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 June 30, 2010
 
 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 o
 
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yeso       No o
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer
o
Accelerated filer                                      oNon-Accelerated Filer
o
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 August 9, 2010 was 14,230,846.
 
 
 
 
  TABLE OF CONTENTS
 
 
 PagePART I.
FINANCIAL INFORMATION
1ITEM 1.
FINANCIAL STATEMENTS (UNAUDITED)
1C CONSOLIDATED BALANCE SHEETS
1C CONSOLIDATED STATEMENTS OF OPERATIONS
2CONSOLIDATED STATEMENTS OF CASH FLOWS
3ITEM 2.i    ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
15ITEM 4.
CONTROLS AND PROCEDURES
22PART II.
OTHER INFORMATION
22ITEM 5.
OTHER INFORMATIONITEM 6.
EXHIBITS
22SIGNATURES
23EXHIBIT INDEX
24
   
 
 
 
 TECHPRECISION CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
  June 30, 2010


March 31, 2010ASSETSCurrent assetsCash and cash equivalents

$
9,591,182


$
8,774,223Accounts receivable, less allowance for doubtful accounts of $259,999


2,592,259



2,693,392Costs incurred on uncompleted contracts, in excess of progress billings


3,225,467



2,749,848Inventories - raw materials


285,344



299,403Deferred tax asset


226,517



303,509Prepaid expenses


143,908



159,854Income taxes receivable


244,461



244,461Total current assets


16,309,138



15,224,690Property, plant and equipment, net


3,269,569



3,349,943Equipment under construction


762,260



762,260Deferred loan cost, net


83,814



87,640Total assets

$
20,424,781


$
19,424,533LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payable

$
620,722


$
444,735Accrued expenses


513,296



620,600Accrued income taxes


285,319



--Deferred revenues


60,957



56,376Current maturity of long-term debt


809,726



809,309Total current liabilities


2,290,020



1,931,020Long-term debt


5,210,329



5,414,002Commitments (Note 12)STOCKHOLDERS’ EQUITYPreferred stock- par value $.0001 per share, 10,000,000 shares authorized, of which9,890,980 are designated as Series A Convertible Preferred Stock, with9,661,482 shares issued and outstanding at June 30, 2010 and March 31, 2010(liquidation preference of  $2,753,523 at June 30, 2010 and March 31, 2010)


2,210,216



2,210,216Common stock -par value $.0001 per share, 90,000,000 shares authorized,issued and outstanding: 14,230,846 shares at June 30, 2010 and March 31, 2010


1,424



1,424Additional paid in capital


2,929,298



2,903,699Retained earnings


7,783,494



6,964,172Total stockholders’ equity


12,924,432



12,079,511Total liabilities and stockholders' equity

$
20,424,781


$
19,424,533
 
 The accompanying notes are an integral part of the financial statements.
 
 -1-
 
 
 TECHPRECISION CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 
 Three months endedJune 30,2010


2009Net sales

$
6,153,502


$
3,318,911Cost of sales


3,837,711



2,754,109Gross profit


2,315,791



564,802Operating expenses:Salaries and related expenses


400,011



393,367Professional fees


177,650



76,212Selling, general and administrative


440,283



298,421Total operating expenses


1,017,944



768,000Income (loss) from operations


1,297,847



(203,198
)Other income (expenses):Other income


60,000



--Interest expense


(107,567
)


(104,162
)Interest income


2,733



3,186Finance costs


(2,589
)


(4,256
)Total other income (expense)


(47,423
)


(105,232
)Income (loss) before income taxes


1,250,424



(308,430
)Income tax expense (benefit)


431,102



(183,685
)Net income (loss)

$
819,322


$
(124,745
)Net income (loss) per share of common stock (basic)

$
0.06


$
(0.01
)Net income (loss) per share (diluted)

$
0.04


$
(0.01
)Weighted average number of shares outstanding (basic)


14,230,846



13,907,513Weighted average number of shares outstanding (diluted)


20,759,521



13,907,513
 
 The accompanying notes are an integral part of the financial statements.
 
 -2-
  
 TECHPRECISION CORPORATIONCONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)
 
 Three Months EndedJune 30,2010


2009CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)

$
819,322


$
(124,745
)Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


91,347



121,383Share based compensation


80,973



--Deferred income taxes


76,991



(246,133
)Gain on sale of equipment


(60,000
)


--Changes in operating assets and liabilities:Accounts receivable


101,132



(206,744
)Inventory


14,059



46,195Costs incurred on uncompleted contracts


(475,619
)


(454,217
)Other current assets


15,946



27,390Accounts payable


175,987



(318,960
)Accrued expenses


(107,304
)


(138,565
)Accrued taxes


285,319



(155,553
)Deferred revenues


4,581



593,307Net cash provided by (used in) operating activities


1,022,734



(856,642
)CASH FLOW FROM INVESTING ACTIVITIES






--Proceeds from sale of equipment


60,000



--Purchases of property, plant and equipment


(7,146
)


--Net cash provided by investing activities


52,854



--CASH FLOWS FROM FINANCING ACTIVITIESCapital distribution of WMR equity


(55,373
)


(45,384
)Payment of notes and capital lease obligations


(203,256
)


(156,768
)Net cash used in financing activities


(258,629
)


(202,152
)Net increase (decrease) in cash and cash equivalents


816,959



(1,058,794
)Cash and cash equivalents, beginning of period


8,774,223



10,462,737Cash and cash equivalents, end of period

$
9,591,182


$
9,403,943SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATIONCash paid during the three months ended June 30, for:Interest expense

$
107,703


$
104,162Income taxes

$
95,000


$
218,000
 SUPPLEMENTAL INFORMATION – NONCASH TRANSACTIONS:
 
 Three months ended June 30, 2010 and 2009
 
 The company placed $887,279 of equipment which was under construction at the beginning the fiscal year ending March 31, 2010 (“fiscal 2010”) into service.
 
 The accompanying notes are an integral part of the financial statements.
 
 -3-
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
 NOTE 1 - DESCRIPTION OF BUSINESS
 
 TechPrecision Corporation (“TechPrecision”) is a Delaware corporation organized in February 2005 under the name Lounsberry Holdings II, Inc. The name was changed to TechPrecision Corporation on March 6, 2006.  TechPrecision is the parent company of Ranor, Inc. (“Ranor”), a Delaware corporation.  TechPrecision and Ranor are collectively referred to as the “Company.”
 
 The Company manufactures metal fabricated and machined precision components and equipment.  These products are used in a variety of markets including the alternative energy, medical, nuclear, defense, industrial, and aerospace industries.
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation and Consolidation
 
 On February 24, 2006, TechPrecision acquired all stock of Ranor in a transaction which is accounted for as a recapitalization (reverse acquisition), with Ranor being treated as the acquiring company for accounting purposes. The accompanying consolidated financial statements include the accounts of the Company and Ranor as well as a variable interest entity, WM Realty. Intercompany transactions and balances have been eliminated in consolidation.
 
 The accompanying consolidated financial statements as of June 30, 2010 and 2009 and for the three months then ended are unaudited, but in the opinion of the management, include all adjustments that are considered necessary for a fair presentation of its respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The March 31, 2010 Consolidated Balance Sheets were taken from audited financial statements. Certain prior year amounts in the Consolidated Statements of Cash Flows have been reclassified between line items for comparative purposes. The reclassifications did not affect the Company’s cash flows from operating activities or financial position.
 
 The Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These notes should be read in conjunction with the Notes to Consolidated Financial Statements of the Company in Item 8 of the 2010 Annual Report on Form 10-K.
 
 Use of Estimates in the Preparation of Financial Statements
 
 In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Actual results could differ from those estimates.
 
 Fair Value of Financial Instruments
 
 We account for fair value of financial instruments under the Financial Accounting Standard Board’s (FASB) authoritative guidance, which defines fair value, and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The FASB establishes a fair value hierarchy used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1:  Inputs based upon quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2:  Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3:  Inputs that are management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.  The inputs are unobservable in the market and significant to the instruments’ valuation.
 
 In addition, we will measure fair value in an inactive or dislocated market based on facts and circumstances and significant management judgment.  We will use inputs based on management estimates or assumptions, or make adjustments to observable inputs to determine fair value when markets are not active and relevant observable inputs are not available.
 
 The carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, prepaid and accrued expenses, and notes payable, as presented in the balance sheet, approximate fair value.
 
 -4-
  Cash and cash equivalents
 
 Holdings of highly liquid investments with maturities of three months or less, when purchased, are considered to be cash equivalents.  The deposits are maintained in a large regional bank and the amount of federally insured cash deposits was $250,000 as of June 30, 2010 and March 31, 2010.
 
