10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

¨ 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	(I.R.S. Employer
incorporation or organization)	Identification No.)

1 Bella Drive
Westminster, MA	01473
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	(978) 874-0591

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

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.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x Yes ¨ No

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.       ¨

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

¨ Yes x No

The number of shares outstanding of the registrant’s common stock as of February 8, 2021 was 29,498,662.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME	4
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	5
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	22
ITEM 4.	CONTROLS AND PROCEDURES	22
PART II.	OTHER INFORMATION	23
ITEM 6.	EXHIBITS	25
	SIGNATURES	25

2 

PART I

ITEM 1. FINANCIAL STATEMENTS

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	December 31, 2020		March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,255,320	$	930,856
Accounts receivable, net		1,173,376		990,300
Contract assets		5,314,653		4,504,621
Raw materials		503,636		561,572
Work-in-process		694,848		656,041
Other current assets		442,024		606,151
Total current assets		9,383,857		8,249,541
Property, plant and equipment, net		4,208,329		4,182,861
Deferred income taxes		2,016,816		2,115,480
Other noncurrent assets, net		16,086		32,600
Total assets	$	15,625,088	$	14,580,482
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	510,434	$	185,065
Accrued expenses		1,306,109		1,554,524
Contract liabilities		308,358		805,049
Current portion of long-term debt		3,088,553		109,829
Total current liabilities		5,213,454		2,654,467
Long-term debt		717,559		2,456,560
Commitments and contingent liabilities (Note 13)
Stockholders’ Equity:
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 29,498,662 and 29,354,594 shares issued and outstanding, at December 31, 2020 and March 31, 2020		2,949		2,935
Additional paid in capital		8,911,160		8,793,062
Accumulated other comprehensive income		21,838		21,688
Retained earnings		758,128		651,770
Total stockholders’ equity		9,694,075		9,469,455
Total liabilities and stockholders’ equity	$	15,625,088	$	14,580,482

See accompanying notes to the condensed consolidated financial statements.

3 

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2020			2019			2020			2019
Net sales	$	3,569,718		$	3,667,276		$	11,566,176		$	11,075,620
Cost of sales		2,864,274			3,352,962			9,034,858			9,238,287
Gross profit		705,444			314,314			2,531,318			1,837,333
Selling, general and administrative		716,361			662,675			2,205,739			2,145,055
(Loss) income from operations		(10,917	)		(348,361	)		325,579			(307,722	)
Other (expense) income		(219	)		185			1,237			21,063
Interest expense		(50,405	)		(69,328	)		(159,885	)		(218,447	)
Total other expense, net		(50,624	)		(69,143	)		(158,648	)		(197,384	)
(Loss) income before income taxes		(61,541	)		(417,504	)		166,931			(505,106	)
Income tax (benefit) expense		(13,369	)		(97,734	)		60,573			(115,092	)
Net (loss) income	$	(48,172	)	$	(319,770	)	$	106,358		$	(390,014	)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	$	1,252		$	9		$	151		$	(329	)
Other comprehensive income (loss), net of tax	$	1,252		$	9		$	151		$	(329	)
Comprehensive (loss) income	$	(46,920	)	$	(319,761	)	$	106,509		$	(390,343	)
Net (loss) income per share basic	$	(0.00	)	$	(0.01	)	$	0.00		$	(0.01	)
Net (loss) income per share diluted	$	(0.00	)	$	(0.01	)	$	0.00		$	(0.01	)
Weighted average number of shares outstanding: Basic		29,498,662			29,254,594			29,430,206			29,254,230
Diluted		29,498,662			29,254,594			31,021,384			29,254,230

See accompanying notes to the condensed consolidated financial statements.

4 

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

	Common Stock Outstanding		Par Value		Additional Paid in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Total Stockholders’ Equity
Balance 3/31/2019		29,234,594	$	2,923	$	8,693,106		$	21,940		$	993,339		$	9,711,308
Stock-based compensation						30,625									30,625
Shares issued under LTIP		20,000		2		7,198									7,200
Net income												220,777			220,777
Currency translation adjustment									(179	)					(179	)
Balance 6/30/2019		29,254,594	$	2,925	$	8,730,929		$	21,761		$	1,214,116		$	9,969,731
Stock-based compensation						30,625									30,625
Net loss												(291,021	)		(291,021	)
Currency translation adjustment									(159	)					(159	)
Balance 9/30/2019		29,254,594	$	2,925	$	8,761,554		$	21,602		$	923,095		$	9,709,176
Stock-based compensation						20,417									20,417
Net loss												(319,770	)		(319,770	)
Currency translation adjustment									9						9
Balance 12/31/2019		29,254,594	$	2,925	$	8,781,971		$	21,611		$	603,325		$	9,409,832
Balance 3/31/2020		29,354,594	$	2,935	$	8,793,062		$	21,688		$	651,770		$	9,469,455
Stock-based compensation						55,500									55,500
Shares issued under LTIP		44,068		4		(4	)								--
Net loss												(116,234	)		(116,234	)
Currency translation adjustment									(97	)					(97	)
Balance 6/30/2020		29,398,662	$	2,939	$	8,848,558		$	21,591		$	535,536		$	9,408,624
Stock-based compensation						57,417									57,417
Restricted stock award		100,000		10		133,990									134,000
Non-vested restricted stock						(134,000	)								(134,000	)
Net income												270,764			270,764
Currency translation adjustment									(1,005	)					(1,005	)
Balance 9/30/2020		29,498,662	$	2,949	$	8,905,965		$	20,586		$	806,300		$	9,735,800
Stock-based compensation						33,500									33,500
Taxes on exercised options						(28,305	)								(28,305	)
Net loss												(48,172	)		(48,172	)
Currency translation adjustment									1,252						1,252
Balance 12/31/2020		29,498,662	$	2,949	$	8,911,160		$	21,838		$	758,128		$	9,694,075

See accompanying notes to the condensed consolidated financial statements.

5 

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Nine Months Ended December 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	106,358		$	(390,014	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation		521,422			548,038
Amortization of debt issue costs		45,099			31,280
Stock based compensation expense		146,417			81,667
Change in contract loss provision		(175,365	)		216,039
Deferred income taxes		60,573			(115,092	)
Changes in operating assets and liabilities:
Accounts receivable		(183,076	)		257,459
Contract assets		(810,032	)		(271,767	)
Inventories		19,129			589,904
Other current assets		164,127			(296,328	)
Other noncurrent assets		38,092			(9,419	)
Accounts payable		325,369			(138,463	)
Accrued expenses		(101,028	)		18,282
Contract liabilities		(496,691	)		87,815
Net cash (used in) provided by operating activities		(339,606	)		609,401
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(546,890	)		(35,225	)
Net cash used in investing activities		(546,890	)		(35,225	)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt issue costs		(24,610	)		(32,209	)
Proceeds from payroll protection program loan		1,317,100			--
Proceeds from revolver loan		1,000,000			--
Repayment of revolver loan		(1,000,000	)		--
Repayment of long-term debt		(81,352	)		(610,515	)
Net cash provided by (used in) financing activities		1,211,138			(642,724	)
Effect of exchange rate on cash and cash equivalents		(178	)		307
Net increase (decrease) in cash and cash equivalents		324,464			(68,241	)
Cash and cash equivalents, beginning of period		930,856			2,036,646
Cash and cash equivalents, end of period	$	1,255,320		$	1,968,405
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest (net of amounts capitalized)	$	106,342		$	187,085
Income taxes	$	--		$	--

See accompanying notes to the condensed consolidated financial statements.

SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:

Nine months ended December 31, 2020

On June 16, 2020, our executive officers exercised options to purchase 150,000 shares of the Company’s common stock, par value $0.0001 per share, in a cashless transaction, pursuant to option awards granted under the Company’s 2016 Long-Term Incentive Plan.

6 

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. The name was changed to TechPrecision Corporation on March 6, 2006. TechPrecision is the parent company of Ranor, Inc., or Ranor, a Delaware corporation, Stadco New Acquisition, LLC, and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise. WCMC has no customers or operations, and we have initiated a plan of termination to legally dissolve this subsidiary. 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 defense and aerospace, nuclear, medical, and precision industrial. We consider our business to consist of one segment - metal fabrication and precision machining. All of our operations and customers are located in the United States.

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2020 and March 31, 2020, the condensed consolidated statements of operations and comprehensive (loss) income and stockholders’ equity for the three and nine months ended December 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2020 and 2019 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.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and 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 the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, or the 2020 Form 10-K, filed with the SEC on June 11, 2020.

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, the recovery of long-lived assets, income taxes and the valuation of equity transactions. We base our estimates on historical and current experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

The COVID-19 pandemic has negatively affected certain customers, suppliers and their labor force. For example, travel restrictions in connection with the pandemic have delayed inspections, deliveries and impacted some supply chain providers. The future financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as its impact depends on future developments, which are highly uncertain and cannot be predicted.

The directives imposed by federal, state and local governments as a result of the COVID-19 pandemic did not impair our ability to maintain operations during the first nine months of fiscal 2021 as the Company was designated an essential service. Our estimates at the end of the first nine months of fiscal 2021 assumed no material impact from the disruptions caused by COVID-19.

NOTE 3 – ACCOUNTING STANDARDS UPDATE

New Accounting Standards Recently Adopted

On April 1, 2020 we adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.  This ASU modifies the disclosure requirements in Topic 820 by removing, modifying or adding certain disclosures.  The amendments for changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are applied prospectively.  All other amendments are applied retrospectively to all periods presented upon their effective date.  The adoption did not have a significant impact on our consolidated financial statement disclosures.

7 

Issued Standards Not Yet Adopted

In December, 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, expected to reduce cost and complexity related to the accounting for income taxes. This ASU removes specific exceptions to the general principles in Topic 740 under U.S. GAAP and removes the limitation on the tax benefit recognized on pre-tax losses in interim periods. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company plans to adopt the standard on April 1, 2021, and is currently evaluating the amendments in this update to determine the impact it may have on its financial statements and disclosures.

NOTE 4 - REVENUE

The Company generates its revenues primarily from performance obligations completed under contracts with customers in two main market sectors: defense and precision industrial. The period over which the Company performs its obligations can range from three to thirty-six months. The Company invoices and receives related payments based upon performance progress not less frequently than monthly.

Revenue is recognized over-time or at a point-in-time given the terms and conditions of the related contracts. The Company utilizes an inputs methodology based on estimated labor hours to measure performance progress. This model best depicts the transfer of control to the customer.

The Company’s contract portfolio is comprised of fixed-price contracts and provides for product type sales only. The following table presents net sales on a disaggregated basis by market and contract type:

Net Sales by market	Defense		Industrial		Totals
Three months ended December 31, 2020	$	2,885,753	$	683,965	$	3,569,718
Three months ended December 31, 2019	$	3,200,671	$	466,605	$	3,667,276
Nine months ended December 31, 2020	$	9,314,846	$	2,251,330	$	11,566,176
Nine months ended December 31, 2019	$	9,725,635	$	1,349,985	$	11,075,620
Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2020	$	3,141,416	$	428,302	$	3,569,718
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Nine months ended December 31, 2020	$	9,251,284	$	2,314,892	$	11,566,176
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620

As of December 31, 2020, the Company had $18.4 million of remaining performance obligations, of which $13.0 million were less than 50% complete. The Company expects to recognize all of its remaining performance obligations as revenue over-time or at a point-in-time during the next thirty-six months.

We have been dependent in each year on a small number of customers who generate a significant portion of our business, and these customers can change from year to year. The following table presents customers who accounted for 10% or more of our net sales for the following periods:

	Three months ended December 31, 2020					Three months ended December 31, 2019					Nine months ended December 31, 2020					Nine months ended December 31, 2019
Customer	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
A	$	398,011		11	%	$	404,062		11	%	$	2,106,998		18	%	$	1,790,311		16	%
B	$	530,583		15	%	$	*		*	%	$	1,871,256		16	%	$	*		*	%
C	$	609,114		17	%	$	1,215,737		33	%	$	1,679,814		15	%	$	2,320,485		21	%
D	$	682,337		19	%	$	727,084		20	%	$	1,631,010		14	%	$	1,825,213		16	%
E	$	550,096		15	%	$	*		*	%	$	*		*	%	$	*		*	%
F	$	*		*	%	$	*		*	%	$	*		*	%	$	1,136,146		10	%
G	$	*		*	%	$	*		*	%	$	*		*	%	$	1,148,242		10	%

*Less than 10% of total

8 

On our condensed consolidated balance sheet, contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In fiscal 2021, we recognized revenue of $0.8 million related to our contract liabilities at March 31, 2020. At December 31, 2020 contract assets consisted of the following:

Contract assets	Unbilled		Less:Progress  payments		Total
December 31, 2020	$	10,074,902	$	4,760,249	$	5,314,653
March 31, 2020	$	10,635,588	$	6,130,967	$	4,504,621

NOTE 5 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items. The income tax provision for the nine months ended December 31, 2020 was $60,573, the income tax benefit for the nine months ended December 31, 2019 was $115,092. The Company's estimated effective tax rate for the nine months ended December 31, 2020 was 36.3%.

The valuation allowance on deferred tax assets was approximately $1.7 million at December 31, 2020. We believe that it is more likely than not that the benefit from certain state and foreign net operating losses, or NOL, carryforwards and other deferred tax assets will not be realized. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

NOTE 6 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing reported earnings available to stockholders by the weighted average number of shares outstanding. Diluted earnings per share includes the effect of stock options that would be dilutive. 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, 2020			Three months ended December 31, 2019			Nine months ended December 31, 2020		Nine months ended December 31, 2019
Basic EPS:
Net (loss) income	$	(48,172	)	$	(319,770	)	$	106,358	$	(390,014	)
Weighted average shares		29,498,662			29,254,594			29,430,206		29,254,230
Basic (loss) income per share	$	(0.00	)	$	(0.01	)	$	0.00	$	(0.01	)
Diluted EPS:
Net (loss) income	$	(48,172	)	$	(319,770	)	$	106,358	$	(390,014	)
Dilutive effect of stock options		--			--			1,591,178		--
Diluted weighted average shares		29,498,662			29,254,594			31,021,384		29,254,230
Diluted (loss) income per share	$	(0.00	)	$	(0.01	)	$	0.00	$	(0.01	)

All potential common stock 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 earnings per share. For the three months ended December 31, 2020 there were 2,814,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above. For the nine months ended December 31, 2020, there were 94,000 of common stock equivalents that were out-of-the-money and not included in the above earnings per share calculations. For the three and nine months ended December 31, 2019, there were 2,967,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above.

NOTE 7 - STOCK-BASED COMPENSATION

Our board of directors approved the 2016 TechPrecision Equity Incentive Plan, or the 2016 Plan, on November 10, 2016. Our stockholders approved the 2016 Plan at the Company’s Annual Meeting of Stockholders on December 8, 2016. The 2016 Plan succeeds the 2006 Plan and applies to awards granted after the 2016 Plan’s adoption by the Company’s stockholders. The 2016 Plan provides for a share reserve of 5,000,000 shares of common stock.

