TECHPRECISION CORP - Regulatory Filings 2007

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

September 30, 2007

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 November 9, 2007 there are 11,083,000 shares of the common stock, par value $.0001 per share, outstanding.

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

Index

	Page
Part
I. Financial Information
Item

Financial Statements | | | Index | | | Unaudited balance sheet at September 30, 2007 | 1 | | Unaudited statements of operations for the three months and six months ended September 30, 2007 and 2006 | 2 | | Unaudited statement of stockholders’ equity for the period April 1, 2007 to September 30, 2007 | 3 | | Unaudited statements of cash flows for the six months ended September 30, 2007 and 2006 | 4 | | Notes to financial statements | 5 | | Item
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | | Item
Controls and Procedures | 24 | | Part II. Other Information | | | Item
Legal Proceedings | 24 | | Item
Submission of Matters to a Vote of Security Holders | 25 | | Item 6 Exhibits | 25 |

TECHPRECISION CORPORATION CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2007 (UNAUDITED)

| CURRENT ASSETS — Cash

and cash equivalents	$ 2,812,029
Accounts
receivable, less allowance for doubtful
accounts
of $25,000 at September 30, 2007	3,149,003
Costs
incurred on uncompleted contracts,
net
of allowance for loss and progress billings	3,314,040
Inventories-
raw materials	189,941
Prepaid
expenses	1,555,069
Total
current assets	11,020,082
Property,
plant and equipment, net	2,463,464
Other
assets deferred loan cost, net	130,206
Total
assets	$ 13,613,752
CURRENT
LIABILITIES
Accounts
payable	$ 1,780,476
Deferred
revenue	3,354,320
Accrued
expenses	810,508
Current
maturity of long-term debt	576,935
Total
current liabilities	6,522,239
LONG-TERM
DEBT
Notes
payable- noncurrent	5,748,505
STOCKHOLDERS’
DEFICIT
Preferred
stock- par value
$.0001 per share, 10,000,000 shares authorized,
of
which 9,000,000 are designated as Series A Preferred Stock, with
7,752,462
shares issued and outstanding at September 30
2007	2,835,276
Common
stock - par value $.0001; 90,000,000 shares authorized, 10,053,000
shares
issued and outstanding	1,006
Additional
paid in capital	1,746,143
Accumulated
deficit	( 3,239,417	)
Total
stockholders’ equity (deficit)	1,343,008
Total
Liabilities and stockholders’ Equity	$ 13,613,752

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

| TECHPRECISION

CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)

| | Three Months Ended September 30, — 2007 | 2006 | | 2007 | | 2006 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net sales | $ 6,370,834 | $ | 3,716,741 | $ | 12,923,946 | $ | 7,915,271 | | | Cost of sales | 4,871,752 | | 2,842,462 | | 9,749,324 | | 6,252,467 | | | Gross profit | 1,499,082 | | 874,279 | | 3,174,622 | | 1,662,804 | | | Payroll and related costs | 247,494 | | 306,651 | | 591,784 | | 650,411 | | | Professional expense | 185,323 | | 41,100 | | 229,368 | | 152,158 | | | Selling, general and administrative | 80,169 | | 198,945 | | 150,789 | | 273,324 | | | Total | 512,986 | | 546,696 | | 971,941 | | 1,075,893 | | | Income (loss) from operations | 986,096 | | 327,583 | | 2,202,681 | | 586,911 | | | Other income (expense) | | | | | | | | | | Interest expense | (133,223 | ) | (181,033 | ) | ( 265,661 | ) | (364,272 | ) | | Finance costs | ( 2,589 | ) | ( 61,018 | ) | ( 5,179 | ) | (212,747 | ) | | Interest income | 191 | | 454 | | 466 | | 663 | | | | (135,621 | ) | (241,597 | ) | ( 270,374 | ) | (576,356 | ) | | Income (loss) before income taxes | 850,475 | | 85,986 | | 1,932,307 | | 10,555 | | | Provision for income taxes | (249,229 | ) | ( 21,000 | ) | ( 646,234 | ) | ( 2,500 | ) | | Tax benefit of loss carry-forward | — | | 21,000 | | — | | 2,500 | | | Net income (loss) | 601,246 | | 85,986 | | 1,286,073 | | 10,555 | | | Deemed dividend on preferred stock | — | | — | | — | | (388,233 | ) | | Net income (loss) to common stockholders | $ 601,246 | $ | 85,986 | $ | 1,286,073 | $ | ( 377,678 | ) | | Net income (loss) per share basic | $ 0.06 | $ | 0.01 | $ | 0.13 | $ | (0.04 | ) | | Diluted | $ 0.03 | $ | 0.00 | $ | 0.07 | $ | (0.04 | ) | | Weighted average number shares of common stock outstanding-basic | 10,051,557 | | 10,009,000 | | 10,051,557 | | 10,005,557 | | | Weighted average number of shares of common stock outstanding-diluted | 19,313,683 | | 19,090,527 | | 19,313,683 | | 19,087,084 | |

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

| TECHPRECISION

CORPORATION
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR
THE PERIOD APRIL 1, 2007 TO SEPTEMBER 30,
2007
Warrants	Preferred
Stock			Common
Stock		Paid
in	Accumulated
Outstanding	Shares		Amount	Shares	Amount	Capital	Deficit		Total
Balance,
March 31, 2007	11,220,000	7,752,462	$ 2,835,276	10,049,000	$ 1,006	$ 1,766,423	$ (4,525,490	)	$ 77,215
Distribution
of Capital - WM
Realty						(21,000	)		(21,000	)
Shares
issued for services				4,000		720			720
Income
for period							1,286,073		1,286,073
Balance
September 30, 2007	11,220,000	7,752,462	$ 2,835,276	10,053,000	$ 1,006	$ 1,746,143	$ (
3,239,417	)	$ 1,343,008

