10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2015
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to           

Commission File Number 000-51378

TECHPRECISION CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	51-0539828
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Bella Drive Westminster, MA	01473
(Address of principal executive offices)	(Zip Code)

(978) 874-0591

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-Accelerated Filer	☐	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes ☐ No ☒

The number of shares of the Registrant's common stock, par value $0.0001 per share, issued and outstanding at February 5, 2016 was 27,324,593.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS	3
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 4.	CONTROLS AND PROCEDURES	26
PART II.	OTHER INFORMATION	26
ITEM 1.	LEGAL PROCEEDINGS	26
ITEM 1A.	RISK FACTORS	26
ITEM 6.	EXHIBITS	28
	SIGNATURES	29
EXHIBIT INDEX

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31, 2015			March 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	816,301		$	1,336,325
Accounts receivable, less allowance for doubtful accounts of approximately $25,000 at  December 31, 2015 and March 31, 2015		766,564			826,363
Costs incurred on uncompleted contracts, in excess of progress billings		2,798,008			2,008,244
Inventories- raw materials		148,550			134,812
Current deferred taxes		826,697			826,697
Other current assets		464,841			538,253
Total current assets		5,820,961			5,670,694
Property, plant and equipment, net		5,217,048			5,610,041
Other noncurrent assets, net		9,676			45,490
Total assets	$	11,047,685		$	11,326,225
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,225,873		$	1,526,123
Trade notes payable		--			138,237
Accrued expenses		1,623,254			1,665,658
Advanced claims payment		507,835			--
Deferred revenues		1,087,179			1,211,506
Short-term debt		--			2,250,000
Current portion of long-term debt		934,176			933,651
Total current liabilities		5,378,317			7,725,175
Long-term debt, including capital lease		4,035,160			2,485,858
Noncurrent deferred taxes		826,697			826,697
Commitments and contingent liabilities (see Note 16)
Stockholders' Equity:
Preferred stock - par value $.0001 per share, 10,000,000 shares authorized, of which 9,890,980 are designated as Series A Preferred Stock, with -0- and 1,927,508 shares issued and outstanding at December 31, 2015 and March 31, 2015, respectively (liquidation preference: $0 - December 31, 2015; $549,340 - March 31, 2015)		--			524,210
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 27,324,593 and 24,669,958 shares issued and outstanding at December 31, 2015 and at March 31, 2015, respectively		2,732			2,467
Additional paid in capital		7,057,807			6,487,589
Accumulated other comprehensive income		23,344			23,561
Accumulated deficit		(6,276,372	)		(6,749,332	)
Total stockholders' equity		807,511			288,495
Total liabilities and stockholders' equity	$	11,047,685		$	11,326,225

See accompanying notes to the condensed consolidated financial statements.

3

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net sales	$	3,506,560		$	3,510,842		$	11,985,422		$	14,311,895
Cost of sales		2,434,900			3,169,456			8,223,349			12,884,553
Gross profit		1,071,660			341,386			3,762,073			1,427,342
Selling, general and administrative		768,220			705,059			2,482,465			3,243,968
Income (loss) from operations		303,440			(363,673	)		1,279,608			(1,816,626	)
Other income (expense)		465			136			1,531			(1,023	)
Interest expense (includes OCI reclassifications for    cash flow hedges of ($-0-) and ($248,464) in 2014)		(291,908	)		(582,202	)		(808,209	)		(1,200,796	)
Interest income		6			21			30			96
Total other expense, net		(291,437	)		(582,045	)		(806,648	)		(1,201,723	)
Income (loss) before income taxes		12,003			(945,718	)		472,960			(3,018,349	)
Income tax benefit (related to OCI reclassification)		--			--			--			(152,792	)
Net income (loss)	$	12,003		$	(945,718	)	$	472,960		$	(2,865,557	)
Other comprehensive income, before tax:
Change in unrealized loss on cash flow hedges		--			--			--			(16,680	)
Reclassification adjustment for cash flow hedges		--			--			--			248,464
Foreign currency translation adjustments		(1,135	)		(4,319	)		217			(4,272	)
Other comprehensive income, before tax		(1,135	)		(4,319	)		217			227,512
Tax expense from reclassification adjustment		--			--			--			152,792
Other comprehensive income, net of tax		(1,135	)		(4,319	)		217			74,720
Comprehensive income (loss)	$	10,868		$	(950,037	)	$	473,177		$	(2,790,837	)
Net income (loss) per share (basic)	$	0.00		$	(0.04	)	$	0.02		$	(0.12	)
Net income (loss) per share (diluted)	$	0.00		$	(0.04	)	$	0.02		$	(0.12	)
Weighted average number of shares outstanding (basic)		27,324,593			24,669,958			26,084,080			24,447,736
Weighted average number of shares outstanding (diluted)		27,509,980			24,669,958			26,210,206			24,447,736

See accompanying notes to the condensed consolidated financial statements.

2

4

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended December 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	472,960		$	(2,865,557	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		582,628			633,741
Amortization of debt issue costs		219,876			177,771
Stock based compensation expense		51,100			196,458
Provision for contract losses		(111,958	)		(589,392	)
Changes in operating assets and liabilities:
Accounts receivable		59,798			220,258
Costs incurred on uncompleted contracts, in excess of progress billings		(789,764	)		2,068,537
Inventories – raw materials		(13,738	)		70,586
Other current assets		(110,355	)		(214,294	)
Other noncurrent assets		--			105,395
Accounts payable		(438,486	)		(908,083	)
Accrued expenses		67,709			116,290
Advanced claims payment		507,835			--
Deferred revenues		(124,327	)		(283,575	)
Net cash provided by (used in) operating activities		373,278			(1,271,865	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(192,215	)		(54,096	)
Net cash used in investing activities		(192,215	)		(54,096	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of long-term debt		--			6,400,000
Repayment of long-term debt		(700,174	)		(4,628,174	)
Deferred loan costs		--			(253,975	)
Net cash (used in) provided by financing activities		(700,174	)		1,517,851
Effect of exchange rate on cash and cash equivalents		(913	)		76
Net (decrease) increase in cash and cash equivalents		(520,024	)		191,966
Cash and cash equivalents, beginning of period		1,336,325			1,086,701
Cash and cash equivalents, end of period	$	816,301		$	1,278,667

See accompanying notes to the condensed consolidated financial statements.

5

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued)

	Nine Months Ended December 31,
	2015		2014
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the period for:
Interest	$	525,451	$	626,962
Income taxes	$	--	$	--

SUPPLEMENTAL INFORMATION – NONCASH INVESTING AND FINANCING TRANSACTIONS:

Nine Months Ended December 31, 2015

For the nine months ended December 31, 2015, the Company issued 2,519,634 shares of common stock in connection with the conversion of 1,927,508 shares of Series A Convertible Preferred Stock. The stock conversions increased Common Stock and Additional Paid in Capital by $252 and $523,956, respectively.

Nine Months Ended December 31, 2014

For the nine months ended December 31, 2014, the Company issued $279,297 of trade notes payable in connection with the conversion of certain vendor trade accounts payables for the purchased of goods and services used in the ordinary course of business.

For the nine months ended December 31, 2014, the Company issued 718,954 shares of common stock in connection with the conversion of 550,000 shares of Series A Convertible Preferred Stock. The stock conversions increased Common Stock and Additional Paid in Capital by $72 and $119,828, respectively.

See accompanying notes to the condensed consolidated financial statements.

6

TECHPRECISION CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

TechPrecision Corporation, or TechPrecision, is a Delaware corporation organized in February 2005 under the name Lounsberry Holdings II, Inc. Our name was changed to TechPrecision Corporation on March 6, 2006. TechPrecision is the parent company of Ranor, Inc., or Ranor, a Delaware corporation and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise (WFOE). TechPrecision, WCMC and Ranor are collectively referred to as the "Company", "we", "us" or "our".

We manufacture large scale metal fabricated and machined precision components and equipment. These products are used in a variety of markets including the aerospace, commercial, defense, medical, and nuclear industries.

Liquidity and Capital Resources

On December 31, 2015, the Company, Ranor and Revere High Yield Fund, LP, or Revere, entered into a Note and Other Loan Documents Modification Agreement, or the Modification Agreement, to the Term Loan and Security Agreement, or TLSA, dated December 22, 2014, between Revere and Ranor. Pursuant to the TLSA, Revere loaned an aggregate of $2.25 million to Ranor under a term loan note in the aggregate principal amount of $1.5 million, or the First Loan Note, and a term loan note in the aggregate principal amount of $750,000, or the Second Loan Note and, together with the First Loan Note, the Notes. Ranor's obligations under the TLSA and the Notes are guaranteed by the Company pursuant to a Guaranty Agreement with Revere. The Modification Agreement extended the maturity date of the TLSA and the Notes from December 31, 2015 to January 22, 2016 and provided that Ranor agreed to waive its right to extend the maturity date of the TLSA and the Notes by six months as set forth in the TLSA. In connection with its entry into the Modification Agreement, Ranor was required to pay an exit fee of $67,500 to Revere.  

On January 22, 2016, the Company and Ranor entered into the Note and Other Loan Documents Modification Agreement No. 2 with Revere, or the Second Modification Agreement, which further amends the TLSA. In connection with the Second Modification Agreement, Ranor executed an Amended and Restated Term Loan Note in the aggregate principal amount of $1.5 million, or the Amended and Restated First Loan Note, and an Amended and Restated Term Loan Note in the aggregate principal amount of $750,000, or the Restated Second Loan Note, and together with the Amended and Restated First Loan Note, the Amended and Restated Notes, each in favor of Revere and each dated January 22, 2016. The Second Modification Agreement extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018. The terms of the Second Modification Agreement are more fully described in Note 18 - Subsequent Events.

At December 31, 2015, we had cash and cash equivalents of $816,301, of which $17,269 is located in China and may not be able to be repatriated for use in the United States without undue cost or expense, if at all. Net cash provided by operating activities was $373,278 for the nine months ended December 31, 2015, which includes an advance payment of $507,835 received on April 17, 2015 under an Assignment of Claim Agreement described below. We have reduced our operating expenses to stay in line with current business conditions. Our profit margins have improved significantly for the nine months ended December 31, 2015, when compared with the nine months ended December 31, 2014. As a result, we recorded net income of $472,960 for the nine months ended December 31, 2015 compared with a net loss of $2.9 million for the nine months ended December 31, 2014.

We incurred an operating loss of $3.6 million for the year ended March 31, 2015, or fiscal 2015. In the year ended March 31, 2014, or fiscal 2014, we recorded a provision for potential contract losses of $2.4 million in connection with the bankruptcy filing of GT Advanced Technologies, Inc., or GTAT, and filed a proof of claim with the bankruptcy court to recover all of our costs under the terms of a purchase agreement with GTAT. The claim is now considered an unsecured creditor claim within GTAT's overall bankruptcy proceedings.

On April 17, 2015, the Company, through Ranor, entered into an Assignment of Claim Agreement, or the Assignment Agreement, with Citigroup Financial Products Inc., or Citigroup. Pursuant to the terms of the Assignment Agreement, Ranor agreed to sell, transfer, convey and assign to Citigroup all of Ranor's right, title and interest in and to Ranor's $3,740,956 unsecured claim against GTAT. Pursuant to the Assignment Agreement, Citigroup paid to Ranor an initial amount equal to $507,835, which amount is classified as a current liability in our balance sheet. The Assignment Agreement provides for Citigroup to pay to Ranor up to an additional $614,452 upon either (A) receipt of written notice that Ranor's claim (or any portion thereof) has been fully and finally allowed against GTAT as a non-contingent, liquidated, and undisputed general unsecured claim, been listed as non-contingent, liquidated, and undisputed on schedules filed by GTAT with the bankruptcy court, or appeared on the claims agent's, or trustee's or other estate representative's records, or has otherwise been conclusively and finally treated in GTAT's bankruptcy, as "allowed" or "accepted as filed"; or (B) the expiration of the time period during which any party (including GTAT) is permitted to file an objection, dispute or challenge with respect to Ranor's claim without any such objection, dispute or challenge having been filed. If Ranor's claim against GTAT is allowed in its entirety, then Citigroup will pay Ranor an additional $614,452. If the amount of Ranor's claim that is allowed is greater than $1,692,782 but less than the full amount or Ranor's claim, then Citigroup will pay Ranor an additional amount equal to $614,452 minus the product of 30% multiplied by the difference between the total amount of Ranor's claim and the amount of such claim that is actually allowed. If the total amount of Ranor's claim against GTAT that is allowed is less than $1,692,782, then Ranor may be obligated to repay Citigroup 30% of the difference between $1,692,782 and the amount of Ranor's claim that is actually allowed plus interest at 7% per annum from April 21, 2015 through the date of the repayment.

7

The Company cannot predict the amount of Ranor's claim that will be finally allowed or admitted in the GTAT bankruptcy proceeding and cannot guarantee that Ranor will receive any additional payment on its claim. The Company continues to vigorously pursue its legal remedies in respect to the case described above; however, an adverse decision in any proceeding could significantly harm our business and our consolidated financial position, results of operations and cash flows.

On May 30, 2014, TechPrecision and Ranor entered into a Loan and Security Agreement, or the LSA, with Utica Leasco, LLC, or Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% or the six-month LIBOR interest rate, as described in the Credit Loan Note. Ranor's obligations under the LSA and the Credit Loan Note are guaranteed by TechPrecision.

Pursuant to the LSA, Ranor is subject to certain restrictive covenants which, among other things, restrict Ranor's ability to (1) declare or pay any dividend or other distribution on its equity, purchase or retire any of its equity, or alter its capital structure; (2) make any loan or guaranty or assume any obligation or liability; (3) default in payment of any debt in excess of $5,000 to any person; (4) sell any of the collateral outside the normal course of business; and (5) enter into any transaction that would materially or adversely affect the collateral or Ranor's ability to repay the obligations under the LSA and the Credit Loan Note.  The restrictions contained in these covenants are subject to certain exceptions specified in the LSA and in some cases may be waived by the written consent of Utica.  Any failure to comply with the covenants outlined in the LSA without waiver by Utica or certain other provisions in the LSA would constitute an event of default, pursuant to which Utica may accelerate the repayment of the loan.

In connection with the execution of the LSA, we paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million of the proceeds of the Credit Loan Note to pay off debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement.  Additionally, the Company retained approximately $1.27 million of the proceeds of the Credit Loan Note for general corporate purposes.

If we were to violate any of the covenants under the above debt agreements, the lenders could demand full repayment of the amounts we owe. As such, we would need to seek alternative financing to pay these obligations as we do not have existing facilities or sufficient cash on hand to satisfy these obligations, and there is no guarantee that we would be able to obtain such alternative financing.

We were successful in amending the TLSA with Revere to extend its maturity date. The TLSA was to expire on December 31, 2015 and was amended in January 2016, with the term of the TLSA extended to January 22, 2018. Our LSA with Utica matures on November 30, 2018. We believe that we will have sufficient cash to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. Our liquidity is highly dependent on our available financing facilities and our ability to sustain our gross profit margins. If we do not execute on our business plans, improve gross profit and operating income, and reduce our operating costs, then our available cash may not be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. We may need to secure additional acceptable financing facilities before 2018.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we may need to secure additional financing on terms consistent with our near-term business plans. We have increased our backlog and changed the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects, which do not efficiently utilize our manufacturing capacity. We plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity. 

The condensed consolidated financial statements for the three and nine months ended December 31, 2015 and for the year ended March 31, 2015, or fiscal 2015, were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total current liabilities of $5.4 million at December 31, 2015 and to continue as a going concern is dependent upon the successful execution of our operating plan and our ability to timely secure long-term financing on favorable terms. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of TechPrecision, WCMC and Ranor. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of December 31, 2015, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine month periods ended December 31, 2015 and 2014, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2015 and 2014 are unaudited, but, in the opinion of management, include all adjustments that are necessary for a fair presentation of our financial statements for interim periods in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The results of operations for an interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.

8

The notes to condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements and related notes should be read in conjunction with our consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2015, or the 2015 Form 10-K, filed with the SEC on June 29, 2015.

Significant Accounting Policies

Our significant accounting policies are set forth in detail in Note 2 to the 2015 Form 10-K.

NOTE 3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2015, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update No. 2015-17, or ASU No. 2015-17, Income Taxes (Topic 740), Balance sheet Classification of Deferred Taxes, or Topic 740. Topic 740 requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred taxes, the amendments in ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU No. 2015-17 apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by these amendments. ASU No. 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not expect the adoption of ASU 2015-17 to have a significant impact on the Company's consolidated results of operations, financial position or cash flows.

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following as of: 

	December 31, 2015			March 31, 2015
Land	$	110,113		$	110,113
Building and improvements		3,252,908			3,235,308
Machinery equipment, furniture and fixtures		8,731,080			8,733,660
Equipment under capital leases		65,568			65,568
Construction in progress		174,615			--
Total property, plant and equipment		12,334,284			12,144,649
Less: accumulated depreciation		(7,117,236	)		(6,534,608	)
Total property, plant and equipment, net	$	5,217,048		$	5,610,041

Depreciation expense for the three and nine months ended December 31, 2015 and 2014 was $187,908 and $582,628, and $206,475 and $633,741, respectively.

9

NOTE 5 - COSTS INCURRED ON UNCOMPLETED CONTRACTS

The following table sets forth information as to costs incurred on uncompleted contracts as of:

	December 31, 2015			March 31, 2015
Cost incurred on uncompleted contracts, beginning balance	$	4,068,488		$	9,960,072
Total cost incurred on contracts during the period		9,138,138			10,034,158
Less cost of sales, during the period		(8,223,349	)		(15,925,742	)
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, beginning balance	$	2,060,244		$	4,702,070
Plus: Total billings incurred on contracts, during the period		12,110,447			15,591,388
Less: Contracts recognized as revenue, during the period		(11,985,422	)		(18,233,214	)
Billings on uncompleted contracts, ending balance	$	2,185,269		$	2,060,244
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, ending balance		2,185,269			2,060,244
Costs incurred on uncompleted contracts, in excess of progress billings	$	2,798,008		$	2,008,244

Contract costs consist primarily of labor and materials and related overhead, to the extent that such costs are recoverable. Revenues associated with these contracts are recorded only when the amount of recovery can be estimated reliably and realization is probable. As of December 31, 2015 and March 31, 2015, we had deferred revenues totaling $1,087,179 and $1,211,506, respectively. Deferred revenues represent customer prepayments on contracts and completed contracts on which revenue cannot yet be recognized. We also receive advance billings and deposits representing down payments for acquisition of materials and progress payments on contracts. The agreements with our customers allow us to offset the progress payments against the costs incurred. We record provisions for losses within costs of sales in our condensed consolidated statement of operations and comprehensive income (loss).

NOTE 6 – OTHER CURRENT ASSETS

	December 31, 2015		March 31, 2015
Payments advanced to suppliers	$	147,362	$	54,422
Prepaid insurance		220,460		205,477
Collateral deposits		85,252		85,252
Deferred loan costs, net of amortization		--		184,063
Other		11,767		9,039
Total	$	464,841	$	538,253

NOTE 7 – OTHER NONCURRENT ASSETS

	December 31, 2015			March 31, 2015
Deferred loan costs	$	253,975		$	253,975
Deferred loan costs, accumulated amortization	$	(244,299	)	$	(208,485	)
Total	$	9,676		$	45,490

NOTE 8 - ACCRUED EXPENSES

	December 31, 2015		March 31, 2015
Accrued compensation	$	589,102	$	613,838
Provision for contract losses		421,841		533,799
Accrued interest expense		483,555		436,787
Other		128,756		81,234
Total	$	1,623,254	$	1,665,658

Our contract loss provision at both December 31, 2015 and March 31, 2015 includes approximately $0.4 million for estimated contract losses in connection with a certain customer purchase agreement. We filed a demand for arbitration under the contract to recover damages, together with attorney's fees, interest and costs, subsequent to the customer's request to reduce the number of units ordered under the purchase agreement. As a result of the customer filing a voluntary bankruptcy claim, the demand is now considered an unsecured creditor claim within the customer's overall bankruptcy proceedings. It is more likely than not that we will not be able to recover the full amount of our claim. As such, part of the total reduction in the liability reflects the netting of approximately $0.8 million of accumulated costs in work-in-progress and $1.1 million of accounts receivable with the loss provision. Accrued interest expense includes deferred interest costs accounted for under the effective interest method in connection with the Utica Credit Loan Note due November 2018.