The 2016 Plan authorizes the award of incentive and non-qualified stock options, restricted stock awards, restricted stock units, and performance awards to employees, directors, consultants, and other individuals who provide services to TechPrecision or its affiliates.

9 

At December 31, 2020 there were 1,376,000 shares available for grant under the 2016 Plan. The following table summarizes information about stock option activity:

	Number Of			Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options			Exercise Price		Value		(in years)
Outstanding at 3/31/2019		2,938,000		$	0.416	$	1,869,200		6.74
Exercised		(20,000	)		0.360
Canceled		(2,000	)
Outstanding at 3/31/2020		2,916,000		$	0.415	$	2,546,800		6.21
Canceled		(2,000	)
Exercised		(150,000	)		0.800
Outstanding at 12/31/2020		2,764,000		$	0.393	$	2,743,300		5.81
Vested or expected to vest at 12/31/2020		2,764,000		$	0.393	$	2,743,300		5.81
Exercisable and vested at 12/31/2020		2,764,000		$	0.393	$	2,743,300		5.81

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on the last trading day of the third quarter of fiscal 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2020. This amount changes based on the fair market value of the Company’s common stock.

At December 31, 2020, there was no remaining unrecognized compensation cost related to stock options. The maximum contractual term is ten years for option grants. Other information relating to stock options outstanding at December 31, 2020 is as follows:

Range of Exercise Prices:	Options Outstanding		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$0.01-$1.00		2,670,000		5.87	$	0.34		2,670,000	$	0.34
$1.01-$1.96		94,000		0.26	$	1.84		94,000	$	1.84
Totals		2,764,000						2,764,000

Restricted Stock Awards

On September 1, 2020 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors. The stock-based compensation expense of $134,000 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. The shares of restricted stock fully vest and cease to be subject to forfeiture on August 31, 2021, or twelve months following the grant date. Each grantee must be serving as a director on the vesting date and must have been continuously serving in such capacity from the grant date through the vesting date for the shares of restricted stock to vest. Prior to the vesting date, the grantee is not permitted to sell, transfer, pledge, assign or otherwise encumber the shares of restricted stock and if the grantee’s service with the Company terminates prior to the vesting date, the grantee’s restricted stock will be forfeited automatically. Total recognized compensation cost related to the restricted stock award was $44,667 for the nine months ended December 31, 2020. At December 31, 2020 there was $89,333 of unrecognized compensation cost related to these restricted stock awards.

On March 16, 2020 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors. The stock-based compensation expense of $111,000 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. The shares of restricted stock fully vested and ceased to be subject to forfeiture on September 1, 2020, or approximately six months following the grant date. Each grantee must have been serving as a director on the vesting date and must have been continuously serving in such capacity from the grant date through the vesting date for the shares of restricted stock to vest. Prior to the vesting date, the grantee was not permitted to sell, transfer, pledge, assign or otherwise encumber the shares of restricted stock and if the grantee’s service with the Company had terminated prior to the vesting date, the grantee’s restricted stock would have been forfeited automatically. Total recognized compensation cost related to the restricted stock award was $101,750 for the nine months ended December 31, 2020. There was no unrecognized compensation cost related to these restricted stock awards at December 31, 2020.

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NOTE 8 - CONCENTRATION OF CREDIT RISK

We maintain bank account balances, which, at times, may exceed 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, 2020, there were trade accounts receivable balances outstanding from five customers comprising 93% of the total trade receivables balance. The following table sets forth information as to trade accounts receivable from customers who accounted for more than 10% of the total balance at:

	December 31, 2020					March 31, 2020
Customer	Dollars		Percent			Dollars		Percent
A	$	356,228		30	%	$	*	*
B	$	243,938		21	%	$	*	*
C	$	193,750		17	%	$	*	*
D	$	*		*		$	365,636	37	%
E	$	167,152		14	%	$	254,637	26	%
F	$	*		*		$	123,000	12	%
G	$	123,909		11	%	$	*	*

 *less than 10% of total

NOTE 9 - OTHER CURRENT ASSETS

	December 31, 2020		March 31, 2020
Payments advanced to suppliers	$	31,268	$	272,070
Prepaid insurance		358,029		250,073
Prepaid subscriptions		22,057		14,440
Refundable AMT credits		22,748		22,748
Employee advances		--		18,173
Other		7,922		28,647
Total	$	442,024	$	606,151

NOTE 10 - ACCRUED EXPENSES

	December 31, 2020		March 31, 2020
Provision for claims settlement	$	495,000	$	495,000
Accrued compensation		316,490		383,555
Provision for contract losses		110,115		285,480
Accrued professional fees		244,703		279,657
Accrued project costs		109,062		76,059
Other		30,739		34,773
Total	$	1,306,109	$	1,554,524

Accrued compensation includes amounts for executive bonuses, payroll and vacation and holiday pay. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in the provision are recorded in cost of sales. Accrued project costs are estimates for certain project expenses during the reporting period.

NOTE 11 - DEBT

Total debt included the following as of:	December 31, 2020		March 31, 2020
Berkshire Term Loan at 5.21% interest, due December 2021	$	2,491,835	$	2,564,389
Berkshire SBA PPP loan at 1% interest, due May 2022		1,317,100		--
Finance lease obligations at 8% interest, due January 2022		13,662		22,460
Total debt	$	3,822,597	$	2,586,849
Less: debt issue costs unamortized	$	16,485	$	20,460
Total debt, net	$	3,806,112	$	2,566,389
Less: Current portion of long-term debt	$	3,088,553	$	109,829
Total long-term debt, net	$	717,559	$	2,456,560

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Small Business Administration Loan

On May 8, 2020, the Company, through its wholly owned subsidiary Ranor, issued a promissory note, or the Note, evidencing an unsecured loan in the amount of $1,317,100 made to Ranor under the Paycheck Protection Program, or the PPP. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and is administered by the U.S. Small Business Administration, or the SBA. The loan to Ranor was made through Berkshire Bank.

Principal and accrued interest are payable monthly in equal installments commencing at a future date in calendar year 2021 and continuing through the maturity date, unless the Note is forgiven as described below. To be available for loan forgiveness, the Note may only be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligations that existed before February 15, 2020. The Note may be prepaid at any time prior to maturity with no prepayment penalties and contains events of default and other conditions customary for a Note of this type. For example, the Note contains events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or Berkshire Bank, or breaching the terms of the loan documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or the SBA or Berkshire Bank filing suit and obtaining judgment against the Company and/or Ranor.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs, certain group health care benefits and insurance premiums, and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part.

On June 5, 2020, the PPP was amended to give borrowers more time to spend loan proceeds and still obtain loan forgiveness. The amendments extended the length of the covered period as defined in the CARES Act from eight to twenty-four weeks, while allowing borrowers that received PPP loans before June 5, 2020 to elect to use the original eight-week covered period. In addition, the amendments provide that if the borrower does not apply for forgiveness of a loan within ten months after the last day of the covered period, the PPP loan is no longer deferred and the borrower must begin paying principal and interest. As provided under the amendments, our first payment, if required, would not be due until September 11, 2021.

Berkshire Term Loan Facility

On December 21, 2016, TechPrecision, through Ranor, closed on a Loan Agreement, or the Berkshire Loan Agreement, with Berkshire Bank. Pursuant to the Berkshire Loan Agreement, Berkshire Bank made a term loan to Ranor in the amount of $2,850,000, or the Term Loan, and made available to Ranor a revolving line of credit of $1,000,000 under the Revolver Loan, or together, the Berkshire Loans. The Berkshire Loans are secured by a first lien on all personal and real property of Ranor.

On December 23, 2019, TechPrecision, through Ranor, entered into a Third Modification to Loan Agreement, or the Third Modification, and an Amended and Restated Promissory Note with Berkshire Bank. Under the Third Modification, Ranor and Berkshire agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000. Advances under the Revolver Loan are now subject to the lesser of (a) $3,000,000 or (b) the sum of (i) 80% of eligible accounts receivable, plus (ii) the lesser of (x) 25% of Eligible Raw Material Inventory, and (y) $250,000, plus (iii) 50% of the Appraised Value of the Eligible Equipment. The loan agreement is available for refinancing existing indebtedness and for working capital and general corporate purposes. Additionally, the parties agreed to lower the interest rate on advances made under the Revolver Loan at a variable rate equal to the one-month LIBOR plus 225 basis points.  The Third Modification contains customary LIBOR replacement provisions.

On December 18, 2020, TechPrecision, through Ranor, entered into a Fourth Modification to Loan Agreement and First Modification and Allonge to Amended and Restated Promissory Note, or the Fourth Modification, with Berkshire Bank. The Modification amends and modifies the Berkshire Loan Agreement. The Fourth Modification also amends the Amended and Restated Promissory Note dated December 23, 2019 made by Ranor in favor of Berkshire in the stated principal amount of $3,000,000. As of the date of the Fourth Modification, there was approximately $2.5 million in remaining principal outstanding under the Term Loan and no amounts outstanding under the Revolver Loan.

Under the Fourth Modification, Ranor and Berkshire agreed to revise the minimum interest rate payable on the Revolver Loan. Under the promissory note for the Revolver Loan, the Company can elect to pay interest at an adjusted LIBOR-based rate or an Adjusted Prime Rate. Under the Fourth Modification, the minimum adjusted LIBOR-based rate is 2.75% and the Adjusted Prime Rate is the greater of (i) the Prime Rate minus 70 basis points or (ii) 2.75%. Interest-only payments on advances made under the Revolver Loan will continue to be payable monthly in arrears. The maturity date of the Revolver Loan was also extended to December 20, 2022. All other material terms of the Berkshire Loan Agreement and the promissory note for the Revolver Loan were unchanged.

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The Company borrowed $1.0 million under the Revolver Loan on April 3, 2020 and repaid principal of $1.0 million on June 30, 2020. There were no borrowed amounts outstanding under the Revolver Loan at December 31, 2020 and March 31, 2020. Interest payments on advances made under the Revolver Loan during the nine months ended December 31, 2020 were $6,664 at a weighted average interest rate of 2.67%. Unused borrowing capacity at December 31, 2020 was $3.0 million.

The Berkshire Loan Agreement contains a covenant whereby the Company is required to maintain a debt service coverage ratio, or DSCR, of at least 1.2 to 1.0 during the term of the Berkshire Loans.  The DSCR is measured at the end of each fiscal quarter of the Company.  The Company was in compliance with all of the financial covenants at December 31, 2020 and March 31, 2020.

The Berkshire Loan Agreement also contains covenants to cause its balance sheet leverage to be less than or equal to 2.50 to 1.00 for each fiscal year end, and require Ranor to maintain a loan-to-value ratio of not greater than 0.75 to 1.00, to be measured by appraisal not more frequently than one time during each 365-day period.

Finance Lease

See Note 12 for information regarding our obligations under the finance lease.

Fair Value Measurements

We account for fair value measurements in accordance with ASC Topic 820, Fair Value Measurement, which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value. The carrying value of short and long-term borrowings approximates their fair value at December 31, 2020 and March 31, 2020. The fair value of the long-term debt was calculated based on interest rates available for debt with terms and maturities similar to the Company's existing debt arrangements. The Company’s short-term and long-term debt with Berkshire bank is privately held with no public market for the debt and is considered to be Level 3 under the fair value hierarchy.

NOTE 12 – LEASES

Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased, or right-of-use assets in finance lease arrangements are reported in net property, plant and equipment on our condensed consolidated balance sheet. Right-of-use assets and liabilities on our condensed consolidated balance sheet at December 31, 2020 were:

Finance lease:	December 31, 2020
Property, plant and equipment	$	54,376
Accumulated depreciation		43,501
Net property, plant and equipment	$	10,875
Current portion of long-term debt	$	12,569
Long-term debt	$	1,093
Total finance lease liabilities	$	13,662

In December 2019, we signed a one-year operating lease for office space which expired in December 2020 and was amortized on a straight line basis. Since the expiration of the term of the lease, we have continued to lease this office space on a month-to-month basis. Other supplemental information regarding our leases are contained in the following tables:

Components of lease expense for the period ended:	December 31, 2020
Operating lease amortization	$	2,878
Finance lease amortization	$	8,156
Finance lease interest	$	1,102

Weighted average lease term and discount rate at:	December 31, 2020
Finance lease term (years)		1.25
Finance lease rate		8	%

Supplemental cash flow information related to leases for the period ended:	December 31, 2020
Cash used in operating activities	$	2,878
Cash used in financing activities	$	8,798

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NOTE 13 - COMMITMENTS

Retirement Benefits

Ranor has a defined contribution and savings plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. The Company contributed $21,897 and $64,167 for the three and nine months ended December 31, 2020.

Provision for claims settlement

On March 16, 2020, the Company reached an agreement to settle all outstanding claims for $495,000 related to a civil action brought by former employees for past wages claimed under a paid time-off program. The claim is to be paid within sixty days following Court approval of the settlement. Such approval has not yet occurred.

NOTE 14 – SUBSEQUENT EVENTS

Securities Purchase Agreement

On October 16, 2020, the Company entered into a stock purchase agreement, or the SPA, with Stadco New Acquisition, LLC, a wholly owned subsidiary of the Company, or the Acquisition Sub, Stadco, Stadco Acquisition, LLC, or the Target, and each stockholder of Target. The SPA provides for the Company, through Acquisition Sub, to acquire all of the issued and outstanding capital stock of Stadco from Target. Stadco, the operating subsidiary of Target, is a California corporation in the business of manufacturing high-precision parts, assemblies and tooling for aerospace, defense, research and commercial customers. As consideration for the acquisition of all of Target’s common stock, the Company, on behalf of Acquisition Sub, will issue 1,000,000 shares of the Company’s common stock to Target. The Company, Stadco and Target are also working, through negotiation with creditors of Stadco and Target, to substantially reduce the approximately $14 million of Stadco liabilities that would otherwise be added to the consolidated balance of the combined company after closing of the acquisition. Reaching agreements with these creditors to the satisfaction of the Company is required for the closing of the deal to occur. The Company expects that a percentage of these liabilities will be satisfied in part or full through the issuance of additional shares of the Company’s common stock.

The SPA contains customary representations and warranties of Stadco, Target, the Company and Acquisition Sub, and Stadco and Target have agreed to customary covenants relating to the conduct of their business during the interim period between the execution of the SPA and the closing of the acquisition. The consummation of the acquisition and the related transactions contemplated by the SPA is subject to certain customary conditions.