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

| TECHPRECISION

CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS SIX
MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)
	2007	2006
CASH
FLOWS FROM OPERATING ACTIVITIES
Net
gain (loss)	1,286,073	$	10,555
Noncash
items included in net loss:
Depreciation
and amortization	235,103		418,823
Equity
based incentives	—		13,500
Shares
issued for services	720		7,561
Changes
in operating assets and liabilities:
Accounts
receivable	(447,296	)	187,372
Inventory	(
6,443	)	22,154
Costs
on uncompleted contracts	(2,047,595	)	(188,044	)
Prepaid
expenses	(1,284,748	)	169,089
Deferred
revenue	3,354,320		—
Accounts
payable and accrued expenses	793,709		(65,883	)
Net
cash provided by (used in) operating activities	1,883,843		575,127
CASH
FLOWS USED IN INVESTING ACTIVITIES
Purchases
of property, plant and equipment	(128,999	)	(187,159	)
Net
cash used in investing activities	(128,999	)	(187,159	)
CASH
FLOWS FROM FINANCING ACTIVITIES
Payment
of notes	(288,724	)	(288,099	)
Payment
of mortgage note	(
17,089	)	(150,000	)
Release
of escrow	—		20,000
Payment
of stockholder loan	(60,000	)	—
Equity
distribution - WM Realty	(
21,000	)	10,000
Net
cash provided by (used in) financing activities	(386,813	)	(408,099	)
Net
increase (decrease) in cash and cash equivalents	1,368,031		(
20,131	)
CASH
AND CASH EQUIVALENTS, beginning of period	1,443,998		492,801
CASH
AND CASH EQUIVALENTS, end of period	$ 2,812,029	$	472,670

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

| TECHPRECISION

CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Continued)
	Six
months ended September
30,
	2007	2006
	(unaudited)	(unaudited)
Supplemental
Disclosures of Cash Flows Information
Cash
paid during the period for:
Interest
expense	$ 265,661	$ 189,302
Income
taxes	$ 646,234	$ 39,088
The
accompanying notes are an integral part of the financial
statements.

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, 2007. Certain prior quarter amounts may have been reclassified to conform to the presentation used in 2007.

NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

In July 2006, FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” which is effective for fiscal years beginning after December 15, 2006. The Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting for interim periods, disclosure, and transition. The Company adopted the Interpretation on January 1, 2007. The Interpretation No. 48 is not expected to have a material effect on the Company’s financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 provides a framework for measuring fair value in accordance with GAAP, and expands disclosures regarding fair value measurements and the effect on earnings. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company adopted SFAS No. 157. The application of SFAS No. 157 is not expected to have a material effect on the Company’s financial position and results of operations.

In September 2006, the U.S. Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” (“SAB No. 108”), which provides interpretive guidance on the SEC’s views regarding the process of quantifying the materiality of financial statement misstatements. SAB No. 108 is effective for years ending after November 15, 2006. The application of SAB No. 108 is not expected to have a material effect on the Company’s financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides reporting entities an option to report selected financial assets, including investment securities designated as available for sale, and liabilities, including most insurance contracts, at fair value. SFAS 159 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The standard also requires additional information to aid financial statement users' understanding of a reporting entity's choice to use fair value on its earnings and also requires entities to display on the face of the balance sheet the fair value of those assets and liabilities for which the reporting entity has chosen to measure at fair value. SFAS 159 is effective as of the beginning of a reporting entity's first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

The Company adopted SFAS No. 159. The application of SFAS No. 159 is not expected to have a material effect on the Company’s financial position and results of operations..

NOTE 3. PROPERTY, PLANT AND EQUIPMENT

As of September 30, 2007 property, plant and equipment consisted of the following:

	September
	30,
2007
Land	$ 110,113
Building
and improvements	1,412,730
Machinery
equipment, furniture and fixtures	3,046,573
Total
property, plant and equipment	4,569,416
Less:
accumulated depreciation	(2,105,952	)
Property,
plant and equipment, net	$ 2,463,464

Depreciation expense for the six-month periods ended September 30, 2007 and 2006 was $226,589 and $208,086, respectively. Land and buildings (which are owned by WM Realty Management, LLC- a consolidated entity under Fin 46 R) are collateral for the $3,171,997 mortgage loan, and other fixed assets of the Company together with the Company’s personal properties, are collateral for the Sovereign Bank $3,142,859 secured loan and line of credit.

NOTE 4. COSTS INCURRED ON UNCOMPLETED CONTRACTS

The Company recognizes revenues based upon the units-of-delivery method (see Note 1). The advance billing and deposits includes down payments for acquisition of materials and progress payments on contracts. The agreements with the buyers of the Company’s products allow the Company to offset the progress payments against the costs incurred. As of September 30, 2007.

	September
	30,
2007
Cost
incurred on uncompleted contracts, beginning balance	$ 5,455,142
Total
cost incurred on contracts, during the year	13,073,547
Less
cost of sales, during the year	(9,749,324	)
Cost
incurred on uncompleted contracts, ending balance	$ 8,779,365
Billings
on uncompleted contracts, beginning balance	$ 4,188,697
Plus:
Total billings on contracts, during the period	11,344,763
(excluding
deferred revenues of $3,354,320)
Less:
Contracts recognized as revenue, during the year	(10,068,135	)
Billings
on uncompleted contracts, ending balance	$ 5,465,325

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

| Cost

incurred on uncompleted contracts, ending balance	$
Billings
on uncompleted contracts, ending balance	(5,465,325	)
Cost
incurred on uncompleted contracts, ending balance, net	$ 3,314,040

For the six months ended September 30, 2007 and 2006, $10,045 and $29,051 of allowance for losses on uncompleted contracts were recognized, respectively.

