**U.S.
      Securities and Exchange Commission**


Washington,
      DC 20549





**Form
      10-QSB**





QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED





**December
      31, 2006**








Commission
      File Number 0-51378





Techprecision
      Corporation


(Name
      of
      small business issuer as specified in its charter)





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





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








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





Indicate
      by checkmark whether the Registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act). Yes o No x





As
      of
      October 31, 2006 there are 10,009,000 shares
      of
      the common stock, par value $.0001 per share, outstanding.





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










Index





PagePart
                I. Financial InformationItem
                1. Financial StatementsUnaudited
                balance sheet at December 31, 2006 and audited balance sheet atMarch
                31,2006
            
            2Unaudited
                statements of operations for the three months and nine months endedDecember
                31, 2006 and 2005
            
            3Unaudited
                statement of stockholders’ equity for the nine months ended December 31,
                2006
            
            4Unaudited
                statements of cash flows for the nine months ended December 31, 2006
                and2005
            
            5Notes
                to financial statements
            
            7Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            
            17Item
                3. Controls and Procedures
            
            27Part
                II. Other InformationItem
                6. Exhibits
            
            27










**TECHPRECISION
                CORPORATION**
              **CONSOLIDATED
                BALANCE SHEETS**




**Audited****December
                31,**
            
            **MARCH
                31,****2006**
            
            **2006****ASSETS**Current
                AssetsCash
                and cash equivalents
            
            $
            797,760
            
            $
            492,801Restricted
                cash-indemnification obligation escrow
            
            
            925,000
            
            
            950,000Mortgage
                escrow
            
            
            4,073
            
            
            —Accounts
                receivable, less allowance for doubtfulAccounts
                of $25,000 at December 31, 2006 and March 31, 2006
            
            
            3,062,427
            
            
            2,481,619Other
                receivables
            
            
            17,744
            
            
            25,665Costs
                incurred on uncompleted contracts,Net
                of allowance for loss and progress billings
            
            
            1,040,461
            
            
            1,306,589Inventories-
                raw materials
            
            
            176,806
            
            
            214,148Prepaid
                expenses
            
            
            281,993
            
            
            386,475Deferred
                loan costs, net
            
            
            101,850
            
            
            207,402Total
                current assets
            
            
            6,408,114
            
            
            6,064,699Property,
                plant and equipment, net
            
            
            2,481,750
            
            
            2,556,994Other
                assets deferred loan cost, net
            
            
            41,125
            
            
            46,127Total
                assets
            
            $
            8,930,989
            
            $
            8,667,820**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                LiabilitiesAccounts
                payable
            
            $
            1,187,335
            
            $
            691,054Accrued
                expenses
            
            
            365,756
            
            
            561,848Due
                to prior shareholders under escrow obligation
            
            
            843,600
            
            
            843,600Current
                maturity of long-term debt
            
            
            610,622
            
            
            576,934Loan
                from stockholder
            
            
            90,000Mortgage
                payable
            
            
            —
            
            
            3,300,000Total
                current liabilities
            
            
            3,097,313
            
            
            5,973,436Long-Term
                DebtNotes
                payable- noncurrent
            
            
            6,173,174
            
            
            3,442,467Stockholders’
                DeficitPreferred
                stock - parvalue
                $.0001 per share, 10,000,000 shares authorized,of
                which 9,000,000 are designated as Series A Preferred Stock, with7,719,250
                shares issued and outstanding at December 31, 2006 andMarch31,2006
            
            
            2,150,000
            
            
            2,150,000Common
                stock - par value $.0001 authorized 90,000,000, 10,009,000 and9,967,000
                issued and outstanding on December 31, 2006 and March 31,2006,
                respectively.
            
            
            1,002
            
            
            997Paid
                in capital
            
            
            1,351,127
            
            
            1,240,821Accumulated
                deficit
            
            
            (3,841,627
            )
            
            (4,139,901
            )Total
                stockholders’ deficit
            
            
            (
                339,498
            )
            
            (
                748,083
            )$
            8,930,989
            
            $
            8,667,820







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




2


**TECHPRECISION
        CORPORATION**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**




Three
                Months Ended December 31,
            
            Nine
                Months Ended December 31,2006
            
            2005
            
            2006
            
            2005Net
                sales
            
            $
            5,533,541
            
            $
            4,636,980
            
            $
            13,448,811
            
            $
            13,713,739Cost
                of sales
            
            
            4,534,415
            
            
            3,986,124
            
            
            10,786,882
            
            
            11,804,763Gross
                profit
            
            
            999,125
            
            
            650,857
            
            
            2,661,929
            
            
            1,908,977Professional
                expense
            
            
            198,633
            
            
            15,299
            
            
            350,791
            
            
            65,444Payroll
                and related costs
            
            
            333,021
            
            
            341,242
            
            
            983,432
            
            
            1,109,700Other
                selling, general and administrative
            
            
            36,342
            
            
            115,862
            
            
            309,667
            
            
            249,561Total
            
            
            567,997
            
            
            472,403
            
            
            1,643,890
            
            
            1,424,705Income
                from operations
            
            
            431,128
            
            
            178,454
            
            
            1,018,038
            
            
            484,272Other
                income (expense)Interest
                expense
            
            
            (141,991
            )
            
            (280,359
            )
            
            (
                506,263
            )
            
            (
                840,849
            )Finance
                costs
            
            
            (
                1,939
            )
            
            —
            
            
            (
                214,686
            )
            
            —Interest
                income
            
            
            523
            
            
            2,826
            
            
            1,186
            
            
            8,707(143,407
            )
            
            (277,533
            )
            
            (
                719,763
            )
            
            (
                832,142
            )Income
                (loss) before income taxes
            
            
            287,721
            
            
            (99,109
            )
            
            298,276
            
            
            (
                347,870
            )Provision
                for income taxes
            
            
            (100,702
            )
            
            —
            
            
            (104,397
            )
            
            —Tax
                Benefit
            
            
            100,702
            
            
            —
            
            
            104,397
            
            
            —Net
                Income (loss)
            
            $
            287,721
            
            $
            (99,109
            )
            $
            298,276
            
            $
            (347,870
            )Weighted
                average number of shares of common stock outstanding
                (basic)
            
            
            10,009,000
            
            
            8,089,000
            
            
            10,005,557
            
            
            8,089,000Weighted
                Average number of shares of common stock outstanding
                (diluted)
            
            
            19,090,527
            
            
            8,089,000
            
            
            19,087,084
            
            
            8,089,000Net
                income (loss) per share (basic)
            
            $
            .01
            
            $
            (.05
            )
            $
            .00
            
            $
            (.03
            )Net
                income per share (diluted)
            
            $
            .01
            
            $
            (.05
            )
            $
            .00
            
            $
            (.03
            )




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





3


**TECHPRECISION
                CORPORATION*****CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ DEFICIT******FOR
                THE NINE MONTHS ENDED DECEMBER 31,
                2006***








Warrants
            
            Preferred
                Stock
            
            Common
              Stock
            
            Paid
              in
            
            AccumulatedOutstanding
            
            Shares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Deficit
            
            TotalBalance,
                March 31, 2006
            
            
            11,220,000
            
            
            7,719,250
            
            $
            2,150,000
            
            
            9,967,000
            
            $
            997
            
            $
            1,240,821
            
            $
            (4,139,901
            )
            $
            (748,083
            )Contributed
                capital
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            89,250
            
            
            0
            
            
            89,250Shares
              issued for
              employee services
            
            
            —
            
            
            —
            
            
            —
            
            
            42,000
            
            
            5
            
            
            7,556
            
            
            —
            
            
            7,561Grant
                of options to directors
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            13,500
            
            
            —
            
            
            13500Net
                income for period
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            298,276
            
            
            10,555Balance
                December 31, 2006
            
            
            11,220,000
            
            
            7,719,250
            
            $
            2,150,000
            
            
            10,009,000
            
            $
            1,002
            
            $
            1,351,127
            
            $
            (
                3,841,625
            )
            $
            (
                339,496
            )








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








4




**TECHPRECISION
                CORPORATION****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**






**Nine
                months ended December 31,****2006**
            
            **2005****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                gain (loss) for the period
            
            
            298,276
            
            
            (347,870
            )Noncash
                items included in net loss:Depreciation
            
            
            305,800
            
            
            310,097Amortization
                of deferred loan costs
            
            
            214,686Shares
                issued for services
            
            
            7,551Expense
                for equity-based incentives
            
            
            13,500Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (584,881
            )
            
            (1,399,850
            )Other
                receivables
            
            
            7,921Inventory
            
            
            37,342
            
            
            (609,610
            )Costs
                on uncompleted contracts
            
            
            266,128
            
            
            373,828Prepaid
                expenses
            
            
            104,482
            
            
            (25,539
            )Accounts
                payable and accrued expenses
            
            
            300,187
            
            
            1,334,979Net
                cash provided by (used in) operating activities
            
            
            970,992
            
            
            (363,965
            )**CASH
                FLOWS USED IN INVESTING ACTIVITIES**Purchases
                of property, plant and equipment
            
            
            (230,558
            )
            
            (79,731
            )Net
                cash used in investing activities
            
            
            (230,558
            )
            
            (79,731
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES**Payment
                on notes
            
            
            (3,735,603
            )
            
            (4,384
            )Issuance
                of notes
            
            
            3,200,000Contribution
                of capital
            
            
            89,260Cash
                from restricted fund
            
            
            25,000Cost
                of issuance new
            
            
            (104,132
            )Loans
                from stockholder
            
            
            90,000Net
                cash provided by (used in) financing activities
            
            
            (435,476
            )
            
            (4,384
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            304,959
            
            
            (448,080
            )**CASH
                AND CASH EQUIVALENTS, beginning of period**
            