On February 2, 2021, the Company entered into an amendment effective as of December 15, 2020, to the previously disclosed stock purchase agreement providing for the Acquisition with Acquisition Sub, Stadco, Target and each stockholder of Target. Under the terms of SPA, if the Acquisition was not closed by December 31, 2020, either the Company or Stadco could have terminated the SPA. The Amendment effected a change to this provision by extending until February 28, 2021 the date after which the parties may terminate if the Acquisition has not closed. The Amendment also effected certain other minor changes to the SPA.

Loan Purchase and Sale Agreement

On January 29, 2021, in connection with securities purchase agreement described above, Acquisition Sub entered into a Loan Purchase and Sale Agreement, effective January 26, 2021, with Sunflower Bank, N.A., and agreed to by Stadco, Target, and Stadco Mexico, Inc.  Under the terms of the Loan Purchase Agreement, Acquisition Sub agreed to purchase certain indebtedness obligations of Stadco consisting of long-term indebtedness and revolving credit line indebtedness owed to Sunflower Bank. The current amount outstanding under these indebtedness obligations is approximately $9.8 million. In exchange, Acquisition Sub agreed to pay $2 million less than the aggregate amount of the indebtedness that is then outstanding on the date of the closing of the transactions contemplated under the Loan Purchase Agreement.  The closing of the indebtedness purchase is subject to the closing of the acquisition contemplated under the SPA and will take place on or about February 15, 2021, with an optional grace period of up to an additional 15 days.  In connection with the closing, Acquisition Sub will also guaranty repayment by Stadco to Sunflower Bank of any of the original approximately $1.5 million in principal indebtedness under Stadco’s Paycheck Protection Program Loan that is not forgiven under the terms of the Coronavirus Aid, Relief, and Economic Security Act.  The Loan Purchase Agreement contains customary representations and warranties of each party, as well as mutual indemnification provisions.

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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 titled “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. All statements other than statements of current or historical fact contained in this quarterly report, including statements that express our intentions, plans, objectives, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “should,” “would” and similar expressions, as they relate to us, are intended to identify forward-looking statements.

These statements are based on current expectations, estimates and projections made by management about our business, our industry and other conditions affecting our financial condition, results of operations or business prospects. 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, or implied by, the forward-looking statements due to numerous risks and uncertainties. Factors that could cause such outcomes and results to differ include, but are not limited to, risks and uncertainties arising from:

· our reliance on individual purchase orders, rather than long-term contracts, to generate revenue;

· our ability to balance the composition of our revenues and effectively control operating expenses;

· external factors, including the COVID-19 pandemic, that may be outside of our control;

· the impacts of the COVID-19 pandemic and government-imposed lockdowns in response thereto;

· the availability of appropriate financing facilities impacting our operations, financial condition and/or liquidity;

· 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;

· our reliance on a small number of customers for a significant percentage of our business;

· competitive pressures in the markets we serve;

· changes in the availability or cost of raw materials and energy for our production facilities;

· operating in a single geographic location;

· restrictions in our ability to operate our business due to our outstanding indebtedness;

· government regulations and requirements;

· pricing and business development difficulties;

· changes in government spending on national defense;

· our ability to make acquisitions and successfully integrate those acquisitions with our business;

· general industry and market conditions and growth rates;

· general economic conditions;

· the risk that the proposed acquisition of Stadco may not be completed in a timely manner or at all, which may adversely affect the Company’s business and the price of Company’s common stock;

· the failure of either party to satisfy any of the conditions to the consummation of the proposed acquisition of Stadco and uncertainties as to the timing of the consummation of the proposed acquisition;

· the occurrence of any event, change or other circumstance that could give rise to the termination of the securities purchase agreement governing the acquisition of Stadco;

· the effect of the announcement or pendency of the proposed acquisition of Stadco on the Company’s business relationships, operating results and business generally;

· risks related to diverting management’s attention from the Company’s ongoing business operations;

· unexpected costs, charges or expenses resulting from the proposed acquisition of Stadco; and

· those risks discussed in “Item 1A. Risk Factors” and elsewhere in our 2020 Annual Report on Form 10-K, as well as those described in any other filings which we make with the SEC.

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.

Overview

Contract Manufacturing

We offer a full range of services required to transform raw materials into precision 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.

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

Because our revenues are derived from the sale of goods manufactured pursuant to a contract, and we do not sell from inventory, it is necessary for us to constantly seek new contracts. There may be a time lag between our completion of one contract and commencement of work on another contract. During such 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. 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 continue to seek more long-term projects with predictable cost structures.

Financial Results

Our results of operations are affected by a number of external factors including the availability of raw materials, commodity prices (particularly steel), 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 in foreign markets. Generally, our projects are made up of short-term contracts with a production timeline that can range from three to as much as thirty-six months. Units manufactured under the majority of our customer contracts are delivered on time and with a positive gross margin.  Our results of operations for any specific period are also 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 obligations under our contracts. A delay in deliveries or cancellations of orders could have an unfavorable impact on liquidity, cause us to have inventories in excess of our short-term needs, and delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog.

If revenue for a particular quarter is below our expectations, we may not be able to proportionally reduce operating expenses for that quarter. Therefore, a revenue shortfall would have a disproportionate effect on our operating results for that quarter. We have reported operating losses in four of the last seven quarters. In Fiscal 2020 we reported a loss from operations of $0.1 million, due primarily to an increase in cost of sales for losses on certain customer projects. Until we complete and deliver the final units from these projects, they will continue to dampen gross margin in future quarterly periods.

For the nine months ended December 31, 2020, our net sales and net income were $11.6 million and $0.1 million, respectively, compared with net sales of $11.1 million and net loss of $0.4 million for the nine months ended December 31, 2019.  Our gross margin for the nine months ended December 31, 2020 and 2019 was 21.9% and 16.6%, respectively. We used $0.3 million of cash in operations for the nine months ended December 31, 2020 and had a cash balance of $1.3 million at December 31, 2020. Our sales order backlog at December 31, 2020 and March 31, 2020 was approximately $18.4 million and $16.8 million, respectively.

Acquisition of Stadco

We recently announced an agreement to purchase a company that manufactures precision parts for the defense and aerospace industries. Incremental costs incurred for due diligence as a result of this agreement could impact earnings in future quarterly periods. Because of the size of this acquisition target relative to our business, following closing, we expect to report that our results of operations, cash flows and financial condition will differ materially from those reported to date. The acquisition agreement is subject to certain conditions, and may or may not be completed unless all of the conditions set forth in the agreement are completed. Failure to successfully integrate and realize the expected benefits of such acquisitions or to implement our acquisition strategy, including successfully integrating acquired businesses, could have an adverse effect on our business, financial condition and results of operations.

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COVID-19

At the end of March 2020, the outbreak of coronavirus (COVID-19) had spread worldwide as a pandemic. The full extent of the outbreak, related business and travel restrictions and changes to social behavior intended to reduce its spread remain uncertain and subject to change as the health crisis continues to evolve in the U.S. and abroad. The directives imposed by federal, state and local governments did not impair our ability to maintain operations during the first nine months of fiscal 2021 as the Company was designated an “Essential Service.” The pandemic has nevertheless negatively affected certain of the Company’s customers, suppliers and labor force, and with the changing conditions as a result of the COVID-19 outbreak, the impact on our operations and financial results for the remainder of calendar year 2021 remains uncertain.

We and our customers have been designated essential services as national critical infrastructure companies by the U.S. Department of Homeland Security. Additionally, we believe that the long term outlook for the defense industry remains positive as we continue to see meaningful opportunities in our defense sector, primarily in the nuclear submarine business for the next twelve months and beyond.

Critical Accounting Policies

The preparation of the 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 revenue recognition, 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 2020 Annual Report on Form 10-K. We consider the policies relating to revenue recognition to be a critical accounting policy. There have been no significant changes to our critical accounting policies during the nine months ended December 31, 2020.

Accounting Pronouncements

New Accounting Standards

See Note 3, Accounting Standards Update, in the Notes to the condensed consolidated financial statements in “Item 1. Financial Statements” for a discussion of recently adopted new accounting guidance and new accounting guidance not yet adopted.

Key Performance Indicators

While we prepare our financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, we also utilize and present certain financial measures that are not based on or included in U.S. GAAP. We refer to these as Non-GAAP financial measures.  Please see the section “EBITDA Non-GAAP financial measure” below for further discussion of these financial measures, including the reasons why we use such financial measures and reconciliations of such financial measures to the most directly comparable U.S. GAAP financial measures.

Three Months Ended December 31, 2020 and 2019

The following table sets forth information from our condensed consolidated statements of operations and comprehensive (loss) income, in dollars and as a percentage of revenue:

	December 31, 2020						December 31, 2019						Changes
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	3,569			100	%	$	3,667			100	%	$	(98	)		(3	)%
Cost of sales		2,864			80	%		3,353			91	%		(489	)		(15	)%
Gross profit		705			20	%		314			9	%		391			124	%
Selling, general and administrative		716			20	%		663			18	%		53			8	%
Loss from operations		(11	)		-	%		(349	)		(9	)%		338			97	%
Other expense, net		(50	)		(1	)%		(69	)		(2	)%		19			28	%
Loss before taxes		(61	)		(2	)%		(418	)		(11	)%		357			85	%
Income tax benefit		(13	)		(1	)%		(98	)		(3	)%		85			87	%
Net loss	$	(48	)		(1	)%	$	(320	)		(8	)%	$	272			85	%

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Net Sales

The Company records most of its revenue over time as it completes performance obligations. We measure progress for performance obligations satisfied over time using input methods (e.g., labor hours expended and time elapsed).

Net sales were $3.6 million for the three months ended December 31, 2020, or 3% lower when compared to net sales for the three months ended December 31, 2019 of $3.7 million. Net sales in our defense markets decreased by $0.3 million when compared to the three months ended December 31, 2019. However, our defense backlog remains strong as new orders for components continue to flow down from our prime defense contractors. Net sales to other commercial markets increased by $0.2 million when compared to the three months ended December 31, 2019, primarily on new projects for components built for a certain nuclear energy customer. We have experienced repeat business in these markets, but the order flow is uneven and difficult to forecast.

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Cost of sales for the three months ended December 31, 2020 were $0.5 million lower when compared to the three months ended December 31, 2019, primarily because of the absence of any significant contract losses. The fiscal 2020 third quarter included a higher loss provision for certain customer projects.

As a result, gross profit was $0.7 million for the three months ended December 31, 2020, or $0.4 million higher when compared to the three months ended December 31, 2019. Gross margin was 19.8% for the three months ended December 31, 2020 and 8.6% for the three months ended December 31, 2019.

We continue to solve learning-curve challenges on a limited number of projects in the manufacturing schedule which had an unfavorable financial impact in fiscal 2020. Progress notwithstanding, until we complete and deliver the final units from these projects, they could have an unfavorable impact on gross margin in future quarterly periods.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the three months ended December 31, 2020 increased by $54,172 compared to the three months ended December 31, 2019, due primarily to an increase in outside advisory services, which included expenses for the proposed Stadco acquisition.

Other Expense, net

Interest expense was lower for the three months ended December 31, 2020 when compared to the three months ended December 31, 2019, and should continue to be lower than the prior year, barring any additional borrowings for working capital purposes under our revolving credit facility, or any new credit facility to meet our changing capital resource needs. Debt issue costs increased as the Company began to amortize costs associated with increasing the borrowing limit under the Revolver loan with Berkshire bank and borrowings under the payroll protection program, or PPP. The following table reflects other income and expense, interest expense and amortization of debt issue costs for the three months ended:

	December 31, 2020			December 31, 2019			$ Change			% Change
Other (expense) income, net	$	(219	)	$	185		$	(404	)		(218	)%
Interest expense	$	(36,391	)	$	(58,817	)	$	22,426			38	%
Amortization of debt issue costs	$	(14,014	)	$	(10,511	)	$	(3,503	)		(33	)%

Income Taxes

For the three months ended December 31, 2020 and December 31, 2019, we recorded a tax benefit of $13,369 and $97,734, respectively. The tax benefit was the result of an operating loss.

Net Loss

As a result of the foregoing, for the three months ended December 31, 2020, we recorded a net loss of $48,172, compared with a net loss of $319,770 for the three months ended December 31, 2019.

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Nine Months Ended December 31, 2020 and 2019

The following table sets forth information from our condensed consolidated statements of operations and comprehensive (loss) income, in dollars and as a percentage of revenue:

	December 31, 2020						December 31, 2019						Changes
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	11,566			100	%	$	11,075			100	%	$	491			4	%
Cost of sales		9,035			78	%		9,238			83	%		(203	)		(2	)%
Gross profit		2,531			22	%		1,837			17	%		694			38	%
Selling, general and administrative		2,206			19	%		2,145			19	%		61			3	%
Income (loss) from operations		325			3	%		(308	)		(3	)%		633			206	%
Other expense, net		(159	)		(1	)%		(197	)		(2	)%		38			20	%
Income (loss) before taxes		166			2	%		(505	)		(5	)%		671			133	%
Income tax expense (benefit)		60			1	%		(115	)		(1	)%		175			152	%
Net income (loss)	$	106			1	%	$	(390	)		(4	)%	$	496			127	%

Net Sales

The Company records most of its revenue over time as it completes performance obligations. We measure progress for performance obligations satisfied over time using input methods (e.g., labor hours expended and time elapsed).

Changes in net sales generally reflect a different product mix and project volume when comparing the current and prior year periods. Net sales were 4% higher for the nine months ended December 31, 2020 when compared to net sales for the nine months ended December 31, 2019. For the nine months ended December 31, 2020, net sales in our defense markets decreased by $0.4 million when compared to the nine months ended December 31, 2019. However, our defense backlog remains strong as new orders for components continue to flow down from our prime defense contractors. Net sales to other commercial markets increased by $0.9 million when compared to the nine months ended December 31, 2019 on projects completed for customers in the nuclear energy and medical markets. We have experienced repeat business in this sector, but the order flow can be uneven and difficult to forecast.

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of sales for the nine months ended December 31, 2020 were $0.2 million lower when compared to the nine months ended December 31, 2019, primarily on the absence of any significant contract losses. The fiscal 2020 nine month period was marked by new project startup activities and higher provisions for contract losses.

Gross profit was $2.5 million for the nine months ended December 31, 2020, or 38% higher when compared to the nine months ended December 31, 2019. Gross margin was 21.9% for the nine months ended December 31, 2020 and 16.6% for the nine months ended December 31, 2019.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the nine months ended December 31, 2020 increased by $60,684 as an increase in compensation and office costs more than offset a decrease in travel expenses when compared to the nine months ended December 31, 2019.

Other Expense, net

Interest expense was lower for the nine months ended December 31, 2020 when compared to the nine months ended December 31, 2019, and should continue to be lower than the prior year, barring any additional borrowings for working capital purposes under our revolving credit facility, or any new credit facility to meet our changing capital resource needs. Debt issue costs increased as we began to amortize costs associated with amendments to the existing Berkshire loan agreement bank and new borrowings under the payroll protection program, or PPP.