NOTE 5. PREPAID EXPENSES

As of September 30, 2007, the prepaid expenses included the following:

| | September 30 2007 | | --- | --- | | Insurance | $ 194,451 | | Real estate taxes | 4,581 | | Prepayments on purchases | 1, 322,898 | | Equipment and software maintenance | 33,139 | | Total | $ 1,555,069 |

NOTE 6. DEFERRED CHARGES

Deferred charges represent the capitalization of costs incurred in connection with obtaining the bank loan and building mortgage. These costs are being amortized over the term of the related debt obligation. Amortization charged to operations in the six months ended September 30, 2007 and September 30, 2006 were $9,313 and $264,720, respectively. As of September 30, 2007, deferred charges were as follows:

| | September 30, 2007 | | | --- | --- | --- | | Deferred costs expiring after one year: | | | | Deferred loan costs | $ 150,259 | | | | (20,053 | ) | | Accumulated amortization | $ 130, 206 | |

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

NOTE 7. LONG-TERM DEBT The following debt obligations, outstanding on September 30, 2007:

	Amount
1. Long-term
debt issued on February 24, 2006:
Sovereign
Bank-Secured Term note payable- 72 month 9% variable term note
with
quarterly principal payments of $142,857 plus interest. Final payment
due
on March 1, 2013	$ 3,142,859
2. Long-term
mortgage loan issued on October 4, 2006
Amalgamated
Bank mortgage loan to WM Realty- 10 years, annual interest rate
of 6.75%,
monthly interest and principal payment $20,955. The amortization
is based
on a thirty-year amortization schedule. WM Realty Management has
the right
to prepay the mortgage note upon payment of a prepayment premium
of 5% of
the amount prepaid if the prepayment is made during the first two
years,
and declining to 1% of the amount prepaid if the prepayment is
made during
the ninth or tenth year	3,171,997
3. Automobile
Loan- Ford Motor Credit Company-Note payable secured by a vehicle

payable in monthly installments of $552 including interest of 4.9%, commencing July 20, 2003 through June 20, 2009 | 10,584 | | | Total | 6,325,440 | | | Less: principal payments due within one year | (576,935 | ) | | Principal payments due after one year | $ 5,748,505 | |

On February 24, 2006, Ranor entered into a loan and security agreement with Sovereign Bank. Pursuant to the agreement, the bank made a term loan of $4,000,000 to the Company and extended the Company a line of credit of $1,000,000, initial interest at 9%. The interest on the line of credit is variable. In February 2007, the Company entered into an agreement with the bank which (i) reduced the interest rate on its revolving credit line from prime plus 1 1/2% to prime plus 1% and (ii) provided capital expenditure line of credit for $500,000 at prime plus 1%. Under this capital expenditures facility, the Company may borrow up to $500,000 until the February 1, 2008, with interest only payable through February 1, 2008 and the principal to be amortized over a five-year term commencing March 1, 2008. On June 28, 2007, the Company increased its line of credit with Sovereign Bank from $1,000,000 to $2,000,000. As of September 30, 2007, the Company had not borrowed any money under the capital expenditures facility or line of credit.

The note is subject to various covenants that include the following: the loan collateral comprises all personal property of the Company, including cash, accounts receivable, inventories, equipment, financial and intangible assets owned when the loan is contracted or acquired thereafter; the amount of loan outstanding at all times is limited to a borrowing base amount of the Company’s qualified accounts receivable and inventory; there are prepayment penalties of 3%, 2% and 1% of the outstanding principal, in the first, second and third years following the issuance date, respectively. There is no prepayment penalty thereafter; the Company’s subsidiary, Ranor, Inc., is prohibited from issuing any additional equity interest (except to the Company), or redeem, retire, purchase or otherwise acquire for value any equity interests; the Company pays an unused credit line fee of 0.25% of the average unused credit line amount in previous month; the earnings available to cover fixed charges are required not to be less than 120% of fixed charges for the rolling four quarters, tested at the end of each fiscal quarter; and interest coverage ratio is required to be not less than 2:1 as at the end of each fiscal quarter.

In connection with the Amalgamated Bank mortgage financing, Mr. Andrew Levy, the principal equity owner of WM Realty Management and a principal stockholder of the Company, executed a limited guarantee. Pursuant to the limited guaranty, Mr. Levy guaranteed the lender the payment of any loss resulting from WM Realty Management’s fraud or misrepresentation in connection with the loan documents, misapplication of rent and insurance proceeds, failure to pay taxes and other defaults resulting from his or WM Realty’s misconduct.

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2007, the maturities of long-term debt were as follows:

| Year

ending March 31,	Amount
2008	$ 303,920
2009	612,752
2010	612,435
2011	612,641
2012	615,628
Due
after 2011	3,568,064
Total	$ 6,325,440

NOTE 8. CONCENTRATION OF CREDIT RISK

A significant portion of our revenue is generated by a small number of customers who differ from period to period as the Company complete work on projects or commence new projects for other customers. Two customers accounted for approximately 62% of our revenues in the six months ended September 30, 2007 and 65% of our receivables as of September 30, 2007.

