
deferred tax assets as of December 31, 2008, based on the revised near-term
projected future operating results.  We concluded that it is “more
likely than not” that we will realize our short term net deferred tax assets and
thus recorded an income tax benefit in the nine months ended December 31, 2008
of $24,587 to establish a provision for these assets.
 
 If, in
the future, we do not generate taxable income in the U.S. on a sustained basis,
our current estimate of the recoverability of our deferred tax assets could
change and result in the increase of the valuation allowance.
 
  -13-
   Income
tax expense was $3,890,780 in the nine months ended December 31, 2008 as
compared with $1,214,988 in the nine months ended December 31,
2007.  The Company’s estimated effective income tax rate was 43.4% in
the nine months ended December 31, 2008 as compared with 31.3% in the nine
months ended December 31, 2007.     The effective tax rate
in the nine months ended December 31, 2008 includes the recognition of a net
deferred tax asset of $24,587.  This deferred tax asset reflects the
impact of recording an income tax benefit for the current portion of net
operating loss carry forwards subject to Internal Revenue Code Section 382 and
related state statutory limitations, and an income tax benefit related to
accrued compensation benefits, and the current portion of deferred tax liability
arising from timing differences in depreciation.
 
 NOTE
9.  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. To the extent that the Company is unable to generate orders from
new customers, it may have difficulty operating profitably.
 
 The
following table sets forth information as to sales from those customers that
accounted for more than 10% of our revenue in the nine months ended December 31,
2008 and 2007:
  December
      31
                              
                              
                              December
      312008
                              
                              
                              2007Customer
                              
                              Dollars
                              
                              
                              Percent
                              
                              
                              Dollars
                              
                              
                              PercentCustomer
      with highest sales
                              
                              $
                              20,821,102
                              
                              
                              
                              62%
                              
                              
                              
                              10,140,043
                              
                              
                              
                              45%Customer
      with next highest sales
                              
                              
                              3,879,514
                              
                              
                              
                              11%
                              
                              
                              
                              4,324,183
                              
                              
                              
                              19%
 
 NOTE 10.
COMMITMENT AND CONTINGENCIES
 
 Leases
 
 Ranor,
Inc. leases its manufacturing, warehouse and office facilities in Westminster
(Westminster Lease), Massachusetts from WM Realty, a variable interest entity,
for a term of 15 years, commencing February 24, 2006. For the quarters ended
December 31, 2008 and 2007, the Company’s rent expenses were $337,500 and
$333,300, respectively. Since the Company consolidated the operations of WM
Realty pursuant to FIN 46, the rental expense is eliminated in consolidation,
the building is carried at cost and depreciation is expensed. The annual rent is
subject to an annual increase based on the increase in the consumer price
index.
 
  -14-
   The
Company has an option to purchase the real property at fair value and an option
to extend the term of the lease for two additional terms of five years, upon the
same terms. The minimum rent payable for each option term will be the greater of
(i) the minimum rent payable under the lease immediately prior to either the
expiration date, or the expiration of the preceding option term, or (ii) the
fair market rent for the leased premises.
 
 The
Company also leases approximately 12,720 square feet of manufacturingspace in Fitchburg,
Massachusetts (“Fitchburg Lease”) from an unaffiliated party. The lease provides
for rent at the annual rate of $50,112 with 3% annual increases, starting 2004.
The lease expires in February 2009, and is renewable for a five year
term.  The company has decided to relocate the equipment from the
Fitchburg location to its Westminster facility and not renew this
lease.  The company’s rent expense for this facility was $42,865 and
$18,300 for the nine months ended December 31, 2008 and December 31, 2007,
respectively.
 
 The
minimum future lease payments under the Company’s real property leases are as
follows:
  
 For
      the Twelve Months Ended December 31,
                                    
                                    
                                    AmountOperating
      Lease- Fitchburg Lease2009
                                    
                                    
                                    $
                                    8,352Total
                                    
                                    
                                    $
                                    8,352Lease
      Payments to WM Realty2009
                                    
                                    
                                    
                                    450,0002010
                                    
                                    
                                    
                                    450,0002011
                                    
                                    
                                    
                                    450,0002012
                                    
                                    
                                    
                                    450,0002013
                                    
                                    
                                    
                                    450,0002014-2018
                                    
                                    
                                    
                                    2,250,0002019-2022
                                    
                                    
                                    
                                    1,425,000Total
                                    
                                    
                                    $
                                    5,925,000
 
 -15-
  
 Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
 
 Statement
Regarding Forward Looking Disclosure
 
 The
following discussion of the results of our operations and financial condition
should be read in conjunction with our financial statements and the related
notes, which appear elsewhere. This quarterly report of on Form 10-Q, including
this section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” may contain predictive or “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, but are not limited to, statements
that express our intentions, beliefs, expectations, strategies, predictions or
any other statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based in part on assumptions made by management.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may, and probably will, differ materially from what is
expressed or forecasted in the forward-looking statements due to numerous
factors. Those factors include those risks discussed under “Risk Factors” in
Item 1 and “Management’s Discussion and Analysis” in our Form 10-KSB for the
year ended March 31, 2008 and this Item 2 in this Form 10-Q and those described
in any other filings which we make with the SEC. In addition, such statements
could be affected by risks and uncertainties related to economic downturn in the
U.S. and global economies, particularly as these uncertainties affect the
requirements of companies for capital expenditures, to our ability to generate
business on an on-going business, to obtain any required financing, to receive
contract awards from the competitive bidding process, maintain standards to
enable us to manufacture products to exacting specifications, enter new markets
for our services, market and customer acceptance, our reliance on a small number
of customers for a significant percentage of our business, competition,
government regulations and requirements, pricing and development difficulties,
our ability to finance any expansion of our facilities, 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. We undertake no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances that may arise
after the date of this report, except as required by applicable
law.
 