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NOTE 9 – DEBT

	December 31, 2015		March 31, 2015
Utica Credit Loan Note due November 2018	$	2,689,815	$	3,381,481
Revere Term Loan and Notes due December 2015		2,250,000		2,250,000
Obligations under capital lease		29,521		38,028
Total debt	$	4,969,336	$	5,669,509
Less: Short-term debt	$	--	$	2,250,000
Less: Current portion of long-term debt	$	934,176	$	933,651
Long-term debt, including capital lease	$	4,035,160	$	2,485,858

Term Loan and Security Agreement

On December 22, 2014, Ranor entered into the TLSA with Revere. Pursuant to the TLSA, Revere agreed to loan an aggregate of $2.25 million to Ranor under the First Loan Note in the aggregate principal amount of $1.5 million and the Second Loan Note in the aggregate principal amount of $750,000. The First Loan Note is collateralized by a secured interest in Ranor's Massachusetts facility and certain machinery and equipment at Ranor. The Second Loan Note is collateralized by a secured interest in certain accounts, inventory and equipment of Ranor. Payments under the TLSA, the First Loan Note and the Second Loan Note were due as follows: (a) payments of interest only on advanced principal on a monthly basis on the first day of each month from February 1, 2015 until December 31, 2015 with an annual interest rate on the unpaid principal balance of the First Loan Note and the Second Loan Note equal to 12% per annum and (b) the principal balance plus accrued and unpaid interest payable on December 31, 2015. Ranor's obligations under the TLSA, the First Loan Note and the Second Loan Note are guaranteed by TechPrecision pursuant to a Guaranty Agreement with Revere. Ranor utilized approximately $1.45 million of the proceeds of the First Loan Note and Second Loan Note to pay off bond obligations owed to Santander Bank N.A. plus breakage fees on a related interest swap of $217,220 under the Loan and Security Agreement with Santander Bank N.A. The remaining proceeds of the First Loan Note and the Second Loan Note were retained by the Company for general corporate purposes. Pursuant to the TLSA, Ranor was subject to certain affirmative and negative covenants, including a cash covenant, which requires that we maintain minimum month end cash balances that range from $400,000 to $820,000. We were required to maintain a cash balance of $789,000 and $500,000 at December 31, 2015 and March 31, 2015, respectively. We were in compliance with all covenants under the TLSA at December 31, 2015 and March 31, 2015.

On December 31, 2015, the Company, Ranor and Revere entered into the Modification Agreement to the TLSA. The Modification Agreement extended the maturity date of the TLSA and the Notes from December 31, 2015 to January 22, 2016 and provided that Ranor agreed to waive its right to extend the maturity date of the TLSA and the Notes by six months as set forth in the TLSA.

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement which further amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere. The Second Modification Agreement extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018. The terms of the Second Modification Agreement are more fully described in Note 18 - Subsequent Events.

Ranor was not in violation of any of the covenants included in the Notes at their maturity date of December 31, 2015 or when it issued its financial statements. As such, noncurrent classification is required as of December 31, 2015 because the Company was able to demonstrate its ability to consummate long-term refinancing by issuing a long-term obligation after its balance sheet date but before the issuance of its balance sheet.

Loan and Security Agreement

On May 30, 2014, TechPrecision and Ranor entered into the LSA with Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and the Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% or the six-month LIBOR interest rate, as described in the Credit Loan Note. At December 31, 2015, the rate of interest on the debt under the LSA was 10.8%. In addition, if the obligations under the LSA and the Credit Loan Note are paid in full at or before the maturity date, Ranor will be required to pay Utica deferred interest in an amount ranging from $166,000 during the first twelve months of the term of the loan to $498,000 at any time after the forty-eighth month of the term of the loan. Ranor's obligations under the LSA and the Credit Loan Note are guaranteed by TechPrecision.

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Pursuant to the LSA, Ranor is subject to certain restrictive covenants which, among other things, restrict Ranor's ability to (1) declare or pay any dividend or other distribution on its equity, purchase or retire any of its equity, or alter its capital structure; (2) make any loan or guaranty or assume any obligation or liability; (3) default in payment of any debt in excess of $5,000 to any person; (4) sell any of the collateral outside the normal course of business; and (5) enter into any transaction that would materially or adversely affect the collateral or Ranor's ability to repay the obligations under the LSA and the Credit Loan Note.  The restrictions contained in these covenants are subject to certain exceptions specified in the LSA and in some cases may be waived by written consent of Utica.  Any failure to comply with the covenants outlined in the LSA without waiver by Utica or certain other provisions in the LSA would constitute an event of default, pursuant to which Utica may accelerate the repayment of the loan. In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million of the proceeds of the Credit Loan Note to pay off, or complete a refinancing of, debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement. We paid a breakage fee of $29,448 for early termination of the interest rate swap for certain bonds and recorded the amount as interest expense in our statement of operations. We retained approximately $1.27 million of the proceeds of the Credit Loan Note for general corporate purposes.

Capital Lease

We entered into a new capital lease in April 2012 for certain office equipment. The lease has a term of 63 months, bears interest at 6.0% and requires monthly payments of principal and interest of $1,136. This lease was amended in fiscal 2014 when we purchased a replacement copier at Ranor. The revised lease term was extended by nine months and will expire in September 2018. The amount of the lease recorded in property, plant and equipment, net as of December 31, 2015 and March 31, 2015 was $26,045 and $38,027, respectively.

NOTE 10 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  At the end of each interim period, we make an estimate of our annual expected effective tax rates in both the United States and China. For the three and nine months ended December 31, 2015 we recorded zero income tax expense. The lack of tax expense or benefit for the three and nine months ended December 31, 2015 was primarily the result of recording a full valuation allowance on our net deferred tax assets. For the nine months ended December 31, 2014, we recorded a tax benefit of $152,792 as we reclassified losses on an interest rate swap to our statement of operations. A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels. We have determined that it is more likely than not that certain future tax benefits may not be realized.  A change in the estimates used to make this determination could require an increase in deferred tax assets if they become realizable.

At March 31, 2015, our federal net operating loss carry-forward was approximately $10.0 million. If not utilized, the federal net operating loss carry-forward will begin to expire in 2025. Section 382 of the Internal Revenue Code, as amended, provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards on a yearly basis due to an ownership change in connection with the acquisition of Ranor in 2006.

We file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Our foreign subsidiary files separate income tax returns in China, the foreign jurisdiction in which it is located.  Tax years 2012 and forward remain open for examination.  We recognize interest and penalties accrued related to income tax liabilities in selling, general and administrative expense in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

NOTE 11 - PROFIT SHARING PLAN

Ranor has a 401(k) profit sharing plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. Our contributions were $36,784 and $38,375 for the nine months ended December 31, 2015 and 2014, respectively.

NOTE 12 - CAPITAL STOCK

Preferred Stock

We have 10,000,000 authorized shares of preferred stock and our board of directors has broad power to create one or more series of preferred stock and to designate the rights, preferences, privileges and limitations of the holders of such series. Our board of directors has created one series of preferred stock - the Series A Convertible Preferred Stock.

Each share of Series A Convertible Preferred Stock was initially convertible into one share of common stock. As a result of our failure to meet certain levels of earnings before interest, taxes, depreciation and amortization for the years ended March 31, 2006 and 2007, the conversion rate changed, and each share of Series A Convertible Preferred Stock became convertible into 1.3072 shares of common stock, with an effective conversion price of $0.218.  

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During the nine months ended December 31, 2015 and 2014, 1,927,508 and 550,000 shares of Series A Convertible Preferred Stock were converted into 2,519,634 and 718,954 shares of common stock, respectively. There were no shares of Series A Convertible Preferred Stock outstanding at December 31, 2015, as the last outstanding shares of Series A Convertible Preferred Stock were converted into shares of common stock on September 24, 2015. There were 1,927,508 shares of Series A Convertible Preferred Stock outstanding at March 31, 2015. Based on the most recent conversion ratio, there were zero and 2,519,634 common shares underlying the Series A Convertible Preferred Stock as of December 31, 2015 and March 31, 2015, respectively.

Common Stock

We had 90,000,000 authorized shares of common stock at December 31, 2015 and March 31, 2015.  There were 27,324,593 and 24,669,958 shares of common stock outstanding at December 31, 2015 and March 31, 2015, respectively. For the nine months ended December 31, 2015 we issued 2,519,634 shares of common stock in connection with conversions of Series A Convertible Preferred Stock. For the nine months ended December 31, 2014, we issued 718,954 shares of common stock in connection with conversions of Series A Convertible Preferred Stock.

NOTE 13 - STOCK BASED COMPENSATION

In 2006, our board of directors adopted, and our stockholders approved, the 2006 long-term incentive plan, or the Plan, covering 1,000,000 shares of common stock. On August 5, 2010, the Plan was amended to increase the maximum number of shares of common stock that may be issued to an aggregate of 3,000,000 shares. On September 15, 2011, the directors adopted and our stockholders approved an amendment to increase the maximum number of shares of common stock that may be issued pursuant to the Plan to an aggregate of 3,300,000 shares. The Plan provides for the grant of incentive and non-qualified options, stock grants, stock appreciation rights and other equity-based incentives to employees, including officers, and consultants. The Plan is to be administered by a committee of not less than two directors each of whom is to be an independent director. In the absence of a committee, the Plan is administered by our board of directors. Independent directors are not eligible for discretionary options.

Pursuant to the Plan, each newly elected independent director receives, at the time of election, a five-year option to purchase 50,000 shares of common stock at the market price on the date of his or her election.  In addition, the Plan provides for the annual grant of an option to purchase 10,000 shares of common stock on July 1 of each year following the third anniversary of the date of election.  

On July 1, 2015, we granted stock options to members of our board of directors to collectively purchase 30,000 shares of common stock at an exercise price of $0.10 per share, the fair market value on the date of grant. Fifty percent of the options will vest upon the six month anniversary of the grant date while the remaining fifty percent of the options will vest upon the eighteen month anniversary of the grant date.

On August 12, 2015, we granted stock options to our chief executive officer to purchase in total 1,000,000 shares of common stock at an exercise price of $0.08 per share, the fair market value on the date of grant. One third of the options vested on the date of the grant, one third of the options will vest on the first anniversary of the grant date, and the final one third of the options will vest on the second anniversary of the grant date.

The fair value of the options we granted was estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The average dividend yield over the historical period for which volatility was computed is zero. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We use the simplified method for all grants to estimate the expected term of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. Because of our limited stock option exercise activity we did not rely on our historical exercise data. The assumptions utilized for option grants during the period presented were as follows: a range from  119.5% to 120.8% for volatility, a range of 1.62% to 1.70% for the risk free interest rate, and approximately six years for the expected term. At December 31, 2015, there were 792,006 shares of common stock available for grant under the Plan. The following table summarizes information about options for the periods presented below: 

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	Number Of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding at 3/31/2015		1,190,500		$	1.049	$	21,600		5.18
Granted		1,030,000		$	0.081
Exercised		(135,000	)	$	1.100
Forfeited		(155,000	)	$	1.015
Outstanding at 12/31/2015		1,930,500		$	0.661	$	102,503		7.85
Vested or expected to vest at 12/31/2015		1,930,500		$	0.661	$	102,503		7.85
Exercisable and vested at 12/31/2015		1,235,500		$	0.767	$	34,568		6.52

At December 31, 2015 there was $40,646 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over the next two years. The total fair value of shares vested during the nine months ended December 31, 2015 was $67,183. The following table summarizes the activity of our stock options outstanding but not vested for the nine months ended December 31, 2015:  

	Number of Options			Weighted Average Exercise Price
Outstanding at 3/31/2015		112,500		$	0.664
Granted		1,030,000		$	0.081
Forfeited		(40,000	)	$	0.670
Vested		(407,500	)	$	0.165
Outstanding at 12/31/2015		695,000		$	0.092

NOTE 14 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

We maintain bank account balances, which, at times, may exceed Federal Deposit Insurance Corporation insured limits. We have not experienced any losses with these accounts and believe that we are not exposed to any significant credit risk on cash.

At December 31, 2015, there were accounts receivable balances outstanding from four customers comprising 83% of the total receivables balance. The following table sets forth information as to accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of: 

Accounts Receivable	December 31, 2015					March 31, 2015
Customer	Dollars		Percent			Dollars		Percent
A	$	261,172		34	%	$	*		*	%
B	$	149,688		20	%	$	296,815		36	%
C	$	123,920		16	%	$	*		*	%
D	$	99,110		13	%	$	*		*	%
E	$	*		*	%	$	128,738		16	%
F	$	*		*	%	$	123,604		15	%

 *less than 10% of total

We have been dependent in each year on a small number of customers who generate a significant portion of our business, and these customers change from year to year. The following table sets forth information as to net sales from customers who accounted for more than 10% of our revenue for the three and nine months ended:

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Net Sales	Three months ended December 31,								Nine months ended December 31,
Customer	2015				2014				2015				2014
A	$	1,568,714	45	%	$	475,317	14	%	$	3,057,140	26	%	$	*	*	%
B	$	*	*	%	$	*	*	%	$	1,971,139	16	%	$	3,107,520	22	%
C	$	*	*	%	$	*	*	%	$	1,459,013	12	%	$	*	*	%
D	$	*	*	%	$	406,089	12	%	$	1,192,848	10	%	$	*	*	%
E	$	*	*	%	$	1,394,999	40	%	$	*	*	%	$	2,399,074	16	%
F	$	*	*	%	$	*	*	%	$	*	*	%	$	1,762,985	12	%
G	$	594,534	17	%	$	*	*	%	$	*	*	%	$	*	*	%
H	$	354,469	10	%	$	*	*	%	$	*	*	%	$	*	*	%
I	$	*	*	%	$	676,729	19	%	$	*	*	%	$	*	*	%

*less than 10% of total

NOTE 15 – SEGMENT INFORMATION

We consider our business to consist of one segment - metal fabrication and precision machining. A significant amount of our operations, assets and customers are located in the United States. The following table presents our geographic information (net sales and property, plant and equipment, net) by the country in which the legal subsidiary is domiciled and assets are located: 

	Net Sales Three Months Ended December 31,						Net Sales Nine Months Ended December 31,						Property, Plant and Equipment, net
	2015			2014			2015			2014			Dec. 31, 2015			March 31, 2015
United States		$	3,506,560		$	3,202,086		$	11,985,422		$	13,517,788		$	5,217,048		$	5,609,973
China			--		$	308,756			--		$	794,107			--		$	68

NOTE 16 – COMMITMENTS

Leases

New Lease

On June 1, 2015 we entered into a new office lease with GPX Wayne Office Properties, L.P., or GPX Wayne, pursuant to which the Company leases approximately 1,100 square feet located at 992 Old Eagle School Road, Wayne, Pennsylvania, or the Wayne Property. The Company assumed possession of the Wayne Property on June 16, 2015. The initial term of this lease will expire on June 30, 2016, unless terminated sooner in accordance with the terms of the lease. The Company's base rent for the Wayne Property is $1,838 per month plus payments for electricity (on a proportionate ratio basis for the entire building), certain contributions for leasehold improvements, and certain other additional rent items (including certain taxes, insurance premiums and operating expenses). Other than as described above, there is no relationship between the Company and GPX Wayne.

Termination of Lease

On June 4, 2015, the Company entered into a lease termination agreement with CLA Building Associates, L.P., or CLA, pursuant to which the Company and CLA agreed to terminate the lease between the Company and CLA with respect to certain office space in Newtown Square, Pennsylvania, or the Newtown Square Property. Pursuant to the lease termination agreement, the lease with respect to the Newtown Square Property was terminated and the Company vacated the Newtown Square Property on June 16, 2015. The lease termination agreement provides that CLA will retain the Company's security deposit of $2,400.

Employment Agreements

We have employment agreements with each of our executive officers. Such agreements provide for minimum salary levels, adjusted annually, and bonuses that are payable if specified company goals are attained. The aggregate commitment at December 31, 2015 for future executive salaries during the next twelve months, including fiscal 2015 bonuses payable after March 31, 2015, was approximately $0.7 million. The aggregate commitment at December 31, 2015 was approximately $0.2 million for accrued payroll, severance, vacation and holiday pay for the remainder of our employees.

NOTE 17 - EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. Diluted EPS also includes the effect of dilutive potential common share equivalents, which consist of convertible preferred stock and stock options. The following table provides a reconciliation of the numerators and denominators reflected in the basic and diluted earnings per share computations, as required under FASB ASC 260. 

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	Three Months ended December 31, 2015		Three Months ended December 31, 2014			Nine Months ended December 31, 2015		Nine Months ended December 31, 2014
Basic EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Weighted average number of shares outstanding		27,324,593		24,669,958			26,084,080		24,447,736
Basic income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)
Diluted EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Dilutive effect of stock options, warrants and preferred stock		185,387		--			126,126		--
Diluted weighted average shares		27,509,980		24,669,958			26,210,206		24,447,736
Diluted income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)

All potential common share equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were 900,500 potential common share equivalents that were out-of-the-money and were not included in the EPS calculations above for both the three and nine month periods ended December 31, 2015. For the three and nine months ended December 31, 2014, there were, respectively, 3,288,008 and 2,277,951 anti-dilutive potential common share equivalents, which were not included in the EPS calculations above.  

NOTE 18 – SUBSEQUENT EVENTS

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement, which amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere.

The Second Modification Agreement (a) extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018, (b) amends the amortization schedule such that payments under the TLSA and Amended and Restated Notes are due as follows: (i) payments of interest only on advanced principal on a monthly basis on the first day of each month from March 1, 2016 until January 1, 2017 and (ii) payments of $9,375 in principal plus accrued interest on a monthly basis on the first day of each month from February 1, 2017 until January 22, 2018, (c) reduces the annual interest rate on the unpaid principal balance of the loans to 10% per annum, or the Interest Rate, from 12% per annum, (d) amends the definition of the Minimum Guaranteed Interest payable by Ranor to Revere on the earlier of prepayment in full of the loans or payment in full of the loans on the maturity date to the greater of (i) twelve (12) months interest at the Interest Rate on the amount outstanding on the loans or (ii) interest due on any amount advanced under the TLSA at the Interest Rate, (e) adds a restrictive covenant whereby Ranor must maintain monthly minimum cash balances, with failure to comply with such restrictive covenant an event of default pursuant to which Revere may accelerate the repayment of the loans, and (f) includes a reaffirmation of the Company's guarantee of Ranor's obligations under the TLSA and the Amended and Restated Notes pursuant to a Guaranty Agreement between the Company and Revere.

Other than as so amended by the Modification Agreement and the Second Modification Agreement, the terms and conditions of the TLSA remain in full force and effect.

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 condensed consolidated financial statements and the related notes which appear elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q, including this section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," may contain predictive or "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions.  These statements are based on current expectations, estimates and projections about our business based in part on assumptions made by management.  These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors.  Those factors include those risks discussed in Part II – Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and those discussed in Item 1A "Risk Factors" in the 2015 Form 10-K for the year ended March 31, 2015, as well as those described in any other filings which we make with the SEC.  In addition, such statements could be affected by risks and uncertainties related to recurring operating losses and the availability of appropriate financing facilities impacting our ability to continue as a going concern, our ability to change the composition of our revenues and effectively reduce our operating expenses, our ability to receive contract awards through competitive bidding processes, our ability to maintain standards to enable us to manufacture products to exacting specifications, our ability to enter new markets for our services, marketing and customer acceptance of our products, our reliance on a small number of customers for a significant percentage of our business, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions.  Any forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this Quarterly Report on Form 10-Q except as required by applicable law. Investors should evaluate any statements made by us in light of these important factors.

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Overview

We offer a full range of services required to transform raw materials into precise finished products. Our manufacturing capabilities include: fabrication operations (cutting, press and roll forming, assembly, welding, heat treating, blasting and painting) and machining operations including CNC (computer numerical controlled) horizontal and vertical milling centers. We also provide support services to our manufacturing capabilities: manufacturing engineering (planning, fixture and tooling development, manufacturing), quality control (inspection and testing), materials procurement, production control (scheduling, project management and expediting) and final assembly.

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

Because our revenues are derived from the sale of goods manufactured pursuant to a contract, and we do not sell from inventory, it is necessary for us to constantly seek new contracts. There may be a time lag between the completion of one contract and commencement of work on another contract. During such periods, we may continue to incur overhead expense but with lower revenue resulting in lower operating margins. Furthermore, changes in either the scope of an existing contract or related delivery schedules 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 the government or its agencies. 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 our services and products.

Our contracts are generated both through negotiation with the customer and from bids made pursuant to a request for proposal. Our ability to receive contract awards is dependent upon the contracting party's perception of such factors as our ability to perform on time, our history of performance, including quality, our financial condition and our ability to price our services competitively.  Although some of our contracts contemplate the manufacture of one or a limited number of units, we are seeking more long-term projects with a more predictable cost structure.

We historically have experienced, and continue to experience, customer concentration. For the nine months ended December 31, 2015 and 2014, our largest customer (who was different in each period) accounted for approximately 26% and 22% of reported net sales, respectively, and our ten largest customers accounted for approximately more than 97% and 88% of our revenue, respectively. Our sales order backlog at December 31, 2015 was approximately $20.5 million compared with a backlog of $14.3 million at March 31, 2015. New orders for maritime and medical components have rebounded significantly during the nine months ended December 31, 2015.