NOTE 9. INCOME TAXES

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to the net income or loss from operations. As of September 30, 2007, the sources and tax effects of the differences are as follows:

	September
	30,
2007
Income
tax provision at statutory rate	$ (671,086	)
Tax
benefit before net operating loss carry forward	24,852
Net
tax provision	$ (646,234	)

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

As of September 30, 2007, the tax effect of temporary differences and net operating loss carry forward that give rise to the Company’s deferred tax assets and liabilities are as follows:

	September
	30,
2007
Deferred
Tax Assets:
Current:
Compensation
accrual	$ 98,000
Bad
debt allowance	9,800
Loss
on uncompleted contracts	4,000
Non-Current:
Net
operating loss carry-forward	521,600
Total
deferred tax assets	633,400
Deferred
Tax Liabilities:
Non-Current:
Depreciation	214,400
Net
deferred tax asset	419,000
Valuation
allowance	(419,000	)
Net
Deferred Tax Asset Balance	$ —

At September 30, 2007, the Company provided a full valuation allowance for its net deferred tax assets. The Company believes sufficient uncertainty exists regarding the realizability of the deferred tax assets. Because of the more than 50% change in ownership of Ranor, Inc, Ranor’s net operating loss carryforward is subject to IRC §382, which limits the amount of the tax loss carryforward that can be used in any year. The amount of net operating loss carryforward that may be used annually is equal to a percentage of the company’s value at the date of ownership. The percentage is the highest long-term federal tax exempt rate for the month during which the ownership occurred and the preceding two months. The ownership change occurred during February 2006. The Federal long term tax exempt rate is determined by the Internal Revenue Service.

As of September 30, 2007, the Company’s federal net operating loss carryforwards was approximately $1,293,000. If not utilized, the federal net operating loss carryforward of Ranor and Techprecision will expire in 2025 and 2027, respectively.

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

NOTE 10. RELATED PARTY TRANSACTIONS

Management Fees

During the six months ended September 30, 2006, the Company paid $100,002 pursuant to a management contract with Techprecision LLC, a limited liability company that was owned by three individuals, including two principal stockholders, one of whom was also the Company’s chief executive. 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 and made eight monthly payments of $9,167 to Techprecision LLC, commencing February 15, 2007 and ending on September 15, 2007. Mr. Reindl has not been a member of Techprecision LLC since December 31, 2006. As a result of the termination of the management agreement, Mr. Reindl no longer receives compensation through Techprecision LLC.

On June 19, 2007, the Company entered into an employment agreement dated as of April 1, 2007 with James G. Reindl, our chief executive officer. Pursuant to the terms of the agreement, the Company are employing Mr. Reindl for an initial term commencing April 1, 2007 and expiring on March 31, 2009 and continuing on a year-to-year basis thereafter unless terminated by either party on 90 days’ written notice prior to the expiration of the initial term or any one-year extension. Mr. Reindl is to receive an annual base salary of $160,000 a year. Mr. Reindl is also entitled to receive an increase to his base salary and receive certain bonus compensation, stock options or other equity-based incentives at the discretion of the compensation committee of the board of directors and reimbursement of his commuting expenses. The agreement may be terminated by us with or without cause or by Mr. Reindl’s resignation. If the Company terminates the agreement without cause, the Company is to pay Mr. Reindl severance pay equal to his salary for the balance of the term plus the amount of his bonus for the prior year. During the term of his employment and for a period thereafter, Mr. Reindl will be subject to non-competition and non-solicitation provisions, subject to standard exceptions.

Loans from Related Parties

The principal equity owner of WM Realty made loans to WM Realty in the year ended March 31, 2007. The loan was paid as of September 30, 2007. Interest paid during the six months ended September 30, 2007 was $4,735. No interest was paid in 2006.

Sale and Lease Agreement and Intra-company Receivable

On February 24, 2006, WM Realty Management, LLC borrowed $3,300,000 to finance the purchase of Ranor’s real property. WM Realty Management purchased the real property for $3,000,000 and leased the property on which Ranor’s facilities are located pursuant to a net lease. The property was appraised on October 31, 2005 at $4,750,000. The Company advanced $226,808 to pay closing costs, which advance was repaid when WM Realty Management refinanced the mortgage in October 2006. WM Realty Management, LLC was formed solely for this purpose; its partners are stockholders of the Company. The Company considers WM Realty Management a special purpose entity as defined by FIN 46, and therefore has consolidated its operations into the Company.

On October 4, 2006, WM Realty Management placed a new mortgage of $3.2 million on the property and the existing mortgage of $3.1 million was paid off. The new mortgage has a term of ten years, bears interest at 6.75% per annum, and provides for monthly payments of principal and interest of $20,595. The payments are based on a thirty-year amortization schedule. WM Realty Management has the right to prepay the mortgage note upon payment of a prepayment premium of 5% of the amount prepaid if the prepayment is made during the first two years, and declining to 1% of the amount prepaid if the prepayment is made during the ninth or tenth year. In connection with the refinancing, Mr. Levy, the principal stockholder of WM Realty, executed a limited guarantee. Pursuant to the limited guaranty, Mr. Levy guaranteed the lender the payment of any loss resulting from WM Realty Management’s fraud or misrepresentation in connection with the loan documents, misapplication of rent and insurance proceeds, failure to pay taxes and other defaults resulting from his or WM Realty’s misconduct.

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

NOTE 11. OPERATING LEASE

Ranor leases office equipment under operating lease agreements expiring through November 2008. Total rent expense charged to operations was $8,562 for the six months ended September 30, 2007 and $8,756in the six months ended September 30, 2006. Future minimum lease payments under non-cancellable portions of the leases as of September 30, 2007, are as follows:

| Years

ending March 31,	Amount
2008	$ 9,079
Total
minimum lease payments	$ 9,079

NOTE 12. SALE AND LEASE

On February 24, 2006 Ranor, Inc. sold its real property to WM Realty Management, LLC, a special purpose entity for $3,000,000, and leased the real property occupied by Ranor pursuant to a fifteen year lease commencing February 24, 2006. For the years ended March 31, 2007 the Company’s annual rent expense was $438,500. This amount was eliminated in consolidation and the interest and depreciation were expensed. The current annual rent is $444,000, and the rent is subject to an annual increase based on the increase in the consumer price index.

The Company has an option to extend the term of the lease for two additional terms of five years, upon the same terms. The minimum rent payable for each option term will be the greater of (i) the minimum rent payable under the lease immediately prior to either the expiration date, or the expiration of the preceding option term, or (ii) the fair market rent for the leased premises.