 Any
forward-looking statements speak only as of the date on which they are made, and
we do not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this report. Investors should
evaluate any statements made by the Company in light of these important
factors.
 
 
 -16-
 
 
 Overview
 
 We offer
a full range of services required to transform raw material into precise
finished products. Our manufacturing capabilities include: fabrication
operations - cutting, press and roll forming, assembly, welding, heat treating,
blasting and painting; and machining operations – CNC (computer numerical
controlled) horizontal and vertical milling centers. We also provide support
services related to our manufacturing capabilities: manufacturing engineering
(planning, fixture and tooling development, manufacturability), quality control
(inspection and testing), and production control (scheduling, project management
and expediting).
 
 All
manufacturing is done in accordance with our written quality assurance program,
which meets specific national and international codes, standards, and
specifications. Ranor holds several certificates of authorization issued by the
American Society of Mechanical Engineers and the National Board of Boiler and
Pressure Vessel Inspectors. The standards used are specific to the customer’s
needs, and we have implemented such standards into our manufacturing
operations.
 
 We have
recently been and could continue to be affected by recessionary pressures. The
recent economic decline has affected companies that manufacture capital goods.
The difficulty in obtaining credit can affect the ability of customers and
potential customers to embark on significant projects, as well as the ability of
customers to expand their own business or to develop new products. Our largest
customer, GT Solar, Inc. accounted for 62% of our sales during the nine month
period ending December 31, 2008. This customer has reported in its SEC filings
that the current tightening of credit in the financial markets may delay or
prevent its customers from securing funding adequate to honor their existing
contracts to purchase products, and that this could result in a decrease or
cancellation of orders. Although our customer has not cancelled any orders,
starting in December it has significantly reduced its monthly delivery
requirements. Our sales in the solar industry could continue to be affected by
any adverse trends that affect our customer.
 
 We have
recently also experienced a slow-down in delivery schedules for orders placed by
our other customers, who advised us that they could have inventories in excess
of their short-term needs, and their customers may also seek to delay deliveries
of their products under existing contracts or to renegotiate the delivery
schedules under their existing contracts. These or similar conditions affecting
our customers or potential customers may result in a decrease in business or
future cancellation or deferral of products which have been ordered from
us.
 
 The
reduced level of business from our largest customer has affected our sales,
gross profit and net income in the December 31, 2008 quarter, and we expect
these factors to continue to affect us for the balance of this fiscal year,
which ends March 31, 2009. We cannot assure you that we can operate profitably
as a result of these factors.
 
 -17-
   To the
extent that we experience a decrease in net sales, whether as a result of
competitive or economic pressure on our pricing, our margins may be impacted
since (i) we may not see any significant decline in cost of sales and (ii) we
may incur operating inefficiencies resulting in a less efficient use of
personnel. We have reduced our cost of sales and general overhead through staff
reductions in order to address these matters.  Thus, we anticipate
that the effects of the worldwide economic downturn are likely to continue to
adversely affect our sales, gross profit and results of operations for the next
several quarters, if not longer.  However, we cannot at this time
quantify the effects of the downturn.
 
 The
economic conditions have also affected our accounts receivables, which increased
more than $3.5 million, from approximately $4.5 million to approximately $8.0
million, or 78%. At December 31, 2008 the accounts receivables were outstanding
for an average of 49 days, as compared with 35 days as of March 31, 2008. It is
possible that, as our customers have their own financing difficulties, the
average age of our accounts receivables may increase, which could affect our
liquidity. Despite the increase in the age of our receivables, we believe that
our receivables, net of the allowance for doubtful accounts of $25,000, are
collectible.
 
 Because
our revenues are derived from the sale of goods manufactured pursuant to
contracts and we do not sell from inventory, it is necessary for us to
constantly seek new contracts. We are actively marketing our manufacturing
services to other potential customers in order to lessen our dependence on one
or two major customers.  Our two largest customers accounted for
approximately 73% of our revenue for the nine months ended December 31,
2008.  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 and any deferrals of delivery dates 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.
 
 Growth
Strategy
 
 Commencing
in our year ended March 31, 2007, we changed the manner in which we approach
potential business. In the past, our contracts generally called for one or a
limited number of units, and once we completed our work on a contract, we
generally did not receive subsequent orders for the same product. Although some
of our contracts contemplate the manufacture of one or a limited number of
units, we are seeking more long-term projects with a more predictable cost
structure. Our performance has improved significantly particularly over the last
year largely as a result of the implementation of this strategy.
   -18-
 
 We seek
to leverage our core competence as a manufacturer of high-precision, large metal
fabrications to expand our business into areas which have shown increasing
demand and which we believe could generate higher margins.
 
