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, 2009




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 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 June 30, 2009 was 13,907,513.













TECHPRECISION
CORPORATION


CONSOLIDATED BALANCE SHEETS




June
      30, 2009
                              
                              
                              March
      31, 2009(unaudited)
                              
                              
                              (audited)ASSETSCurrent
      assetsCash
      and cash equivalents
                              
                              $
                              9,403,943
                              
                              
                              $
                              10,462,737Accounts
      receivable, less allowance for doubtful accounts of
$25,000
                              
                              
                              1,655,553
                              
                              
                              
                              1,418,830Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                              
                              
                              3,529,599
                              
                              
                              
                              3,660,802Inventories
      - raw materials
                              
                              
                              305,161
                              
                              
                              
                              351,356Deferred
      tax asset
                              
                              
                              246,133
                              
                              
                              
                              --Prepaid
      expenses
                              
                              
                              1,555,844
                              
                              
                              
                              1,583,234Other
      receivables
                              
                              
                              30,000
                              
                              
                              
                              59,979Total
      current assets
                              
                              
                              16,726,233
                              
                              
                              
                              17,536,938Property,
      plant and equipment, net
                              
                              
                              3,533,588
                              
                              
                              
                              2,763,434Equipment
      under construction
                              
                              
                              --
                              
                              
                              
                              887,279Deferred
      loan cost, net
                              
                              
                              100,410
                              
                              
                              
                              104,666Total
      assets
                              
                              $
                              20,360,231
                              
                              
                              $
                              21,292,317LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
                              
                              $
                              631,721
                              
                              
                              
                              950,681Accrued
      expenses
                              
                              
                              571,767
                              
                              
                              
                              710,332Accrued
      taxes
                              
                              
                              -
                              
                              
                              
                              155,553Deferred
      revenues
                              
                              
                              3,953,249
                              
                              
                              
                              3,945,364Current
      maturity of long-term debt
                              
                              
                              624,593
                              
                              
                              
                              624,818Total
      current liabilities
                              
                              
                              5,781,330
                              
                              
                              
                              6,386,748LONG-TERM
      DEBTNotes
      payable- noncurrent
                              
                              
                              4,668,914
                              
                              
                              
                              4,824,453STOCKHOLDERS’
      EQUITYPreferred
      stock- par value $.0001 per share, 10,000,000 sharesauthorized,
      of which 9,000,000 are designated as Series A PreferredStock,
      with 6,295,508 shares issued and outstanding at June
    30,2009and
      6,295,508 at March 31, 2009 (liquidation preference of
                                $1,794,220
      and  $1,794,220 at June 30, 2009 and March 31,
2009,
                                respectively.)
                              
                              
                              2,287,508
                              
                              
                              
                              2,287,508Common
      stock -par value $.0001 per share, authorized,90,000,000
      shares, issued and outstanding, 13,907,513shares
      at June 30, 2009 and March 31, 2009
                              
                              
                              1,392
                              
                              
                              
                              1,392Paid
      in capital
                              
                              
                              2,827,395
                              
                              
                              
                              2,872,779Retained
      earnings
                              
                              
                              4,794,692
                              
                              
                              
                              4,919,437Total
      stockholders’ equity
                              
                              
                              9,910,987
                              
                              
                              
                              10,081,116Total
      liabilities and stockholders' equity
                              
                              $
                              20,360,231
                              
                              
                              $
                              21,292,317





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






-1-











TECHPRECISION
      CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS
              (unaudited)






Three
      Months EndedJune
      30 ,2009
                                            
                                            
                                            2008Net
      sales
                                            
                                            $
                                            3,318,911
                                            
                                            
                                            $
                                            11,658,134Cost
      of sales
                                            
                                            
                                            2,754,109
                                            
                                            
                                            
                                            8,277,803Gross
      profit
                                            
                                            
                                            564,802
                                            
                                            
                                            
                                            3,380,331Operating
      expenses:Salaries
      and related expenses
                                            
                                            
                                            393,367
                                            
                                            
                                            
                                            435,095Professional
      fees
                                            
                                            
                                            76,212
                                            
                                            
                                            
                                            47,687Selling,
      general and administrative
                                            
                                            
                                            298,421
                                            
                                            
                                            
                                            138,996Total
      operating expenses
                                            
                                            
                                            768,000
                                            
                                            
                                            
                                            621,778Income
      from operations
                                            
                                            
                                            (203,198
                                            )
                                            
                                            
                                            2,758,553Other
      income (expenses)Interest
      expense
                                            
                                            
                                            (104,162
                                            )
                                            
                                            
                                            (118,781
                                            )Interest
      income
                                            
                                            
                                            3,186
                                            
                                            
                                            
                                            --Finance
      costs
                                            
                                            
                                            (4,256
                                            )
                                            
                                            
                                            (3,826
                                            )Total
      other income (expense)
                                            
                                            
                                            (105,232
                                            )
                                            
                                            
                                            (122,607
                                            )Income
      (loss)  before income taxes
                                            
                                            
                                            (308,430
                                            )
                                            
                                            
                                            2,635,946Provision
      for income taxes
                                            
                                            
                                            183,685
                                            
                                            
                                            
                                            (1,064,250
                                            )Net
      (loss) income
                                            
                                            $
                                            (124,745
                                            )
                                            
                                            $
                                            1,571,696Net
      (loss) income  per share of common stock (basic)
                                            
                                            $
                                            (0.01
                                            )
                                            
                                            $
                                            0.12Net
      (loss) income per share (basic) and net income per share
      (diluted)
                                            
                                            $
                                            (0.01
                                            )
                                            
                                            $
                                            0.06Weighted
      average number of shares outstanding (basic)
                                            
                                            
                                            13,907,513
                                            
                                            
                                            
                                            12,925,606Weighted
      average number of shares outstanding (diluted)
                                            
                                            
                                            13,907,513
                                            
                                            
                                            
                                            26,421,957




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








-2-










TECHPRECISION
      CORPORATIONCONSOLIDATED STATEMENT OF CASH FLOWS
              (unaudited)




Three
      Months EndedJune
      30,2009
                                      
                                      
                                      2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
                                      
                                      $
                                      (124,745
                                      )
                                      
                                      $
                                      1,571,696Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                                      
                                      
                                      121,383
                                      
                                      
                                      
                                      136,471Changes
      in operating assets and liabilities:Accounts
      receivable
                                      
                                      
                                      (236,723
                                      )
                                      
                                      
                                      (1,891,316
                                      )Deferred
      income taxes
                                      
                                      
                                      (246,133
                                      )
                                      
                                      
                                      (90,772
                                      )Inventory
                                      
                                      
                                      46,195
                                      
                                      
                                      
                                      (57,584
                                      )Costs
      incurred on uncompleted contracts
                                      
                                      
                                      (454,217
                                      )
                                      
                                      
                                      4,790Other
      receivables
                                      
                                      
                                      29,979
                                      
                                      
                                      
                                      --Prepaid
      expenses
                                      
                                      
                                      27,390
                                      
                                      
                                      
                                      787,284Accounts
      payable and accrued expenses
                                      
                                      
                                      (725,578
                                      )
                                      
                                      
                                      1,316,052Accrued
      severance
                                      
                                      
                                      112,500
                                      
                                      
                                      
                                      --Customer
      advances
                                      
                                      
                                      593,307
                                      
                                      
                                      
                                      (551,836
                                      )Net
      cash provided by (used in)operating activities
                                      
                                      
                                      (856,642
                                      )
                                      