 Accounts receivable
 
 Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. There was no bad debt expense recorded for the quarters ended June 30, 2010 and 2009.
 
 Inventories
 
 Inventories - raw materials is stated at the lower of cost or market determined principally by the first-in, first-out method.
 
 Notes Payable
 
 We account for all notes that are due and payable in one year as short-term liabilities.
 
 Long-lived Assets
 
 Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are accounted for on the straight-line method based on estimated useful lives. The amortization of leasehold improvements is based on the shorter of the lease term or the useful life of the improvement. Betterments and large renewals, which extend the life of the asset, are capitalized whereas maintenance and repairs and small renewals are expensed as incurred. The estimated useful lives are: machinery and equipment, 7-15 years; buildings, up to 30 years; and leasehold improvements, 10-20 years.
 
 The accounting for the impairment or disposal of long-lived assets requires an assessment of the recoverability of our investment in long-lived assets to be held and used in operations whenever events or circumstances indicate that their carrying amounts may not be recoverable. Such assessment requires that the future cash flows associated with the long-lived assets be estimated over their remaining useful lives. An impairment loss may be required when the future cash flows are less than the carrying value of such assets.
 
 Repair and maintenance activities
 
 The Company incurs maintenance costs on all of its major equipment. Costs that extend the life of the asset, materially add to its value, or adapt the asset to a new or different use are separately capitalized in property, plant and equipment and are depreciated over their estimated useful lives. All other repair and maintenance costs are expensed as incurred.
 
 Leases
 
 Operating leases are charged to operations as paid. Capital leases are capitalized and depreciated over the term of the lease.  A lease is considered a capital lease if one of four criteria are satisfied: 1) the lease contains an option to purchase the property for less than fair market value, 2) transfer of ownership at the end of the lease, 3) the lease term is 75% or more of estimated economic life of leased property, and 4) present value of minimum lease payments is at least 90% of fair value of the leased property to the lessor at the inception of the lease.
 
 Convertible Preferred Stock and Warrants
 
 The Company measures the fair value of the Series A Convertible Preferred Stock by the amount of cash that was received for their issuance and determined that the convertible preferred shares and the accompanying warrants issued are equity instruments. The Company had a sufficient number of authorized shares, there is no required cash payment or net cash settlement requirement and the holders of the Series A Convertible Preferred Stock had no right higher than the common stockholders other than the liquidation preference in the event of liquidation of the Company. Although the Company had an unconditional obligation to issue additional shares of common stock upon conversion of the Series A Convertible Preferred Stock if EBITDA per share was below the targeted amount, the certificate of designation relating to the Series A Convertible Preferred Stock does not require the Company to issue shares that are registered pursuant to the Securities Act of 1933.
 
 -5-
 
 The Company’s warrants were excluded from derivative accounting because they were indexed to the Company’s own unregistered common stock and are classified in stockholders’ equity. The majority of warrants were exchanged for preferred stock on August 14, 2009.  At June 30, 2010, the Company had 112,500 warrants issued and outstanding.
 
 Shipping Costs
 
 Shipping and handling costs are included in cost of sales in the Consolidated Statements of Operations for all periods presented.
 
 Selling, General, and Administrative
 
 Selling expenses include items such as business travel and advertising costs. Advertising costs are expensed as incurred. General and administrative expenses include items for Company’s administrative functions and include costs for items such as office supplies, insurance, telephone, board fees and corporate consulting costs as well as payroll services.
 
 Stock Based Compensation
 
 Stock based compensation represents the cost related to stock-based awards granted to employees. The Company measures stock based compensation cost at grant date, based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the employee’s requisite service period. The Company estimates the fair value of stock options using a Black-Scholes valuation model.
 
 Earnings per Share of Common Stock
 
 Basic net income per common share is computed by dividing net income or loss by the weighted average number of shares outstanding during the period. Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of potential common stock issuable in respect of convertible preferred stock, warrants and share-based compensation were calculated using the treasury stock method.
 
 Revenue Recognition and Costs Incurred
 
 Revenue and costs are recognized on the units of delivery method. This method recognizes as revenue the contract price of units of the product delivered during each period and the costs allocable to the delivered units as the cost of earned revenue. When the sales agreements provide for separate billing of engineering services, the revenues for those services are recognized when the services are completed. Costs allocable to undelivered units are reported in the balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, constructive changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reasonably estimated. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable. The unit of delivery method requires the existence of a contract to provide the persuasive evidence of an arrangement and determinable seller’s price, delivery of the product and reasonable collection prospects. The Company has written agreements with the customers that specify contract prices and delivery terms. The Company recognizes revenues only when the collection prospects are reasonable.
 
 Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined and are reflected as reductions of the carrying value of the costs incurred on uncompleted contracts. Costs incurred on uncompleted contracts consist of labor, overhead, and materials. Work in process is stated at the lower of cost or market and reflect accrued losses, if required, on uncompleted contracts.
 
 Income Taxes
 
 The Company uses the asset and liability method of financial accounting and reporting for income taxes required by FASB ASC 740,Income Taxes . Under FASB ASC 740, 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, qualified domestic production activities, and net operating loss carry-forwards. According to FASB ASC 740-270-25,Intraperiod Tax Allocation, tax expense related to interim period ordinary income is computed at an estimated annual effective tax rate and the taxes related to all other items are individually computed and recognized when the items occur.  The tax effects of losses that arise in the early portion of a fiscal year are recognized only when the benefits are expected to be either realized during the year or recognized as a deferred tax asset at the end of the year. Interest and penalties are included in general and administrative expenses.
 
 -6-
 
 Variable Interest Entity (VIE)
 
 Conforming to the authoritative FASB guidance for VIEs, under ASC 810, (see Note 8 for more information related to the VIE), the Company has consolidated WM Realty, a variable interest entity which entered into a sale and leaseback contract with the Company in 2006. The creditors of WM Realty do not have recourse to the general credit of TechPrecision or Ranor.
 
 Recent Accounting Pronouncements
 
 In July 2010, the FASB issued Accounting Standards Update No. 2010-20, Receivables (Topic 310): “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASC 2010-20”). The amendments in this update require additional disclosure about the credit quality of financing receivables, such as aging information and credit quality indicators. Both new and existing disclosures must be disaggregated by portfolio segment or class. The disaggregation of information is based on how allowances for credit losses are developed and how credit exposure is managed. The amendments in this Update affect all entities with financing receivables, excluding short-term trade accounts receivable or receivables measured at fair value or lower of cost or fair value.ASC 2010-20 is effective for interim periods and fiscal years ending after December 15, 2010.  The Company has determined that the adoption of this standard will not have a material effect on its consolidated financial statements.
 
 In February 2010, the FASB issued update No. 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements.This update provides amendments to Subtopic 855-10 for an entity that is an SEC filer and is required to evaluate subsequent events through the date that the financial statements are issued. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. The adoption of this update on February 24, 2010 did not have any impact on the consolidated financial statements.
 
 In January 2010, the FASB issued update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.This update amends subtopic 820-10 to require new disclosures about 1) transfers in and out of level 1 and 2, i.e. a reporting entity should disclose separately the amounts of significant transfers in and out of level 1 and 2 fair value measurements and describe the reasons for the transfers, and 2) in the reconciliation for fair value measurements using significant unobservable inputs (level 3), a  reporting entity should present separately information about purchases, sales, issuances, and settlements (i.e. on a gross basis rather than as one net number). This update also provides clarification about existing disclosures about the level of disaggregation and inputs and valuation techniques.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 2009. The adoption of this update did not have a material impact on the consolidated financial statements. Disclosures about purchases, sales, issuances, and settlements in the roll forward of activity on Level 3 fair value measurements is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
 
 In January 2010, the FASB issued update No. 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification.The amendments in this update affect the accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary, and expands the disclosures about the deconsolidation of a subsidiary or de-recognition of a group of assets within the scope of Topic 810-10. The amendments clarify, but do not necessarily change, the scope of current U.S. GAAP. The adoption of this amendment did not have a material impact on the consolidated financial statements.
 
 In December 2009, the FASB issued update No. 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.This update amends the FASB Accounting Standards Codification for Statements 167. In June 2009, the FASB amended authoritative guidance for the manner in which entities evaluate whether consolidation is required for VIEs. A company must first perform a qualitative analysis in determining whether it must consolidate a VIE, and if the qualitative analysis is not determinative, must perform a quantitative analysis. Further, the guidance requires that companies continually evaluate VIEs for consolidation, rather than assessing based upon the occurrence of triggering events, and also requires enhanced disclosures about how a company’s involvement with a VIE affects its financial statements and exposure to risks. The Company has adopted this update as of April 1, 2010 and it will not have any impact on the Company’s accounting for its VIE.
 