 We
believe that rising energy demands along with increasing environmental concerns
are likely to continue to drive demand in the alternative energy industry,
particularly the wind, solar and nuclear power industries. Because of our
capabilities and the nature of the equipment required by companies in the
alternative energy industries, we intend to focus our services in this
sector.  We believe that nuclear power may become an increasingly
important source of energy. Because we have certification from the American
Society of Mechanical Engineers, along with our historic relationships with
suppliers in the industry, we believe that we have the qualifications to benefit
from any increased activity in the nuclear sector that may result. One of our
customers is currently involved in a variety of commercial nuclear reactor
repairs and overhaul projects. We have manufactured several components needed to
support this work. Another customer provides a complete nuclear waste storage
system to commercial nuclear power plants. We manufacture lifting equipment for
this company to use in these storage systems.   We also see the
fabrication of medical isotopes storage systems as a potential business
area.  Although recently we have received new orders, revenues derived
from the nuclear industry were insignificant for the three and nine months ended
December 31, 2008 and do not constitute a significant portion of our backlog. We
cannot assure you that we will be able to develop any significant business from
the nuclear industry in the future.
 
 Because
of the recent decline in oil prices, the demand for products in alternative
energy, including solar, wind and nuclear, may be uncertain. Although we believe
that over the long term, the alternative energy segment will expand. We are
trying to address the potential current reduced demand in the alternative
industry by seeking to diversify into other industries.
 
 As an
example of our plan for diversification, we are currently working with a medical
customer to manufacture critical components for proton beam therapy machines
designed to be used to treat cancer.
 
 We are
evaluating plans to expand our current manufacturing facilities in the near-term
both at our present location and in other locations. We believe that this
expansion will allow us to increase our overall industry offerings and capacity,
allowing us to handle high volume orders or niche orders simultaneously.
However, this expansion will require financing which may not be available on
acceptable terms, if any.
 
 We plan
to offer more integrated products and turnkey solutions to provide greater value
to our customers. We may target acquisitions that could enhance our existing
business, although we are not engaged in any discussions or negotiations with
respect to any acquisition.
 
 As of
December 31, 2008, we had a backlog of firm orders totaling approximately $40
million. We anticipate that we will continue to deliver products reflected in
our backlog on a continuing basis during the next three to five years, and we
expect that the timing of the deliveries will reflect domestic and international
economic conditions. The backlog includes orders for about $6.4 million from
four customers in addition to GT Solar, which accounts for approximately 73% of
our December 31, 2008 backlog.






-19-


Critical
Accounting Policies
 
 The
preparation of the Company’s financial statements in conformity with generally
accepted accounting principles in the United States requires our management to
make assumptions, estimates and judgments that 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 financial statements for the quarter
ended December 31, 2008 from the assumptions, estimates and judgments used in
the preparation of our audited financial statements, for the year ended March
31, 2008.
 
 Revenue
Recognition and Costs Incurred
 
 We derive
revenues from (i) the fabrication of large metal components for our customers;
(ii) the precision machining of such large metal components, including
incidental engineering services; and (iii) the installation of such components
at the customers’ locations when the scope of the project requires such
installations.
 
 Sales and
cost of sales 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 receives written purchase orders
from the customers that specify contract prices and delivery terms. The Company
recognizes revenues only when the collection prospects are
reasonable.
 
 Adjustments
to cost estimates are made periodically, and losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined and are reflected as reductions of the carrying value of the costs
incurred on uncompleted contracts. Costs incurred on uncompleted contracts
consist of labor, overhead, and materials. Work in process is stated at the
lower of cost or market and reflects accrued losses, if required, on uncompleted
contracts.
 
  -20-
  Variable
Interest Entity
 
 We have
consolidated WM Realty Management, a variable interest entity from which we
lease our real estate, to conform to FASB Interpretation No. 46, “Consolidation of Variable Interest
Entities” (FIN 46). We have also adopted the revision to FIN 46, FIN 46
(R), which clarified certain provisions of the original interpretation and
exempted certain entities from its requirements.
 
 Income
Taxes
 
 We
provide for federal and state income taxes currently payable, as well as those
deferred because of temporary differences between reporting income and expenses
for financial statement purposes versus tax purposes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recoverable.  The effect of the change in the tax rates
is recognized as income or expense in the period of the change. A valuation
allowance is established, when necessary, to reduce deferred income taxes to the
amount that is more likely than not to be realized.  As a result of
the change in ownership resulting from the acquisition of Ranor in February
2006, our annual usage of the tax benefit of the tax loss-carry forward pursuant
to Section 382 of the Internal Revenue Code and the treasury regulations is
limited to approximately $88,662.
 
 New
Accounting Pronouncements
 
 See Note
2 of Notes to Consolidated Financial Statements for information relating to new
accounting pronouncements.
  Results of Operations(amounts
in thousands, except per share amounts)
 Three
months Ended December, 2008 and 2007
 
 The
following table sets forth information from our statements of operations for the
quarters ended December 31, 2008 and 2007, in dollars and as a percentage of
sales:
   -21-
  
 Change from
      QuarterQuarter
      Ended December 31
                                                                                        
                                                                                        
                                                                                        Ended
      December 31, 20072008
                                                                                        
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        to December
      31, 2008Amount
                                                                                        
                                                                                        
                                                                                        Percent
                                                                                        
                                                                                        
                                                                                        Amount
                                                                                        
                                                                                        
                                                                                        Percent
                                                                                        
                                                                                        
                                                                                        Amount
                                                                                        
                                                                                        
                                                                                        PercentNet
      sales
                                                                                        
                                                                                        
                                                                                        8,555
                                                                                        
                                                                                        
                                                                                        
                                                                                        100.0
                                                                                        %
                                                                                        
                                                                                        
                                                                                        9,610
                                                                                        
                                                                                        
                                                                                        
                                                                                        100.0
                                                                                        %
                                                                                        