                                      
                                      1,224,785CASH
      FLOW FROM INVESTING ACTIVITIESPurchases
      of property, plant and equipment
                                      
                                      
                                      --
                                      
                                      
                                      
                                      (123,540
                                      )Deposits
      on equipment
                                      
                                      
                                      --
                                      
                                      
                                      
                                      (150,000
                                      )Net
      cash used in investing activities
                                      
                                      
                                      --
                                      
                                      
                                      
                                      (273,540
                                      )CASH
      FLOWS FROM FINANCING ACTIVITIESCapital
      distribution of WMR equity
                                      
                                      
                                      (45,384
                                      )
                                      
                                      
                                      (46,875
                                      )Issuance
      of common stock on exercise of warrants
                                      
                                      
                                      --
                                      
                                      
                                      
                                      170,060Payment
      of notes and lease obligations
                                      
                                      
                                      (156,768
                                      )
                                      
                                      
                                      (153,217
                                      )Net
      cash used in financing activities
                                      
                                      
                                      (202,152
                                      )
                                      
                                      
                                      (30,032
                                      )Net
      (decrease) increase in cash and cash equivalents
                                      
                                      
                                      (1,058,794
                                      )
                                      
                                      
                                      921,213Cash
      and cash equivalents, beginning of period
                                      
                                      
                                      10,462,737
                                      
                                      
                                      
                                      2,852,676Cash
      and cash equivalents, end of period
                                      
                                      $
                                      9,403,943
                                      
                                      
                                      $
                                      3,773,889




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








-3-










TECHPRECISION
CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(unaudited)


(continued)





Three
      Months Ended June 30,2009
                        
                        
                        2008SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS INFORMATIONCash
      paid during the year for:Interest
      expense
                        
                        $
                        104,162
                        
                        
                        $
                        118,781Income
      taxes
                        
                        $
                        218,000
                        
                        
                        $
                        937,067




SUPPLEMENTAL
INFORMATION – NONCASH TRANSACTIONS:





Three
months Ended June 30, 2009





The
company placed $887,279 of equipment which was under construction at the
beginning of the period into service.





Three
months Ended June 30, 2008





During
the three months ended June 30, 2008, the Company issued 723,000 shares of
common stock upon conversion of 553,093 shares of series A preferred stock,
based on a conversion ratio of 1.3072 shares of common stock for each share of
series A preferred stock. The conversion price of each share of common stock was
computed at $0.2180.





During
the three months ended June 30, 2008, the Company issued 390,000 shares of
common stock upon exercise of 390,000 warrants having an exercise price of
$0.43605. The Company had estimated the costs of warrants at $.03 per warrant
using Black-Scholes model, at the time of issuance.





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




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.






-4-




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.




Use
of Estimates in the Preparation of Financial Statements




In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reported period.  Actual results could differ from
those estimates.




Fair
Values of Financial Instruments




The
Company’s financial instruments consist primarily of cash, cash equivalents,
accounts receivable, and accounts payable. The carrying values of these
financial instruments approximate their fair values.




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 Company adopted Statement of
Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” on
April 1, 2008. This statement defines fair value, establishes a framework to
measure fair value, and expands disclosures about fair value measurements. SFAS
No. 157 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
February 2008, the FASB issued Staff Position (“FSP”) No. FAS 157-2, “Effective
Date of FASB Statement No. 157,”which delays the effective
date of SFAS No. 157 for non-financial assets and liabilities to fiscal years
beginning after November 15, 2008. The Company has analyzed the requirements of
FSP No. FAS 157-2 and does not believe it has any impact on its financial
condition, results of operations, or cash flows.




In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the
Fair Value of a Financial Asset When the Market for That Asset is Not
Active.”  This statement clarifies that determining fair value in an
inactive or dislocated market depends on facts and circumstances and requires
significant management judgment.  This statement specifies that it is
acceptable to use inputs based on management estimates or assumptions, or for
management to make adjustments to observable inputs to determine fair value when
markets are not active and relevant observable inputs are not
available.  FSP 157-3 does not have an impact on the Company’s
financial statements.






-5-




The
Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets
and Financial Liabilities,” effective March 1, 2008, and elected not to
establish a fair value for its financial instruments and certain other items
under this statement.  Therefore, the Company’s adoption of this statement
did not impact its consolidated financial statements during the three months
ended June 30, 2009.





The
carrying amount of trade accounts receivable, accounts payable, prepaid and
accrued expenses, and notes payable, as presented in the balance sheet,
approximates fair value.





Cash
and cash equivalents




Holdings
of highly liquid investments with maturities of three months or less, when
purchased, are considered to be cash equivalents. The carrying amount reported
in the balance sheet for cash and cash equivalents approximates its fair value.
The deposits are maintained in a large regional bank and the amount of federally
insured cash deposits was $250,000 as of June 30, 2009 and $100,000 as of June
30, 2008.





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. Current
earnings are also charged with an allowance for sales returns based on
historical experience. There was no bad debt expense for the quarters ended June
30, 2009 and 2008.




Inventories




Inventories
- raw materials is stated at the lower of cost or market determined principally
by the first-in, first-out method.




Notes
Payable




The
Company accounts for all note liabilities that are due and payable in one year
as short-term liabilities.





Long-lived
Assets




Property,
plant and equipment 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.




-6-






We
account for the impairment or disposal of long-lived assets in accordance with
the provisions of the Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets(SFAS 144). SFAS 144 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




Major
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 the lease contains an option to purchase the property for less
than fair market value.




Convertible
Preferred Stock and Warrants




In
accordance with EITF 00-19, the Company initially measured the fair value of the
series A preferred stock by the amount of cash that was received for their
issuance. The Company subsequently determined that the convertible preferred
shares and the accompanying warrants were equity instruments under SFAS 150 and
133. Although the Company had an unconditional obligation to issue additional
shares of common stock upon conversion of the series A preferred stock if EBITDA
per share was below the targeted amount, the certificate of designation relating
to the series A preferred stock does not require the Company to issue shares
that are registered pursuant to the Securities Act of 1933, and as a result, the
additional shares issuable upon conversion of the Series A preferred stock need
not be registered shares. Our preferred stock also met all other conditions for
the classification as 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 preferred stock had no right higher
than the common stockholders other than the liquidation preference in the event
of liquidation of the Company.




The
Company’s warrants were excluded from derivative accounting because they were
indexed to the Company’s own unregistered common stock and were classified in
stockholders’ equity section according to SFAS 133 paragraph 11(a), under
preferred stock.





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





Shipping
Costs




Shipping
and handling costs are included in cost of sales in the accompanying
Consolidated Statements of Operations for all periods presented.




Selling,
General, and Administrative




Selling
expenses include items such 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 and payroll services.






-7-







Stock
Based Compensation




Stock-based
compensation represents the cost related to stock-based awards granted to
employees. The Company measures stock-based compensation cost at grant date,
based on the estimated fair value of the award and recognizes the cost as
expense on a straight-line basis (net of estimated forfeitures) over the
employee requisite service period. The Company estimates the fair value of stock
options using a Black-Scholes valuation model.





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 year. 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 convertible
preferred stock, preferred shareholders and other 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 statement of Financial Accounting
Standards No. 109 (“FAS 109”), “Accounting for Income Taxes.”
Under FAS 109, deferred income taxes reflect the tax impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax
purposes.




Temporary
differences giving rise to deferred income taxes consist primarily of the
reporting of losses on uncompleted contracts, the excess of depreciation for tax
purposes over the amount for financial reporting purposes, and accrued expenses
accounted for differently for financial reporting and tax purposes, and net
operating loss carry-forwards.