            
            492,801
            
            
            1,226,000**CASH
                AND CASH EQUIVALENTS, end of period**
            
            
            797,760
            
            
            777,920




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





5








**TECHPRECISION
                CORPORATION****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Continued)**




**Nine
                months ended December 31,****2006**
            
            **2005**Supplemental
                Disclosures of Cash Flows InformationCash
                paid during the period for:Interest
                expense
            
            $
            506,263
            
            $
            —Income
                taxes
            
            $
            —
            
            $
            3,100






In
                the nine-month period ended December 31, 2006, the Company issued
                42,000
                restricted shares to employees of the Company. The shares were valued
                at
                $.18 per share or $7,561. The valuation was based on a discount on
                the
                price paid per share by independent third parties. The issuance was
                part
                of an issuance of a total of 126,000 shares of common stock, and
                the
                remaining shares are subject to forfeiture and, therefore, are not
                treated
                as issued shares. On July 27, 2006 the Board of Directors amended
                the
                Company’s 2006 long-term incentive plan to increase the number of options
                granted to independent directors upon their initial election as directors.
                Pursuant to such plan, options to purchase 75,000 shares of common
                stock
                had been granted in March 2006 and options to purchase an additional
                75,000 shares were granted on July 27, 2006, subject to stockholder
                approval of the plan, which has been obtained and which will become
                effective following the mailing of an information statement to the
                Company’s stockholders. The options were valued under the fair value
                recognition provisions of SFAS 123R. The fair value was calculated
                at $.09
                per share, for total of $13,500 for the options to purchase a total
                of
                150,000 shares. The weighted average grant date fair value of options
                granted during the nine months ended December 31, 2006 were estimated
                on
                the grant date using the binomial lattice option-pricing model with
                the
                following assumptions: expected volatility of 25% expected term of
                5
                years, risk-free interest rate of 5.0%, and expected dividend yield
                of 0%.
                Expected volatility is an estimate. The average expected life was
                calculated using the simplified method under SAB 107. The risk-free
                rate
                is based on the rate of U.S. Treasury zero-coupon issues with a remaining
                term equal to the expected life of option grants.The
                accompanying notes are an integral part of the financial
                statements.







6




**TECHPRECISION
      CORPORATION**


**NOTES
      TO FINANCIAL STATEMENTS**







**NOTE
      1. INTERIM FINANCIAL INFORMATION**




The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and with the
      instructions to Form 10-QSB and Item 310 of Regulation S-B. In the opinion
      of
      management, the condensed consolidated financial statements reflect all
      adjustments (consisting of normal recurring adjustments) considered necessary
      for a fair presentation of the results Techprecision Corporation and its
      subsidiaries for the periods presented. Operating results for interim periods
      are not necessarily indicative of results that may be expected for the fiscal
      year as a whole. The preparation of the financial statements in conformity
      with
      accounting principles generally accepted in the U.S. requires management to
      make
      estimates and assumptions that affect the reported amounts of assets,
      liabilities, revenues, expenses, and the related disclosures at the date of
      the
      financial statements and during the reporting period. Actual results could
      materially differ from these estimates. For further information, refer to the
      consolidated financial statements and notes thereto included in the Company’s
      Annual Report on Form 10-KSB for the year ended March 31, 2006. Certain prior
      year amounts may have been reclassified to conform with the presentation used
      in
      2006.




**NOTE
      2. NEW ACCOUNTING PRONOUNCEMENTS**




***FASB
      Interpretation No. 46R, Consolidation of Variable Interest Entities - An
      Interpretation of ARB51*** The FASB
      finalized FIN 46R in December 2003. FIN 46R expands the scope of ARB51 and
      various EITFs and can require consolidation of legal structures, called Variable
      Interest Entities (VIEs) .
      Companies with investments in Special
      Purpose Entities (SPEs) were
      required to implement FIN 46R in 2003; however, companies with VIEs were
      permitted to implement in the first quarter of 2004. We have a SPE, WM Realty
      Management LLC (“WM Realty”), that we have determined must be consolidated
      pursuant to FIN 46R. We have consolidated this VIE for the period ended December
      31, 2006 and the most significant impact to our financial statements is to
      include the mortgage of $3.2 million as a liability, and to show the land and
      building at the value on the books of Ranor prior to the sale and to reflect
      the
      interest and other costs incurred by WM Realty.




In
      November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of
      Accounting Research Bulletin No. 43, Chapter 4,” which adopts wording from the
      International Account Standards Board’s (IASB) LAS 2 “Inventories” in an effort
      to improve the comparability of cross-border financial reporting. The FASB
      and
      IASB both believe the standards have the same intent; however, an amendment
      to
      the wording was adopted to avoid inconsistent application. The new standard
      indicates that abnormal freight, handling costs, and wasted materials (spoilage)
      are required to be treated as current period  charges
      rather than as a portion of inventory cost. Additionally, the standard clarifies
      that fixed production overhead should be allocated based on the normal capacity
      of a production facility. The Statement is effective beginning in fiscal year
      2007. Adoption is not expected to have a material impact on our consolidated
      earning, financial position or cash flows.




In
      December 2004, the FASB issued FSP FAS 109-1, “Application of FASB Statement No.
      109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production
      Activities Provided by the American Jobs Creation Act of 2004.” The FSP
      clarifies that the manufacturer’s deduction provided for under the American Jobs
      Creation Act of 2004 (the Act) should be accounted for as a special deduction
      in
      accordance with SFAS No. 109, “Accounting for Income Taxes,” and not as a tax
      rate reduction. The Qualified Production Activities Deduction will not impact
      our consolidated earnings, financial position or cash flows for fiscal year
      2006
      because the deduction is not available to us. We are currently evaluating the
      effect that this deduction will have in subsequent years.




7


In
      December 2004, the FASB issued SFAS No. 123
      (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123,
      “Accounting for Stock-Based Compensation” (“SFAS 123”) and supersedes APB
      Opinion No. 25,
      “Accounting for Stock Issued to Employee.” SFAS 123R requires that all
      share-based payments to employees, including grants of employee stock options,
      be recognized in the financial statements based on their fair values, beginning
      with the first interim or annual period after June 15, 2005, with early adoption
      encouraged. The pro forma disclosures previously permitted under SFAS 123 will
      no longer be an alternative to financial statement recognition. Effective
      January 1, 2006, the Company adopted Statement No. 123R, Share-Based Payment
      (“SFAS 123R”), which requires companies to measure and recognize compensation
      expense for all share-based payment awards made to employees and directors
      based
      on estimated fair values. SFAS 123R is being applied on the modified prospective
      basis. Prior to the adoption of SFAS 123R, the Company accounted for its
      stock-based compensation plans under the recognition and measurement principles
      of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
      to Employees, as provided by SFAS 123, “Accounting for Stock Based Compensation”
(“SFAS 123”) and accordingly, recognized no compensation expense related to the
      stock-based plans as stock options granted to employees and directors were
      equal
      to the fair market value of the underlying stock at the date of grant. In March
      2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) relating to
      SFAS 123R. The Company has applied the provisions of SAB 107 in its adoption
      of
      SFAS 123R. Under the modified prospective approach, SFAS 123R applies to new
      awards and to awards that were outstanding on January 1, 2006 that are
      subsequently modified, repurchased or cancelled. Under the modified prospective
      approach, compensation cost recognized includes compensation cost for all
      share-based payments granted prior to, but not yet vested on January 1, 2006,
      based on the grant-date fair value estimated in accordance with the provisions
      of SFAS 123, and compensation cost for all share-based payments granted
      subsequent to January 1, 2006, based on the grant-date fair value estimated
      in
      accordance with the provisions of SFAS 123R.




New
      Accounting Pronouncements: In May 2005, the FASB issued SFAS No. 154,
      "Accounting Changes and Error Corrections, - a replacement of APB Opinion No.
      20
      and FASB Statement No.3". The Statement establishes, unless impracticable,
      retrospective application as the required method for reporting a change in
      accounting principle in the absence of explicit transition requirements specific
      to the newly adopted accounting principle. The provisions of this Statement
      are
      effective for accounting changes and corrections of errors made in fiscal years
      beginning after December 15, 2005. Early adoption is permitted for accounting
      changes and corrections of errors made in fiscal years beginning after the
      date
      this Statement was issued. The Company does not believe that the adoption of
      this Statement in fiscal 2007 will have a material impact on the Company's
      financial position or result of operations.




In
      February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments - and amendment of FASB Statements No. 133 and 140".
      This
      Statement, among other things, allows a preparer to elect fair value measurement
      of instruments in cases in which a derivative would otherwise have to be
      bifurcated. The provisions of this Statement are effective for all financial
      instruments acquired or issued in fiscal years beginning after December 15,
      2006. Early adoption is permitted for instruments that an entity holds at the
      date of adoption on an instrument-by-instrument basis. The Company does not
      believe that the adoption of this Statement in fiscal 2007 will have a material
      impact on the Company's consolidated financial position or results of
      operations.




In
      March
      2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets-an amendment of FASB Statement No. 140" This Statement amends SFAS No.
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities", with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. The provisions of this
      Statement are effective for all financial instruments acquired or issued in
      fiscal years beginning after December 15, 2006. Early adoption is permitted
      for
      instruments that an entity holds at the date of adoption on an
      instrument-by-instrument basis. The Company does not believe that the adoption
      of this Statement is fiscal 2007 will have material impact on the Company's
      consolidated financial position or results of operations.




In
      July
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48") which
      prescribes a recognition threshold and measurement attribute, as well as
      criteria for subsequently recognizing, derecognizing and measuring uncertain
      tax
      positions for financial statement purposes. FIN 48 also requires expanded
      disclosure with respect to the uncertainty in income taxes assets and
      liabilities. FIN 48 is effective for fiscal years beginning after December
      15,
      2006 and is required to be recognized as a change in accounting principle
      through a cumulative-effect adjustment to retained earnings as of the beginning
      of the year of adoption. The Company is currently evaluating the impact of
      adopting the provisions of FIN 48 in fiscal 2008.