Other income for the nine months ended December 31, 2019 included proceeds from the sale of machinery and equipment of $16,000. The following table reflects other income, interest expense and amortization of debt issue costs for the nine months ended:

	December 31, 2020			December 31, 2019			$ Change			% Change
Other income, net	$	1,237		$	21,063		$	(19,826	)		(94	)%
Interest expense	$	(114,786	)	$	(187,167	)	$	72,381			39	%
Amortization of debt issue costs	$	(45,099	)	$	(31,280	)	$	(13,819	)		(44	)%

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Income Taxes

For the nine months ended December 31, 2020 we recorded tax expense of $60,573 and a tax benefit of $115,092 for the nine months ended December 31, 2019. The tax benefit for the nine months ended December 31, 2019 was the result of an operating loss.

The valuation allowance on deferred tax assets at December 31, 2020 was approximately $1.7 million. We believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards and other deferred tax assets will not be realized. In recognition of this risk, we continue to provide a valuation allowance on these items. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

Net Income (Loss)

As a result of the foregoing, for the nine months ended December 31, 2020, we recorded net income of $0.1 million, compared with a net loss of $0.4 million for the nine months ended December 31, 2019.

Liquidity and Capital Resources

Small Business Administration Loan

On May 8, 2020, the Company, through Ranor, issued a promissory note, or the Note, evidencing an unsecured loan in the amount of $1,317,100 made to Ranor under the Paycheck Protection Program, or the PPP. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and is administered by the U.S. Small Business Administration, or the SBA. The loan to Ranor was made through Berkshire Bank.

The Note provides for an interest rate of 1.00% per year and matures two years after the issuance date. Principal and accrued interest are payable monthly in equal installments commencing on the date that is approximately six months after the date funds are first disbursed on the loan and continuing through the maturity date, unless the Note is forgiven as described below. To be available for loan forgiveness, the Note may only be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that existed before February 15, 2020. The Note may be prepaid at any time prior to maturity with no prepayment penalties and contains events of default and other conditions customary for a Note of this type.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs, certain group health care benefits and insurance premiums, and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part.

On June 5, 2020, the PPP was amended to give borrowers more time to spend loan proceeds and still obtain loan forgiveness. The amendments extended the length of the covered period as defined in the CARES Act from eight to twenty-four weeks, while allowing borrowers that received PPP loans before June 5, 2020 to elect to use the original eight-week covered period. In addition, the amendments provide that if the borrower does not apply for forgiveness of a loan within ten months after the last day of the covered period, the PPP loan is no longer deferred and the borrower must begin paying principal and interest. As provided under the amendments, our first payment, if required, would not be due until September 11, 2021.

Berkshire Term Loan Facility

On December 21, 2016, TechPrecision, through Ranor, closed on a Loan Agreement with Berkshire Bank. Pursuant to the Berkshire Loan Agreement, Berkshire Bank made a term loan to Ranor in the amount of $2,850,000, and made available to Ranor a revolving line of credit of $1,000,000 under the Revolver Loan. The debt matures on December 20, 2021, with a balloon payment of approximately $2.4 million due under the terms of the Term Loan with Berkshire bank. We anticipate that we will be able to refinance that debt with Berkshire Bank.

On December 23, 2019, TechPrecision, through Ranor, entered into a Third Modification to Loan Agreement, and an Amended and Restated Promissory Note with Berkshire Bank. Under the Third Modification, Ranor and Berkshire agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000.

The Company borrowed $1.0 million under the Revolver Loan on April 3, 2020 and repaid that principal on June 30, 2020. There were no borrowed amounts outstanding under the Revolver Loan at December 31, 2020 and March 31, 2020. Interest-only payments on advances made under the Revolver Loan during the nine months ended December 31, 2020 totaled $6,664 at a weighted average interest rate of 2.67%.

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On December 18, 2020, under the Fourth Modification, Ranor and Berkshire Bank agreed to revise the minimum interest rate payable on the Revolver Loan. Under the Line of Credit Note, the Company can elect to pay interest at an adjusted LIBOR-based rate or an Adjusted Prime Rate. Under the Fourth Modification, the minimum adjusted LIBOR-based rate is 2.75% and the Adjusted Prime Rate is the greater of (i) the Prime Rate minus 70 basis points or (ii) 2.75%. Interest-only payments on advances made under the Revolver Loan will continue to be payable monthly in arrears. The maturity date of the Revolver Loan was also extended to December 20, 2022. All other material terms of the Loan Agreement and Line of Credit Note were unchanged. Unused borrowing capacity at December 31, 2020 was $3.0 million.

At December 31, 2020, we had cash and cash equivalents of $1.3 million and working capital of $4.2 million. We believe our available cash plus cash expected to be provided by operations during fiscal 2021, and borrowing capacity available under the Revolver Loan will be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the 12 months from the issuance date of our financial statements. However, following the closing of the acquisition of Stadco, or in connection therewith, we may need to reevaluate our financing needs in light of the significant changes we expect to the combined company’s capital resource needs. As a result, we may decide to seek new debt and/or equity financing.

The table below presents selected liquidity and capital measures at the indicated dates:

(dollars in thousands)	December 31, 2020		March 31, 2020		Change Amount
Cash and cash equivalents	$	1,255	$	931	$	324
Working capital	$	4,170	$	5,595	$	(1,425	)
Total debt	$	3,823	$	2,587	$	1,236
Total stockholders’ equity	$	9,694	$	9,469	$	225

The following table summarizes the primary components of cash flows for the nine months ended:

(dollars in thousands)	December 31, 2020			December 31, 2019			Change Amount
Cash flows provided by (used in):
Operating activities	$	(340	)	$	609		$	(949	)
Investing activities		(547	)		(35	)		(512	)
Financing activities		1,211			(642	)		1,853
Net increase (decrease) in cash	$	324		$	(68	)	$	392

Operating activities

Our primary sources of cash are from accounts receivable collections, customer advance payments and project progress payments. Our customers 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, progress payments and payments made after shipment of finished goods. Cash used in operations for the nine months ended December 31, 2020 was $0.3 million compared with cash provided by operations of $0.6 million for fiscal 2020.

We used cash in operations during the first nine months of fiscal 2021, as accounts receivable and contract assets increased and contract liabilities decreased due to a changing production mix. We have encountered some delayed inspections, deliveries, and disrupted supply chain issues, due to travel restrictions in connection with the COVID-19 pandemic. The future financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as its impact depends on future developments, which are highly uncertain and cannot be predicted.

Investing activities

We do not anticipate any additional expenditures for new factory machinery and equipment during the last quarter of fiscal 2021. Net cash used in investing activities for purchases of property, plant and equipment in the nine months ended December 31, 2020 and 2019 totaled $546,890 and $35,225, respectively. The increase in the nine months ended December 31, 2020 occurred because the Company purchased new robotic equipment during fiscal 2021.

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Financing activities

On May 8, 2020 we borrowed $1.3 million under the CARES Act payroll protection program. On April 3, 2020 we borrowed $1.0 million under our Revolver loan, then paid down $1.0 million in principal on June 30, 2020.

For the nine months ended December 31, 2020 and 2019 we made monthly principal payments of $81,352 and $610,515 in connection with our term debt and finance lease obligations.

All of the above activity resulted in a net increase in cash of $0.3 million for the nine months ended December 31, 2020 compared with a decrease in cash of $0.1 million for the nine months ended December 31, 2019.

Off-Balance Sheet Arrangements

We do not currently have, and have not had, any off-balance sheet assets, liabilities or arrangements at December 31, 2020.

EBITDA Non-GAAP Financial Measure

To complement our condensed consolidated statements of operations and comprehensive (loss) income and condensed consolidated statements of cash flows, we use EBITDA, a non-GAAP financial measure. Net (loss) income is the financial measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to EBITDA. We believe EBITDA provides our board of directors, management and investors with a helpful measure for comparing our operating performance with the performance of other companies that have different financing and capital structures or tax rates. We also believe that EBITDA is a measure frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, and is a measure contained in our debt covenants. However, while we consider EBITDA to be an important measure of operating performance, EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.

We define EBITDA as net (loss) income plus interest, income taxes, depreciation and amortization. EBITDA, a non-GAAP financial measure, was $0.8 million for the nine months ended December 31, 2020, as compared to $0.3 million for the nine months ended December 31, 2019. The following table provides a reconciliation of EBITDA to net (loss) income, the most directly comparable GAAP measure reported in our condensed consolidated financial statements for the following periods:

	Three Months ended December 31,									Nine Months ended December 31,
(dollars in thousands)	2020			2019			Change			2020		2019			Change
Net (loss) income	$	(48	)	$	(320	)	$	272		$	106	$	(390	)	$	496
Income tax (benefit) expense		(13	)		(98	)		85			61		(115	)		176
Interest expense (1)		50			69			(19	)		160		218			(58	)
Depreciation and amortization		182			168			14			521		548			(27	)
EBITDA	$	171		$	(181	)	$	352		$	848	$	261		$	587

(1) Includes amortization of debt issue costs.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

As a smaller reporting company, we have elected not to provide the information required by this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are controls and procedures that are designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and includes controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, an evaluation was carried out, 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. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective at a reasonable assurance level.

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Inherent Limitations Over Internal Controls

The Company’s internal control over financial reporting is designed under the supervision of our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

For the quarter ended December 31, 2020, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information.

Item 1A. Risk Factors

Our ability to complete the acquisition of Stadco is subject to closing conditions, including the receipt of consents and approvals from third parties, which may impose conditions that could adversely affect us or cause the acquisition not to be completed.

Our acquisition of Stadco and its affiliates is subject to a number of closing conditions as specified in the stock purchase agreement entered into with Stadco and its holding company. These include, among others, the entry into arrangements with certain lenders of Stadco and its affiliates and the absence of governmental restraints or prohibitions preventing the consummation of the acquisition. No assurance can be given that the required consents and approvals will be obtained or that the closing conditions will be satisfied in a timely manner or at all. Any delay in completing the acquisition could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve. In addition, we can provide no assurance that these conditions will not result in the abandonment or delay of the acquisition. The occurrence of any of these events could have a material adverse effect on our results of operations, cash flows, financial condition and/or the trading price of our common stock.

We may not achieve the intended benefits of our acquisition of Stadco, and the acquisition may disrupt our current plans or operations.

We may not be able to successfully integrate Stadco’s business and assets or otherwise realize the expected benefits of the transaction, including anticipated annual operating cost and capital synergies to the extent currently anticipated, or at all. To realize these anticipated benefits, our business and Stadco’s business must be successfully combined, which is subject to our ability to consolidate operations, corporate cultures and systems and our ability to eliminate redundancies and costs. Difficulties in integrating Stadco into our operations may result in the combined company performing differently than expected, in operational challenges or in the failure to realize anticipated synergies and efficiencies in the expected time frame or at all. The integration of the two companies may result in material challenges, including the diversion of management’s attention from ongoing business concerns; retaining key management and other employees; retaining existing business and operational relationships, including customers and other counterparties, and attracting new business and operational relationships; the possibility of faulty assumptions underlying expectations regarding the integration process and associated expenses; consolidating corporate and administrative infrastructures and eliminating duplicative operations; coordinating geographically separate organizations; difficulties in the assimilation of employees and corporate cultures; unanticipated issues in integrating information technology, communications and other systems; as well as unforeseen expenses or delays associated with the acquisition. If we are not successful in integrating Stadco’s business and assets or otherwise fail to realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Stadco acquisition, our results of operations, cash flows and financial condition may be materially adversely affected.

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Whether or not it is completed, the announcement and pendency of the acquisition of Stadco could cause disruptions in our business, which could have an adverse effect on our business and financial results.

Whether or not it is completed, the announcement and pendency of our acquisition of Stadco could cause disruptions in our business: our and Stadco’s current and prospective employees may experience uncertainty about their future roles with the combined company, which might adversely affect the ability to retain key employees; uncertainty regarding the completion of the acquisition may cause customers, suppliers, distributors, vendors, strategic partners or others to delay or defer entering into contracts, make other decisions or seek to change or cancel existing business relationships; and the attention of management may be directed toward the completion of the acquisition. If the acquisition is not completed, we will have incurred significant costs and diverted management resources, for which we will have received little or no benefit.

We are expected to incur substantial expenses related to the acquisition of Stadco and its affiliates and the integration of their business with ours.

We expect to incur substantial expenses in connection with the integration of our business with Stadco and its affiliates. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. In addition, our and Stadco’s businesses will continue to maintain a presence in Westminster, Massachusetts and Los Angeles, California, respectively. Some of these costs will be non-recurring expenses related to the acquisition itself, including legal and accounting costs and systems consolidation costs. We may also incur additional costs to attract, motivate or retain management personnel and other key employees. We have incurred and will continue to incur acquisition fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs.

Our stockholders may not realize a benefit from the acquisition of Stadco commensurate with the ownership dilution they will experience in connection with the transaction.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the acquisition of Stadco and its affiliates, our stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the acquisition.

The market price of our common stock following the acquisition of Stadco may decline as a result of the transaction.

The market price of our common stock may decline as a result of our acquisition of Stadco and its affiliates for a number of reasons, including if:

· investors react negatively to the prospects of the combined company’s business and financial condition following the acquisition;

· the effect of the acquisition on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or

· the combined company does not achieve the perceived benefits of the acquisition as rapidly or to the extent anticipated by management and the Company’s investors, or at all.

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Item 6. Exhibits.
Exhibit Index
Exhibit No.	Description
2.1*	Stock Purchase Agreement among TechPrecision Corporation, Stadco New Acquisition, LLC, Stadco, Stadco Acquisition, LLC and the stockholders of Stadco, dated as of October 16, 2020 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed with the Commission on October 20, 2020).
3.1	Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to our registration statement on Form SB-2, filed with the Commission on August 28, 2006).
3.2	Amended and Restated By-laws of the Registrant (incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on February 3, 2014).
3.3	Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006).
3.4	Certificate of Amendment to Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (incorporated herein by reference to Exhibit 3.5 to our Quarterly Report on Form 10-Q, filed with the Commission on November 12, 2009).
10.1*	Fourth Modification to Loan Agreement and First Modification and Allonge to Amended and Restated Promissory Note, dated December 18, 2020, between Ranor, Inc. and Berkshire Bank (incorporated by reference to Exhibit 10.1 to our Current Report, filed with the Commission on December 21, 2020)
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	The following financial information from this Quarterly Report on Form 10-Q for the three and nine months ended December 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at December 31, 2020 and March 31, 2020; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended December 31, 2020 and 2019; (iii) the Condensed Consolidated Statements of Stockholders’ Equity for the periods ended December 31, 2020 and 2019; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months  ended December 31, 2020 and 2019; and (v) the Notes to the Condensed Consolidated Financial Statements.

*Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules have been omitted. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request.