All of our sales recorded for the nine months ended December 31, 2015 are from our U.S. segment. There were no sales generated from WCMC, our subsidiary in China, during the nine months ended December 31, 2015. At December 31, 2015, we did not have any open customer orders for WCMC in our backlog. We are evaluating how to utilize the WCMC entity moving forward.

For the nine months ended December 31, 2015, our net sales and net income were $12.0 million and $0.5 million, respectively, compared with net sales of $14.3 million and net loss of $2.9 million, respectively, for the nine months ended December 31, 2014.  Our gross margins for the nine months ended December 31, 2015 were 31.4% compared with gross margins of 10.0% for the nine months ended December 31, 2014.

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement, which amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere. The Second Modification Agreement extends the maturity date of the terms loans made pursuant to the TLSA to January 22, 2018.

We incurred an operating loss of $3.6 million for the fiscal year ended March 31, 2015. During fiscal 2014, we recorded a provision for potential contract losses of approximately $2.4 million in connection with the bankruptcy filing of GTAT and filed a proof of claim with the bankruptcy court to recover all of our costs under the terms of a purchase agreement. The claim is now considered an unsecured creditor claim within GTAT's overall bankruptcy proceedings.

On April 17, 2015, the Company, through Ranor, entered into the Assignment Agreement with Citigroup. Pursuant to the terms of the Assignment Agreement, Ranor agreed to sell, transfer, convey and assign to Citigroup all of Ranor's right, title and interest in and to Ranor's $3,740,956 unsecured claim against GTAT. Pursuant to the Assignment Agreement, Citigroup paid to Ranor an initial amount equal to $507,835. The Assignment Agreement provides for Citigroup to pay to Ranor up to an additional $614,452 upon either (A) receipt of written notice that Ranor's claim (or any portion thereof) has been fully and finally allowed against GTAT as a non-contingent, liquidated, and undisputed general unsecured claim, been listed as non-contingent, liquidated, and undisputed on schedules filed by GTAT with the bankruptcy court, or appeared on the claims agent's, or trustee's or other estate representative's records, or has otherwise been conclusively and finally treated in GTAT's bankruptcy proceedings, as "allowed" or "accepted as filed"; or (B) the expiration of the time period during which any party (including GTAT) is permitted to file an objection, dispute or challenge with respect to Ranor's claim without any such objection, dispute or challenge having been filed. If Ranor's claim against GTAT is allowed in its entirety, then Citigroup will pay Ranor an additional $614,452. If the amount of Ranor's claim that is allowed is greater than $1,692,782 but less than the full amount or Ranor's claim, then Citigroup will pay Ranor an additional amount equal to $614,452 minus the product of 30% multiplied by the difference between the total amount of Ranor's claim and the amount of such claim that is actually allowed. If the total amount of Ranor's claim against GTAT that is allowed is less than $1,692,782, then Ranor may be obligated to repay to Citigroup 30% of the difference between $1,692,782 and the amount of Ranor's claim that is actually allowed, plus interest at 7% per annum from April 21, 2015 through the date of the repayment.

17

The Company cannot predict the amount of Ranor's claim that will be finally allowed or admitted in the GTAT bankruptcy proceeding and cannot guarantee that Ranor will receive any additional payment on its claim. The Company continues to vigorously pursue its legal remedies in respect to the case described above; however, an adverse decision in any proceeding could significantly harm our business and our consolidated financial position, results of operations and cash flows.

At December 31, 2015, we had cash and cash equivalents of $816,301, of which $17,269 is located in China and may not be able to be repatriated for use in the United States without undue cost or expense, if at all. Net cash provided by operating activities was $373,278 for the nine months ended December 31, 2015, which includes an advance payment of $507,835 received under the Assignment Agreement.

Recurring operating losses and negative cash flows from operating activities in prior years have caused working capital deficiencies and raise substantial doubt regarding our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources" and Part II – Item 1A "Risk Factors."

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We continually evaluate our estimates, including those related to contract accounting, inventories, recovery of long-lived assets, income taxes and the valuation of equity transactions. These estimates and assumptions require management's most difficult, subjective or complex judgments. Actual results may differ under different assumptions or conditions.

Our significant accounting policies are set forth in detail in Note 2 to the consolidated financial statements included in the 2015 Form 10-K. There were no significant changes in the critical accounting policies during the nine months ended December 31, 2015, nor did we make any changes to our accounting policies that would have changed these critical accounting policies.

New Accounting Pronouncements

See Note 3 – Recently Issued and Adopted Accounting Pronouncements to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting guidance and other new accounting guidance.

Results of Operations

Our results of operations are affected by a number of external factors including the availability of raw materials (particularly steel), commodity prices, macroeconomic factors, including the availability of capital that may be needed by our customers, and political, regulatory and legal conditions in the United States and foreign markets. Our revenue stream can be uneven and reflects an irregular pattern of orders we receive from our customers as they gauge their customers' demand for new and existing products. Our results of operations are affected by our success in booking new contracts, the timing of revenue recognition, delays in customer acceptances of our products, delays in deliveries of ordered products and our rate of progress fulfilling our obligations under our contracts. A delay in deliveries or cancellations of orders would cause us to have inventories in excess of our short-term needs, and may delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog. We continue to execute the business plan we developed in fiscal 2015, which has the immediate goal of realigning and stabilizing our cost structure so we can return to and sustain profitability, even at current lower revenue levels. In connection with the execution of this business plan, we need to rebuild our backlog with orders from our key customers. 

18

Three Months Ended December 31, 2015 and 2014

The following table sets forth information from our statements of operations in dollars and as a percentage of revenue: 

	Three Months Ended December 31, 2015						Three Months Ended December 31, 2014						Changes Period Ended December 31, 2015 to 2014
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	3,507			100	%	$	3,511			100	%	$	(4	)	nm	%
Cost of sales		2,435			70	%		3,170			90	%		(735	)	(23	)%
Gross profit		1,072			30	%		341			10	%		731		214	%
Selling, general and administrative		768			22	%		705			20	%		63		9	%
Income (loss) from operations		304			9	%		(364	)		(10	)%		668		nm	%
Other income (expense), net		--			--	%		--			--	%		--		nm	%
Interest expense		(292	)		(8	)%		(582	)		(17	)%		290		50	%
Total other expense, net		(292	)		(8	)%		(582	)		(17	)%		290		50	%
Income (loss) before income taxes		12			--	%		(946	)		(27	)%		958		nm	%
Income tax expense		--			--	%		--			--	%		--		nm	%
Net income (loss)	$	12			--	%	$	(946	)		(27	)%	$	958		nm	%

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Net Sales

The following increases and decreases in net sales reflect changes in order flows among our key customers as they gauge market demand for their new and existing products. Our net sales for the three months ended December 31, 2015 were relatively unchanged when compared with the same prior year period. For the three months ended December 31, 2015, net sales decreased by $4,282, or 0.1%, to $3.5 million, compared to the three months ended December 31, 2014.  Net sales to our key defense customers, our largest market group, increased by $1.8 million on higher shipments of maritime components. Net sales in our energy group decreased by $0.5 million on lower volume. Net sales to our precision industrial group decreased by $1.3 million on lower volume for medical components.

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, labor, overhead, depreciation and subcontracting costs. Our cost of sales for the three months ended December 31, 2015 decreased by $0.7 million, or 23%, compared to the three months ended December 31, 2014.  Gross profit increased by $0.7 million for the three months ended December 31, 2015 compared to the same prior year period. Gross margins for the three months ended December 31, 2015 were 30.5% compared with 9.7% for the three months ended December 31, 2014. Gross margins for the three months ended December 31, 2015 were higher because of improved throughput, lower material and labor costs, and the absence of low margin contracts. Gross margins for the three months ended December 31, 2014 were dampened by higher labor costs and under absorbed overhead. Gross margin in any reporting period is impacted by the mix of services we provide on projects completed and in-process within that period.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the three months ended December 31, 2015 were higher by $63,161 when compared with the same period in fiscal 2015.  During the three months ended December 31, 2014, in order to conserve cash, our board elected not to pay accrued board fees and executive chairman compensation. As a result, we reversed approximately $0.3 million of accrued board fees and executive chairman compensation.

19

Other Income (Expense)

The following table reflects other income (expense) and interest expense for the three months ended:

	December 31, 2015			December 31, 2014			$ Change			% Change
Other income (expense), net	$	471		$	157		$	314		nm		%
Interest rate swaps	$	--		$	(217,220	)	$	217,220		nm		%
Interest expense	$	(213,188	)	$	(113,565	)	$	(99,623	)		(88	)%
Interest expense: non-cash	$	(78,720	)	$	(251,417	)	$	172,697			69	%

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For the three months ended December 31, 2015, cash paid for interest expense increased by 88% when compared with the three months ended December 31, 2014 primarily due to the payment of a $67,500 exit fee to Revere. The remaining increase is due to higher interest cost because of higher rates of interest on outstanding debt. Non-cash interest expense was lower and reflects deferred interest cost and the amortization of deferred loan costs in connection with the Credit Loan Note, the First Loan Note and the Second Loan Note. For the three months ended December 31, 2014, we incurred certain cash and non-cash charges in connection with the termination of our Series A Bond interest rate swap hedge. We reclassified the change in fair value from other comprehensive income to the statement of operations. All subsequent changes in fair value related to the interest rate swap were recorded in our statement of operations.

Income Taxes

For the three months ended December 31, 2015 and 2014, we recorded zero tax expense, as a result of maintaining a full valuation allowance on our net deferred tax assets. We maintain a full valuation allowance on our net deferred tax assets. A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels. We regularly assess the effects resulting from these factors to determine the adequacy of our provision for income taxes. Our future effective tax rate would be affected if earnings were lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof.

Net Income (Loss)

As a result of the foregoing, our net income was $12,003, or $0.00 per share basic and fully diluted, for the three months ended December 31, 2015, compared with a net loss of $945,718, or $0.04 per share basic and fully diluted, for the three months ended December 31, 2014. 

20

Nine Months Ended December 31, 2015 and 2014

The following table sets forth information from our statements of operations for the nine months ended December 31, 2015 and 2014, in dollars and as a percentage of revenue:   

	Nine Months Ended December 31, 2015						Nine Months Ended December 31, 2014						Changes Period Ended December 31, 2015 to 2014
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	11,985			100	%	$	14,312			100	%	$	(2,327	)	(16	)%
Cost of sales		8,223			69	%		12,885			90	%		(4,662	)	(36	)%
Gross profit		3,762			31	%		1,427			10	%		2,335		nm	%
Selling, general and administrative		2,483			20	%		3,244			23	%		(761	)	(23	)%
Income (loss) from operations		1,279			11	%		(1,817	)		(13	)%		3,096		nm	%
Other income, (expense)		2			--	%		(1	)		--	%		3		nm	%
Interest expense		(808	)		(7	)%		(1,201	)		(8	)%		393		33	%
Total other expense, net		(806	)		(7	)%		(1,202	)		(8	)%		396		33	%
Income (loss) before income taxes		473			4	%		(3,019	)		(21	)%		3,492		nm	%
Income tax benefit		--			--	%		(153	)		(1	)%		153		nm	%
Net income (loss)	$	473			4	%	$	(2,866	)		(20	)%	$	3,339		nm	%

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Net Sales

The following increases and decreases in net sales reflect changes in product mix as our customers gauge their demand for their new and existing products. Our shipments for the nine months ended December 31, 2015 primarily included orders for new and repeat business from existing key customers. For the nine months ended December 31, 2015, net sales decreased by $2.3 million, or 16%, to $12.0 million.  Net sales to our defense market group, increased by $1.5 million, primarily on higher shipments of maritime components to key defense customers.  Net sales in our energy group increased by $0.7 million as a result of increased demand for nuclear components. Net sales in our precision industrial group decreased by $4.5 million, primarily on lower volume for medical components, production furnaces, and certain prototypes. Net sales for medical components were lower by $1.9 million as orders slowed in the nine months ended December 31, 2015. We shipped $1.8 million of production furnace components for the nine months ended December 31, 2014 as required under a purchase agreement with GTAT. GTAT significantly reduced the number of units ordered under the contract and we filed a demand for arbitration under the terms of the agreement.  We recorded a provision for potential contract losses in connection with GTAT's subsequent bankruptcy filing and filed a proof of claim with the bankruptcy court to recover all of our costs under the contract terms. The claim is now considered an unsecured creditor claim within the customer's overall bankruptcy proceedings. We have entered into the Assignment Agreement with Citigroup whereby we assigned our unsecured claim to Citigroup, but we cannot predict the amount of the claim that will be recovered in GTAT's bankruptcy proceeding or the amount that will be received pursuant to the Assignment Agreement.

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, labor, overhead, depreciation and subcontracting costs. Our cost of sales for the nine months ended December 31, 2015 decreased by $4.7 million to $8.2 million, primarily as a result of lower sales volume and lower labor costs. Gross margins were 31.4% and 10.0% for the same comparable periods, respectively. Gross profit was $3.8 million, or $2.3 million higher in the nine months ended December 31, 2015 when compared with the nine month period ended December 31, 2014. Gross margin in the nine months ended December 31, 2015 was impacted favorably by improved throughput and the product mix within this reporting period. Certain low margin projects, contract losses, and under absorbed overhead of $1.0 million dampened our gross profit in the nine months ended December 31, 2014.

Selling, General and Administrative Expenses

SG&A expenses for the nine months ended December 31, 2015 were $2.5 million compared to $3.2 million for nine months ended December 31, 2014, representing a decrease of $0.8 million or 23%.  The primary drivers of this decrease in SG&A expenses were a $0.2 million decrease in share-based compensation, a $0.5 million reduction of outside advisory fees, and a $0.1 million decrease in rent and related office and administrative costs.

21

Other Income (Expense)

The following table reflects other income (expense) and interest expense for the nine months ended:

	December 31, 2015			December 31, 2014			$ Change			% Change
Other income (expense), net	$	1,561		$	(927	)	$	2,488			nm	%
Interest rate swaps	$	--		$	(246,668	)	$	246,668		nm		%
Interest expense	$	(525,450	)	$	(380,294	)	$	(145,156	)		(38	)%
Interest expense: non-cash	$	(282,759	)	$	(573,834	)	$	291,075			51	%

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For the nine months ended December 31, 2015, interest expense increased by 38% when compared to the nine months ended December 31, 2014 due to the payment of an exit fee of $67,500 to Revere and higher rates of interest on outstanding debt. Non-cash interest expense reflects lower amortization amounts for debt issue costs and deferred interest expense. For the nine months ended December 31, 2015 and 2014, we recorded deferred interest cost of $62,825 and $362,862, respectively. During the nine months ended December 31, 2014, we terminated our Series A Bond interest rate swap and recorded a breakage fee of $217,220.

Income Taxes

We recorded zero tax expense for the nine months ended December 31, 2015, as a result of maintaining a full valuation allowance on our net deferred tax assets. For the nine months ended December 31, 2014 we recorded a tax benefit of $152,792 as we reclassified losses on an interest rate swap to our statement of operations. We maintain a full valuation allowance on our net deferred tax assets. A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels. We regularly assess the effects resulting from these factors to determine the adequacy of our provision for income taxes.

Our future effective tax rate would be affected if earnings were lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof.

Net Income (Loss)

As a result of the factors described above, our net income was $472,960, or $0.02 per share basic and fully diluted for the nine months ended December 31, 2015. For the nine months ended December 31, 2014 our net loss was $2.9 million, or $0.12 per share basic and fully diluted.

Liquidity and Capital Resources

On December 22, 2014, Ranor entered into the TLSA with Revere. Pursuant to the TLSA, Revere agreed to loan an aggregate of $2.25 million to Ranor under the First Loan Note in the aggregate principal amount of $1.5 million and the Second Loan Note in the aggregate principal amount of $750,000. The First Loan Note is collateralized by a secured interest in Ranor's Massachusetts facility and certain machinery and equipment at Ranor. The Second Loan Note is collateralized by a secured interest in certain accounts, inventory and equipment of Ranor. Payments under the TLSA, the First Loan Note and the Second Loan Note are due as follows: (a) payments of interest only on advanced principal on a monthly basis on the first day of each month from February 1, 2015 until December 31, 2015 with an annual interest rate on the unpaid principal balance of the First Loan Note and the Second Loan Note equal to 12% per annum and (b) the principal balance plus accrued and unpaid interest payable on December 31, 2015. Ranor's obligations under the TLSA, the First Loan Note and the Second Loan Note are guaranteed by TechPrecision pursuant to a Guaranty Agreement with Revere. Ranor utilized approximately $1.45 million of the proceeds of the First Loan Note and the Second Loan Note to repay in full loan obligations owed to Santander Bank N.A., plus breakage fees on a related interest swap of $217,220 under a Loan and Security Agreement with Santander Bank N.A. The remaining proceeds of the First Loan Note and the Second Loan Note were retained by the Company to be used for general corporate purposes. Pursuant to the TLSA, Ranor is subject to certain affirmative and negative covenants, including a cash covenant, which requires that we maintain minimum month end cash balances that range from $400,000 to $820,000. We were required to maintain a cash balance of $789,000 and $500,000 at December 31, 2015 and March 31, 2015, respectively. We were in compliance with all covenants under the TLSA at December 31, 2015 and March 31, 2015.

On December 31, 2015, the Company, Ranor and Revere entered into the Modification Agreement to the TLSA. The Modification Agreement extended the maturity date of the TLSA and the Notes from December 31, 2015 to January 22, 2016 and provided that Ranor agreed to waive its right to extend the maturity date of the Loan Agreement and the Notes by six months as set forth in the TLSA. 

22

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement, which further amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere.

The Second Modification Agreement (a) extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018, (b) amends the amortization schedulesuch that payments under the TLSA and Amended and Restated Notes are due as follows: (i) payments of interest only on advanced principal on a monthly basis on the first day of each month from March 1, 2016 until January 1, 2017 and (ii) payments of $9,375 in principal plus accrued interest on a monthly basis on the first day of each month from February 1, 2017 until January 22, 2018, (c) reduces the annual interest rate on the unpaid principal balance of the loans to 10% per annum, or the Interest Rate, from 12% per annum, (d) amends the definition of the Minimum Guaranteed Interest payable by Ranor to Revere on the earlier of prepayment in full of the loans or payment in full of the loans on the maturity date to the greater of (i) twelve (12) months interest at the Interest Rate on the amount outstanding on the loans or (ii) interest due on any amount advanced under the TLSA at the Interest Rate, (e) adds a restrictive covenant whereby Ranor must maintain monthly minimum cash balances, with failure to comply with such restrictive covenant an event of default pursuant to which Revere may accelerate the repayment of the loans, and (f) includes a reaffirmation of the Company's guarantee of Ranor's obligations under the TLSA and the Amended and Restated Notes pursuant to a Guaranty Agreement between the Company and Revere.

Other than as so amended by the Modification Agreement and the Second Modification Agreement, the terms and conditions of the TLSA remain in full force and effect.

At December 31, 2015, we had cash and cash equivalents of $816,301, of which $17,269 is located in China and may not be able to be repatriated for use in the United States without undue cost or expense, if at all. Net cash provided by operating activities was $373,278 for the nine months ended December 31, 2015, which includes an advance payment of $507,835 received under the Assignment Agreement with Citigroup. We have reduced our operating expenses to stay in line with current business conditions. Our profit margins have improved significantly for the nine months ended December 31, 2015, when compared with the nine months ended December 31, 2014. As a result, we recorded net income of $472,960 for the nine months ended December 31, 2015 compared with a net loss of $2.9 million for the nine months ended December 31, 2014.

We incurred an operating loss of $3.6 million for the year ended March 31, 2015. During fiscal 2014, we recorded a provision for potential contract losses of $2.4 million in connection with the bankruptcy filing and filed a proof of claim with the bankruptcy court to recover all of our costs under the terms of a purchase agreement with GTAT. The claim is now considered an unsecured creditor claim within GTAT's overall bankruptcy proceedings.

On April 17, 2015, the Company, through Ranor, entered into the Assignment Agreement with Citigroup. Pursuant to the terms of the Assignment Agreement, Ranor agreed to sell, transfer, convey and assign to Citigroup all of Ranor's right, title and interest in and to Ranor's $3,740,956 unsecured claim against GTAT. Pursuant to the Assignment Agreement, Citigroup paid to Ranor an initial amount equal to $507,835. The Assignment Agreement provides for Citigroup to pay to Ranor up to an additional $614,452 upon either (A) receipt of written notice that Ranor's claim (or any portion thereof) has been fully and finally allowed against GTAT as a non-contingent, liquidated, and undisputed general unsecured claim, been listed as non-contingent, liquidated, and undisputed on schedules filed by GTAT with the bankruptcy court, or appeared on the claims agent's, or trustee's or other estate representative's records, or has otherwise been conclusively and finally treated in GTAT's bankruptcy, as "allowed" or "accepted as filed"; or (B) the expiration of the time period during which any party (including GTAT) is permitted to file an objection, dispute or challenge with respect to Ranor's claim without any such objection, dispute or challenge having been filed. If Ranor's claim against GTAT is allowed in its entirety, then Citigroup will pay Ranor an additional $614,452. If the amount of Ranor's claim that is allowed is greater than $1,692,782 but less than the full amount or Ranor's claim, then Citigroup will pay Ranor an additional amount equal to $614,452 minus the product of 30% multiplied by the difference between the total amount of Ranor's claim and the amount of such claim that is actually allowed. If the total amount of Ranor's claim against GTAT that is allowed is less than $1,692,782, then Ranor may be obligated repay to Citigroup 30% of the difference between $1,692,782 and the amount of Ranor's claim that is actually allowed plus interest at 7% per annum from April 21, 2015 through the date of the repayment.