8





**NOTE
      3. PROPERTY, PLANT AND EQUIPMENT**




As
      of
      December 31, 2006 and March 31, 2006 property, plant and equipment consisted
      of
      the following:




2006
            
            2005Land
            
            $
            110,113
            
            $
            110,113Building
                and improvements
            
            
            1,282,120
            
            
            1,290,072Machinery
                equipment, furniture and fixtures
            
            
            2,848,208
            
            
            2,609,6984,240,441
            
            
            4,009,883Less:
                accumulated depreciation
            
            
            (1,758,689
            )
            
            (1,452,889
            )$
            2,481,752
            
            $
            2,556,994







Depreciation
      expense for the nine months ended December 31, 2006 and 2005 were $305,800
      and
      $310,097, respectively. Land and buildings (which are owned by WM Realty
      Management, LLC- a consolidated VIE under Fin 46 R) are collateral for the
      $3,200,000 mortgage loan, and the Company’s other fixed assets of the Company
      together with its personal property, are collateral for the Sovereign Bank
      $4,000,000 secured loan and line of credit.






**NOTE
      4. COSTS INCURRED ON UNCOMPLETED CONTRACTS**




The
      Company recognizes revenues based upon the units-of-delivery
      method.




Contracts
      in process consisted of the following at December 31 and March 31:






December
                31, 2006
            
            March
                31, 2006Costs
                incurred on uncompleted contracts, net of allowance for
                loss
            
            $
            4,536,851
            
            $
            2,889,650Less:
                Advance billings and deposits
            
            
            (3,496,390
            )
            
            (1,583,061
            )$
            1,040,461
            
            $
            1,306,589




All
      inventories are collateral for Sovereign Bank loan and constitute a part of
      the
      computation of the maximum loan amount under the agreement.




9


**NOTE
      5. DEFERRED CHARGES**




Deferred
      charges represent the capitalization of costs incurred in connection with
      obtaining the bank loan and building mortgage. These costs are being amortized
      over the term of the related debt obligation, 72 to 120 months. Amortization
      charged to operations in the nine months ended December 31, 2006 and 2005 were
      $214,686 and $-0-, respectively. As of December 31, deferred charges were as
      follows:






December
                31, 2006
            
            March
                31, 2006Deferred
                costs expiring in one year or less:****Deferred
                mortgage costs
            
            $
            103,577
            
            $
            265,943Less:
                accumulated amortization
            
            
            (1,726
            )
            
            (
                58,541
            )$
            101,851
            
            $
            207,402Deferred
                costs expiring after one year:Deferred
                loan costs
            
            $
            46,852
            
            $
            46,852Accumulated
                amortization
            
            
            (5,727
            )
            
            (725
            )$
            41,125
            
            $
            46,127







10


**NOTE
      6. LONG-TERM DEBT**




The
      following debt obligations, outstanding on December 31 and March 31, 2006:




December
                31,
              2006
            
            March
                31,
              2006Sovereign
                Bank- Secured Term note payable-72
                month 9% variable
              term
                note with quarterly principal payments of $142,857 plus
              interest
                final payment due on March 1, 2013.
            
            $
            3,571,429
            
            $
            4,000,000Amalgamated
                Bank, Mortgage loan
            
            
            3,197,295Automobile
                loan, monthly installments of $552 including interest of 4.9%, commencing
                July 20, 2003 through June 20, 2009.
            
            
            15,073
            
            
            19,4016,783,796
            
            
            4,019,401Principal
                payments due within one year
            
            
            (610,622
            )
            
            (576,934
            )Principal
                payments due after one year
            
            $
            6,173,174
            
            $
            3,442,467







In
      October 2006, WM Realty refinanced its mortgage with a ten-year mortgage loan
      in
      the principal amount of $3,200,000, with interest at 6.75%. The note provides
      for monthly payments of $20,954.94 for ten years, with the remaining principal
      due at maturity. The cost of refinancing, approximately $104,000, will be
      amortized over the term of the new loan.




WM
      Realty
      used the proceeds of the mortgage loan to pay its outstanding obligations under
      its prior mortgage and to pay the Company the money the Company advanced WM
      Realty at the time of its initial purchase of the real estate from the Company
      in February 2006. The amount advanced, $226,808, was offset by rent arrearages
      of $43,018, October rent of $36,500, a late payment fee of $625 and a tax escrow
      payment in the amount of $24,445, resulting in a net payment to the Company
      of
      $122,220.






**NOTE
      7. RESTRICTED CASH - INDEMNIFICATION OBLIGATION ESCROW**




In
      May
      2004, the Company was requested to undertake a response and remedial action
      to
      cleanup environmental issues discovered during an onsite inspection by the
      Commonwealth of Massachusetts Office of Environmental Affairs. The Company
      signed a consent order in October 2004, paid a fine of $7,800 and proceeded
      to
      correct the deficiencies.




The
      stock
      purchase agreement pursuant to which the Company purchased the stock of Ranor
      provided for the parties to establish an escrow account into which $925,000
      of
      the purchase price of the securities was placed.  If the sellers had
      breached any of their representations and warranties under the stock purchase
      agreement, the Company’s sole recourse is against the escrow account. To
      the extent that there is no claim against the escrow by one year from the
      closing, the escrow account is paid to Ranor’s former stockholders.  The
      Company is entitled to recover from the escrow an amount equal to its damages
      sustained as a result of a breach by the selling stockholders of their
      representations and warranties.  The Company has recorded an expense and a
      claim against the escrow account in the amount of $81,400. The claim is for
      the
      former stockholders’ breach of their representations and warranties relating to
      environmental matters.  The Company reflects the recovery of this amount on
      its March 31, 2006 and December 31, 2006 balance sheets as a reduction in the
      amount due to the former stockholders and an increase in additional paid in
      capital.  A claim has been submitted to the escrow agent.




11


In
      the
      fiscal year ended March 31, 2007, the Company constructed a shed to store scrap
      materials and has made a claim for construction costs under the escrow
      agreement, based on a breach of the seller’s representations and warranties
      relating to environmental compliance. The purpose of the shed is to protect
      the
      surrounding soil from any seepage. The cost of constructing the shed was
      $114,620.




**NOTE
      8. RELATED PARTY TRANSACTIONS**




**Management
      Fees**




Prior
      to
      February 24, 2006, Ranor entered into management agreements with four of its
      former stockholders which provided for compensation of $75,000, $75,000, $25,000
      and $25,000 to them. With the consent of the former stockholders, no
      compensation was paid under these agreements and, in lieu of payment under
      these
      agreements; Ranor paid three of these former stockholders, who also served
      as
      officers of Ranor, a salary of $150,000 each. No compensation was paid to the
      fourth stockholder. On February 24, 2006, any obligations of Ranor to these
      former stockholders were terminated. Also on February 24, 2006,
      contemporaneously with the reverse acquisition, the Company entered into a
      new
      management and consulting agreement with Techprecision LLC, a limited liability
      company composed of three stockholders of the Company, including the Company’s
      chief executive officer. The Company pays compensation to Techprecision LLC
      at
      the annual rate of $200,000 pursuant to this agreement. The Agreement expires
      on
      March 31, 2009. During the term of the agreement, the manager shall serve as
      a
      consultant to the Company and each of its existing and future subsidiaries.
      The
      consultation will include assistance with the determination of the goals,
      general policies and direction of the Company and its subsidiaries, financings,
      manufacturing, sales, distribution and customer relations.




In
      addition to the $200,000 management fee, the manager shall be entitled to a
      performance bonus determined as follows; the compensation committee of the
      Board
      of Directors will set performance objectives for the fiscal year. If the
      performance objectives are attained or exceeded, the Company will pay the
      manager a performance bonus equal to two and one-half percent of the Company’s
      cash flow from operations for the fiscal year. In the event that the Company
      makes an acquisition or disposes of a business segment during a fiscal year,
      the
      performance objectives may be revised by the compensation committee to reflect
      such transaction.




**Sale
      of Real Property to Related Party**




On
      February 24, 2006, WM Realty borrowed $3,300,000 to purchase from Ranor, Inc.
      its real property for $3,000,000 which was appraised on October 31, 2005 at
      $4,750,000, and WM Realty leased the building and a major portion of the land
      back to Ranor, Inc. The Company advanced $226,808 to pay closing costs, which
      was paid at the time of the refinancing in October 2006. WM Realty was formed
      solely for the purpose of purchasing the real property from Ranor, and its
      partners are stockholders of the Company. The Company has considered WM Realty
      Management, LLC a special purpose entity as defined by FIN 46, and therefore
      has
      consolidated WM Realty operations into the Company.




At
      the
      time of the purchase or the real estate, WM Realty borrowed $3,300,000 and
      issued its mortgage note due August 1, 2006. The note bore interest at 11%
      and
      provided for monthly principal payments of $25,000. Expenses of obtaining the
      mortgage were $192,455 were amortized over approximately a five-month period.
      In
      August 2006, WM Realty obtained a one-month extension and the right to extend
      the maturity date for one month with the right to extend for an additional
      two
      months.




On
      October 4, 2006, WM Realty refinanced the real estate and borrowed $3.2 million.
      The proceeds were used to pay the existing mortgage of $3.1 million and closing
      costs. The new mortgage loan is for ten years at 6.75% with monthly payments
      of
      principal and interest of $20,595. The authorization is based on a thirty-year
      payout.




Pursuant
      to the agreement with the new lender, WM Realty maintains a tax escrow with
      the
      mortgagee. This escrow, which was $4,073 at December 31, 2006, is reflected
      on
      the balance sheet as “Mortgage escrow.”