-8-







According
to FASB Codification740-270-25, tax (benefit) related to interim period ordinary
income (loss) is computed at an estimated annual effective tax rate and tax
(benefit) 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.  Based on projected contractual
profitability during the fiscal year, the company has recognized a net tax
benefit of $183,685 in the three months ended June 30, 2009 that it would expect
to realize during subsequent periods of profitability during the remainder of
the fiscal year.





Interest
and penalties are included in general and administrative expenses.





Variable
Interest Entity




The
Company has consolidated WM Realty, a variable interest entity that entered into
a sale and leaseback contract with the Company, in 2006, to conform to FASB
Interpretation No. 46, “Consolidation of Variable Interest
Entities” (FIN 46). The Company has also adopted the revision to FIN 46,
FIN 46R, which clarified certain provisions of the original interpretation and
exempted certain entities from its requirements.  The creditors of WM
Realty do not have recourse to the general credit of Techprecision or
Ranor.




Recent
Accounting Pronouncements




In April
2009, the FASB issued FSP 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments(“FSP 107-1/APB 28-1”). FSP 107-1/APB 28-1
amends the requirements in FASB 107, Disclosure about Fair Value of
Financial Instruments, to require disclosure about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. This FSP also amends APB Opinion 28,
Interim Financial
Reporting, to require those disclosures in summarized financial
information at interim reporting periods. The Company will disclose the fair
value of financial instruments under FSP 107-1/APB 28-1 if they are not already
carried at fair value.





In May
2009, the FASB issued FAS 165, Subsequent Events (“FAS
165”). FAS 165 is to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. In particular,
this Statement sets forth:





1.
            The
      period after the balance sheet date during which management of a reporting
      entity should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial
  statements;


2.
            The
      circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements; and


3.
            The
      disclosures that an entity should make about events or transactions that
      occurred after the balance sheet
date.





FAS 165
is effective for periods ending after June 15, 2009 and its adoption did
not have a material impact on the Company’s consolidated financial
statements.





In April
2009, the FASB issued FSP 157-4, Determining Fair Value When Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly (“FSP 157-4”). FSP
157-4 provides guidance in determining fair value when the volume and level of
activity for the asset or liability have significantly decreased and on
identifying transactions that are not orderly. FSP 157-4 requires disclosure in
interim and annual periods of the inputs and valuation techniques used to
measure fair value and a discussion of changes in valuation techniques. FSP
157-4 is effective for periods ending after June 15, 2009 and its adoption
did not have a material impact on the Company’s consolidated financial
statements or the fair value of its financial assets.






-9-





In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairment (“FSP 115-2/124-2”). FSP 115-2/124-2
amends the requirements for the recognition and measurement of
other-than-temporary impairments for debt securities by modifying the
pre-existing “intent and ability” indicator. Under FSP 115-2/124-2, an
other-than-temporary impairment is triggered when there is an intent to sell the
security, it is more likely than not that the security will be required to be
sold before recovery, or the security is not expected to recover the entire
amortized cost basis of the security. Additionally, FSP 115-2/124-2 changes the
presentation of an other-than-temporary impairment in the income statement for
those impairments involving credit losses. The credit loss component will be
recognized in earnings and the remainder of the impairment will be recorded in
other comprehensive income. FSP 115-2/124-2 is effective for periods ending
after June 15, 2009 and its adoption did not have a material impact on the
Company’s consolidated financial statements.





NOTE 3 - PROPERTY, PLANT AND
EQUIPMENT




As of
June 30, 2009 and March 31, 2009, property, plant and equipment consisted of the
following:




June
      30, 2009
                        (unaudited)
                      
                      
                      March
      31, 2009
                        (audited)Land
                      
                      $
                      110,113
                      
                      
                      $
                      110,113Building
      and improvements
                      
                      
                      1,486,349
                      
                      
                      
                      1,486,349Machinery
      equipment, furniture and fixtures
                      
                      
                      4,893,515
                      
                      
                      
                      4,006,235Equipment
      under capital leases
                      
                      
                      56,242
                      
                      
                      
                      56,242Total
      property, plant and equipment
                      
                      
                      6,546,219
                      
                      
                      
                      5,658,939Less:
      accumulated depreciation
                      
                      
                      (3,012,631
                      )
                      
                      
                      (2,895,505)Total
      property, plant and equipment, net
                      
                      $
                      3,533,588
                      
                      
                      $
                      2,763,434




Depreciation
expense for the periods ended June 30, 2009 and 2008 was $117,126 and $132,645,
respectively. Land and buildings (which are owned by WM Realty - a consolidated
entity under Fin 46 (R)) 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 $4,000,000 secured loan and line of
credit.





The
Company has placed $887,279 of equipment into service during the three months
ended June 30, 2009 that it had ordered in 2008 and received in January
2009.  The new equipment expands the Company’s machining
capacity.




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 include down payments for acquisition
of materials and progress payments on contracts. The agreements with the buyers
of the Company’s products allow the Company to offset the progress payments
against the costs incurred.  The following table sets forth information as
to costs incurred on uncompleted contracts as of June 30, 2009 and
March 31, 2009:






-10-










June
      30, 2009
                                (unaudited)
                              
                              
                              March
      31, 2009
                                (audited)Cost
      incurred on uncompleted contracts, beginning balance
                              
                              $
                              12,742,217
                              
                              
                              $
                              10,633,862Total
      cost incurred on contracts during the period
                              
                              
                              3,208,327
                              
                              
                              
                              28,078,982Less
      cost of sales, during the period
                              
                              
                              (2,754,110
                              )
                              
                              
                              (25,970,626
                              )Cost
      incurred on uncompleted contracts, ending balance
                              
                              $
                              13,196,434
                              
                              
                              $
                              12,742,218Billings
      on uncompleted contracts, beginning balance
                              
                              $
                              9,081,416
                              
                              
                              $
                              6,335,179Plus:
      Total billings incurred on contracts, during the period
                              
                              
                              3,904,330
                              
                              
                              
                              40,833,972Less:
      Contracts recognized as revenue, during the period
                              
                              
                              (3,318,911
                              )
                              
                              
                              (38,087,735
                              )Billings
      on uncompleted contracts, ending balance
                              
                              $
                              9,666,835
                              
                              
                              $
                              9,081,416Cost
      incurred on uncompleted contracts, ending balance
                              
                              $
                              13,196,434
                              
                              
                              $
                              12,742,218Billings
      on uncompleted contracts, ending balance
                              
                              
                              (9,666,835
                              )
                              
                              
                              (9,081,416
                              )Costs
      incurred on uncompleted contracts, in excess of progress
      billings
                              
                              $
                              3,529,599
                              
                              
                              $
                              3,660,802




As of
June 30, 2009 and March 31, 2009, the Company had deferred revenues totaling
$3953,249 and $3,945,364, respectively. Deferred revenues represent the customer
prepayments on their contracts.