The Company cannot predict the amount of Ranor's claim that will be finally allowed or admitted in the GTAT bankruptcy proceeding and cannot guarantee that Ranor will receive any additional payment on its claim. The Company continues to vigorously pursue its legal remedies in respect to the case described above, however, an adverse decision in any proceeding could significantly harm our business and our consolidated financial position, results of operations and cash flows.

On May 30, 2014, TechPrecision and Ranor entered into the LSA with Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% or the six-month LIBOR interest rate, as described in the Credit Loan Note. Ranor's obligations under the LSA and the Credit Loan Note are guaranteed by TechPrecision.

Pursuant to the LSA, Ranor is subject to certain restrictive covenants which, among other things, restrict Ranor's ability to (1) declare or pay any dividend or other distribution on its equity, purchase or retire any of its equity, or alter its capital structure; (2) make any loan or guaranty or assume any obligation or liability; (3) default in payment of any debt in excess of $5,000 to any person; (4) sell any of the collateral outside the normal course of business; and (5) enter into any transaction that would materially or adversely affect the collateral or Ranor's ability to repay the obligations under the LSA and the Credit Loan Note.  The restrictions contained in these covenants are subject to certain exceptions specified in the LSA and in some cases may be waived by the written consent of Utica.  Any failure to comply with the covenants outlined in the LSA without waiver by Utica or certain other provisions in the LSA would constitute an event of default, pursuant to which Utica may accelerate the repayment of the loan.

23

In connection with the execution of the LSA, we paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million of the proceeds of the Credit Loan Note to pay off debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement.  Additionally, the Company retained approximately $1.27 million of the proceeds of the Credit Loan Note for general corporate purposes.

If we were to violate any of the covenants under the above debt agreements, the lenders could demand full repayment of the amounts we owe. As such, we would need to seek alternative financing to pay these obligation as we do not have existing facilities or sufficient cash on hand to satisfy these obligations, and there is no guarantee that we would be able to obtain such alternative financing.

We were successful in amending the TLSA with Revere to extend its maturity date. The TLSA was to expire on December 31, 2015 and was amended in January 2016, with the term of the TLSA extended to January 22, 2018. Our LSA with Utica matures on November 30, 2018. We believe that we will have sufficient cash to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. Our liquidity is highly dependent on our available financing facilities and our ability to improve our gross profit and operating income. If we do not execute on our business plans, improve gross profit and operating income, and reduce our operating costs, then our available cash may not be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. We may need to secure additional acceptable financing facilities before 2018.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we may need to secure additional financing on terms consistent with our near-term business plans.  We have increased our backlog and changed the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects, which do not efficiently utilize our manufacturing capacity. We plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

The condensed consolidated financial statements for the three and nine months ended December 31, 2015 and for the year ended March 31, 2015 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total current liabilities of $5.4 million at December 31, 2015 and to continue as a going concern is dependent upon the successful execution of our operating plan and our ability to timely secure long-term financing on favorable terms. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Our failure to service our current debt and obtain new or additional financing could impair our ability to both serve our existing customer base and develop new customers and could result in our failure to continue to operate as a going concern. To the extent that we require new or additional financing, we cannot assure you that we will be able to get such financing on terms equal to or better than the terms of the LSA or the TLSA. If we are unable to raise funds through a credit facility, it may be necessary for us to conduct an offering of debt and/or equity securities on terms which may be disadvantageous to us or have a negative impact on our outstanding securities and the holders of such securities.  In the event of an equity offering, it may be necessary that we offer such securities at a price that is significantly below our current trading price which may result in substantial dilution to our investors that do not participate in the offering and a new lower trading price for our common stock.

24

At December 31, 2015 we had positive working capital of $0.4 million, and at March 31, 2015 we had negative working capital of $2.1 million, respectively. The following table sets forth the changes in our current assets and current liabilities: 

(dollars in thousands)	December 31, 2015		March 31, 2015		Change Amount			Percentage Change
Cash and cash equivalents	$	816	$	1,336	$	(520	)			(39	)%
Accounts receivable, less allowance for doubtful accounts	$	767	$	826	$	(59	)			(7	)%
Costs incurred on uncompleted contracts, in excess of progress billings	$	2,798	$	2,008	$	790				39	%
Inventory - raw materials	$	149	$	135	$	14				10	%
Current deferred taxes	$	827	$	827	$	--				--	%
Other current assets	$	465	$	538	$	(73	)			(14	)%
Accounts payable	$	1,226	$	1,526	$	(300	)			(20	)%
Trade notes payable	$	--	$	138	$	(138	)			(100	)%
Accrued expenses	$	1,623	$	1,666	$	(43	)			(2	)%
Advanced claims payment	$	508	$	--	$	508		nm			%
Deferred revenues	$	1,087	$	1,212	$	(125	)			(10	)%
Short-term debt	$	--	$	2,250	$	(2,250	)		nm		%
Current portion of long-term debt	$	934	$	934	$	--				--	%
nm- not meaningful

The following table summarizes our primary cash flows for the periods presented: 

(dollars in thousands)	December 31, 2015			December 31, 2014			Change Amount
Cash flows provided by (used in):
Operating activities	$	373		$	(1,272	)	$	1,645
Investing activities	$	(192	)	$	(54	)	$	(138	)
Financing activities	$	(700	)	$	1,518		$	(2,218	)
Effect of exchange rates on cash	$	(1	)	$	--		$	(1	)
Net (decrease) increase in cash and cash equivalents	$	(520	)	$	192		$	(712	)

Operating activities

Our primary sources of cash are from accounts receivable collections, customer advance payments, and project progress payments. Our customers continue to make advance payments and progress payments under the terms of each manufacturing contract. Our cash flows can fluctuate significantly from period to period as the composition of our receivables collections mix changes between advance payments and customer payments made after shipment of finished goods. Cash provided by operations for the nine months ended December 31, 2015 was $373,278 compared with cash used in operations of $1.3 million for the nine months ended December 31, 2014. Cash provided by operations for the nine months ended December 31, 2015 was augmented by an advance payment of $507,835 received under the Assignment Agreement with Citigroup on April 17, 2015. For the nine months ended December 31, 2015 we recorded net income of $472,960 compared to a net loss of $2.9 million for the nine months ended December 31, 2014.

Investing activities

The nine month periods ended December 31, 2015 and 2014 were marked by cash outflows for capital spending for building improvements and equipment of $192,215 and $54,096, respectively. In the third quarter of fiscal 2016 we began a project to replace all the fluorescent lighting in our fabrication and machine shops with LED lighting. The project qualifies for incentive payments if the project is completed as planned in accordance with the applicable terms and conditions.

Financing activities

For the nine months ended December 31, 2015, we used cash in financing activities of $0.7 million to make principal payments on our outstanding debt.For the nine months ended December 31, 2014 we refinanced all of our outstanding debt with Revere and Utica, pursuant to which the lenders agreed to loan an aggregate of $6.4 million to Ranor. We used approximately $4.6 million of these proceeds to pay off debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement, while the remaining proceeds were used to fund our operations and investing activities.

All of the above activity resulted in a net decrease in cash for the nine months ended December 31, 2015 of $520,024, compared with a net increase in cash of $191,966 for the nine months ended December 31, 2014. We have no off-balance sheet assets or liabilities.

25

A table summarizing the amounts and estimated timing of future cash payments from commitments and contractual obligations was provided in the 2015 Form 10-K. During the nine months ended December 31, 2015 there were no material changes to our commitments and contractual obligations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2015, we carried out an evaluation, under the supervision and with the participation of management, including our  chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on the evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2015, our disclosure controls and procedures and internal control over financial reporting were not effective because of the material weakness described in Item 9A of the 2015 Form 10-K.

Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

We are making progress remediating the material weakness identified in the 2015 Form 10-K as described in the next section. Notwithstanding this material weakness, we believe our condensed consolidated statements presented in this Quarterly Report on Form 10-Q fairly represent, in all material respects, our financial position, results of operations and cash flows for all periods presented herein.

Changes in Internal Controls

Except as identified below, there has been no change to our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the quarter ended December 31, 2015 we continued to monitor our control environment and improve manual controls that support our financial reporting process by providing guidelines for account reconciliations and enhancing documentation to support sub-ledger account reconciliations. As we continue to remediate the material weakness described in Item 9A of the 2015 Form 10-K, we will determine the appropriate complement of corporate and divisional accounting personnel required to consistently operate management review controls.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes to the legal proceedings discussed in Item 3. "Legal Proceedings," in the 2015 Form 10-K. 

Item 1A. Risk Factors

Except for the risk factor below, which supplements the risk factors discussed in Item 1A. "Risk Factors," in the 2015 Form 10-K, there have been no material changes to the risk factors discussed in Item 1A. "Risk Factors," in the 2015 Form 10-K.  You should carefully consider the risks described in this Quarterly Report on Form 10-Q and the 2015 Form 10-K, which could materially affect our business, financial condition or future results.  The risks described in this Quarterly Report on Form 10-Q and the 2015 Form 10-K are not the only risks we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.  If any of these risks actually occur, our business, financial condition and/or results of operations could be negatively affected.

We may require additional capital to fund our operations. In the event that we determine that we are unable to secure additional funding when required, we may need to downsize or wind down our operations through liquidation, bankruptcy or a sale of our assets.

As of December 31, 2015, we had $0.8 million of cash and cash equivalents. Cash provided by operations for the nine months ended December 31, 2015 was $373,278 compared with cash used in operations of $1.3 million for the nine months ended December 31, 2014. Cash provided by operations for the nine months ended December 31, 2015 was augmented by an advance payment of $507,835 received under the Assignment Agreement with Citigroup on April 17, 2015.

We may require additional capital to fund our operations. If we do not successfully secure additional acceptable financing facilities, execute on our business plans, improve gross profit and operating income, and reduce our operating costs, then our available cash may not be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months.

26

Our cash flows can fluctuate significantly from period to period as the composition of our receivables collections mix changes between advance payments for materials and customer payments made after shipment of finished goods. If no additional debt or equity financing is consummated, it is possible that our existing cash and cash equivalents and expected revenue from operations may not be sufficient to meet our operating and capital requirements through the near-term, and changes in our business, whether or not initiated by us, may cause us to deplete such cash and cash equivalents available to us at a quicker rate. We must obtain additional financing in order to continue our operations beyond the near-term. There are no assurances that funding will be available when we need it on terms that we find favorable, if at all. If we are unable to secure additional financing on terms acceptable to us and on a timely basis, we may seek stockholder approval to dissolve or we may file for, or be forced to resort to, bankruptcy protection. Any decision to seek stockholder approval to dissolve or to file for, or be forced to resort to bankruptcy protection, may occur at any point during the near-term. In addition, if we raise additional capital by issuing equity securities, our existing stockholders' percentage ownership will be reduced and they may experience substantial dilution. We may also issue equity securities that provide for rights, preferences and privileges senior to those of our common stock. If we raise additional funds by issuing debt securities, these debt securities would have rights, preferences, and privileges senior to those of our common stock, and the terms of such debt securities could impose significant restrictions on our operations. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, take advantage of opportunities, and otherwise respond to competitive pressures could be significantly delayed or limited, and we may need to downsize or halt our operations.

27

Item 6. Exhibits

Exhibit No.	Description
10.1 †	Employment Agreement, dated February 7, 2015, between Ranor, Inc. and Thomas Sammons
10.2	Note and Other Loan Documents Modification Agreement dated December 31, 2015 by and between Revere High Yield Fund, LP, Ranor, Inc. and TechPrecision Corporation (Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on January 6, 2016 and incorporated herein by reference)
10.3	Note and Other Loan Documents Modification Agreement No. 2 dated January 22, 2016 by and between Revere High Yield Fund, LP, Ranor, Inc. and TechPrecision Corporation (Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on January 25, 2016 and incorporated herein by reference)
10.4	Amended and Restated Term Note in the original principal amount of $1,500,000 in the name of Revere High Yield Fund, LP, dated January 22, 2016 (Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on January 25, 2016 and incorporated herein by reference)
10.5	Amended and Restated Term Note in the original principal amount of $750,000 in the name of Revere High Yield Fund, LP, dated January 22, 2016 (Exhibit 10.3 to our Current Report on Form 8-K filed with the Commission on January 25, 2016 and incorporated herein by reference)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	101.INS XBRL Instance Document
101.SCH 101.CAL 101.LAB 101.PRE 101.DEF	101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB XBRL Taxonomy Extension Labels Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document

† Management contract or compensatory arrangement or plan.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TECHPRECISION CORPORATION
Dated:  February 16, 2015	By:	/s/ Thomas Sammons
		Thomas Sammons Chief Financial Officer

29

EXHIBIT INDEX

Exhibit No.	Description
10.1 †	Employment Agreement, dated February 7, 2015, between Ranor, Inc. and Thomas Sammons
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	101.INS XBRL Instance Document
101.SCH 101.CAL 101.LAB 101.PRE 101.DEF	101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB XBRL Taxonomy Extension Labels Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document

† Management contract or compensatory arrangement or plan.

30

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of February 7, 2015, between Ranor, Inc., a Delaware corporation (the "Company"), and Thomas Sammons (the "Employee").

RECITALS

WHEREAS, the Company is a wholly-owned subsidiary of TechPrecision Corporation, a Delaware corporation ("TechPrecision");

WHEREAS, the Company desires to employ the Employee in the capacity and on the terms and conditions set forth herein, and the Employee desires to be employed by the Company on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereto hereby agree as follows:

1.Employment.  The Company agrees to employ the Employee during the Term specified in Paragraph 2 hereof, and the Employee agrees to accept such employment, upon the terms and conditions hereinafter set forth.

2.Term.  The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, beginning on March 9, 2015 (the "Start Date"), until termination of this Agreement in accordance with the provisions of Paragraph 6 of this Agreement (the "Term").

3.Duties and Responsibilities.

a.The Employee shall serve as Vice President - Finance, of the Company.

b.Subject to the authority of the Chief Executive Officer, or other designee of TechPrecision and the Board of Directors of TechPrecision (the "Board") to modify the duties and responsibilities of the Employee, the Employee's powers, duties and responsibilities shall initially consist of such powers, duties and responsibilities as are customary to the office of Vice President - Finance of a company similar in size and stature to the Company.  The Employee shall report to the President of Ranor, and the Chief Executive Officer, or designee, of TechPrecision, the Board and others at the direction of the Board at such time and in such detail as the Chief Executive Officer of TechPrecision or the Board shall reasonably require.  Notwithstanding anything contained herein to the contrary, the Employee shall not be required to perform any act which would constitute or require the violation of any federal, state or local law, rule, regulation, ordinance or the like.

c.The Employee shall devote not less than an average of forty (40) hours per week to carrying out his duties hereunder and to the business of the Company and its affiliates, and during the Term the Employee agrees that he will (i) devote his best efforts and all his skill and ability to the performance of his duties hereunder; (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of the Company and its affiliates.  During the Term it shall not be a violation of this Agreement for the Employee to serve on civic or charitable boards or committees, to perform speaking engagements, or to manage his personal passive investments, so long as such activities (individually or collectively) do not interfere with the performance of the Employee's responsibilities as an employee of the Company.

4.Compensation; Bonus; Stock Options.

a.As compensation for services hereunder and in consideration of his agreement not to compete as set forth in Paragraph 8 hereof, the Company shall pay the Employee an initial base salary at the annual rate of One Hundred Ninety Five Thousand Dollars ($195,000).  Such base salary shall be paid in equal installments in accordance with the normal payroll policies of the Company.

b.The Employee's base salary as set forth in Paragraph 4(a) above may be increased by order of the Chief Executive Officer of TechPrecision.

c.With respect to the Company's fiscal year ending March 31, 2016, the Employee shall be eligible for a performance bonus, payable in cash, with a bonus opportunity equal to 25% of the Employee's base salary, based upon the achievement of such goals and objectives as approved by the Board within 90 days of employee's start date.  Notwithstanding the foregoing, the Company will pay no less than one half of the target bonus amount for the fiscal year ending March 31, 2016.  With respect to each fiscal year during the Term subsequent to March 31, 2016, the Employee shall be eligible for an annual cash performance bonus of up to 25% of base salary based upon TechPrecision and the Company's financial performance as set forth in a resolution of the Board within the first three months of each year hereunder and based upon the Company's business plan.  Any amount payable to the Employee as an annual bonus pursuant to the terms of this Paragraph 4(c) shall be paid as soon as administratively practicable following the date that the Board determines the extent to which the applicable performance metrics have been achieved, provided that the Employee must be employed with the Company on the date of payment in order to receive such amount.

d.As soon as reasonably practicable following the Start Date, the Company shall recommend to the Compensation Committee of the Board that the Employee be awarded stock options (the "Options") of TechPrecision, par value $.0001 per share ("Common Stock"), pursuant to TechPrecision's 2006 Long-Term Incentive Plan, as amended from time to time (the "Plan").  The options will have a Black Scholes value of $150,000 at the time of grant.  The Options will vest in substantially equal amounts on each of the first three anniversaries of the date of grant; provided that in the event of a Change in Control (as defined in the Plan), all outstanding, unvested Options shall become fully vested.  Any additional future option grants will be as the Board shall in its sole discretion institute.

5.Expenses; Fringe Benefits.

a.The Company agrees to pay or to reimburse the Employee during the Term for all reasonable, ordinary and necessary business expenses incurred in the performance of his services hereunder in accordance with the policies of the Company as are from time to time in effect.  The Employee, as a condition to obtaining such payment or reimbursement, shall provide to the Company any and all statements, bills or receipts evidencing the travel or out-of-pocket expenses for which the Employee seeks payment or reimbursement, and any other information or materials required by such Company policy or as the Company may otherwise from time to time reasonably require.

b.During the Term the Employee and, to the extent eligible, his dependents, shall be entitled to participate in and receive all benefits under any welfare benefit plans and programs provided by the Company (including without limitation, medical, dental, disability, group life (including accidental death and dismemberment) and business travel insurance plans and programs) applicable generally to the employees of the Company, subject, however, to the generally applicable eligibility and other provisions of the various plans and programs in effect from time to time.

c.During the Term the Employee shall be entitled to participate in all retirement plans and programs (including without limitation any profit sharing/401(k) plan) applicable generally to the employees of the Company, subject, however, to generally applicable eligibility and other provisions of the various plans and programs in effect from time to time.  In addition, during the Term the Employee shall be entitled to receive fringe benefits and perquisites in accordance with the plans, practices, programs and policies of the Company from time to time in effect, available generally to the executive officers of the Company and consistent with the generally applicable guidelines determined by the Board.

d.The Employee shall be entitled to four (4) weeks vacation per year and such holidays, sick days and personal days as are in accordance with the Company's policy then in effect for its employees generally, upon such terms as may be provided of general application to all employees of the Company.

e.The position is located at Westminster, MA.  The Board expects that within a reasonable period of time the Employee will relocate his principal residence within a reasonable commuting distance. In connection with this process the Company will assist with temporary living arrangements and will provide $20,000 at the time of relocation to the Westminster, MA area.