12


**Loan
      from Stockholder**




The
      loan
      from stockholder represents a loan by Andrew Levy, who owns a 60% interest
      in WM
      Realty, to WM Realty, and is reflected on our balance sheet as a result of
      the
      consolidation of WM Realty with the Company. The
      loan
      of $105,000 made in October 2006, and $15,000 was repaid during the quarter
      ended December 31, 2006. The remaining $90,000 is payable in monthly
      installments of $10,000 on the first day of each month commencing January 1,
      2007 for nine months. Interest at the rate of 8% per annum is payable at the
      end
      of the loan.




**NOTE
      9. LEASE**




On
      February 24, 2006, Ranor, Inc. entered into a lease with WM Realty, a special
      purpose entity and related party. The term of the lease is for a period of
      fifteen years commencing on February 24, 2006. For the nine months ended
      December 31, 2006 rent expense paid by the Company was $343,165. This amount
      was
      eliminated in consolidation and the interest and depreciation, in the amount
      of
      $251,597, were expensed.




The
      Company has an option to extend the term of the lease for two additional terms
      of five years, upon the same terms. The Minimum Rent payable for each option
      term will be the greater of (i) the minimum rent payable under the lease
      immediately prior to either the expiration date, or the expiration of the
      preceding option term, or (ii) the fair market rent for the leased premises.
      Minimum rental for the base year of the lease is $438,000. Effective as of
      January of each year subsequent to the base year, during the contract and any
      subsequent extension, a cost of living adjustment will be made to the minimum
      rental, based on the Consumer Price Index.




The
      Company has the option to repurchase the property at any time beginning after
      one year from the date of the agreement, at the appraised market
      value.




The
      minimum future lease payments are as follows:




Year
                Ended March 31
            
            Amount2007
            
            $
            438,0002008
            
            
            438,0002009
            
            
            438,0002010
            
            
            438,0002011-2015
            
            
            2,190,0002016-2021
            
            
            2,190,0002022
            
            
            438,000Total
            
            $
            6,570,000






**NOTE
      10. CAPITAL STOCK**




**Preferred
      stock**




On
      February 24, 2006, Barron Partners LP purchased 7,719,250 shares of series
      A
      preferred stock, par value $0.0001 per share for $2,150,000, net of a $50,000
      due diligence fee payable to Barron Partners. Initially, Series A Preferred
      Stock is convertible into common stock at a conversion rate of one share of
      Common Stock, for each share of Series A Preferred Stock. In addition, pursuant
      to the preferred stock purchase agreement, the Company issued to Barron Partners
      common stock purchase warrants to purchase up to 5,610,000 of common stock
      at
      $0.57 per share and 5,610,000 shares of common stock at $0.855 per share.




Because
      the Company did not attain EBITDA of $.04613 per share for the year ended March
      31, 2006 on a fully-diluted basis, as defined, the conversion price was adjusted
      from $.285 to $.24225, a reduction of 15%, with the result that the series
      A
      preferred stock became convertible into 9,081,527 shares of common stock. As
      a
      result of the Company’s failure to meet the EBITDA target for the year ended
      March 31, 2006, the exercise price of the warrants decreased by 15%, from $.57
      to $.4845 and from $.855 to $.7268 per share.




13


The
      conversion rate of the series A preferred stock and the exercise price of the
      warrants are subject to further adjustment if the Company’s EBITDA per share, on
      a fully-diluted basis, is less than $.08568 per share for the year ended March
      31, 2007, based on the percentage shortfall from $.08568 per share, from zero
      up
      to a maximum adjustment of 15%. The adjustment could result in an increase
      in
      the maximum number of shares of common stock being issued upon conversion of
      the
      series A preferred stock from 9,081,527 to 10,684,150 shares of common stock
      and
      a further reduction in the exercise price of the warrants from $.4845 to $.4118
      and from $.7268 to $.6177 per share.




EBITDA
      per share is earnings from recurring operation before any charges relating
      to
      the transactions involved in February 24, 2006 agreement and any other non
      recurring items, including warrants, but excluding options or stock grants
      issued to management and key employee. The per share figures are computed on
      a
      fully-diluted basis. Fully diluted EBITDA is based on the number of outstanding
      shares of common stock plus all shares of common stock issuable upon conversion
      of all outstanding convertible securities and upon exercise of all outstanding
      warrants, options and rights, regardless of whether (i) such shares would be
      included in determining diluted earnings per share and (ii) such convertible
      securities are subject to a restriction or limitation on exercise. Thus, for
      purpose of determining fully-diluted EBITDA per Share, the 4.9% limitation
      shall
      be disregarded. In determining the EBITDA any shares of common stock issuable
      as
      a result of an adjustment to the conversion prices will be
      excluded.




The
      holders of the series A preferred stock and their affiliates are not be entitled
      to convert the series A preferred stock into shares of common stock or exercise
      warrants to the extent that such conversion or exercise would result in
      beneficial ownership by the investor and its affiliates of more than 4.9% (“4.9%
      Limitation”) of the then outstanding number of shares of common stock. The
      agreement, as well as the certificate of designation relating to the series
      A
      preferred stock and the warrants, provide that this provision cannot be
      amended.




The
      Company agreed not to issue any additional preferred stock until the earlier
      of
      (a) three years from the closing or (b) the date that the Investor transfers
      and/or converts not less than 90% of the shares of preferred stock and sells
      the
      underlying shares of common stock and for two years after closing not to enter
      into any new borrowing of more than three times the sum of the earnings before
      interest, tax, depreciation and amortization (EBITDA) from recurring operations
      over the trailing four quarters.




The
      preferred stockholders have the right of first refusal in the event that the
      Company seeks to raise additional funds through a private placement of
      securities, other than exempt issuances. The percentage of shares that preferred
      stockholders may acquire is based on the ratio of shares held by the investor
      plus the number of shares issuable upon conversion of series A preferred stock
      owned by the investor to the total of such shares.




No
      dividends are payable with respect to the series A preferred stock and no
      dividends are payable on common stock while series A preferred stock is
      outstanding. The Company is also prohibited from purchasing its common stock
      while preferred stock is outstanding.




Upon
      any
      liquidation the Company is required to pay a liquidated preference of $.285
      for
      each share of series A preferred stock. The payment will be made before any
      payment to holders of any junior securities and after payment to holders of
      securities that are senior to the series A preferred stock.




The
      series A preferred stockholders do not have voting rights. However, the approval
      of the holders of 75% of the outstanding shares of series A preferred stock
      is
      required to amend the certificate of incorporation, change the provisions of
      the
      certificate of designation relating to the series A preferred stock, authorize
      additional shares of series A preferred stock in addition to the 9 million
      presently authorized, or to authorize any class of stock that ranks senior
      with
      respect to voting rights, dividends or liquidations.




14


**Common
      stock purchase warrants**




On
      December 31, 2006 there were outstanding warrants to purchase 11,220,000 shares
      of common stock, which are held by the holder of the series A preferred stock.
      These warrants are exercisable, in part or full, at any time from February
      24,
      2006 to expiration time, February 24, 2011. Warrants to purchase 5,610,000
      shares have an exercise price of $.4845 and warrants to purchase the remaining
      5,610,000 shares have an exercise price of $.7368. The exercise price may be
      reduced by up to 15% if the Company does not have fully diluted EBITDA of $.08568
      per share for the year ending March 31, 2006. Any reduction in the exercise
      price of the warrants will not affect the number of shares issuable upon
      exercise of the warrants. The exercise price of the warrants is also subject
      to
      reduction in the event that the Company issues, with certain limited exceptions,
      common stock at a price or convertible securities with an exercise or conversion
      price which is less than the exercise price of the warrants.




**Common
      stock**




The
      Company had 10,009,000 shares of common stock, $.0001 par value, outstanding
      on
      December 31, 2006.




During
      the nine months ended December 31, 2006, the Company granted 126,000 shares
      of
      common stock to employees as compensation for services. The vested shares were
      valued at $.18 per share, representing a discount for sale restriction, from
      the
      market price per share based on the $.285 conversion price of the series A
      preferred stock. The employees’ rights to the shares vested immediately as to
      42,000 shares and they vest in installments as to the remaining
      shares.




**2006
      Long-Term Incentive Plan**




On
      July
      27, 2006, the board of directors approved an amendment to the 2006 Long-Term
      Incentive Plan which resulted in the grant to the independent directors of
      options to purchase an aggregate of 50,000 shares. Prior to the amendment,
      the
      number of shares subject to options granted to independent directors were 25,000
      shares, which were granted to the present independent directors in March 2006.
      All options held by the board of directors have an exercise price of $.285
      being
      the fair value per share of common stock. The grant of options to purchase
      150,000 shares of common stock to the independent directors resulted in a charge
      to income during the nine months ended December 31, 2006 of
      $13,500.




On
      October 30, 2006, the stockholders approved (i) the adoption of the 2006
      Long-Term Incentive Plan and (ii) an amendment to the Company’s certificate of
      incorporation to include the following provision:




“The
      terms and conditions of any rights, options and warrants approved by the Board
      of Directors may provide that any or all of such terms and conditions may not
      be
      waived or amended or may be waived or amended only with the consent of the
      holders of a designated percentage of a designated class or classes of capital
      stock of the Corporation (or a designated group or groups of holders within
      such
      class or classes, including but not limited to disinterested holders), and
      the
      applicable terms and conditions of any such rights, options or warrants so
      conditioned may not be waived or amended or may not be waived or amended absent
      such consent.”




The
      plan
      will become effective 20 days after an information statement relating to the
      2006 plan and the amendment to the Company’s certificate of incorporation is
      mailed to the Company’s stockholders. The information statement was mailed to
      stockholders on January 24, 2007.




15





**NOTE
      11. EARNINGS PER SHARE**




We
      compute basic earnings per share (“basic EPS”) by dividing net income by the
      weighted average number of shares of common stock outstanding for the reporting
      period. Diluted earnings per share (“diluted EPS”) gives effects to all dilutive
      potential shares outstanding resulting from employee stock options during the
      period. The following table sets forth the computation of basic and diluted
      per
      share for the nine-month periods ended December 31, 2006 and 2005.