NOTE
5 - PREPAID EXPENSES




As of
June 30, 2009 and March 31, 2009, the prepaid expenses included the
following:




June
      30, 2009
                        (unaudited)
                      
                      
                      March
      31, 2009
                        (audited)Prepayments
      on material purchases
                      
                      $
                      1,414,433
                      
                      
                      $
                      1,418,510Insurance
                      
                      
                      83,139
                      
                      
                      
                      140,237Other
                      
                      
                      58,272
                      
                      
                      
                      24,487Total
                      
                      $
                      1,555,844
                      
                      
                      $
                      1,583,234




NOTE
6 – LONG-TERM DEBT





The
following debt obligations were outstanding on June 30, 2009 and March 31,
2009:





June
      30, 2009
                                  (unaudited)
                                
                                
                                March
      31, 2009
                                  (audited)Sovereign
      Bank Secured Term Note Payable
                                
                                $
                                2,142,858
                                
                                
                                $
                                2,285,715Amalgamated
      Bank Mortgage Loan
                                
                                
                                3,109,188
                                
                                
                                
                                3,118,747Ford
      Motor Credit Vehicle Loan
                                
                                
                                -
                                
                                
                                
                                1,098Total
      long-term debt
                                
                                
                                5,252,046
                                
                                
                                
                                5,405,560Principal
      payments due within one year
                                
                                
                                (611,089
                                )
                                
                                
                                (611,362
                                )Principal
      payments due after one year
                                
                                $
                                4,640,957
                                
                                
                                $
                                4,794,198




On
February 24, 2006, Ranor entered into a loan and security agreement with
Sovereign Bank.  Pursuant to the agreement, 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 $1,000,000 the (“Revolving
Note”).  On January 29, 2007, the loan and security agreement was
amended, adding a capital expenditure line of credit facility to the earlier two
debt facilities the (“CapEx Note”).






-11-







Significant
terms associated with the Sovereign debt facilities are summarized
below.





Term
Note:





The Term
Note issued on February 24, 2006 has a term of 7 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 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.  The company
has incurred a loss in the three months ended June 30, 2009 but meets the
covenants after that loss.  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.





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 $1,000,000.   The agreement has been amended
several times with the effect of increasing the maximum available borrowing
limit to $2,000,000 as of June 30, 2009.  There were no borrowings
outstanding under this facility as of June 30, 2009 and 2008.  The
Company pays and unused credit line fee .25% on the average unused credit line
amount in the previous month.  The Company received notice from
Sovereign Bank that this facility had been renewed on August





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 June 30, 2009.  The facility is
open for renewal on an annual basis.  Under the facility, the Company
may borrow 80% of the original purchase cost of qualifying capital
equipment.  The interest rate is LIBOR, plus 3%.  The
Company is obligated to make interest only payments monthly on any borrowings
through November 30, 2009 and on December 1, 2009 any outstanding borrowings and
interest will be due and payable monthly on a five year amortization
schedule.  There were no amounts outstanding under this facility as of
June 30, 2009 and March 31, 2009.   The Company
is  however in the process of  financing approximately $1.1
million of qualifying equipment purchased as of June 30, 2009 under the facility
and expects to draw down $880,000 in borrowings during August 2009.





Mortgage
Loan:





The
mortgage loan is an obligation of WM Realty.  The mortgage has a term
of 10 years, maturing October 1, 2016, and carries an annual interest rate of
6.7% 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.






-12-






In
connection with the mortgage financing of the real estate owned by WM Realty,
Mr. Andrew Levy 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.




As of
June 30, 2009, the maturities of long-term debt were as follows:





Year
      ending June 30,2010
                  
                  $
                  611,0892011
                  
                  
                  613,8932012
                  
                  
                  616,8962013
                  
                  
                  477,2542014
                  
                  
                  52,124Due
      after 2014
                  
                  
                  2,880,790Total
                  
                  $
                  5,252,046





In
addition to $5,252,046, the total long term long-term debt of $5,292,507
includes $40,461 of capitalized lease obligations (see Note 9).




NOTE
7 - INCOME TAXES




For the
three months ended June 30, 2009 and 2008, the Company recorded provisions for
the federal and State income tax benefit and income tax expense of $183,685 and
$(1,064,250), respectively. The effective tax benefit and expense rates for the
three months ended June 30, 2009 and 2008 were (60)% and 40% respectively. The
difference between the provision for income taxes and the income tax determined
by applying the statutory federal income tax rate of 39% 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 compensated
absences, net operating loss carryforwards, and operating losses that occurred
during the period.




As of
June 30, 2009, the Company’s federal net operating loss carry-forward was
approximately $1,780,714. 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 Intra-company 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 FIN 46
(R), and therefore has consolidated its operations into the
Company.






-13-






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 $20,595 (See Note 6). In
connection with the new mortgage, Andrew Levy, the managing member of WM Realty,
executed a limited guaranty. 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 $48,052 of cash and
real property acquired from Ranor, Inc. at a cost of $3,000,000 less $299,210 of
accumulated depreciation.  The real property has a net carrying cost
of $1,143,435 on Techprecision’s consolidated balance sheet.





The only
liability of WM Realty is the mortgage payable to Amalgamated bank with the
carrying cost of $3,109,248.  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 $291,885 on June 30, 2009. During the three
months ended June 30, 2009, WM Realty had a net income of $30,894 and capital
distributions of $45,375.




NOTE
9 - 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 June 30, 2009 and 2008, the Company’s rent expense was
$112,500 and $112,500, respectively. Since the Company consolidated the
operations of WM Realty pursuant to FIN 46, the rental expense is eliminated in
consolidation, the building is carried at cost and depreciation is expensed. The
annual rent is subject to an annual increase based on the increase in the
consumer price index.




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 previously leased approximately 12,720 square feet of manufacturingspace in Fitchburg,
Massachusetts from an unaffiliated lessor. The rent expense for the Fitchburg
facility was $-0- and $14,100  in the three months ended June 30, 2009
and June 30, 2008, respectively.  The lease provided for rent at the
annual rate of $50,112 with 3% annual increases, starting 2004. The lease
expired in February 2009 and was not renewed.





On
February 24, 2009, the Company 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. During the three months ended June 30,
2009 the Company’s rent expense with respect to the Delaware property was
$7,500.





During
2007, the Company also leased certain office equipment under a non-cancelable
capital lease. This lease will expire in 2011. Lease payments for capital lease
obligations for the three months ended June 30, 2009 totaled
$3,253.






-14-








Future
minimum lease payments required under operating and capital leases as of June
30, 2009, are as follows:




Capital
                  
                  
                  OperatingYear
      ended June 30,
                  
                  Leases
                  
                  
                  Leases2010
                  
                  $
                  15,564
                  
                  
                  $
                  480,0002011
                  
                  
                  15,564
                  
                  
                  
                  488,6402012
                  
                  
                  12,970
                  
                  
                  
                  480,5552013
                  
                  
                  --
                  
                  
                  
                  450,0002014
                  
                  
                  --
                  
                  
                  
                  450,000Thereafter
                  
                  
                  --
                  
                  
                  
                  3,450,000Total
      minimum payments required
                  
                  
                  44,098
                  
                  
                  $
                  5,799,195Less
      amount representing interest
                  
                  
                  3,637Present
      value of future minimum lease payments
                  
                  
                  40,461Less
      current obligations under capital leases
                  
                  
                  13,504Long-term
      obligations under capital leases
                  
                  $
                  26,957





NOTE
10 - 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 (“series A preferred
stock”).





Each
share of series A 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 June 30,
2009, each share of series A preferred stock was convertible into 1.3072 shares
of common stock, with an effective conversion price of $.2180.




The
shares of series A preferred stock and warrants to purchase a total of
11,220,000 shares of common stock were issued pursuant to a securities purchase
agreement dated February 24, 2006.  Contemporaneously with the
securities purchase agreement, the Company entered into a registration rights
agreement with the investor, pursuant to which it agreed to register the shares
of common stock underlying the securities in accordance with a schedule. The
registration statement was not declared effective in accordance with the
original schedule, and the Company issued 33,212 shares of series A preferred
stock to the investor as liquidated damages.