                                                                                        
                                                                                        (1,055
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (11.0
                                                                                        )%Cost
      of sales
                                                                                        
                                                                                        
                                                                                        5,933
                                                                                        
                                                                                        
                                                                                        
                                                                                        69.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        7,030
                                                                                        
                                                                                        
                                                                                        
                                                                                        73.2
                                                                                        %
                                                                                        
                                                                                        
                                                                                        (1,097
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (15.6
                                                                                        )%Gross
      profit
                                                                                        
                                                                                        
                                                                                        2,622
                                                                                        
                                                                                        
                                                                                        
                                                                                        30.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        2,580
                                                                                        
                                                                                        
                                                                                        
                                                                                        26.8
                                                                                        %
                                                                                        
                                                                                        
                                                                                        42
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.6
                                                                                        %Operating
      expenses:Salaries
      and related expenses
                                                                                        
                                                                                        
                                                                                        331
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.9
                                                                                        %
                                                                                        
                                                                                        
                                                                                        294
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.0
                                                                                        %
                                                                                        
                                                                                        
                                                                                        37
                                                                                        
                                                                                        
                                                                                        
                                                                                        12.6
                                                                                        %Professional
      fees
                                                                                        
                                                                                        
                                                                                        63
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        74
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.8
                                                                                        %
                                                                                        
                                                                                        
                                                                                        (11
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (14.9
                                                                                        )%Selling,
      general and administrative
                                                                                        
                                                                                        
                                                                                        145
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        135
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.4
                                                                                        %
                                                                                        
                                                                                        
                                                                                        10
                                                                                        
                                                                                        
                                                                                        
                                                                                        7.4
                                                                                        %Total
      operating expenses
                                                                                        
                                                                                        
                                                                                        539
                                                                                        
                                                                                        
                                                                                        
                                                                                        6.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        503
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.2
                                                                                        %
                                                                                        
                                                                                        
                                                                                        36
                                                                                        
                                                                                        
                                                                                        
                                                                                        7.2
                                                                                        %Income
      from operations
                                                                                        
                                                                                        
                                                                                        2,083
                                                                                        
                                                                                        
                                                                                        
                                                                                        24.4
                                                                                        %
                                                                                        
                                                                                        
                                                                                        2,077
                                                                                        
                                                                                        
                                                                                        
                                                                                        21.6
                                                                                        %
                                                                                        
                                                                                        
                                                                                        6
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.3
                                                                                        %Other
      income (expenses)Interest
      expense
                                                                                        
                                                                                        
                                                                                        (111
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (1.3
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        (124
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (1.3
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        13
                                                                                        
                                                                                        
                                                                                        
                                                                                        (10.5
                                                                                        )%Finance
      costs
                                                                                        
                                                                                        
                                                                                        (4
                                                                                        )
                                                                                        
                                                                                        
                                                                                        0.0
                                                                                        %
                                                                                        
                                                                                        
                                                                                        (8
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (0.1
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        4
                                                                                        
                                                                                        
                                                                                        
                                                                                        (50.0
                                                                                        )%Total
      other income (expense)
                                                                                        
                                                                                        
                                                                                        (115
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (1.3
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        (132
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (1.4
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        17
                                                                                        
                                                                                        
                                                                                        
                                                                                        (12.9
                                                                                        )%Income
      before income taxes
                                                                                        
                                                                                        
                                                                                        1,968
                                                                                        
                                                                                        
                                                                                        
                                                                                        23.0
                                                                                        %
                                                                                        
                                                                                        
                                                                                        1,945
                                                                                        
                                                                                        
                                                                                        
                                                                                        20.2
                                                                                        %
                                                                                        
                                                                                        
                                                                                        23
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.2
                                                                                        %Provision
      for income taxes
                                                                                        
                                                                                        
                                                                                        (955
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (11.2
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        (568
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (5.9
                                                                                        )%
                                                                                        
                                                                                        
                                                                                        (387
                                                                                        )
                                                                                        
                                                                                        
                                                                                        68.1
                                                                                        %Net
      income
                                                                                        
                                                                                        
                                                                                        1,013
                                                                                        
                                                                                        
                                                                                        
                                                                                        11.8
                                                                                        %
                                                                                        
                                                                                        
                                                                                        1,377
                                                                                        
                                                                                        
                                                                                        
                                                                                        14.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        (364
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (26.4
                                                                                        )%
 
 Sales
decreased by $1,055, or 11%, from $9,610 for the quarter ended December 31, 2007
(the “December 2007 Quarter”) to $8,555 for the quarter ended December 31, 2008
(the “December 2008 Quarter”).  The decrease in sales was primarily
the result of capital goods market uncertainty due to economic
recession.
 
 As a
result of decrease in sales, our cost of sales for the December 2008 Quarter
decreased by $1,097 to $5,933, a decrease of 15.6%, from $7,030 during the
December 2007 Quarter. The greater decrease in cost of sales as compared to
sales revenues reflected the sale of scrap and the efficiencies gained on
production work. Sale of scrap metal was $118 for the December 2008 Quarter, as
compared to $73 for the December 2007 Quarter.  Since the carrying
value of the scrap metal was nominal, substantially all of the revenue from the
sale of scrap metal is reflected in gross profit. As a consequence, our gross
margin increased from 26.8% to 30.7%.
 