 In October 2009, the FASB issued update No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force , which provides guidance for identifying separate deliverables in a revenue-generating transaction where multiple deliverables exist, and provides guidance for allocating and recognizing revenue based on those separate deliverables. The guidance is expected to result in more multiple deliverable arrangements being separable than under current guidance. This guidance is effective for the Company beginning on April 1, 2011 and is required to be applied prospectively to new or significantly modified arrangements. The Company will assess the impact this guidance may have on the consolidated financial statements.
 
 In June 2009, the FASB issued update No. 2009-01 “Topic 105—Generally Accepted Accounting Principles—amendments based on—Statement of Financial Accounting Standards No. 168—The FASB Accounting Standards Codificationand the Hierarchy of Generally Accepted Accounting Principles.”  This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of GAAP”. This Accounting Standards Update includes Statement 168 in its entirety, and establishes the Codification as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SEC rules and interpretive releases are also sources of authoritative GAAP for SEC registrants. This guidance modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and non-authoritative. The guidance was effective for the Company as of September 30, 2009, and did not impact the Company’s results of operations, cash flows or financial positions. The Company has adjusted historical GAAP references beginning in its second quarter 2009 Form 10-Q to reflect accounting guidance references included in the codification.
   -7-
  NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
 
 As of June 30, 2010 and March 31, 2010, property, plant and equipment consisted of the following:
 
 June 30, 2010


March 31,2010Land

$
110,113


$
110,113Building and improvements


1,504,948



1,504,948Machinery equipment, furniture and fixtures


4,948,710



4,974,302Equipment under capital leases


56,242



56,242Total property, plant and equipment


6,620,013



6,645,605Less: accumulated depreciation


(3,350,444
)


(3,295,662
)Total property, plant and equipment, net

$
3,269,569


$
3,349,943
 
 Depreciation expense for the three months ended June 30, 2010 and 2009 was $86,754 and $117,126, respectively. Land and buildings (which are owned by WM Realty, a consolidated VIE) are collateral for the $3,200,000 Amalgamated Bank Mortgage Loan described in greater detail under Note 6 Long-Term Debt. Other fixed assets of the Company together with its other personal properties, are collateral for the Sovereign Bank secured term note, capital expenditure note and revolving line of credit.
 
 NOTE 4 - COSTS INCURRED ON UNCOMPLETED CONTRACTS
 
 The Company recognizes revenues based upon the units-of-delivery method (see Note 2). The advance billing and deposits includes down payments for acquisition of materials and progress payments on contracts. The agreements with the buyers of the Company’s products allow the Company to offset the progress payments against the costs incurred. The following table sets forth information as to costs incurred on uncompleted contracts as of June 30, 2010 and March 31, 2010:
 
 June 30,

2010


March 31,

2010Cost incurred on uncompleted contracts, beginning balance

$
5,149,663


$
12,742,218Total cost incurred on contracts during the period


4,223,308



14,652,700Less cost of sales, during the period


(3,837,311
)


(22,245,255
)Cost incurred on uncompleted contracts, ending balance

$
5,535,560


$
5,149,663Billings on uncompleted contracts, beginning balance

$
2,399,815


$
9,081,416Plus: Total billings incurred on contracts, during the period


6,063,780



21,665,150Less: Contracts recognized as revenue, during the period


(6,153,502
)


(28,346,751
)Billings on uncompleted contracts, ending balance

$
2,310,093


$
2,399,815Cost incurred on uncompleted contracts, ending balance

$
5,535,560


$
5,149,663Billings on uncompleted contracts, ending balance


(2,310,093
)


(2,399,815
)Costs incurred on uncompleted contracts, in excess of progress billings

$
3,225,467


$
2,749,848
 
 As of June 30, 2010 and March 31, 2010, the Company had deferred revenues totaling $60,957 and $56,375, respectively. Deferred revenues represent the customer prepayments on their contracts. The cost incurred on uncompleted contracts in excess of progress billings on June 30, 2010 and March 31, 2010 are net of allowances for losses on uncompleted contracts of $40,499 and $172,413, respectively.
 
 -8-
 
 NOTE 5 - PREPAID EXPENSES
 
 As of June 30, 2010 and March 31, 2010, the prepaid expenses included the following:
  June 30, 2010


March 31, 2010Prepaid insurance

$
96,255


$
128,927Prepayments for material purchases


32,486



19,638Other


15,167



11,289Total

$
143,908


$
159,854
 
 NOTE 6 – LONG-TERM DEBT and CAPITAL LEASE OBLIGATION
 
 The following debt and capital lease obligations were outstanding on June 30, 2010 and March 31, 2010:
  June 30,2010


March 31,2010Sovereign Bank Secured Term Note

$
1,571,429


$
1,715,034Amalgamated Bank Mortgage Loan


3,068,530



3,078,764Sovereign Bank Capital expenditure note, other


796,723



842,687Sovereign Bank Staged advance note


556,416



556,416Obligations under capital leases


26,957



30,410Total long-term debt


6,020,055



6,223,3111Principal payments due within one year


(809,726
)


(809,3099
)Principal payments due after one year

$
5,210,329


$
5,414,002
 
 On February 24, 2006, Ranor entered into a loan and security agreement with Sovereign Bank (the “bank”).  Pursuant to the agreement, as amended, the bank provided Ranor with a secured term loan of $4,000,000 (“Term Note”) and also extended to Ranor a revolving line of credit of up $2,000,000 (the “Revolving Note”).  On January 29, 2007, the loan and security agreement was amended, adding a capital expenditure line of credit facility of $3,000,000 (the “CapEx Note”). On March 29, 2010, the bank agreed to extend to Ranor a loan facility (the “Staged Advance Note”) in the amount of up to $1,900,000 for the purpose of acquiring a gantry mill machine. Significant terms associated with the Sovereign debt facilities are summarized below.
 
 Sovereign Bank Secured Term Note:
 
 The Term Note issued on February 24, 2006 has a term of 7 years with an initial fixed interest rate of 9% which converts to a variable rate on February 28, 2011.  From February 28, 2011 until maturity the note will bear interest at the prime rate plus 1.5%, payable on a quarterly basis.   Principal of $142,857, plus interest is payable in quarterly installments, with final payment due on March 1, 2013.
 
 The Term Note is subject to various covenants that include the following: the loan collateral comprises all personal property of Ranor, including cash, accounts receivable inventories, equipment, financial and intangible assets.  The company must also maintain a ratio of earnings available to cover fixed charges of at least 120% of the fixed charges for the rolling four quarters, tested at the end of each fiscal quarter.  Additionally the Company must also maintain an interest coverage ratio of at least 2:1 at the end of each fiscal quarter. Ranor’s obligations under the notes to the bank are guaranteed by TechPrecision.
 
 As of June 30 2010 and March 31, 2010, the Company was in compliance with all debt covenants.  The ratio of earnings to cover fixed charges as of June 30, 2010 was 360% and the interest coverage ratio for the three months then ended was 10:1.  In the event of default, the lending bank may choose to accelerate payment of any amounts outstanding under the Note and, under certain circumstances, the bank may be entitled to cancel the facility.  If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy any payment due, may require the Company to obtain alternate financing to satisfy any accelerated payment obligation.
 
 Sovereign Bank Revolving Note:
 
 The Revolving Note bears interest at a variable rate determined as the Prime Rate, plus 1.5% annually on any outstanding balance.   The borrowing limit on the Revolving Note has been limited to the sum of 70% of the Company’s eligible accounts receivable plus 40% of eligible inventory up to a maximum borrowing limit of $2,000,000.   There were no borrowings outstanding under this facility as of June 30, 2010 and March 31, 2010.  The Company pays an unused credit line fee 0.25% on the average unused credit line amount in the previous month. The facility was renewed with the bank on July 30, 2010 and the maturity date was changed to July 31, 2011.
 
 
 -9-
 
 Sovereign Bank Capital Expenditure Note:
 
 The initial borrowing limit under the Capital Expenditure Note was $500,000 and has been amended several times resulting in a borrowing limit of $3,000,000 available under the facility as of November 30, 2009.  The facility was subject to renewal on an annual basis.  On November 30, 2009, the Company elected not to renew this facility when it terminated as the Company plans to finance any future equipment financing needs on a specific basis rather than under a blanket revolving line of credit. Under the facility, the Company was permitted to borrow 80% of the original purchase cost of qualifying capital equipment.  The current rate of interest is based on LIBOR plus 3%.  Principal and interest payments are due monthly based on a five year amortization schedule.  There was $796,723 outstanding under this facility at June 30, 2010.
 