The Company has the option to purchase the property at the appraised market value.

The minimum future lease payments are as follows:

| Year

Ended March 31,	Amount
2008	$ 222,000
2009	444,000
2010	444,000
2011	444,000
2012	444,000
Total
next five years, 2013 to 2017	2,220,000
Total
remaining years, 2018 to 2021	1,776,000
Total	$ 5,994,000

TECHPRECISION CORPORATION

NOTES TO FINANCIAL STATEMENTS

NOTE 13. EARNINGS PER SHARE

The Company computes 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 earnings per share for the six-month periods ended September 30, 2007 and 2006.

| | Three Months Ended September 30, — 2007 | 2006 | Six Months Ended September 30, — 2007 | 2006 | | | --- | --- | --- | --- | --- | --- | | Net income (loss) to common | | | | | | | Stockholders | $ 601,246 | $ 85,986 | $ 1,286,073 | $ (377,678 | ) | | Net income (loss) per share | | | | | | | Basic | $ 0.06 | $ 0.01 | $ 0.13 | $ (0.04 | ) | | Diluted | $ 0.03 | $ — | $ 0.07 | $ (0.04 | ) | | Weighted average number shares of common stock outstanding-basic | 10,053,000 | 10,009,000 | 10,053,000 | 10,005,557 | | | Weighted average number of shares of common stock outstanding-diluted | 19,313,683 | 19,090,527 | 19,313,683 | 19,087,084 | |

NOTE 14. SUBSEQUENT EVENT

On October 3, 2007, a registration statement covering 2,000,000 shares of common stock, of which 1,900,000 are shares of common stock issuable upon exercise of warrants, was declared effective by the Securities and Exchange Commission. As of November 7, 2007, the Company received $449,133 from the exercise of warrants to purchase 1,030,000 shares of common stock.

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 prospectus. 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, 2007 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, 2007 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 are a nationally recognized manufacturer of high-precision, large scale metal fabrications and machined assemblies weighing up to 100 tons. Our wholly-owned subsidiary, Ranor, Inc., has been in continuous operation since 1956 with clients in the defense, aerospace, commercial, nuclear, alternative energy and medical industries. Recently, we have refocused our resources on working on long-term production programs with clients in the alternative energy (mainly solar), nuclear and medical equipment sectors as a result of growing industry demands for our services.. 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.

We operate a build-to-print business model. In this way, we work with clients from the design and manufacturing stages to ensure that all projects are completed according to the exact client specifications with very close tolerances. We believe that we are one of a few operations that offers clients a “one-stop-shop” for their projects covering, engineering, fabrication, machining, quality control, assembly and production control services.

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. However, over the last several years, and based on recent project inquiries, recent projects awarded and current customer demands for our services and our backlog, 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 six months ended September 31, 2007, two customers accounted for approximately 62% 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. We have changed 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 we are rejecting or not bidding on projects we do not believe would generate an adequate gross margin. Thus, in the six months ended September 30, 2007, our sales and net income were $12,923,946 and $1,286,073, respectively, as compared to revenues of $7,915,271 and a net income of $10,555, respectively, for the six months of the previous fiscal year. Our gross margin for the six months ended September 30, 2007 was 24.56% as compared to 16.8% in the six months ended September 30, 2006.

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.

Growth Strategy

Our strategy is to leverage our core-competency as a manufacturer of high-precision, large metal fabrications to grow our organization in areas which have shown increasing demand and higher margins.

Target Higher Volume, Long-term Contracts - Historically, our orders have often consisted of either one or a small number of products with limited possibility of subsequent orders for the same product. These orders generally provided low margins, particularly because the services demanded by clients throughout the project lifecycles were unpredictable. Going forward we intend to concentrate on higher-volume, long-term projects with more predictable cost structures, and will not seek to bid on projects which we do not believe would generate an adequate gross margin. This strategy has already resulted in improved profitability with gross margins rising from 13% in the year ended March 31, 2006 to 19% in the year ended March 31, 2007 and 24% for the six months ended September 30, 2007.

Alternative Energy — Solar and Nuclear Power

Rising energy demand along with increasing environmental concerns are likely to continue driving alternative energy growth, namely the solar and nuclear power industries. Because of our capabilities and the nature of the equipment required by companies in the alternative energy industries, we intend to focus our services in this sector. Currently, the solar industry products that we provide represent a significant part of our present business and growth focus as well as backlog. Our solar products consist of large-scale fabricated and machined components used in the production of photovoltaic (PV) cells. This business is profitable and has seen several quarters of continued growth.

As a result of both the increased prices of oil and gas and the resulting greenhouse gas emissions, nuclear power may become an increasingly important source of energy, although the use of nuclear power is not without its risks. Given our certification from the American Society of Mechanical Engineers , along with our historic relationships with suppliers in the industry, we believe that we are qualified to benefit from any increased activity in the nuclear sector that may result. One of our customers in currently involved in a variety of commercial nuclear reactor repairs and overhaul projects. We have manufactured several components needed to support this work. Another customer provides a complete nuclear waste storage system to commercial nuclear power plants. We manufacture lifting equipment for this company to use in these storage systems. We also see fabrication of nuclear fuel storage systems as a potential business area.

Diversification into other High-growth Industries. As an example of our plan for diversification, we are currently working with a customer to manufacture critical components for proton bean therapy machines designed to be used to treat cancer.

Expansion of Manufacturing Facilities - We plan to expand our current manufacturing facilities in the near-term both on-site and in other locations. This will allow us to increase our overall industry offerings and capacity, allowing us to handle high volume orders or niche orders simultaneously.

Broaden Product and Service Offerings - We plan to offer more integrated products and turnkey solutions to provide greater value to our customers. We may target acquisitions that could provide enhance our existing business.

