10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2014

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

For the transition period from __________________ to __________________

Commission File Number: 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.)
3477 Corporate Parkway, Suite 140 Center Valley, PA	18034
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	(484) 693-1700
Securities registered under Section 12(b) of the Exchange Act:   None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $.0001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.   

o Yes x No

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 o No

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

x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

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

Large accelerated filer   o	Accelerated filer   o
Non-accelerated filer   o (Do not check if a smaller reporting company)	Smaller reporting company   x

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

o Yes x No

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of September 30, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $10.1 million.

The number of shares outstanding of the registrant’s common stock as of July 7, 2014 was 24,669,958.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

	Page
PART I
Item 1. Business	1
Item 1A. Risk Factors	5
Item IB. Unresolved Staff Comments	15
Item 2. Property	15
Item 3. Legal Proceedings	15
Item 4. Mine Safety Disclosures	16
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6. Selected Financial Data	16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A. Quantitative and Qualitative Disclosure About Market Risk	24
Item 8. Financial Statements and Supplementary Data	24
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	24
Item 9A. Controls and Procedures	24
Item 9B. Other Information	26
PART III
Item 10. Directors, Executive Officers, and Corporate Governance	26
Item 11. Executive Compensation	27
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 13.  Certain Relationships and Related Transactions and Director Independence	27
Item 14. Principal Accountant Fees and Services	27
PART IV
Item 15. Exhibits and Financial Statement Schedules	28

PART I

Item 1. Business.

Our Business

We are a global manufacturer of precision, large-scale fabricated and machined metal components and systems operating two wholly-owned subsidiaries, Ranor, Inc., or Ranor, a Delaware corporation, located in Westminster Massachusetts, USA, and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a limited company organized under the laws of the People’s Republic of China, or China, located in Wuxi City, Jiangsu Province, China. We offer a full range of services required to transform metallic raw materials into precise finished products. We sell these finished products to customers in three main industry groups: Naval/Maritime, Energy and Industrial. The finished products are used in a variety of markets including: alternative energy, medical, nuclear, defense, industrial, and aerospace. Our mission is to be the leading end-to-end global service provider to our markets by furnishing custom, fully integrated "turn-key" solutions for complete products that require custom fabrication, precision machining, assembly, integration, inspection, non-destructive evaluation and testing.

We work with our customers to manufacture products in accordance with the customers’ drawings and specifications. Our work complies with specific national and international codes and standards applicable to our industry. We believe that we have earned our reputation through outstanding technical expertise, attention to detail, and a total commitment to quality and excellence in customer service.

On November 4, 2010, we announced the formation of WCMC to meet the demand for local manufacture and machining of components in China. We formed WCMC after consultation with a large customer in the solar energy industry, and in order to meet demand for solar and nuclear energy components in Asia, including China in particular.  During the fiscal year ended March 31, 2011, or fiscal 2011, we undertook organizational and start-up activities at WCMC, including forming the entity, obtaining the necessary licenses to conduct business in China, and identifying and qualifying manufacturing subcontractors within China. Our relationship with the subcontractors is confirmed when we issue purchase orders for manufacturing services. WCMC subcontracts all fabrication and machining services and such subcontracted services are overseen by our own personnel.

About Us

We are a Delaware corporation, organized in 2005 under the name Lounsberry Holdings II, Inc. On February 24, 2006, we acquired all of the issued and outstanding capital stock of Ranor. Ranor together with its predecessors, has been in continuous operation since 1956. Since February 24, 2006, our primary business has been the business of Ranor. On March 6, 2006, following the acquisition of Ranor, we changed our corporate name to TechPrecision Corporation. Our acquisition of Ranor was accounted for as a reverse acquisition.

Our executive offices are located at Saucon Valley Plaza, 3477 Corporate Parkway, Suite 140, Center Valley, PA 18034, and our telephone number is (484) 693-1700. Our website is www.techprecision.com. Information on our website, or any other website, is not incorporated in this annual report.

References in this annual report to “the Company,” “we,” “us,” “our” and similar words refer to TechPrecision Corporation and its subsidiaries, Ranor and WCMC, unless the context indicates otherwise.  

General

Our manufacturing operations within the U.S. are situated on approximately 65 acres in North Central Massachusetts. Our 145,000 square foot facility is the home for state-of-the-art equipment which gives us the capability to manufacture products as large as 100 tons. We offer a full range of services required to transform raw material into precise finished products. Our manufacturing capabilities include: fabrication operations (cutting, press and roll forming, assembly, welding, heat treating, blasting and painting) and machining operations including CNC (computer numerical controlled) horizontal and vertical milling centers. We also provide support services to our manufacturing capabilities: manufacturing engineering (planning, fixture and tooling development, and manufacturing), quality control (inspection and testing), materials procurement and production control (scheduling, project management and expediting) and final assembly. During fiscal year ended March 31, 2012, or fiscal 2012, we completed an expansion project at our Massachusetts facility that expanded our manufacturing capacity by an additional 19,500 square feet.  This expansion project was completed in September 2011 at a cost of approximately $1.7 million, which was financed in part from the proceeds of a Massachusetts Development Authority bond financing that was completed in December 2010. During the third quarter of fiscal 2012 we completed the installation and testing of a new $2.4 million gantry mill machine. This machine was placed into service during January 2012.

All U.S. based 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 customer’s needs, and we have implemented such standards into our manufacturing operations.

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Our operations in China are conducted through WCMC. WCMC, through its subcontractors, provides large-scale precision component fabrication and machining solutions in Asia. WCMC is positioned to provide our customers in Asia with quality, durable, and efficient current and next-generation components that address industry-specific needs. WCMC is licensed in China as a trading company, allowing it to contract freely with multiple manufacturers within China to source the manufacturing capacity and expertise required by our customers and their product designs. In February 2012, WCMC received certification that its Quality Management Systems comply with the requirements of ISO 9001: 2008 indicating that WCMC operates to this international standard.

Products

We manufacture a wide variety of products pursuant to customer contracts and based on individual customer needs. We also provide manufacturing engineering services to assist customers in optimizing their engineering designs for manufacturing efficiency.  In general, we do not design the products we manufacture, but rather manufacture according to “build-to-print” requirements specified by our customers. Accordingly, we do not distribute the products that we manufacture on the open market and we do not market any typical product on an on-going basis. We do not own the intellectual property rights to any proprietary marketed product, and we do not manufacture products in anticipation of orders. Manufacturing operations do not commence on any project before we receive a customer’s purchase order. All contracts cover specific products within the capability of our resources.

Although our focus is to provide long-term integrated solutions to our customers on continuous production programs, our activities include a variety of both custom-based and production-based requirements. The custom-based work is typically either a prototype or unique, one-of-a-kind product. The production-based work is repeat work or a single product with multiple quantity releases. To the greatest extent possible, we seek opportunities where we are in a Tier 1 or Tier 2 supplier relationship with our customers.

Changes in market demand for our manufacturing expertise can be significant and sudden and require us to be able to adapt to the collective needs of the customers and industries that we serve. Understanding this dynamic, we have developed the capability to transform our workforce to manufacture products for customers across different industries.

In addition to manufacturing services, WCMC also provides field service repairs for our customers who have their proprietary equipment deployed and operating at their customer locations within Asia.

Examples of the industries we serve and products we have manufactured within such industries during recent years include, but are not limited to:

Navy/Maritime:

Aircraft carrier steam accumulator tanks

DDX destroyer prototype propulsion equipment, gun and weapons handling equipment

Submarine sonar system components, primary shield tank heads and foundations

Delta rocket precision-machined fuel tank bulkheads

F-15 special equipment pods

Various other components, fixtures and tooling

Energy:

Commercial nuclear reactor internal components and temporary heads

Spent nuclear fuel storage and transportation canisters and casks

Material handling equipment

Radioactive isotope transportation casks

Industrial:

Components and major assemblies for proton beam accelerators for cancer treatment

Production chambers to manufacture multi-crystalline and mono-crystalline solar panels

Polysilicon production chambers

Production chambers for sapphire growth systems

Wind turbine components

Vacuum chambers

Food processing equipment

Chemical processing equipment

Pressure vessels 

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Source of Supply

Manufacturing operations are partly dependent on the availability of raw materials. Raw material requirements vary with each contract and are dependent upon customer requirements and specifications. We have established relationships with numerous suppliers. We consistently seek to initiate new contacts in order to establish alternate sources of material supply to reduce our dependency on any one supplier. The purchase of raw material is subject to the customer’s purchase order requirements, and not based on speculation or long-term contract awards. Some contracts require the use of customer-supplied raw materials in the manufacture of their product.

Our projects include the manufacturing of products from various traditional as well as specialty metal alloys. These materials may include, but are not limited to: inconel, titanium, stainless steel, high strength steel and other alloys. Certain of these materials are subject to long-lead time delivery schedules. In fiscal year ended March 31, 2014, or fiscal 2014, and the fiscal year ended March 31, 2013, or fiscal 2013, a supplier that provided forging, accounted for 10% and 15%, respectively, of our purchased material. There was no other single supplier that provided 10% or more of purchased raw materials in fiscal 2014 or fiscal 2013.

Marketing

While we have had significant customer concentration over the past three years, we endeavor to broaden our customer base as well as the industries we serve. We market to our existing customer base and we initiate contacts with new potential customers through various sources including personal contacts, customer referrals, and trade show participation. A significant portion of our business is the result of competitive bidding processes and a significant portion of our business is from contract negotiation. We believe that the reputation we have developed with our current customers represents an important part of our marketing effort.

Requests for quotations received from customers are reviewed to determine the specific requirements and our ability to meet such requirements. Quotations are prepared by estimating the material and labor costs and assessing our current backlog to determine our delivery commitments. Competitive bid quotations are submitted to the customer for review and award of contract. Negotiation bids typically require the submission of additional information to substantiate the quotation. The bidding process can range from several weeks for a competitive bid, to several months for a negotiation bid before the customer awards a contract.

Research and Product Development

Many of our customers generate drawings illustrating their projected unit design and technology requirements. Our research and product development activities are focused on delivering robust production solutions to such projected unit design and technology requirements. We accomplish this by introducing improved versions of existing products or by developing next-generation products. We follow this product development methodology in all our major product lines. We incurred no expenses for research and development in fiscal 2014 and fiscal 2013.

Principal Customers

A significant portion of our business is generated by a small number of major customers. The balance of our business consists of discrete projects for numerous other customers. As industry and market demand changes, our major customers may also change. Our top six customers generated over 65% and 79% of our total revenue in fiscal 2014 and fiscal 2013, respectively. Our group of largest customers can change from year to year. Our largest customer in fiscal 2014, BAE systems, accounted for 19% of our net sales and is engaged in the development, delivery and support of advanced defense, security and aerospace systems. Our largest customer in fiscal 2013 was Mevion Medical Systems, Inc., or Mevion, which accounted for 24% of our net sales. Mevion is a radiation therapy company dedicated to advancing the treatment of cancer. We build components and major assemblies for Mevion’s Proton Therapy Systems which are being installed at certain institutions throughout North America. Our largest customer in China is a leading global provider of production technology and materials for the solar, LED and other specialty markets that engaged us to manufacture production furnaces for the manufacturing of solar panels and sapphire products.

Our business is dependent on purchase orders, or POs, received from our customers for work. Certain of these POs are issued under long-term purchase agreements. We historically have experienced, and continue to experience, customer concentration. A significant loss of business from our largest customer or a combination of several of our significant customers could result in lower operating profitability and/or operating losses if we are unable to replace such lost revenue from other sources.  Our customer base consists of many businesses in the markets identified above.  

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The revenue derived from all of our customers in the designated industry groups during fiscal 2014 and fiscal 2013 are highlighted within the table below (dollars in thousands):

For the year ended March 31,	2014					2013
Net Sales	Amount		Percent			Amount		Percent
Navy/Maritime	$	9,680		46	%	$	9,780		30%
Nuclear	$	4,193		20	%	$	3,684		11%
Precision Industrial	$	7,195		34	%	$	19,009		59%

The following table sets forth the revenue, both in dollars and as a percentage of total revenue, generated by individual customers in their specific markets that accounted for 10% or more of our revenue in either of the two past fiscal years ended (dollars in thousands):

For the year ended March 31,	2014					2013
Net Sales	Amount		Percent			Amount		Percent
Navy/Maritime	$	3,984		19	%	$	4,800		15%
Nuclear	$	*		*	%	$	*		*%
Precision Industrial Customer 1	$	2,955		14	%	$	6,087		19%
Precision Industrial Customer 2	$	2,069		10	%	$	7,666		24%

* No single customer in market accounted for 10% or more of our revenue during the period.

At March 31, 2014, we had a backlog of orders totaling approximately $22.9 million. We expect to deliver the backlog over the course of the next two fiscal years. The comparable backlog at the end of fiscal 2013 was $16.4 million. As of May 31, 2014, our backlog was $18.0 million. Included in the March 31, 2014 and May 31, 2014 backlog is $3.5 million which may be cancelled pending the outcome of a potential contract modification with one of our customers.

For fiscal 2014 and fiscal 2013, WCMC generated $0.2 million and $3.3 million of our total revenue, respectively. A downturn in demand for alternative energy components and a transfer of manufacturing back to the U.S. by WCMC’s largest customer has limited our ability to scale larger order volumes for WCMC in China.

Competition

We face competition from both domestic and foreign manufacturers in the manufacture of metal fabricated and machined precision components and equipment The industry in which we compete is fragmented with no one dominant player. We compete against companies that are both larger and smaller in size and capacity. Some competitors may be better known, have greater resources at their disposal, and may have lower production costs. For certain products, being a domestic manufacturer may play a role in determining whether we are awarded a certain contract. For other products, we may be competing against foreign manufacturers who have a lower cost of production. If a contracting party has a relationship with a vendor and is required to place a contract for bids, the preferred vendor may provide or assist in the development of the specification for the product which may be tailored to that vendor’s products. In such event, we would be at a disadvantage in seeking to obtain that contract. We believe that customers focus on such factors as the quality of work, the reputation of the vendor, the perception of the vendor’s ability to meet the required schedule, and price in selecting a vendor for their products. 

WCMC was formed to serve existing customers who expressed a strong desire for a qualified supply chain within China to serve their Asian end markets. China’s manufacturing base is large and developed, and we believe that there are many domestic and international companies that could compete with us in China. However, we believe that our strategy of augmenting our China-based subcontractors with experienced fabrication and machining expertise from the United States at WCMC enables us to better serve the precision manufacturing requirements of our customers within China, as compared to existing China manufacturers operating solely on their own.  We also believe that WCMC allows us to offer our customers global manufacturing solutions in North America and Asia that are not easily replicated by competitors operating exclusively only in either the United States or China.

Government Regulations

Although we have very few contracts with government agencies, a significant portion of our manufacturing services are provided as a subcontractor to prime government contractors. Such prime government contractors are subject to government procurement and acquisition regulations which give the government the right to termination for convenience, certain renegotiation rights, and rights of inspection. Any government action which affects our customers who are prime government contractors would affect us. Some of the work we perform for our customers is part of government appropriation packages, and therefore, subject to the Miller Act, requiring our customers who are prime government contractors to pay all subcontractors first under contracted purchase agreements. 

Because of the nature and use of our products, we are subject to compliance with quality assurance programs, compliance with which is a condition for our ability to bid on government contracts and subcontracts. We believe we are in compliance with all of these programs.

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We are also subject to laws applicable to manufacturing regulations, such as federal and state occupational health and safety laws, and environmental laws, which are discussed in more detail below under “Environmental Compliance.” WCMC operates under a business license granted by the appropriate government authorities in China. WCMC must operate under the terms and scope of that license in order to maintain its right to conduct business operations in China.

Environmental Compliance

We are subject to compliance with United States federal, state and local environmental laws and regulations that involve the use, disposal and cleanup of substances regulated by those laws and the filing of reports with environmental agencies, and we are subject to periodic inspections to monitor our compliance. We believe that we are currently in compliance with applicable environmental regulations. As part of our normal business practice we are required to develop and file reports and maintain logbooks that document all environmental issues within our organization. We may engage outside consultants to assist us in keeping current on developments in environmental regulations. Expenditures for environmental compliance purposes during fiscal 2014 were not material.

Intellectual Property Rights

Presently, we have no patent rights and we do not believe that our business requires patent or similar protection. Because of the nature of our business as a contract manufacturer, we do not believe that the lack of ownership of intellectual property will adversely affect our operations. In the course of our business we develop know-how for use in the manufacturing process. Although we have non-disclosure policies in place and in our contractual relations, we cannot assure you that we will be able to protect our intellectual property rights with respect to this know-how.

Personnel

As of March 31, 2014, we had approximately 117 full-time employees, of whom 28 are salaried and 89 are hourly. Of those employees, two employees are located in China at WCMC, and three are located at our executive office in Center Valley. None of our employees is represented by a labor union. 

Item 1A. Risk Factors.

We believe the following are the most significant risks related to our business that could cause actual results to differ materially from those contained in any forward-looking statements.

We are not in compliance with certain financial covenants under our Loan and Security Agreement with Santander Bank, as amended by Forbearance and Modification Agreement. We have incurred operating losses for the past three years. These factors raise substantial doubt about our ability to continue as a going concern.

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants under our Loan and Security Agreement between Ranor and Santander Bank, or the Bank, dated February 24, 2006, or, as amended, the Loan Agreement, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013.. The Loan Agreement was amended by the Forbearance and Modification Agreement, dated January 16, 2014, or the Forbearance Agreement. The Forbearance Agreement expired on March 31, 2014. The Bank did not agree to waive the non-compliance with the covenants at March 31, 2014. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon the termination date of the Forbearance Agreement. As a consequence, we classified all amounts under the Loan Agreement, $4.2 million at March 31, 2014, as a current liability. We entered into a Forbearance and Modification Agreement, dated May 30, 2014, or the  Second Forbearance Agreement, pursuant to which the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014. On July 1, 2014, the Company and the Bank entered into a Forbearance and Modification Agreement, or the Third Forbearance Agreement. Under the Third Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014.We continue to make principal and interest payments pursuant to the terms of the Forbearance Agreement. If the Bank were to demand full repayment, we would be unable to pay the obligation as we do not have existing facilities or sufficient cash on hand to satisfy these obligations and would need to seek alternative financing.

On May 30, 2014, we and Ranor entered into a Loan and Security Agreement, or the LSA, with Utica Leasco, LLC, or Utica. Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Note equal to7.5% plus the greater of 3.3% and the six-month LIBOR interest rate, as described in the Credit Loan Note.  Ranor’s obligations under the LSA and Credit Loan Note are guaranteed by the Company.

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We incurred operating losses of $7.1 million and $2.4 million for the periods ended March 31, 2014 and 2013, respectively. At March 31, 2014, we had cash and cash equivalents of $1.1 million. Approximately thirty thousand U.S. dollars is located in China which we may not be able to repatriate for use in the U.S. without undue cost or expense, if at all.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we must secure long-term financing on terms consistent with our near-term business plans. In addition, we must increase our backlog and change the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects which do not efficiently use our manufacturing capacity, and reduce our operating expenses to be in line with current business conditions in order to increase profit margins and decrease the amount of cash used in operations.