Nine
                months ended December 31,2006
            
            2005Net
                income (loss)
            
            $
            298,276
            
            $
            (248,761
            )Basic-weighted
                average shares outstanding
            
            
            10,005,557
            
            
            8,089,000Basic
                EPS
            
            $
            .01
            
            $
            (.03
            )Effect
                of dilutive potential securities
            
            
            9,081,527
            
            
            -0-Dilutive
                weighted average shares outstanding
            
            
            19,090,527
            
            
            8,089,000Dilutive
                earnings per share
            
            $
            .01
            
            $
            (.03
            )







The
      assumed exercise of outstanding stock options has been excluded from the
      calculations of earnings per share for the nine months ended December 31, 2006
      as their effect is antidilutive.




**NOTE
      12. SUBSEQUENT EVENTS**




In
      February 2007, the Company entered into an agreement with Sovereign Bank which
      will (i) reduce the interest rate on our revolving credit line from prime plus
      11⁄2% to prime plus 1% and (ii) provide for the Company to borrow up to $500,000
      at prime plus 1% in order to financing capital expenditures. Under this capital
      expenditures facility, the Company may borrow up to $500,000 until the February
      1, 2008, with interest only payable through February 1, 2008 and the principal
      to be amortized over a five-year term commencing February 1, 2008.




On
      January 29, 2007, the management agreement with Techprecision LLC was terminated
      as of December 31, 2006. In connection with the termination, the Company made
      a
      payment of $16,667 on or about January 15, 2007 and the Company agreed to make
      eight monthly payments of $9,167 to Techprecision LLC, commencing February
      15,
      2007 and ending on September 15, 2007.




As
      a
      result of the termination of the management agreement, the Company’s chief
      executive officer is no longer receiving compensation through Techprecision
      LLC,
      and the Company is paying him a salary of $160,000 per annum.




Pursuant
      to the stock purchase agreement dated August 17, 2005, by which the Company
      acquired the stock of Ranor, Inc., the Company placed $925,000 of the purchase
      price payable to Ranor’s two principal stockholders (the “sellers”) in an escrow
      account to secure the sellers’ liabilities for any breach of their
      representations and warranties under the stock purchase agreement. In January
      2007, the Company made a claim under the escrow agreement for damages resulting
      from breaches of the sellers’ representations and warranties under the stock
      purchase agreement. On February 13, 2007, the Company entered into a settlement
      agreement with the sellers pursuant to which $500,000 of the escrow account
      is
      to be paid to the Company, the balance of the escrow account is to be paid
      to
      the sellers and the Company and the sellers exchanged general
      releases.




16


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




**Statement
      Regarding Forward Looking Disclosure**


The
      following discussion of the results of our operations and financial condition
      should be read in conjunction with our financial statements and the related
      notes, which appear elsewhere in this report. This quarterly report of
      Techprecision Corporation on Form 10-QSB, 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, including those risks discussed under “Risk Factors” in our
      Form 10-KSB annual report for the year ended March 31, 2006 and those described
      in any other filings which we make with the SEC, as well as the disclosure
      contained in “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” in the Form 10-KSB for the year ended March 31, 2006 and
      this Form 10-QSB. In addition, such statements could be affected by risks and
      uncertainties related to our ability to generate business on an on-going
      business, to obtain any required financing, to receive contract awards from
      the
      competitive bidding process, maintain standards to enable us to manufacture
      products to exacting specifications, enter new markets for our services, market
      and customer acceptance, our ability to raise any financing which we may require
      for our operations, competition, government regulations and requirements,
      pricing and development difficulties, our ability to make acquisitions and
      successfully integrate those acquisitions with our business, as well as general
      industry and market conditions and growth rates, and general economic
      conditions. Any forward-looking statements speak only as of the date on which
      they are made, and we do not undertake any obligation to update any
      forward-looking statement to reflect events or circumstances after the date
      of
      this report. Investors should evaluate any statements made by the Company in
      light of these important factors.




**Overview**




We
      operate in one business segment - fabrication, precision machining and
      engineering of metal products up to 100 tons. Most of our products are
      fabricated from raw metal plate or forgings. Materials used in the manufacturing
      of our products are either supplied by our customers or acquired from raw
      material suppliers we have worked with for many years. Our clients are generally
      in industries associated with the nuclear, aerospace, military and defense,
      commercial and national laboratory industries. Payment terms associated with
      each project often include progress payments and occasionally include deposits.
      Generally, payment terms are 30 to 45 days from the invoice date. Some of the
      work we perform for our customers is a part of government appropriation
      packages, and therefore, subject to the Miller Act, requiring the prime
      contractors (our customers) to pay all subcontractors under contracted purchase
      agreements first.




These
      products are manufactured for our clients under build-to-print agreements.
      Work
      is performed by our personnel under firm contracted purchase orders, for each
      project undertaken at the facility. Our work is contracted under terms that
      require down payments for the acquisition of materials. Additionally, depending
      on the length of a given project, some contracts require progress payments
      based
      on major milestones of work completed.




Ranor,
      together with its predecessor, has been in business since 1956. Ranor’s
      predecessor was sold by its founders in 1999 to Standard Automotive Corporation
      through its subsidiary Critical Components Corporation. From June 1999 until
      August 2002, Ranor’s predecessor, which was also named Ranor, was operated by
      Critical Components. In December 2001, Standard filed for protection under
      the
      Bankruptcy Code and Ranor’s predecessor operated under Chapter 11 until on or
      about the quarter ended June 30, 2002. Subsequently, all Standard’s holdings
      were sold. In 2002, Ranor acquired the assets of its predecessor from the
      bankruptcy estate. See the discussion under “Reverse Acquisition.” As a result
      of the bankruptcy of Standard’s subsidiary, customers were initially reluctant
      to use our services. In recent years, as both the market for our services has
      improved and we demonstrated to our customers that we have both the financial
      and manufacturing ability to meet their specifications and time requirements,
      we
      have been able to improve both our revenue and our gross margin, although not
      necessarily on a quarter to quarter basis.




17


In
      recent
      years, the capital goods market experienced a slow down due to both the industry
      over-build of product in the late 1990’s and the events of September 11, 2001.
      As noted in the preceding paragraph, the development of our business was further
      affected by the bankruptcy of Standard. However, based on recent project
      inquiries, recent projects awarded and current customer demands for our
      services, we believe the market has rebounded and that we are finding increased
      acceptance of our services.




A
      significant portion of our revenue is generated by a small number of customers
      who differ from period to period as we complete work on projects or commence
      new
      projects for other customers. In the nine months ended December 31, 2006, three
      customers accounted for approximately 40% of our revenue. Our contracts
      generally result from negotiation and from bids made pursuant to a request
      for
      proposal. Our ability to receive contract awards is dependent upon the
      contracting party’s perception of such factors as our ability to perform on
      time, our history of performance and our financial condition. We believe, based
      on increased requests for quotations, that there is an increasing demand for
      services of the type which we perform, notwithstanding the decline in revenue
      from the nine months ended December 31, 2005 to the nine months ended December
      31, 2006. We are changing the manner in which we treat potential business.
      Ranor
      and its predecessor had traditionally performed services on relatively low
      margins since the customers demanded more services without an increase in cost.
      We are seeking more long-term projects with a more predictable cost structure,
      and rejecting or not bidding on projects we do not believe would generate an
      adequate gross margin. Thus, although our sales decreased from the nine months
      ended December 31, 2006 from the comparable period of 2005, our gross margin
      increased from 14.% to 19.8% and our income from operations increased from
      $484,000 to $1,018,000.




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




Although
      we provide manufacturing services for large governmental programs, we usually
      do
      not work directly for agencies of the United States government. Rather, we
      perform our services for large governmental contractors and large utility
      companies. However, our business is dependent in part on the continuation of
      governmental programs, which require the services we provide.




We
      lease
      our facilities from WM Realty which is an affiliated entity, to whom we sold
      the
      real property in February 2006. Because WM Realty is an affiliated entity and
      our lease with WM Realty Management is the sole source of funding for WM Realty,
      under generally accepted accounting principles, the real estate is treated
      as
      being owned by us and WM Realty’s mortgage obligations are treated as our
      obligations. See “Variable Interest Entity.”.




**Critical
      Accounting Policies**




The
      preparation of the Company’s financial statements conform to the generally
      accepted accounting principles in the United States and requires our management
      to make assumptions, estimates and judgments that effect the amounts reported
      in
      the financial statements, including all notes thereto, and related disclosures
      of commitments and contingencies, if any. We rely on historical experience
      and
      other assumptions we believe to be reasonable in making our estimates. Actual
      financial results of the operations could differ materially from such estimates.
      There have been no significant changes in the assumptions, estimates and
      judgments used in the preparation of our audited 2006 financial statements
      from
      the assumptions, estimates and judgments used in the preparation of our 2005
      audited financial statements.




18


**Revenue
      Recognition and Costs Incurred**




We
      derive
      revenues from (i) the fabrication of large metal components for our customers;
      (ii) the precision machining of such large metal components, including
      incidental engineering services, and (iii) the installation of such components
      at the customers’ locations when the scope of the project requires such
      installations.




Revenue
      and costs are recognized on the units of delivery method. This method recognizes
      as revenue the contract price of units of the product delivered during each
      period and the costs allocable to the delivered units as the cost of earned
      revenue. Costs allocable to undelivered units are reported in the balance sheet
      as inventory. Amounts in excess of agreed upon contract price for customer
      directed changes, constructive changes, customer delays or other causes of
      additional contract costs are recognized in contract value if it is probable
      that a claim for such amounts will result in additional revenue and the amounts
      can be reasonably estimated. Revisions in cost and profit estimates are
      reflected in the period in which the facts requiring the revision become known
      and are estimable.