 Our
payroll and related costs were $331 for the December 2008 Quarter as compared
with $294 for the December 2007 Quarter.  The $37 (12.6%) rise in
payroll was attributable to increase in both executive compensation and office
salaries.
  Professional
fees decreased by $11 from $74 in the December 2007 Quarter to $63 in December
2008 Quarter as a result of the reduced regulatory filings.
 
  -22-
  Selling,
administrative and other expenses for the December 2008 Quarter were $145 as
compared with $135 for December 2007 Quarter, an increase of $10 or
7.4%.  This increase reflected primarily increased marketing
costs.
 
 Interest
expense and amortization of deferred loan costs for the December 2008 Quarter
was $111 as compared with $124 for the December 2007 Quarter. The reduction of
$13 (10.5%) is a result of the repayment of the principal and decrease in the
amount of the long-term debt of Ranor.
 
 As a
result of the factors described above, our income before income taxes increased
$23, or 1.2%, from $1,945 to $1,968, notwithstanding the decline in net
sales.
 
 Income
tax expense was $955 in the December 2008 Quarter as compared with $568 in the
December 2007 Quarter. Our effective income tax rate, inclusive of federal and
state taxes, was 48.5% in the December 2008 Quarter as compared to 29.2% in the
December 2007 Quarter. The increase in effective income tax rate was primarily
due to the application of higher statutory marginal tax rates.
 
 As a
result of the foregoing, our net income decreased by $364 or (26.4)%. The net
income was $1,013, or $ 0.07 per share (basic), and $0.04 per share (diluted)
for the December 2008 Quarter, as compared with net income of $1,377, or $0.12
per share (basic) and $0.05 per share (diluted) for December 2007
Quarter.
 
 Nine
months Ended December 31, 2008 and 2007
 
 The
following table sets forth information from our statements of operations for the
nine months ended December 31, 2008 and 2007, in dollars and as a percentage of
sales:
   -23-
 
 Change from
      Nine monthsNine
      months Ended December 31
                                                                                  
                                                                                  
                                                                                  Ended
      December 31, 20072008
                                                                                  
                                                                                  
                                                                                  2007
                                                                                  
                                                                                  
                                                                                  to December
      31, 2008Amount
                                                                                  
                                                                                  
                                                                                  Percent
                                                                                  
                                                                                  
                                                                                  Amount
                                                                                  
                                                                                  
                                                                                  Percent
                                                                                  
                                                                                  
                                                                                  Amount
                                                                                  
                                                                                  
                                                                                  Percent(dollars
      in thousands except per share amounts)Net
      sales
                                                                                  
                                                                                  
                                                                                  33,814
                                                                                  
                                                                                  
                                                                                  
                                                                                  100.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  22,534
                                                                                  
                                                                                  
                                                                                  
                                                                                  100.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  11,280
                                                                                  
                                                                                  
                                                                                  
                                                                                  50.1
                                                                                  %Cost
      of sales
                                                                                  
                                                                                  
                                                                                  22,799
                                                                                  
                                                                                  
                                                                                  
                                                                                  67.4
                                                                                  %
                                                                                  
                                                                                  
                                                                                  16,779
                                                                                  
                                                                                  
                                                                                  
                                                                                  74.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  6,020
                                                                                  
                                                                                  
                                                                                  
                                                                                  35.9
                                                                                  %Gross
      profit
                                                                                  
                                                                                  
                                                                                  11,015
                                                                                  
                                                                                  
                                                                                  
                                                                                  32.6
                                                                                  %
                                                                                  
                                                                                  
                                                                                  5,755
                                                                                  
                                                                                  
                                                                                  
                                                                                  25.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  5,260
                                                                                  
                                                                                  
                                                                                  
                                                                                  91.4
                                                                                  %Operating
      expenses:Salaries
      and related expenses
                                                                                  
                                                                                  
                                                                                  1,088
                                                                                  
                                                                                  
                                                                                  
                                                                                  3.2
                                                                                  %
                                                                                  
                                                                                  
                                                                                  885
                                                                                  
                                                                                  
                                                                                  
                                                                                  3.9
                                                                                  %
                                                                                  
                                                                                  
                                                                                  203
                                                                                  
                                                                                  
                                                                                  
                                                                                  22.9
                                                                                  %Professional
      fees
                                                                                  
                                                                                  
                                                                                  184
                                                                                  
                                                                                  
                                                                                  
                                                                                  0.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  303
                                                                                  
                                                                                  
                                                                                  
                                                                                  1.3
                                                                                  %
                                                                                  
                                                                                  
                                                                                  (119
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (39.3
                                                                                  )%Selling,
      general and administrative
                                                                                  
                                                                                  
                                                                                  434
                                                                                  
                                                                                  
                                                                                  
                                                                                  1.3
                                                                                  %
                                                                                  
                                                                                  
                                                                                  286
                                                                                  
                                                                                  
                                                                                  
                                                                                  1.3
                                                                                  %
                                                                                  
                                                                                  
                                                                                  148
                                                                                  
                                                                                  
                                                                                  
                                                                                  51.7
                                                                                  %Total
      operating expenses
                                                                                  
                                                                                  
                                                                                  1,706
                                                                                  
                                                                                  
                                                                                  
                                                                                  5.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  1,474
                                                                                  
                                                                                  
                                                                                  
                                                                                  6.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  232
                                                                                  
                                                                                  
                                                                                  
                                                                                  15.7
                                                                                  %Income
      from operations
                                                                                  
                                                                                  
                                                                                  9,309
                                                                                  
                                                                                  
                                                                                  
                                                                                  27.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  4,281
                                                                                  
                                                                                  
                                                                                  