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
February 11, 2021	By:	/s/ Thomas Sammons
		Thomas Sammons
		Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 functions):

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 11, 2021	/s/ Alexander Shen
	Alexander Shen
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 functions):

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 11, 2021	/s/ Thomas Sammons
	Thomas Sammons
	Chief Financial Officer
	(Principal 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 on Form 10-Q of TechPrecision Corporation (the “Company”) for the quarter ended December 31, 2020, 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 11, 2021	/s/ Alexander Shen
	Alexander Shen
	Chief Executive Officer
	(Principal Executive Officer)
Dated: February 11, 2021	/s/ Thomas Sammons
	Thomas Sammons
	Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2020	Feb. 08, 2021
Document and Entity Information
Document Type	10-Q
Document Period End Date	Dec. 31, 2020
Entity Registrant Name	TECHPRECISION CORP
Title of 12(b) Security	None
Entity Address, State or Province	MA
Security Exchange Name	NONE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		29,498,662
Entity Central Index Key	0001328792
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--03-31
Trading Symbol	TPCS

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
Current assets:
Cash and cash equivalents	$ 1,255,320	$ 930,856
Accounts receivable, net	1,173,376	990,300
Contract assets	5,314,653	4,504,621
Raw materials	503,636	561,572
Work-in-process	694,848	656,041
Other current assets	442,024	606,151
Total current assets	9,383,857	8,249,541
Property, plant and equipment, net	4,208,329	4,182,861
Deferred income taxes	2,016,816	2,115,480
Other noncurrent assets, net	16,086	32,600
Total assets	15,625,088	14,580,482
Current liabilities:
Accounts payable	510,434	185,065
Accrued expenses	1,306,109	1,554,524
Contract liabilities	308,358	805,049
Current portion of long-term debt	3,088,553	109,829
Total current liabilities	5,213,454	2,654,467
Long-term debt	717,559	2,456,560
Commitments and contingent liabilities (Note 13)
Stockholders' Equity:
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 29,498,662 and 29,354,594 shares issued and outstanding, at December 31, 2020 and March 31, 2020	2,949	2,935
Additional paid in capital	8,911,160	8,793,062
Accumulated other comprehensive income	21,838	21,688
Retained earnings	758,128	651,770
Total stockholders' equity	9,694,075	9,469,455
Total liabilities and stockholders' equity	$ 15,625,088	$ 14,580,482

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2020	Mar. 31, 2020
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
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	29,498,662	29,354,594
Common stock, shares outstanding	29,498,662	29,354,594

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)
Net sales	$ 3,569,718	$ 3,667,276	$ 11,566,176	$ 11,075,620
Cost of sales	2,864,274	3,352,962	9,034,858	9,238,287
Gross profit	705,444	314,314	2,531,318	1,837,333
Selling, general and administrative	716,361	662,675	2,205,739	2,145,055
(Loss) income from operations	(10,917)	(348,361)	325,579	(307,722)
Other (expense) income	(219)	185	1,237	21,063
Interest expense	(50,405)	(69,328)	(159,885)	(218,447)
Total other expense, net	(50,624)	(69,143)	(158,648)	(197,384)
(Loss) income before income taxes	(61,541)	(417,504)	166,931	(505,106)
Income tax (benefit) expense	(13,369)	(97,734)	60,573	(115,092)
Net (loss) income	(48,172)	(319,770)	106,358	(390,014)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	1,252	9	151	(329)
Other comprehensive income (loss), net of tax	1,252	9	151	(329)
Comprehensive (loss) income	$ (46,920)	$ (319,761)	$ 106,509	$ (390,343)
Net (loss) income per share basic	$ 0.00	$ (0.01)	$ 0.00	$ (0.01)
Net (loss) income per share diluted	$ 0.00	$ (0.01)	$ 0.00	$ (0.01)
Weighted average number of shares outstanding:
Basic	29,498,662	29,254,594	29,430,206	29,254,230
Diluted weighted average shares	29,498,662	29,254,594	31,021,384	29,254,230

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited) - USD ($)	Common Stock [Member]	Additional Paid in Capital [Member]	Accumulated Other Comprehensive Income [Member]	Retained Earnings (Accumulated Deficit) [Member]	Total
Balance at Mar. 31, 2019	$ 2,923	$ 8,693,106	$ 21,940	$ 993,339	$ 9,711,308
Balance (in shares) at Mar. 31, 2019	29,234,594
Stock-based compensation		30,625			30,625
Shares issued under LTIP	$ 2	7,198			7,200
Shares issued under LTIP (in shares)	20,000
Net (loss) income				220,777	220,777
Currency translation adjustment			(179)		(179)
Balance at Jun. 30, 2019	$ 2,925	8,730,929	21,761	1,214,116	9,969,731
Balance (in shares) at Jun. 30, 2019	29,254,594
Balance at Mar. 31, 2019	$ 2,923	8,693,106	21,940	993,339	9,711,308
Balance (in shares) at Mar. 31, 2019	29,234,594
Net (loss) income					(390,014)
Balance at Dec. 31, 2019	$ 2,925	8,781,971	21,611	603,325	9,409,832
Balance (in shares) at Dec. 31, 2019	29,254,594
Balance at Jun. 30, 2019	$ 2,925	8,730,929	21,761	1,214,116	9,969,731
Balance (in shares) at Jun. 30, 2019	29,254,594
Stock-based compensation		30,625			30,625
Net (loss) income				(291,021)	(291,021)
Currency translation adjustment			(159)		(159)
Balance at Sep. 30, 2019	$ 2,925	8,761,554	21,602	923,095	9,709,176
Balance (in shares) at Sep. 30, 2019	29,254,594
Stock-based compensation		20,417			20,417
Net (loss) income				(319,770)	(319,770)
Currency translation adjustment			9		9
Balance at Dec. 31, 2019	$ 2,925	8,781,971	21,611	603,325	9,409,832
Balance (in shares) at Dec. 31, 2019	29,254,594
Balance at Mar. 31, 2020	$ 2,935	8,793,062	21,688	651,770	9,469,455
Balance (in shares) at Mar. 31, 2020	29,354,594
Stock-based compensation		55,500			55,500
Shares issued under LTIP	$ 4	(4)
Shares issued under LTIP (in shares)	44,068
Net (loss) income				(116,234)	(116,234)
Currency translation adjustment			(97)		(97)
Balance at Jun. 30, 2020	$ 2,939	8,848,558	21,591	535,536	9,408,624
Balance (in shares) at Jun. 30, 2020	29,398,662
Balance at Mar. 31, 2020	$ 2,935	8,793,062	21,688	651,770	9,469,455
Balance (in shares) at Mar. 31, 2020	29,354,594
Net (loss) income					106,358
Balance at Dec. 31, 2020	$ 2,949	8,911,160	21,838	758,128	9,694,075
Balance (in shares) at Dec. 31, 2020	29,498,662
Balance at Jun. 30, 2020	$ 2,939	8,848,558	21,591	535,536	9,408,624
Balance (in shares) at Jun. 30, 2020	29,398,662
Stock-based compensation		57,417			57,417
Restricted stock award	$ 10	133,990			134,000
Restricted stock award (in shares)	100,000
Non-vested restricted stock		(134,000)			(134,000)
Net (loss) income				270,764	270,764
Currency translation adjustment			(1,005)		(1,005)
Balance at Sep. 30, 2020	$ 2,949	8,905,965	20,586	806,300	9,735,800
Balance (in shares) at Sep. 30, 2020	29,498,662
Stock-based compensation		33,500			33,500
Taxes on exercised options		(28,305)			(28,305)
Net (loss) income				(48,172)	(48,172)
Currency translation adjustment			1,252		1,252
Balance at Dec. 31, 2020	$ 2,949	$ 8,911,160	$ 21,838	$ 758,128	$ 9,694,075
Balance (in shares) at Dec. 31, 2020	29,498,662

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 106,358	$ (390,014)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation	521,422	548,038
Amortization of debt issue costs	45,099	31,280
Stock based compensation expense	146,417	81,667
Change in contract loss provision	(175,365)	216,039
Deferred income taxes	60,573	(115,092)
Changes in operating assets and liabilities:
Accounts receivable	(183,076)	257,459
Contract assets	(810,032)	(271,767)
Inventories	19,129	589,904
Other current assets	164,127	(296,328)
Other noncurrent assets	38,092	(9,419)
Accounts payable	325,369	(138,463)
Accrued expenses	(101,028)	18,282
Contract liabilities	(496,691)	87,815
Net cash (used in) provided by operating activities	(339,606)	609,401
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(546,890)	(35,225)
Net cash used in investing activities	(546,890)	(35,225)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt issue costs	(24,610)	(32,209)
Proceeds from payroll protection program loan	1,317,100	0
Proceeds from revolver loan	1,000,000	0
Repayment of revolver loan	(1,000,000)	0
Repayment of long-term debt	(81,352)	(610,515)
Net cash provided by (used in) financing activities	1,211,138	(642,724)
Effect of exchange rate on cash and cash equivalents	(178)	307
Net increase (decrease) in cash and cash equivalents	324,464	(68,241)
Cash and cash equivalents, beginning of period	930,856	2,036,646
Cash and cash equivalents, end of period	$ 1,255,320	$ 1,968,405

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash paid during the year for:
Interest (net of amounts capitalized)	$ 114,785	$ 187,085
Income taxes	$ 0	$ 0
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Options exercised to purchase common stock	150,000
Common stock, par value (in dollars per share)	$ 0.0001

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DESCRIPTION OF BUSINESS

9 Months Ended

Dec. 31, 2020

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. The name was changed to TechPrecision Corporation on March 6, 2006. TechPrecision is the parent company of Ranor, Inc., or Ranor, a Delaware corporation, Stadco New Acquisition, LLC, and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise. WCMC has no customers or operations, and we have initiated a plan of termination to legally dissolve this subsidiary. 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 defense and aerospace, nuclear, medical, and precision industrial. We consider our business to consist of one segment - metal fabrication and precision machining. All of our operations and customers are located in the United States.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Dec. 31, 2020

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 and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2020 and March 31, 2020, the condensed consolidated statements of operations and comprehensive (loss) income and stockholders’ equity for the three and nine months ended December 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2020 and 2019 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.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and 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 the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, or the 2020 Form 10-K, filed with the SEC on June 11, 2020.

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, the recovery of long-lived assets, income taxes and the valuation of equity transactions. We base our estimates on historical and current experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

The COVID-19 pandemic has negatively affected certain customers, suppliers and their labor force. For example, travel restrictions in connection with the pandemic have delayed inspections, deliveries and impacted some supply chain providers. The future financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as its impact depends on future developments, which are highly uncertain and cannot be predicted.

The directives imposed by federal, state and local governments as a result of the COVID-19 pandemic did not impair our ability to maintain operations during the first nine months of fiscal 2021 as the Company was designated an essential service. Our estimates at the end of the first nine months of fiscal 2021 assumed no material impact from the disruptions caused by COVID-19.

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ACCOUNTING STANDARDS UPDATE

9 Months Ended

Dec. 31, 2020

ACCOUNTING STANDARDS UPDATE

ACCOUNTING STANDARDS UPDATE

NOTE 3 - ACCOUNTING STANDARDS UPDATE

New Accounting Standards Recently Adopted

On April 1, 2020 we adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.  This ASU modifies the disclosure requirements in Topic 820 by removing, modifying or adding certain disclosures.  The amendments for changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are applied prospectively.  All other amendments are applied retrospectively to all periods presented upon their effective date.  The adoption did not have a significant impact on our consolidated financial statement disclosures.

Issued Standards Not Yet Adopted

In December, 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, expected to reduce cost and complexity related to the accounting for income taxes. This ASU removes specific exceptions to the general principles in Topic 740 under U.S. GAAP and removes the limitation on the tax benefit recognized on pre-tax losses in interim periods. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company plans to adopt the standard on April 1, 2021, and is currently evaluating the amendments in this update to determine the impact it may have on its financial statements and disclosures.

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REVENUE

9 Months Ended

Dec. 31, 2020

REVENUE

REVENUE

NOTE 4 - REVENUE

The Company generates its revenues primarily from performance obligations completed under contracts with customers in two main market sectors: defense and precision industrial. The period over which the Company performs its obligations can range from three to thirty-six months. The Company invoices and receives related payments based upon performance progress not less frequently than monthly.

Revenue is recognized over-time or at a point-in-time given the terms and conditions of the related contracts. The Company utilizes an inputs methodology based on estimated labor hours to measure performance progress. This model best depicts the transfer of control to the customer.

The Company’s contract portfolio is comprised of fixed-price contracts and provides for product type sales only. The following table presents net sales on a disaggregated basis by market and contract type:

Net Sales by market	Defense		Industrial		Totals
Three months ended December 31, 2020	$	2,885,753	$	683,965	$	3,569,718
Three months ended December 31, 2019	$	3,200,671	$	466,605	$	3,667,276
Nine months ended December 31, 2020	$	9,314,846	$	2,251,330	$	11,566,176
Nine months ended December 31, 2019	$	9,725,635	$	1,349,985	$	11,075,620

Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2020	$	3,141,416	$	428,302	$	3,569,718
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Nine months ended December 31, 2020	$	9,251,284	$	2,314,892	$	11,566,176
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620

As of December 31, 2020, the Company had $18.4 million of remaining performance obligations, of which $13.0 million were less than 50% complete. The Company expects to recognize all of its remaining performance obligations as revenue over-time or at a point-in-time during the next thirty-six months.

We have been dependent in each year on a small number of customers who generate a significant portion of our business,  and these customers can change from year to year. The following table presents customers who accounted for 10% or more of our net sales for the following periods:

	Three months ended				Three months ended				Nine months ended				Nine months ended
	December 31, 2020				December 31, 2019				December 31, 2020				December 31, 2019
Customer	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
A	$	398,011	11	%	$	404,062	11	%	$	2,106,998	18	%	$	1,790,311	16	%
B	$	530,583	15	%	$	*	*	%	$	1,871,256	16	%	$	*	*	%
C	$	609,114	17	%	$	1,215,737	33	%	$	1,679,814	15	%	$	2,320,485	21	%
D	$	682,337	19	%	$	727,084	20	%	$	1,631,010	14	%	$	1,825,213	16	%
E	$	550,096	15	%	$	*	*	%	$	*	*	%	$	*	*	%
F	$	*	*	%	$	*	*	%	$	*	*	%	$	1,136,146	10	%
G	$	*	*	%	$	*	*	%	$	*	*	%	$	1,148,242	10	%

*Less than 10% of total

On our condensed consolidated balance sheet, contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In fiscal 2021, we recognized revenue of $0.8 million related to our contract liabilities at March 31, 2020. At December 31, 2020 contract assets consisted of the following:

			Less: Progress
Contract assets	Unbilled		payments		Total
December 31, 2020	$	10,074,902	$	4,760,249	$	5,314,653
March 31, 2020	$	10,635,588	$	6,130,967	$	4,504,621

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INCOME TAXES

9 Months Ended

Dec. 31, 2020

INCOME TAXES

INCOME TAXES

NOTE 5 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items. The income tax provision for the nine months ended December 31, 2020 was $60,573, the income tax benefit for the nine months ended December 31, 2019 was $115,092. The Company's estimated effective tax rate for the nine months ended December 31, 2020 was 36.3%. 