If successful in changing the composition of revenue and reducing costs, we anticipate that the fiscal year ending March 31, 2015, or fiscal 2015, operating results will reflect positive cash flows. However, we plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

The consolidated financial statements for the fiscal years ended March 31, 2014 and 2013 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total liabilities of $13.7 million at March 31, 2014 and to continue as a going concern is dependent upon the timely availability of long-term financing and successful execution of our operating plan. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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

Our going concern may have an adverse effect on our customer and supplier relationships.

Our relationships with our customers and suppliers are predicated on the belief that we will continue to operate as a going concern. Certain of our customers may not enter into sales contracts with us if there is uncertainty regarding our ability to continue as a going concern. This may have an adverse effect on our ability to grow our revenues and increase our backlog, which is a key component of our plan to continue as a going concern. Current and future suppliers may be less likely to grant us credit, resulting in a negative impact on our working capital and cash flows. While management has developed plans to continue to operate as a going concern, in the event such adverse consequences should occur, we cannot provide assurance that we will successfully execute these plans.

We have a history of operating losses, and we may incur additional losses in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter.

We have recorded net losses in each of the last two fiscal years, and we cannot be certain that we will regain profitability in the future.

Our operating results historically have been difficult to predict and have at times significantly fluctuated from quarter to quarter due to a variety of factors, many of which are outside of our control. As a result of all of these factors, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. If our revenue or operating results fall below the expectations of investors or any securities analysts that follow our company in any period, the trading price of our common stock would likely decline. Our operating expenses do not always vary directly with revenue and may be difficult to adjust in the short term. As a result, if revenue for a particular quarter is below our expectations, we may not be able to proportionately reduce operating expenses for that quarter, and therefore such a revenue shortfall would have a disproportionate effect on our operating results for that quarter.

Our inability to use a short form registration statement on Form S-3 may affect our ability to access the capital markets, if needed.

A Registration Statement on Form S-3, or Form S-3, permits an eligible issuer to incorporate by reference its past and future filings and reports made under the Exchange Act. In addition, Form S-3 enables eligible issuers to conduct primary offerings “off the shelf” under Rule 415 of the Securities Act of 1933, as amended, or the Securities Act. The shelf registration process under Form S-3 combined with the ability to incorporate information on a forward basis, allows issuers to avoid additional delays and interruptions in the offering process and to access the capital markets in a more expeditious and efficient manner than raising capital in a standard offering on Form

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S-1. One of the requirements for Form S-3 eligibility is for an issuer to have timely filed all required reports for a period of 12 months. Because we did not timely file our Annual Report on Form 10-K for the fiscal year ended March 31, 2013 and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, we will not be eligible to use Form S-3 for a period of at least 12 months (assuming we timely file our required filings within such 12 month period).

Due to our present inability to use Form S-3, if we wanted to conduct a registered offering of securities to investors, we will be required to use long form registration and may experience delays. In addition, our ability to undertake certain types of financing transactions may be limited or unavailable to us without the ability to use Form S-3. Furthermore, because of the delay associated with long form registration and the limitations on the financing transactions we may undertake, the terms of any financing transaction we are able to conduct may not be advantageous to us or may cause us not to obtain capital in a timely fashion to execute our business strategies and continue to operate as a going concern.

The terms of certain of our financing arrangements may impair our ability to raise capital.

The securities purchase agreement pursuant to which we sold our Series A Convertible Preferred Stock to Barron Partners provides the holders of our Series A Convertible Preferred Stock with certain rights, particularly a right of first refusal on certain future equity financings, that may impair our ability to raise capital in the equity markets.

In addition the Loan Agreement and the Loan and Security Agreement, dated May 30, 2014, by and between Ranor and Utica Leaseco, LLC, or the LSA, contain restrictive covenants and other provisions that could limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes. If we refinance our credit facilities, we cannot guarantee that any new credit facility will not contain similar covenants and restrictions.

Our indebtedness could adversely affect our ability to raise additional capital to fund our operations and limit our ability to pursue our growth strategy or to react to changes in the economy or our industry, and our debt obligations include restrictive covenants which may restrict our operations or otherwise adversely affect us.

Our current credit facilities contain, and any future credit facilities will likely contain, restrictive covenants and other provisions that could have important negative consequences to our business, including, without limitation:

· increasing our vulnerability to general economic and industry conditions because our debt payment obligations may limit our ability to use our cash to respond to or defend against changes in the industry or the economy;

· requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

· limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

· limiting our ability to pursue our growth strategy, including restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; and

· placing us at a disadvantage compared to our competitors who are less leveraged and may be better able to use their cash flow to fund competitive responses to changing industry, market or economic conditions.

We have identified a material weakness in our internal control over financial reporting, and if we fail to remediate this material weakness and maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our published financial data.

Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. In evaluating the effectiveness of our internal control over financial reporting as of March 31, 2014, management identified a material weakness in the Company's internal control over financial reporting. Specifically, we did not maintain a sufficient complement of corporate accounting personnel or Ranor accounting staff necessary to consistently perform management review controls over financial information and complete account reconciliations on a timely basis to ensure all transactions were accurately captured and recorded in the proper period. The demand on the corporate accounting resources is significant due to the manual nature of controls necessary to maintain effective control over our legacy system. As a result of this material weakness, we made a certain late or post-closing adjustment to work-in-process and cost of sales. The adjustment corrected a data entry input error of an incorrect date for certain project costs at our Ranor subsidiary. The error was discovered before our first general ledger closing at year end but was not reconciled in a timely manner.

During fiscal 2014 we have formalized our accounting policies and implemented a proper account reconciliation process. For fiscal 2015, we will review our compensating controls, staffing requirements and the cost/benefit for upgrading our legacy systems.

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We believe that the measures described above will facilitate remediation of the material weakness we have identified and will continue to strengthen our internal control over financial reporting. We are committed to continually improving our internal control process and will diligently review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide that additional measures are necessary to address control deficiencies. 

We face strong competition in our markets.

We face competitive pressures from both domestic and foreign manufacturers in each of the markets we serve.  No one company dominates the industry.  Our competitors include international, national, and local manufacturers, some of whom may have greater financial, manufacturing, marketing and technical resources than we do, or greater penetration in or familiarity with a particular geographic market than we have.  

Some competitors may be better known, with greater resources at their disposal, and some have lower production costs.  For certain products, being a domestic manufacturer may play a role in determining whether we are awarded a certain contract.  For other products, we may be competing against foreign manufacturers who have a lower cost of production.  If a contracting party has a relationship with a vendor and is required to place a contract for bids, the preferred vendor may provide or assist in the development of the specification for the product which may be tailored to that vendor’s products.  In such event, we would be at a disadvantage in seeking to obtain that contract.  We believe that customers focus on such factors as the quality of work, the reputation of the vendor, the perception of the vendor’s ability to meet the required schedule, and the price in selecting a vendor for their products.  Some of our customers have moved manufacturing operations or product sourcing overseas, which can negatively impact our sales.  To remain competitive, we will need to invest continuously in manufacturing, product development and customer service, and we may need to reduce our prices, particularly with respect to customers in industries that are experiencing downturns.  We cannot provide assurance that we will be able to maintain our competitive position in each of the markets that we serve.

The demand for certain products we produce may be cyclical.

Demand in our end-use markets, including companies in the renewable energy (solar and wind), medical, nuclear, defense, industrial, and aerospace industries can be cyclical in nature and sensitive to general economic conditions, competitive influences and fluctuations in inventory levels throughout the supply chain.  Our sales are sensitive to the market conditions present in the industries in which the ultimate consumers of our products operate, which in some cases have been highly cyclical and subject to substantial downturns.

As a result of the cyclical nature of these markets, we have experienced, and in the future we may experience, significant fluctuations in our sales and results of operations with respect to a substantial portion of our total product offering, and such fluctuations could be material and adverse to our overall financial condition, results of operations and liquidity.

We rely on third parties to supply certain raw materials that are critical to the manufacture of our products and we may not be able to access alternative sources of these raw materials if the suppliers are unwilling or unable to meet our demand.

Costs of certain critical raw material, such as inconel, titanium, stainless steel, high strength steel and other alloys, among others, have been volatile due to factors beyond our control.  Raw material costs are included in our contracts with customers but in some cases we are exposed to changes in raw material costs from the time purchase orders are placed to when we purchase the raw materials for production.  Changes in business conditions could adversely affect our ability to recover rapid increases in raw material costs and may adversely affect our results of operations.

In addition, the availability of these critical raw materials is subject to factors that are not in our control.  In some cases, these critical raw materials are purchased from suppliers operating in countries that may be subject to unstable political and economic conditions.  At any given time, we may be unable to obtain an adequate supply of these critical raw materials on a timely basis, at prices and other terms acceptable to us, or at all.

If suppliers increase the price of critical raw materials or are unwilling or unable to meet our demand, we may not have alternative sources of supply.  In addition, to the extent that we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials to our customers.

The manufacture of some of our products is a complex process and requires long lead times.  As a result, we may experience delays or shortages in the supply of raw materials.  If unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely manufacture sufficient quantities of products.  This could cause us to lose sales, incur additional costs, delay new product introductions or suffer harm to our reputation.

Our manufacturing processes are complex and depend upon critical, high cost equipment for which there may be only limited or no production alternatives.

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It is possible that we could experience prolonged periods of reduced production due to unplanned equipment failures, and we could incur significant repair or replacement costs in the event of those failures.  It is also possible that operations could be disrupted due to other unforeseen circumstances such as power outages, explosions, fires, floods, accidents and severe weather conditions.  

We must make regular capital investments and changes to our manufacturing processes to lower production costs, improve productivity, manufacture new or improved products and remain competitive.  We may not be in a position to take advantage of business opportunities or respond to competitive pressures if we fail to update, replace or make additions to our equipment or our manufacturing processes in a timely manner.  The cost to repair or replace much of our equipment or facilities would be significant.  We cannot be certain that we will have sufficient internally generated cash or acceptable external financing to make necessary capital expenditures in the future.

Failure to obtain and retain skilled technical personnel could impede our operations.

Our production facilities in both the U.S. and China require skilled personnel to operate and provide technical services and support for our business. Competition for the personnel required for our businesses intensifies as activity increases. In periods of high utilization, it may become more difficult to find and retain qualified individuals. This could increase our costs or have other adverse effects on our operations.

A significant portion of our manufacturing and production facilities are located in only a few locations around the world, which increases our exposure to significant disruption to our business as a result of unforeseeable developments in a single geographic area.

It is possible that we could experience prolonged periods of reduced production due to unforeseen catastrophic events occurring in or around our manufacturing facilities.  As a result, we may be unable to shift manufacturing capabilities to alternate locations, accept materials from suppliers, meet customer shipment needs or address other severe consequences that may be encountered.  Our financial condition and results of our operations could be materially adversely affected.

We rely on third parties to supply energy consumed at each of our energy-intensive production facilities.

The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions.  These market conditions often are affected by political and economic factors beyond our control.  Disruptions or lack of availability in the supply of energy resources could temporarily impair the ability to operate our production facilities.  Further, increases in energy costs, or changes in costs relative to energy costs paid by competitors, may adversely affect our profitability.  To the extent that these uncertainties cause suppliers and customers to be more cost sensitive, increased energy prices may have an adverse effect on our results of operations and financial condition.

Laws and regulations governing international operations may require us to develop and implement costly compliance programs and the failure to comply with such laws may result in substantial penalties.

As we have a subsidiary and operations outside of the United States, we must comply with laws and regulations relating to international business operations.  The creation and implementation of international business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.

The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.  The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.  The anti-bribery provisions of the FCPA are enforced primarily by the U.S. Department of Justice.  

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem.  The failure to comply with laws governing international business practices may result in substantial penalties, including suspension or debarment from government contracting.  Violation of the FCPA can result in significant civil and criminal penalties.  Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the pending claims are resolved.  Conviction of a violation of the FCPA can result in long term disqualification as a government contractor.  

The termination of a government contract or relationship as a result of our failure to satisfy any of our obligations under laws governing international business practices would have a negative impact on our operations and harm our reputation and ability to procure government contracts.  The Securities and Exchange Commission, or SEC, also may suspend or bar issuers from trading securities on United States exchanges for violations of the FCPA’s accounting provisions.

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Additionally, we, through our WCMC subsidiary, are subject to other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business.  We have operations, agreements with third parties, and sell most of our WCMC manufactured products in China.  China also strictly prohibits bribery of government officials.  Our activities in China create the risk of unauthorized payments or offers of payments by our employees, consultants, sales agents, or distributors of ours, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees.  However, our existing safeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents, or distributors may engage in conduct for which we might be held responsible.  Violations of Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.

Our business, financial condition and results of operations could be adversely affected by the political and economic conditions in China.

We have significant operations located in China.  Multiple factors relating to WCMC’s operations could have a material adverse effect on our business, financial condition, and results of operations.  These factors include:

· changes in political, regulatory, legal or economic conditions;

· governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments;

· civil disturbances, including terrorism or war;

· political instability;

· public health emergencies;

· changes in employment practices and labor standards;

· local business and cultural factors that differ from our customary standards and practices; and

· changes in tax laws.

In addition, the Chinese economy may differ favorably or unfavorably from other economies in several respects, including the growth rate of GDP, the rate of inflation, resource self-sufficiency and balance of payments position.  The Chinese government has traditionally exercised and continues to exercise a significant influence over many aspects of the Chinese economy.  Further actions or changes in policy, including taxation, of the Chinese central government or the respective Chinese provincial or local governments could have a significant effect on the Chinese economy, which could adversely affect private sector companies, market conditions, and the success of our operations.

U.S. and Chinese transfer pricing regulations require that any international transactions involving associated enterprises are undertaken at an arm’s length price.  Applicable income tax authorities review our tax returns and if they determine that the transfer prices we have applied are not appropriate, we may incur increased tax liabilities, including accrued interest and penalties, which would cause our tax expense to increase, possibly materially, thereby materially reducing our profitability and cash flows.

We have limited insurance coverage in China.

We do not have any business liability, interruption or litigation insurance coverage for our operations in China. While business interruption insurance and other types of insurance are available to a limited extent in China, we have determined that the risks of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Therefore, our existing insurance coverage may not be sufficient to cover all risks associated with our business. As a result, we may be required to pay for financial and other losses, damages and liabilities, including those caused by natural disasters and other events beyond our control, out of our own funds, which could have a material adverse effect on our business, financial condition and results of operations.

Fluctuations in exchange rates could adversely affect our business and the value of our securities.

The value of our common stock will be indirectly affected by the foreign exchange rate between the U.S. dollar and Chinese yuan renminbi, or RMB, and between those currencies and other currencies in which our sales may be denominated.  Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

Since July 2005, the RMB has no longer been pegged to the U.S. dollar.  Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term.  Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

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Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations.  To date, we have not entered into any hedging transactions.  While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all.  In addition, our foreign currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert RMB into foreign currencies.

Restrictions on currency exchange may limit our ability to receive and use our sales effectively.

The majority of WCMC’s sales will be settled in RMB and U.S. dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars.  Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business.  In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items.  We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

Restrictions under Chinese law on WCMC’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.

Chinese regulations restrict the ability of WCMC to make dividends and other payments to their offshore parent company.  Any limitations on the ability of WCMC to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Future inflation in China may inhibit our ability to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and fluctuating rates of inflation.  These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation.  High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.

As a publicly traded company, we are subject to certain regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to maintain an effective system of internal controls, our reputation and our business could be harmed.

As a publicly traded company in the U.S., our ongoing compliance with various rules and regulations, including the Sarbanes-Oxley Act of 2002, will increase our legal and finance compliance costs and will make some activities more time-consuming and costly. These rules and requirements may be modified, supplemented or amended from time to time. Implementing these changes may take a significant amount of time and may require specific compliance training of our personnel. For example, Section 404 of the Sarbanes-Oxley Act requires that our management report on the effectiveness of our internal control over financial reporting in our annual reports filed with the SEC. Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. If in the future our Chief Executive Officer, Chief Financial Officer or independent registered public accounting firm determines that our internal controls over financial reporting are not effective as defined under Section 404, we could be subject to sanctions or investigations by the SEC, or other regulatory authorities. As a result, investor perceptions of our company may suffer, and this could cause a decline in the market price of our common stock. Irrespective of compliance with these rules and regulations, including the requirements under the Sarbanes-Oxley Act, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our business and reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting, or financial results.

We are subject to new regulations related to conflict minerals which could adversely impact our business.

The SEC has promulgated final rules mandated by the Dodd-Frank Act regarding disclosure of the use of tin, tantalum, tungsten, gold and certain other minerals, known as conflict minerals, in products manufactured by public companies. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that public companies conduct due diligence to determine whether such minerals originated from the Democratic Republic of Congo, or the DRC, or an adjoining country and whether such minerals helped finance the armed conflict in the DRC. These new rules will require due diligence efforts in fiscal year 2014 and thereafter, with the first conflict minerals report due by May 31, 2014 and annually thereafter. There will be costs associated with complying with these disclosure requirements, including costs to determine the origin of conflict minerals used in our products.

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In addition, the implementation of these rules could adversely affect the sourcing, supply and pricing of materials used in our products. As there may be only a limited number of suppliers offering conflict-free minerals, we cannot be sure that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if the due diligence procedures we implement do not enable us to verify the origins for all conflict minerals or to determine that such minerals are DRC conflict-free. We may also encounter challenges to satisfy customers that may require all of the components of products purchased to be certified as DRC conflict-free because our supply chain is complex. If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier.

Because our contracts are individual purchase orders and not long-term agreements, the results of our operations can vary significantly from quarter to quarter.

We currently do not have long-term contracts with our customers, and major contracts with a small number of customers account for a significant percentage of our revenue.  We must bid or negotiate each contract separately, and when we complete a contract, there is generally no continuing source of revenue under that contract.  As a result, we cannot assure you that we have a continuing stream of revenue from any contract.  Our failure to generate new business on an ongoing basis would materially impair our ability to operate profitably.  Because a significant portion of our revenue is derived from services rendered from the alternative energy, nuclear, medical, defense, industrial, aerospace and related industries, our operating results may suffer from conditions affecting these industries, including any budgeting, economic or other trends that have the effect of reducing the requirements for our services.

Because of our dependence on a limited number of customers, our failure to generate major contracts from a small number of customers may impair our ability to operate profitably.

We have, in the past, been dependent in each year on a small number of customers who generate a significant portion of our business, and these customers change from year to year.  For the year ended March 31, 2014, our three largest customers accounted for approximately 43% of our revenue, with the largest accounting for 19% of our revenue.  For the year ended March 31, 2013 our largest customer accounted for 24% of our revenue and our three largest customers accounted for 58% of our revenue. In addition, as of March 31, 2014, we had a $22.9 million order backlog, of which $18.6 million was attributable to six customers. Included in the March 31, 2014 backlog is $3.5 million which may be cancelled pending the outcome of a potential contract modification with one of our customers.     

As a result, the default in payment by any of our major customers, the loss of existing orders or to the extent that we are unable to generate orders from new customers, we may have difficulty operating profitably.  Furthermore, to the extent that any one customer accounts for a large percentage of our revenue, the loss of that customer could materially affect our ability to operate profitably.  Since one customer, accounted for 19% of our revenue in the fiscal year ended March 31, 2014, the loss of this customer could have a material adverse effect upon our business and may impair our ability to operate profitably. We anticipate that our dependence on a limited number of customers in any given fiscal year will continue for the foreseeable future. There is a risk that existing customers will elect not to do business with us in the future or will experience financial difficulties.  Furthermore, certain of our customers are at an early stage and are dependent on the equity capital markets to finance their purchase of our products.  