 Sovereign BankStaged Advance Note:
 
 The bank may loan to Ranor, during a one year period expiring on March 29, 2011, amounts up to $1,900,000 for the purpose of acquiring a gantry mill machine. The machine will serve as collateral for the loan. The total aggregate amount of advances under this agreement should not exceed 80% of the actual purchase price of the gantry mill machine. All advances provide for a payment of interest only monthly through February 28, 2011, and thereafter no further borrowings will be permitted under this facility. The interest rate is LIBOR plus 4%. Beginning on April 1, 2011, Ranor is obligated to pay principal and interest sufficient to amortize the outstanding balance on a five year schedule. On March 29, 2010, Ranor drew down $556,416 under this facility to finance the initial deposit on the purchase of the mill machine. TechPrecision has guaranteed the payment and performance from and by Ranor.
 
 Amalgamated Bank Mortgage Loan:
 
 The mortgage loan is an obligation of WM Realty. The mortgage has a term of 10 years, maturing November 1, 2016, and carries an annual interest rate of 6.85% with monthly interest and principal payments of $20,955.  The amortization is based on a 30 year term. WM Realty has the right to repay the mortgage note upon payment of a prepayment premium of 5% of the amount prepaid if the prepayment is made during the first two years, and declining to 1% of the amount prepaid if the prepayment is made during the ninth or tenth year.
 
 In connection with the mortgage financing of the real estate owned by WM Realty, Mr. Andrew Levy, a director and principal shareholder, executed a limited guaranty.  Pursuant to the limited guaranty, Mr. Levy personally guaranteed the lender the payment of any loss resulting from WM Realty’s fraud or misrepresentation in connection with the loan documents, misapplication of rent and insurance proceeds, failure to pay taxes and other defaults resulting from his or WM Realty’s misconduct.
 
 Capital Lease:
 
 During 2007, the Company also leased certain office equipment under a non-cancelable capital lease. This lease will expire in 2012, and future minimum payments under this lease for annual periods ending on June 30, 2011 and 2012 are $15,564 and $12,970, respectively. Interest payments included in the above total $1,577 and the present value of all future minimum lease payments total $26,957. Lease payments for capital lease obligations for the three months ended June 30, 2010 totaled $3,891.
 
 NOTE 7 - INCOME TAXES
 
 For the three months ended June 30, 2010 and 2009, the Company recorded Federal and State income tax expense of $431,102 and a tax benefit of $183,685, respectively. The estimated annual effective tax rate for the three months ended June 30, 2010 was 38.25%. The difference between the provision for income taxes and the income tax determined by applying the statutory federal income tax rate of 34% and the State of Massachusetts income tax rate of 9.5% was due primarily to differences in the lives and methods used to depreciate and/or amortize our property and equipment, deductions for domestic production activities, share based compensation, and net operating loss carryforwards.
 
 The Company accounts for income taxes under the provisions of FASB ASC 740, Income Taxes.  Based on the weight of available evidence, the Company’s management has determined that it is more likely than not that the current deferred tax assets will be realized.  At June 30, 2010, the Company recorded a deferred tax asset of $266,517. For the period ended June 30, 2010, the total decrease in the valuation allowance was $1,236.
 
 
 -10-
 
 
 At of June 30, 2010, the Company’s federal net operating loss carry-forward was approximately $1.9 million. If not utilized, the federal net operating loss carry-forward of Ranor and TechPrecision will expire in 2025 and 2027, respectively. Furthermore, because of over fifty percent change in ownership as a consequence of the reverse acquisition in February 2006, as a result of the application of Section 382 of the Internal Revenue Code, the amount of net operating loss carry forward used in any one year in the future is substantially limited.
 
 NOTE 8 - RELATED PARTY TRANSACTIONS
 
 Sale and Lease Agreement and Intercompany Receivable
 
 On February 24, 2006, WM Realty borrowed $3,300,000 to finance the purchase of Ranor’s real property. WM Realty purchased the real property for $3,000,000 and leased the property on which Ranor’s facilities are located pursuant to a net lease agreement. The property was appraised on October 31, 2005 at $4,750,000.  The Company advanced $226,808 to WM Realty to pay closing costs, which advance was repaid when WM Realty refinanced the mortgage in October 2006. WM Realty was formed solely for this purpose; its partners are stockholders of the Company. The Company considers WM Realty a variable interest entity as defined by the FASB, and therefore has consolidated its operations into the Company.
 
 On October 4, 2006, WM Realty placed a new mortgage of $3.2 million on the property and the then existing mortgage of $3.1 million was paid off. The new mortgage has a term of ten years, bears interest at 6.75% per annum, and provides for monthly payments of principal and interest of $20,955 (See Note 6). In connection with the new mortgage, Andrew Levy, a director and principal shareholder, and the managing member of WM Realty, executed a limited guarantee. pursuant to which Mr. Levy guaranteed the lender the payment of any loss resulting from WM Realty’s fraud or misrepresentation in connection with the loan documents, misapplication of rent and insurance proceeds, failure to pay taxes and other defaults resulting from his or WM Realty’s misconduct.
 
 The only assets of WM Realty available to settle its obligations are $51,007 of cash and real property acquired from Ranor, Inc. at a cost of $3,000,000 less $388,574 of accumulated depreciation.  The real property has a carrying cost of $1,112,075 on TechPrecision’s consolidated balance sheet. There is also a loan receivable due from a related party for $30,000. The only liability of WM Realty is the mortgage payable to Amalgamated bank with the carrying cost of $3,068,529. Amalgamated Bank, the sole creditor of WM realty, has no recourse to the general credit of TechPrecision.
 
 Distribution to WM Realty Members
 
 WM Realty had a deficit equity balance of $345,839 on June 30, 2010. For the three months ended June 30, 2010 and 2009, WM Realty had net income of $35,965 and $30,894, and capital distributions of $55,373 and $45,375, respectively.
 
 NOTE 9 - CAPITAL STOCK
 
 Preferred Stock
 
 The Company has 10,000,000 authorized shares of preferred stock and the board of directors has broad power to create one or more series of preferred stock and to designate the rights, preferences, privileges and limitation of the holders of such series. The board of directors has created one series of preferred stock - the Series A Convertible Preferred Stock.
 
 Each share of Series A Convertible Preferred Stock was initially convertible into one share of common stock. As a result of the failure of the Company to meet the levels of earnings before interest, taxes, depreciation and amortization for the years ended March 31, 2006 and 2007, the conversion rate changed, and, at December 31, 2009, each share of Series A Convertible Preferred Stock was convertible into 1.3072 shares of common stock, with an effective conversion price of $0.218.  Based on the current conversion ratio, there were 12,629,489 common shares underlying the Series A Convertible Preferred Stock as of June 30, 2010 and March 31, 2010.
 
 In addition to the conversion rights described above, the certificate of designation for the Series A Preferred Stock provides that the holder of the Series A Preferred Stock or its affiliates will not be entitled to convert the Series A Preferred Stock into shares of common stock or exercise warrants to the extent that such conversion or exercise would result in beneficial ownership by the investor and its affiliates of more than 4.9% of the shares of common stock outstanding after such exercise or conversion. This provision cannot be amended.
 
 
 -11-
 
 Under the terms of the purchase agreement, the investor has the right of first refusal in the event that the Company seeks to raise additional funds through a private placement of securities, other than exempt issuances. The percentage of shares that investors may acquire is based on the ratio of shares held by the investor plus the number of shares issuable upon conversion of series A preferred stock owned by the investor to the total of such shares.
 
 No dividends are payable with respect to the Series A Preferred Stock and no dividends are payable on common stock while Series A Preferred Stock is outstanding. The common stock will not be redeemed while preferred stock is outstanding.
 
 The holders of the Series A Preferred Stock have no voting rights. However, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative approval of the holders of 75% of the outstanding shares of Series A Preferred stock then outstanding, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) authorize or create any class of stock ranking as to dividends or distribution of assets upon liquidation senior to or otherwise pari passu with the Series A Preferred Stock, or any of preferred stock possessing greater voting rights or the right to convert at a more favorable price than the Series A Preferred stock, (c) amend its certificate of incorporation or other charter documents in breach of any of the provisions hereof, (d) increase the authorized number of shares of Series A Preferred stock, or (e) enter into any agreement with respect to the foregoing.
 
 Upon any liquidation the Company is required to pay $0.285 for each share of Series A Preferred stock. The payment will be made before any payment to holders of any junior securities and after payment to holders of securities that are senior to the series A preferred stock.
 