6.Termination.

a.The Employee's employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice from the Board that his employment with the Company has been or will be terminated; (ii) on the date not less than thirty days following written notice from the Employee that he is resigning from the Company; (iii) on the date of his death; or (iv) in accordance with Paragraph 6(c).  Upon cessation of his employment for any reason, unless otherwise consented to in writing by the Board, the Employee shall resign immediately from any and all officer, director and other positions he then holds with the Company and/or its affiliates.  Upon any cessation of his employment with the Company, the Employee will be entitled only to such compensation and benefits as described in this Paragraph 6.

b.If the Employee's employment with the Company ceases for any reason other than as described in Paragraph 6(c) below, then the Company's obligation to the Employee will be limited solely to the payment of accrued and unpaid base salary through the date of such cessation of employment, subject to appropriate offsets (as permitted by applicable law) for debts or money due to the Company, including without limitation personal loans to the Employee and travel advances.  All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise provided by COBRA, the Company will have no further liability or obligation by reason of such termination.  The foregoing will not be construed to limit the Executive's right to payment or reimbursement for claims incurred prior to the date of such termination under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of such insurance contract.

c.The Company, or its successor, may terminate the Employee's employment without Cause and the Employee may terminate his employment for Good Reason at any time during the six (6) month period following a Change in Control, in which case the Employee shall be entitled to receive continuation of his base salary for twelve months following termination of his employment, payable under the normal payroll practice of the Company (the "Severance Payment"); provided that Employee's right to any Severance Payment and any amounts paid shall be forfeited and recoverable by the Company in the event the Company determines in good faith that the Employee has violated any provision in Paragraphs 8 or 9 hereof or any other provisions of this Agreement.  The Severance Payment is subject to the Employee's execution and non- revocation of a general release substantially in the form attached as Exhibit A (the "Release"), which becomes effective within 60 days following the date of termination of his employment.  The Severance Payment will commence as soon as practicable after the Release becomes effective.  Notwithstanding the foregoing, if the 60 day period following the Executive's termination ends in a calendar year after the year in which the Executive's employment terminates, the Severance Payment shall commence no earlier than the first day of such later calendar year.  All other rights the Executive may have, other than as set forth in this Paragraph 6, shall terminate upon such termination. For the avoidance of doubt, the transfer of Employee's employment to an affiliate or successor of the Company shall not, on its own, constitute termination of the Employee's employment without Cause or for Good Reason.

7.Definitions. For purposes of this Agreement:

a."Cause" shall mean:

i.the Employee's failure or refusal to perform his material duties and responsibilities (other than any such failure resulting from Employee's death) or his repeated failure or refusal to follow lawful and reasonable directives of the Company, the Chief Executive Officer of TechPrecision or the Board;

ii.the willful misappropriation by Employee of the funds or property of the Company or its affiliates;

iii.the commission by the Employee of any willful or intentional act, which he should reasonably have anticipated would reasonably be expected to have the effect of materially injuring the reputation, business or business relationships of the Company or its affiliates;

iv.use of alcohol to excess or illegal drugs, continuing after written warning from the Company, the Chief Executive Officer of TechPrecision or the Board; or

v.any breach by the Employee (not covered by any of clauses (i) through (iv) and other than in connection with the death of Employee) of any material provision of this Agreement.

b."Good Reason" shall mean, without the prior express written consent of the Employee:

i.the Employee suffers a material adverse change in the duties, responsibilities or effective authority associated with his titles and positions, as set forth and described in Paragraph 3 of this Agreement; or

ii.a material reduction by the Company or its successor of the Employee's base salary.

Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless the Employee gives the Company written notice within thirty (30) days after the occurrence of the event which the Employee believes constitutes the basis for Good Reason, specifying the particular act or failure to act which the Employee believes constitutes the basis for Good Reason. If the Company or its successor fails to cure such act or failure to act, if curable, within thirty (30) days after receipt of such notice, the Employee may terminate his employment for Good Reason.

8.Non-Competition and Protection of Confidential Information.

a.The Employee agrees that his services to the Company are of a special, unique, extraordinary and intellectual character and his position with the Company places him in a position of confidence and trust with the employees and customers of the Company and its affiliates.  Consequently, the Employee agrees that it is reasonable and necessary for the protection of the goodwill, intellectual property, trade secrets, designs, proprietary information and business of the Company that the Employee make the covenants contained herein.  Accordingly, the Employee agrees that, during the period of the Employee's employment hereunder and for the period of one (1) year immediately following the termination of his employment hereunder, he shall not, directly or indirectly:

i.own, operate, manage or be employed by or affiliated with any person or entity headquartered within or with a management office in the United States that engages in any business then being engaged or planned to be engaged hi by the Company or any of its subsidiaries or affiliates; or

ii.attempt in any manner to solicit from any customer or supplier business of the type performed for or by the Company or persuade any customer or supplier of the Company to cease to do business or to reduce the amount of business which any such customer or supplier has customarily done or contemplates doing with the Company, whether or not the relationship between the Company and such customer or supplier was originally established in whole or in part through his efforts; or

iii.employ as an employee or retain as a consultant, or persuade or attempt to persuade any person who is at the date of termination of the Employee's employment with the Company or at any time during the preceding year was, or in the six (6) months following such termination becomes, an employee of or exclusive consultant to the Company to leave the Company or to become employed as an employee or retained as a consultant by anyone other than the Company.

iv.As used in this Paragraph 8, the term: "customer" and "supplier" shall mean any person or entity that is a customer or supplier of the Company at the date of termination of the Employee's employment with the Company, or at any time during the preceding year was, or in the six (6) months following such termination becomes, a customer or supplier of the Company, or if the Employee's employment shall not have terminated, at the time of the alleged prohibited conduct.

b.The Employee agrees that he will not at any time (whether during the Term or after termination of this Agreement for any reason), disclose to anyone, any confidential information or trade secret of the Company or utilize such confidential information or trade secret for his own benefit, or for the benefit of third parties, and all memoranda or other documents compiled by him or made available to him during the Term pertaining to the business of the Company shall be the property of the Company and shall be delivered to the Company on the date of termination of the Employee's employment with the Company or at any other time, as reasonable, upon request. The term "confidential information or trade secret" does not include any information which (i) becomes generally available to the public other than by breach of this provision, or (ii) is required to be disclosed by law or legal process.

c.If the Employee commits a breach or threatens to commit a breach of any of the provisions of Paragraphs 8(a) or (b) hereof, the Company shall have the right to have the provisions of this Agreement specifically enforced by any court having jurisdiction without being required to post bond or other security and without having to prove the inadequacy of any other available remedies, it being acknowledged and agreed that any such breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.  In addition, the Company may take all such other actions and seek such other remedies available to it in law or in equity and shall be entitled to such damages as it can show it has sustained by reason of such breach.

d.The parties acknowledge that the type and periods of restriction imposed in the provisions of Paragraphs 8(a) and (b) hereof are fair and reasonable and are reasonably required for the protection of the Company and the goodwill associated with the business of the Company; and that the time, scope, geographic area and other provisions of this Paragraph 8 have been specifically negotiated by sophisticated parties and accordingly it is reasonable that the restrictive covenants set forth herein are not limited by narrow geographic area.  If any of the covenants in Paragraphs 8(a) or (b) hereof, or any part thereof, is hereafter construed to be invalid or unenforceable, it is the intention of the parties that the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions.  If any of the covenants contained in Paragraphs 8(a) or (b), or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination should reduce the duration and/or areas of such provision such that, in its reduced form, said provision shall then be enforceable.  The parties intend to and hereby confer jurisdiction to enforce the covenants contained in Paragraphs 8(a) and (b) upon the courts of any jurisdiction within the geographical scope of such covenants.  In the event that the courts of any one or more of such jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such time, scope or geographic area, it is the intention of the parties hereto that such determination not bar or in any way affect the Company's right to the relief provided above in the courts of any other jurisdiction within the geographical scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants.

e.For purposes of Paragraphs 8 and 9 of this Agreement, the "Company" shall be deemed to include the Company and each of its subsidiaries and affiliates.

9.Intellectual Property.  During the Term, the Employee will disclose to the Company all ideas, inventions, advertising campaigns, designs, logos, slogans, processes, operations, products or improvements which may be patentable or copyrightable or subject to any trade or service mark or name, and business plans developed by him during such period, either individually or in collaboration with others, which relate to the business of the Company ("Intellectual Property").  The Employee agrees that such Intellectual Property will be the sole property of the Company and that he will at the Company's request and cost do whatever is reasonably necessary to secure the rights thereto by patent, copyright, trademark or otherwise to the Company.

10.Enforceability.  The failure of either party at any time to require performance by the other party of any provision hereunder shall in no way affect the right of that party thereafter to enforce the same, nor shall it affect any other party's right to enforce the same, or to enforce any of the other provisions in this Agreement; nor shall the waiver by either party of the breach of any provision hereof be taken or held to be a waiver of any subsequent breach of such provision or as a waiver of the provision itself.

11.Assignment.  This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be sold, transferred, assigned, pledged or hypothecated by either party hereto without the prior written consent of the other party; provided, the Company may assign its rights and obligations under the Agreement without written consent in connection with the sale or other transfer of all or substantially all of the Company's business (whether by way of sale of stock, assets, merger or otherwise).

12.Severability.  In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted.

13.Life Insurance.  The Employee agrees that the Company shall have the right to obtain life insurance on the Employee's life, at the Company's sole expense and with the Company as the sole beneficiary thereof to that end, the Employee shall (a) cooperate fully with the Company in obtaining such life insurance, (b) sign any necessary consents, applications and other related forms or documents and (c) take any reasonably required medical examinations.

14.Notice.  Any notice, request, instrument or other document to be given under this Agreement by either party hereto to the other shall be in writing and shall be deemed effective (a) upon personal delivery, if delivered by hand, (b) three (3) days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered mail, or (c) on the next business day, if sent by a prepaid overnight courier service, and in each case addressed as follows:

If to the Employee:Mr. Thomas Sammons

160 Gage Road

Riverside, IL 60546

If to the Company:Ranor, Inc. c/o TechPrecision, Corp.

3477 Corporate Parkway, Suite 140

Center Valley, PA 18034

Attention: Executive Chairman

Any party may change the address to which notices are to be sent by giving notice of such change of address to the other party in the manner herein provided for giving notice.

15.No Conflict.  The Employee represents and warrants that he is not subject to any agreement, instrument, order, judgment or decree of any kind, or any other restrictive agreement of any character, which would prevent him from entering into this Agreement or which would be breached by the Employee upon the performance of his duties pursuant to this Agreement.

16.Section 409A Compliance.  The following rules shall apply, to the extent necessary, with respect to distribution of the payments and benefits, if any, to be provided to the Employee under this Agreement.  Subject to the provisions in this Paragraph 16, the severance payments pursuant to this Agreement shall begin only upon the date of the Employee's "separation from service" (determined as set forth below) which occurs on or after the date of the Employee's termination of employment.

a.This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (to the extent applicable) ("Section 409A") and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Company.

b.It is intended that each installment of the severance payments and benefits provided under this Agreement shall be treated as a separate "payment" for purposes of Section 409A.  Neither the Employee nor the Company shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

c.If, as of the date of the Employee's "separation from service" from the Company, the Employee is not a "specified employee" (within the meaning of Section 409A), then each installment of the severance payments and benefits shall be made on the dates and terms set forth in this Agreement, without regard to Paragraph 16(d).

d.If, as of the date of the Employee's "separation from service" from the Company, the Employee is a "specified employee" (within the meaning of Section 409A), then:

i.Each installment of the severance payments and benefits due under this Agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when the separation from service occurs, be paid within the short-term deferral period (as defined in Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-l(b)(4) (or any successor provision) to the maximum extent permissible under Section 409A; and

ii.Each installment of the severance payments and benefits due under this Agreement that is hot described in Paragraph 16(d)(i) above and that would, absent this subsection, be paid within the six-month period following the Employee's "separation from service" from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, the Employee's death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following the Employee's separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of severance payments and benefits if and to the maximum extent that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-l(b)(9)(iii) (or any successor provision) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-l(b)(9)(iii) (or any successor provision) must be paid no later than the last day of the second taxable year following the taxable year in which the separation from service occurs.

e.The determination of whether and when the Employee's separation from service from the Company has occurred shall be made in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-l(h) (or any successor provision).  Solely for purposes of this Section, "Company" shall include all persons with whom the Company would be considered a single employer as determined under Treasury Regulation Section 1.409A-l(h)(3) (or any successor provision).

f.All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during the Employee's lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

g.Notwithstanding anything herein to the contrary, the Company shall have no liability to the Employee or to any other person if the payments and benefits provided in this Agreement that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant.

17.Miscellaneous.

a.The headings contained in this Agreement are for reference purposes only, and shall not affect the meaning or interpretation of this Agreement.

b.The Company may withhold from any amount payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to applicable law or regulation.

c.This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.  Any action arising out of the breach or threatened breach of this Agreement shall be commenced in a state court of the State of Delaware and the parties hereto hereby submit to the jurisdiction of such courts for the purpose of enforcing this Agreement.

d.This Agreement represents the entire agreement between the Company and the Employee with respect to the subject matter hereof, and all prior agreements relating to the employment of the Employee, written or oral, are nullified and superseded hereby.

e.This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by both parties to this Agreement, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought.

f.As used in this Agreement, any gender includes a reference to all other genders and the singular includes a reference to the plural and vice versa.

* * * * *

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

COMPANY:		EMPLOYEE:
RANOR, INC.		/s/ Thomas Sammons
		Thomas Sammons
By:	/s/ Alexander Shen	Signed:  Feb 7, 2015
	Alexander Shen
	Chief Executive Officer, TechPrecision
	Corp

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alexander Shen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of TechPrecision Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: February 16, 2016			/s/ Alexander Shen
			Alexander Shen Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas Sammons, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of TechPrecision Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: February 16, 2016	/s/ Thomas Sammons
	Thomas Sammons Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TechPrecision Corporation (the "Company") on Form 10-Q for the nine months ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alexander Shen, the Chief Executive Officer of the Company, and I, Thomas Sammons, the Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 16, 2016	/s/ Alexander Shen
	Alexander Shen
	Chief Executive Officer
Dated: February 16, 2016	/s/ Thomas Sammons
	Thomas Sammons
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2015	Feb. 05, 2016
Document and Entity Information
Entity Registrant Name	TECHPRECISION CORP
Entity Central Index Key	0001328792
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		27,324,593
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Mar. 31, 2015
Current assets:
Cash and cash equivalents	$ 816,301	$ 1,336,325
Accounts receivable, less allowance for doubtful accounts of approximately $25,000 at December 31, 2015 and March 31, 2015	766,564	826,363
Costs incurred on uncompleted contracts, in excess of progress billings	2,798,008	2,008,244
Inventories- raw materials	148,550	134,812
Current deferred taxes	826,697	826,697
Other current assets	464,841	538,253
Total current assets	5,820,961	5,670,694
Property, plant and equipment, net	5,217,048	5,610,041
Other noncurrent assets, net	9,676	45,490
Total assets	11,047,685	11,326,225
Current liabilities:
Accounts payable	1,225,873	1,526,123
Trade notes payable		138,237
Accrued expenses	1,623,254	1,665,658
Advanced claims payment	507,835
Deferred revenues	1,087,179	1,211,506
Short-term debt		2,250,000
Current portion of long-term debt	934,176	933,651
Total current liabilities	5,378,317	7,725,175
Long-term debt, including capital lease	4,035,160	2,485,858
Noncurrent deferred taxes	$ 826,697	$ 826,697
Commitments and contingent liabilities (see Note 16)
Stockholders' Equity:
Preferred stock - par value $.0001 per share, 10,000,000 shares authorized, of which 9,890,980 are designated as Series A Preferred Stock, with -0- and 1,927,508 shares issued and December 31, 2015 and March 31, 2015, respectively (liquidation preference: $0 - December 31, 2015; $549,340 - March 31, 2015)		$ 524,210
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 27,324,593 and 24,669,958 shares issued and outstanding at December 31, 2015 and at March 31, 2015, respectively	$ 2,732	2,467
Additional paid in capital	7,057,807	6,487,589
Accumulated other comprehensive income	23,344	23,561
Accumulated deficit	(6,276,372)	(6,749,332)
Total stockholders' equity	807,511	288,495
Total liabilities and stockholders' equity	$ 11,047,685	$ 11,326,225

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2015	Mar. 31, 2015
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 25,000	$ 25,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	27,324,593	24,669,958
Common stock, shares outstanding	27,324,593	24,669,958
Series A Convertible Preferred Stock
Preferred stock, designated as Series A Convertible Preferred Stock	9,890,980	9,890,980
Preferred Stock, Shares Issued	0	1,927,508
Preferred stock, shares outstanding	0	1,927,508
Preferred stock, liquidation preference (in dollars)	$ 0	$ 549,340

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Net sales	$ 3,506,560	$ 3,510,842	$ 11,985,422	$ 14,311,895
Cost of sales	2,434,900	3,169,456	8,223,349	12,884,553
Gross profit	1,071,660	341,386	3,762,073	1,427,342
Selling, general and administrative	768,220	705,059	2,482,465	3,243,968
Income (loss) from operations	303,440	(363,673)	1,279,608	(1,816,626)
Other income (expense)	465	136	1,531	(1,023)
Interest expense (includes OCI reclassifications for cash flow hedges of ($-0-) and ($248,464) in 2014)	(291,908)	(582,202)	(808,209)	(1,200,796)
Interest income	6	21	30	96
Total other expense, net	(291,437)	(582,045)	(806,648)	(1,201,723)
Income (loss) before income taxes	12,003	(945,718)	472,960	(3,018,349)
Income tax benefit (related to OCI reclassification)	0		0	(152,792)
Net income (loss)	12,003	(945,718)	472,960	(2,865,557)
Other comprehensive income, before tax:
Change in unrealized loss on cash flow hedges				(16,680)
Reclassification adjustment for cash flow hedges				248,464
Foreign currency translation adjustments	(1,135)	(4,319)	217	(4,272)
Other comprehensive income, before tax	(1,135)	(4,319)	217	227,512
Tax expense from reclassification adjustment				152,792
Other comprehensive income, net of tax	(1,135)	(4,319)	217	74,720
Comprehensive income (loss)	$ 10,868	$ (950,037)	$ 473,177	$ (2,790,837)
Net income (loss) per share (basic) (in dollars per share)	$ 0.00	$ (0.04)	$ 0.02	$ (0.12)
Net income (loss) per share (diluted) (in dollars per share)	$ 0.00	$ (0.04)	$ 0.02	$ (0.12)
Weighted average number of shares outstanding (basic) (in shares)	27,324,593	24,669,958	26,084,080	24,447,736
Weighted average number of shares outstanding (diluted) (in shares)	27,509,980	24,669,958	26,210,206	24,447,736

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Paranthetical) - USD ($)	3 Months Ended	9 Months Ended
	Dec. 31, 2014	Dec. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) reclassifications for cash flow hedges	$ 0	$ (248,464)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 472,960	$ (2,865,557)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	582,628	633,741
Amortization of debt issue costs	219,876	177,771
Stock based compensation expense	51,100	196,458
Provision for contract losses	(111,958)	(589,392)
Changes in operating assets and liabilities:
Accounts receivable	59,798	220,258
Costs incurred on uncompleted contracts, in excess of progress billings	(789,764)	2,068,537
Inventories - raw materials	(13,738)	70,586
Other current assets	(110,355)	(214,294)
Other noncurrent assets		105,395
Accounts payable	(438,486)	(908,083)
Accrued expenses	67,709	116,290
Advanced claims payment	507,835
Deferred revenues	(124,327)	(283,575)
Net cash provided by (used in) operating activities	373,278	(1,271,865)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(192,215)	(54,096)
Net cash used in investing activities	(192,215)	(54,096)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of long-term debt		6,400,000
Repayment of long-term debt	(700,174)	(4,628,174)
Deferred loan costs		(253,975)
Net cash (used in) provided by financing activities	(700,174)	1,517,851
Effect of exchange rate on cash and cash equivalents	(913)	76
Net (decrease) increase in cash and cash equivalents	(520,024)	191,966
Cash and cash equivalents, beginning of period	1,336,325	1,086,701
Cash and cash equivalents, end of period	816,301	1,278,667
Cash paid during the period for:
Interest	525,451	626,962
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Notes Payable		279,297
Common Stock
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Amount of increase from stock conversions	252	72
Additional Paid in Capital
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Amount of increase from stock conversions	$ 523,956	$ 119,828
Series A Convertible Preferred Stock
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Number of shares of common stock issued for converted preferred stock	2,519,634	718,954
Shares converted into common stock	1,927,508	550,000

XML

DESCRIPTION OF BUSINESS

9 Months Ended

Dec. 31, 2015

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

NOTE 1 - DESCRIPTION OF BUSINESS

TechPrecision Corporation, or TechPrecision, is a Delaware corporation organized in February 2005 under the name Lounsberry Holdings II, Inc. Our name was changed to TechPrecision Corporation on March 6, 2006. TechPrecision is the parent company of Ranor, Inc., or Ranor, a Delaware corporation and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise (WFOE). TechPrecision, WCMC and Ranor are collectively referred to as the “Company”, “we”, “us” or “our”.

We manufacture large scale metal fabricated and machined precision components and equipment. These products are used in a variety of markets including the aerospace, commercial, defense, medical, and nuclear industries.

Liquidity and Capital Resources

On December 31, 2015, the Company, Ranor and Revere High Yield Fund, LP, or Revere, entered into a Note and Other Loan Documents Modification Agreement, or the Modification Agreement, to the Term Loan and Security Agreement, or TLSA, dated December 22, 2014, between Revere and Ranor. Pursuant to the TLSA, Revere loaned an aggregate of $2.25 million to Ranor under a term loan note in the aggregate principal amount of $1.5 million, or the First Loan Note, and a term loan note in the aggregate principal amount of $750,000, or the Second Loan Note and, together with the First Loan Note, the Notes. Ranor’s obligations under the TLSA and the Notes are guaranteed by the Company pursuant to a Guaranty Agreement with Revere. The Modification Agreement extended the maturity date of the TLSA and the Notes from December 31, 2015 to January 22, 2016 and provided that Ranor agreed to waive its right to extend the maturity date of the TLSA and the Notes by six months as set forth in the TLSA. In connection with its entry into the Modification Agreement, Ranor was required to pay an exit fee of $67,500 to Revere.