As a result, these customers could experience financial difficulties, business reversals or lose orders or anticipated orders which would reduce or eliminate the need for the products which they ordered from us, and as a result they could be unable or unwilling to fulfill their contracts with us.  There is also a risk that our customers will attempt to impose new or additional requirements on us that reduce the profitability of those customers for us.  Further, even if the orders are not changed, these orders may not generate margins equal to our recent historical or targeted results.  If we do not develop relationships with new customers, we may not be able to increase, or even maintain, our revenue, and our financial condition, results of operations, business and/or prospects may be materially adversely affected.

The extensive environmental, health and safety regulatory regimes applicable to our manufacturing operations create the potential exposure to significant liabilities.

The nature of our manufacturing business subjects our operations to numerous and varied federal, state, local and international laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.  Failure to comply with these laws and regulations, or with the permits required for our operations, could result in fines or civil or criminal sanctions, third party claims for property damage or personal injury, and investigation and cleanup costs.  Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future.

We have used, and currently use certain quantities of substances that are considered hazardous, extremely hazardous or toxic under worker safety and health laws and regulations.  Although we implement controls and procedures designed to reduce continuing risk of adverse impacts and health and safety issues, we could incur substantial cleanup costs, fines and civil or criminal sanctions, third party property damage or personal injury claims as a result of violations, non-compliance or liabilities under these regulatory regimes required at our facilities.

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Our failure to comply with these regulations could result in increased costs as well as penalties for violation of these regulations.  As a manufacturing business, we must comply with federal and state environmental laws and regulations which relate to the manner in which we store and dispose of materials and the reports that we are required to file.  We cannot assure you that we will not incur additional costs to maintain compliance with environmental laws and regulations or that we will not incur significant penalties for failure to be in compliance.

Changes in delivery schedules and order specifications may affect our revenue stream.

Although we perform manufacturing services pursuant to orders placed by our customers, we have in the past experienced delays in the scheduling and changes in the specification of the products.  These changes may result from a number of factors, including a determination by the customer that the product specifications need to be changed after receipt of an initial product or prototype.  As a result of these changes, we may suffer a delay in the recognition of revenue from the projects and may incur contract losses.  We cannot assure you that our revenue will not be affected in the future by delays or changes in specifications or that we will ever be able to recoup revenue which was lost as a result of the delays or changes.  Further, if we cannot allocate our personnel to a different project, we will continue to incur some expenses relating to the project, including labor and overhead.  Thus, if orders are postponed, our results of operations would be impacted by our need to maintain staffing and other expense generating aspects of production for the postponed projects, even though they were not fully utilized, and revenue associated with the project is not recognized, during this period.  We cannot assure you that our operating results will not decline in future periods as a result of changes in customers’ orders or their requirements for the products that they ordered.

If we make any acquisitions, they may disrupt or have a negative impact on our business.

Although we have no present plans for any acquisitions, in the event that we make acquisitions, we could have difficulty integrating the acquired companies’ personnel and operations with our own.  We cannot predict the effect expansion may have on our core business.  Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses.  

Negative economic conditions may adversely impact the demand for our products and services, and the ability of our customers to meet their obligations to us on a timely basis.  Any disputes with customers could also have an adverse impact on our income and cash flows.

Tightening of credit in financial markets may lead businesses to postpone spending, which may impact our customers, causing them to cancel, decrease or delay their existing and future orders with us.  Declines in economic conditions may further impact the ability of our customers to meet their obligations to us on a timely basis.  If customers are unable to meet their obligations on a timely basis, it could adversely impact the realization of receivables, the valuation of inventories and the valuation of long lived assets across our businesses.  Additionally, we may be negatively affected by contractual disputes with customers, which could have an adverse impact on our income and cash flows.

Our business may be impacted by external factors that we may not be able to control.

War, civil conflict, terrorism, natural disasters and public health issues including domestic or international pandemic have caused and could cause damage or disruption to domestic or international commerce by creating economic or political uncertainties.  Additionally, the volatility in the financial markets and disruptions or downturns in other areas of the global or U.S. economies, could negatively impact our business.  These events could result in a decrease in demand for our products, make it difficult or impossible to deliver orders to customers or receive materials from suppliers, affect the availability or pricing of energy sources or result in other severe consequences that may or may not be predictable.  As a result, our business, financial condition and results of operations could be materially adversely affected.

We rely in part on international sales, which are associated with various risks.

Risks associated with international sales include without limitation: political and economic instability, including weak conditions in the world’s economies; difficulty in collecting accounts receivable; unstable or unenforced export controls; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in tax laws and tariffs; and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on international sales when converted into dollars).  Any of these factors could materially adversely affect our results for the period in which they occur.

The dangers inherent in our operations and the limits on insurance coverage could expose us to potentially significant liability costs and materially interfere with the performance of our operations.

The fabrication of large steel structures involves operating hazards that can cause personal injury or loss of life, severe damage to and destruction of property and equipment and suspension of operations. The failure of such structures during and after installation can result in similar injuries and damages. Although we believe that our insurance coverage is adequate, there can be no assurance that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims that may arise. Claims for which we are not fully insured may adversely affect our working capital and profitability. In addition, changes in the insurance industry have generally led to higher insurance costs and decreased availability of coverage. The availability of insurance that covers risks we and our competitors typically insure against may decrease, and the insurance that we are able to obtain may have higher deductibles, higher premiums and more restrictive policy terms.

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The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.

Our certificate of incorporation gives our board of directors the right to create new series of preferred stock.  As a result, the board of directors may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights, which could adversely affect the voting power and equity interest of the holders of common stock.  Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control.  The possible impact on takeover attempts could adversely affect the price of our common stock.  Although we have no present intention to issue any additional shares of preferred stock or to create any new series of preferred stock and the certificate of designation relating to the series A preferred stock restricts our ability to issue additional series of preferred stock, we may issue such shares in the future.  Without the consent of the holders of 75% of the outstanding shares of series A preferred stock, we may not alter or change adversely the rights of the holders of the series A preferred stock or increase the number of authorized shares of series A preferred stock,create a class of stock which is senior to or on a parity with the series A preferred stock, amend our certificate of incorporation in breach of these provisions or agree to any of the foregoing.

The issuance of shares of our common stock as compensation may dilute the value of existing stockholders and may affect the market price of our stock.

We may use stock options, stock grants and other equity-based incentives, to provide motivation and compensation to our officers, employees and key independent consultants.  The award of any such incentives will result in an immediate and potentially substantial dilution to our existing stockholders and could result in a decline in the value of our stock price.  The exercise of these options and the sale of the underlying shares of common stock and the sale of stock issued pursuant to stock grants may have an adverse effect upon the price of our stock.

Because of our cash requirements and restrictions in the terms of our preferred stock and our debt agreements, we may be unable to pay dividends.

In view of the cash requirements of our business, we expect to use any cash flow generated by our business to finance our operations and growth.  Further, we are prohibited from paying dividends on our common stock while the series A preferred stock is outstanding.

Our stock price may be affected by our failure to meet projections and estimates of earnings developed either by us or by independent securities analysts.

Although we do not make projections relating to our future operating results, our operating results may fall below the expectations of securities analysts and investors.  In this event, the market price of our common stock would likely be materially adversely affected.

The deterioration of the credit and capital markets may adversely affect our access to sources of funding.

We rely on our credit facilities to fund a portion of our working capital needs and other general corporate purposes. If the Bank backing these facilities were unable to perform on its commitments, our liquidity could be impacted, which could adversely affect funding of working capital requirements and other general purposes. In the event that we need to access the capital markets or other sources of financing, there can be no assurance that we will be able to obtain financing on acceptable terms or within an acceptable time, if at all.  Our inability to obtain financing on terms and within a time acceptable to us could have an adverse impact on our operations, financial condition, and liquidity.

Our stock price may fluctuate significantly.

The stock market, particularly in recent years, has experienced significant volatility, and the volatility of stocks often does not relate to the operating performance of the companies represented by the stock.  The market price of our common stock could be subject to significant fluctuations because of general market conditions and because of factors specifically related to our businesses.

Factors that could cause volatility in the market price of our common stock include market conditions affecting our customers’ businesses, including the level of mergers and acquisitions activity, and  actual and anticipated fluctuations in our quarterly operating results, rumors relating to us or our competitors, actions of stockholders, including sales of shares by our directors and executive officers additions or departures of key personnel; and developments concerning current or future strategic alliances or acquisitions.

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These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock at a profit and may otherwise negatively affect the liquidity of our common stock.  In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.  If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit.  Such a lawsuit could also divert the time and attention of our management.

If equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business.  The price of our common stock could decline if one or more securities analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We own approximately 145,000-square feet of office and manufacturing space at 1 Bella Drive, Westminster, Massachusetts 01473. On December 20, 2010, we, through Ranor, purchased the Westminster property pursuant to a purchase and sale agreement, by and among the former owner of the property, WM Realty (an entity controlled by our director, Andrew Levy), and Ranor. Prior to consummation of the sale under such purchase and sale agreement, we had leased the purchased property from WM Realty. During fiscal 2012, we expanded the Westminster facility to increase its manufacturing capacity by an additional 19,500 square feet.  The total cost of the expansion was $1.7 million and this expansion was financed from the proceeds of a bond financing we completed with the Massachusetts Development Authority in December 2010 (see Note 8, Long-Term Debt, in the notes to our audited financial statements for additional information).

On November 17, 2010, we entered into a lease agreement pursuant to which we leased approximately 3,200 square feet of office space in Center Valley, Pennsylvania now used as our corporate headquarters.  We took possession of the property on April 1, 2011.   Under the Center Valley lease, our payment obligations were deferred until the fifth month after taking possession, at which time we pay annual rent of approximately $60,000 in equal monthly installments, subject to upward adjustments during each subsequent year of the term of the lease.  In addition, we are required to pay certain operating expenses and other fees in accordance with the terms of the lease.  All of our payment obligations under the Center Valley lease may be accelerated if we fail to satisfy our payment obligations under the lease in a timely manner, or otherwise default on our obligations under the Center Valley lease, which expires on March 17, 2016. We may elect to renew the lease for an additional five-year term.

WCMC leased approximately 1,000 sq. ft. of office space from an affiliate of Cleantech Solutions International, or CSI, to serve as its primary corporate offices in Wuxi, China. The lease had an initial two-year term and rent under the lease with the CSI affiliate was approximately $17,000 on an annual basis. This lease expired on November 15, 2013 and was not renewed.

In November 2013, we leased approximately 1,000 square feet of new office space in Wuxi City, Jiangsu Province, China, which houses WCMC.  The lease has a one-year term and provides for rent of approximately $4,000 annually. The lease can be renewed thereafter on an annual basis. Our current facilities at the Westminster facility are adequate for present requirements.

Item 3. Legal Proceedings.

On May 29, 2014, the Company filed a Demand for Arbitration against a customer, GTAT Corporation, for breach of contractual duties set forth pursuant to Rule R-4 of the Commercial Rules of the American Arbitration Association in accordance with the Terms and Conditions of the purchase agreement, dated November 8, 2013, between the parties. The claim was filed by the Company in response to GTAT Corporation’s request in April to reduce the number of units ordered under the purchase agreement. The basis for the Company’s claim is detrimental reliance on the purchase order and subsequent modifications by the respondent during the course of production as evidenced by its purchased materials, personnel hires, units shipped, and other incurred costs. The parties negotiated but were not able to resolve the dispute under the terms of the contract. As such, the Company submitted the dispute to binding arbitration. The Company seeks to recover damages, together with attorney's fees, interest and costs.

We cannot predict the outcome of the proceeding described above. The Company continues to vigorously pursue its legal remedies in respect to the arbitration described in the paragraph above, however, an adverse decision in any proceeding could significantly harm our business and our consolidated financial position, results of operations and cash flows.

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Item 4. Mine Safety Disclosures

Not applicable to the Registrant.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is traded on the Over the Counter (OTC) Bulletin Board under the symbol “TPCS”.  The following table sets forth the high and low bid quotations per share of our common stock as reported on the OTC Bulletin Board for the last two completed fiscal years. The quarterly high and low bid quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.  

	High		Low
Fiscal year ended March 31, 2014
4th Quarter (three months ended March 31, 2014)	$	1.35	$	0.94
3rd Quarter (three months ended December 31, 2013)	$	1.26	$	0.40
2nd Quarter (three months ended September 30, 2013)	$	0.70	$	0.27
1st Quarter (three months ended June 30, 2013)	$	1.15	$	0.59
Fiscal year ended March 31, 2013
4th Quarter (three months ended March 31, 2013)	$	1.42	$	1.02
3rd Quarter (three months ended December 31, 2012)	$	1.23	$	0.76
2nd Quarter (three months ended September 30, 2012)	$	1.00	$	0.55
1st Quarter (three months ended June 30, 2012)	$	0.85	$	0.55

As of July 7, 2014, we had approximately 1,963 record holders of our common stock. We have not paid dividends on our common stock, and the terms of certificate of designation relating to the creation of the Series A Convertible Preferred Stock prohibit us from paying dividends. We plan to retain future earnings, if any, for use in our business, and do not anticipate paying dividends on our common stock in the foreseeable future.

Item 6.  Selected Financial Data

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

Item 7.  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 audited consolidated financial statements and the related notes, which appear elsewhere in this annual report on Form 10K. This annual report on Form 10-K, including this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may contain predictive or “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors. Those factors include those risks discussed in Item 1A “Risk Factors” and elsewhere in this Form 10-K as well as and those described in any other filings which we make with the SEC. In addition, such statements could be affected by risks and uncertainties related to recurring operating losses and the availability of appropriate financing facilities impacting our ability to continue as a going concern, to change the composition of our revenues and effectively reduce operating expenses, our ability to receive contract awards from the competitive bidding process, maintain standards to enable us to manufacture products to exacting specifications, enter new markets for our services, market and customer acceptance, our reliance on a small number of customers for a significant percentage of our business, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions. We undertake no obligation to publicly update or revise any forward looking statements to reflect events or circumstances that may arise after the date of this report, except as required by applicable law. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report. Investors should evaluate any statements made by us in light of these important factors.

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Overview

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

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

Because our revenues are derived from the sale of goods manufactured pursuant to a contract, and we do not sell from inventory, it is necessary for us to constantly seek new contracts. There may be a time lag between 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 and large utility companies. However, our business is dependent in part on the continuation of governmental programs which require our services and products.

We historically have experienced, and continue to experience, customer concentration. Our six largest customers collectively accounted for approximately 65% of our revenue for fiscal 2014. For fiscal 2014 and fiscal 2013, our largest customer accounted for approximately 19% and 24% of reported net sales, respectively. In any year, it is likely that our top five significant customers (albeit not always the same customers from year to year) will account for up to approximately 60% in aggregate of our total annual revenues.  

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

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants under the Loan Agreement, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013.. The Loan Agreement was amended by the Forbearance Agreement. The Forbearance Agreement expired on March 31, 2014. The Bank did not agree to waive the non-compliance with the covenants at March 31, 2014. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days' written notice. As a consequence, we classified all amounts under the Loan Agreement $4.2 million at March 31, 2014, as a current liability. Our cash and cash equivalents totaled $1.1 million at March 31, 2014. On March 31, 2014, we requested an extension of the forbearance agreement.

On May 30, 2014, the Company and the Bank entered into the Second Forbearance Agreement with the Bank.  Under the Second  Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014. On July 1, 2014, the Company and the Bank entered into the Third Forbearance Agreement. Under the Third Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than July 31, 2014. If the Bank were to make a demand for repayment, we may be unable to pay the obligation as we do not have existing facilities or sufficient cash on hand to satisfy our current obligations and would need to seek alternative financing.

On May 30, 2014, we, through our wholly owned subsidiary Ranor, entered into the LSA, with Utica.  Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% and the six-month LIBOR interest rate, as described in the Credit Loan Note.  Ranor’s obligations under the LSA and Credit Loan Note are guaranteed by TechPrecision. In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million to pay off debt obligations owed to the Bank under the Loan Agreement described below.  Additionally, the Company retained approximately $1.27 million for general corporate purposes.

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For fiscal 2014, our net sales and net loss were $21.1 million and $7.1 million, respectively, as compared to net sales of $32.5 million and net loss of $2.4 million, respectively, for fiscal 2013.  Our gross margins for fiscal 2014 were negative as compared with positive gross margins of 20.2% for fiscal 2013. Fiscal 2014 margins were impacted by approximately $4.6 million of new contract losses, primarily with two customer contracts. One contract resulted in cost production overruns and unplanned costs incurred on first articles and prototyping. On the second contract, our customer has indicated a desire to significantly reduce the number of units ordered. We have recorded a reserve for potential losses and have filed a claim for remediation under the contract terms to recover all of our potential losses. We cannot be certain that we will be successful in recovering the full amount of our loss.

These factors raise substantial doubt regarding our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

Strategy

Our strategy is to leverage our core competence as a manufacturer of high-precision, large-scale metal fabrications and machined components to optimize profitability of our current business and expand into stronger markets that have shown increasing demand.   We aim to establish our expertise in Program and Project Management and develop and expand a repeatable customer business model in our strongest markets. Historically alternative energy has been our largest market served and has comprised a significant amount of our annual net sales. In November 2010, we announced the formation of WCMC. This subsidiary was formed to respond to an existing customer’s desire to migrate their supply chain nearer to their end market within China. Since forming WCMC, we have produced, through subcontractors, furnaces for alternative energy customers in China. The primary products we have manufactured for alternative energy customers have been multi-crystalline and mono-crystalline solar furnaces, as well as polysilicon reactor vessels and sapphire growth furnaces. During fiscal 2014 and fiscal 2013, the pace at which solar manufacturers increased their production capacity has slowed significantly. For fiscal 2014 and fiscal 2013, WCMC’s net sales were $0.2 million and $3.3 million, respectively. In fiscal 2014, we concentrated our sales and marketing activities on customers under three main industry groups, Navy/Maritime, Energy and Precision Industrial.

Navy/Maritime

Our Ranor subsidiary performs precision fabrication and machining for the defense and aerospace industries, delivering turn-key defense components to our customers stringent design specifications, as well as quality and safety manufacturing standards specifically for defense component fabrication and machining. Defense components the Ranor team has delivered include critical sonar housings and fairings, vertical launch missile tubes, and magnetic motor system components. In addition, the team at Ranor has successfully developed new, effective approaches to fabrication that continue to be utilized at their facility and at our customer’s own defense component manufacturing facilities. We have developed and built Tier 1 and Tier 2 relationships with our customers and will continue to seek opportunities in this sector where we have a Tier 1 or Tier 2 supplier relationship. We have endeavored to increase our business development efforts with large prime defense contractors.  Based upon these efforts, we believe there are additional opportunities to secure increased business with existing and new defense contractors who are actively looking to increase outsourced content on certain defense programs over the next several years.  We believe that the military quality certifications it maintains and its ability to offer turn-key fabrication and manufacturing services at a single facility position it as an attractive outsourcing partner for prime contractors looking to increase outsourced production.

Energy

In February 2013, we completed the initial manufacture of Type B radioactive isotope transport casks on behalf of our customer, Alpha-Omega Services, Inc.  We have been working with this customer for several years while it was seeking U.S. Nuclear Regulatory Commission, or NRC, license approval of its proprietary Type B radioactive isotope transport casks.  As this customer’s cask design meets the NRC’s most recent regulatory requirements for Type B transport casks, we and our customer expect increased demand for this product as companies that transport radioactive isotopes replace their existing Type B transport casks with casks that meet the latest NRC requirements.