As of September 30, 2007, we had a backlog of firm orders totaling approximately $36 million. We anticipate that approximately $17 million of this backlog will be shipped during the year ended March 31, 2008, and most of the balance will be shipped in the following year. The backlog includes orders for more than $28 million from two customers.

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

Critical Accounting Policies

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States requires our management to make assumptions, estimates and judgments that effect the amounts reported in the financial statements, including all notes thereto, and related disclosures of commitments and contingencies, if any. We rely on historical experience and other assumptions we believe to be reasonable in making our estimates. Actual financial results of the operations could differ materially from such estimates. There have been no significant changes in the assumptions, estimates and judgments used in the preparation of our audited 2007 financial statements from the assumptions, estimates and judgments used in the preparation of our 2006 audited financial statements.

Revenue Recognition and Costs Incurred

We 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. The unit of delivery method requires the existence of a contract to provide the persuasive evidence of an arrangement and determinable seller’s price, delivery of the product and reasonable collection prospects. The Company has written agreements with the customers that specify contract prices and delivery terms. The company recognizes revenues only when the collection prospects are reasonable.

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

Variable Interest Entity

We have consolidated WM Realty Management LLC, a variable interest entity from which we lease our real estate to conform to FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). We have also adopted the revision to FIN 46, FIN 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 September 30, 2007, we had net operating loss carry-forwards approximating $1,347,423 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.

Non-GAAP Information

We refer to earnings before interest, tax, depreciation and amortization (EBITDA), which is a non-GAAP performance measure, because our agreement with Barron Partners used 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. Although we are no longer subject to adjustments based on our EBITDA, we believe that EBITDA is a meaningful way to reflect the growth of our business. 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 six months ended September 30, 2007 and 2006.

	2007	2006
Net
income (loss)	$ 1,286,073	$ 10,555
Plus
interest	265,661	363,606
Plus
taxes	646,234	—
Plus
depreciation and amortization	235,103	418,823
EBITDA	$ 2,433,071	$ 792,984

New Accounting Pronouncements

In July 2006, FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” which is effective for fiscal years beginning after December 15, 2006. The Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure, and transition. We adopted the Interpretation on January 1, 2007. The application of Interpretation No. 48 is not expected to have a material effect on our financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 provides a framework for measuring fair value in accordance with GAAP, and expands disclosures regarding fair value measurements and the effect on earnings. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has adopted SFAS No. 157. The application of SFAS No. 157 is not expected to have a material effect on our financial position and results of operations.

Results of operations

Three Months Ended September 30, 2007 and 2006

The following table sets forth information from our statements of operations for the three months ended September 30, 2007 and 2006, in dollars and as a percentage of revenue (dollars in thousands):

| | | | | | | | | | Changes Three Months Ended September 30, | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2007 | | | | 2006 | | | | 2006 to 2007 | | | | | | Amount | Percent | | | Amount | Percent | | | Amount | Percent | | | | Net sales | $ 6371 | | 100 | % | $ 3717 | | 100 | % | $ 2654 | | 71 | % | | Cost of sales | 4872 | | 76 | % | 2842 | | 76 | % | 2030 | | 71 | % | | Gross profit | 1499 | | 24 | % | 874 | | 24 | % | 625 | | 72 | % | | Payroll and related costs | 247 | | 4 | % | 307 | | 8 | % | ( 60 | ) | (20 | )% | | Professional expense | 185 | | 3 | % | 41 | | 1 | % | 144 | | 351 | % | | Selling, general and administrative | 80 | | 1 | % | 199 | | 5 | % | (119 | ) | (60 | )% | | Total operating expenses | 513 | | 8 | % | 547 | | 15 | % | ( 34 | ) | (6 | )% | | Income (loss) from operations | 986 | | 15 | % | 328 | | 9 | % | 658 | | 201 | % | | Interest expense | (133 | ) | (2 | )% | (181 | ) | (5 | )% | 48 | | (27 | )% | | Finance costs | (3 | ) | (0 | )% | (61 | ) | (2 | )% | 58 | | (95 | )% | | Total other income (expenses | (136 | ) | (2 | )% | (242 | ) | (7 | )% | 106 | | (44 | )% | | Income (loss) before income taxes | 850 | | 13 | % | 86 | | 2 | % | 764 | | 888 | % | | Provision for income taxes, net of tax benefits | (249 | ) | (4 | )% | — | | — | | (249 | ) | — | | | Net income to common Shareholders | $ 601 | | 9 | % | $ 86 | | 2 | % | $ 515 | | 599 | % |

Sales increased by $2,654,000 or 71%, from $3,717,000 for the quarter ended September 30, 2006 to $6,371,000 for the quarter ended September 30, 2007. This increase in sales reflected improved market conditions for capital goods and increasing acceptance of us as a contract manufacturer for major projects.

Our cost of sales for the quarter September 30, 2007 increased by $2,030,000 to $4,872,000 an increase of 71%, from $2,842,000 for quarter ended September 30, 2006. The increase in cost of sales reflected the increase in sale, with the result that our gross margin was 24% in each period.

Our payroll and related costs were $247,000 in the quarter ended September 30, 2007 as compared to $307,000 for the quarter ended September 30, 2006. The $60,000 (20%) decrease in payroll was partly attributable to the termination of the management agreement with Techprecision LLC and decrease in compensation of sales persons.

Professional fees increased from $41,000 to $185,000 for the quarters ended September 30, 2006 and September 30, 2007, respectively. This increase was attributable to increased fees related to regulatory filings.

Selling, administrative and other expenses for quarter ended September 30, 2007 were $80,000 as compared to $199,000 for quarter ended September 30, 2006, a decrease of $119,000 or 60%. The reduction in WM Realty’s non-recurring fees was the primary reason for the reduction.