Adjustments
      to cost estimates are made periodically, and losses expected to be incurred
      on
      contracts in progress are charged to operations in the period such losses are
      determined and are reflected as reductions of the carrying value of the costs
      incurred on uncompleted contracts. Costs incurred on uncompleted contracts
      consist of labor, overhead, and materials. Work in process is stated at the
      lower of cost or market and reflect accrued losses, if required, on uncompleted
      contracts.




**Variable
      Interest Entity**




We
      have
      consolidated a variable interest entity that entered into a sale and leaseback
      contract with us to conform to FASB Interpretation No. 46, “Consolidation of
      Variable Interest Entities” (FIN 46). We have also adopted the revision to FIN
      46, FIN 46R, which clarified certain provisions of the original interpretation
      and exempted certain entities from its requirements. ****




**Income
      Taxes**




Our
      fiscal year ends on March 31. We provide for federal and state income taxes
      currently payable, as well as those deferred because of temporary differences
      between reporting income and expenses for financial statement purposes versus
      tax purposes. Deferred tax assets and liabilities are recognized for the future
      tax consequences attributable to differences between carrying amount of assets
      and liabilities for financial reporting purposes and the amounts used for income
      tax purposes. Deferred tax assets and liabilities are measured using the enacted
      tax rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recoverable and or settled. The effect
      of the change in the tax rates is recognized as income or expense in the period
      of the change. A valuation allowance is established, when necessary, to reduce
      deferred income taxes to the amount that is more likely than not to be realized.
      As of March 31, 2005, we had net operating loss carry-forwards approximating
      $3,470,000. Pursuant to Section 382 of the Internal Revenue Code, utilization
      of
      these losses may be limited in the event of a change in control, as defined
      in
      the Treasury Regulations. The change in ownership resulting from our acquisition
      of Ranor limits our ability to use the loss carry-forwards.




19


**Reverse
      Acquisition**




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




**Non-GAAP
      Information**




We
      refer
      to EBITDA, which is a non-GAAP performance measure, because our agreement with
      Barron Partners uses EBITDA as a measure for determining whether there is an
      adjustment in the conversion price of the series A preferred stock or the
      exercise price of the warrants. EBITDA is determined by adding to net income
      the
      amount deducted for interest, taxes, depreciation and amortization. The
      following table shows the relationship between net income and EBITDA for the
      nine and three months ended December 31, 2006 and 2005 (dollars in
      thousands).




Nine
                Months Ended
              December
                31,
            
            Three
                Months Ended
              December
                31,2006
            
            2005
            
            2006
            
            2005Net
                gain(loss)
            
            $
            298
            
            $
            (347
            )
            $
            287
            
            $
            (99
            )Plus
                interest (net)
            
            
            506
            
            
            841
            
            
            142
            
            
            281Plus
                taxes
            
            
            —
            
            
            —
            
            
            —
            
            
            —Plus
                depreciation and amortization
            
            
            521
            
            
            310
            
            
            100
            
            
            103EBITDA
            
            $
            1,325
            
            $
            804
            
            $
            529
            
            $
            285





**New
      Accounting Pronouncements**




In
      November 2004, the FASB issued SFAS No. 151 “Inventory Costs, an amendment of
      Accounting Research Bulletin (“ARB”) No. 43, Chapter 4.” The amendments made by
      Statement 151 clarify that, abnormal amounts of idle facility expense, freight,
      handling costs and wasted materials (spoilage) should be recognized as
      current-period charges and require the allocation of fixed production overheads
      to inventory based on the normal capacity of the production facilities. The
      guidance is effective for inventory costs incurred during the fiscal years
      beginning after June 15, 2005.




In
      December 2004, The FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,
      an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions”
(“SFAS 153”). The amendments made by SFAS 153 as based on the principle that
      exchanges of nonmonetary assets should be measured based on the fair value
      of
      the assets exchanged. Further, the amendments eliminate the narrow exception
      for
      nonmonetary exchanges of similar productive assets and replace it with a broader
      exception for exchanges of nonmonetary assets that do not have commercial
      substance. Previously, Opinion 29 required that the accounting for an exchange
      of a productive asset should be based on the recorded amount of the asset
      relinquished. Opinion 29 provided for an exception to its basic measurement
      principle (fair value) for exchanges of similar productive assets. The Board
      believes that exception required that some nonmonetary exchanges, although
      commercially substantive, be recorded on a carry over basis. By focusing the
      exception on exchanges that lack commercial substance, the Board believes this
      Statement produces financial reporting that more faithfully represents the
      economics of the transaction. The Statement is effective for nonmonetary asset
      exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
      application is permitted for nonmonetary asset exchanges occurring in fiscal
      periods beginning after the date of issuance. The provision of this statement
      shall be applied prospectively.




20


In
      December 2004, the FASB issued SFAS No.123 (revised 2004), “Share-Based
      Payment.” Statement 123R will provide investors and other users of financial
      statements with more complete financial information by requiring that the
      compensation cost relating to share-based payment transactions be recognized
      in
      financial statements. That cost will be measured based on the fair value of
      the
      equity or liability instruments issued. Statement 123R covers a wide range
      of
      share-based compensation arrangements including stock options, restricted stock
      plans, performance-based awards, stock appreciation rights, and employee stock
      purchase plans. Statement 123R replaces FASB Statement No. 123, Accounting
      for
      Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
      Stock Issued to Employees. Statement 123, as originally issued in 1995,
      established as preferable a fair-value-based method of accounting for
      share-based payment transactions with employees. However, that statement
      permitted entities the option of continuing to apply the guidance in Opinion
      25,
      as long as the footnotes to financial statements disclosed what net income
      would
      have been had the preferable fair-value-based method been used. Public entities
      that are small business issuers will be required to apply Statement 123R as
      of
      the first interim or annual reporting period of the first fiscal year that
      begins after December 15, 2005. Because our fiscal year at January 1, 2006
      was
      the calendar year, we became subject to Statement 123R on January 1, 2006.
      Prior
      to the reverse acquisition, we did not grant any options or equity-based
      incentives. To the extent that we grant such options or other equity-based
      incentives, the value thereof is included as a general and administrative
      expense.




The
      adoption of the foregoing new statements did not have a significant impact
      on
      our financial statements through December 31, 2006, since we did not grant
      any
      options that would not be treated as an expense under FASB 123, prior to the
      revision. However, on an ongoing basis, to the extent that we grant options
      to
      employees, we will incur a compensation expense which will have the effect
      of
      increasing our administrative expenses and reducing our net income and
      EBITDA.




In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections,
      -
      a replacement of APB Opinion No. 20 and FASB Statement No.3". The Statement
      establishes, unless impracticable, retrospective application as the required
      method for reporting a change in accounting principle in the absence of explicit
      transition requirements specific to the newly adopted accounting principle.
      The
      provisions of this Statement are effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 15, 2005.
      Early adoption is permitted for accounting changes and corrections of errors
      made in fiscal years beginning after the date this Statement was issued. The
      Company does not believe that the adoption of this Statement in fiscal 2007
      will
      have a material impact on the Company's financial position or result of
      operations.




In
      February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments - and amendment of FASB Statements No. 133 and 140".
      This
      Statement, among other things, allows a preparer to elect fair value measurement
      of instruments in cases in which a derivative would otherwise have to be
      bifurcated. The provisions of this Statement are effective for all financial
      instruments acquired or issued in fiscal years beginning after December 15,
      2006. Early adoption is permitted for instruments that an entity holds at the
      date of adoption on an instrument-by-instrument basis. The Company does not
      believe that the adoption of this Statement in fiscal 2007 will have a material
      impact on the Company's consolidated financial position or results of
      operations.




In
      March
      2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets-an amendment of FASB Statement No. 140" This Statement amends SFAS No.
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities", with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. The provisions of this
      Statement are effective for all financial instruments acquired or issued in
      fiscal years beginning after December 15, 2006. Early adoption is permitted
      for
      instruments that an entity holds at the date of adoption on an
      instrument-by-instrument basis. The Company does not believe that the adoption
      of this Statement is fiscal 2007 will have material impact on the Company's
      consolidated financial position or results of operations.




21




In
      July
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48") which
      prescribes a recognition threshold and measurement attribute, as well as
      criteria for subsequently recognizing, derecognizing and measuring uncertain
      tax
      positions for financial statement purposes. FIN 48 also requires expanded
      disclosure with respect to the uncertainty in income taxes assets and
      liabilities. FIN 48 is effective for fiscal years beginning after December
      15,
      2006 and is required to be recognized as a change in accounting principle
      through a cumulative-effect adjustment to retained earnings as of the beginning
      of the year of adoption. The Company is currently evaluating the impact of
      adopting the provisions of FIN 48 in fiscal 2008.