The valuation allowance on deferred tax assets was approximately $1.7 million at December 31, 2020. We believe that it is more likely than not that the benefit from certain state and foreign net operating losses, or NOL, carryforwards and other deferred tax assets will not be realized. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

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EARNINGS PER SHARE

9 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 6 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing reported earnings available to stockholders by the weighted average number of shares outstanding. Diluted earnings per share includes the effect of stock options that would be dilutive. 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		Three months ended		Nine months ended		Nine months ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Basic EPS:
Net (loss) income	$	(48,172)	$	(319,770)	$	106,358	$	(390,014)
Weighted average shares		29,498,662		29,254,594		29,430,206		29,254,230
Basic (loss) income per share	$	(0.00)	$	(0.01)	$	0.00	$	(0.01)
Diluted EPS:
Net (loss) income	$	(48,172)	$	(319,770)	$	106,358	$	(390,014)
Dilutive effect of stock options		—		—		1,591,178		—
Diluted weighted average shares		29,498,662		29,254,594		31,021,384		29,254,230
Diluted (loss) income per share	$	(0.00)	$	(0.01)	$	0.00	$	(0.01)

All potential common stock 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 earnings per share. For the three months ended December 31, 2020 there were 2,814,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above. For the nine months ended December 31, 2020, there were 94,000 of common stock equivalents that were out-of-the-money and not included in the above earnings per share calculations. For the three and nine months ended December 31, 2019, there were 2,967,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above.

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STOCK-BASED COMPENSATION

9 Months Ended

Dec. 31, 2020

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 7 – STOCK-BASED COMPENSATION

Our board of directors approved the 2016 TechPrecision Equity Incentive Plan, or the 2016 Plan, on November 10, 2016. Our stockholders approved the 2016 Plan at the Company’s Annual Meeting of Stockholders on December 8, 2016. The 2016 Plan succeeds the 2006 Plan and applies to awards granted after the 2016 Plan’s adoption by the Company’s stockholders. The 2016 Plan provides for a share reserve of 5,000,000 shares of common stock.

The 2016 Plan authorizes the award of incentive and non-qualified stock options, restricted stock awards, restricted stock units, and performance awards to employees, directors, consultants, and other individuals who provide services to TechPrecision or its affiliates.

At December 31, 2020 there were 1,376,000 shares available for grant under the 2016 Plan. The following table summarizes information about stock option activity:

						Weighted
						Average
		Weighted		Aggregate		Remaining
	Number Of	Average		Intrinsic		Contractual Life
	Options	Exercise Price		Value		(in years)
Outstanding at 3/31/2019	2,938,000	$	0.416	$	1,869,200	6.74
Exercised	(20,000)		0.360
Canceled	(2,000)
Outstanding at 3/31/2020	2,916,000	$	0.415	$	2,546,800	6.21
Canceled	(2,000)
Exercised	(150,000)		0.800
Outstanding at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81
Vested or expected to vest at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81
Exercisable and vested at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on the last trading day of the third quarter of fiscal 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2020. This amount changes based on the fair market value of the Company’s common stock.

At December 31, 2020, there was no remaining unrecognized compensation cost related to stock options. The maximum contractual term is ten years for option grants. Other information relating to stock options outstanding at December 31, 2020 is as follows:

		Weighted
		Average
		Remaining	Weighted			Weighted
	Options	Contractual	Average		Options	Average
Range of Exercise Prices:	Outstanding	Term	Exercise Price		Exercisable	Exercise Price
$0.01‑$1.00	2,670,000	5.87	$	0.34	2,670,000	$	0.34
$1.01‑$1.96	94,000	0.26	$	1.84	94,000	$	1.84
Totals	2,764,000				2,764,000

Restricted Stock Awards

On September 1, 2020 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors. The stock-based compensation expense of $134,000 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. The shares of restricted stock fully vest and cease to be subject to forfeiture on August 31, 2021, or twelve months following the grant date. Each grantee must be serving as a director on the vesting date and must have been continuously serving in such capacity from the grant date through the vesting date for the shares of restricted stock to vest. Prior to the vesting date, the grantee is not permitted to sell, transfer, pledge, assign or otherwise encumber the shares of restricted stock and if the grantee's service with the Company terminates prior to the vesting date, the grantee's restricted stock will be forfeited automatically. Total recognized compensation cost related to the restricted stock award was  $44,667 for the nine months ended December 31, 2020. At December 31, 2020 there was $89,333 of unrecognized compensation cost related to these restricted stock awards.

On March 16, 2020 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors. The stock-based compensation expense of $111,000 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company's common stock. The shares of restricted stock fully vested and ceased to be subject to forfeiture on September 1, 2020, or approximately six months following the grant date. Each grantee must have been serving as a director on the vesting date and must have been continuously serving in such capacity from the grant date through the vesting date for the shares of restricted stock to vest. Prior to the vesting date, the grantee was not permitted to sell, transfer, pledge, assign or otherwise encumber the shares of restricted stock and if the grantee's service with the Company had terminated prior to the vesting date, the grantee's restricted stock would have been forfeited automatically. Total recognized compensation cost related to the restricted stock award was $101,750 for the nine months ended December 31, 2020. There was no unrecognized compensation cost related to these restricted stock awards at December 31, 2020.

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CONCENTRATION OF CREDIT RISK

9 Months Ended

Dec. 31, 2020

CONCENTRATION OF CREDIT RISK

CONCENTRATION OF CREDIT RISK

NOTE 8 - CONCENTRATION OF CREDIT RISK

We maintain bank account balances, which, at times, may exceed 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, 2020, there were trade accounts receivable balances outstanding from five customers comprising 93% of the total trade receivables balance. The following table sets forth information as to trade accounts receivable from customers who accounted for more than 10% of the total balance at:

	December 31, 2020				March 31, 2020
Customer	Dollars		Percent		Dollars		Percent
A	$	356,228	30	%	$	*	*
B	$	243,938	21	%	$	*	*
C	$	193,750	17	%	$	*	*
D	$	*	*		$	365,636	37	%
E	$	167,152	14	%	$	254,637	26	%
F	$	*	*		$	123,000	12	%
G	$	123,909	11	%	$	*	*

*less than 10% of total

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OTHER CURRENT ASSETS

9 Months Ended

Dec. 31, 2020

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

NOTE 9 - OTHER CURRENT ASSETS

	December 31, 2020		March 31, 2020
Payments advanced to suppliers	$	31,268	$	272,070
Prepaid insurance		358,029		250,073
Prepaid subscriptions		22,057		14,440
Refundable AMT credits		22,748		22,748
Employee advances		—		18,173
Other		7,922		28,647
Total	$	442,024	$	606,151

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ACCRUED EXPENSES

9 Months Ended

Dec. 31, 2020

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 10 - ACCRUED EXPENSES

	December 31, 2020		March 31, 2020
Provision for claims settlement	$	495,000	$	495,000
Accrued compensation		316,490		383,555
Provision for contract losses		110,115		285,480
Accrued professional fees		244,703		279,657
Accrued project costs		109,062		76,059
Other		30,739		34,773
Total	$	1,306,109	$	1,554,524

Accrued compensation includes amounts for executive bonuses, payroll and vacation and holiday pay. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in the provision are recorded in cost of sales. Accrued project costs are estimates for certain project expenses during the reporting period.

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DEBT

9 Months Ended

Dec. 31, 2020

DEBT

DEBT

NOTE 11 – DEBT

Total debt included the following as of:	December 31, 2020		March 31, 2020
Berkshire Term Loan at 5.21% interest, due December 2021	$	2,491,835	$	2,564,389
Berkshire SBA PPP loan at 1% interest, due May 2022		1,317,100		—
Finance lease obligations at 8% interest, due January 2022		13,662		22,460
Total debt	$	3,822,597	$	2,586,849
Less: debt issue costs unamortized	$	16,485	$	20,460
Total debt, net	$	3,806,112	$	2,566,389
Less: Current portion of long-term debt	$	3,088,553	$	109,829
Total long-term debt, net	$	717,559	$	2,456,560

Small Business Administration Loan

On May 8, 2020, the Company, through its wholly owned subsidiary Ranor, issued a promissory note, or the Note, evidencing an unsecured loan in the amount of $1,317,100 made to Ranor under the Paycheck Protection Program, or the PPP. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and is administered by the U.S. Small Business Administration, or the SBA. The loan to Ranor was made through Berkshire Bank.

Principal and accrued interest are payable monthly in equal installments commencing at a future date in calendar year 2021 and continuing through the maturity date, unless the Note is forgiven as described below. To be available for loan forgiveness, the Note may only be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligations that existed before February 15, 2020. The Note may be prepaid at any time prior to maturity with no prepayment penalties and contains events of default and other conditions customary for a Note of this type. For example, the Note contains events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or Berkshire Bank, or breaching the terms of the loan documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or the SBA or Berkshire Bank filing suit and obtaining judgment against the Company and/or Ranor.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs, certain group health care benefits and insurance premiums, and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part.

On June 5, 2020, the PPP was amended to give borrowers more time to spend loan proceeds and still obtain loan forgiveness. The amendments extended the length of the covered period as defined in the CARES Act from eight to twenty-four weeks, while allowing borrowers that received PPP loans before June 5, 2020 to elect to use the original eight-week covered period. In addition, the amendments provide that if the borrower does not apply for forgiveness of a loan within ten months after the last day of the covered period, the PPP loan is no longer deferred and the borrower must begin paying principal and interest. As provided under the amendments, our first payment, if required, would not be due until September 11, 2021.

Berkshire Term Loan Facility

On December 21, 2016, TechPrecision, through Ranor, closed on a Loan Agreement, or the Berkshire Loan Agreement,  with Berkshire Bank. Pursuant to the Berkshire Loan Agreement, Berkshire Bank made a term loan to Ranor in the amount of $2,850,000, or the Term Loan, and made available to Ranor a revolving line of credit of $1,000,000 under the Revolver Loan, or together, the Berkshire Loans. The Berkshire Loans are secured by a first lien on all personal and real property of Ranor.

On December 23, 2019, TechPrecision, through Ranor, entered into a Third Modification to Loan Agreement, or the Third Modification, and an Amended and Restated Promissory Note with Berkshire Bank. Under the Third Modification, Ranor and Berkshire agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000. Advances under the Revolver Loan are now subject to the lesser of (a) $3,000,000 or (b) the sum of (i) 80% of eligible accounts receivable, plus (ii) the lesser of (x) 25% of Eligible Raw Material Inventory, and (y) $250,000, plus (iii) 50% of the Appraised Value of the Eligible Equipment. The loan agreement is available for refinancing existing indebtedness and for working capital and general corporate purposes. Additionally, the parties agreed to lower the interest rate on advances made under the Revolver Loan at a variable rate equal to the one-month LIBOR plus 225 basis points.  The Third Modification contains customary LIBOR replacement provisions.

On December 18, 2020, TechPrecision, through Ranor, entered into a Fourth Modification to Loan Agreement and First Modification and Allonge to Amended and Restated Promissory Note, or the Fourth Modification, with Berkshire Bank. The Modification amends and modifies the Berkshire Loan Agreement. The Fourth Modification also amends the Amended and Restated Promissory Note dated December 23, 2019 made by Ranor in favor of Berkshire in the stated principal amount of $3,000,000. As of the date of the Fourth Modification, there was approximately $2.5 million in remaining principal outstanding under the Term Loan and no amounts outstanding under the Revolver Loan.

Under the Fourth Modification, Ranor and Berkshire agreed to revise the minimum interest rate payable on the Revolver Loan. Under the promissory note for the Revolver Loan, the Company can elect to pay interest at an adjusted LIBOR-based rate or an Adjusted Prime Rate. Under the Fourth Modification, the minimum adjusted LIBOR-based rate is 2.75% and the Adjusted Prime Rate is the greater of (i) the Prime Rate minus 70 basis points or (ii) 2.75%. Interest-only payments on advances made under the Revolver Loan will continue to be payable monthly in arrears. The maturity date of the Revolver Loan was also extended to December 20, 2022. All other material terms of the Berkshire Loan Agreement and  the promissory note for the Revolver Loan were unchanged.

The Company borrowed $1.0 million under the Revolver Loan on April 3, 2020 and repaid principal of $1.0 million on June 30, 2020. There were no borrowed amounts outstanding  under the Revolver Loan at December 31, 2020 and March 31, 2020. Interest payments on advances made under the Revolver Loan during the nine months ended December 31, 2020 were $6,664 at a weighted average interest rate of 2.67%. Unused borrowing capacity at December 31, 2020 was $3.0 million.

The Berkshire Loan Agreement contains a covenant whereby the Company is required to maintain a debt service coverage ratio, or DSCR, of at least 1.2 to 1.0 during the term of the Berkshire Loans.  The DSCR is measured at the end of each fiscal quarter of the Company.  The Company was in compliance with all of the financial covenants at December 31, 2020 and March 31, 2020.

The Berkshire Loan Agreement also contains covenants to cause its balance sheet leverage to be less than or equal to 2.50 to 1.00 for each fiscal year end, and require Ranor to maintain a loan-to-value ratio of not greater than 0.75 to 1.00, to be measured by appraisal not more frequently than one time during each 365-day period.

Finance Lease

See Note 12 for information regarding our obligations under the finance lease.

Fair Value Measurements

We account for fair value measurements in accordance with ASC Topic 820,  Fair Value Measurement, which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value. The carrying value of short and long-term borrowings approximates their fair value at December 31, 2020 and March 31, 2020. The fair value of the long-term debt was calculated based on interest rates available for debt with terms and maturities similar to the Company's existing debt arrangements. The Company’s short-term and long-term debt with Berkshire bank is privately held with no public market for the debt and is considered to be Level 3 under the fair value hierarchy.