During
the three months ended June 30, 2009, no shares of series A preferred stock were
converted into shares of common stock, respectively.




The
Company had 6,295,508 shares of series A preferred stock outstanding at June 30,
2009 and March 31, 2009.




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.








-15-





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 $.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.





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 investor 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.




Common
Stock Purchase Warrants




In
February 2006, we issued to the investor warrants to purchase 11,220,000 shares
of common stock in connection with its purchase of the series A preferred stock.
These warrants are exercisable, in part or full, at any time from February 24,
2006 until February 24, 2011. If the shares of common stock are not registered
pursuant to the Securities Act of 1933, the holders of the warrants have
cashless exercise rights which will enable them to receive the value of the
appreciation in the common stock through the issuance of additional shares of
common stock. These warrants had initial exercise prices of $0.57 as to
5,610,000 shares and $0.855 as to 5,610,000 shares. As a result of the Company’s
failure to meet the EBITDA per share targets for the years ended March 31, 2006
and 2007, the exercise prices per share of the warrants were reduced from $0.57
to $.43605 and from $0.855 to $.654075, respectively.





On
September 1, 2007, the Company entered into a contract with an investor
relations firm 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 the Company to deliver
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.





Common
Stock




The
Company had 90,000,000 authorized common shares at June 30, 2009 and March 31,
2009.  The Company had 13,907,513 shares of common stock outstanding
at June 30, 2009 and March 31, 2009.


During
the three months ended June 30, 2009 the Company issued no shares of common
stock.






-16-






NOTE
11 - STOCK 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 received 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 1 coincident
with or following the third anniversary of the date of his or her first
election.  These options are exercisable in
installments.  Pursuant to the Plan, in July 2006, the Company granted
non-qualified stock options to purchase an aggregate of 150,000 shares of common
stock at an exercise price of $.285 per share, which was determined to be the
fair market value on the date of grant, to the three independent
directors.





On April
1, 2007, the Company granted options to purchase 211,660 shares of common stock
at an exercise price of $.285 to the employees. The company shares did not trade
in the market and had no intrinsic value at the date of grant.  It was
not possible to reasonably estimate fair market value at their grant date, fair
value, and thus according to SFAS 123(R) they were measured at intrinsic value.





On
October 1, 2008, the Company granted options to purchase 22,500 shares of common
stock at an exercise price of $1.31 per share to its independent
directors.  The options provided for vesting as follows: 13,500 were
immediately vested on the date of grant and the remaining 9,000 options vest in
two installments of 4,500 each on the first and second anniversary of the grant
date.  The options are not covered under the plan.





On March
23, 2009, the Company entered into an employment agreement with the Company’s
CFO, pursuant to which, he was granted an option to purchase 150,000 shares of
common stock options at an exercise price of $0.49 per share, being the fair
market value on the date of grant.  The options will vest in equal
amounts of 50,000 over three years on the anniversary of the date of this
agreement.  Pursuant to the terms of the employment agreement, the
option exercise price was determined based upon the market price of the
Company’s common stock as of the date of grant. Any future option grants will be
in the sole discretion of the Board.





At June
30, 2009, 455,841 shares of common stock were available for grant under the
Plan.





The
status of the Company stock options and stock awards are summarized as
follows:





Weighted
                    
                    
                    AggregateNumber
      Of
                    
                    
                    Average
                    
                    
                    IntrinsicOptions
                    
                    
                    Exercise
      Price
                    
                    
                    ValueOutstanding
      at March 31, 2009
                    
                    
                    544,159
                    
                    
                    $
                    0.384
                    
                    
                    $
                    87,240Granted
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    --Outstanding
      at June 30, 2009
                    
                    
                    544,159
                    
                    
                    $
                    0.384
                    
                    
                    $
                    87,240









-17-




The
following table summarizes information about our options outstanding at June 30,
2009:





Weighted
      Average Remaining
                  
                  
                  Weighted
                  
                  
                  Exercisable
      OptionsExercise
                    Price
                  
                  
                  Number
                    Outstanding
                  
                  
                  Contractual
                    Life
      (in years)
                  
                  
                  Average
                    Exercise
      Price
                  
                  
                  Number
                    Outstanding
                  
                  
                  Exercise
                    Price0.285
                  
                  
                  
                  371,659
                  
                  
                  
                  2.7-7
                  .0
                  
                  
                  0.285
                  
                  
                  
                  371,659
                  
                  
                  
                  0.2850.49
                  
                  
                  
                  150,000
                  
                  
                  
                  4.7
                  
                  
                  
                  0.490
                  
                  
                  
                  -
                  
                  
                  
                  -1.31
                  
                  
                  
                  22,500
                  
                  
                  
                  4.3
                  
                  
                  
                  1.310
                  
                  
                  
                  13,500
                  
                  
                  
                  1.310544,159
                  
                  
                  
                  3.6
                  
                  
                  
                  0.384
                  
                  
                  
                  395,159
                  
                  
                  
                  0.344





As of
June 30, 2009 there was $67,300, respectively, of total unrecognized
compensation cost related to non vested stock options. These costs are expected
to be recognized over three years. No shares fully vested during the three
months ended June 30, 2009.




The fair
value was 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 US Treasury issues. The expected life of
the option was estimated at one half of the contractual term of the option and
the vesting period. The assumptions utilized for option grants during the
periods presented are as follows:




June
      30,2009Volatility
                      
                      
                      29.8
                      %Risk-Free
      Interest Rate
                      
                      
                      2.7
                      %Expected
      Life of Options
                      
                      
                      5
      yrs.




No
options were granted during the three months ended June 30, 2009.





NOTE
12 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS




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




The
Company has been dependent in each year on a small number of customers who
generate a significant portion of our business, and these customers change from
year to year. To the extent that the Company is unable to generate orders from
new customers, it may have difficulty operating profitably.




The
following table sets forth information as to revenue derived from those
customers who accounted for more than 10% of our revenue in the three months
ended June 30, 2009 and 2008:




Three
      Months Ended June 30,2009
                      
                      
                      2008Customer
                      
                      
                      Dollars
                      
                      
                      Percent
                      
                      
                      Dollars
                      
                      
                      PercentA
                      
                      
                      $
                      1,321,111
                      
                      
                      
                      40%
                      
                      
                      $
                      1,552,084
                      
                      
                      
                      13%B
                      
                      
                      
                      691,237
                      
                      
                      
                      21%C
                      
                      
                      
                      488,177
                      
                      
                      
                      15%D
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      8,046,100
                      
                      
                      
                      69%






-18-






During
April 2009, the Company’s largest customer, GT Solar, provided notice of its
intent to cancel a portion of an open purchase order reducing the total purchase
commitment by approximately $16.8 million.  Post the cancellation, the
remaining GT Solar backlog of approximately $11.7 million includes approximately
$3.4 million of open product purchase orders and approximately $8.3 million of
material buyback.




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 by SFAS No. 128, “Earnings Per
Share,” (“EPS”).