**Results
      of operations**






**Nine
      Months Ended December 31, 2006 and 2005**






The
      amounts and percentages of changes in revenues and expenses and percentage
      of
      each expense to total revenues, for the nine months ended December 31, 2006
      as
      compared to 2005 are presented in the following table:




Nine
                Months Ended December 31,
            
            Increase
                (Decrease)2006
            
            2005
            
            2006
                Compared to 2005Percentage
            
            
            
            PercentageAmount
            
            of
                Sales
            
            Amount
            
            of
                Sales
            
            Amount
            
            PercentageNet
                sales
            
            $
            13,448,811
            
            
            100
            %
            $
            13,713,739
            
            
            100
            %
            $
            (264,928
            )
            
            -2
            %Cost
                of sales
            
            
            10,786,882
            
            
            80
            %
            
            11,804,763
            
            
            86
            %
            
            (1,017,881
            )
            
            -9
            %Gross
                profit
            
            
            2,661,929
            
            
            20
            %
            
            1,908,977
            
            
            14
            %
            
            752,952
            
            
            39
            %0
            %
            
            
            
            
            0
            %Professional
                expense
            
            
            350,791
            
            
            3
            %
            
            65,444
            
            
            0
            %
            
            285,347
            
            
            436
            %Payroll
                and related costs
            
            
            983,432
            
            
            7
            %
            
            1,109,700
            
            
            8
            %
            
            (126,268
            )
            
            -11
            %Other
                general and administrative
            
            
            309,667
            
            
            2
            %
            
            249,561
            
            
            2
            %
            
            60,106
            
            
            24
            %Total
                operating expenses
            
            
            1,643,890
            
            
            12
            %
            
            1,424,705
            
            
            10
            %
            
            219,185
            
            
            15
            %Income
                (loss) from operations
            
            
            1,018,038
            
            
            8
            %
            
            484,272
            
            
            4
            %
            
            533,766
            
            
            110
            %Other
                income (Expenses)Interest
                expense
            
            
            (506,263
            )
            
            -4
            %
            
            (840,849
            )
            
            -6
            %
            
            334,586Finance
                costs
            
            
            (214,686
            )
            
            -2
            %
            
            
            
            
            0
            %
            
            (214,686
            )Interest
                income
            
            
            1,186
            
            
            0
            %
            
            8,707
            
            
            0
            %
            
            (7,521
            )
            
            -86
            %(719,763
            )
            
            -5
            %
            
            (832,142
            )
            
            -6
            %
            
            112,379
            
            
            -14
            %Income
                (loss) before income taxes
            
            $
            298,276
            
            
            2
            %
            $
            (347,870
            )
            
            -3
            %
            $
            646,146
            
            
            -186
            %







Sales
      in
      the nine months ended December 31, 2006 (the “December 2006 period”) decreased
      $264,928 , or 2%, to $13,448,811, compared to $13,713,739 for the nine months
      ended December 31, 2005 (the “December 2005 period”). This decrease in sales
      reflected changes in our strategy of selling only the most cost efficient
      products. As a consequence of this strategy, our cost of sales for the December
      2006 period decreased $1,017,881, to $10,786,882, a decrease of 9%, from
      $11,804,763 for the December 2005 period. This decrease was greater than the
      decrease in sales, resulting in an improvement in the gross margin from 14%
      to
      20%.




22


Total
      operating expenses for the December 2006 period were $1,643,890, compared to
      $1,424,705, for the December 2005 period, an increase of $219,185, or 15%.
      The
      principal reason for increase in the total operating expenses was the additional
      professional fees.  The
      increase in professional fees reflected additional legal and accounting fees
      resulting from our status as a reporting company under the Securities Exchange
      Act of 1934.




Our
      payroll and related costs decreased by $126,268 (11%) from $1,109,700 to
      $983,432, in December 2006 as compared to, in December 2005. The decrease in
      payroll expense resulted from a decrease in compensation for officers and sales
      staff as a reduction in number of employees. During the December 2005 period,
      our compensation to officers included compensation to former stockholders who
      were officers and whose services were no longer required by us. Our payroll
      expense for the nine months ended December 31, 2006 includes payments of
      $150,000 under our management agreement with Techprecision LLC. These expenses
      are included under payroll since the services performed are those that are
      performed by officers and other employees.




Our
      other
      selling and administrative expenses increased by $60,106 (24%) from $249,561
      to
      $309,667, in December 2006 as compared to December 2005. Other selling, general
      and administrative expenses reflect sales development expenses, travel expenses
      relating to our management agreement with Techprecision LLC, and officers and
      directors’ liability insurance, as well as $13,500 of expense of equity-based
      compensation relating to the grant of options to our independent directors.
      Since our rent is paid to WM Realty, our rent is not reflected as an expense.




WM
      Realty
      is a special purpose entity which is consolidated with us. Costs relating to
      WM
      Realty include debt service charges, amortization of closing costs and
      depreciation, and interest of $230,000 on WM Realty’s mortgage
      obligation.




Interest
      expense for the December 2006 period was $506,263 as compared with $840,849
      for
      the December 2005 period. The decrease in interest expense reflects both a
      decrease in debt as a result of the payment of debt to related parties, which
      was paid on February 24, 2006 and a lower interest rate. The outstanding debt
      to
      the related parties was approximately $8,000,000 throughout fiscal 2005 and
      during fiscal 2006 through February 24, 2006. At December 31, 2006, our
      long-term debt (including the current portion) was $6,813,796. The long-term
      debt included the $3,197,295 mortgage debt of WM Realty. The average interest
      rate was 10% for the December 2006 period as compared with 14% for the December
      2005 period.




WM
      Realty
      expenses of $88,962 for professional fees, $2,502 for selling general and
      administrative expenses, $229,630 amortization of deferred loan costs and
      $230,317 for interest expense are included in our expenses.




As
      a
      result of the foregoing, the total operating income increased by $533,766 (110%)
      from $484,272 to $1,018,38, and we generated net income for the December 2006
      period of $298,276 or less than $.01 per share (basic and diluted), as compared
      to a net loss of $347.870, or $.03 per share (basic and diluted), for the
      December 2005 period.




23




**Three
      Months Ended December 31, 2006 and 2005**






The
      amounts and percentages of changes in revenues and expenses and percentage
      of
      each expense to total revenues, for the three months ended December 31, 2006
      as
      compared to 2005 are presented in the following table:




Three
                months ended December 31,
            
            Increase
                (Decrease)2006
            
            2005
            
            2006
                Compared to 2005Percentage
            
            
            
            PercentageAmount
            
            of
                Sales
            
            Amount
            
            of
                Sales
            
            Amount
            
            PercentageNet
                sales
            
            $
            5,533,541
            
            
            100
            %
            $
            4,636,980
            
            
            100
            %
            $
            896,561
            
            
            19
            %Cost
                of sales
            
            
            4,534,415
            
            
            82
            %
            
            3,986,124
            
            
            86
            %
            
            548,291
            
            
            14
            %Gross
                profit
            
            
            999,125
            
            
            18
            %
            
            650,857
            
            
            14
            %
            
            348,268
            
            
            54
            %Professional
                expense
            
            
            198,633
            
            
            4
            %
            
            15,299
            
            
            0
            %
            
            183,334
            
            
            1198
            %Payroll
                and related costs
            
            
            333,021
            
            
            6
            %
            
            341,242
            
            
            7
            %
            
            (8,221
            )
            
            -2
            %Other
                general and administrative
            
            
            36,342
            
            
            1
            %
            
            115,862
            
            
            2
            %
            
            (79,520
            )
            
            -69
            %Total
                operating expenses
            
            
            567,997
            
            
            10
            %
            
            472,403
            
            
            10
            %
            
            95,594
            
            
            20
            %Income
                (loss) from operations
            
            
            431,128
            
            
            8
            %
            
            178,454
            
            
            4
            %
            
            252,674
            
            
            142
            %Other
                income (Expenses)Interest
                expense
            
            
            (141,991
            )
            
            -3
            %
            
            (280,359
            )
            
            -6
            %
            
            138,368
            
            
            49
            %Finance
                costs
            
            
            (1,939
            )
            
            0
            %
            
            
            
            
            0
            %
            
            (1,939
            )Interest
                income
            
            
            523
            
            
            0
            %
            
            2,826
            
            
            0
            %
            
            (2,303
            )
            
            -81
            %(143,407
            )
            
            -3
            %
            
            (277,533
            )
            
            -6
            %
            
            134,126
            
            
            -48
            %Income
                (loss) before income taxes
            
            $
            287,721
            
            
            5
            %
            $
            (99,109
            )
            
            -2
            %
            $
            386,830
            
            
            390
            %







Sales
      in
      the three months ended December 31, 2006 (the “December 2006 quarter”) increased
      $896,591, or 19%, from $4,636,980 for the three months ended December 31, 2005
      (the “December 2005 quarter”) to $5,533,541. Our revenue was also affected by
      our change of marketing focus. We are seeking more longer-term projects with
      a
      more predictable cost structure, and rejecting or not bidding on projects which
      we do not believe are cost efficient. Cost of goods sold for the December 2006
      quarter were $4,534,415 as compared to $3,986,124 for the December 2005 quarter,
      an increase of $548,291, or 14%. As a result of our new strategy, our gross
      profit increased by $ 348,268, from $650,857 in the December 2005 quarter to
      $999,125, in December 2006 quarter as compared to 2005.






Total
      operating expenses for the December 2006 quarter were $594,000, compared to
      $448,000 for the December 2005. Despite decreases of $79,520 and $8,221 in
      other
      general and administrative and payroll expenses, respectively, the increase
      of
      $183,334 in professional fees resulted in an increase of $95,594, or 20% in
      total operating expenses, in December 2006 quarter as compared to 2005. The
      increase in professional fees reflected additional legal and accounting fees
      resulting from our status as a reporting company under the Securities Exchange
      Act of 1934.




24


The
      payroll and related costs decreased by $8,221 (2%), from $341,242 in the
      December 2005 quarter to $333,021 in December 2006 quarter. The decrease in
      payroll expense resulted from a decrease in compensation for officers and sales
      staff. During the December 2005 quarter, our compensation to officers included
      compensation to former stockholders who were officers and whose services are
      no
      longer required by us. In the December 2005 quarter, we carried more employees
      than we required under our then current contracts. We have reduced our staff
      which has allowed us to operate more efficiently; however, in connection with
      one project that was postponed, we retained the project group even though there
      were periods during the December 2006 quarter when they were not utilized
      efficiently.





Other
      selling, general and administrative expenses for the December 2006 quarter
      were
      $36,342, compared to $115,862 for the December 2005 period, a decrease of
      $153,312, or 55%. Other selling, general and administrative expenses reflect
      sales development expenses, travel expenses and officers and directors’
liability insurance. Since our rent is paid to WM Realty, our rent is not
      reflected either as an expense or revenue.