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LEASES

9 Months Ended

Dec. 31, 2020

LEASES

LEASES

NOTE 12 – LEASES

Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased, or right-of-use assets in finance lease arrangements are reported in net property, plant and equipment on our condensed consolidated balance sheet. Right-of-use assets and liabilities on our condensed consolidated balance  sheet at December 31, 2020 were:

Finance lease:	December 31, 2020
Property, plant and equipment	$	54,376
Accumulated depreciation		43,501
Net property, plant and equipment	$	10,875
Current portion of long-term debt	$	12,569
Long-term debt	$	1,093
Total finance lease liabilities	$	13,662

In December 2019, we signed a one-year operating lease for office space which expired in December 2020 and was amortized on a straight line basis. Since the expiration of the term of the lease, we have continued to lease this office space on a month-to-month basis. Other supplemental information regarding our leases are contained in the following tables:

Components of lease expense for the period ended:	December 31, 2020
Operating lease amortization	$	2,878
Finance lease amortization	$	8,156
Finance lease interest	$	1,102

Weighted average lease term and discount rate at:	December 31, 2020
Finance lease term (years)	1.25
Finance lease rate	8	%

Supplemental cash flow information related to leases for the period ended:	December 31, 2020
Cash used in operating activities	$	2,878
Cash used in financing activities	$	8,798

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COMMITMENTS

9 Months Ended

Dec. 31, 2020

COMMITMENTS

COMMITMENTS

NOTE 13 - COMMITMENTS

Retirement Benefits

Ranor has a defined contribution and savings plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. The Company contributed $21,897 and $64,167 for the three and nine months ended December 31, 2020.

Provision for claims settlement

On March 16, 2020, the Company reached an agreement to settle all outstanding claims for $495,000 related to a civil action brought by former employees for past wages claimed under a paid time-off program. The claim is to be paid within sixty days following Court approval of the settlement. Such approval has not yet occurred.

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SUBSEQUENT EVENTS

9 Months Ended

Dec. 31, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 14 - SUBSEQUENT EVENTS

Securities Purchase Agreement

On October 16, 2020, the Company entered into a stock purchase agreement, or the SPA, with Stadco New Acquisition, LLC, a wholly owned subsidiary of the Company, or the Acquisition Sub, Stadco, Stadco Acquisition, LLC, or the Target, and each stockholder of Target. The SPA provides for the Company, through Acquisition Sub, to acquire all of the issued and outstanding capital stock of Stadco from Target. Stadco, the operating subsidiary of Target, is a California corporation in the business of manufacturing high-precision parts, assemblies and tooling for aerospace, defense, research and commercial customers. As consideration for the acquisition of all of Target's common stock, the Company, on behalf of Acquisition Sub, will issue 1,000,000 shares of the Company's common stock to Target. The Company, Stadco and Target are also working, through negotiation with creditors of Stadco and Target, to substantially reduce the approximately $14 million of Stadco liabilities that would otherwise be added to the consolidated balance of the combined company after closing of the acquisition. Reaching agreements with these creditors to the satisfaction of the Company is required for the closing of the deal to occur. The Company expects that a percentage of these liabilities will be satisfied in part or full through the issuance of additional shares of the Company's common stock.

The SPA contains customary representations and warranties of Stadco, Target, the Company and Acquisition Sub, and Stadco and Target have agreed to customary covenants relating to the conduct of their business during the interim period between the execution of the SPA and the closing of the acquisition. The consummation of the acquisition and the related transactions contemplated by the SPA is subject to certain customary conditions.

On February 2, 2021, the Company entered into an amendment effective as of December 15, 2020, to the previously disclosed stock purchase agreement providing for the Acquisition with Acquisition Sub, Stadco, Target and each stockholder of Target. Under the terms of SPA, if the Acquisition was not closed by December 31, 2020, either the Company or Stadco could have terminated the SPA. The Amendment effected a change to this provision by extending until February 28, 2021 the date after which the parties may terminate if the Acquisition has not closed. The Amendment also effected certain other minor changes to the SPA.

Loan Purchase and Sale Agreement

On January 29, 2021, in connection with securities purchase agreement described above, Acquisition Sub entered into a Loan Purchase and Sale Agreement, effective January 26, 2021, with Sunflower Bank, N.A., and agreed to by Stadco, Target, and Stadco Mexico, Inc. Under the terms of the Loan Purchase Agreement, Acquisition Sub agreed to purchase certain indebtedness obligations of Stadco consisting of long-term indebtedness and revolving credit line indebtedness owed to Sunflower Bank. The current amount outstanding under these indebtedness obligations is approximately $9.8 million. In exchange, Acquisition Sub agreed to pay $2 million less than the aggregate amount of the indebtedness that is then outstanding on the date of the closing of the transactions contemplated under the Loan Purchase Agreement. The closing of the indebtedness purchase is subject to the closing of the acquisition contemplated under the SPA and will take place on or about February 15, 2021, with an optional grace period of up to an additional 15 days. In connection with the closing, Acquisition Sub will also guaranty repayment by Stadco to Sunflower Bank of any of the original approximately $1.5 million in principal indebtedness under Stadco's Paycheck Protection Program Loan that is not forgiven under the terms of the Coronavirus Aid, Relief, and Economic Security Act. The Loan Purchase Agreement contains customary representations and warranties of each party, as well as mutual indemnification provisions.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Dec. 31, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2020 and March 31, 2020, the condensed consolidated statements of operations and comprehensive (loss) income and stockholders’ equity for the three and nine months ended December 31, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2020 and 2019 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.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and 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 the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, or the 2020 Form 10-K, filed with the SEC on June 11, 2020.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, the recovery of long-lived assets, income taxes and the valuation of equity transactions. We base our estimates on historical and current experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.

The COVID-19 pandemic has negatively affected certain customers, suppliers and their labor force. For example, travel restrictions in connection with the pandemic have delayed inspections, deliveries and impacted some supply chain providers. The future financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as its impact depends on future developments, which are highly uncertain and cannot be predicted.

The directives imposed by federal, state and local governments as a result of the COVID-19 pandemic did not impair our ability to maintain operations during the first nine months of fiscal 2021 as the Company was designated an essential service. Our estimates at the end of the first nine months of fiscal 2021 assumed no material impact from the disruptions caused by COVID-19.

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REVENUE (Tables)

9 Months Ended

Dec. 31, 2020

Schedule of net sales on a disaggregated basis by market and contract type

The following table presents net sales on a disaggregated basis by market and contract type:

Net Sales by market	Defense		Industrial		Totals
Three months ended December 31, 2020	$	2,885,753	$	683,965	$	3,569,718
Three months ended December 31, 2019	$	3,200,671	$	466,605	$	3,667,276
Nine months ended December 31, 2020	$	9,314,846	$	2,251,330	$	11,566,176
Nine months ended December 31, 2019	$	9,725,635	$	1,349,985	$	11,075,620

Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2020	$	3,141,416	$	428,302	$	3,569,718
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Nine months ended December 31, 2020	$	9,251,284	$	2,314,892	$	11,566,176
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620

Schedule of Contract Assets

At December 31, 2020 contract assets consisted of the following:

			Less: Progress
Contract assets	Unbilled		payments		Total
December 31, 2020	$	10,074,902	$	4,760,249	$	5,314,653
March 31, 2020	$	10,635,588	$	6,130,967	$	4,504,621

Sales [Member]

Schedule of revenues from customers who accounted for more than 10% of our net sales

	Three months ended				Three months ended				Nine months ended				Nine months ended
	December 31, 2020				December 31, 2019				December 31, 2020				December 31, 2019
Customer	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
A	$	398,011	11	%	$	404,062	11	%	$	2,106,998	18	%	$	1,790,311	16	%
B	$	530,583	15	%	$	*	*	%	$	1,871,256	16	%	$	*	*	%
C	$	609,114	17	%	$	1,215,737	33	%	$	1,679,814	15	%	$	2,320,485	21	%
D	$	682,337	19	%	$	727,084	20	%	$	1,631,010	14	%	$	1,825,213	16	%
E	$	550,096	15	%	$	*	*	%	$	*	*	%	$	*	*	%
F	$	*	*	%	$	*	*	%	$	*	*	%	$	1,136,146	10	%
G	$	*	*	%	$	*	*	%	$	*	*	%	$	1,148,242	10	%

*Less than 10% of total

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EARNINGS PER SHARE (Tables)

9 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

Schedule of basic and diluted earnings per share computations

	Three months ended		Three months ended		Nine months ended		Nine months ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Basic EPS:
Net (loss) income	$	(48,172)	$	(319,770)	$	106,358	$	(390,014)
Weighted average shares		29,498,662		29,254,594		29,430,206		29,254,230
Basic (loss) income per share	$	(0.00)	$	(0.01)	$	0.00	$	(0.01)
Diluted EPS:
Net (loss) income	$	(48,172)	$	(319,770)	$	106,358	$	(390,014)
Dilutive effect of stock options		—		—		1,591,178		—
Diluted weighted average shares		29,498,662		29,254,594		31,021,384		29,254,230
Diluted (loss) income per share	$	(0.00)	$	(0.01)	$	0.00	$	(0.01)

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Dec. 31, 2020

STOCK-BASED COMPENSATION

Schedule of options

						Weighted
						Average
		Weighted		Aggregate		Remaining
	Number Of	Average		Intrinsic		Contractual Life
	Options	Exercise Price		Value		(in years)
Outstanding at 3/31/2019	2,938,000	$	0.416	$	1,869,200	6.74
Exercised	(20,000)		0.360
Canceled	(2,000)
Outstanding at 3/31/2020	2,916,000	$	0.415	$	2,546,800	6.21
Canceled	(2,000)
Exercised	(150,000)		0.800
Outstanding at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81
Vested or expected to vest at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81
Exercisable and vested at 12/31/2020	2,764,000	$	0.393	$	2,743,300	5.81

Schedule of exercise price range

		Weighted
		Average
		Remaining	Weighted			Weighted
	Options	Contractual	Average		Options	Average
Range of Exercise Prices:	Outstanding	Term	Exercise Price		Exercisable	Exercise Price
$0.01‑$1.00	2,670,000	5.87	$	0.34	2,670,000	$	0.34
$1.01‑$1.96	94,000	0.26	$	1.84	94,000	$	1.84
Totals	2,764,000				2,764,000

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CONCENTRATION OF CREDIT RISK (Tables)

9 Months Ended

Dec. 31, 2020

Accounts Receivable

Concentration of credit risk and major customers

Schedule of revenues from customers who accounted for more than 10% of our net sales

	December 31, 2020				March 31, 2020
Customer	Dollars		Percent		Dollars		Percent
A	$	356,228	30	%	$	*	*
B	$	243,938	21	%	$	*	*
C	$	193,750	17	%	$	*	*
D	$	*	*		$	365,636	37	%
E	$	167,152	14	%	$	254,637	26	%
F	$	*	*		$	123,000	12	%
G	$	123,909	11	%	$	*	*

*less than 10% of total

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OTHER CURRENT ASSETS (Tables)

9 Months Ended

Dec. 31, 2020

OTHER CURRENT ASSETS

Schedule of other current assets

	December 31, 2020		March 31, 2020
Payments advanced to suppliers	$	31,268	$	272,070
Prepaid insurance		358,029		250,073
Prepaid subscriptions		22,057		14,440
Refundable AMT credits		22,748		22,748
Employee advances		—		18,173
Other		7,922		28,647
Total	$	442,024	$	606,151

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ACCRUED EXPENSES (Tables)

9 Months Ended

Dec. 31, 2020

ACCRUED EXPENSES

Schedule of accrued expenses

	December 31, 2020		March 31, 2020
Provision for claims settlement	$	495,000	$	495,000
Accrued compensation		316,490		383,555
Provision for contract losses		110,115		285,480
Accrued professional fees		244,703		279,657
Accrued project costs		109,062		76,059
Other		30,739		34,773
Total	$	1,306,109	$	1,554,524

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DEBT (Tables)

9 Months Ended

Dec. 31, 2020

DEBT

Schedule of outstanding debt obligations

Total debt included the following as of:	December 31, 2020		March 31, 2020
Berkshire Term Loan at 5.21% interest, due December 2021	$	2,491,835	$	2,564,389
Berkshire SBA PPP loan at 1% interest, due May 2022		1,317,100		—
Finance lease obligations at 8% interest, due January 2022		13,662		22,460
Total debt	$	3,822,597	$	2,586,849
Less: debt issue costs unamortized	$	16,485	$	20,460
Total debt, net	$	3,806,112	$	2,566,389
Less: Current portion of long-term debt	$	3,088,553	$	109,829
Total long-term debt, net	$	717,559	$	2,456,560

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LEASES (Tables)

9 Months Ended

Dec. 31, 2020

LEASES

Schedule of Right of use assets and liabilities

Right-of-use assets and liabilities on our condensed consolidated balance  sheet at December 31, 2020 were:

Finance lease:	December 31, 2020
Property, plant and equipment	$	54,376
Accumulated depreciation		43,501
Net property, plant and equipment	$	10,875
Current portion of long-term debt	$	12,569
Long-term debt	$	1,093
Total finance lease liabilities	$	13,662

Schedule of Supplemental Information of leases

Since the expiration of the term of the lease, we have continued to lease this office space on a month-to-month basis. Other supplemental information regarding our leases are contained in the following tables:

Components of lease expense for the period ended:	December 31, 2020
Operating lease amortization	$	2,878
Finance lease amortization	$	8,156
Finance lease interest	$	1,102

Weighted average lease term and discount rate at:	December 31, 2020
Finance lease term (years)	1.25
Finance lease rate	8	%

Schedule of Supplemental Cash flow information

Supplemental cash flow information related to leases for the period ended:	December 31, 2020
Cash used in operating activities	$	2,878
Cash used in financing activities	$	8,798

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REVENUE - Disaggregated Basis (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer, Including Assessed Tax	$ 3,569,718	$ 3,667,276	$ 11,566,176	$ 11,075,620
Over Time Member
Revenue from Contract with Customer, Including Assessed Tax	3,141,416	3,439,367	9,251,284	9,104,395
Point In Time Member
Revenue from Contract with Customer, Including Assessed Tax	428,302	227,909	2,314,892	1,971,225
Defense
Revenue from Contract with Customer, Including Assessed Tax	2,885,753	3,200,671	9,314,846	9,725,635
Industrial
Revenue from Contract with Customer, Including Assessed Tax	$ 683,965	$ 466,605	$ 2,251,330	$ 1,349,985

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REVENUE - Net Sales from Customers (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenues	$ 3,569,718	$ 3,667,276	$ 11,566,176	$ 11,075,620
Customer A | Sales Revenue, Net
Revenues	$ 398,011	$ 404,062	$ 2,106,998	$ 1,790,311
Concentration risk percentage	11.00%	11.00%	18.00%	16.00%
Customer B | Sales Revenue, Net
Revenues	$ 530,583		$ 1,871,256
Concentration risk percentage	15.00%		16.00%
Customer C | Sales Revenue, Net
Revenues	$ 609,114	$ 1,215,737	$ 1,679,814	$ 2,320,485
Concentration risk percentage	17.00%	33.00%	15.00%	21.00%
Customer D | Sales Revenue, Net
Revenues	$ 682,337	$ 727,084	$ 1,631,010	$ 1,825,213
Concentration risk percentage	19.00%	20.00%	14.00%	16.00%
Customer E | Sales Revenue, Net
Revenues	$ 550,096
Concentration risk percentage	15.00%
Customer F | Sales Revenue, Net
Revenues				$ 1,136,146
Concentration risk percentage				10.00%
Customer G | Sales Revenue, Net
Revenues				$ 1,148,242
Concentration risk percentage				10.00%