 The Company had 9,661,482 shares of Series A Preferred stock outstanding at June 30, 2010 and March 31, 2010.
 
 Common Stock Purchase Warrants
 
 On September 1, 2007, the Company entered into a contract with a third party pursuant to which the Company issued three-year warrants to purchase 112,500 shares of common stock at an exercise price of $1.40 per share.   Using the Black-Scholes options pricing formula assuming a risk free rate of 5%, volatility of 28.5%, a term of three years, and the price of the common stock on September 1, 2007 of $0.285 per share, the value of the warrant was calculated at $0.0001 per share issuable upon exercise of the warrant, or a total of $11. Since the warrant permits delivery of unregistered shares, the Company has the control in settling the contract by issuing equity. The cost of warrants was added as additional paid in capital. At June 30, 2010 and March 31, 2010, there were 112,500 warrants issued and outstanding.
 
 Common Stock
 
 The Company had 90,000,000 authorized common shares at June 30, 2010 and March 31, 2010, and there were 14,230,846 shares of common stock outstanding at June 30, 2010 and March 31, 2010.
 
 NOTE 10 - SHARE BASED COMPENSATION
 
 In 2006, the directors adopted, and the stockholders approved, the 2006 long-term incentive plan (the “Plan”) covering 1,000,000 shares of common stock. The Plan provides for the grant of incentive and non-qualified options, stock grants, stock appreciation rights and other equity-based incentives to employees, including officers, and consultants. The Plan is to be administered by a committee of not less than two directors each of whom is to be an independent director. In the absence of a committee, the plan is administered by the board of directors. Independent directors are not eligible for discretionary options. Pursuant to the Plan, each newly elected independent director will receive at the time of his election, a five-year option to purchase 50,000 shares of common stock at the market price on the date of his or her election.  In addition, the plan provides for the annual grant of an option to purchase 5,000 shares of common stock on July 1st of each year, commencing July 1, 2009, with respect to directors in office in July 2006 and commencing on July 1st coincident with or following the third anniversary of the date of his or her first election.
 
 Fair value is estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The risk-free interest rate was selected based upon yields of five year U.S. Treasury issues. At June 30, 2010, 125,840 shares of common stock were available for grant under the Plan. No options were granted during the three months ended June 30, 2010 and 2009.
 
 -12-
 The following table summarizes information about options for the most recent annual income statements presented:
 
 Number Of


Weighted

Average


Aggregate

Intrinsic

Weighted Average Remaining

Contractual LifeOptions


Exercise Price


Value

(in years)Outstanding at 3/31/2010


850,827


$
0.558Granted


--



--Outstanding at 6/30/2010


850,827


$
0.558


$
225,238


5.38Outstanding but not vested 6/30/2010


199,500


$
0.656


$
31,000


8.37Exercisable and vested at 6/30/2010


651,327


$
0.528


$
194,238


3.20
 
 As of June 30, 2010 there was $118,631 of total unrecognized compensation cost related to non vested stock options. These costs are expected to be recognized over the next three years. The total fair value of shares vested during the quarter was $80,973.
 
 NOTE 11 - 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.
 
 At June 30, 2010, there were receivable balances outstanding from three customers comprising 70% of the total receivables balance; the largest balance from a single customer represented 52% of our receivables balance, while the smallest balance from a single customer making up this group was 7%.  The Company recorded bad debt expense of $234,999 in connection with a single customer who has failed to make any payments for goods purchased during the 2009 calendar year.  The Company is pursuing legal action to recover the balance due from this customer, however, it cannot be determined at this time if those legal collection efforts will be successful.
 
 The Company has been dependent in each year on a small number of customers who generate a significant portion of our business, and these customers change from year to year. To the extent that the Company is unable to generate orders from new customers, it may have difficulty operating profitably. The following table sets forth information as to revenue derived from those customers who accounted for more than 10% of our revenue in the three months ended June 30, 2010 and 2009:
 
 Three Months Ended June 30,2010


2009Customer


Dollars


Percent


Dollars


PercentA


$
3,722,027



60
%

$
--



--
%B


$
784,263



13
%

$
1,321,111



40
%C


$
--



--
%

$
691,237



21
%D


$
--



--
%

$
488,177



15
%
 
 NOTE 12 – COMMITMENTS
 
 Operating Leases
 
 Ranor, Inc. has leased its manufacturing, warehouse and office facilities in Westminster (Westminster Lease), Massachusetts from WM Realty, a variable interest entity, for a term of 15 years, commencing February 24, 2006. For the three months ended on June 30, 2010 and 2009, respectively the Company’s rent expense was $112,500. Since the Company consolidated the operations of WM Realty, a variable interest entity, the rental expense is eliminated in consolidation, the building is carried at cost and depreciation is expensed. The annual rent is subject to an annual increase based on the increase in the consumer price index.
 
 The Company has an option to purchase the real property at fair value and an option to extend the term of the lease for two additional terms of five years, upon the same terms.  The minimum rent payable for each option term will be the greater of (i) the minimum rent payable under the lease immediately prior to either the expiration date, or the expiration of the preceding option term, or (ii) the fair market rent for the leased premises. The Company intends to exercise its purchase option under the lease during fiscal year 2011.
 
 On February 24, 2009, we entered into a lease for 2,089 square feet of office space in Centreville, Delaware.  The lease has a three-year term and provides for initial rent of $2,500 per month, escalating to $3,220 per month in year two and $3,395 per month in year three of the lease.  The Company has the option to renew this lease for a period of three years at the end of the lease term.
 
 Future minimum lease payments required under operating leases in the aggregate, at June 30, 2010, totaled $66,504.  The totals for each annual period ended June 30 are:  2011 - $39,344 and 2012 - $27,160.
 
 -13-
 
 
 Employment Agreements
 
 The Company has employment agreements with its executive officers. Such agreements, the terms of which expire at various times through February, 2012, provide for minimum salary levels, adjusted annually, as well as for incentive bonuses that are payable if specified company goals are attained. The aggregate commitment for future salaries at June 30, 2010, excluding bonuses was approximately $366,667.
  NOTE 13 - EARNINGS PER SHARE (“EPS”)
 
 Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. Diluted EPS also includes the effect of dilutive potential common shares. The following table provides a reconciliation of the numerators and denominators reflected in the basic and diluted earnings per share computations, as required under FASB ASC 260.
 
 June 30, 2010


June 30, 2009Net income (loss)

$
819,322


$
(124,745)Weighted average shares


14,230,846



13,907,513Dilutive effect of convertible preferred stock, warrants and stock options


6,528,675



--Diluted weighted average shares


20,759,521



13,907,513Basic income (loss) per share

$
0.06


$
(0.01)Diluted income (loss) per share

$
0.04


$
(0.01)
 
 During the three months ended June 30, 2010 there were 460,000 shares of potentially anti-dilutive stock options and convertible preferred stock.
  NOTE 14 - SUBSEQUENT EVENTS
 
 Agreement with Chief Executive Officer
 
 On July 15, 2010, the Board of Directors, upon the recommendation of its nominating committee, appointed Mr. James S. Molinaro to serve as the Company’s Chief Executive Officer and as a director on the Board. Mr. Molinaro’s service as the Company’s Chief Executive Officer began on July 21, 2010 and will be governed by the terms of an offer letter executed by Mr. Molinaro and the Company dated July 15, 2010.  Pursuant to the Offer Letter, Mr. Molinaro will receive an annual base salary of $300,000 (subject to adjustment by the Board from time to time) and will be eligible to receive an annual performance bonus of up to 50% of his then-current base salary.  In addition to the compensation and severance arrangements described above, the Offer Letter contains customary provisions relating to confidentiality and non-competition, and provides for the execution of an At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement, which was executed by the Company and Mr. Molinaro on July 21, 2010.  The Company has filed a Form 8-K, dated July 15, 2010, that provides further detail on Mr. Molinaro’s employment terms.
 
 On July 30, 2010, the Company amended its Revolving Note agreement with Sovereign Bank.  The amendment has the effect of extending the maturity date under this facility to July 31, 2011.  There are currently no amounts outstanding under the Revolving Note and there was no balance outstanding at June 30, 2010 or March 31, 2010 under the facility.
 