Interest
      expense for the December 2006 quarter was $141,991 as compared to $280,359
      for
      the December 2005 quarter, a decrease of $138,368 or 49%. The decrease is a
      result of lower interest rates charged on the present outstanding debt of
      $6,813,796 as compared to the outstanding debt of $8,000,000 for the period
      of
      2005 and up to the refinancing on February 24, 2006. The average interest rate
      was 10% for the December 2006 quarter as compared with 14% for the December
      2005
      quarter. WM Realty is a special purpose entity, which is consolidated with
      us.
      Costs relating to WM Realty include debt service charges, amortization of
      closing costs and depreciation, and interest of $93,000 on WM Realty’s mortgage
      obligation. The reduction in interest expenses also reflects a reduced interest
      rate on the WM Realty mortgage, which was refinanced in October
      2006.




As
      a
      result of the foregoing, our operating income increased by $252,674, from
      $178,454 to $567,997, in December 2006 quarter as compared to 2005. We generated
      net income for the December 2006 quarter of $287,721, or $.01 per share (basic
      and diluted), as compared to a net loss of $99,100, or $.05 per share (basic
      and
      diluted), for December 2005 period.




**Liquidity
      and Capital Resources**




Our
      cash
      position was $797,760 at December 31, 2006 and $492,801 at March 31, 2006.
      At
      December 31, 2006, we had a net working capital of $3,310,801, as compared
      with
      working capital of $91,000 at March 31, 2006. The $2,400,801 improvement in
      the
      net working capital was the result of refinancing WM Realty’s short-term
      mortgage loan of $3,300,000 with a long-term loan. In October 2006, WM Realty
      refinanced its mortgage with a ten-year mortgage loan in the principal amount
      of
      $3,200,000, with interest at 6.75%. The note provides for monthly payments
      of
      $20,954.94 for ten years, with the remaining principal due at maturity. The
      cost
      of refinancing, approximately $104,000, is being amortized over the term of
      the
      new loan.




WM
      Realty
      used the proceeds of the mortgage loan to pay its outstanding obligations under
      its prior mortgage and to pay the Company the money the Company advanced WM
      Realty at the time of its initial purchase of the real estate from the Company
      in February 2006. The amount advanced, $226,808, was offset by rent arrearages
      of $43,018, October rent of $36,500, a late payment fee of $625 and a tax escrow
      payment in the amount of $24,445, resulting in a net payment to the Company
      of
      $122,220.




In
      the
      normal course of our business, we require funds to enable us to complete our
      contracts. We generally receive customer progress payments to purchase raw
      materials required for the contract, and fund our operations from working
      capital. Contemporaneously with the reverse acquisition, we entered into an
      agreement with Sovereign Bank pursuant to which we borrowed $4,000,000 on a
      term
      loan basis (“the Term Note”), and we obtained a $1,000,000 revolving credit
      facility. We used the net proceeds from the $4,000,000 term loan to pay a
      portion of our obligations to the former Ranor stockholders under the Ranor
      stock purchase agreement. Since the revolving credit facility presently has
      a
      June 30, 2007 maturity date, our ability to use that facility is limited unless
      the bank agrees to an extension of the maturity date.




25


The
      Term
      Note is due on March 1, 2013, and is payable in 28 quarterly installments of
      $142,847. The note bears interest at 9% per annum through December 31, 2010
      and
      at prime plus 11⁄2% thereafter. At December 31, 2006 the principal balance due on
      our term loan to Sovereign Bank was $3,714,000.




The
      revolving credit facility initially provided for interest at prime plus 11⁄2%. In
      February 2007, this rate was reduced to prime plus 1% **.** We
      may
      borrow, subject to the borrowing formula at any time prior to June 30, 2007.
      Any
      advances under the revolving note become due on June 30, 2007. The maximum
      borrowing under the revolving note is the lesser of (i) $1,000,000 or (ii)
      the
      sum of 70% of eligible accounts and 40% of eligible inventory. At December
      31,
      2006, the maximum available under the borrowing formula was $1,000,000. At
      December 31, 2006, there was no borrowing under the revolving note.




The
      Term
      Note requires Ranor to maintain a ratio of earnings available for fixed charges
      to fixed charges of at least 1.2 to 1, commencing June 30, 2006, and an interest
      coverage ratio of at least 2:1. The interest coverage ratio is the ratio of
      earnings before interest and taxes to current interest payments. The agreement
      also limits our capital expenditures to $500,000 per year.




In
      February 2007, we amended our agreement with Sovereign Bank to (i) provide
      for a
      reduction in the interest rate on the revolving credit facility from prime
      plus
      11⁄2% to prime plus 1% and (ii) provide us with a capital expenditure facility
      pursuant to which we can borrow up to $500,000 at prime plus 1%. We pay interest
      only on this note until February 1, 2008, and thereafter we pay principal and
      interest, with principal being amortized over a five-year term commencing
      February 1, 2008. Although we incurred $4,000,000 in bank debt and, pursuant
      to
      FIN 46, the $3,200,000 in mortgage debt which is owed by a related party special
      purpose entity, the former debt to the related parties in the amount of
      approximately $10,000,000 was settled for payments totaling $8,975,000 of which
      $8,000,000 was principal and $975,500 was interest. In addition, interest of
      $222,944 due to the former stockholders was cancelled. The cancellation is
      reflected as a credit to capital in excess of par value. The outstanding debt
      prior to the reverse acquisition included $2,000,000 of mandatory redeemable
      preferred stock which was reflected as debt at March 31, 2005.




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




In
      the
      nine months ended December 31, 2006, we had cash flow from operations of
      $970,992, which is an improvement from the year ended March 31, 2006, in which
      we had negative cash flow from operations of $679,000. We attribute this
      improvement to our ability to operate more efficiently, which is reflected
      in
      our improved gross margin in the December 2006 period notwithstanding a decline
      in revenue. However, as a result of the reverse acquisition, we have additional
      expenses resulting from being a public company and we pay annual compensation
      of
      $200,000 pursuant to a management agreement with Techprecision. Offsetting
      these
      cost increases is the elimination of compensation that was paid to the former
      stockholders of Ranor.




On
      January 29, 2007, the management agreement with Techprecision LLC was terminated
      as of December 31, 2006. In connection with the termination, the Company made
      a
      payment of $16,667 on or about January 15, 2007 and the Company agreed to make
      eight monthly payments of $9,167 to Techprecision LLC, commencing February
      15,
      2007 and ending on September 15, 2007. As a result of the termination of the
      management agreement, the Company’s chief executive officer is no longer
      receiving compensation through Techprecision LLC, and the Company is paying
      him
      a salary of $160,000 per annum.


26




During
      the nine months ended December 31, 2006, we utilized the $970,992 cash from
      operations to purchase $230,558 to our property, plant and equipment and pay
      off
      $435,476 of indebtedness and increase our cash balance by $304,959. While we
      believe that our $500,000 capital expenditure facility and our cash flow from
      our operations should be sufficient to enable us to satisfy our cash
      requirements at least through the end of fiscal 2007, it is possible that we
      may
      require additional funds. If we require funds under the revolving credit
      facility, we may need to obtain an extension of the June 30, 2007 maturity
      date.
      In the event that we make an acquisition, we may require additional financing
      for the acquisition. However, we do not have any current plans for any
      acquisition, and we cannot give any assurance that we will make any acquisition.
      We have no commitment from any party for additional funds; however, the terms
      of
      our agreement with Barron Partners, particularly Barron Partners’ right of first
      refusal, may impair our ability to raise capital in the equity markets since
      potential investors are often reluctant to negotiate a financing when another
      party has a right to match the terms of the financing.




Pursuant
      to the stock purchase agreement dated August 17, 2005, by which we acquired
      the
      stock of Ranor, Inc., we placed $925,000 of the purchase price payable to
      Ranor’s two principal stockholders (the “sellers”) in an escrow account to
      secure the sellers’ liabilities for any breach of their representations and
      warranties under the stock purchase agreement. In January 2007, we made a claim
      under the escrow agreement for damages resulting from breaches of the sellers’
representations and warranties under the stock purchase agreement. On February
      13, 2007, we entered into a settlement agreement with the sellers pursuant
      to
      which $500,000 of the escrow account is to be paid to the Company, the balance
      of the escrow account is to be paid to the sellers and the Company and the
      sellers exchanged general releases.




**Item
      3. Controls and Procedures**




As
      of the
      end of the period covered by this report, our chief executive officer and chief
      financial officer evaluated the effectiveness of our disclosure controls and
      procedures. Based on their evaluation, the chief executive officer and chief
      financial officer concluded that our disclosure controls and procedures are
      effective in alerting them to material information that is required to be
      included in the reports that we file or submit under the Securities Exchange
      Act
      of 1934 and that the information required to be disclosed in the reports that
      we
      file or submit under the Securities Exchange Act of 1934 is accumulated and
      communicated to our management, including our chief executive officer and chief
      financial officer, to allow timely decisions regarding required
      disclosure.






Our
      chief
      executive officer and chief financial officer have concluded that there were
      no
      significant changes in our internal controls or in other factors that could
      significantly affect these controls during the quarter ended December 31,
      2006.




**PART
      II. OTHER INFORMATION**




**Item
      6.**  **Exhibits**





31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act


31.2
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act


32.1
            Certification
                of Chief Executive and Financial Officer pursuant to Section 906
                of the
                Sarbanes-Oxley Act







27





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




TECHPRECISION
              CORPORATION(Registrant)Dated:
              February 14, 2007
            By:
            /s/ James
              G.
              ReindlJames
              G. Reindl, Chief Executive
              Officer  Dated:
              February 14, 2007
            By:
            /s/ Mary
              DesmondMary
              Desmond, Chief Financial
              Officer




28