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REVENUE - Contract Assets and Contract Liabilities (Details) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
Contract assets	$ 5,314,653	$ 4,504,621
Unbilled
Contract assets	10,074,902	10,635,588
Less: Progress payments
Contract assets	$ 4,760,249	$ 6,130,967

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REVENUE - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2020	Sep. 30, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Amount		$ 18.4
Revenue Remaining Performance Obligation Completed Less Than 50		$ 13.0
Revenue, Remaining Performance Obligation, Percentage		50.00%
Revenue Recognized By Contract Liabilities	$ 0.8
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period			3 months
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period			36 months

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INCOME TAXES - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
INCOME TAXES
Income tax (benefit) expense	$ (13,369)	$ (97,734)	$ 60,573	$ (115,092)
Effective tax rate			36.30%
Deferred Tax Assets, Valuation Allowance	$ 1,700,000		$ 1,700,000

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EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended						9 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2020	Dec. 31, 2019
Basic EPS:
Net (loss) income	$ (48,172)	$ 270,764	$ (116,234)	$ (319,770)	$ (291,021)	$ 220,777	$ 106,358	$ (390,014)
Weighted average shares	29,498,662			29,254,594			29,430,206	29,254,230
Basic (loss) income per share	$ 0.00			$ (0.01)			$ 0.00	$ (0.01)
Diluted EPS:
Net (loss) income	$ (48,172)	$ 270,764	$ (116,234)	$ (319,770)	$ (291,021)	$ 220,777	$ 106,358	$ (390,014)
Dilutive effect of stock options							1,591,178
Diluted weighted average shares	29,498,662			29,254,594			31,021,384	29,254,230
Diluted (loss) income per share	$ 0.00			$ (0.01)			$ 0.00	$ (0.01)
Antidilutive securities excluded from computation of earnings per share amount (in shares)	2,814,000			2,967,000			94,000	2,967,000

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STOCK-BASED COMPENSATION - Stock Option Activity (Details) - USD ($)		9 Months Ended	12 Months Ended
	Jun. 16, 2020	Dec. 31, 2020	Mar. 31, 2020	Mar. 31, 2019
Number Of Options
Outstanding at the beginning of the period (in shares)		2,916,000	2,938,000
Exercised (in shares)	(150,000)	(150,000)	(20,000)
Canceled (in shares)		(2,000)	(2,000)
Outstanding at the end of the period (in shares)		2,764,000	2,916,000	2,938,000
Vested or expected to vest at the end of the period (in shares)		2,764,000
Exercisable and vested at the end of the period (in shares)		2,764,000
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)		$ 0.415	$ 0.416
Exercised (in shares)		0.800	0.360
Canceled (in dollars per share)		0.000	0.000
Outstanding at the end of the period (in dollars per share)		0.393	$ 0.415	$ 0.416
Vested or expected to vest at the end of the period (in dollars per share)		0.393
Exercisable and vested at the end of the period (in dollars per share)		$ 0.393
Aggregate Intrinsic Value
Outstanding Value		$ 2,743,300	$ 2,546,800	$ 1,869,200
Vested or expected to vest at the end of the period		2,743,300
Exercisable and vested at the end of the period		$ 2,743,300
Weighted Average Remaining Contractual Life (in years)
Outstanding at the end of the period		5 years 9 months 22 days	6 years 2 months 16 days	6 years 8 months 27 days
Vested or expected to vest at the end of the period		5 years 9 months 22 days
Exercisable and vested at the end of the period		5 years 9 months 22 days

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STOCK-BASED COMPENSATION - Stock Options Outstanding By Exercise Price (Details)	9 Months Ended
	Dec. 31, 2020 $ / shares shares
Stock Based Compensation By Exercise Price Range
Options Outstanding | shares	2,764,000
Options Exercisable | shares	2,764,000
Range One
Stock Based Compensation By Exercise Price Range
Exercise Price, Lower Range	$ 0.01
Exercise Price, Upper Range	$ 1.00
Options Outstanding | shares	2,670,000
Options Outstanding, Weighted Average Remaining Contractual Term	5 years 10 months 13 days
Options Outstanding, Weighted Average Exercise Price	$ 0.34
Options Exercisable | shares	2,670,000
Options Exercisable, Weighted Average Exercise Price	$ 0.34
Range Two
Stock Based Compensation By Exercise Price Range
Exercise Price, Lower Range	1.01
Exercise Price, Upper Range	$ 1.96
Options Outstanding | shares	94,000
Options Outstanding, Weighted Average Remaining Contractual Term	3 months 4 days
Options Outstanding, Weighted Average Exercise Price	$ 1.84
Options Exercisable | shares	94,000
Options Exercisable, Weighted Average Exercise Price	$ 1.84

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STOCK-BASED COMPENSATION - Additional Information (Details) - USD ($)			9 Months Ended
	Sep. 01, 2020	Mar. 16, 2020	Dec. 31, 2020
Share based compensation
Contractual term of options			5 years 9 months 22 days
Granted a total of shares of restricted stock	100,000
Restricted Stock [Member]
Share based compensation
Granted a total of shares of restricted stock		100,000
Stock based compensation cost		$ 111,000	$ 134,000
Total recognized compensation cost related to restricted stock award			101,750
Total unrecognized compensation cost related to restricted stock awards			0
Stock option [Member]
Share based compensation
Unrecognized compensation cost related to stock options			0
Stock option [Member] | Restricted Stock [Member]
Share based compensation
Total recognized compensation cost related to restricted stock award			44,667
Total unrecognized compensation cost related to restricted stock awards			$ 89,333
2016 Plan
Share based compensation
Shares reserved			5,000,000
Shares available for grant			1,376,000
Maximum | Stock option [Member]
Share based compensation
Contractual term of options			10 years

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CONCENTRATION OF CREDIT RISK (Details)	9 Months Ended	12 Months Ended
	Dec. 31, 2020 USD ($) customer	Mar. 31, 2020 USD ($)
Concentration of credit risk and major customers
Accounts receivable	$ 1,173,376	$ 990,300
Accounts Receivable | Customer Concentration Risk | Customer A
Concentration of credit risk and major customers
Accounts receivable	$ 356,228
Concentration risk percentage	30.00%
Accounts Receivable | Customer Concentration Risk | Customer B
Concentration of credit risk and major customers
Accounts receivable	$ 243,938
Concentration risk percentage	21.00%
Accounts Receivable | Customer Concentration Risk | Customer C
Concentration of credit risk and major customers
Accounts receivable	$ 193,750
Concentration risk percentage	17.00%
Accounts Receivable | Customer Concentration Risk | Customer D
Concentration of credit risk and major customers
Accounts receivable		$ 365,636
Concentration risk percentage		37.00%
Accounts Receivable | Customer Concentration Risk | Customer E
Concentration of credit risk and major customers
Accounts receivable	$ 167,152	$ 254,637
Concentration risk percentage	14.00%	26.00%
Accounts Receivable | Customer Concentration Risk | Customer F
Concentration of credit risk and major customers
Accounts receivable		$ 123,000
Concentration risk percentage		12.00%
Accounts Receivable | Customer Concentration Risk | Customer G
Concentration of credit risk and major customers
Accounts receivable	$ 123,909
Concentration risk percentage	11.00%
Trade Receivables
Concentration of credit risk and major customers
Number of significant customers | customer	5
Concentration risk percentage	93.00%

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OTHER CURRENT ASSETS (Details) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
OTHER CURRENT ASSETS
Payments advanced to suppliers	$ 31,268	$ 272,070
Prepaid insurance	358,029	250,073
Prepaid subscriptions	22,057	14,440
Refundable AMT credits	22,748	22,748
Employee advances		18,173
Other	7,922	28,647
Total	$ 442,024	$ 606,151

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ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
ACCRUED EXPENSES
Provision for claims settlement	$ 495,000	$ 495,000
Accrued compensation	316,490	383,555
Provision for contract losses	110,115	285,480
Accrued professional fees	244,703	279,657
Accrued project costs	109,062	76,059
Other	30,739	34,773
Total	$ 1,306,109	$ 1,554,524

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DEBT - Long-term Debt (Details) - USD ($)	Dec. 31, 2020	Dec. 18, 2020	Mar. 31, 2020
Long-term Debt
Total debt	$ 3,822,597		$ 2,586,849
Less: debt issue costs unamortized	16,485		20,460
Total debt, net	3,806,112		2,566,389
Less: Current portion of long-term debt	3,088,553		109,829
Total long-term debt, net	717,559		2,456,560
Berkshire Term Loan at 5.21% interest, due December 2021
Long-term Debt
Total debt	$ 2,491,835	$ 2,500,000	$ 2,564,389
Interest rate (as a percent)	5.21%		5.21%
Berkshire SBA PPP loan at 1% interest, due May 2022
Long-term Debt
Total debt	$ 1,317,100
Interest rate (as a percent)	1.00%		1.00%
Finance lease obligations at 8% interest, due January 2022
Long-term Debt
Total debt	$ 13,662		$ 22,460
Less: Current portion of long-term debt	12,569
Total long-term debt, net	$ 1,093
Interest rate (as a percent)	8.00%		8.00%

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DEBT - Small Business Administrative PPP loan (Details)	May 08, 2020 USD ($)
Small Business Administration Paycheck Protection Program Loan [Member] | Promissory Note [Member] | Ranor, Inc.
Debt
Amount of promissory notes issued	$ 1,317,100

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DEBT - Berkshire Bank & Trust Company Loan Facility (Details)					9 Months Ended		12 Months Ended	21 Months Ended
	Dec. 18, 2020 USD ($)	Jun. 30, 2020 USD ($)	Apr. 03, 2020 USD ($)	Dec. 23, 2019 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 21, 2016 USD ($)
Debt Instrument [Line Items]
Amount borrowed					$ 1,000,000	$ 0
Repayment of principal					1,000,000	$ 0
Amount outstanding					3,822,597		$ 2,586,849	$ 3,822,597
Ranor, Inc. | Revolving Credit Facility
Debt Instrument [Line Items]
Term loan									$ 1,000,000
Berkshire Loan | Revolver loan
Debt Instrument [Line Items]
Amount borrowed			$ 1,000,000
Repayment of principal		$ 1,000,000
Amount outstanding	$ 0				0		$ 0	$ 0
Interest payments					$ 6,664
Weighted average interest rate (as a percent)					2.67%			2.67%
Unused borrowing capacity					$ 3,000,000			$ 3,000,000
Berkshire Loan | Revolver loan | Adjusted Prime Rate
Debt Instrument [Line Items]
Adjusted interest rate (as a percent)	2.75%
Basis spread on variable rate (as a percent)	0.70%
Berkshire Loan | Restated Promissory Note
Debt Instrument [Line Items]
Term loan	$ 3,000,000
Maximum Amount Of Borrowing Base Required To Grant Loan Advance				$ 3,000,000
Debt Instrument Percentage Of Accounts Receivable Used For Determination Of Aggregate Amount Of Advances				80.00%
Debt Instrument Percentage Of Eligible Raw Material Used For Determination Of Aggregate Amount Of Advances				25.00%
Amount Included In Sum To Calculate Maximum Borrowing Base				$ 250,000
Debt Instrument Percentage Of Appraised Value Of Equipment For Determination Of Aggregate Amount Of Advances				50.00%
Debt Instrument, Description of Variable Rate Basis				one-month LIBOR plus 225 basis points
Berkshire Loan | Ranor, Inc.
Debt Instrument [Line Items]
Term loan									2,850,000
Debt Instrument Covenant Trailing Period For Measurement Of Loan To Value Ratio								365 days
Berkshire Loan | Maximum
Debt Instrument [Line Items]
Debt Instrument Covenant Leverage Ratio Year One					2.50
Berkshire Loan | Maximum | Ranor, Inc.
Debt Instrument [Line Items]
Debt Instrument Covenant Loan To Value Ratio					0.75			0.75
Berkshire Loan | Minimum
Debt Instrument [Line Items]
Debt Instrument Debt Service Coverage Ratio Threshold					1.2		1.2
Berkshire Loan | Minimum | Revolver loan | LIBOR
Debt Instrument [Line Items]
Adjusted interest rate (as a percent)	2.75%
Ranor and Berkshire
Debt Instrument [Line Items]
Revolving line of credit				$ 3,000,000					$ 1,000,000
Berkshire Term Loan at 5.21% interest, due December 2021
Debt Instrument [Line Items]
Amount outstanding	$ 2,500,000				$ 2,491,835		$ 2,564,389	$ 2,491,835

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LEASES - Finance Lease (Details) - USD ($)	Dec. 31, 2020	Mar. 31, 2020
Net property, plant and equipment	$ 4,208,329	$ 4,182,861
Current portion of long-term debt	3,088,553	109,829
Long-term debt	717,559	$ 2,456,560
Finance lease obligations at 8% interest, due January 2022
Current portion of long-term debt	12,569
Long-term debt	1,093
Total finance lease liabilities	13,662
Assets Held under Capital Leases [Member]
Property, plant and equipment	54,376
Accumulated depreciation	43,501
Net property, plant and equipment	$ 10,875

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LEASES - Supplemental Information of Leases (Details)	9 Months Ended
	Dec. 31, 2020 USD ($)
LEASES
Operating lease amortization	$ 2,878
Finance lease amortization	8,156
Finance lease interest	$ 1,102
Finance lease term (years)	1 year 3 months
Finance lease rate	8.00%

XML

LEASES - Supplemental Cash Flow Information (Details)	9 Months Ended
	Dec. 31, 2020 USD ($)
LEASES
Cash used in operating activities	$ 2,878
Cash used in financing activities	$ 8,798

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COMMITMENTS (Details) - USD ($)		3 Months Ended	9 Months Ended
	Mar. 16, 2020	Dec. 31, 2020	Dec. 31, 2020
Contractual commitments
Defined Contribution Plan, Cost		$ 21,897	$ 64,167
Provision for claims settlement	$ 495,000
Period for payment of claim settlement amount	60 days

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Millions	Feb. 15, 2021	Jan. 29, 2021	Oct. 16, 2020
Stadco Acquisition, LLC
Subsequent Event [Line Items]
Liabilities			$ 14.0
Stadco Acquisition, LLC
Subsequent Event [Line Items]
Consideration in the form of the Company's common stock (in shares)			1,000,000
Subsequent Event [Member] | Acquisition Sub | Loan Purchase and Sale agreement
Subsequent Event [Line Items]
Liabilities acquired		$ 9.8
Reduction in payment for liabilities acquired.		2.0
Optional grace period	15 days
Subsequent Event [Member] | Paycheck Protection Program [Member] | Acquisition Sub | Loan Purchase and Sale agreement
Subsequent Event [Line Items]
Guaranty Payments		$ 1.5