                                                                                  19.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  5,028
                                                                                  
                                                                                  
                                                                                  
                                                                                  117.4
                                                                                  %Other
      income (expenses)Interest
      expense
                                                                                  
                                                                                  
                                                                                  (345
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (1.0
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  (389
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (1.7
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  44
                                                                                  
                                                                                  
                                                                                  
                                                                                  (11.3
                                                                                  )%Finance
      costs
                                                                                  
                                                                                  
                                                                                  (13
                                                                                  )
                                                                                  
                                                                                  
                                                                                  0.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  (13
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (0.1
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  
                                                                                  0.0
                                                                                  %Total
      other income (expense)
                                                                                  
                                                                                  
                                                                                  (358
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (1.1
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  (402
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (1.8
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  44
                                                                                  
                                                                                  
                                                                                  
                                                                                  (10.9
                                                                                  )%Income
      before income taxes
                                                                                  
                                                                                  
                                                                                  8,951
                                                                                  
                                                                                  
                                                                                  
                                                                                  26.5
                                                                                  %
                                                                                  
                                                                                  
                                                                                  3,879
                                                                                  
                                                                                  
                                                                                  
                                                                                  17.2
                                                                                  %
                                                                                  
                                                                                  
                                                                                  5,072
                                                                                  
                                                                                  
                                                                                  
                                                                                  130.8
                                                                                  %Provision
      for income taxes
                                                                                  
                                                                                  
                                                                                  (3,891
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (11.5
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  (1,215
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (5.4
                                                                                  )%
                                                                                  
                                                                                  
                                                                                  (2,676
                                                                                  )
                                                                                  
                                                                                  
                                                                                  220.2
                                                                                  %Net
      income
                                                                                  
                                                                                  
                                                                                  5,060
                                                                                  
                                                                                  
                                                                                  
                                                                                  15.0
                                                                                  %
                                                                                  
                                                                                  
                                                                                  2,664
                                                                                  
                                                                                  
                                                                                  
                                                                                  11.8
                                                                                  %
                                                                                  
                                                                                  
                                                                                  2,396
                                                                                  
                                                                                  
                                                                                  
                                                                                  89.9
                                                                                  %
  Sales
increased by $11,280 or 50.1%, from $22,534 for the nine months ended December
31, 2007 (the “December 2007 Period”) to $33,814 for the nine months ended
December 31, 2008 (the “December 2008 Period”). The increase in sales was
primarily the result of an increase of $10,681, or 105%, in sales to GT Solar
from $10,140 in the nine months ended December, 2007 as compared to
$20,821 in 2008.
 
 Along
with increased sales, our cost of sales increased by $6,020 to $22,799 an
increase of 35.9%, from $16,799 for the nine months ended December 31, 2008 as
compared to 2007.  The increase in cost of sales was not at the same
rate as the increase in sales reflecting the effects of the sale of
approximately $715 of scrap, as compared with $174 for the December 2007 Period,
and the reversal of an accrual of $120 on a contract that was taken in a prior
period and efficiencies gained on production work.Since the carrying value
of the scrap metal was nominal, substantially all of the revenue from the sale
of the scrap metal is reflected in gross profit.  As a result, our
gross margin improved from 25.5% in the December 2007 Period to 32.6% in the
December 2008 Period.
 
  -24-
  Our
payroll and related costs were $1,088 for the December 2008 Period, as compared
with $885 for the December 2007 Period. The $203 (22.8%) increase in payroll was
increase in payroll was attributable to the increased compensation of the
officers ($124) and office personnel ($44).
 
 Professional
fees decreased by $119 (39.3%) from $303 in the December 2007 Period to $184 in
the December 2008 Period.  This decrease was attributable to reduced
fees related to regulatory filings.
 
 Total
selling, administrative and other expenses were $434 for the nine months ended
December 31, 2008 as compared to $286 for the December 2007 Period, an increase
of $148, or 51.7%. This increase reflected in part additional costs which we
incurred as a public company, following the commencement of trading in November
2007, as well as additional expense incurred as a result of the overall increase
in our business and increased marketing costs.
 
 Interest
expense for the December 2008 Period was $345 as compared with $389 for the
December 2007 period. The decrease of $44 (11.3%) is due to reduction in
interest on the long-term note payable of Ranor to the Sovereign
Bank.
 
 As a
result of the factors described above, our income before income taxes increased
$5,072, or 130.8%, from $3,879 to $8,951.
 
 Income
tax expense was $3,891 in the December 2008 Period as compared with $1,215 in
the December 2007 Period.  Our effective income tax rate was 43.5% in
the December 2008 Period as compared to 31.3% in the December 2007
Period.    The increase is a result of increased
profitability and positive earnings estimates for the current
period.  The effective tax rate in the December 2008 Period includes
the recognition of a net deferred tax asset of $25.  This deferred tax
asset reflects the impact of recording an income tax benefit for the current
portion of net operating loss carry forwards subject to Internal Revenue Code
Section 382 and related state statutory limitations in the amount of $38 and an
income tax benefit of $64 related to accrued compensation
benefits.  The deferred tax asset reflected on the balance sheet is
net of the current portion deferred tax liability arising from timing
differences in depreciation in the amount of $77. The increase in effective
income tax rate was primarily due to the application of higher statutory
marginal tax rates.
   -25-
 
 As a
result of the foregoing, our net income increased by $2,396 or
89.9%.  The net income was $5,060 ($ 0.37 per share basic and $0.19
per share diluted) for the December 2008 Period, as compared with $2,664 ($0.26
per share basic and $0.10 per share diluted) for December 2007
Period.
 