We believe that nuclear power plants scheduled to be built over the next 10 years worldwide could present a significant opportunity for us. Our Ranor subsidiary has the certifications required to produce the necessary components for new plants. Because of our manufacturing capabilities, our certification from the American Society of Mechanical Engineers and our historic relationships with suppliers in the nuclear power industry, we believe that we are well positioned to benefit from any increased activity in the nuclear sector. However, we cannot assure you that we will be able to develop any significant business from the nuclear industry.

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Precision Industrial

For several years we have been providing production services to Mevion for the manufacture of its proprietary proton beam radiotherapy system. Mevion received 510(k) clearance from the U.S. Food and Drug Administration, or FDA, in June 2012 to market its proton radiotherapy device. Presently Mevion has ten systems under development with customers in the U.S. In January 2013, we announced a five-year agreement with Mevion to exclusively produce precision components for Mevion’s proton beam system.  In December 2013, the first center to enter clinical commissioning with Mevion’s proton beam system began treating patients. During calendar year 2014, Mevion expects that a second center employing its technology will enter clinical commissioning and begin treating cancer patients. During the fiscal year ended March 31, 2013, Mevion became our largest customer and accounted for $7.7 million in net sales.  For the fiscal year ended March 31, 2014, sales to Mevion were $2.1 million as orders were delayed until the first clinical commissioning events commenced. We expect that sales volume to Mevion will increase as Mevion further expands the market launch of its innovative proton therapy device.

Growing global demand for sapphire, a core component in high-end LED products and smartphones, has increased the worldwide demand for Heat Exchanger Method, or HEM, sapphire. Accordingly, many polysilicon companies are expanding into the field of HEM sapphire and existing players in the HEM sapphire industry are expanding their production capacity. The production of HEM sapphire requires robust high temperature vacuum furnaces much like those we have been producing for the processing of polysilicon within the solar industry. We believe the HEM sapphire field is a growing sector where our manufacturing expertise and experience with similar products for the solar industry can be directly leveraged. We are in active dialogue with existing customers regarding our capability and capacity to manufacture furnaces for the HEM sapphire industry.

Revenue Recognition

We account for revenues and earnings in our business using the percentage-of-completion method of accounting. Percentage-of-completion is considered the revenue recognition model that best reflects the economics for our custom contracts. We recognize contract revenue and gross profit under this method as the work progresses, either as the products are produced and delivered, or as services are rendered. We determine progress toward completion on production contracts based on either input measures, such as labor hours incurred, or output measures, such as units delivered.

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability are recognized in the period in which the revisions are determined. Costs incurred on uncompleted contracts consist of labor, overhead, and materials. Work in process is stated at the lower of cost or market. We may combine contracts for accounting purposes when they are negotiated as a package with an overall profit margin objective. These essentially represent an agreement to do a single project for a single customer, involve interrelated construction activities with substantial common costs, and are performed concurrently or sequentially. When a group of contracts is combined, revenue and profit are earned during the performance of the combined contracts.

Costs allocable to undelivered units are reported in the consolidated balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, construction changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reliably estimated. Revenues from such claims are recorded only to the extent that contract costs have been incurred.

Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable. The unit of delivery method requires the existence of a contract to provide the persuasive evidence of an arrangement and determinable seller’s price, delivery of the product and reasonable collection prospects. We have written agreements with the customers that specify contract prices and delivery terms. We recognize revenues only when the collectability is reasonably assured. When we can only estimate a range of revenues and costs, we use the most likely estimate within the range. If we cannot determine which estimate in the range is most likely, the amounts within the ranges that would result in the lowest profit margin (the lowest contract revenue estimate and the highest contract cost estimate) is used.

Income Taxes

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

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In assessing the recoverability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. If we determine that it is more likely than not that certain future tax benefits may not be realized, a valuation allowance will be recorded against deferred tax assets that are unlikely to be realized. Realization of the remaining deferred tax assets will depend on the generation of sufficient taxable income in the appropriate jurisdiction, the reversal of deferred tax liabilities, tax planning strategies and other factors prior to the expiration date of the carryforwards. A change in the estimates used to make this determination could require a reduction in the valuation allowance for deferred tax assets if they become realizable. Our tax expense for fiscal 2013 includes the result of recording a full valuation allowance on our deferred tax assets.

As of March 31, 2014, our federal net operating loss carryforward was approximately $6.0 million. If not utilized, the federal net operating loss carryforward will expire in 2033. Furthermore, because of the over fifty-percent change in ownership as a consequence of the reverse acquisition of Ranor in February 2006, the amount of net operating loss carryforward used in any one year in the future is substantially limited.

New Accounting Pronouncements

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

Results of Operations

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 foreign markets. Ranor’s product mix changed significantly between fiscal 2011 and fiscal 2014, and includes a higher volume of prototyping and first article production contracts which resulted in contract losses. These contract losses have been the result of only a few contracts which have dampened our gross profit margins. Units manufactured under a greater number of our customer contracts are delivered on time and with a positive gross margin. Our results of operations are also affected by our success in booking new contracts, when we are able to recognize the related revenue, delays in customer acceptances of our products, delays in deliveries of ordered products and our rate of progress fulfilling obligations under our contracts. A delay in deliveries or cancellations of orders would cause us to have inventories in excess of our short-term needs, and may delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog.

Years Ended March 31, 2014 and 2013

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

	2014					2013					Changes Year Ended March 31, 2014 to 2013
(dollars in thousands)	Amount			Percent		Amount			Percent		Amount		Percent
Net sales	$	21,068		100	%	$	32,473		100	%	$(11,405	)	(35	)%
Cost of sales		21,800		104	%		25,914		80	%	(4,114	)	(16	)%
Gross (loss) profit		(732	)	(4	)%		6,559		20	%	(7,291	)	(111	)%
Selling, general and administrative		6,113		29	%		8,161		25	%	(2,048	)	(25	)%
Loss from operations		(6,845	)	(33	)%		(1,602	)	(5	)%	(5,243	)	nm	%
Other income (expense):
Other income (expense)		1		--	%		(29	)	--	%	30		nm	%
Interest expense		(441	)	(2	)%		(310	)	(1	)%	(131	)	(42	)%
Interest income		4		--	%		2		--	%	2		nm	%
Total other expense, net		(436	)	(2	)%		(337	)	(1	)%	(99	)	(29	)%
Loss before income taxes		(7,281	)	(35	)%		(1,939	)	(6	)%	(5,342	)	nm	%
Income tax (benefit) expense		(186	)	(1	)%		472		1	%	(658	)	nm	%
Net Loss	$	(7,095	)	(34	)%	$	(2,411	)	(7	)%	$(4,684	)	nm	%

Net Sales

In fiscal 2014, net sales decreased by $11.4 million, or 35%, to $21.1 million. Our net sales to Industrial customers decreased by $11.8 million when compared with fiscal 2013 primarily on a lower volume of new orders for proton beam accelerator components ($5.6 million), production furnaces ($2.3 million), polysilicon reactor components ($3.1 million), and chemical processing equipment ($0.8 million). Net sales for components and products sold to our customers in the Energy group increased by $0.5 million, and net sales to customers in the Navy/Maritime group decreased by $0.1 million. In fiscal 2014, net sales originating at our WCMC division decreased by $3.1 million in fiscal 2014, as WCMC’s largest customer transferred furnace production back to the U.S. and delayed orders into  fiscal 2015. Revenues generated from operations domiciled in the U.S. during fiscal 2014 were $20.9 million compared with $29.2 million in fiscal 2013.

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Cost of Sales and Gross Margin

Gross margin in any reporting period is impacted by the mix of services we provide on projects completed and in-process within that period.  Our cost of sales for fiscal 2014 decreased by $4.1 million or 16% when compared to fiscal 2013 on lower contract volume. Gross margins for fiscal 2014 were negative compared with a 20.2% positive gross margin for the same period in fiscal 2013. Actual production levels were lower than planned and resulted in approximately $3.2 million in under absorbed overheads for the period. Ranor’s product mix in fiscal 2014 included a certain prototyping and first article production contract with a new customer that resulted in losses of $1.9 million. We also recorded a provision for potential contract losses of $2.7 million in connection with a customer change request to reduce or delay the number units delivered under a long-term purchase agreement. We have filed a legal claim and demand for arbitration under the contract to recover all of our potential losses. We recorded the loss due to the uncertain outcome in connection with the contract.

Selling, General and Administrative Expenses

Total selling, general, and administrative expenses for fiscal 2014 were $6.1 million compared with $8.2 million for fiscal 2013, representing a decrease of $2.1 million or 25%.  Reduced SG&A headcounts resulted in lower spending for compensation ($0.8 million), outside advisory services ($0.6 million), travel ($0.5 million) and other business expenses ($0.2 million) when compared with the same period in fiscal 2013.

Other Income (Expense)

The following table reflects other income (expense), interest income and interest expense for fiscal 2014 and 2013:

	2014		2013			$ Change			% Change
Other income (expense)	$	4,472	$	(27,397	)	$	31,869			nm	%
Interest expense	$	(385,767)	$	(268,351	)	$	(117,416	)		(44)	%
Interest expense: non-cash	$	(54,867)	$	(41,448	)	$	(13,419	)		(32)	%

Interest expense for fiscal 2014 increased when compared with fiscal 2013 due to increased interest rates in connection with the default under the term loan and forbearance agreement. The makeup for other income in fiscal 2014 is primarily foreign exchange gains. In fiscal 2013 other expense totaled $27,397, primarily the sum of certain bank fees paid in the U.S. and China.  Non –cash interest expense reflects the amortization of deferred loan costs in connection with our Series A and Series B bonds. The loan costs were fully amortized as of March 31, 2014.

Income Taxes

For fiscal 2014, we recorded tax benefit of $185,473 and in fiscal 2013 we recorded tax expense of $472,331. The fiscal 2014 tax benefit primarily reflects a reduction in our tax liability in China. The fiscal 2013 tax expense was the result of recording a full valuation allowance on our net deferred tax assets. A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels.

Our future effective tax rate would be affected if earnings were lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. We regularly assess the effects resulting from these factors to determine the adequacy of our provision for income taxes.

Net Loss

As a result of the foregoing, our net loss was $7.1 million or $0.34 per share both basic and fully diluted for fiscal 2014, as compared to net loss of $2.4 million or $0.13 per share basic and fully diluted for fiscal 2013.

Liquidity and Capital Resources

We have incurred an operating loss of $7.1 million for the period ended March 31, 2014. At March 31, 2014, we had cash and cash equivalents of $1.1 million. Our fiscal 2014 margins were impacted by approximately $4.9 million of new contract losses. We have filed a claim for remediation under a certain customer contract to recover all of our potential losses. We cannot be certain that we will be successful in recovering the full amount of our loss. We have no material commitments for capital expenditures as of March 31, 2014. We expect to fund our purchase commitments for materials and operating costs with existing cash, accounts receivable collections and customer advance payments.

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On March 31, 2014, the Forbearance Agreement expired and terminated pursuant to its terms. The Bank did not demand repayment as it considered an extension of the forbearance agreement. We continued to make payments pursuant to the terms of the Loan Agreement, and at the same time, continued to engage in discussions with potential alternative financing sources to secure a new financing arrangement to, among other things, replace the financing provided by the Loan and Security Agreement between Ranor and Santander Bank, dated February 24, 2006.

On May 30, 2014, the Company and the Bank entered into the Second Forbearance Agreement.  Under the Second Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014. On July 1, 2014, the Company and the Bank entered into the Third Forbearance Agreement. Under the Third Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than July 31, 2014. If the Bank were to make a demand for repayment, we may be unable to pay the obligation as we do not have existing facilities or sufficient cash on hand to satisfy our current obligations and would need to seek alternative financing.

On May 30, 2014, we, through our wholly owned subsidiary Ranor, entered into the LSA, with Utica.  Pursuant to the LSA, Utica agreed to loan $4.15 million to Ranor under a Credit Loan Note, which is collateralized by a first secured interest in certain machinery and equipment at Ranor.  Payments under the LSA and Credit Loan Note are due in monthly installments with an interest rate on the unpaid principal balance of the Credit Loan Note equal to 7.5% plus the greater of 3.3% and the six-month LIBOR interest rate, as described in the Credit Loan Note.  Ranor’s obligations under the LSA and Credit Loan Note are guaranteed by the Company. In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million to pay off debt obligations owed to the Bank under the Loan Agreement described below.  Additionally, the Company retained approximately $1.27 million for general corporate purposes.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we must secure additional long-term financing on terms consistent with our near-term business plans. In addition, we must increase our backlog and change the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects which do not efficiently use our manufacturing capacity, and reduce our operating expenses to be in line with current business conditions in order to increase profit margins and decrease the amount of cash used in operations. If successful in changing the composition of revenue and reducing costs, we anticipate that fiscal 2015 operating results will reflect positive cash flows. However, we plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

The consolidated financial statements for the year ended March 31, 2014 and 2013 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total liabilities of $13.4 million at March 31, 2014 and to continue as a going concern is dependent upon the availability to timely secure long-term financing and successful execution of our operating plan. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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

Our liquidity is highly dependent on our available financing facilities and ability to improve our gross profit and operating income. If we successfully secure additional acceptable financing facilities, execute on our business plans, and improve gross profit and operating income, then we believe that our available cash, together with additional reductions in operating costs and capital expenditures, will be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the next twelve months.

At March 31, 2014, we had negative working capital of $2.0 million as compared with positive working capital of $3.1 million at March 31, 2013, representing a decrease of $5.1 million. The following table sets forth information as to the principal changes in the components of our working capital:  

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(dollars in thousands)	March 31, 2014		March 31, 2013		Change Amount			Percentage Change
Cash and cash equivalents	$	1,086	$	3,075	$	(1,989	)		(65)	%
Accounts receivable, net	$	2,280	$	4,331	$	(2,051	)		(47)	%
Costs incurred on uncompleted contracts	$	5,258	$	4,298	$	960			22	%
Inventory - raw materials	$	293	$	354	$	(61	)		(17)	%
Other current assets	$	461	$	1,578	$	(1,117	)		(71)	%
Income taxes receivable	$	8	$	374	$	(366	)		(97)	%
Current deferred tax assets	$	991	$	256	$	735			nm	%
Accounts payable	$	2,888	$	2,537	$	351			14	%
Accrued expenses	$	3,893	$	1,875	$	2,018			nm	%
Accrued taxes payable	$	--	$	232	$	(232	)		(100)	%
Deferred revenues	$	1,462	$	253	$	1,209			nm	%
Short-term debt	$	4,169	$	5,784	$	(1,615	)		(28)	%
Short-term revolving line of credit	$	--	$	500	$	(500	)		(100)	%

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

(dollars in thousands)	March 31, 2014			March 31, 2013			Change Amount
Cash flows provided by (used in):
Operating activities	$	203		$	1,779		$	(1,576	)
Investing activities		(65	)		(663	)		598
Financing activities		(2,127	)		(866	)		(1,261	)
Effect of exchange rates on cash and cash equivalents		--			2			(2	)
Net (decrease) increase in cash and cash equivalents	$	(1,989	)	$	252		$	(2,241	)

Operating activities

Cash provided by operations in fiscal 2014 was $0.2 million compared with cash provided by operations of $1.8 million in fiscal 2013. Customer advance payments, accounts receivable collections and other payments received in fiscal 2014 more than offset cash outflows from operations. In fiscal 2013 cash provided by operations was primarily impacted by the receipt of $2.1 million in federal and state tax refunds.  

Investing activities

During the years ended March 31, 2014 and 2013, we invested $0.1 and $0.7 million, respectively, in property and equipment. The cash outflow for fiscal 2013 was for the purchase of a new water jet cutter.

Financing activities

In fiscal 2014 and fiscal 2013, net cash used in financing activities was $2.1 and $0.9 million, respectively. In fiscal 2014 we used $1.2 million to meet our normal monthly debt obligations, including repayment of $500,000 under our revolving line of credit with the Bank. In addition we used $0.9 million to retire our capital expenditure and staged advance note and to pay down additional principal under our MDFA bonds. Fiscal 2013 outflows were comprised of principal payments of $1.4 million for long-term debt and borrowings of $500,000 under our revolving line of credit with the Bank in the fourth quarter to fund operations.  The credit line expired on July 31, 2013 and was not renewed by the Bank.

All of the above activity resulted in a net decrease in cash of $2.0 million in fiscal 2014 compared with an increase in cash for fiscal 2013 of $0.3 million.

Obligations under the Term Note, Revolving Note, Capital Expenditure Note, Staged Advance Note and the Credit Loan Note are guaranteed by TechPrecision and Ranor. Collateral securing such notes comprises all personal property of TechPrecision and Ranor, including cash, accounts receivable, inventories, equipment, financial and intangible assets. There are no material commitments for capital expenditures at March 31, 2014. We have no off-balance sheet assets or liabilities.

The following table sets forth information as of March 31, 2014 as to our contractual obligations:

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(dollars in thousands)	Payments due by period
Contractual obligations	Total		Less than 1  year		2-3 years		4-5 years		After 5  Years
Debt and capital lease obligations	$	4,208	$	4,170	$	24	$	14	$	--
Interest on debt and capital leases		74		71		2		1		--
Purchase obligations		663		663		--		--		--
Non-cancellable operating leases		150		65		85		--		--
Total	$	5,095	$	4,969	$	111	$	15	$	--

Item 7A. 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 8. Financial Statements.

The financial statements begin on Page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On October 14, 2013, KPMG LLP, the independent registered public accounting firm of TechPrecision Corporation, notified the audit committee of the board of directors of the Company that it would not, if it were asked to do so, stand for reappointment as the Company’s independent registered public accounting firm for the year ending March 31, 2014.

The audit report of KPMG on the Company’s consolidated financial statements as of and for the year ended March 31, 2013, did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except as follows:

KPMG’s report on the consolidated financial statements of the Company as of and for the year ended March 31, 2013, contained a separate paragraph stating that “the Company was not in compliance with the fixed charges and interest coverage financial covenants under their credit facility, and the Bank has not agreed to waive non-compliance with the covenants. Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice. The Company has suffered recurring losses from operations, and the Company’s liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters are also described in note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.”

During the Company’s fiscal years ended March 31, 2013 and the subsequent interim period through October 14, 2013, there were no (1) disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure, which disagreements, if not resolved to KPMG’s satisfaction, would have caused it therein to make reference in connection with their opinion to the subject matter of the disagreements, or (2) “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, except for the material weakness disclosed by the Company in Item 9A of the Company’s Annual Report on Form 10-K for the year ended March 31, 2013, as follows: “In connection with our assessment of our internal control over financial reporting described above, we have identified a material weakness in our internal control over financial reporting as of March 31, 2013. We did not maintain a sufficient complement of corporate accounting personnel or Ranor accounting staff necessary to consistently perform management review controls over Ranor financial information and complete account reconciliations on a  timely basis to ensure all transactions were accurately captured and recorded in the proper period. The demand on the corporate accounting resources is significant due to the manual nature of controls necessary to maintain effective control over our legacy system and intensified during the fourth quarter of fiscal 2013 as a result of turnover of accounting personnel at Ranor. As a result of this material weakness, we made a number of late or post-closing adjustments to net sales, cost of sales, stock based compensation expense, contract loss reserves, selling, general and administrative expenses, cash and related footnote disclosures in order to prepare the consolidated financial statements and footnotes included in this Form 10-K.”