On January 22, 2016, the Company and Ranor entered into the Note and Other Loan Documents Modification Agreement No. 2 with Revere, or the Second Modification Agreement, which further amends the TLSA. In connection with the Second Modification Agreement, Ranor executed an Amended and Restated Term Loan Note in the aggregate principal amount of $1.5 million, or the Amended and Restated First Loan Note, and an Amended and Restated Term Loan Note in the aggregate principal amount of $750,000, or the Restated Second Loan Note, and together with the Amended and Restated First Loan Note, the Amended and Restated Notes, each in favor of Revere and each dated January 22, 2016. The Second Modification Agreement extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018. The terms of the Second Modification Agreement are more fully described in Note 18 - Subsequent Events.

At December 31, 2015, we had cash and cash equivalents of $816,301, of which $17,269 is located in China and may not be able to be repatriated for use in the United States without undue cost or expense, if at all. Net cash provided by operating activities was $373,278 for the nine months ended December 31, 2015, which includes an advance payment of $507,835 received on April 17, 2015 under an Assignment of Claim Agreement described below. We have reduced our operating expenses to stay in line with current business conditions. Our profit margins have improved significantly for the nine months ended December 31, 2015, when compared with the nine months ended December 31, 2014. As a result, we recorded net income of $472,960 for the nine months ended December 31, 2015 compared with a net loss of $2.9 million for the nine months ended December 31, 2014.

We incurred an operating loss of $3.6 million for the year ended March 31, 2015, or fiscal 2015. In the year ended March 31, 2014, or fiscal 2014, we recorded a provision for potential contract losses of $2.4 million in connection with the bankruptcy filing of GT Advanced Technologies, Inc., or GTAT, and filed a proof of claim with the bankruptcy court to recover all of our costs under the terms of a purchase agreement with GTAT. The claim is now considered an unsecured creditor claim within GTAT’s overall bankruptcy proceedings.

On April 17, 2015, the Company, through Ranor, entered into an Assignment of Claim Agreement, or the Assignment Agreement, with Citigroup Financial Products Inc., or Citigroup. Pursuant to the terms of the Assignment Agreement, Ranor agreed to sell, transfer, convey and assign to Citigroup all of Ranor’s right, title and interest in and to Ranor’s $3,740,956 unsecured claim against GTAT. Pursuant to the Assignment Agreement, Citigroup paid to Ranor an initial amount equal to $507,835, which amount is classified as a current liability in our balance sheet. The Assignment Agreement provides for Citigroup to pay to Ranor up to an additional $614,452 upon either (A) receipt of written notice that Ranor’s claim (or any portion thereof) has been fully and finally allowed against GTAT as a non-contingent, liquidated, and undisputed general unsecured claim, been listed as non-contingent, liquidated, and undisputed on schedules filed by GTAT with the bankruptcy court, or appeared on the claims agent’s, or trustee’s or other estate representative’s records, or has otherwise been conclusively and finally treated in GTAT’s bankruptcy, as “allowed” or “accepted as filed”; or (B) the expiration of the time period during which any party (including GTAT) is permitted to file an objection, dispute or challenge with respect to Ranor’s claim without any such objection, dispute or challenge having been filed. If Ranor’s claim against GTAT is allowed in its entirety, then Citigroup will pay Ranor an additional $614,452. If the amount of Ranor’s claim that is allowed is greater than $1,692,782 but less than the full amount or Ranor’s claim, then Citigroup will pay Ranor an additional amount equal to $614,452 minus the product of 30% multiplied by the difference between the total amount of Ranor’s claim and the amount of such claim that is actually allowed. If the total amount of Ranor’s claim against GTAT that is allowed is less than $1,692,782, then Ranor may be obligated to repay Citigroup 30% of the difference between $1,692,782 and the amount of Ranor’s claim that is actually allowed plus interest at 7% per annum from April 21, 2015 through the date of the repayment.

The Company cannot predict the amount of Ranor’s claim that will be finally allowed or admitted in the GTAT bankruptcy proceeding and cannot guarantee that Ranor will receive any additional payment on its claim. The Company continues to vigorously pursue its legal remedies in respect to the case described above; however, an adverse decision in any proceeding could significantly harm our business and our consolidated financial position, results of operations and cash flows.

On May 30, 2014, TechPrecision and Ranor entered into a Loan and Security Agreement, or the LSA, with Utica Leasco, LLC, or Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% or the six-month LIBOR interest rate, as described in the Credit Loan Note. Ranor’s obligations under the LSA and the Credit Loan Note are guaranteed by TechPrecision.

Pursuant to the LSA, Ranor is subject to certain restrictive covenants which, among other things, restrict Ranor’s ability to (1) declare or pay any dividend or other distribution on its equity, purchase or retire any of its equity, or alter its capital structure; (2) make any loan or guaranty or assume any obligation or liability; (3) default in payment of any debt in excess of $5,000 to any person; (4) sell any of the collateral outside the normal course of business; and (5) enter into any transaction that would materially or adversely affect the collateral or Ranor’s ability to repay the obligations under the LSA and the Credit Loan Note.  The restrictions contained in these covenants are subject to certain exceptions specified in the LSA and in some cases may be waived by the written consent of Utica.  Any failure to comply with the covenants outlined in the LSA without waiver by Utica or certain other provisions in the LSA would constitute an event of default, pursuant to which Utica may accelerate the repayment of the loan.

In connection with the execution of the LSA, we paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million of the proceeds of the Credit Loan Note to pay off debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement.  Additionally, the Company retained approximately $1.27 million of the proceeds of the Credit Loan Note for general corporate purposes.

If we were to violate any of the covenants under the above debt agreements, the lenders could demand full repayment of the amounts we owe. As such, we would need to seek alternative financing to pay these obligations as we do not have existing facilities or sufficient cash on hand to satisfy these obligations, and there is no guarantee that we would be able to obtain such alternative financing.

We were successful in amending the TLSA with Revere to extend its maturity date. The TLSA was to expire on December 31, 2015 and was amended in January 2016, with the term of the TLSA extended to January 22, 2018. Our LSA with Utica matures on November 30, 2018. We believe that we will have sufficient cash to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. Our liquidity is highly dependent on our available financing facilities and our ability to sustain our gross profit margins. If we do not execute on our business plans, improve gross profit and operating income, and reduce our operating costs, then our available cash may not be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months. We may need to secure additional acceptable financing facilities before 2018.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we may need to secure additional financing on terms consistent with our near-term business plans. We have increased our backlog and changed the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects, which do not efficiently utilize our manufacturing capacity. We plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

The condensed consolidated financial statements for the three and nine months ended December 31, 2015 and for the year ended March 31, 2015, or fiscal 2015, were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total current liabilities of $5.4 million at December 31, 2015 and to continue as a going concern is dependent upon the successful execution of our operating plan and our ability to timely secure long-term financing on favorable terms. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Dec. 31, 2015

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of TechPrecision, WCMC and Ranor. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of December 31, 2015, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine month periods ended December 31, 2015 and 2014, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2015 and 2014 are unaudited, but, in the opinion of management, include all adjustments that are necessary for a fair presentation of our financial statements for interim periods in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The results of operations for an interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.

The notes to condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements and related notes should be read in conjunction with our consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2015, or the 2015 Form 10-K, filed with the SEC on June 29, 2015.

Significant Accounting Policies

Our significant accounting policies are set forth in detail in Note 2 to the 2015 Form 10-K.

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Dec. 31, 2015

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

NOTE 3 — RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2015, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update No. 2015-17, or ASU No. 2015-17, Income Taxes (Topic 740), Balance sheet Classification of Deferred Taxes, or Topic 740. Topic 740, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred taxes, the amendments in ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU No. 2015-17 apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by these amendments. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not expect the adoption of ASU 2015-17 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

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PROPERTY, PLANT AND EQUIPMENT, NET

9 Months Ended

Dec. 31, 2015

PROPERTY, PLANT AND EQUIPMENT, NET

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following as of:

	December 31, 2015			March 31, 2015
Land	$	110,113		$	110,113
Building and improvements	3,252,908			3,235,308
Machinery equipment, furniture and fixtures	8,731,080			8,733,660
Equipment under capital leases	65,568			65,568
Construction in progress	174,615			—
Total property, plant and equipment	12,334,284			12,144,649
Less: accumulated depreciation	(7,117,236		)	(6,534,608		)
Total property, plant and equipment, net	$	5,217,048		$	5,610,041

Depreciation expense for the three and nine months ended December 31, 2015 and 2014 was $187,908 and $582,628, and $206,475 and $633,741, respectively.

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COSTS INCURRED ON UNCOMPLETED CONTRACTS

9 Months Ended

Dec. 31, 2015

COSTS INCURRED ON UNCOMPLETED CONTRACTS

COSTS INCURRED ON UNCOMPLETED CONTRACTS

NOTE 5 - COSTS INCURRED ON UNCOMPLETED CONTRACTS

The following table sets forth information as to costs incurred on uncompleted contracts as of:

	December 31, 2015			March 31, 2015
Cost incurred on uncompleted contracts, beginning balance	$	4,068,488		$	9,960,072
Total cost incurred on contracts during the period	9,138,138			10,034,158
Less cost of sales, during the period	(8,223,349		)	(15,925,742		)
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, beginning balance	$	2,060,244		$	4,702,070
Plus: Total billings incurred on contracts, during the period	12,110,447			15,591,388
Less: Contracts recognized as revenue, during the period	(11,985,422		)	(18,233,214		)
Billings on uncompleted contracts, ending balance	$	2,185,269		$	2,060,244
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, ending balance	2,185,269			2,060,244
Costs incurred on uncompleted contracts, in excess of progress billings	$	2,798,008		$	2,008,244

Contract costs consist primarily of labor and materials and related overhead, to the extent that such costs are recoverable. Revenues associated with these contracts are recorded only when the amount of recovery can be estimated reliably and realization is probable. As of December 31, 2015 and March 31, 2015, we had deferred revenues totaling $1,087,179 and $1,211,506, respectively. Deferred revenues represent customer prepayments on contracts and completed contracts on which revenue cannot yet be recognized. We also receive advance billings and deposits representing down payments for acquisition of materials and progress payments on contracts. The agreements with our customers allow us to offset the progress payments against the costs incurred. We record provisions for losses within costs of sales in our condensed consolidated statement of operations and comprehensive income (loss).

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OTHER CURRENT ASSETS

9 Months Ended

Dec. 31, 2015

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

NOTE 6 — OTHER CURRENT ASSETS

	December 31, 2015		March 31, 2015
Payments advanced to suppliers	$	147,362	$	54,422
Prepaid insurance	220,460		205,477
Collateral deposits	85,252		85,252
Deferred loan costs, net of amortization	—		184,063
Other	11,767		9,039
Total	$	464,841	$	538,253

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OTHER NONCURRENT ASSETS

9 Months Ended

Dec. 31, 2015

OTHER NONCURRENT ASSETS

OTHER NONCURRENT ASSETS

NOTE 7 — OTHER NONCURRENT ASSETS

	December 31, 2015			March 31, 2015
Deferred loan costs	$	253,975		$	253,975
Deferred loan costs, accumulated amortization	$	(244,299	)	$	(208,485	)
Total	$	9,676		$	45,490

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ACCRUED EXPENSES

9 Months Ended

Dec. 31, 2015

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 8 - ACCRUED EXPENSES

	December 31, 2015		March 31, 2015
Accrued compensation	$	589,102	$	613,838
Provision for contract losses	421,841		533,799
Accrued interest expense	483,555		436,787
Other	128,756		81,234
Total	$	1,623,254	$	1,665,658

Our contract loss provision at both December 31, 2015 and March 31, 2015 includes approximately $0.4 million for estimated contract losses in connection with a certain customer purchase agreement. We filed a demand for arbitration under the contract to recover damages, together with attorney’s fees, interest and costs, subsequent to the customer’s request to reduce the number of units ordered under the purchase agreement. As a result of the customer filing a voluntary bankruptcy claim, the demand is now considered an unsecured creditor claim within the customer’s overall bankruptcy proceedings. It is more likely than not that we will not be able to recover the full amount of our claim. As such, part of the total reduction in the liability reflects the netting of approximately $0.8 million of accumulated costs in work-in-progress and $1.1 million of accounts receivable with the loss provision. Accrued interest expense includes deferred interest costs accounted for under the effective interest method in connection with the Utica Credit Loan Note due November 2018.

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DEBT

9 Months Ended

Dec. 31, 2015

DEBT

DEBT

NOTE 9 — DEBT

	December 31, 2015		March 31, 2015
Utica Credit Loan Note due November 2018	$	2,689,815	$	3,381,481
Revere Term Loan and Notes due December 2015	2,250,000		2,250,000
Obligations under capital lease	29,521		38,028
Total debt	$	4,969,336	$	5,669,509
Less: Short-term debt	$	—	$	2,250,000
Less: Current portion of long-term debt	$	934,176	$	933,651
Long-term debt, including capital lease	$	4,035,160	$	2,485,858

Term Loan and Security Agreement

On December 22, 2014, Ranor entered into the TLSA with Revere. Pursuant to the TLSA, Revere agreed to loan an aggregate of $2.25 million to Ranor under the First Loan Note in the aggregate principal amount of $1.5 million and the Second Loan Note in the aggregate principal amount of $750,000. The First Loan Note is collateralized by a secured interest in Ranor’s Massachusetts facility and certain machinery and equipment at Ranor. The Second Loan Note is collateralized by a secured interest in certain accounts, inventory and equipment of Ranor. Payments under the TLSA, the First Loan Note and the Second Loan Note were due as follows: (a) payments of interest only on advanced principal on a monthly basis on the first day of each month from February 1, 2015 until December 31, 2015 with an annual interest rate on the unpaid principal balance of the First Loan Note and the Second Loan Note equal to 12% per annum and (b) the principal balance plus accrued and unpaid interest payable on December 31, 2015. Ranor’s obligations under the TLSA, the First Loan Note and the Second Loan Note are guaranteed by TechPrecision pursuant to a Guaranty Agreement with Revere. Ranor utilized approximately $1.45 million of the proceeds of the First Loan Note and Second Loan Note to pay off bond obligations owed to Santander Bank N.A. plus breakage fees on a related interest swap of $217,220 under the Loan and Security Agreement with Santander Bank N.A. The remaining proceeds of the First Loan Note and the Second Loan Note were retained by the Company for general corporate purposes. Pursuant to the TLSA, Ranor was subject to certain affirmative and negative covenants, including a cash covenant, which requires that we maintain minimum month end cash balances that range from $400,000 to $820,000. We were required to maintain a cash balance of $789,000 and $500,000 at December 31, 2015 and March 31, 2015, respectively. We were in compliance with all covenants under the TLSA at December 31, 2015 and March 31, 2015.

On December 31, 2015, the Company, Ranor and Revere entered into the Modification Agreement to the TLSA. The Modification Agreement extended the maturity date of the TLSA and the Notes from December 31, 2015 to January 22, 2016 and provided that Ranor agreed to waive its right to extend the maturity date of the TLSA and the Notes by six months as set forth in the TLSA.

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement which further amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere. The Second Modification Agreement extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018. The terms of the Second Modification Agreement are more fully described in Note 18 - Subsequent Events.

Ranor was not in violation of any of the covenants included in the Notes at their maturity date of December 31, 2015 or when it issued its financial statements. As such, noncurrent classification is required as of December 31, 2015 because the Company was able to demonstrate its ability to consummate long-term refinancing by issuing a long-term obligation after its balance sheet date but before the issuance of its balance sheet.

Loan and Security Agreement

On May 30, 2014, TechPrecision and Ranor entered into the LSA with Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and the Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% or the six-month LIBOR interest rate, as described in the Credit Loan Note. At December 31, 2015, the rate of interest on the debt under the LSA was 10.8%. In addition, if the obligations under the LSA and the Credit Loan Note are paid in full at or before the maturity date, Ranor will be required to pay Utica deferred interest in an amount ranging from $166,000 during the first twelve months of the term of the loan to $498,000 at any time after the forty-eighth month of the term of the loan. Ranor’s obligations under the LSA and the Credit Loan Note are guaranteed by TechPrecision.

Pursuant to the LSA, Ranor is subject to certain restrictive covenants which, among other things, restrict Ranor’s ability to (1) declare or pay any dividend or other distribution on its equity, purchase or retire any of its equity, or alter its capital structure; (2) make any loan or guaranty or assume any obligation or liability; (3) default in payment of any debt in excess of $5,000 to any person; (4) sell any of the collateral outside the normal course of business; and (5) enter into any transaction that would materially or adversely affect the collateral or Ranor’s ability to repay the obligations under the LSA and the Credit Loan Note.  The restrictions contained in these covenants are subject to certain exceptions specified in the LSA and in some cases may be waived by written consent of Utica.  Any failure to comply with the covenants outlined in the LSA without waiver by Utica or certain other provisions in the LSA would constitute an event of default, pursuant to which Utica may accelerate the repayment of the loan. In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million of the proceeds of the Credit Loan Note to pay off, or complete a refinancing of, debt obligations owed to Santander Bank N.A. under a Loan and Security Agreement. We paid a breakage fee of $29,448 for early termination of the interest rate swap for certain bonds and recorded the amount as interest expense in our statement of operations. We retained approximately $1.27 million of the proceeds of the Credit Loan Note for general corporate purposes.

Capital Lease

We entered into a new capital lease in April 2012 for certain office equipment. The lease has a term of 63 months, bears interest at 6.0% and requires monthly payments of principal and interest of $1,136. This lease was amended in fiscal 2014 when we purchased a replacement copier at Ranor. The revised lease term was extended by nine months and will expire in September 2018. The amount of the lease recorded in property, plant and equipment, net as of December 31, 2015 and March 31, 2015 was $26,045 and $38,027, respectively.

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INCOME TAXES

9 Months Ended

Dec. 31, 2015

INCOME TAXES

INCOME TAXES

NOTE 10 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  At the end of each interim period, we make an estimate of our annual expected effective tax rates in both the United States and China. For the three and nine months ended December 31, 2015 we recorded zero income tax expense. The lack of tax expense or benefit for the three and nine months ended December 31, 2015 was primarily the result of recording a full valuation allowance on our net deferred tax assets. For the nine months ended December 31, 2014, we recorded a tax benefit of $152,792 as we reclassified losses on an interest rate swap to our statement of operations. A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels. We have determined that it is more likely than not that certain future tax benefits may not be realized.  A change in the estimates used to make this determination could require an increase in deferred tax assets if they become realizable.

At March 31, 2015, our federal net operating loss carry-forward was approximately $10.0 million. If not utilized, the federal net operating loss carry-forward will begin to expire in 2025. Section 382 of the Internal Revenue Code, as amended, provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards on a yearly basis due to an ownership change in connection with the acquisition of Ranor in 2006.

We file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Our foreign subsidiary files separate income tax returns in China, the foreign jurisdiction in which it is located.  Tax years 2012 and forward remain open for examination.  We recognize interest and penalties accrued related to income tax liabilities in selling, general and administrative expense in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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PROFIT SHARING PLAN

9 Months Ended

Dec. 31, 2015

PROFIT SHARING PLAN

PROFIT SHARING PLAN

NOTE 11 - PROFIT SHARING PLAN

Ranor has a 401(k) profit sharing plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. Our contributions were $36,784 and $38,375 for the nine months ended December 31, 2015 and 2014, respectively.

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CAPITAL STOCK

9 Months Ended

Dec. 31, 2015

CAPITAL STOCK

CAPITAL STOCK

NOTE 12 - CAPITAL STOCK

Preferred Stock

We have 10,000,000 authorized shares of preferred stock and our board of directors has broad power to create one or more series of preferred stock and to designate the rights, preferences, privileges and limitations of the holders of such series. Our board of directors has created one series of preferred stock - the Series A Convertible Preferred Stock.

Each share of Series A Convertible Preferred Stock was initially convertible into one share of common stock. As a result of our failure to meet certain levels of earnings before interest, taxes, depreciation and amortization for the years ended March 31, 2006 and 2007, the conversion rate changed, and each share of Series A Convertible Preferred Stock became convertible into 1.3072 shares of common stock, with an effective conversion price of $0.218.