 Liquidity
and Capital Resources
 
 At
December 31, 2008, we had net working capital of $10,641 as compared with
$6,391, at March 31, 2008.  The increase of $4,250 (66.5%) reflects
the increased profitability of our business.  The following table sets
forth information as to the principal changes in the components of our working
capital.
 
 Category
                      
                      December
      31,
                      
                      
                      March
      31,
                      
                      
                      March
      31 to December 31, 20082008
                      
                      
                      2008
                      
                      
                      Change
                      
                      
                      Percent
      ChangeCurrent
      AssetsCash
      and cash equivalents
                      
                      $
                      5,930
                      
                      
                      $
                      2,853
                      
                      
                      $
                      3,077
                      
                      
                      
                      107.9
                      %Accounts
      receivable, net
                      
                      
                      8,026
                      
                      
                      
                      4,509
                      
                      
                      
                      3,517
                      
                      
                      
                      78.0
                      %Costs
      Incurred on uncompleted contracts
                      
                      
                      3,567
                      
                      
                      
                      4,299
                      
                      
                      
                      (732
                      )
                      
                      
                      (17.0
                      )%Inventories
                      
                      
                      347
                      
                      
                      
                      196
                      
                      
                      
                      151
                      
                      
                      
                      77.0
                      %Deferred
      tax asset
                      
                      
                      25
                      
                      
                      
                      -
                      
                      
                      
                      25
                      
                      
                      
                      -Prepaid
      expenses
                      
                      
                      1,547
                      
                      
                      
                      1,039
                      
                      
                      
                      508
                      
                      
                      
                      48.9
                      %Accounts
      payable
                      
                      
                      1,243
                      
                      
                      
                      991
                      
                      
                      
                      252
                      
                      
                      
                      25.4
                      %Accrued
      expenses
                      
                      
                      2,084
                      
                      
                      
                      1,481
                      
                      
                      
                      603
                      
                      
                      
                      40.7
                      %Progress
      billings in excess ofcost
      of uncompleted contracts
                      
                      
                      4,861
                      
                      
                      
                      3,419
                      
                      
                      
                      1,442
                      
                      
                      
                      42.2
                      %Current
      maturity of long-term debt
                      
                      
                      613
                      
                      
                      
                      614
                      
                      
                      
                      (1
                      )
                      
                      
                      (0.2
                      )%Net
      Working CapitalTotal
      current assets
                      
                      
                      19,442
                      
                      
                      
                      12,896
                      
                      
                      
                      6,546
                      
                      
                      
                      50.8
                      %Less:  total
      current liabilities
                      
                      
                      8,801
                      
                      
                      
                      6,505
                      
                      
                      
                      2,296
                      
                      
                      
                      35.3
                      %Net
      working capital
                      
                      $
                      10,641
                      
                      
                      $
                      6,391
                      
                      
                      $
                      4,250
                      
                      
                      
                      66.5
                      %
 
 The cash
flow from operations was $4,306 for December 2008 Period as compared with $756
in the December 2007 Period.  The increase in cash flows from
operations of $3,500, or 469%, was the net effect of an increase in the net
profits and decrease in costs incurred on uncompleted contracts.
 
 The net
cash used in financing activities was $431 for the December 2008 Period as
compared with cash used in operations of $75 for the December 2007
Period.  The increase in cash used in financing activities reflects
the receipt of $170 from the exercise of warrants, a $60 loan to WM Realty from
the principal member of WM Realty in the December 2007 which was not incurred in
the December 2008 period, and an increase in distribution of WM Realty equity of
$75, reflecting a distribution of $140 as compared with a distribution of $65 in
2007.  Because our financial statements include the operations of WM
Realty, the cash flows from WM Realty are included in our consolidated financial
statements.
 
 We
invested $798 and $691 in property plant and equipment during the nine months
ended December 31, 2008 and 2007, respectively.  Our capital
expenditure in the December 2008 Period includes a deposit of $614 with
manufacturers to acquire additional equipment.
 
  -26-
  As a
result of cash flows from operations, our cash balance increased by $3,077
(107.9%) from $2,853 on March 31, 2008 to $5,930, on December 31,
2008.
 
 During
the December 2008 Period, WM Realty had a net income of $92.  The
accumulated deficit of WM Realty was $272, as of December 31, 2008.
 
 With the
rapid expansion of operations our need for operating and investing cash flows
has substantially increased.  In addition to the costs of uncompleted
contracts, our current available cash balance will be used to acquire equipment
having a cost of more than $1,000 that is currently on order and or which
delivery and payment are expected to be due this fiscal year.
 
 We have a
loan and security agreement with Sovereign Bank, pursuant to which we borrowed
$4.0 million on a term loan basis in connection with the acquisition of
Ranor.  As a result of amendments to the loan and security agreement,
we have a $2.0 million revolving credit facility and a $3.0 million capital
expenditure facility, which is available to us until November 30, 2009, at which
time any amounts borrowed under the line are to be amortized over a five year
period. Pursuant to the agreement, Ranor is required to maintain a ratio of
earnings available for fixed charges to fixed charges of at least 1.2 to 1, and
an interest coverage ratio of at least 2 to 1. At December 31, 2008, we were in
compliance with both of these ratios, with our ratio of earnings available for
fixed charges to fixed charges being  9 to 1 and our interest
coverage ratio being  50.5 to 1.
 