Item 9A.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 Securities and Exchange Act of 1934, as amended, or the Exchange Act, are controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

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 Executive Chairman and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Executive Officer and Chief Financial Officer concluded that, as of March 31, 2014, our disclosure controls and procedures were not effective because of a material weakness in our internal control over financial reporting as discussed below.

Inherent Limitations Over Internal Controls

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. 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.

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Management, including the Company’s Executive Chairman 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 are 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.

Management’s Report of Internal Control over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Executive Chairman and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2014 based on the 1992 framework established by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO, in Internal Control - Integrated Framework .

Material Weakness

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In evaluating the effectiveness of our internal control over financial reporting as of March 31, 2014, management identified a material weakness in the Company's internal control over financial reporting. Specifically, we did not maintain a sufficient complement of corporate accounting personnel or Ranor accounting staff necessary to consistently perform management review controls over  financial information and complete account reconciliations on a timely basis to ensure all transactions were accurately captured and recorded in the proper period. The demand on the corporate accounting resources is significant due to the manual nature of controls necessary to maintain effective control over our legacy system. As a result of this material weakness, we made a certain late or post-closing adjustment to work-in-process and cost of sales for one of our projects. The adjustment corrected a data entry input error of an incorrect date for certain project costs at our Ranor subsidiary. The error was discovered before our first general ledger closing at year end, but the correcting journal entry was not reconciled and posted in a timely manner during the year end reporting cycle.

Remediation Plan

We engaged in substantial efforts to remediate the material weakness identified in our Annual report on Form 10-K for the year ended March 31, 2013, or fiscal 2013 Form 10-K. Our efforts to remediate the material weakness identified in fiscal 2013 were ongoing in fiscal 2014. As a result of the delayed filing of our fiscal 2013 Form 10-K until August 16, 2013 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 until September 18, 2013, the testing and evaluation processes necessary to complete our assessment of the effectiveness of our internal control over financial reporting were delayed for fiscal 2014. The following paragraphs describe changes in our internal control over financial reporting as a result of our efforts to remediate the material weakness.

· We hired a new Ranor Controller during the second quarter of fiscal 2014.

· We have implemented account reconciliation process to provide guidelines for account reconciliations and enhancing documentation to support sub-ledger account reconciliations.

· We enhanced contract administration and review procedures, including the review of customer contracts with regard to the appropriate application of GAAP to ensure proper accounting treatment.

In addition, for fiscal 2015, we will continue to review our compensating controls, staffing requirements and the cost/benefit for upgrading our legacy systems.

We believe that the measures described above will facilitate remediation of the material weakness we have identified and will continue to strengthen our internal control over financial reporting. We are committed to continually improving our internal control process and will diligently review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide that additional measures are necessary to address control deficiencies.

Changes in Internal Control over Financial Reporting

Except for our remediation efforts described above, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected or are reasonably likely to affect, our internal control over financial reporting.

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Item 9B. Other Information.

Not Applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

a)	Directors of the Registrant.
	Information with respect to Directors of the Company is set forth under the heading “Election of Directors” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

b) Executive Officers of the Registrant.

The following table sets forth certain information concerning our executive officers.

Name	Age	Position
Leonard M. Anthony (1)(2)(3)	59	Executive Chairman
Richard F. Fitzgerald	50	Chief Financial Officer
Alexander Shen	52	President of Ranor, Inc.

(1) Member of the audit committee, or Audit Committee

(2) Member of the compensation committee, or Compensation Committee

(3) Chairman of our board of directors

Leonard M. Anthony, has been a member of our board of directors since September 2010 and currently serves as our Executive Chairman. Mr. Anthony’s primary professional activity, since September 2008, has been serving on the board of directors for MRC Global, Inc. where he chairs the audit committee. Previously, Mr. Anthony served as the President and Chief Executive Officer of WCI Steel, Inc., an integrated producer of custom steel products, from December 2007 to October 2008. He was also a member of the board of directors of WCI Steel from December 2007 to October 2008. Mr. Anthony has more than 25 years of financial and operational management experience. From April 2005 to August 2007, Mr. Anthony was the Executive Vice President and Chief Financial Officer of Dresser-Rand Group Inc., a global supplier of rotating equipment solutions to the oil, gas, petrochemical and processing industries. Mr. Anthony earned a B.S. in Accounting from Pennsylvania State University, an M.B.A. from the Wharton School of the University of Pennsylvania and an A.M.P. from Harvard Business School.

Richard F. Fitzgerald, became our Chief Financial Officer in March 2009. Prior to joining us as Chief Financial Officer, Mr. Fitzgerald was engaged as a consultant providing tax, corporate development and financial consulting services for a specialty pharmaceutical company and a transportation manufacturing concern between December 2008 and March 2009. Prior to December 2008, Mr. Fitzgerald served as Vice President and Chief Financial Officer of Nucleonics, Inc., a private venture capital backed biotechnology company. Before becoming Chief Financial Officer of Nucleonics, Mr. Fitzgerald served in a variety of senior financial roles during his tenure there, which extended from 2002 through December 2008. Prior to his employment with Nucleonics, Inc., Mr. Fitzgerald served as Director, Corporate Development of Exelon Corporation and PECO Energy Company from 1997 through 2002. Mr. Fitzgerald began his career with Coopers & Lybrand (now PricewaterhouseCoopers) in Philadelphia, PA. Mr. Fitzgerald is a member of both the American and Pennsylvania Institutes of Certified Public Accountants. He holds a Bachelor of Science in Business Administration from Bucknell University.

Alexander Shen, was appointed President of our Ranor subsidiary on June 23, 2014. Mr. Shen has experience in a broad range of industries including metal fabrication, automotive, contract manufacturing, safety and security, and industrial distribution.  Prior to joining us, Mr. Shen served as President of SIB Development and Consulting in 2013, a firm specializing in fixed, monthly cost reduction. Prior to January 2013, Mr. Shen served as President of Tydenbrooks Security Products Group, a security products company, from July 2011 to December 2012. Prior to 2011, Mr. Shen served as President and CEO of Burgon Tool Steel Company between January 2009 and June 2011, and served as CEO of Ryerson Mexico & Vice President – International for Ryerson, Inc., a multi-national distributor and processor of metals, from 2007 to 2010. Prior to 2007, Mr. Shen was Division General Manager & COO at Sumitomo Electric Group from 1998 to 2007, focused on automotive electrical and electronic products. Prior to 1998 he had a 10-year career at the Automotive Division of Alcoa Inc. with roles of increasing responsibility.  Mr. Shen began his career with General Motors, moving to Chrysler, before joining Alcoa Inc.  His career includes multiple international management roles in Japan, China, Mexico, and Europe, and he is fluent in the Chinese and Japanese languages and cultures.  Mr. Shen holds a B.S. in Engineering from Michigan State University.

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c)	Section 16(a) Compliance.
	Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the heading “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

d)	Identification of the Audit Committee.
	Information concerning the audit committee of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

e)	Audit Committee Financial Expert.
	Information concerning the audit committee financial expert of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

f)	Corporate Governance/Nominating Committee.
	Information concerning any material changes to the way in which security holders may recommend nominees to the Company’s Board of Directors is set forth under the heading “Corporate Governance” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

g)

Code of Ethics for Chief Executive Officer and Senior Financial Officers.

The Company has adopted a Code of Ethics for the principal executive officer, principal financial officer and principal accounting officer, which may be found on the Company’s website at www.techprecision.com. Any amendments to the Code of Ethics or any grant of a waiver from the provisions of the Code of Ethics requiring disclosure under applicable Securities and Exchange Commission rules will be disclosed on the Company’s website.

Item 11. Executive Compensation

Information regarding executive compensation, including the “Compensation Discussion and Analysis,” the “Report of the Compensation Committee,” “Compensation Tables” and “Potential Payments Upon Termination or Change of Control” is set forth under the heading “Executive Compensation” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information regarding security ownership of certain beneficial owners and management appearing under “Stock Ownership of Executive Officers and Directors” and “Beneficial Ownership of Principal Stockholders” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information appearing under “Certain Relationships and Related Transactions” and “Independence” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

Information appearing under “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders is incorporated herein by reference.

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Part IV

Item 15. Exhibits.

(a)

3.1	Certificate of Incorporation of the Registrant (Exhibit 3.1 to our registration statement on Form SB-2, filed with the Commission on August 28, 2006 and incorporated herein by reference).
3.2	Amended and Restated By-laws of the Registrant.  (Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on February 3, 2014 and incorporated herein by reference)
3.3	Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
3.4	Certificate of Amendment to Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (Exhibit 3.5 to our quarterly report on Form 10-Q, filed with the Commission on November 12, 2009 and incorporated herein by reference).
4.1	Loan and Security Agreement, dated February 24, 2006, between Ranor, Inc. and Sovereign Bank (Exhibit 4.1 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
4.2	Guaranty of the Registrant in favor of Sovereign Bank (Exhibit 4.2 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
4.3	First Amendment, dated January 29, 2007, to Loan and Security Agreement, dated February 24, 2006, between Ranor, Inc. and Sovereign Bank (Exhibit 99.1 to our Current Report on Form 8-K, filed with the Commission on February 20, 2007 and incorporated herein by reference).
4.4	Second Amendment, dated June 28, 2007 to Loan and Security Agreement dated February 24, 2006, between Ranor, Inc. and Sovereign Bank (Exhibit 4.5 to our annual report on Form 10-KSB, filed with the Commission on July 2, 2007 and incorporated herein by reference).
4.5	Mortgage Security Agreement and Fixture Filing, dated as of October 4, 2006, between WM Realty Management, LLC and Amalgamated Bank (Exhibit 4.6 to our annual report on Form 10-KSB, filed with the Commission on July 2, 2007 and incorporated herein by reference).
4.6	Mortgage Note, dated October 4, 2006, made by WM Realty Management, LLC in favor of Amalgamated Bank (Exhibit 4.7 to our annual report on Form 10-KSB, filed with the Commission on July 2, 2007 and incorporated herein by reference).
4.7	Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010a, dated December 30, 2010 in the original aggregate principal amount of $4,250,000 (Exhibit 4.1 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
4.8	Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010b, dated December 30, 2010 in the original aggregate principal amount of $1,950,000 (Exhibit 4.2 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
4.9	Mortgage, Loan and Security Agreement, dated December 1, 2010, between Massachusetts Development Finance Agency, Ranor, Inc. and Sovereign Bank (Exhibit 10.5 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
4.10	ISDA 2002 Master Agreement, dated as of December 30, 2010, between Sovereign Bank and Ranor, Inc. (Exhibit 10.6 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).

4.11	Bond Purchase Agreement, dated December 30, 2010, from Ranor, Inc. and Registrant to Sovereign Bank and Massachusetts Development Finance Agency (Exhibit 10.7 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
4.12	Tenth Amendment, dated March 29, 2012, to the Loan Agreement, dated December 30, 2010, between Ranor, Inc. and Sovereign Bank (Exhibit 4.13 to our Annual Report on Form 10-K filed with the Commission on July 16, 2012 and incorporated herein by reference.
4.13	Eleventh Amendment, dated July 6, 2012, to the Loan Agreement, dated December 30, 2010, between Ranor, Inc. and Sovereign Bank.  (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on July 12, 2012 and incorporated herein by reference).
4.14	Twelfth Amendment to Loan Agreement dated February 14, 2013 by and between Ranor, Inc. and Sovereign Bank, N.A. (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on February 19, 2013 and incorporated herein by reference).
4.15	Forbearance and Modification Agreement, dated January 16, 2014, by and among the Registrant, Ranor and Santander Bank N.A. (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on January 23, 2014 and incorporated herein by reference).
4.16	Loan and Security Agreement, dated as May 30, 2014, by and between Utica Leaseco, LLC and Ranor, Inc. (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on June 4, 2014 and incorporated herein by reference).
4.17	Credit Loan Note in the name of Utica Leaseco, LLC, dated May 30, 2014 (Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on June 4, 2014 and incorporated herein by reference).
4.18	Forbearance and Modification Agreement, dated May 30, 2014 by and among TechPrecision Corporation, Ranor, Inc. and Santander Bank, N.A. (Exhibit 10.3 to our Current Report on Form 8-K, filed with the Commission on June 4, 2014 and incorporated herein by reference).
4.19	Forbearance and Modification Agreement, dated July 1, 2014 by and between Registrant, Ranor, Inc. and Santander Bank, N.A. (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on July 7, 2014 and incorporated herein by reference).
10.1	Preferred Stock Purchase Agreement, dated February 24, 2006, between the Registrant and Barron Partners LP (Exhibit 99.1 to our current report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
10.2	Registration Rights Agreement, dated February 24, 2006, between the Registrant and Barron Partners LP (Exhibit 99.2 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
10.3	Agreement dated February 24, 2006, among the Registrant, Ranor Acquisition LLC and the members of Ranor Acquisition LLC (Exhibit 99.3 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference),
10.4	Subscription Agreement, dated February 24, 2006, between the Registrant and certain purchasers of the Registrant's Common Stock (Exhibit 99.4 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
10.5	Registration Rights Provisions, dated February 24, 2006, between the Registrant and certain purchasers of the Registrant’s Common Stock  (Exhibit 99.5 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006 and incorporated herein by reference).
10.6†	2006 Long-term Incentive Plan, as restated effective November 22, 2010 (Exhibit 10.2 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
10.7	Limited Guarantee, dated October 4, 2006, by Andrew Levy in favor of Amalgamated Bank (Exhibit 10.13 to our annual report on Form 10-KSB, filed with the Commission on July 2, 2007 and incorporated herein by reference).
10.8†	At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement, dated July 21, 2010, between the Registrant and James Molinaro (Exhibit 10.2 to our Current Report on Form 8-K, filed with the Commission on July 22, 2010 and incorporated herein by reference).

10.9	Lease Agreement, dated November 17, 2010, between Center Valley Parkway Associates, L.P. and the Registrant (Exhibit 10.1 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
10.10	Purchase and Sale Agreement, dated December 20, 2010, between WM Realty Management, LLC and Ranor, Inc. dated December 20, 2010 (Exhibit 10.3 to our quarterly report on Form 10-Q, filed with the Commission on February 14, 2011 and incorporated herein by reference).
10.11	Amendment, dated May 31, 2007, to the Agreement between TechPrecision Corporation and Barron Partners LP dated August 17, 2005 (Exhibit 10.14 to our annual report on Form 10-KSB, filed with the Commission on July 2, 2007 and incorporated herein by reference).
10.12†	Separation, Severance and Release Agreement, dated March 31, 2009, between the Registrant and James G. Reindl (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on April 2, 2009 and incorporated herein by reference).
10.13†	Executive Consulting Agreement, dated March 31, 2009, between the Registrant and Louis A. Winoski (Exhibit 10.2 to our Current Report on Form 8-K, filed with the Commission on April 2, 2009 and incorporated herein by reference).
10.14†	Employment Agreement, dated March 23, 2009, between the Registrant and Richard F. Fitzgerald (Exhibit 10.3 to our Current Report on Form 8-K, filed with the Commission on April 2, 2009 and incorporated herein by reference).
10.15†	Employment Agreement, dated January 12, 2012, between the Registrant and Robert Francis (Exhibit 10.14 to our Annual Report on Form 10-K filed with the Commission on July 16, 2012 and incorporated herein by reference).
10.16†	Form of Option Award Agreement for Directors (Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on June 17, 2013 and incorporated herein by reference).
10.17†	Form of Restricted Stock Award Agreement (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on March 20, 2014 and incorporated herein by reference).
10.18†	Employment Agreement, dated June 20, 2014 between Ranor, Inc. and Alexander Shen (Exhibit 10.1 to our Current Report on Form 8-K, filed with the Commission on June 27, 2014, and incorporated herein by reference).
21.1	List of Subsidiaries.
23.1	Consent of Marcum LLP
23.2	Consent of KPMG LLP
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 theSarbanes-Oxley Act of 2002
101	The following financial information from this Annual Report on Form 10-K for the fiscal year ended March 31, 2014, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets at March 31, 2014 and 2013; (ii) the Consolidated Statements of Operations and Comprehensive Loss for the years ended March 31, 2014 and 2013; (iii) the Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2014 and 2013; (iv) the Consolidated Statements of Cash Flows for the years ended March 31, 2014 and 2013; and (v) the Notes to the Consolidated Financial Statements.

†     Management contract or compensatory arrangement or plan.

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 hereunto duly authorized.

	TechPrecision Corporation
July 15, 2014	By:	/s/ Richard F. Fitzgerald
		Richard F. Fitzgerald
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes Leonard M. Anthony and Richard F. Fitzgerald or either of them acting in the absence of the others, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission.

Signature	Title	Date
/s/ Leonard M. Anthony	Executive Chairman and Director	July 15, 2014
Leonard M. Anthony	(Principal Executive Officer)
/s/ Richard F. Fitzgerald	Chief  Financial Officer	July 15, 2014
Richard F. Fitzgerald	(Principal Financial and Accounting Officer)
/s/ Michael R. Holly	Director	July 15, 2014
Michael R. Holly
/s/ Andrew A. Levy	Director	July 15, 2014
Andrew A. Levy
/s/ Philip A. Dur	Director	July 15, 2014
Philip A. Dur
/s/ Robert G. Isaman	Director	July 15, 2014
Robert G. Isaman

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2014 AND 2013

Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets at March 31, 2014 and 2013	F-4
Consolidated Statements of Operations and Comprehensive Loss for the years ended March 31, 2014 and 2013	F-5
Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2014 and 2013	F-6
Consolidated Statements of Cash Flows for the years ended March 31, 2014 and 2013	F-7
Notes to Consolidated Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the Board of Directors

 and Stockholders of TechPrecision Corporation

We have audited the accompanying consolidated balance sheet of TechPrecision Corporation and subsidiaries (the “Company”) as of March 31, 2014, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of TechPrecision Corporation and subsidiaries as of March 31, 2014, and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the Company was not in compliance with the leverage ratio covenant under their credit facility, and the Bank has not agreed to waive the non-compliance with the covenant.  Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice.  The Company has suffered recurring losses from operations, and the Company’s liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months.  These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 1.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Marcum llp

Bala Cynwyd, Pennsylvania

July 15, 2014

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of TechPrecision Corporation:

We have audited the accompanying consolidated balance sheet of TechPrecision Corporation and subsidiaries (“the Company”) as of March 31, 2013 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended March 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TechPrecision Corporation and subsidiaries as of March 31, 2013, and the results of their operations and their cash flows for the year ended March 31, 2013, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, the Company was not in compliance with the fixed charges and interest coverage financial covenants under their credit facility, and the Bank has not agreed to waive the non-compliance with the covenants. Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice. The Company has suffered recurring losses from operations, and the Company’s liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Philadelphia, Pennsylvania

August 16, 2013

F-3

TECHPRECISION CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31, 2014			March 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	1,086,701		$	3,075,376
Accounts receivable, less allowance for doubtful accounts of $25,010 in 2014 and 2013		2,280,469			4,330,637
Costs incurred on uncompleted contracts, in excess of progress billings		5,258,002			4,298,293
Inventories- raw materials		293,326			354,516
Income taxes receivable		8,062			374,030
Current deferred taxes		991,096			255,765
Other current assets		461,245			1,578,484
Total current assets		10,378,901			14,267,101
Property, plant and equipment, net		6,489,212			7,300,248
Other noncurrent assets, net		105,395			--
Total assets	$	16,973,508		$	21,567,349
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	2,888,385		$	2,537,060
Accrued expenses		3,893,028			1,874,924
Accrued taxes payable		--			232,624
Deferred revenues		1,461,689			253,813
Revolving credit facility		--			500,000
Debt		4,169,771			5,784,479
Total current liabilities		12,412,873			11,182,900
Long-term debt, including capital leases		38,071			31,108
Noncurrent deferred taxes		991,096			255,765
Commitments and contingent liabilities (see Note 16)
Stockholders’ Equity:
Preferred stock- par value $.0001 per share, 10,000,000 shares authorized,
of which 9,890,980 are designated as Series A Preferred Stock, with
2,477,508 and 5,532,998 shares issued and outstanding at March 31, 2014 and 2013,
(liquidation preference of $706,090 and $1,576,904 at March 31, 2014 and 2013)		644,110			1,310,206
Common stock -par value $.0001 per share, authorized, 90,000,000 shares
issued and outstanding, 23,951,004 shares at March 31, 2014
and 19,956,871 at March 31, 2013		2,395			1,996
Additional paid in capital		6,105,211			5,076,552
Accumulated other comprehensive loss		(55,097	)		(221,418	)
Retained earnings (accumulated deficit)		(3,165,151	)		3,930,240
Total stockholders’ equity		3,531,468			10,097,576
Total liabilities and stockholders’ equity	$	16,973,508		$	21,567,349

See accompanying notes to the consolidated financial statements.