During the nine months ended December 31, 2015 and 2014, 1,927,508 and 550,000 shares of Series A Convertible Preferred Stock were converted into 2,519,634 and 718,954 shares of common stock, respectively. There were no shares of Series A Convertible Preferred Stock outstanding at December 31, 2015, as the last outstanding shares of Series A Convertible Preferred Stock were converted into shares of common stock on September 24, 2015. There were 1,927,508 shares of Series A Convertible Preferred Stock outstanding at March 31, 2015. Based on the most recent conversion ratio, there were zero and 2,519,634 common shares underlying the Series A Convertible Preferred Stock as of December 31, 2015 and March 31, 2015, respectively.

Common Stock

We had 90,000,000 authorized shares of common stock at December 31, 2015 and March 31, 2015.  There were 27,324,593 and 24,669,958 shares of common stock outstanding at December 31, 2015 and March 31, 2015, respectively. For the nine months ended December 31, 2015 we issued 2,519,634 shares of common stock in connection with conversions of Series A Convertible Preferred Stock. For the nine months ended December 31, 2014, we issued 718,954 shares of common stock in connection with conversions of Series A Convertible Preferred Stock.

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STOCK BASED COMPENSATION

9 Months Ended

Dec. 31, 2015

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE 13 - STOCK BASED COMPENSATION

In 2006, our board of directors adopted, and our stockholders approved, the 2006 long-term incentive plan, or the Plan, covering 1,000,000 shares of common stock. On August 5, 2010, the Plan was amended to increase the maximum number of shares of common stock that may be issued to an aggregate of 3,000,000 shares. On September 15, 2011, the directors adopted and our stockholders approved an amendment to increase the maximum number of shares of common stock that may be issued pursuant to the Plan to an aggregate of 3,300,000 shares. The Plan provides for the grant of incentive and non-qualified options, stock grants, stock appreciation rights and other equity-based incentives to employees, including officers, and consultants. The Plan is to be administered by a committee of not less than two directors each of whom is to be an independent director. In the absence of a committee, the Plan is administered by our board of directors. Independent directors are not eligible for discretionary options.

Pursuant to the Plan, each newly elected independent director receives, at the time of election, a five-year option to purchase 50,000 shares of common stock at the market price on the date of his or her election.  In addition, the Plan provides for the annual grant of an option to purchase 10,000 shares of common stock on July 1 of each year following the third anniversary of the date of election.

On July 1, 2015, we granted stock options to members of our board of directors to collectively purchase 30,000 shares of common stock at an exercise price of $0.10 per share, the fair market value on the date of grant. Fifty percent of the options will vest upon the six month anniversary of the grant date while the remaining fifty percent of the options will vest upon the eighteen month anniversary of the grant date.

On August 12, 2015, we granted stock options to our chief executive officer to purchase in total 1,000,000 shares of common stock at an exercise price of $0.08 per share, the fair market value on the date of grant. One third of the options vested on the date of the grant, one third of the options will vest on the first anniversary of the grant date, and the final one third of the options will vest on the second anniversary of the grant date.

The fair value of the options we granted was estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The average dividend yield over the historical period for which volatility was computed is zero. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We use the simplified method for all grants to estimate the expected term of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. Because of our limited stock option exercise activity we did not rely on our historical exercise data. The assumptions utilized for option grants during the period presented were as follows: a range from 119.5% to 120.8% for volatility, a range of 1.62% to 1.70% for the risk free interest rate, and approximately six years for the expected term. At December 31, 2015, there were 792,006 shares of common stock available for grant under the Plan. The following table summarizes information about options for the periods presented below:

	Number Of		Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options		Exercise Price		Value		(in years)
Outstanding at 3/31/2015	1,190,500		$	1.049	$	21,600	5.18
Granted	1,030,000		$	0.081
Exercised	(135,000	)	$	1.100
Forfeited	(155,000	)	$	1.015
Outstanding at 12/31/2015	1,930,500		$	0.661	$	102,503	7.85
Vested or expected to vest at 12/31/2015	1,930,500		$	0.661	$	102,503	7.85
Exercisable and vested at 12/31/2015	1,235,500		$	0.767	$	34,568	6.52

At December 31, 2015 there was $40,646 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over the next two years. The total fair value of shares vested during the nine months ended December 31, 2015 was $67,183. The following table summarizes the activity of our stock options outstanding but not vested for the nine months ended December 31, 2015:

	Number of Options		Weighted Average Exercise Price
Outstanding at 3/31/2015	112,500		$	0.664
Granted	1,030,000		$	0.081
Forfeited	(40,000	)	$	0.670
Vested	(407,500	)	$	0.165
Outstanding at 12/31/2015	695,000		$	0.092

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

9 Months Ended

Dec. 31, 2015

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

NOTE 14 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

We maintain bank account balances, which, at times, may exceed Federal Deposit Insurance Corporation insured limits. We have not experienced any losses with these accounts and believe that we are not exposed to any significant credit risk on cash.

At December 31, 2015, there were accounts receivable balances outstanding from four customers comprising 83% of the total receivables balance. The following table sets forth information as to accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of:

Accounts Receivable	December 31, 2015				March 31, 2015
Customer	Dollars		Percent		Dollars		Percent
A	$	261,172	34	%	$	*	*	%
B	$	149,688	20	%	$	296,815	36	%
C	$	123,920	16	%	$	*	*	%
D	$	99,110	13	%	$	*	*	%
E	$	*	*	%	$	128,738	16	%
F	$	*	*	%	$	123,604	15	%

*less than 10% of total

We have been dependent in each year on a small number of customers who generate a significant portion of our business, and these customers change from year to year. The following table sets forth information as to net sales from customers who accounted for more than 10% of our revenue for the three and nine months ended:

Net Sales	Three months ended December 31,								Nine months ended December 31,
Customer	2015				2014				2015				2014
A	$	1,568,714	45	%	$	475,317	14	%	$	3,057,140	26	%	$	*	*	%
B	$	*	*	%	$	*	*	%	$	1,971,139	16	%	$ 3,107,520		22	%
C	$	*	*	%	$	*	*	%	$	1,459,013	12	%	$*		*	%
D	$	*	*	%	$	406,089	12	%	$	1,192,848	10	%	$	*	*	%
E	$	*	*	%	$	1,394,999	40	%	$	*	*	%	$ 2,399,074		16	%
F	$	*	*	%	$	*	*	%	$	*	*	%	$	1,762,985	12	%
G	$	594,534	17	%	$	*	*	%	$	*	*	%	$*		*	%
H	$	354,469	10	%	$	*	*	%	$	*	*	%	$*		*	%
I	$	*	*	%	$	676,729	19	%	$	*	*	%	$	*	*	%

*less than 10% of total

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SEGMENT INFORMATION

9 Months Ended

Dec. 31, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 15 — SEGMENT INFORMATION

We consider our business to consist of one segment - metal fabrication and precision machining. A significant amount of our operations, assets and customers are located in the United States. The following table presents our geographic information (net sales and property, plant and equipment, net) by the country in which the legal subsidiary is domiciled and assets are located:

	Net Sales Three Months Ended December 31,				Net Sales Nine Months Ended December 31,				Property, Plant and Equipment, net
	2015		2014		2015		2014		Dec. 31, 2015		March 31, 2015
United States	$	3,506,560	$	3,202,086	$	11,985,422	$	13,517,788	$	5,217,048	$	5,609,973
China	—		$	308,756	—		$	794,107	—		$	68

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COMMITMENTS

9 Months Ended

Dec. 31, 2015

COMMITMENTS

COMMITMENTS

NOTE 16 — COMMITMENTS

Leases

New Lease

On June 1, 2015 we entered into a new office lease with GPX Wayne Office Properties, L.P., or GPX Wayne, pursuant to which the Company leases approximately 1,100 square feet located at 992 Old Eagle School Road, Wayne, Pennsylvania, or the Wayne Property. The Company assumed possession of the Wayne Property on June 16, 2015. The initial term of this lease will expire on June 30, 2016, unless terminated sooner in accordance with the terms of the lease. The Company’s base rent for the Wayne Property is $1,838 per month plus payments for electricity (on a proportionate ratio basis for the entire building), certain contributions for leasehold improvements, and certain other additional rent items (including certain taxes, insurance premiums and operating expenses). Other than as described above, there is no relationship between the Company and GPX Wayne.

Termination of Lease

On June 4, 2015, the Company entered into a lease termination agreement with CLA Building Associates, L.P., or CLA, pursuant to which the Company and CLA agreed to terminate the lease between the Company and CLA with respect to certain office space in Newtown Square, Pennsylvania, or the Newtown Square Property. Pursuant to the lease termination agreement, the lease with respect to the Newtown Square Property was terminated and the Company vacated the Newtown Square Property on June 16, 2015. The lease termination agreement provides that CLA will retain the Company’s security deposit of $2,400.

Employment Agreements

We have employment agreements with each of our executive officers. Such agreements provide for minimum salary levels, adjusted annually, and bonuses that are payable if specified company goals are attained. The aggregate commitment at December 31, 2015 for future executive salaries during the next twelve months, including fiscal 2015 bonuses payable after March 31, 2015, was approximately $0.7 million. The aggregate commitment at December 31, 2015 was approximately $0.2 million for accrued payroll, severance, vacation and holiday pay for the remainder of our employees.

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EARNINGS PER SHARE (EPS)

9 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE (EPS)

EARNINGS PER SHARE (EPS)

NOTE 17 - EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. Diluted EPS also includes the effect of dilutive potential common share equivalents, which consist of convertible preferred stock and stock options. The following table provides a reconciliation of the numerators and denominators reflected in the basic and diluted earnings per share computations, as required under FASB ASC 260.

	Three Months ended December 31, 2015		Three Months ended December 31, 2014			Nine Months ended December 31, 2015		Nine Months ended December 31, 2014
Basic EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Weighted average number of shares outstanding	27,324,593		24,669,958			26,084,080		24,447,736
Basic income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)
Diluted EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Dilutive effect of stock options, warrants and preferred stock	185,387		—			126,126		—
Diluted weighted average shares	27,509,980		24,669,958			26,210,206		24,447,736
Diluted income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)

All potential common share equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were 900,500 potential common share equivalents that were out-of-the-money and were not included in the EPS calculations above for both the three and nine month periods ended December 31, 2015. For the three and nine months ended December 31, 2014, there were, respectively, 3,288,008 and 2,277,951 anti-dilutive potential common share equivalents, which were not included in the EPS calculations above.

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SUBSEQUENT EVENTS

9 Months Ended

Dec. 31, 2015

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 18 — SUBSEQUENT EVENTS

On January 22, 2016, the Company, Ranor and Revere entered into the Second Modification Agreement, which amends the TLSA. In connection with the Second Modification Agreement, Ranor executed the Amended and Restated Notes in favor of Revere.

The Second Modification Agreement (a) extends the maturity date of the term loans made pursuant to the TLSA to January 22, 2018, (b) amends the amortization schedule such that payments under the TLSA and Amended and Restated Notes are due as follows: (i) payments of interest only on advanced principal on a monthly basis on the first day of each month from March 1, 2016 until January 1, 2017 and (ii) payments of $9,375 in principal plus accrued interest on a monthly basis on the first day of each month from February 1, 2017 until January 22, 2018, (c) reduces the annual interest rate on the unpaid principal balance of the loans to 10% per annum, or the Interest Rate, from 12% per annum, (d) amends the definition of the Minimum Guaranteed Interest payable by Ranor to Revere on the earlier of prepayment in full of the loans or payment in full of the loans on the maturity date to the greater of (i) twelve (12) months interest at the Interest Rate on the amount outstanding on the loans or (ii) interest due on any amount advanced under the TLSA at the Interest Rate, (e) adds a restrictive covenant whereby Ranor must maintain monthly minimum cash balances, with failure to comply with such restrictive covenant an event of default pursuant to which Revere may accelerate the repayment of the loans, and (f) includes a reaffirmation of the Company’s guarantee of Ranor’s obligations under the TLSA and the Amended and Restated Notes pursuant to a Guaranty Agreement between the Company and Revere.

Other than as so amended by the Modification Agreement and the Second Modification Agreement, the terms and conditions of the TLSA remain in full force and effect.

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PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

9 Months Ended

Dec. 31, 2015

PROPERTY, PLANT AND EQUIPMENT, NET

Schedule of components of property, plant and equipment, net

	December 31, 2015			March 31, 2015
Land	$	110,113		$	110,113
Building and improvements	3,252,908			3,235,308
Machinery equipment, furniture and fixtures	8,731,080			8,733,660
Equipment under capital leases	65,568			65,568
Construction in progress	174,615			—
Total property, plant and equipment	12,334,284			12,144,649
Less: accumulated depreciation	(7,117,236		)	(6,534,608		)
Total property, plant and equipment, net	$	5,217,048		$	5,610,041

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COSTS INCURRED ON UNCOMPLETED CONTRACTS (Tables)

9 Months Ended

Dec. 31, 2015

COSTS INCURRED ON UNCOMPLETED CONTRACTS

Schedule of costs incurred on uncompleted contracts

	December 31, 2015			March 31, 2015
Cost incurred on uncompleted contracts, beginning balance	$	4,068,488		$	9,960,072
Total cost incurred on contracts during the period	9,138,138			10,034,158
Less cost of sales, during the period	(8,223,349		)	(15,925,742		)
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, beginning balance	$	2,060,244		$	4,702,070
Plus: Total billings incurred on contracts, during the period	12,110,447			15,591,388
Less: Contracts recognized as revenue, during the period	(11,985,422		)	(18,233,214		)
Billings on uncompleted contracts, ending balance	$	2,185,269		$	2,060,244
Cost incurred on uncompleted contracts, ending balance	$	4,983,277		$	4,068,488
Billings on uncompleted contracts, ending balance	2,185,269			2,060,244
Costs incurred on uncompleted contracts, in excess of progress billings	$	2,798,008		$	2,008,244

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OTHER CURRENT ASSETS (Tables)

9 Months Ended

Dec. 31, 2015

OTHER CURRENT ASSETS

Schedule of other current assets

	December 31, 2015		March 31, 2015
Payments advanced to suppliers	$	147,362	$	54,422
Prepaid insurance	220,460		205,477
Collateral deposits	85,252		85,252
Deferred loan costs, net of amortization	—		184,063
Other	11,767		9,039
Total	$	464,841	$	538,253

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OTHER NONCURRENT ASSETS (Tables)

9 Months Ended

Dec. 31, 2015

OTHER NONCURRENT ASSETS

Schedule of other noncurrent assets

	December 31, 2015			March 31, 2015
Deferred loan costs	$	253,975		$	253,975
Deferred loan costs, accumulated amortization	$	(244,299	)	$	(208,485	)
Total	$	9,676		$	45,490

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ACCRUED EXPENSES (Tables)

9 Months Ended

Dec. 31, 2015

ACCRUED EXPENSES

Schedule of accrued expenses

	December 31, 2015		March 31, 2015
Accrued compensation	$	589,102	$	613,838
Provision for contract losses	421,841		533,799
Accrued interest expense	483,555		436,787
Other	128,756		81,234
Total	$	1,623,254	$	1,665,658

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DEBT (Tables)

9 Months Ended

Dec. 31, 2015

DEBT

Schedule of outstanding debt obligations

	December 31, 2015		March 31, 2015
Utica Credit Loan Note due November 2018	$	2,689,815	$	3,381,481
Revere Term Loan and Notes due December 2015	2,250,000		2,250,000
Obligations under capital lease	29,521		38,028
Total debt	$	4,969,336	$	5,669,509
Less: Short-term debt	$	—	$	2,250,000
Less: Current portion of long-term debt	$	934,176	$	933,651
Long-term debt, including capital lease	$	4,035,160	$	2,485,858

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STOCK BASED COMPENSATION (Tables)

9 Months Ended

Dec. 31, 2015

STOCK BASED COMPENSATION

Summary of information about options for the periods presented

	Number Of		Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options		Exercise Price		Value		(in years)
Outstanding at 3/31/2015	1,190,500		$	1.049	$	21,600	5.18
Granted	1,030,000		$	0.081
Exercised	(135,000	)	$	1.100
Forfeited	(155,000	)	$	1.015
Outstanding at 12/31/2015	1,930,500		$	0.661	$	102,503	7.85
Vested or expected to vest at 12/31/2015	1,930,500		$	0.661	$	102,503	7.85
Exercisable and vested at 12/31/2015	1,235,500		$	0.767	$	34,568	6.52

Summary of activity of stock options outstanding but not vested

	Number of Options		Weighted Average Exercise Price
Outstanding at 3/31/2015	112,500		$	0.664
Granted	1,030,000		$	0.081
Forfeited	(40,000	)	$	0.670
Vested	(407,500	)	$	0.165
Outstanding at 12/31/2015	695,000		$	0.092

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Tables) - Customer Concentration Risk

9 Months Ended

Dec. 31, 2015

Accounts Receivable

Concentration of credit risk and major customers

Schedule of concentration of risk by factors

Accounts Receivable	December 31, 2015				March 31, 2015
Customer	Dollars		Percent		Dollars		Percent
A	$	261,172	34	%	$	*	*	%
B	$	149,688	20	%	$	296,815	36	%
C	$	123,920	16	%	$	*	*	%
D	$	99,110	13	%	$	*	*	%
E	$	*	*	%	$	128,738	16	%
F	$	*	*	%	$	123,604	15	%

*less than 10% of total

Net sales

Concentration of credit risk and major customers

Schedule of concentration of risk by factors

Net Sales	Three months ended December 31,								Nine months ended December 31,
Customer	2015				2014				2015				2014
A	$	1,568,714	45	%	$	475,317	14	%	$	3,057,140	26	%	$	*	*	%
B	$	*	*	%	$	*	*	%	$	1,971,139	16	%	$ 3,107,520		22	%
C	$	*	*	%	$	*	*	%	$	1,459,013	12	%	$*		*	%
D	$	*	*	%	$	406,089	12	%	$	1,192,848	10	%	$	*	*	%
E	$	*	*	%	$	1,394,999	40	%	$	*	*	%	$ 2,399,074		16	%
F	$	*	*	%	$	*	*	%	$	*	*	%	$	1,762,985	12	%
G	$	594,534	17	%	$	*	*	%	$	*	*	%	$*		*	%
H	$	354,469	10	%	$	*	*	%	$	*	*	%	$*		*	%
I	$	*	*	%	$	676,729	19	%	$	*	*	%	$	*	*	%

*less than 10% of total

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SEGMENT INFORMATION (Tables)

9 Months Ended

Dec. 31, 2015

SEGMENT INFORMATION

Schedule of geographic information (net sales and net property, plant and equipment) by the country in which the legal subsidiary is domiciled and assets are located

	Net Sales Three Months Ended December 31,				Net Sales Nine Months Ended December 31,				Property, Plant and Equipment, net
	2015		2014		2015		2014		Dec. 31, 2015		March 31, 2015
United States	$	3,506,560	$	3,202,086	$	11,985,422	$	13,517,788	$	5,217,048	$	5,609,973
China	—		$	308,756	—		$	794,107	—		$	68

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EARNINGS PER SHARE (EPS) (Tables)

9 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE (EPS)

Schedule of reconciliation of the numerators and denominators reflected in the basic and diluted loss per share computations

	Three Months ended December 31, 2015		Three Months ended December 31, 2014			Nine Months ended December 31, 2015		Nine Months ended December 31, 2014
Basic EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Weighted average number of shares outstanding	27,324,593		24,669,958			26,084,080		24,447,736
Basic income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)
Diluted EPS
Net income (loss)	$	12,003	$	(945,718	)	$	472,960	$	(2,865,557	)
Dilutive effect of stock options, warrants and preferred stock	185,387		—			126,126		—
Diluted weighted average shares	27,509,980		24,669,958			26,210,206		24,447,736
Diluted income (loss) per share	$	0.00	$	(0.04	)	$	0.02	$	(0.12	)