 On August 4, 2010, the Board of Directors amended the Company’s 2006 Long-Term Incentive Plan to increase the maximum number of shares of common stock that may be issued under the Plan from 1,000,000 shares to an aggregate of 3,000,000 shares. In addition, effective August 4, 2010, the Company issued 1,000,000 incentive stock options under the Plan to its Chief Executive Officer and an additional 150,000 incentive stock options to its Chief Financial Officer. The Options have a per share exercise price of $0.70, the closing price per share of the Company’s common stock on the date of grant.  The options will vest in substantially equal annual installments on each of the first three anniversaries of the date of grant, and will expire on August 4, 2020. The treatment of the Options as “incentive stock options” under the Internal Revenue Code of 1986 is dependent upon receipt of shareholder approval within 12 months of the date of grant.  The Company expects to request such approval from its stockholders at the annual meeting of the Company’s stockholders to be held in the third fiscal quarter ending December 31, 2010. If shareholder approval is not obtained, the Options will be treated as non-qualified stock options under the Code.  The Company has filed a Form 8-K, dated August 4, 2010, that provides further detail on the stock option grants and amendment to the 2006 Long-Term Incentive Plan.
 
 
 -14-
 
 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 in this annual report on Form 10K. This annual report 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 in this Item 2 “Management’s Discussion and Analysis” 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 our ability to generate business on an on-going business, to obtain any required financing, to receive contract awards from the competitive bidding process, maintain standards to enable us to manufacture products to exacting specifications, enter new markets for our services, market and customer acceptance, our reliance on a small number of customers for a significant percentage of our business, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions. 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.
 
 Overview
 
 We offer a full range of services required to transform raw material into precise finished products. Our manufacturing capabilities include: fabrication operations which include cutting, press and roll forming, assembly, welding, heat treating, blasting and painting; and machining operations which include CNC (computer numerical controlled) horizontal and vertical milling centers. We also provide support services to our manufacturing capabilities: manufacturing engineering (planning, fixture and tooling development, manufacturability), quality control (inspection and testing), materials procurement, and production control (scheduling, project management and expediting).
 
 All manufacturing is done in accordance with our written quality assurance program, which meets specific national and international codes, standards, and specifications. Ranor holds several certificates of authorization issued by the American Society of Mechanical Engineers and the National Board of Boiler and Pressure Vessel Inspectors. The standards used are specific to the customers’ needs, and our manufacturing operations are conducted in accordance with these standards.
 
 During the years ended March 31, 2009 and 2008, demand for our services was relatively strong. However, recessionary pressures began to affect the requirements of our customers in October 2008.  GT Solar, which has been our largest customer for each of the past three fiscal years, slowed production significantly during the second half of the fiscal year ended March 31, 2009 and in April 2009, canceled the majority of its outstanding purchase orders.  Beginning in December 2009, we began to see an improvement in the volume of requests for quotes and order placements from our customers, including our largest customer and reported that our backlog had reached $21.5 million as of March 31, 2010, and we ended the first quarter with an order backlog of $25.2 million as of June 30, 2010. We expect to deliver the backlog during the years ended March 31, 2011 and March 31, 2012.
 
 A significant portion of our revenue is generated by a small number of customers. For the three months ended June 30, 2010, our largest customer, GT Solar, accounted for 60% of our revenue and BAE Systems accounted for 13% of our revenue. In the year ended March 31, 2010, our largest customer, GT Solar, accounted for approximately 52% of our revenue, and our second largest customer, BAE Systems, accounted for approximately 14% of our revenue.
 
 
 -15-
 
 
 The Company historically has experienced, and continues to experience, customer concentration.  In any year, it is likely that five or six significant customers (albeit not always the same customers from year to year) will account for 5% to 60% individually and up to 86% in the aggregate of our total annual revenues.  A significant loss of business from the Company’s largest customer or a combination of several of our significant customers could result in lower operating profitability and/or operating losses if the Company is unable to replace such lost revenue from other sources.  A material, sustained downturn in revenue could make it more challenging for the Company to meet debt covenants under its existing long-term debt agreements.  If the Company defaulted on such covenants and was unable to cure the defaults or obtain waivers, the lending bank could choose to accelerate payment of any amounts outstanding under various debt facilities and, under certain circumstances, the bank may be entitled to cancel the facilities.  If the bank chose to accelerate our obligations, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy any payment due, may require the Company to obtain alternate financing.
 
 Our contracts are generated both through negotiation with the customer and from bids made pursuant to a request for proposal. Our ability to receive contract awards is dependent upon the contracting party’s perception of such factors as our ability to perform on time, our history of performance, our financial condition and our ability to price our services competitively.  Although some of our contracts contemplate the manufacture of one or a limited number of units, we are seeking more long-term projects with a more predictable cost structure. For the three months ended June 30, 2010, our sales and net income was $6.2 million and $0.8 million, as compared to sales of $3.3 million and a net loss of $124,475 for the three months ended June 30, 2009.  Our gross margin for the three months ended June 30, 2010 was 37.6% as compared to 17.0% for the three months ended June 30, 2009, reflecting increased sales volume and higher capacity utilization during the quarter ended June 30, 2010. A majority of the increased sales and production volume during the first quarter of 2011 was attributed to new orders from GT Solar, our largest customer as well as higher volumes of business from several other customers.
 
 Because our revenues are derived from the sale of goods manufactured pursuant to a contract, and we do not sell from inventory, it is necessary for us to constantly seek new contracts. There may be a time lag between our completion of one contract and commencement of work on another contract. During this period, we will continue to incur overhead expense but with lower revenue resulting in lower operating margins. Furthermore, changes in either the scope of a contract or the delivery schedule may impact the revenue we receive under the contract and the allocation of manpower.
 
 Although we provide manufacturing services for large governmental programs, we usually do not work directly for agencies of the United States government. Rather, we perform our services for large governmental contractors and large utility companies. However, our business is dependent in part on the continuation of governmental programs which require the services we provide.
 
 Growth Strategy
 
 Our strategy is to leverage our core competence as a manufacturer of high-precision, large-scale metal fabrications and machined components to expand our business into markets such as clean tech, alternative energy and medical devices, which have shown increasing demand and which we believe could generate higher margins.
 
 Diversifying Our Core Industries
 
 We believe that rising energy demands along with increasing environmental concerns are likely to continue to drive demand in the alternative energy industry, particularly the solar, wind and nuclear power industries. Because of our capabilities and the nature of the equipment required by companies in the alternative energy industries, we intend to focus our services in this sector.  We also expect to market our services for medical device applications where customer requirements demand strict tolerances and an ability to manufacture complex heavy equipment.
 
 As a result of both the increased prices of oil and gas and the resulting greenhouse gas emissions, nuclear power may become an increasingly important source of energy. In January 2010, the Obama administration increased the level of government-backed debt guarantees from $18 billion to $56 billion as an incentive to support the construction of new nuclear plants in the U.S. We did not derive any revenue from the nuclear power industry during the quarter ended June 30, 2010 but nuclear-related revenues were $1.8 million for the year ended March 31, 2010. Currently, nuclear related orders constituted approximately 8.3% of our June 30, 2010 backlog. Because of our manufacturing capabilities, our certification from the American Society of Mechanical Engineers and our historic relationships with suppliers in the nuclear power industry, we believe that we are well positioned to benefit from any increased activity in the nuclear sector. However, we cannot assure you that we will be able to develop any significant business from the nuclear industry.
 
 In addition to the nuclear energy industry, we are also exploring potential business applications in the medical industry.  These efforts include the development and fabrication of radioactive isotopes transportation/storage solutions and the development and fabrication of critical components for proton beam therapy machines designed to be utilized in the treatment of cancer.  Net sales from our proton beam therapy customer accounted for $1.7 million and $3.7 million or 6% and 9.7% of our total net sales for the years ended March 31, 2010 and 2009, respectively.
 
 -16-
 
 Expansion of Manufacturing Capabilities
 
 In addition to the possible expansion of our existing manufacturing capabilities, we may, from time to time, pursue opportunistic acquisitions to increase and strengthen our manufacturing, marketing, product development capabilities and customer diversification. On January 8, 2010, the Company issued a purchase order for the purchase of a gantry mill machine totaling $2.3 million. This purchase commitment represents an investment necessary to refresh and upgrade the Company’s fleet of manufacturing equipment and capabilities.  With this purchase commitment, the Company is obligated to make three equal payments beginning in January 2010 with the final payment to be made upon final delivery approximately one year from the purchase order date. The Company intends to borrow up to 80% of the purchase price in order to finance these payments.
 
 Critical Accounting Policies
 
 The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including all notes thereto, and related disclosures of commitments and contingencies, if any. We rely on historical experience and other assumptions we believe to be reasonable in making our estimates. Actual financial results of the operations could differ materially from such estimates. There have been no significant changes in the assumptions, estimates and judgments used in the preparation of our unaudited financial statements for the three months ended June 30, 2010, from the assumptions, estimates and judgments used in the preparation of our 2010 audited financial statements.
 