F-4

 TECHPRECISION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years ended March 31,
	2014			2013
Net sales	$	21,068,063		$	32,472,919
Cost of sales		21,799,856			25,914,345
Gross (loss) profit		(731,793	)		6,558,574
Selling, general and administrative		6,112,909			8,160,984
Loss from operations		(6,844,702	)		(1,602,410	)
Other income (expense)		874			(29,586	)
Interest expense		(440,634	)		(309,799	)
Interest income		3,598			2,189
Total other expense, net		(436,162	)		(337,196	)
Loss before income taxes		(7,280,864	)		(1,939,606	)
Income tax (benefit) expense		(185,473	)		472,331
Net loss	$	(7,095,391	)	$	(2,411,937	)
Other comprehensive income (loss), before tax:
Change in unrealized loss on cash flow hedges		157,197			(13,470	)
Foreign currency translation adjustments		9,124			10,964
Other comprehensive income (loss), before tax		166,321			(2,506	)
Net tax benefit of other comprehensive income (loss) items		--			(4,672	)
Comprehensive loss	$	(6,929,070	)	$	(2,409,771	)
Net loss per share (basic)	$	(0.34	)	$	(0.13	)
Net loss per share (diluted)	$	(0.34	)	$	(0.13	)
Weighted average number of shares outstanding (basic)		20,766,914			19,004,897
Weighted average number of shares outstanding (diluted)		20,766,914			19,004,897

See accompanying notes to the consolidated financial statements.

F-5

 TECHPRECISION CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Preferred Stock Outstanding			Preferred Stock		Warrants Outstanding			Common Stock Outstanding		Par Value		Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)	Retained Earnings (accumulated deficit)		Total Stockholders’ Equity
Balance  3/31/2012		7,035,982		$	1,637,857		100,000			17,992,177	$	1,799	$	4,412,075	$     (223,584)	$6,342,177		$12,170,324
Warrants expired							(100,000	)										--
Share based compensation														337,023				337,023
Conversion of preferred stock		(1,502,984	)		(327,651)					1,964,694		197		327,454				--
Net Loss																(2,411,937)		(2,411,937)
Other comprehensive loss, net of tax benefit ($4,672)															2,166			2,166
Balance 3/31/2013		5,532,998		$	1,310,206		--			19,956,871	$	1,996	$	5,076,552	$     (221,418)	$3,930,240		$10,097,576
Share based compensation														362,962				362,962
Conversion of preferred stock		(3,055,490	)		(666,096)					3,994,133		399		665,697				--
Net Loss																(7,095,391)		(7,095,391)
Other comprehensive loss, net of tax benefit ($0)															166,321			166,321
Balance 3/31/2014		2,477,508		$	644,110		--			23,951,004	$	2,395	$	6,105,211	$    (55,097)	$(3,165,151	)	$3,531,468

See accompanying notes to the consolidated financial statements. 

F-6

TECHPRECISION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(7,095,391	)	$	(2,411,937	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		953,428			846,012
Loss on sale of equipment		882			--
Stock based compensation expense		362,962			337,023
Deferred income taxes		--			695,762
Provision for contract losses		2,988,931			270,172
Changes in operating assets and liabilities:
Accounts receivable		2,056,509			572,786
Costs incurred on uncompleted contracts, in excess of progress billings		(959,709	)		(388,267	)
Inventories – raw materials		62,220			19,985
Other current assets		1,059,350			(75,540	)
Taxes receivable		365,968			1,824,262
Other noncurrent assets		(105,395	)		212,700
Accounts payable		357,115			1,171,600
Accrued expenses		(818,858	)		(822,450	)
Accrued taxes payable		(232,624	)		72,638
Deferred revenues		1,207,223			(545,600	)
Net cash provided by operating activities		202,611			1,779,146
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(64,895	)		(663,185	)
Net cash used in investing activities		(64,895	)		(663,185	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of short-term debt		--			500,000
Repayment of long-term debt		(2,126,935	)		(1,366,017	)
Net cash used in financing activities		(2,126,935	)		(866,017	)
Effect of exchange rate on cash and cash equivalents		544			1,947
Net (decrease) increase in cash and cash equivalents		(1,988,675	)		251,891
Cash and cash equivalents, beginning of period		3,075,376			2,823,485
Cash and cash equivalents, end of period	$	1,086,701		$	3,075,376

See accompanying notes to the consolidated financial statements.

F-7

TECHPRECISION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Continued)

	Years ended March 31,
	2014		2013
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest expense	$	385,767	$	268,351
Income taxes	$	--	$	--

SUPPLEMENTAL INFORMATION – NONCASH INVESTING AND FINANCING TRANSACTIONS:

Year Ended March 31, 2014

In connection with shareholder transactions during Fiscal 2014, Series A Convertible Preferred Stock of 3,055,490 shares were converted into 3,994,133 shares of common stock.

We recorded a liability of $231,784 (net of tax of $0) to reflect the fair value of interest rate swap contracts in connection with a tax-exempt bond financing transaction.

Year Ended March 31, 2013

We issued 1,964,694 shares of common stock in connection with the conversion of 1,502,984 shares of Series A Convertible Preferred Stock.

We recorded a liability of $388,982 (net of tax of $0) to reflect the fair value of an interest rate swap contract in connection with a tax exempt bond financing transaction.

Ranor entered into a capital lease arrangement for $46,378 for new office equipment.

See accompanying notes to the consolidated financial statements.

F-8

TECHPRECISION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise (WFOE), to meet growing demand for local manufacturing of components in China. TechPrecision, WCMC and Ranor are collectively referred to as the “Company”, “we”, “us” or “our”.

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

The formation of WCMC was made in consultation with one of our largest customers in the Solar Energy industry, and was based on the forecasted demand for solar and nuclear energy components in Asia, and especially in China. During the third quarter of fiscal 2011, WCMC commenced organizational and start-up activities and production began during the fourth quarter of fiscal 2011, with initial production units shipped to our largest solar customer on March 31, 2011. Through our subcontractors, we have the capability and capacity to manufacture production furnaces for the Solar Energy industry and HEM Sapphire industry in both the U.S. and Asia.

Liquidity and Capital Resources

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants under our Loan and Security Agreement between Ranor and Santander Bank, or the Bank, dated February 24, 2006, or, as amended, the Loan Agreement, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013.. The Loan Agreement was amended by the Forbearance and Modification Agreement, dated January 16, 2014, or the Forbearance Agreement. The Forbearance Agreement expired on March 31, 2014. The Bank did not agree to waive the non-compliance with the covenants at March 31, 2014. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon the termination date of the Forbearance Agreement. As a consequence, we classified all amounts under the Loan Agreement, $4.2 million at March 31, 2014, as a current liability. We entered into a Forbearance and Modification Agreement, dated May 30, 2014, or the Second Forbearance Agreement, pursuant to which the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014. On July 1, 2014, the Company and the Bank entered into a Forbearance and Modification Agreement, dated July 1, 2014, or the Third Forbearance Agreement. Under the Third Forbearance  Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014. We continue to make principal and interest payments pursuant to the terms of the Forbearance Agreement. If the Bank were to demand full repayment, we would be unable to pay the obligation as we do not have existing facilities or sufficient cash on hand to satisfy these obligations and would need to seek alternative financing.

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

We have incurred an operating loss of $7.1 million for the period ended March 31, 2014. At March 31, 2014, we had cash and cash equivalents of $1.1 million. Fiscal 2014 margins were impacted by approximately $4.9 million of new contract losses. We have recorded a provision for potential losses and, in one case, filed a demand for arbitration under a customer’s purchase agreement to recover all of our costs under the contract terms. We cannot be certain that we will be successful in recovering the full amount of our loss.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we must secure long-term financing on terms consistent with our near-term business plans. In addition, we must increase our backlog and change the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects which do not efficiently use our manufacturing capacity, and reduce our operating expenses to be in line with current business conditions in order to increase profit margins and decrease the amount of cash used in operations. If successful in changing the composition of revenue and reducing costs, we expect that fiscal 2015 operating results will reflect positive cash flows. We plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

F-9

The consolidated financial statements for the years ended March 31, 2014 and 2013 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total liabilities of $13.4 million at March 31, 2014 and to continue as a going concern is dependent upon the timely availability of long-term financing and successful execution of an operating plan. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The accompanying consolidated financial statements include the accounts of TechPrecision, WCMC and Ranor. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles (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 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, 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. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.

Fair Value Measurements

We account for fair value of financial instruments under the Financial Accounting Standard Board’s (FASB) Accounting Standards Codification (ASC) authoritative guidance which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The FASB establishes a fair value hierarchy used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Inputs based upon quoted market prices for identical assets or liabilities in active markets at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and Level 3: Inputs that are management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments’ valuation.

In addition, we will measure fair value in an inactive or dislocated market based on facts and circumstances and significant management judgment.  We will use inputs based on management estimates or assumptions, or make adjustments to observable inputs to determine fair value when markets are not active and relevant observable inputs are not available.  The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as presented in the balance sheet, approximates fair value due to the short-term nature of these instruments. 

Cash and cash equivalents

Holdings of highly liquid investments with maturities of three months or less, when purchased, are considered to be cash equivalents.  U.S. based deposits are maintained in a large regional bank. Our China subsidiary also maintains a bank account in a large national Bank in China subject to People’s Republic of China (PRC) banking regulations. Cash on deposit with a large national China-based bank was $29,191 and $482,630 at March 31, 2014 and 2013, respectively.

Foreign currency translation

The majority of our business is transacted in U.S. dollars; however, the functional currency of our China subsidiary is the local currency, the Chinese Yuan Renminbi. In accordance with ASC No. 830, Foreign Currency Matters (ASC 830), foreign currency translation adjustments of subsidiaries operating outside the U.S. are accumulated in other comprehensive income, a separate component of equity. Foreign currency transaction gains and losses are recognized in the determination of net income.

F-10

Accounts receivable and allowance for doubtful accounts

Accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Based on management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances which remain outstanding after  reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Current earnings are also charged with an allowance for sales returns based on historical experience. Historically, the level of uncollectible accounts has not been significant. There was no bad debt expense for the years ended March 31, 2014 and 2013.

Inventories

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

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are accounted for on the straight-line method based on estimated useful lives. The amortization of leasehold improvements is based on the shorter of the lease term or the useful life of the improvement. Amortization of assets recorded under capital leases is included under depreciation expense. Betterments and large renewals, which extend the life of the asset, are capitalized whereas maintenance and repairs and small renewals are expensed as incurred. The estimated useful lives are: machinery and equipment, 5-15 years; buildings, 30 years; and leasehold improvements, 2-5 years.

Interest is capitalized for assets that are constructed or otherwise produced for our own use, including assets constructed or produced for us by others for which deposits or progress payments have been made. Interest is capitalized to the date the assets are available and ready for use. When an asset is constructed in stages, interest is capitalized for each stage until it is available and ready for use. We use the interest rate incurred on funds borrowed specifically for the project. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized in fiscal 2014 and 2013.

In accordance with ASC No. 360, Property, Plant & Equipment (ASC 360), our property, plant and equipment is tested for impairment when triggering events occur, and if impaired, written-down to fair value based on either discounted cash flows or appraised values. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. There were no impairments for the years ended March 31, 2014 and 2013.

Operating Leases

Operating leases are charged to operations on a straight-line basis over the term of the lease. We lease our office facilities for various terms under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2017 and provide for renewal options ranging from three months to five years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

Derivative Financial Instruments

We are exposed to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we may periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with and for notional amounts equal to or less than the related underlying exposures. We do not purchase or hold any derivative financial instruments for speculation or trading purposes.

All derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent of holding them. At March 31, 2014, we had two interest rate swap transactions designated as cash flow hedges, each with an effective date of January 3, 2011. For our cash flow hedges, the effective portion of the derivative’s gain or loss is initially reported in Shareholders’ equity (as a component of accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The ineffective portion of the gain or loss of a cash flow hedge is reported in earnings immediately.

We formally document the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. We also formally assess, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions.

F-11

We will discontinue hedge accounting prospectively when we determine that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires, is sold, terminated, or exercised, or our management determines to remove the designation of a cash flow hedge. See Note 8 for additional disclosure related to interest rate swaps.

Convertible Preferred Stock and Warrants

We measured the fair value of the Series A Convertible Preferred Stock by the amount of cash that was received for their issuance. We have determined that the convertible preferred shares and warrants issued are equity instruments. The holders of the Series A Convertible Preferred Stock have no right higher than the common stockholders other than the liquidation preference in the event of liquidation of the Company.

Our warrants were excluded from derivative accounting because they were indexed to our unregistered common stock and are classified in stockholders’ equity. The majority of the warrants were exchanged for preferred stock on August 14, 2009. The remaining 112,500 warrants expired on September 1, 2010.

On February 15, 2011, we issued an additional 100,000 warrants to acquire common stock at an exercise price of $1.65/share. The warrants had a fair value of $51,428. The warrants outstanding terminated at the end of the exercise period on February 14, 2013.

Research and Development

We charge research and development costs associated with the design and development of new products to expense when incurred. We incurred no research and development expense in fiscal 2014 or 2013.

Selling, General, and Administrative 

Selling, general and administrative (SG&A) expenses include items such as executive compensation, business travel and advertising costs. Advertising costs are nominal and expensed as incurred. Other general and administrative expenses include items for our administrative functions and include costs for items such as office rent, supplies, insurance, legal, accounting, tax, telephone and other outside services. SG&A consisted of the following as of March 31:  

	2014		2013
Salaries and related expenses	$	3,634,538	$	4,460,708
Professional fees		1,165,523		1,793,282
Other general and administrative		1,312,848		1,906,994
Total Selling, General and Administrative	$	6,112,909	$	8,160,984

Stock Based Compensation

Stock based compensation represents the cost related to stock based awards granted to our board of directors and employees. We measure stock based compensation cost at the grant date based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. We estimate the fair value of stock options using a Black-Scholes valuation model.

Excess tax benefits of awards that are recognized in equity related to stock options exercises are reflected as financing cash inflows. Stock based compensation cost that has been included in (loss) income from operations amounted to $362,962 and $337,023 for the fiscal years ended 2014 and 2013, respectively. See Note 13 for additional disclosures related to stock based compensation.

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per common share is computed by dividing net income or loss by the weighted average number of shares outstanding during the year. Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of convertible preferred stock, stock options and warrants calculated using the treasury stock method. See Note 13 for additional disclosures related to stock based compensation.

Revenue Recognition

We account for revenues and earnings using the percentage-of-completion method of accounting. Under this method, we recognize contract revenue and gross profit as the work progresses, either as the products are produced and delivered, or as services are rendered. We determine progress toward completion on production contracts based on either input measures, such as labor hours incurred, or output measures, such as units delivered.

F-12

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability are recognized in the period in which the revisions are determined. Costs incurred on uncompleted contracts consist of labor, overhead, and materials.

We may combine contracts for accounting purposes when they are negotiated as a package with an overall profit margin objective. These essentially represent an agreement to do a single project for a single customer, involve interrelated construction activities with substantial common costs, and are performed concurrently or sequentially. When a group of contracts is combined, revenue and profit are earned during the performance of the combined contracts.

Costs allocable to undelivered units are reported in the consolidated balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, construction changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reliably estimated. Revenues from such claims are recorded only to the extent that contract costs relating to the claim have been incurred. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable.

When we can only estimate a range of revenues and costs, we use the most likely estimate within the range. If we cannot determine which estimate in the range is most likely, the amounts within the ranges that would result in the lowest profit margin (the lowest contract revenue estimate and the highest contract cost estimate) are used.

In some situations, it may be impractical for us to estimate either specific amounts or ranges of contract revenues and costs. However, if we can at least determine that we will not incur a loss, a zero profit model is adopted. The zero profit model results in the recognition of an equal amount of revenues and costs. This method is only used if more precise estimates cannot be made and its use is discontinued when such estimates are obtainable. When we obtain more precise estimates, the change is treated as a change in an accounting estimate.

Income Taxes

In accordance with ASC No. 740, Income Taxes (ASC 740), income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Recent Accounting Pronouncements

In June, 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718)- Accounting for Share-based Payments when Terms of an award Provide That a Performance Target Could be Achieved after the Requisite Service Period. The Amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating ASU 2014-12 to determine the impact on the Company’s consolidated results of operations, financial position or cash flows.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued, ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. The guidance substantially converges final standards on revenue recognition between the FASB and IASB providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The ASU is effective for annual reporting periods beginning after December 15, 2016. We are currently evaluating ASU 2014-09 to determine the impact it may have on our current practices.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted. The Company does not expect the adoption of ASU 2013-11 to have a significant impact on the Company’s financial statement presentation.

F-13

In March 2013, the FASB issued ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 provides guidance for the treatment of the cumulative translation adjustment when an entity ceases to hold a controlling financial interest in a subsidiary or group of assets within a foreign entity. ASU 2013-05 is effective for interim and annual reporting periods beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following as of March 31: 

	2014			2013
Land	$	110,113		$	110,113
Building and improvements		3,261,680			3,261,680
Machinery equipment, furniture and fixtures		8,889,051			8,826,050
Equipment under capital leases		65,568			46,378
Total property, plant and equipment		12,326,412			12,244,221
Less: accumulated depreciation		(5,837,200	)		(4,943,973	)
Total property, plant and equipment, net	$	6,489,212		$	7,300,248

Depreciation expense for the years ended March 31, 2014 and 2013 was $895,528 and $804,564, respectively.