June
      30,
                      
                      
                      June
      30,2009
                      
                      
                      2008Basic
      EPSNet
      (loss) income
                      
                      $
                      (124,755
                      )
                      
                      $
                      1,571,696Weighted
      average shares
                      
                      
                      13,907,513
                      
                      
                      
                      12,925,606Basic
      (loss) income per share
                      
                      $
                      (0.01
                      )
                      
                      $
                      0.12Diluted
      EPSNet
      (loss) income
                      
                      $
                      (124,755
                      )
                      
                      $
                      1,571,696Dilutive
      effect of Convertible preferred stock, warrant and stock
      options
                      
                      
                      --
                      
                      
                      
                      13,496,351Diluted
      weighted average shares
                      
                      
                      13,907,513
                      
                      
                      
                      26,421,957Diluted
      income per share
                      
                      $
                      (0.01
                      )
                      
                      $
                      0.06




During
the three months ended June 30, 2008 there were no potentially anti-dilutive
options, warrants, or convertible preferred stock.




NOTE
14 - SEGMENT INFORMATION





We
operate in one industry segment - metal fabrication and precision machining. All
of our operations, assets and customers are located in the United
States.





NOTE
15 –SUBSEQUENT EVENT





On August
4, 2009, Sovereign Bank extended the Company a commitment letter to renew a
$2,000,000 revolving working capital line of credit under terms substantially
equivalent to those in place on the prior line of credit.








-19-








Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations




Statement
Regarding Forward Looking Disclosure




The
following discussion of the results of our operations and financial condition
should be read in conjunction with our financial statements and the related
notes, which appear elsewhere. This quarterly report of on Form 10-Q, including
this section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” may contain predictive or “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, but are not limited to, statements
that express our intentions, beliefs, expectations, strategies, predictions or
any other statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based in part on assumptions made by management.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may, and probably will, differ materially from what is
expressed or forecasted in the forward-looking statements due to numerous
factors. Those factors include those risks discussed under “Management’s
Discussion and Analysis” in our Form 10-K for the year ended March 31, 2009 and
this Item 2 in this Form 10-Q and those described in any other filings which we
make with the SEC. In addition, such statements could be affected by risks and
uncertainties related to the U.S. and global economies, 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 in addition to our manufacturing capabilities: which
include manufacturing engineering (planning, fixture and tooling development,
manufacturability), quality control (inspection and testing), and production
control (scheduling, project management and expediting).




All
manufacturing is done in accordance with our written quality assurance program,
which meets specific national and international codes, standards, and
specifications. Ranor holds several certificates of authorization issued by the
American Society of Mechanical Engineers and the National Board of Boiler and
Pressure Vessel Inspectors. The standards used are specific to the customers’
needs, and our manufacturing operations are conducted in accordance with these
standards.




During
the last several years, the demand for our services has been relatively
strong. However recent recessionary pressures have affected the requirements of
our customers.  GT Solar, which has been our largest customer for each
of the past three fiscal years, has slowed production significantly and in April
2009  provided notice of its’ intention to cancel the majority of
orders included in our  June 30, 2009 backlog.  Other
customers have delayed deliveries of existing orders and have delayed the
placement of new orders.








-20-





A
significant portion of our revenue is generated by a small number of customers.
During the three months ended June 30, 2009, our largest customer, BAE Systems,
accounted for approximately 40% of our revenue, our second largest customer,
Still River Systems, accounted for approximately 21% of our revenue, and our
third largest customer, General Dynamics Electric Boat Corporation ,accounted
for approximately 15% of our revenue. For the three months ended June 30, 2008,
our largest customer, GT Solar, accounted for 69% of our revenue and BAE
accounted for 13% of our revenue.




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,
and whenever possible. During the three months ended June 30, 2009, our sales
and net loss were $3.3 million and ($125,745), respectively as compared to sales
of $11.7 million and net income of $1.6 million, respectively, for the three
months ended June 30, 2008.  Our gross margin for the three months
ended June 30, 2009 was 17% as compared to 29% in the three months ended June
30, 2008 as a result of lesser sales volume.  Both net sales and gross
margin declined in the three months ended June 30, 2009, reflecting the effects
of the global economic downturn on our customers and their
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 such a period,
we would continue to incur our overhead expense but with lower revenue.
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.





As of
June 30, 2009, we had a backlog of orders totaling approximately $39.5 million,
of which approximately $28.5 million represented orders from GT Solar. 
During the three months ended June 30, 2009, GT Solar provided notice of its
intent to cancel a portion of an open purchase order reducing its total purchase
commitment by approximately $16.8 million, reducing our total backlog to $22.7
million.  Post the cancellation, the remaining GT Solar backlog of
approximately $11.7 million includes approximately $3.4 million of open product
purchase orders and approximately $8.3 million of material
buyback.  The backlog also includes orders in excess of $1.0 million
from each of five customers totaling more than $7.9 million in addition to GT
Solar. We expect to deliver the backlog during the years ended March 31, 2010
and March 31, 2011.





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 areas 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.






-21-




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. 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 that may result.
However, revenues derived from the nuclear power industry were insignificant for
the three months ended June 30, 2009 and currently constitute approximately 5%
of our backlog that we expect to deliver by March 31, 2010 and March 2011. 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 focused on the medical industry.  These efforts
include the development and fabrication of medical isotopes 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
21% of our total net sales for the three months ended June 30, 2009 while sales
to our medical isotope customer were not significant during the three months
ended June 30, 2009.




Expansion
of Manufacturing Capabilities





In
addition to the possible expansion of our existing manufacturing capabilities
through expansion of our existing facilities, we may, from time to time, pursue
opportunistic acquisitions to increase and strengthen our manufacturing,
marketing, product development capabilities and customer
diversification.  We do not have any current plans for any
acquisition, and we cannot give any assurance that we will complete any
acquisition.





Impact
of Recent Legislation





The
Congress has passed and the President has signed the $800 billion American
Recovery and Reinvestment Act of 2009 into law. Significant components of the
bill allow manufacturing concerns to apply various tax credits and apply for
government loan guarantees for the development of or the retooling of existing
facilities for using electricity derived from renewable and previously
underutilized sources.  The Company has historically derived
significant revenues from contracts with manufacturing concerns in these
alternative energy fields.  The American Recovery and Reinvestment Act
extended the 50% Bonus depreciation enacted as a part of the Economic Stimulus
Act of 2008.  Under the Act, 50% of the basis of the qualified
property may be deducted in the year the property is placed in service (i.e.
2008 and 2009).  The remaining 50% is recovered under otherwise
applicable depreciation rules. This significant tax incentive could drive
increased demand on the part of some customers.




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 financial statements for the three
months ended June 30, 2009 from the assumptions, estimates and judgments used in
the preparation of our audited financial statements for the year ended March 31,
2009.





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.






-22-




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 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, to conform to FASB Interpretation No. 46, “Consolidation of Variable
Interest Entities” (FIN 46). We have also adopted the revision to FIN 46, FIN 46
(R), which clarified certain provisions of the original interpretation and
exempted certain entities from its requirements.




Income
Taxes




We
provide for federal and state income taxes currently payable, as well as those
deferred because of temporary differences between reporting income and expenses
for financial statement purposes versus tax purposes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recoverable. The effect of the change in the tax rates is
recognized as income or expense in the period of the change. A valuation
allowance is established, when necessary, to reduce deferred income taxes to the
amount that is more likely than not to be realized.





For the
three months ended June 30, 2009 and 2008, the Company recorded provisions for
the Federal and State income tax benefit and income tax expense of $183,685 and
$(1,064,250), respectively. The effective tax benefit and expense rates for the
three months ended June 30, 2009 and 2008 were (60)% and 40% respectively. The
difference between the provision for income taxes and the income tax determined
by applying the statutory federal income tax rate of 39% 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 compensated
absences, net operating loss carryforwards, and operating losses that occurred
during the period.