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DESCRIPTION OF BUSINESS (Details) - USD ($)				3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 17, 2015	Dec. 22, 2014	May. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015	Jan. 22, 2016	Mar. 31, 2014
DESCRIPTION OF BUSINESS
Cash and cash equivalents				$ 816,301	$ 1,278,667	$ 816,301	$ 1,278,667	$ 1,336,325		$ 1,086,701
Cash deposits located in China, which may not be able to be repatriated for use in the U.S. without undue cost or expense				17,269		17,269
Net cash provided by operating activities						373,278	(1,271,865)
Advanced claims payment						507,835
Net income (loss)				12,003	$ (945,718)	472,960	$ (2,865,557)	(3,600,000)
Provision for estimated customer purchase agreement losses				400,000		400,000		400,000
Total current liabilities				5,378,317		5,378,317		$ 7,725,175
GT Advanced Technologies
DESCRIPTION OF BUSINESS
Provision for estimated customer purchase agreement losses										$ 2,400,000
LSA
DESCRIPTION OF BUSINESS
Fees and associated costs			$ 240,000
Loan proceeds retained for general corporate purposes			1,270,000
Ranor, Inc. | Citigroup Financial Products Inc | Assignment of Claim Agreement
DESCRIPTION OF BUSINESS
Unsecured claim sold and assigned	$ 3,740,956
Initial amount received from the sale and assignment of unsecured claim	507,835
Claim, net of holdback, used as threshold for determining final payment or required repurchase on sale of unsecured claim	$ 1,692,782
Percentage of total claim received as initial payment to be used as multiplier in calculation of final settlement of agreement	30.00%
Percentage of interest to be payable for repurchase	7.00%
Ranor, Inc. | LSA
DESCRIPTION OF BUSINESS
Maximum amount of debt that can be defaulted			5,000
Ranor, Inc. | Maximum | Citigroup Financial Products Inc | Assignment of Claim Agreement
DESCRIPTION OF BUSINESS
Additional amount to be received from the sale and assignment of unsecured claim	$ 614,452
Revere Term Loan and Notes Due December 2015 | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Period of time the maturity date of loans may be extended		6 months
Amount borrowed		$ 2,250,000
First Term Loan Note | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Amount borrowed		1,500,000
Second Loan Note | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Amount borrowed		$ 750,000
Modification Agreement | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Exit fee				$ 67,500		$ 67,500
Amended and Restated First Loan Note | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Amount borrowed									$ 1,500,000
Restated Second Loan Note | Ranor, Inc. | TLSA
DESCRIPTION OF BUSINESS
Amount borrowed									$ 750,000
Utica Credit Loan Note due November 2018 | Ranor, Inc. | LSA
DESCRIPTION OF BUSINESS
Amount borrowed			$ 4,150,000
Stated interest rate to be used as variable interest basis			7.50%
Interest margin (as a percent)			3.30%
Variable interest basis			six-month LIBOR
Loan Agreement With Santander Bank,NA | LSA
DESCRIPTION OF BUSINESS
Repayment of debt			$ 2,650,000

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PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015
Property, Plant and Equipment
Total property, plant and equipment	$ 12,334,284		$ 12,334,284		$ 12,144,649
Less: accumulated depreciation	(7,117,236)		(7,117,236)		(6,534,608)
Total property, plant and equipment, net	5,217,048		5,217,048		5,610,041
Depreciation expense	187,908	$ 206,475	582,628	$ 633,741
Land
Property, Plant and Equipment
Total property, plant and equipment	110,113		110,113		110,113
Building and improvements
Property, Plant and Equipment
Total property, plant and equipment	3,252,908		3,252,908		3,235,308
Machinery equipment, furniture and fixtures
Property, Plant and Equipment
Total property, plant and equipment	8,731,080		8,731,080		8,733,660
Equipment under capital leases
Property, Plant and Equipment
Total property, plant and equipment	65,568		65,568		$ 65,568
Construction in progress
Property, Plant and Equipment
Total property, plant and equipment	$ 174,615		$ 174,615

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COSTS INCURRED ON UNCOMPLETED CONTRACTS (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015	Dec. 31, 2015	Mar. 31, 2015
Cost incurred on uncompleted contracts
Cost incurred on uncompleted contracts, beginning balance			$ 4,068,488	$ 9,960,072	$ 9,960,072
Total cost incurred on contracts during the period			9,138,138		10,034,158
Less cost of sales, during the period	$ (2,434,900)	$ (3,169,456)	(8,223,349)	(12,884,553)	(15,925,742)
Cost incurred on uncompleted contracts, ending balance	4,983,277		4,983,277		4,068,488
Billings on uncompleted contracts
Billings on uncompleted contracts, beginning balance			2,060,244	4,702,070	4,702,070
Plus: Total billings incurred on contracts, during the period			12,110,447		15,591,388
Less: Contracts recognized as revenue, during the period	(3,506,560)	$ (3,510,842)	(11,985,422)	(14,311,895)	(18,233,214)
Billings on uncompleted contracts, ending balance	2,185,269		2,185,269		2,060,244
Cost incurred on uncompleted contracts
Cost incurred on uncompleted contracts, ending balance	4,983,277		4,068,488	9,960,072	9,960,072	$ 4,983,277	$ 4,068,488
Billings on uncompleted contracts, ending balance	$ 2,185,269		$ 2,060,244	$ 4,702,070	$ 4,702,070	2,185,269	2,060,244
Costs incurred on uncompleted contracts, in excess of progress billings						2,798,008	2,008,244
Deferred revenues						$ 1,087,179	$ 1,211,506

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OTHER CURRENT ASSETS (Details) - USD ($)	Dec. 31, 2015	Mar. 31, 2015
OTHER CURRENT ASSETS
Payments advanced to suppliers	$ 147,362	$ 54,422
Prepaid insurance	220,460	205,477
Collateral deposits	85,252	85,252
Deferred loan costs, net of amortization		184,063
Other	11,767	9,039
Total	$ 464,841	$ 538,253

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OTHER NONCURRENT ASSETS (Details) - USD ($)	Dec. 31, 2015	Mar. 31, 2015
OTHER NONCURRENT ASSETS
Deferred loan costs	$ 253,975	$ 253,975
Deferred loan costs, accumulated amortization	(244,299)	(208,485)
Total	$ 9,676	$ 45,490

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ACCRUED EXPENSES (Details) - USD ($)	9 Months Ended
	Dec. 31, 2015	Mar. 31, 2015
ACCRUED EXPENSES
Accrued compensation	$ 589,102	$ 613,838
Provision for contract losses	421,841	533,799
Accrued interest expense	483,555	436,787
Other	128,756	81,234
Total	1,623,254	1,665,658
Provision for estimated customer purchase agreement losses	400,000	$ 400,000
Netting adjustment for accumulated costs in work-in-progress	800,000
Provision for loss on accounts receivable	$ 1,100,000

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DEBT (Details) - USD ($)			1 Months Ended	9 Months Ended	12 Months Ended
	Dec. 22, 2014	May. 30, 2014	Apr. 30, 2012	Dec. 31, 2015	Mar. 31, 2014	Mar. 31, 2015
Debt and capital lease obligations
Total debt				$ 4,969,336		$ 5,669,509
Less: Short-term debt						2,250,000
Less: Current portion of long-term debt				934,176		933,651
Total Long-term debt, including capital lease				4,035,160		2,485,858
LSA
Debt and capital lease obligations
Fees and associated costs		$ 240,000
Loan proceeds retained for general corporate purposes		1,270,000
LSA | Ranor, Inc.
Debt and capital lease obligations
Maximum amount of debt that can be defaulted		5,000
TLSA
Debt and capital lease obligations
Minimum cash balance requirement				$ 789,000		500,000
Interest rate (as a percent)				12.00%
TLSA | Minimum
Debt and capital lease obligations
Minimum cash balance requirement				$ 400,000
TLSA | Maximum
Debt and capital lease obligations
Minimum cash balance requirement				820,000
Utica Credit Loan Note due November 2018
Debt and capital lease obligations
Total debt				$ 2,689,815		3,381,481
Utica Credit Loan Note due November 2018 | LSA | Ranor, Inc.
Debt and capital lease obligations
Aggregate principal amount		$ 4,150,000
Stated interest rate to be used as variable interest basis		7.50%
Variable interest basis		six-month LIBOR
Interest margin (as a percent)		3.30%
Effective interest rate at end of period (as a percent)				10.80%
Deferred interest due during the first twelve months of the term (minimum range)				$ 166,000
Deferred interest due after the forty-eighth month of the term (maximum range)				498,000
Revere Term Loan and Notes Due December 2015
Debt and capital lease obligations
Total debt				2,250,000		2,250,000
Revere Term Loan and Notes Due December 2015 | TLSA | Ranor, Inc.
Debt and capital lease obligations
Period of time the maturity date of loans may be extended	6 months
Aggregate principal amount	$ 2,250,000
First Term Loan Note | TLSA | Ranor, Inc.
Debt and capital lease obligations
Aggregate principal amount	$ 1,500,000
Interest rate (as a percent)	12.00%
Second Loan Note | TLSA | Ranor, Inc.
Debt and capital lease obligations
Aggregate principal amount	$ 750,000
Interest rate (as a percent)	12.00%
Bonds financing | TLSA | Ranor, Inc.
Debt and capital lease obligations
Repayment of debt	$ 1,450,000
Long-term obligations under capital leases
Debt and capital lease obligations
Total debt				29,521		38,028
Amount of the lease recorded in property, plant and equipment, net				$ 26,045		$ 38,027
Capital lease term			63 months
Capital lease term extension					9 months
Capital lease interest rate (as a percent)			6.00%
Capital lease monthly payment			$ 1,136
Loan Agreement With Santander Bank,NA | LSA
Debt and capital lease obligations
Repayment of debt		$ 2,650,000
Interest Rate Swap | MDFA Bonds | LSA
Debt and capital lease obligations
Breakage fee		$ 29,448
Interest Rate Swap | Loan agreement with bank | Ranor, Inc.
Debt and capital lease obligations
Breakage fee	$ 217,220

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INCOME TAXES (Details) - USD ($)	3 Months Ended	9 Months Ended
	Dec. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015
INCOME TAXES
Income tax expense (benefit)	$ 0	$ 0	$ 152,792
Federal net operating loss carry-forward				$ 10,000,000

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PROFIT SHARING PLAN (Details) - Ranor, Inc. - USD ($)	9 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
PROFIT SHARING PLAN
Eligibility for employer matching contributions, period of service	90 days
Matching contributions made by the company	$ 36,784	$ 38,375

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CAPITAL STOCK (Details)	9 Months Ended
	Dec. 31, 2015 item $ / shares shares	Dec. 31, 2014 shares	Mar. 31, 2015 shares
Capital stock
Preferred stock, shares authorized	10,000,000		10,000,000
Number of authorized common shares	90,000,000		90,000,000
Number of outstanding common shares	27,324,593		24,669,958
Minimum
Capital stock
Number of series of preferred stock | item	1
Series A Convertible Preferred Stock
Capital stock
Number of series of preferred stock | item	1
Conversion ratio prior to adjustment	1
Conversion ratio	1.3072
Effective conversion price (in dollars per share) | $ / shares	$ 0.218
Number of shares of common stock issuable upon conversion of convertible preferred stock	0		2,519,634
Shares converted into common stock	1,927,508	550,000
Number of shares of common stock issued for converted preferred stock	2,519,634	718,954
Shares outstanding	0		1,927,508

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STOCK BASED COMPENSATION (Details)			9 Months Ended	12 Months Ended
	Aug. 12, 2015 $ / shares shares	Jul. 01, 2015 $ / shares shares	Dec. 31, 2015 USD ($) item $ / shares shares	Mar. 31, 2015 USD ($) $ / shares shares	Sep. 15, 2011 shares	Aug. 05, 2009 shares	Mar. 31, 2006 shares
Share based compensation
Maximum number of shares authorized to be issued					3,300,000	3,000,000	1,000,000
Options granted (in shares)			1,030,000
Exercise price of shares granted (in dollars per share) | $ / shares			$ 0.081
Assumption used in valuation of stock options
Average dividend yield | $			$ 0
Yield term of U.S. Treasury issues on which risk free interest rate is based			5 years
Volatility rate, minimum (as a percent)			119.50%
Volatility rate, maximum (as a percent)			120.80%
Risk free interest rate, minimum (as a percent)			1.62%
Risk free interest rate, maximum (as a percent)			1.70%
Expected term			6 years
Additional general disclosure
Common stock available for grant under plan (in shares)			792,006
Number Of Options
Outstanding at the beginning of the period (in shares)			1,190,500
Granted (in shares)			1,030,000
Exercised (in shares)			(135,000)
Forfeited (in shares)			(155,000)
Outstanding at the end of the period (in shares)			1,930,500	1,190,500
Vested or expected to vest at the end of the period (in shares)			1,930,500
Exercisable and vested at the end of the period (in shares)			1,235,500
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares			$ 1.049
Granted (in dollars per share) | $ / shares			0.081
Exercised (in dollars per share) | $ / shares			1.100
Forfeited (in dollars per share) | $ / shares			1.015
Outstanding at the end of the period (in dollars per share) | $ / shares			0.661	$ 1.049
Vested or expected to vest at the end of the period (in dollars per share) | $ / shares			0.661
Exercisable and vested at the end of the period (in dollars per share) | $ / shares			$ 0.767
Aggregate Intrinsic Value
Outstanding at the end of the period | $			$ 102,503	$ 21,600
Vested or expected to vest at the end of the period | $			102,503
Exercisable and vested at the end of the period | $			$ 34,568
Weighted Average Remaining Contractual Life
Outstanding at the end of the period			7 years 10 months 6 days	5 years 2 months 5 days
Vested or expected to vest at the end of the period			7 years 10 months 6 days
Exercisable and vested at the end of the period			6 years 6 months 7 days
Additional information on stock options
Unrecognized compensation cost related to stock options | $			$ 40,646
Period of recognition of unrecognized compensation expense			2 years
Fair value of shares vested | $			$ 67,183
Stock options outstanding but not vested, Number of Options
Outstanding at the beginning of the period (in shares)			112,500
Granted (in shares)			1,030,000
Forfeited (in shares)			(40,000)
Vested (in shares)			(407,500)
Outstanding at the end of the period (in shares)			695,000	112,500
Stock options outstanding but not vested, Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares			$ 0.664
Granted (in dollars per share) | $ / shares			0.081
Forfeited (in dollars per share) | $ / shares			0.670
Vested (in dollars per share) | $ / shares			0.165
Outstanding at the end of the period (in dollars per share) | $ / shares			$ 0.092	$ 0.664
Director
Share based compensation
Terms of options			5 years
Options granted (in shares)			50,000
Annual grants to Directors on third anniversary of initial election (in shares)			10,000
Number Of Options
Granted (in shares)			50,000
Stock options outstanding but not vested, Number of Options
Granted (in shares)			50,000
Director | Minimum
Share based compensation
Number of directors on a committee to administer the plan | item			2
Chief Executive Officer
Share based compensation
Options granted (in shares)	1,000,000
Exercise price of shares granted (in dollars per share) | $ / shares	$ 0.08
Percentage of awards granted vesting	33.30%
Number Of Options
Granted (in shares)	1,000,000
Weighted Average Exercise Price
Granted (in dollars per share) | $ / shares	$ 0.08
Stock options outstanding but not vested, Number of Options
Granted (in shares)	1,000,000
Stock options outstanding but not vested, Weighted Average Exercise Price
Granted (in dollars per share) | $ / shares	$ 0.08
Chief Executive Officer | Awards vesting in one year
Share based compensation
Percentage of awards granted vesting	33.30%
Vesting period	1 year
Chief Executive Officer | Awards vesting in two years
Share based compensation
Percentage of awards granted vesting	33.30%
Vesting period	2 years
Members of board
Share based compensation
Options granted (in shares)		30,000
Exercise price of shares granted (in dollars per share) | $ / shares		$ 0.10
Number Of Options
Granted (in shares)		30,000
Weighted Average Exercise Price
Granted (in dollars per share) | $ / shares		$ 0.10
Stock options outstanding but not vested, Number of Options
Granted (in shares)		30,000
Stock options outstanding but not vested, Weighted Average Exercise Price
Granted (in dollars per share) | $ / shares		$ 0.10
Members of board | Awards vesting in six months
Share based compensation
Percentage of awards granted vesting		50.00%
Vesting period		6 months
Members of board | Awards vesting in eighteen months
Share based compensation
Percentage of awards granted vesting		50.00%
Vesting period		18 months

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Mar. 31, 2015 USD ($)
Concentration of credit risk and major customers
Accounts receivable	$ 766,564		$ 766,564		$ 826,363
Net sales	3,506,560	$ 3,510,842	$ 11,985,422	$ 14,311,895	18,233,214
Accounts Receivable | Customer Concentration Risk
Concentration of credit risk and major customers
Number of major customers | item			4
Concentration risk percentage			83.00%
Accounts Receivable | Customer Concentration Risk | Customer A
Concentration of credit risk and major customers
Accounts receivable	261,172		$ 261,172
Concentration risk percentage			34.00%
Accounts Receivable | Customer Concentration Risk | Customer B
Concentration of credit risk and major customers
Accounts receivable	149,688		$ 149,688		$ 296,815
Concentration risk percentage			20.00%		36.00%
Accounts Receivable | Customer Concentration Risk | Customer C
Concentration of credit risk and major customers
Accounts receivable	123,920		$ 123,920
Concentration risk percentage			16.00%
Accounts Receivable | Customer Concentration Risk | Customer D
Concentration of credit risk and major customers
Accounts receivable	99,110		$ 99,110
Concentration risk percentage			13.00%
Accounts Receivable | Customer Concentration Risk | Customer E
Concentration of credit risk and major customers
Accounts receivable					$ 128,738
Concentration risk percentage					16.00%
Accounts Receivable | Customer Concentration Risk | Customer F
Concentration of credit risk and major customers
Accounts receivable					$ 123,604
Concentration risk percentage					15.00%
Net sales | Customer Concentration Risk | Customer A
Concentration of credit risk and major customers
Net sales	$ 1,568,714	$ 475,317	$ 3,057,140
Concentration risk percentage	45.00%	14.00%	26.00%
Net sales | Customer Concentration Risk | Customer B
Concentration of credit risk and major customers
Net sales			$ 1,971,139	$ 3,107,520
Concentration risk percentage			16.00%	22.00%
Net sales | Customer Concentration Risk | Customer C
Concentration of credit risk and major customers
Net sales			$ 1,459,013
Concentration risk percentage			12.00%
Net sales | Customer Concentration Risk | Customer D
Concentration of credit risk and major customers
Net sales		$ 406,089	$ 1,192,848
Concentration risk percentage		12.00%	10.00%
Net sales | Customer Concentration Risk | Customer E
Concentration of credit risk and major customers
Net sales		$ 1,394,999		$ 2,399,074
Concentration risk percentage		40.00%		16.00%
Net sales | Customer Concentration Risk | Customer F
Concentration of credit risk and major customers
Net sales				$ 1,762,985
Concentration risk percentage				12.00%
Net sales | Customer Concentration Risk | Customer G
Concentration of credit risk and major customers
Net sales	$ 594,534
Concentration risk percentage	17.00%
Net sales | Customer Concentration Risk | Customer H
Concentration of credit risk and major customers
Net sales	$ 354,469
Concentration risk percentage	10.00%
Net sales | Customer Concentration Risk | Customer I
Concentration of credit risk and major customers
Net sales		$ 676,729
Concentration risk percentage		19.00%

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SEGMENT INFORMATION (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Mar. 31, 2015 USD ($)
SEGMENT INFORMATION
Number of operating segments | item			1
SEGMENT INFORMATION
Net Sales	$ 3,506,560	$ 3,510,842	$ 11,985,422	$ 14,311,895	$ 18,233,214
Property, Plant and Equipment, Net	5,217,048		5,217,048		5,610,041
United States
SEGMENT INFORMATION
Net Sales	3,506,560	3,202,086	11,985,422	13,517,788
Property, Plant and Equipment, Net	$ 5,217,048		$ 5,217,048		5,609,973
China
SEGMENT INFORMATION
Net Sales		$ 308,756		$ 794,107
Property, Plant and Equipment, Net					$ 68

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COMMITMENTS (Details)	Jun. 01, 2015 USD ($) ft²	Dec. 31, 2015 USD ($)	Jun. 04, 2015 USD ($)
Employment agreements
Aggregate annual commitment for future executive salaries during the next fiscal year		$ 700,000
Aggregate commitment for vacation and holiday pay for non-executive employees		$ 200,000
New Lease | GPX Wayne
Commitments
Area of land leased (in square feet) | ft²	1,100
Monthly base rent	$ 1,838
Lease termination agreement | CLA
Commitments
Security Deposit			$ 2,400

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EARNINGS PER SHARE (EPS) (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2015
Basic EPS
Net income (loss)	$ 12,003	$ (945,718)	$ 472,960	$ (2,865,557)	$ (3,600,000)
Weighted average number of shares outstanding	27,324,593	24,669,958	26,084,080	24,447,736
Basic Income (Loss) per share (in dollars per share)	$ 0.00	$ (0.04)	$ 0.02	$ (0.12)
Diluted EPS
Net income (loss)	$ 12,003	$ (945,718)	$ 472,960	$ (2,865,557)	$ (3,600,000)
Dilutive effect of stock options, warrants and preferred stock	185,387		126,126
Diluted weighted average shares	27,509,980	24,669,958	26,210,206	24,447,736
Diluted Income (Loss) per share (in dollars per share)	$ 0.00	$ (0.04)	$ 0.02	$ (0.12)
Antidilutive securities excluded from computation of earnings per share amount (in shares)	900,500	3,288,008	900,500	2,277,951

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SUBSEQUENT EVENTS (Details) - TLSA - USD ($)	Jan. 22, 2016	Dec. 31, 2015
Subsequent events
Interest rate (as a percent)		12.00%
Subsequent event | Second Modification Agreement
Subsequent events
Periodic payment of principal and accured interest	$ 9,375
Interest rate (as a percent)	10.00%