NOTE 4 - COSTS INCURRED ON UNCOMPLETED CONTRACTS

The following table sets forth information as to costs incurred on uncompleted contracts as of March 31:

	2014			2013
Cost incurred on uncompleted contracts, beginning balance	$	6,180,839		$	10,879,743
Total cost incurred on contracts during the year		25,579,089			21,215,441
Less cost of sales, during the year		(21,799,856	)		(25,914,345	)
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, beginning balance	$	1,882,546		$	6,969,717
Plus: Total billings incurred on contracts, during the year		23,887,587			27,385,748
Less: Contracts recognized as revenue, during the year		(21,068,063	)		(32,472,919	)
Billings on uncompleted contracts, ending balance	$	4,702,070		$	1,882,546
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, ending balance		4,702,070			1,882,546
Costs incurred on uncompleted contracts, in excess of progress billings	$	5,258,002		$	4,298,293

Contract costs consist primarily of labor and materials and related overhead, to the extent that such costs are recoverable. Revenues associated with these contracts are recorded only when the amount of recovery can be estimated reliably and realization is probable. As of March 31, 2014 and 2013, we had deferred revenues totaling $1,461,689 and $253,813, respectively. Deferred revenues represent customer prepayments on their contracts and completed contracts on which all revenue recognition criteria were not met.   We record provisions for losses within costs of sales in our consolidated statement of operations and comprehensive (loss) income. We also receive advance billings and deposits representing down payments for acquisition of materials and progress payments on contracts. The agreements with our customers allow us to offset the progress payments against the costs incurred.

NOTE 5 – OTHER CURRENT ASSETS

Other current assets included the following as of March 31:	2014		2013
Payments advanced to suppliers	$	196,534	$	267,513
Prepaid insurance		229,727		187,086
Collateral deposits (see Note 8)		--		1,032,348
Deferred loan costs, net of amortization		--		57,930
Other		34,984		33,607
Total	$	461,245	$	1,578,484

F-14

NOTE 6 – OTHER NONCURRENT ASSETS

Other noncurrent assets included the following as of March 31:	2014		2013
Deferred loan costs, net of amortization	$	105,395	$	--
Total	$	105,395	$	--

NOTE 7 - ACCRUED EXPENSES

Accrued expenses included the following as of March 31:	2014		2013
Accrued compensation	$	320,419	$	668,038
Interest rate swaps market value		231,783		388,982
Provision for contract losses		3,259,103		270,172
Other		81,723		547,732
Total	$	3,893,028	$	1,874,924

Our loss provision includes approximately $2.7 million for estimated contract losses in connection with a certain customer purchase agreement. We filed a demand for arbitration under the contract to recover damages, together with attorney's fees, interest and costs subsequent to the customer’s request to reduce the number of units ordered under the purchase agreement (See Note 19).

NOTE 8 – DEBT

Debt obligations outstanding were classified as of March 31:	2014		2013
Sovereign Bank Capital expenditure note due November 2014	$	--	$	306,432
Sovereign Bank Staged advance note due March 2016		--		333,850
MDFA Series A Bonds due January 2021		3,559,375		3,789,583
MDFA Series B Bonds due January 2018		599,634		1,346,429
Obligations under capital leases		10,762		8,185
Total Short-term debt	$	4,169,771		5,784,479
Long-term debt, obligations under capital leases		38,071		31,108
Total Debt	$	4,207,842	$	5,815,587

Loan Agreement

On February 24, 2006, we entered into the Loan Agreement, with the Bank which has since been amended as further described below. Pursuant to the Loan Agreement, as amended, the Bank provided us with a secured term loan of $4.0 million, or the Term Note, and a revolving line of credit of up to $2.0 million, or Revolving Note. The Term Note was paid off in full on March 1, 2013. On January 29, 2007, the Loan Agreement was amended, adding a capital expenditure line of credit facility of $3.0 million, or Capital Expenditure Note. On March 29, 2010, the Bank agreed to extend to us a loan facility, or Staged Advance Note, in the amount of up to $1.9 million for the purpose of acquiring a gantry mill machine.

MDFA Series A and B Bonds

On December 30, 2010, we completed a $6.2 million tax exempt bond financing with the Massachusetts Development Finance Authority, or the MDFA, pursuant to which the MDFA sold to the Bank MDFA Revenue Bonds, Ranor Issue, Series 2010A in the original aggregate principal amount of $4.25 million, or Series A Bonds, and MDFA Revenue Bonds, Ranor Issue, Series 2010B in the original aggregate principal amount of $1.95 million, or Series B Bonds together with the Series A Bonds, the Bonds. The proceeds of such sales were loaned to us under the terms of a Mortgage Loan and Security Agreement, dated as of December 1, 2010, by and among us, MDFA and the Bank (as Bond owner and Disbursing Agent), or the MLSA.

In connection with the December 30, 2010 bond financing, we executed an Eighth Amendment to the Loan Agreement, or Eighth Amendment. The Eighth Amendment incorporated borrowing of the Bond proceeds into the borrowings covered by the Loan Agreement. The MLSA provides for customary events of default, including any event of default under the Loan Agreement described above. Subject to lapse of any applicable cure period, a default under the MLSA would cause the acceleration of all of our outstanding obligations under the MLSA. Under the MLSA and the Eighth Amendment, we were required, as of the end of each fiscal quarter, to meet certain financial covenants applicable while the Bonds remain outstanding, including, among other things, that the ratio of earnings available to cover fixed charges will be greater than or equal to 120%; the interest coverage ratio will equal or exceed 2:1; and that our leverage ratio will be less than or equal to 3:1.

F-15

The proceeds from the sale of the Series A Bonds were used to finance the Ranor facility acquisition and 19,500 sq. ft. expansion of Ranor’s manufacturing facility in Westminster, Massachusetts, and the proceeds from the sale of the Series B Bonds were used to finance acquisitions of qualifying manufacturing equipment installed at the Westminster facility.

Under the MLSA and related documents, the Westminster facility secures, and we further guarantee, Ranor’s obligations to the Bank and subsequent holders of the Bonds. The initial rate of interest on the Bonds was 1.96% for a period from the bond date to and including January 31, 2011, and the interest rate thereafter is 65% times the sum of 275 basis points plus one-month LIBOR. We are required to make monthly payments of $17,708 and $23,214 with respect to the Loans beginning on February 1, 2011 until the maturity date or earlier redemption of each Bond. The Series A Bonds and the Series B Bonds will mature on January 1, 2021 and January 1, 2018, respectively. The Bonds are redeemable pursuant to the MLSA prior to maturity, in whole or in part, on any payment date in accordance with the terms of the MLSA.

In connection with the Bond financing, we and the Bank entered into the International Swap and Derivatives Association, Inc. 2002 Master Agreement, dated December 30, 2010, or ISDA Master Agreement, pursuant to which the variable interest rates applicable to the Bonds were swapped for fixed interest rates of 4.14% on the Series A Bonds and 3.63% on the Series B Bonds. Under the ISDA Master Agreement, we and the Bank entered into two swap transactions, each with an effective date of January 3, 2011. The notional amount of outstanding fair value interest rate swaps totaled $4.6 and $5.1 million at March 31, 2014 and 2013, respectively. These derivative instruments, which are designated as cash flow hedges, are carried on our consolidated balance sheet at fair value with the effective portion of the gain or loss on the derivative reported in stockholders’ equity as a component of accumulated other comprehensive loss and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The swaps will terminate on January 4, 2021 and January 2, 2018, respectively. The fair value of the interest rate swaps contracts were measured using market based level 2 inputs. The method employed to calculate the values conforms to the industry convention for calculation of such values. The swap’s market value can be calculated any time by comparing the fixed rate set at the inception of the transaction and the “swap replacement rate,” which represents the market rate for an offsetting interest rate swap with the same Notional Amounts and final maturity date. The market value is then determined by calculating the present value interest differential between the contractual swap and the replacement swap. The termination value is the sum of the present value interest differential as described above plus the accrued interest due at termination.

Revolving Note:

We and the Bank agreed to extend the maturity date of the revolving credit facility to July 29, 2012 under the Ninth Amendment to the Loan Agreement. The maturity date of the revolving credit facility was extended to January 31, 2013 under the Eleventh Amendment, and was extended further to July 31, 2013 under the Twelfth Amendment. The Revolving Note bears interest at a variable rate determined as the Prime Rate, plus 1.5% annually on any outstanding balance. We pay an unused credit line fee of 0.25% on the average unused credit line amount in the previous month. The borrowing limit on the Revolving Note is limited to the sum of 70% of our eligible accounts receivable plus 40% of eligible inventory up to a maximum borrowing limit of $2.0 million. There was $500,000 borrowed and outstanding under this facility as of March 31, 2013. As of March 31, 2013, $1.5 million was available under this facility. In July 2013, we repaid the $500,000 borrowed under the Revolving Note. This facility expired by its terms on July 31, 2013 and was not renewed by the Bank.

Capital Expenditure Note:

The initial borrowing limit under the Capital Expenditure Note was $0.5 million and has been amended several times resulting in a borrowing limit of $3.0 million. On November 30, 2009, we elected not to renew this facility when it terminated. Borrowings outstanding under this facility were converted to a note when the facility terminated. The current rate of interest is LIBOR plus 3%. Principal and interest payments are due monthly based on a five year amortization schedule. The application of cash from the restricted cash collateral account was used to pay off this obligation on January 16, 2014.

Staged Advance Note:

The Bank made certain loans to us limited to a cap of $1.9 million for the purpose of acquiring a gantry mill machine. The machine serves as collateral for the loan. The total aggregate amount of advances under this agreement could not exceed 80% of the actual purchase price of the gantry mill machine. All advances provided for a payment of interest only monthly through February 28, 2011, and thereafter, no further borrowings were permitted under this facility. The current interest rate is LIBOR plus 4%. Beginning on April 1, 2011, we were obligated to pay principal and interest sufficient to amortize the outstanding balance on a five year schedule. The application of cash from our restricted cash collateral account was used to pay off this obligation on January 16, 2014.

Capital Lease:

We leased certain office equipment under a non-cancelable capital lease that expired in April 2012.  We entered into a new capital lease in April 2012 in the amount of $46,378 for certain office equipment. The lease term is for 63 months, bears interest at 6.0% and requires monthly payments of principal and interest of $860. This lease was amended in fiscal 2014 when we purchased another replacement copier at Ranor. The revised lease term was extended by nine months and will expire in March 2018. The amount of the lease recorded in property, plant and equipment, net was $46,420 and $37,544 as of March 31, 2014 and 2013.

F-16

The maturities of all of our debt including the capital lease are as follows: 2015: $4,169,771; 2016: $11,426; 2017: $12,130; 2018: $10,596; and 2019: $3,919.

Loan Agreement Amendments

On February 14, 2013, we executed a Twelfth Amendment and obtained a waiver for failure to comply with the fixed charge coverage ratio and the interest coverage ratio covenants at December 31, 2012. The actual fixed charge ratio at December 31, 2012 was negative 41% and the actual interest coverage ratio was negative 256% as we reported an operating loss for the three months ended December 31, 2012. The leverage ratio covenant remained in effect (and must not be greater than 2:1).

We were in compliance with the leverage ratio covenant at December 31, 2012, as the actual leverage ratio was 1:1. The Twelfth Amendment revised the covenant to provide that the ratio of earnings available to cover fixed charges and the interest ratio coverage covenant testing will resume at March 31, 2013 on a trailing three month basis, and continue at June 30, 2013 on a trailing six month basis, at September 30, 2013 on a trailing nine month basis, and quarterly thereafter on a trailing twelve month basis beginning at December 31, 2013. Also, in connection with the Twelfth Amendment, we paid the Bank a fee of $7,500 and were required to continue to maintain a collateral deposit of $840,000 to cover estimated principal and interest on its obligation. The $840,000 collateral was included in other current assets at March 31, 2013.

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013. The actual fixed charge ratio at March 31, 2013 was negative 81% and the actual interest coverage ratio was negative 351% as we reported an operating loss for the three months ended March 31, 2013. The leverage ratio covenant remained in effect (and must not be greater than 2:1). We were in compliance with the leverage ratio covenant at March 31, 2013, as the actual leverage ratio was 1:1.

Forbearance Agreement

On January 16, 2014, we entered into a forbearance and modification agreement with the Bank, in connection with the Loan and Security Agreement, dated as of February 24, 2006, between Ranor, Inc. and Sovereign Bank, as supplemented and amended. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreements until March 31, 2014.

The Loan Agreement consists of a secured term loan of $4.0 million, a revolving line of credit of $2.0 million and a capital expenditure line of credit facility of $3.0 million.  Additionally, in connection with the $6.2 million tax exempt bond financing with the Massachusetts Development Finance Authority, or the MDFA, in December 2010, the MDFA sold to the Bank MDFA Revenue Bonds, Ranor Issue, Series 2010A in the original aggregate principal amount of $4.25 million and MDFA Revenue Bonds, Ranor Issue, Series 2010B in the original aggregate principal amount of $1.95 million, the proceeds of which were loaned to the Company under the terms of a Mortgage Loan and Security Agreement, dated as of December 1, 2010, by and among the Company, MDFA and the Bank (as Bond owner and Disbursing Agent).  The $4.0 million secured term loan matured with final payment made on March 1, 2013 and the revolving credit line expired on July 31, 2013, and was not renewed by the Bank.   At January 16, 2014, the outstanding balances on the capital expenditure line of credit facility, Series A Bonds and Series B Bonds were $394,329, $3,612,500 and $1,114,285, respectively.

In consideration for the granting of the Forbearance Agreement, we agreed to: (i) have paid in full all interest and fees accrued under the Loan Agreement and other related documents through December 31, 2013 (at such interest rate and in accordance with the terms therein); (ii) reimburse the Bank for appraisal costs in the amount of $11,240; (iii) an increase in the interest rate of 2% for the Series A Bonds and the Series B Bonds to 5.6% and 6%, respectively, during the Forbearance Period; (iv) the application of $394,329 and $445,671 of the Company’s restricted cash collateral deposit of $840,000 to pay off certain obligations under the Loan Agreement described above and the Series B Bonds respectively and (v) pay a forbearance fee of 3% of the net outstanding balance due from the Obligors to the Bank, which amounts to $128,433 due in installments during the Forbearance Period.

During the Forbearance Period, we agreed to comply with the terms, covenants and provisions in the Loan Agreement and related documents, as amended by the Forbearance Agreement.  The Forbearance Agreement amends the Loan Agreement to, among other things, prohibit the Company’s Leverage Ratio  (as such term is defined in the Loan Agreement) to be greater than 1.75 to 1.0.  We were not in compliance with the leverage ratio covenant at March 31, 2014, as the actual leverage ratio was 3.8:1.0. In the event that we fail to complete a refinancing of the current outstanding obligations by the completion of the Forbearance Period, the interest rate on outstanding obligations will convert to the Default Interest Rate (as such term is defined in the Loan Agreement). We have entered into two subsequent forbearance agreement subsequent to March 31, 2014 which extended the period to first June 30, 2014, then to July 31, 2014. The Company is engaged in discussions with potential alternative financing sources to secure a new financing arrangement to, among other things, replace the financing provided by the Loan and Security Agreement between Ranor and Santander Bank, dated February 24, 2006 (See Note 1 and Note 19).

F-17

NOTE 9 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The following table reflects loss from continuing operations by location, and the provision and benefit for income taxes and the effective tax rate for fiscal: 

	2014			2013
U.S. operations	$	(6,722,696	)	$	(1,796,789	)
Foreign operations		(558,168	)		(142,817	)
Loss from operations before tax		(7,280,864	)		(1,939,606	)
Income tax (benefit) expense provision		(185,473	)		472,331
Net Loss	$	(7,095,391	)	$	(2,411,937	)

The provision (benefit) for income taxes consists of the following as of March 31: 

Current	2014			2013
Federal	$	28,450		$	(332,580	)
State		702			12,987
Foreign		(214,625	)		96,162
Total Current		(185,473	)		(223,431	)
Deferred
Federal		--			606,757
State		--			(47,458	)
Foreign		--			136,463
Total Deferred		--			695,762
Income tax expense (benefit) provision	$	(185,473	)	$	472,331

Reconciliation between income taxes computed at the federal statutory rate for fiscal years ended March 31, 2014 and 2013 to the effective income tax rates applied to the net loss reported in the Consolidated Statements of Operations and Other Comprehensive Loss:  

	2014		2013
Federal statutory income tax rate	34	%		34	%
State income tax, net of federal benefit	--	%		1	%
Change in valuation allowance	(32)	%		(53)	%
Stock based compensation	(1)	%		(6)	%
Other	2	%		-	%
Effective income tax rate	3	%		(24)	%

The following table summarizes the components of deferred income tax assets and liabilities: 

Current Deferred Tax Assets:	2014			2013
Compensation	$	32,965		$	177,703
Allowance for doubtful accounts		9,866			9,824
Loss on uncompleted contracts		1,272,070			106,123
Net operating loss carryforward		30,145			30,145
Interest rate swaps		95,479			152,792
Other liabilities not currently deductible		310,089			341,726
Valuation allowance		(759,518	)		(562,548	)
Total Current Deferred Tax Asset	$	991,096		$	255,765
Noncurrent Deferred Tax Asset (Liability):
Share based compensation awards		369,880			323,734
Net operating loss carryforward		3,315,221			1,662,848
Valuation allowance		(3,647,070	)		(1,062,741	)
Total Noncurrent Deferred Tax Assets	$	38,031		$	923,841
Accelerated depreciation		(1,029,127	)		(1,179,606	)
Net Noncurrent Deferred Tax Asset (Liability)	$	(991,096	)	$	(255,765	)
Net Deferred Tax Asset	$	--		$	--

F-18

In assessing the recoverability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  We have determined that it is more likely than not that certain future tax benefits may not be realized.  Accordingly, a valuation allowance has been recorded against deferred tax assets that are unlikely to be realized.  Realization of the remaining deferred tax assets will depend on the generation of sufficient taxable income in the appropriate jurisdiction, the reversal of deferred tax liabilities, tax planning strategies and other factors prior to the expiration date of the carryforwards.  A change in the estimates used to make this determination could require an increase in deferred tax assets if they become realizable.

The following table summarizes carryforwards of net operating losses and tax credits as of March 31, 2014:

	Amount		Begins to Expire:
Federal net operating losses	$	5,865,609		2025
Federal alternative minimum tax credits	$	76,185	Indefinite
State net operating losses	$	20,016,690		2032

The Internal Revenue Code provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards on a yearly basis. We experienced an ownership change in connection with the acquisition of Ranor. Accordingly, our ability to utilize certain carryforwards is limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, we may not be able to take full advantage of these carryforwards for Federal or state income tax purposes.

The following table provides a reconciliation of our unrecognized tax benefits as of March 31, 2014:
Unrecognized tax benefits at March 31, 2013	$	17,206
Increases based on tax positions related to 2014		--
Increases based on tax positions prior to 2014		702
Decreases from expiration of statute of limitations		--
Unrecognized tax benefits at March 31, 2014	$	17,908

We recognized $702 in interest expense related to uncertain tax positions in the tax provision (benefit) on the Consolidated Statements of Operations and Other Comprehensive Income (Loss). We have not accrued any penalties with respect to uncertain tax positions.

We file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Our foreign subsidiary files separate income tax returns in the foreign jurisdiction in which it is located.  Tax years 2010 and forward remain open for examination.  We recognize interest and penalties accrued related to income tax liabilities in selling, general and administrative expense in its Consolidated Statements of Operations.