 The term
note is due on March 1, 2013, and is payable in quarterly installments of $143.
The note bears interest at 9% per annum through December 31, 2010 and at prime
plus 11⁄2% thereafter.  At December 31, 2008 the principal balance due
on our term loan to Sovereign Bank was approximately
$2,381.   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) $2.0 million or (ii) the
sum of 70% of eligible accounts receivable and 40% of eligible inventory. At
December 31, 2008, there were no borrowings under the line and maximum available
under the borrowing formula was $2.0 million.
 
 Ranor has a $3,000,000 capital
expenditures facility pursuant to whichRanor is able to borrow up to
$3,000,000 until November 30, 2009. We pay interest only on borrowings under the
capital expenditures line until November 30, 2009, at which time the principal
balance is amortized over five years, commencing December 31,
2009.  The interest on borrowings under the capital expenditure line
is either equal to the prime plus 1⁄2% or the LIBOR rate plus 3%, as the Company
may elect.  Any unpaid balance on the capital expenditures facility is
to be paid on November 30, 2014.  As of December 31, 2008 and March
31, 2008, there were no borrowings outstanding under either the revolving line
or the capital expenditure line.
 
 Any borrowings under the capital
expenditures line are amortized over five years, commencing December 31,
2009.  The interest on the capital expenditure loans is either equal
to the prime plus 1⁄2% or the LIBO rate plus 3%.  The interest rate is
chosen by the Company prior to each advance and may be changed at any time
during the term of the loan repayment. The Company is required to payinterest only on advances untilNovember 30, 2009. The total principal
sum, or any amount thereof outstanding together with any accrued but unpaid
interest shall be due and payable in full on November 30, 2014.  As of
December 31, 2008 and March 31, 2008, there were no borrowings outstanding under
either the revolving line or the capital expenditure line. Any outstanding
principal or accrued interest has to be paid off on or before November 2013, the
maturity date.
 
  -27-
  The
securities purchase agreement pursuant to which we sold the series A preferred
stock and warrants to Barron Partners provides Barron Partners with a right of
first refusal on future equity financings, which may affect our ability to raise
funds from other sources if the need arises.
 
 While we
believe that the $2.0 million revolving credit facility, which remained unused
as of December 31, 2008 and terminates in June 2009, our $3.0 million capital
expenditure facility and our cash flow from operations should be sufficient to
enable us to satisfy our cash requirements at least through the end of fiscal
2009, it is possible that we may require additional funds to the extent that we
expand our facilities. In the event that we make an acquisition, we may require
additional financing for the acquisition. However, we do not have any current
plans for any acquisition, and we cannot give any assurance that we will 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.
 
 In
December 2007, Ranor acquired all the equipment Vertex Tool and Die, Inc for
$150 and assumed Vertex’s real property lease obligation.  The current
lease expires on February 28, 2009, and Ranor has the option to extend the lease
for an additional term of five years.  We have the option to purchase
the leased property at market price.  However we have decided to
relocate the equipment from the Fitchburg location to the Westminster facility
and not renew the lease as of the end of February 2009.
 
 We
contemplate that we will expand our facilities during the next twelve months.
Although we may use the bank facilities for this purpose, we may require
additional financing as well.  We can give no assurance that the
necessary financing will be available.
 
 The
following table set forth information as of December 31, 2008 as to our
contractual obligations (dollars in thousands).
  Payments
      due by periodContractual obligations
                          
                          Total
                          
                          
                          Less than 1 year
                          
                          
                          1-3 years
                          
                          
                          3-5 years
                          
                          
                          More than 5 yearsLong-term
      debt obligations
                          
                          $
                          5,559
                          
                          
                          $
                          613
                          
                          
                          $
                          1,229
                          
                          
                          $
                          813
                          
                          
                          $
                          2,904Capital
      lease obligations
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0Operating
      lease obligations
                          
                          
                          5,933
                          
                          
                          
                          458
                          
                          
                          
                          900
                          
                          
                          
                          900
                          
                          
                          
                          3,675Purchase
      obligations
                          
                          
                          412
                          
                          
                          
                          412
                          
                          
                          
                          0
                          
                          
                          
                          0
                          
                          
                          
                          0Total
                          
                          
                          11,904
                          
                          
                          
                          1,483
                          
                          
                          
                          2,129
                          
                          
                          
                          1,713
                          
                          
                          
                          6,579
 
 We have
no off-balance sheet assets or liabilities
 
  -28-
  ITEM
4 – CONTROLS AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
 
 As of
December 31, 2008, we carried out an evaluation, under the supervision and with
the participation of management, including our chief executive officer and chief
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)).
 
 Based
upon that evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were effective as of
December 31, 2008, to ensure that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.
 
 Changes
in Internal Controls
 
 There was
no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) that
occurred during the quarter ended December 31, 2008 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
 
 PART
II: OTHER INFORMATION
  ITEM 6 - EXHIBITS
 
 31.1
  Rule 13a-14(a) certification of chief executive officer
 31.2
  Rule 13a-14(a) certification of chief financial officer
 32.1
  Section 1350 certification of chief executive and chief financial
officers
   -29-
  SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 
 TECHPRECISION
      CORPORATION
                  
                  (Registrant)Dated:  February
      11, 2009
                /s/
      James G. ReindlJames
      G. Reindl, Chief Executive OfficerDated:  February
      11, 2009
                /s/
      Mary DesmondMary
      Desmond, Chief Financial
Officer
   -30-