As of
June 30, 2009, the Company’s federal net operating loss carry-forward was
approximately $1,780,714. 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.






-23-





New
Accounting Pronouncements




See Note
2, Significant Accounting Policies, in the Notes to the Consolidated Financial
Statements.





Results of
Operations




Three
Months Ended June 30, 2009 and 2008





The
following table sets forth information from our statements of operations for the
three months ended June 30, 2009 and 2008, in dollars and as a percentage of
revenue (dollars in thousands):




Changes
      Three MonthsEnded
      June 30,2009
                    
                    
                    2008
                    
                    
                    2009
      to 2008Amount
                    
                    
                    Percent
                    
                    
                    Amount
                    
                    
                    Percent
                    
                    
                    Amount
                    
                    
                    PercentNet
      sales
                    
                    $
                    3,318
                    
                    
                    
                    100
                    %
                    
                    $
                    11,658
                    
                    
                    
                    100
                    %
                    
                    $
                    (8,340
                    )
                    
                    
                    (72
                    )%Cost
      of sales
                    
                    
                    2,754
                    
                    
                    
                    83
                    %
                    
                    
                    8,277
                    
                    
                    
                    71
                    %
                    
                    
                    (5,523
                    )
                    
                    
                    (67
                    )%Gross
      profit
                    
                    
                    564
                    
                    
                    
                    17
                    %
                    
                    
                    3,381
                    
                    
                    
                    29
                    %
                    
                    
                    (2,817
                    )
                    
                    
                    (83
                    )%Payroll
      and related costs
                    
                    
                    394
                    
                    
                    
                    12
                    %
                    
                    
                    435
                    
                    
                    
                    4
                    %
                    
                    
                    (41
                    )
                    
                    
                    (9
                    )%Professional
      expense
                    
                    
                    76
                    
                    
                    
                    2
                    %
                    
                    
                    47
                    
                    
                    
                    0
                    %
                    
                    
                    29
                    
                    
                    
                    62
                    %Selling,
      general and administrative
                    
                    
                    298
                    
                    
                    
                    9
                    %
                    
                    
                    139
                    
                    
                    
                    1
                    %
                    
                    
                    159
                    
                    
                    
                    114
                    %Total
      operating expenses
                    
                    
                    768
                    
                    
                    
                    23
                    %
                    
                    
                    621
                    
                    
                    
                    5
                    %
                    
                    
                    147
                    
                    
                    
                    24
                    %Income
      (loss)  from operations
                    
                    
                    (204
                    )
                    
                    
                    (6
                    )%
                    
                    
                    2,760
                    
                    
                    
                    24
                    %
                    
                    
                    (2,964
                    )
                    
                    
                    (107
                    )%Interest
      expense, net
                    
                    
                    (101
                    )
                    
                    
                    (3
                    )%
                    
                    
                    (119
                    )
                    
                    
                    (1
                    )%
                    
                    
                    18
                    
                    
                    
                    (15
                    )%Finance
      costs
                    
                    
                    (4
                    )
                    
                    
                    0
                    %
                    
                    
                    (4
                    )
                    
                    
                    0
                    %
                    
                    
                    -
                    
                    
                    
                    -
                    %Income
      (loss) before income taxes
                    
                    
                    (309
                    )
                    
                    
                    (9
                    )%
                    
                    
                    2,637
                    
                    
                    
                    23
                    %
                    
                    
                    (2,946
                    )
                    
                    
                    (112
                    )%Provision
      for income taxes, net
                    
                    
                    184
                    
                    
                    
                    6
                    %
                    
                    
                    (1,064
                    )
                    
                    
                    (9
                    )%
                    
                    
                    1,248
                    
                    
                    
                    117
                    %Net
      (loss) income
                    
                    $
                    (125
                    )
                    
                    
                    (4
                    )%
                    
                    
                    1,573
                    
                    
                    
                    13
                    %
                    
                    
                    (1,698
                    )
                    
                    
                    (108
                    )%




Our
results of operations are affected by a number of external factors including the
availability of raw materials, commodity prices (particularly steel and graphite
prices), 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.






-24-





Recent
disruptions in the global capital markets have resulted in reduced availability
of funding worldwide and a higher level of uncertainty experienced by some
end-user solar cell module manufacturers. As a result, our customers have made
reductions in their direct labor workforce and reported decreases in their order
backlogs as well as adjustments to the procurement of materials in their
photovoltaic related production.  In response, we have been
negotiating extensions of the delivery schedules and other modifications under
some of our existing contracts. During the three months ended, 2009, GT Solar
provided notice of its intent to cancel a portion of an open purchase order
reducing the total purchase commitment by approximately $16.8 million, reducing
our total backlog to $21.8 million.  Post the cancellation, the
remaining GT Solar backlog of approximately $11.7 million includes approximately
$3.4 million of open product purchase orders and approximately $8.3 million of
material buyback.





Net
Sales





Net sales
decreased by $8.3 million , or 72%, from $11.7 million  for the three
months ended June 30, 2008 to $3.3 million  for the three months ended
June 30, 2009. A significant portion of the decrease resulted from decrease in
sales to GT Solar.  The global economic downturn adversely impacted
our operations in much of the first quarter of fiscal year 2009.





Cost
of Sales and Gross Margin





Our cost
of sales for the three months ended June 30, 2009 decreased by $5.5
million  to $2,8 million a decrease of 67%, from $8.3
million  for three months ended June 30, 2008. The decrease in the
cost of sales was principally due to the reduction in volume of
sales.   The decline in gross profit margin was $2.8 million (83%)
from $3.4 million  or 29% of sales, during the three months ended June
30, 2008 to $564,,802 or 17% of sales for the period ending June 30,
2009.  Contributing to the deline in gross margin were costs
associated with underutilized capacity as well as relatively higher labor cost
on several contracts.





Operating
Expenses




Our
payroll and related costs within our selling and administrative costs were
$393,367 for the three months ended June 30, 2009 as compared to $435,095 for
the three months ended June 30, 2008. The $41,529  (10%) decrease in
payroll is due primarily to a decline in bonus compensation compared to the
prior year..




Professional
fees increased from $47,687 for the three months ended June 30, 2008 to $76,212
for the three months ended June 30, 2009. This increase was primarily
attributable to an increase in legal costs related to contract review and SEC
filing requirements.




Selling,
administrative and other expenses three months ended June 30, 2009 were
$298,421  as compared to $138,996 for three months ended June 30,
2008, an increase of $159,425 or 114%.  Additional expenditures of
$112,500 related to executive severance pay were the principal component of the
increase.





Interest
Expense




Interest
expense for three months ended June 30, 2009 was $104,162 compared to $118,781
for the three months ended June 30, 2008. The decrease of $14,619 (11%) is a
result of lower principal balances of the Sovereign and Amalgamated bank loans
outstanding in the three months ended June 30, 2009 as compared to the three
months ended June 30, 2008.





Net
Income




As a
result of the foregoing, our net loss was ($124,745) ($0.01 per share) for the
three months ended June 30, 2009, as compared to net income of $1.57
million  ($0.12 and $.0.06 per share basic and diluted, respectively)
for the three months ended June 30, 2008.






-25-






Liquidity
and Capital Resources




At June
30 2009, we had working capital of $10..9 million  as compared to
working capital of $11.1 million at March 31, 2009, a decrease of $205,787 or
1.8% . The following table sets forth information as to the principal changes in
the components of our working capital (dollars in thousands).