Interest expense for the quarter ended September 30, 2007 was $133,223 compared to $181,033 for the quarter ended September 30, 2006. The decrease of $48,810 (26.4%) is a result of refinancing the short term loan of WM Realty from with a longer term loan. The refinancing of the loan also eliminated $150,000 amortization expenses of deferred short term loan costs.

In the quarter ended September 30, 2006, we were required to adjust the conversion price into which our series A preferred stock was convertible into common stock. The beneficial effect of the reduction in conversion price of preferred stock to common stock from $0.285 to $0.24225 was $.04275 per share for a total of $398,788 which was recognized as a preferred stock deemed dividend. This was a non-cash transaction.

As a result of the foregoing, our net income allocable to common stockholders was $601,246 ($0.06 per share basic and $0.03 per share diluted) in the three months ended September 30, 2007 as compared to $85,986 ($.01 per share basic and $.00 per share diluted) in the three months ended September 30, 2006.

Six Months Ended September 30, 2007 and 2006

The following table sets forth information from our statements of operations for the six months ended September 30, 2007 and 2006, in dollars and as a percentage of revenue (dollars in thousands):

| | | | | | | | Change Six Months Ended September 30, | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2007 | | 2006 | | | | 2006 to 2007 | | | | | | Amount | Percent | Amount | Percent | | | Amount | Percent | | | | Net sales | $ 12,924 | 100 % | $ 7,915 | | 100 | % | $ 5,009 | | 63 | % | | Cost of sales | 9,749 | 75 % | 6,252 | | 79 | % | 3,497 | | 56 | % | | Gross profit | 3,175 | 25 % | 1,663 | | 21 | % | 1,512 | | 91 | % | | Payroll and related costs | 592 | 5 % | 650 | | 8 | % | (58 | ) | (9 | )% | | Professional expense | 229 | 2 % | 152 | | 2 | % | 77 | | 51 | % | | Selling, general and Administrative | 151 | 1 % | 273 | | 3 | % | (122 | ) | (45 | )% | | Total operating expenses | 972 | 8 % | 1,076 | | 14 | % | (104 | ) | (10 | )% | | Income (loss) from operations | 2,203 | 17 % | 587 | | 7 | % | 1,616 | | 275 | % | | Interest expense | 266 | 2 % | 364 | | 5 | % | (98 | ) | (27 | )% | | Finance costs | 5 | 0 % | 213 | | 3 | % | (208 | ) | (98 | )% | | Income (loss) before income Taxes | 1,932 | 15 % | 11 | | 0 | % | 1,921 | | 17,464 | % | | Provision for income taxes | 646 | 5 % | — | | — | | 646 | | — | | | Net Income (loss) | 1,286 | 10 % | 11 | | 0 | % | 1,275 | | 11,591 | % | | Deemed dividend | — | — | (388 | ) | (5 | )% | 388 | | (100 | )% | | Income (Loss) to common shareholders | $ 1,286 | 10 % | $ (378 | ) | (5 | )% | $ 1,664 | | (440 | )% |

Sales increased by $5,009,000 or 63%, from $7,915,000 for the six months ended September 30, 2006 to $12,923,000 for the six months ended September 30, 2007. This increase in sales reflected improved market conditions for capital goods and increasing acceptance of us as a contract manufacturer for major projects.

Our cost of sales for the six months ended September 30, 2007 increased by $3,497,000 to $9,749,000 an increase of 56%, from $6,252,000 for the six months ended September 30, 2006. This increase was less than the increase in sales, resulting in an improvement in the gross margin from 21% to 25%. The increase in gross profit for the six month period largely reflects an improved profit margin in the first quarter as a result of sales of products in which we have competitive production advantage. In the second quarter, the increase in cost of goods sold because of additional material requirements of the products and miscellaneous production expenses was in part offset by the lower direct labor requirement.

Our payroll and related costs were $592,000 for the six months ended September 30, 2007 as compared to $650,000 for the six months ended September 30, 2006. The $58,000 (9%) decrease in payroll was partially attributable to the termination of the management agreement with Techprecision LLC and decrease in compensation of the salespersons.

Professional fees increased from $152,000 to $229,000 for the six months ended September 30, 2006 and September 30, 2007, respectively. This increase was attributable to increased fees related to regulatory filings.

Total selling, administrative and other expenses for the six months ended September 30, 2007 were $151,000 as compared to $273,000 for the six months ended September 30, 2006, a decrease of $122,000 or 45%. The reduction in WM Realty’s non-recurring fees was the primary reason for the reduction .

Interest expense for the six months ended September 30, 2007 was $266,000 as compared to $364,000 for the six months ended September 30, 2006. The decrease of $98,000 (27%) is a result of refinancing the short term loan of WM Realty from with a longer term loan. The refinancing of the WM Realty loan also eliminated the financing costs of the previous loan (i.e. the amortization expenses of deferred costs of the short term loan) by $208,000 (98%).

Liquidity and Capital Resources

At September 30, 2007, we had working capital of $4,498,000 as compared with working capital of $3,398,000 at March 31, 2007, an increase of $1,100,000 reflecting our increased level of business. The following table sets forth information as to the principal changes in the components of our working capital (dollars in thousands).

| Category | September 30, 2007 | March 31, 2007 | Change Amount | | | --- | --- | --- | --- | --- | | Cash and cash equivalents | $ 2,812 | $ 1,444 | $ 1,368 | 95 % | | Accounts receivable, net | 3,149 | 2,685 | 464 | 17 % | | Costs incurred on uncompleted contracts | 3,314 | 1,226 | 2,088 | 170 % | | Prepaid expenses | 1,555 | 270 | 1,285 | 475 % | | Accounts payable | 1,780 | 1,299 | 481 | 37 % |

The cash flows from operations were $1,884,000 as compared to $575,000 in the six months ended September 30, 2007 as compared to 2006. Increase in revenues and advanced billings were primary sources of increased operating cash inflows.