 Revenue Recognition and Costs Incurred
 
 We derive revenues from (i) the fabrication of large metal components for our customers; (ii) the precision machining of such large metal components, including incidental engineering services; and (iii) the installation of such components at the customers’ locations when the scope of the project requires such installations.
 
 Revenue and costs are recognized on the units of delivery method. This method recognizes as revenue the contract price of units of the product delivered during each period and the costs allocable to the delivered units as the cost of earned revenue. When the sales agreements provide for separate billing of engineering services, the revenues for those services are recognized when the services are completed. Costs allocable to undelivered units are reported in the balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, constructive changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reasonably estimated. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable. The unit of delivery method requires the existence of a contract to provide the persuasive evidence of an arrangement and determinable seller’s price, delivery of the product and reasonable collection prospects. The Company has written agreements with the customers that specify contract prices and delivery terms. The Company recognizes revenues only when the collection prospects are reasonably assured.
 
 Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined and are reflected as reductions of the carrying value of the costs incurred on uncompleted contracts. Costs incurred on uncompleted contracts consist of labor, overhead, and materials. Work in process is stated at the lower of cost or market and reflects accrued losses, if required, on uncompleted contracts.
 
 Variable Interest Entity
 
 We have consolidated WM Realty, a variable interest entity from which we lease our real estate.
 
 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.
 
 -17-
  As of March 31, 2010, the Company’s federal net operating loss carry-forward was approximately $1.9 million. If not utilized, the federal net operating loss carry-forward of Ranor and TechPrecision will expire in 2025 and 2027, respectively. Furthermore, because of the over fifty-percent change in ownership as a consequence of the reverse acquisition in February 2006, the amount of net operating loss carry forward used in any one year in the future is substantially limited.
 
 New Accounting Pronouncements
 
 See Note 2, Significant Accounting Policies, in the Notes to the Consolidated Financial Statements.
 
 Results of Operations
 
 Our results of operations are affected by a number of external factors including the availability of raw materials, commodity prices (particularly steel), macro economic factors, including the availability of capital that may be needed by our customers, and political, regulatory and legal conditions in the United States and foreign markets.
 
 Our results of operations are also affected by a number of other factors including, among other things, success in booking new contracts and when we are able to recognize the related revenue, delays in customer acceptances of our products, delays in deliveries of ordered products and our rate of progress in the fulfillment of our obligations under our contracts. A delay in deliveries or cancellations of orders would cause us to have inventories in excess of our short-term needs, and may delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog.
 
 During the quarter ended June 30, 2010, we benefited from renewed orders sourced by our largest customer, GT Solar which began placing new orders in January 2010, trailing their significant order cancellation in April 2009.  Sales to GT, Solar during the quarter totaled $3.7 million as compared to zero sales during the same quarter in the prior year.  During the fourth quarter for the year ended March 31, 2010, we began to see signs of recovery within the solar sector in the form of new production orders placed by our largest customer, GT Solar and a build up in our sales order backlog. During the three months ended June 30, 2010, our backlog increased from $21.5 million at March 31, 2010 to $25.2 million as of June 30, 2010.  The June 30, 2010 backlog included $7.9 million in orders from GT Solar. The comparable backlog at June 30, 2009, excluding $11.7 million of non-recurring GT Solar orders, was $11 million.
 
 Three Months Ended June 30, 2010 and 2009
 
 The following table sets forth information from our statements of operations for the three months ended June 30, 2010 and 2009, in dollars and as a percentage of revenue (dollars in thousands):
  Changes Three MonthsEnded June 30,2010


2009


2010 to 2009Amount


Percent


Amount


Percent


Amount


PercentNet sales

$
6,154



100
%

$
3,319



100
%

$
2,835



85
%Cost of sales


3,838



62
%


2,754



83
%


1,084



39
%Gross profit


2,316



38
%


565



17
%


1,751



310
%Payroll and related costs


400



7
%


393



12
%


7



2
%Professional expense


178



3
%


76



2
%


101



133
%Selling, general and administrative


440



7
%


298



9
%


142



48
%Total operating expenses


1,018



17
%


768



23
%


250



33
%Income (loss) from operations


1,298



21
%


(203)



(6)
%


1,501



739
%Interest expense


(108)



(2)
%


(104)



(3)
%


(4)



4
%Other income (expense)


60



1
%


(1)



--
%


61



--
%Income before income taxes


1,250



20
%


(308)



(9)
%


1,558



506
%Income tax expense (benefit)


431



7
%


(184)



(5)
%


615



334
%Net income (loss)

$
819



13
%

$
(124)



(4)
%

$
943



760
%
 
 
 -18-
 
 Net Sales
 
 Net sales increased by $2.8 million, or 85%, to $6.2 million for the three months ended June 30, 2010.  The increase included sales of $3.8 million to alternative energy markets, offset in part by a reduction in sales to our customers in the defense and medical device markets. Sales to alternative energy customers were virtually absent in the first quarter ended June 30, 2009 when our largest customer provided notice of its intent to cancel a majority of its open purchase orders reducing its total purchase commitment.
 
 Cost of Sales and Gross Margin
 
 Our cost of sales for the three months ended June 30, 2010 increased by $1.1 million to $3.8 million, or 39%, from $2.8 million for the comparative period in fiscal 2010. The increase in the cost of sales was principally due to the impact of higher manufacturing activity as a result of increased shipments to customers. Gross profit increased to $2.3 million or 38% of net sales from $0.6 million or 17% of net sales for the comparative three month periods ended June 30, 2010 and 2009, respectively.  The increase in gross profit margin was $1.7 million, or 310%. Contributing to the increase in gross margin was a volume and mix of projects that resulted in higher capacity utilization and increased processing-related revenue during the three month period ended June 30, 2010.  In general, gross margins on the Company’s processing services are higher than gross margins on the procurement of materials.
 
 Operating Expenses
 
 Our payroll and related costs were $400,011 for the three months ended June 30, 2010 as compared with $393,367 for the three months ended June 30, 2009. The $6,644 or 2% increase in payroll and related costs was due primarily to an increase in payroll tax expense offset in part by a reduction in compensation when compared to the same three month period in fiscal 2010.
 
 Professional fees increased to $177,650 for the three months ended June 30, 2010 from $76,212 for the three months ended June 30, 2009. This increase was primarily attributable to an increase in legal and accounting costs related to contract reviews and various SEC filing requirements.
 
 Selling, administrative and other expenses for the three months ended June 30, 2010 were $440,283 compared to $298,421 for three months ended June 30, 2009, an increase of $141,862.  Primary components of the increase were additional expenditures related to the consulting expenses in connection with our CEO search and the pending ISO 9000 certification effort, share-based compensation related to increased stock option vesting, investor relations, business travel and office operations.
 
 Interest Expense
 
 Interest expense increased by 3% for the three months ended June 30, 2010 to $107,567 compared with $104,162 for the three months ended June 30, 2009 due to higher average levels of long-term debt during the period.
 
 Income Taxes
 
 For the three months ended June 30, 2010, the Company recorded tax expense of $431,102 compared with a recorded tax benefit for Federal and state income tax of $183,685 in the comparable periods last year. The estimated annual effective income tax rate for the current fiscal year is 38.25%.  The difference between the provision for income taxes and the income tax determined by applying the statutory federal income tax rate of 34% was due primarily to differences in the lives and methods used to depreciate and/or amortize our property and equipment, timing differences of expenses related to share based compensation and the expected utilization of net operating loss carryforwards.
 
 Net Income
 
 As a result of the foregoing, our net income was $819,322 or $0.06 and $0.04 per share basic and diluted, respectively, for the three months ended June 30, 2010, as compared to a net loss of $124,745 or $0.01 per share basic and diluted for the three months ended June 30, 2009.
 
 
 -19-
  Liquidity and Capital Resources
 
 At June 30, 2010, we had working capital of $14.0 million as compared with working capital of $13.2 million at March 31, 2010, an increase of $725,448 million or 5%. The following table sets forth information as to the principal changes in the components of our working capital:
 
 (dollars in thousands)

June 30,

2010


March 31,

2010


Change

Amount


Percentage

ChangeCash and cash equivalents

$
9,591


$
8,774


$
817



9
%Accounts receivable, net


2,592



2,693



(101)



(4)
%Costs incurred on uncompleted contracts


3,225



2,750



475



17
%Raw material inventories


285



299



(14)



(5)
%Other current assets


388



404



(16)



(10)
%Deferred tax asset


227



304



(77)



(25)
%Accounts payable


621



445



176



40
%Accrued expenses


513



621



(108)



(17)
%Accrued taxes


285



--



285



--
%Progress billings in excess of cost of uncompleted contracts


61



56



5



8
%Current maturity of long-term debt


810



809



1



3
%
 
 Cash provided by operations was $1.0 million for the three months ended June 30, 2010 as compared with cash used in operations of $0.9 million for the three months ended June 30, 2009. The increase in cash flows from operations is the result of a significant increase in net income when compared to the same period in the last fiscal year. An increase in manufacturing activity also led to a higher balance of costs allocable to undelivered units incurred on uncompleted projects during the period. However, accounts receivable has decreased since March 31, 2010 reflecting an increase in collections during the period and providing higher cash balances. Also, accrued taxes payable recorded a higher amount because of a higher effective tax rate during the first quarter ended June 30, 2010.
 