Category
                  
                  June
      30, 2009
                  
                  
                  March
      31, 2009
                  
                  
                  Change
                    Amount
                  
                  
                  Percentage
      ChangeCash
      and cash equivalents
                  
                  
                  9,404
                  
                  
                  
                  10,463
                  
                  
                  
                  (1,059
                  )
                  
                  
                  (10.1
                  )%Accounts
      receivable, net
                  
                  
                  1,656
                  
                  
                  
                  1,419
                  
                  
                  
                  237
                  
                  
                  
                  16.7
                  %Costs
      incurred on uncompleted contracts
                  
                  
                  3,530
                  
                  
                  
                  3,661
                  
                  
                  
                  (131
                  )
                  
                  
                  (3.6
                  )%Raw
      material inventories
                  
                  
                  305
                  
                  
                  
                  351
                  
                  
                  
                  (46
                  )
                  
                  
                  (13.1
                  )%Prepaid
      expenses
                  
                  
                  1,556
                  
                  
                  
                  1,583
                  
                  
                  
                  (27
                  )
                  
                  
                  (1.7
                  )%Deferred
      tax asset
                  
                  
                  246
                  
                  
                  
                  --
                  
                  
                  
                  246
                  
                  
                  
                  --
                  %Other
      receivables
                  
                  
                  30
                  
                  
                  
                  60
                  
                  
                  
                  (30
                  )
                  
                  
                  (50.0
                  )%Accounts
      payable
                  
                  
                  632
                  
                  
                  
                  951
                  
                  
                  
                  (319
                  )
                  
                  
                  (33.6
                  )%Accrued
      expenses
                  
                  
                  459
                  
                  
                  
                  710
                  
                  
                  
                  (251
                  )
                  
                  
                  (35.3
                  )%Accrued
      severance
                  
                  
                  113
                  
                  
                  
                  -
                  
                  
                  
                  113Accrued
      taxes
                  
                  
                  -
                  
                  
                  
                  156
                  
                  
                  
                  (156
                  )
                  
                  
                  (100.0
                  )%Progress
      billings in excess of cost ofuncompleted
      contracts
                  
                  
                  3,953
                  
                  
                  
                  3,945
                  
                  
                  
                  8
                  
                  
                  
                  0.2
                  %Current
      maturity of long-term debt
                  
                  
                  625
                  
                  
                  
                  625
                  
                  
                  
                  (0
                  )
                  
                  
                  0.0
                  %




The cash
used in operations was $856,642 for the three months ended June 30, 2009 as
compared to the cash provided by operations of $1,2 million for the three months
ended June 30, 2008. The decrease in cash flows from operations of $2.1 million
or 170%, was the net effect of a decrease in the net profits, decrease in costs
incurred on uncompleted contracts and payment of accounts payable and accrued
expenses in the three months ended June 30, 2009.





The net
cash used in financing activities was $202,152 for the three months ended June
30, 2009 as compared to $30,032 for the three months ended June 30,
2008.  During the three months ended June 30, 2009, we made principal
payment of $142,857 on our loans from Sovereign Bank and principal payments of
$3,251 on capital lease obligations.  In addition, WM Realty made
principal payments on its mortgage of $9,559.  WM Realty also made
capital distributions to its members of $45,375.  During the three
months ended June 30, 2008, the Company made principal payments of $142,857 on
our loans from Sovereign Bank and received $170,060 from the exercise of
warrants.  WM Realty made mortgage principal reduction payments
totaling $8,788 and made capital distributions to its members of
$46,875.




During
the three months ended June 30, 2009, the installation of the equipment under
construction at March 31, 2009 had been fully completed, placed into service and
was transferred to property, plant and equipment.  We did not engage
in additional investing activities for the three months ended June 30,
2009.  For the three months ended June 30, 2008 we invested $123,540
in property, plant and equipment and paid a deposit on equipment of
$150,000.  This deposit was credited to our purchase price in fiscal
2009 when the equipment was received.




The net
decrease in cash was $1,.06 million for the three months ended June 30, 2009, as
compared to $921,214 increase for the for the three months ended June 30,
2008.






-26-








At June
30, 2009, 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 6.75% 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.





Debt
Facilities




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 which is available until June 30,
2010.   We also have a $3.0 million capital expenditure facility
which is available until November 30, 2009.  Pursuant to the terms of
the capital expenditure facility we may request financing of capital equipment
purchased through November 30, 2009, at which time any amounts borrowed under
the line are to be amortized over a five year period. Pursuant to the agreement,
Ranor is required to maintain a ratio of earnings available for fixed charges to
fixed charges of at least 1.2 to 1, and an interest coverage ratio of 2 to 1. At
June 30, 2009, we were in compliance with both of these ratios, with Ranor’s
ratio of earnings available for fixed charges to fixed charges being 3.6 to
1 and Ranor’s interest coverage ratio, calculated on a rolling basis
being 15.2 to 1.





The term
note issued on February 24, 2006 has a term of 7 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 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.  Ranor 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,
Ranor 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.  At June 30, 2009, there
were no borrowings under the revolving note and the maximum available under the
borrowing formula was $2.0 million.





Under the
$3.0 million capital expenditures facility Ranor is able to borrow up to $3.0
million until November 30, 2009. We pay interest only on borrowings under the
capital expenditures line until November 30, 2009, at which time the principal
balance is amortized over five years, commencing December 31,
2009.  The interest on borrowings under the capital expenditure line
is either equal to the prime plus 1⁄2% or the LIBOR rate plus 3%, as the Company
may elect.  Any unpaid balance on the capital expenditures facility is
to be paid on November 30, 2014.  As of June 30, 2009 and June 30,
2008, there were no borrowings outstanding under either the revolving line or
the capital expenditure line.  We intend to borrow approximately
$880,000 to finance the purchase of equipment that has been installed and placed
in service during the quarter ended June 30, 2009..





The
securities purchase agreement pursuant to which we sold the series A preferred
stock and warrants to Barron Partners provides Barron Partners with a right of
first refusal on future equity financings, which may affect our ability to raise
funds from other sources if the need arises.





We
believe that the $2.0 million revolving credit facility, which remained unused
as of June 30, 2009 and terminates in June 2010, and the $3.0 million capital
expenditure facility and our cash flow from operations should be sufficient to
enable us to satisfy our cash requirements at least through the end of fiscal
2010.  Nevertheless, it is possible that we may require additional
funds to the extent that we expand our manufacturing facilities. In the event
that we make an acquisition, we may require additional financing for the
acquisition. However, we do not have any current plans for any acquisition, and
we cannot give any assurance that we will complete any acquisition. We have no
commitment from any party for additional funds; however, the terms of our
agreement with Barron Partners, particularly Barron Partners’ right of first
refusal, may impair our ability to raise capital in the equity markets 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.








-27-





ITEM
4 – CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





As of
June 30, 2009, we carried out an evaluation, under the supervision and with the
participation of management, including our chief executive officer and chief
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)).





Based
upon that evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures were effective as of June
30, 2009, to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.





Changes
in Internal Controls





There was
no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) that
occurred during the quarter ended June 30, 2009 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.




PART
II: OTHER INFORMATION




ITEM 6 - EXHIBITS





31.1
  Rule 13a-14(a) certification of chief executive officer


31.2
  Rule 13a-14(a) certification of chief financial officer


32.1
  Section 1350 certification of chief executive and chief financial
officers








-28-






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
      12, 2009
            By:
            /s/
      Richard F.
      FitzgeraldRichard
      F. Fitzgerald
              Chief
      Financial Officer
              (duly
      authorized officer and principal financial
  officer)








-29-