The cash outflows for financing activities were $387,000 and $408,000 during the six months ended September 30, 2007 and 2006. The principal payment of the Sovereign bank notes was $286,000 the auto loan $3,000 and the Amalgamated mortgage note $18,000 in the six months ended September 30, 2007. WM Realty repaid $60,000 loan from a shareholder and made a capital distribution of $21,000 in the six months ended September 30, 2007.

The amount of cash expended for additional property, plant and equipment were $129,000 and $187,000 in the six months ended September 30, 2007 and 2006, respectively.

As a result of increased operating cash inflows and reduced cash outflows during the six months ended September 30, 2007, our cash balance increased by $1,368,000 as compared to a decrease of $20,000 in the six months ended September 30, 2007 as compared to 2006.

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

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

The loan and security agreement with Sovereign Bank, pursuant to which we borrowed $4,000,000 on a term loan basis in connection with the acquisition of Ranor, and, as a result of a June 2007 amendment to the loan and security agreement, we have a $2,000,000 revolving credit facility and a $500,000 capital expenditure facility. Pursuant to the agreement, Ranor is required to maintain a ratio of earnings available for fixed charges to fixed charges of at least 1.2 to 1, and an interest coverage ratio of at least 2:1. The interest coverage ratio is the ratio of earnings before interest and taxes to current interest payments. The agreement also limits our capital expenditures to $500,000 per year.

The term note is due on March 1, 2013, and is payable in 28 quarterly installments of $143,000. The note bears interest at 9% per annum through December 31, 2010 and at prime plus 1½% thereafter. At March 31, 2007 the principal balance due on our term loan to Sovereign Bank was $3,429,000.

The revolving note bears interest at prime plus ½%, and we have the right to borrow at a LIBOR rate plus 300 basis points. We may borrow, subject to the borrowing formula at any time prior to June 30, 2009. Any advances under the revolving note become due on June 30, 2009. The maximum borrowing under the revolving note is the lesser of (i) $2,000,000 or (ii) the sum of 70% of eligible accounts receivable and 40% of eligible inventory. At September 30, 2007, there were no borrowings under the line and maximum available under the borrowing formula was $2,000,000

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

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

While we believe that the $2,000,000 revolving credit facility, which remained unused as of September 30, 2007 and terminates in June 2009, our $500,000 capital expenditure facility and our cash flow from our operations should be sufficient to enable us to satisfy our cash requirements at least through the end of fiscal 2008, it is possible that we may require additional funds. In the event that we make an acquisition, we may require additional financing for the acquisition. However, we do not have any current plans for any acquisition, and we cannot give any assurance that we will make any acquisition. We have no commitment from any party for additional funds; however, the terms of our agreement with Barron Partners, particularly Barron Partners’ right of first refusal, may impair our ability to raise capital in the equity markets since potential investors are often reluctant to negotiate a financing when another party has a right to match the terms of the financing.

In October 2007, a registration statement covering 2,000,000 shares of common stock, of which 1,900,000 are shares of common stock issuable upon exercise of warrants, was declared effective by the Securities and Exchange Commission. As of November 7, 2007, we received $449,133 from the exercise of warrants to purchase 1,030,000 shares of common stock. If all of the warrants for which the underlying shares are exercised, we could receive a maximum of $828,495 . However, we cannot give any assurance that the warrants will be exercised.

To the extent that we are able to implement our program for expansion, including the purchase of additional equipment or the expansion of our facilities, we will require additional capital. To the extent that we receive funds from the exercise of the warrants, we will be able to use these proceeds to fund our capital budget. However, regardless of whether we receive additional proceeds from the exercise of warrants, we believe that our available cash, together with cash flow from operations and our existing available credit facilities will be sufficient to enable us to meet our anticipated cash requirements over the next year.

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.

Our principal executive officer and principal financial officer have concluded that there were no significant changes in our internal controls or in other factors that could significantly affect these controls during the quarterly period covered by this report.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported, on June 11, 2007, the Environmental Protection Agency issued an administrative complaint against us relating to alleged violations of the Clean Water Act and the Emergency Planning and Community Right-to-Know Act, known as “EPCRA.” The complaint in the action In the Matter of Ranor, Inc. and Techprecision Corporation is filed with Boston office of the EPA. In August 2007, we entered into a consent agreement and final order with the EPA of all claims contained in the complaint. In September 2007, a final order was issued in the proceeding. Pursuant to the settlement, we paid a total penalty of $105,635, of which $15,000 is in the form of a special environmental project by which we are to purchase specified emergency response equipment and donate the equipment to the Westminster, Massachusetts Fire Department.

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

On August 21, 2007, the holders of 6,746,200 shares of common stock, or 67.1% of our outstanding common stock voted (i) for the election of James G. Reindl, Stanley A. Youtt, Michael Holly, Larry Steinbrueck and Louis A. Winoski as directors, and (ii) approved the selection of the firm of Tabriztchi & Co., CPA, P.C. as our independent registered public accounting firm for the year ending March 31, 2008.

Item 6. Exhibits and Reports on Form 8-K

| 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 |

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: November 14, 2007 | /s/ James G. Reindl | | | James G. Reindl, Chief Executive Officer | | Dated: November 14, 2007 | /s/ Mary Desmond | | | Mary Desmond, Chief Financial Officer |

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TECHPRECISION CORP Regulatory Filings 2007

34534_rns_2007-11-14_3fddb872-0ea7-464c-a8b4-313a2ea67618.zip

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TECHPRECISION CORP — Regulatory Filings 2007

34534_rns_2007-11-14_3fddb872-0ea7-464c-a8b4-313a2ea67618.zip

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TECHPRECISION CORP Regulatory Filings 2007