 We invested $7,146 in new equipment and received proceeds of $60,000 from the sale of equipment. On January 8, 2010, the Company issued a purchase order for the purchase of a gantry mill totaling $2.3 million. The Company has made a payment of $762,260 and is committed to make two more payments during fiscal 2011, with final payment due upon delivery approximately one year from the purchase order date. The Company intends to borrow up to 80% of the purchase price in order to finance this purchase.  This purchase commitment represents an investment necessary to refresh and upgrade the Company’s fleet of manufacturing equipment and capabilities.
 
 Net cash used in financing activities was $258,629 for the period ended June 30, 2010 as compared with net cash used in financing activities of $202,152 for the period ended June 30, 2009. We paid down $203,256 of principal on our debt and capital lease obligations during the three months ended June 30, 2010, and our consolidated VIE WM Realty distributed $55,373 to its partners, an increase of $10,000 when compared to the same quarterly period last year.
 
 All of the above activity resulted in a net increase in cash of $0.8 million for the three months ended June 30, 2010 compared with a $1.1 million cash decrease for the three months ended June 30, 2009.
 
 Debt Facilities
 
 At June 30, 2010, WM Realty had an outstanding mortgage of $3.1 million on the real property that it leases to Ranor. The mortgage has a term of ten years, maturing November 1, 2016, bears interest at 6.85% per annum, and provides for monthly payments of principal and interest of $20,955. The monthly payments are based on a thirty-year amortization schedule, with the unpaid principal being due in full at maturity. WM Realty has the right to prepay the mortgage note upon payment of a prepayment premium of 5% of the amount prepaid if the prepayment is made during the first two years, and declining to 1% of the amount prepaid if the prepayment is made during the ninth or tenth year.
 
 
 -20-
  We have a loan and security agreement with Sovereign Bank, dated February 24, 2006, pursuant to which we borrowed $4.0 million on a term loan basis in connection with our acquisition of Ranor. As a result of amendments to the loan and security agreement, we currently have a $2.0 million revolving credit facility, wihch was renewed on July 30, 2010 for an additional one-year term.  At June 30, 2010 there were no borrowings under the revolving note and maximum available under the borrowing formula was $2.0 million.
 
 The term note issued on February 24, 2006 has a term of seven years with an initial fixed interest rate of 9%.  The interest rate on the term note converts from a fixed rate of 9% to a variable rate on February 28, 2011.  From February 28, 2011 until maturity the term note will bear interest at the prime rate plus 1.5%, payable on a quarterly basis.   Principal is payable in quarterly installments of $142,857 plus interest, with a final payment due on March 1, 2013.  The balance outstanding on the term note as of June 30, 2010 and March 31, 2010 was $1.5 million and $1.7 million, respectively.
 
 The Term Note is subject to various covenants that include the following: the loan collateral comprises all personal property of the Company, including cash, accounts receivable inventories, equipment, financial and intangible assets.  The company must also maintain a ratio of earnings available to cover fixed charges of at least 120% of the fixed charges for the rolling four quarters, tested at the end of each fiscal quarter.  Additionally the Company must also maintain an interest coverage ratio of at least 2.1 at the end of each fiscal quarter. Ranor’s obligations under the notes to the bank are guaranteed by TechPrecision.
 
 As of June 30, 2010, the Company was in compliance with all debt covenants as the ratio of earnings available to cover fixed charges was 360% and the interest coverage ratio was 10:1 at June 30, 2010. In the event of default (which default may occur in connection with a non-waived breach), the lending bank may choose to accelerate payment of any amounts outstanding under the Term Note and, under certain circumstances, the bank may be entitled to cancel the facility.  If the Company were unable to obtain a waiver for a breach of covenant and the bank accelerated the payment of any outstanding amounts, such acceleration may cause the Company’s cash position to deteriorate or, if cash on hand were insufficient to satisfy any payment due, may require the Company to obtain alternate financing to satisfy any accelerated payment obligation.
 
 We also had a $3.0 million capital expenditure facility which was available until November 30, 2009.   The capital expenditure facility was not renewed upon its expiration on November 30, 2009 as the Company intends to finance future equipment purchases on a specific item basis. We paid 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 was equal to the prime rate plus 0.5% through and including November 30, 2009 and thereafter at LIBOR, plus 3%.  Any unpaid balance on the capital expenditures facility is to be paid on November 30, 2014.  As of June 30, 2010, there was $796,723 outstanding under this facility.
 
 Under a Staged Advance Facility the bank may loan to Ranor, during a one year period expiring on March 29, 2011, amounts up to $1,900,000 for the purpose of acquiring a gantry mill machine. The machine will serve as collateral for the loan. The total aggregate amount of advances under this agreement should not exceed 80% of the actual purchase price of the mill machine. All advances provide for payment of interest only monthly through February 28, 2011, and thereafter no further borrowings shall be permitted under this facility. The interest rate is LIBOR plus 4%. Beginning on April 1, 2011, Ranor is obligated to pay principal and interest sufficient to amortize the outstanding balance on a five year schedule. On March 29, 2010, Ranor drew down $556,416 under this facility to finance the purchase of the gantry mill machine. TechPrecision has guaranteed the payment and performance from and by Ranor.
 
 We believe that the $2.0 million revolving credit facility, which remained unused as of June 30, 2010 and was renewed on July 30, 2010, our capacity to access equipment specific financing, our current cash balance of $9.6 million, and our cash flow from operations should be sufficient to enable us to satisfy our cash requirements at least through the end of fiscal 2011. Nevertheless, it is possible that we may require additional funds to the extent that we upgrade or expand our manufacturing facilities.
 
 The securities purchase agreement pursuant to which we sold the Series A Convertible 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.
 
 In the event that we make an acquisition, we may require additional financing for the acquisition. We have no commitment from any party for additional funds, however, the terms of our agreement with Barron Partners, particularly Barron Partners’ right of first refusal, may impair our ability to raise capital in the equity markets to the extent that potential investors would be reluctant to negotiate a financing when another party has a right to match the terms of the financing.
 
 We have no off-balance sheet assets or liabilities.
 
 -21-
 
 Item 4.  Controls and Procedures
 
 Evaluation of Disclosure Controls and Procedures
 
 As of June 30, 2010, we carried out an evaluation, under the supervision and with the participation of management, including our interim 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”)).
 
 Disclosure controls and procedures are designed to ensure that information required to be disclosed is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure
 
 Based upon that evaluation, our interim chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2010, to provide reasonable assurance that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including our interim chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
 Changes in Internal Controls
 
 During the three months ended June 30, 2010, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 PART II: OTHER INFORMATION


Item 5.   Other Information
 
 On July 30, 2010, the Company amended its Revolving Note agreement with Sovereign Bank.  The amendment has the effect of extending the maturity date under this facility to July 31, 2011.  There are currently no amounts outstanding under the Revolving Note and there was no balance outstanding at June 30, 2010 or March 31, 2010 under the facility.   A copy of the amendment will be filed as an exhibit to our quarterly report on Form 10-Q for the quarter ending September 30, 2010.
 Item 6.   Exhibits
 
 (a)  Exhibits.
 
 Exhibit No.
Description31.1
Rule 13a-14(a) certification of chief executive officer31.2
Rule 13a-14(a) certification of chief financial officer32.1
Section 1350 certification of chief executive and chief financial officers
 
 
 -22-
 
 SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 TECHPRECISION CORPORATION

(Registrant)Dated:  August  13, 2010
By:
/s/ Richard F. FitzgeraldRichard F. Fitzgerald

Chief Financial Officer

(duly authorized officer and principal financial officer)
 
 
   -23-
 
 
 
 EXHIBIT INDEX
 Exhibit No.
Description31.1
Rule 13a-14(a) certification of chief executive officer31.2
Rule 13a-14(a) certification of chief financial officer32.1
Section 1350 certification of chief executive and chief financial officers
  
     -24-