NOTE 10- RELATED PARTY TRANSACTIONS

WCMC leased approximately 1,000 sq. ft. of office space from an affiliate of Cleantech Solutions International, or CSI, to serve as its primary corporate offices in Wuxi, China. The lease had an initial two-year term and rent under the lease with the CSI affiliate is approximately $17,000 on an annual basis. This lease expired on November 15, 2013 and was not renewed. In addition to having leased property from an affiliate of CSI, we subcontract fabrication and machining services from CSI through their manufacturing facility in Wuxi, China and such subcontracted services are overseen by our personnel co-located at CSI in Wuxi, China.

We view CSI as a related party because a holder of an approximate 5% fully diluted equity interest in CSI, also holds an approximate 36% fully diluted equity interest in us. WCMC is also subcontracting manufacturing services from other Chinese manufacturing companies on comparable terms as those it has with CSI. We paid $1.9 million to CSI for materials and manufacturing services in fiscal 2013. There were no payments made to CSI in fiscal 2014.

NOTE 11 - PROFIT SHARING PLAN

Ranor has a 401(k) profit sharing plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. Our contributions were $12,413 and $21,219 for the years ended March 31, 2014 and 2013, respectively.

F-19

NOTE 12 - CAPITAL STOCK

Preferred Stock

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

Each share of Series A Convertible Preferred Stock was initially convertible into one share of common stock. As a result of the failure of us to meet certain levels of earnings before interest, taxes, depreciation and amortization for the years ended March 31, 2006 and 2007, the conversion rate changed, and, at December 31, 2009, each share of Series A Convertible Preferred Stock was convertible into 1.3072 shares of common stock, with an effective conversion price of $0.218.  Based on the current conversion ratio, there were 3,238,598 and 7,232,735 common shares underlying the Series A Convertible Preferred Stock as of March 31, 2014 and 2013, respectively.

In addition to the conversion rights described above, the certificate of designation for the Series A Convertible Preferred Stock provides that the holder of the series A preferred stock or its affiliates will not be entitled to convert the Series A Convertible Preferred Stock into shares of common stock or exercise warrants to the extent that such conversion or exercise would result in beneficial ownership by the investor and its affiliates of more than 4.9% of the shares of common stock outstanding after such exercise or conversion. This provision cannot be amended. No dividends are payable with respect to the Series A Convertible Preferred Stock and no dividends are payable on common stock while Series A Convertible Preferred Stock is outstanding. The common stock will not be redeemed while preferred stock is outstanding.

The holders of the Series A Convertible Preferred Stock have no voting rights. However, so long as any shares of Series A Convertible Preferred Stock are outstanding, we shall not, without the affirmative approval of the holders of 75% of the outstanding shares of Series A Convertible Preferred Stock then outstanding, (a) alter or change adversely the powers, preferences or rights given to the Series A Convertible Preferred Stock, (b) authorize or create any class of stock ranking as to dividends or distribution of assets upon liquidation senior to or otherwise pari passu with the Series A Convertible Preferred Stock, or any of preferred stock possessing greater voting rights or the right to convert at a more favorable price than the Series A Convertible Preferred Stock, (c) amend our certificate of incorporation or other charter documents in breach of any of the provisions hereof, (d) increase the authorized number of shares of Series A Convertible Preferred Stock, or (e) enter into any agreement with respect to the foregoing.

Upon any liquidation we will be required to pay $0.285 for each share of Series A Convertible Preferred Stock. The payment will be made before any payment to holders of any junior securities and after payment to holders of securities that are senior to the Series A Convertible Preferred Stock.

Under the terms of the purchase agreement, the investor has the right of first refusal in the event that we seek to raise additional funds through a private placement of securities, other than certain exempt issuances. The percentage of shares that an investor may acquire is based on the ratio of shares held by the investor plus the number of shares issuable upon conversion of Series A Convertible Preferred Stock owned by the investor to the total of such shares.

On August 14, 2009, our board of directors adopted a resolution authorizing and directing that the designated shares of Series A Convertible Preferred Stock be increased from 9,000,000 to 9,890,980.

On August 14, 2009, we entered into a warrant exchange agreement pursuant to which we agreed to issue 3,595,472 shares of Series A Convertible Preferred Stock to certain investors in exchange for warrants to purchase 9,320,000 shares of common stock. Effective September 11, 2009, the warrants were surrendered to us, we filed an amendment to its certificate of designation relating to its Series A Convertible Preferred Stock to increase the number of designated shares of Series A Convertible Preferred Stock, and the 3,595,472 shares of Series A Convertible Preferred Stock were issued pursuant to the terms of the warrant exchange agreement.  All warrants surrendered in connection with the warrant exchange were cancelled.

During the fiscal year ended March 31, 2014 and 2013, 3,055,490 and 1,502,984 shares of Series A Convertible Preferred Stock were converted into 3,994,134 and 1,964,694 shares of common stock, respectively. We had 2,477,508 and 5,532,998 shares of Series A Convertible Preferred Stock outstanding at March 31, 2014 and 2013, respectively.

Common Stock Purchase Warrants

On February 15, 2011, we entered into a contract with a third party pursuant to which we issued two-year warrants to purchase 100,000 shares of common stock at an exercise price of $1.65 per share. Using the Black-Scholes options pricing formula assuming a risk free rate of 0.30%, volatility of 79%, an expected term of one year, and the price of the common stock on February 15, 2011 of $1.65 per share, the value of the warrant was calculated at $51,428, or $0.51 per share issuable upon exercise of the warrant. Since the warrant permitted delivery of unregistered shares, we have control in settling the contract by issuing equity.

F-20

The cost of warrants was charged to selling, general and administrative. The warrants expired on February 14, 2013 and at March 31, 2013 there were no warrants outstanding.

Common Stock

We had 90,000,000 authorized common shares at March 31, 2014 and 2013.  We had 23,951,004 shares of common stock outstanding at March 31, 2014, and 19,956,871 shares of common stock outstanding at March 31, 2013. In fiscal 2014, we issued 3,994,134 shares of common stock in connection with a Series A Convertible Preferred Stock conversions. In fiscal 2013, we issued 1,964,694 shares of common stock in connection with a Series A Convertible Preferred Stock conversions.

NOTE 13 - STOCK BASED COMPENSATION

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

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

On April 26, 2012, we granted employee stock options for 50,000 shares of common stock at an exercise price of $0.70 per share, the fair market value on the date of grant. The options will vest in equal amounts over three years on the anniversary of the grant date.

On July 2, 2012, we granted stock options to two directors to purchase 10,000 shares of common stock each at an exercise price of $0.61 per share, the fair market value on the date of grant, pursuant to the plan provision following the third anniversary date of each director’s first election to the board. Fifty percent of the shares will vest in six months and 50% in eighteen months from the grant date, respectively.

On December 5, 2012, we granted stock options to a new member of our board of directors to purchase 50,000 shares of common stock each at an exercise price of $1.02 per share, the fair market value on the date of grant. Thirty thousand shares will vest immediately, with the remaining options vesting in equal amounts on the second and third year anniversary of the grant date.

On June 13, 2013, we granted stock options to our Executive Chairman to purchase 100,000 shares of common stock each at an exercise price of $0.67 per share, the fair market value on the date of grant. One third of the share grant will vest immediately, with the remaining options vesting in equal amounts on the second and third year anniversary of the grant date.

On June 13, 2013, we granted stock options to our senior management team to purchase 300,000 shares of common stock at an exercise price of $0.67 per share, the fair market value on the date of grant. The options will vest in equal amounts over three years on the anniversary of the grant date.

On March 19, 2014, the Board approved 180,000 restricted common stock grants to the CFO and other members of the Company’s finance team in recognition of their service to the Company. Assuming the employees remain employed by the Company at the time of each vesting event, vesting shall occur upon the timely completion of a new financing that provides adequate liquidity to the Company for one year; upon timely filing of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 with no material weaknesses; and upon one year from the date of grant.

The fair value was estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We use the simplified method for all grants to estimate the expected term of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. Because of our limited stock exercise activity we did not rely on our historical exercise data. The assumptions utilized for option grants during the periods presented ranged from 100.7% to 116.2% for volatility, a risk free interest rate of 0.061% to 1.750%, and expected term of approximately six years. At March 31, 2014, 1,547,006 shares of common stock were available for grant under the Plan.

F-21

The following table summarizes information about options for the most recent annual income statements presented: 

	Number Of			Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options			Exercise Price		Value		(in years)
Outstanding at 3/31/2012		2,415,666		$	1.040	$	107,375	7.71
Granted		120,000		$	0.820
Forfeited		(51,666	)	$	1.150
Exercised		--			--
Outstanding at 3/31/2013		2,484,000		$	1.027	$	776,475	9.07
Granted		580,000		$	0.670
Forfeited		(1,708,500	)	$	0.952
Outstanding at 3/31/2014		1,355,500		$	1.014	$	329,025	7.32
Vested or expected to vest 3/31/2014		1,355,500		$	1.014	$	329,025		7.32
Exercisable at 3/31/2014		734,167		$	1.055	$	189,525		5.98

At March 31, 2014 there was $340,731 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over the next three years. The total fair value of shares vested during the year was $244,655.

The following table summarizes the status of our stock options outstanding but not vested for the year ended March 31, 2014:  

	Number of  Options		Weighted Average
Outstanding at 3/31/2012		1,489,000	$	1.205
Granted		120,000	$	0.820
Forfeited		(51,666)	$	1.150
Vested		(703,000)	$	1.090
Outstanding at 3/31/2013		854,334	$	1.249
Granted		580,000	$	0.670
Forfeited		(607,667)	$	1.191
Vested		(205,334)	$	1.783
Outstanding at 3/31/2014		621,333	$	0.967

We made a discretionary grant outside of the Plan on June 13, 2013 of 200,000 options at an exercise price of $0.67 per share, the fair market value on the date of grant, to our non-employee directors in recognition of their additional services while we seek a permanent chief executive officer. The options have a term of ten years and will vest in three equal installment amounts on each of the grant date and first anniversaries of the grants and are subject to continuous service as members of the board through the second anniversary of the grant date. Although the grants were made outside of the Plan, the terms of the options are the same as those issued under the Plan.

NOTE 14 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

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 March 31, 2014, there were accounts receivable balances outstanding from three customers comprising 58% of the total receivables balance.  

The following table sets forth information as to accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of: 

		March 31, 2014					March 31, 2013
Customer		Dollars		Percent			Dollars		Percent
	A	$	750,146		33	%	$	915,632		21	%
	B	$	312,576		14	%	$	--		--	%
	C	$	255,360		11	%	$	--		--	%
	D	$	--		--	%	$	2,379,078		55	%
	E	$	--		--	%	$	516,174		12	%

F-22

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

		March 31, 2014				March 31, 2013
Customer		Dollars		Percent		Dollars		Percent
	A	$	3,983,838		19%	$	--		--%
	B	$	2,955,296		14%	$	6,086,928		19%
	C	$	2,069,468		10%	$	7,665,775		24%
	D	$	--		--%	$	4,800,047		15%

NOTE 15 – SEGMENT INFORMATION

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

		Net Sales				Property, Plant and Equipment, Net
		2014		2013		2014		2013
United States	$	20,848,081	$	29,146,085	$	6,485,491	$	7,252,027
China	$	219,982	$	3,326,834	$	3,721	$	19,346

NOTE 16 – COMMITMENTS

Leases

On November 17, 2010, we entered into a lease agreement to lease approximately 3,200 square feet of office space in Center Valley, Pennsylvania to be used as our corporate headquarters.  We took possession of the office space on April 1, 2011.  Under the Lease, our payment obligations were deferred until the fifth month after it takes possession, at which time we began to pay annual rent in equal monthly installments, subject to upward adjustments during each subsequent year of the term of the Lease.  In addition to Base Rent, we will pay to the Landlord certain operating expenses and other fees in accordance with the terms of the Lease.  Payment of Base Rent and other fees under the Lease may be accelerated if we fail to satisfy our payment obligations in a timely manner, or otherwise default on our obligations under the Lease. The Lease expires sixty-four months after the date of the Lease. We may elect to renew the lease for an additional five-year term. The Lease contains customary representations and covenants regarding occupancy, maintenance and care of the Property. At March 31, 2014 we recorded a liability for deferred rent of $12,778 reflecting the difference between the expense recorded in the consolidated statement of operations and the monthly rent cash payments paid to the lessor.

On November 15, 2013 we entered into a new lease agreement for approximately 1,000 sq. ft. of office space in Wuxi, China. The annual rental cost is approximately $4,000 and the lease expires on November 26, 2014. The lease can be renewed thereafter on an annual basis.

Rent expense for all operating leases for the fiscal years ended March 31, 2014 and 2013 was $104,047 and $138,765, respectively.

Future minimum lease payments required under non-cancellable operating leases in the aggregate, at March 31, 2014, totaled $150,314. The totals for each annual period ended on March 31 were: 2015- $64,954, 2016- $63,624 and 2017- $21,736. 

As of March 31, 2014, we had $0.7 million in purchase obligations outstanding, which primarily consisted of contractual commitments to purchase raw materials and supplies at fixed prices.

Employment Agreements

We have employment agreements with our executive officers. Such agreements provide for minimum salary levels, adjusted annually, as well as for incentive bonuses that are payable if specified company goals are attained. The aggregate annual commitment at March 31, 2014 for future salaries during the next fiscal year 2015, excluding bonuses, was approximately $0.9 million.

F-23

NOTE 17 - EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. Diluted EPS also includes the effect of dilutive potential common shares. 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. 

	March 31, 2014			March 31,  2013
Basic EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Weighted average shares		20,766,914			19,004,897
Basic Loss per share	$	(0.34	)	$	(0.13	)
Diluted EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Dilutive effect of convertible preferred stock, warrants and stock options		--			--
Diluted weighted average shares		20,766,914			19,004,897
Diluted Loss per share	$	(0.34	)	$	(0.13	)

All potential common share equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the period ended March 31, 2014 and 2013, there were 4,801,246 and 5,594,949, respectively, of potentially anti-dilutive stock options, warrants and convertible preferred stock, none of which were included in the EPS calculations above.  

NOTE 18 - SELECTED QUARTERLY INFORMATION (UNAUDITED)

The following table sets forth certain unaudited quarterly data for each of the four quarters in the years ended March 31, 2014 and 2013. The data has been derived from our unaudited consolidated financial statements that, in management's opinion, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of such information when read in conjunction with the Consolidated Financial Statements and Notes thereto.  Net Losses for each period include contract losses and unabsorbed overhead that increased cost of goods sold and lowered gross profit. The results of operations for any quarter are not necessarily indicative of the results of operations for any future period. 

(in thousands, except for per share data)	First  Quarter			Second Quarter			Third  Quarter			Fourth  Quarter (a)
Year ended March 31, 2014
Net sales	$	7,097		$	5,196		$	5,167		$	3,608
Gross profit (loss)	$	420		$	727		$	773		$	(2,651	)
Net Loss	$	(1,424	)	$	(819	)	$	(757	)	$	(4,095	)
Basic Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Diluted Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Year ended March 31, 2013
Net sales	$	7,145		$	8,079		$	7,294		$	9,955
Gross profit	$	1,105		$	1,938		$	1,884		$	1,631
Net Loss	$	(706	)	$	(45	)	$	(545	)	$	(1,115	)
Basic Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)
Diluted Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)

(a)   Fourth quarter gross margin for the year ended March 31, 2014 includes $2.7 million for estimated contract losses (see Note 7).

F-24

NOTE 19 – SUBSEQUENT EVENTS

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

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

In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million to pay off debt obligations owed to the Bank under the Loan Agreement described below.  Additionally, the Company retained approximately $1.27 million for general corporate purposes.

On May 30, 2014, the Company and the Bank entered into a new forbearance and modification agreement. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014.

On May 29, 2014, the Company filed a Demand for Arbitration against a customer, GTAT Corporation, for breach of contractual duties set forth pursuant to Rule R-4 of the Commercial Rules of the American Arbitration Association in accordance with the Terms and Conditions of the purchase agreement, dated November 8, 2013, between the parties. The claim was filed by the Company in response to GTAT Corporation’s request in April to reduce the number of units ordered under the purchase agreement. The basis for the Company’s claim is detrimental reliance on the purchase order and subsequent modifications by the respondent during the course of production as evidenced by its purchased materials, personnel hires, units shipped, and other incurred costs. The parties negotiated but were not able to resolve the dispute under the terms of the contract. As such, the Company submitted the dispute to binding arbitration. The Company seeks to recover damages, together with attorney's fees, interest and costs.

On June 23, 2014, Alexander Shen was appointed as President of our Ranor, Inc. subsidiary.  Pursuant to the Shen Employment Agreement, Mr. Shen will: (i) receive an annual base salary of $275,000; (ii) receive an award of stock options to purchase shares of the Company’s common stock, granted pursuant to the Plan, as amended, with a Black Scholes value of $250,000 at the time of grant; and (iii) be eligible for an annual cash performance bonus of up to 50% of base salary, subject to goals and objectives set by the Board of Directors of the Company.  Under the Shen Employment Agreement, Mr. Shen also will be eligible to participate in the Company’s benefits provided to other senior executives as well as benefits available to Company employees generally.

On June 25, 2014, in connection with a shareholder transaction, Series A Convertible Preferred Stock of 550,000 shares were converted into 718,959 shares of common stock.

On July 1, 2014, the Company and the Bank entered into a new forbearance and modification agreement. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014.

F-25

Exhibit Index.

Exhibit Number	Description of Document
21.1	List of Subsidiaries
23.1	Consent of Marcum, LLP
23.2	Consent of KPMG, LLP
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 Annual Report on Form 10-K for the fiscal year ended March 31, 2014, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Balance Sheets at March 31, 2014 and 2013; (ii) the Consolidated Statements of Operations and Comprehensive Loss for the years ended March 31, 2014 and 2013; (iii) the Consolidated Statements of Stockholders’ Equity for the years ended March 31, 2014 and 2013; (iv) the Consolidated Statements of Cash Flows for the years ended March 31, 2014 and 2013; and (v) the Notes to the Consolidated Financial Statements.

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE COMPANY

	State of Incorporation	Stock Ownership
TechPrecision Corporation	Delaware	Parent Co.
Ranor, Inc.	Delaware	100%
R2 TPCS, Inc.	Delaware	100%
Wuxi Critical Mechanical Components	China	100%

EX-23.1

                                                                                                                                                     Exhibit 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statement of TechPrecision Corporation and subsidiaries on Form S-8 (File No. 333 148152) of our report, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, dated July 15, 2014, with respect to our audit of the consolidated  financial statements of TechPrecision Corporation and subsidiaries as of March 31, 2014 and for the year ended March 31, 2014, which report is included in this Annual Report on Form 10-K of TechPrecision Corporation and subsidiaries for the year ended March 31, 2014.

/s/ Marcum llp

Bala Cynwyd, Pennsylvania

July 15, 2014

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors

TechPrecision Corporation:

We consent to the incorporation by reference in the registration statement (No. 333 148152) on Form S-8,  of TechPrecision Corporation and subsidiaries of our report dated August 16, 2013, with respect to the consolidated balance sheet of TechPrecision Corporation and subsidiaries as of March 31, 2013, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended March 31, 2013, which report appears in the March 31, 2014 annual report on Form 10-K of TechPrecision Corporation.

Our report dated August 16, 2013 contains an explanatory paragraph that states that the Company was not in compliance with the fixed charges and interest coverage financial covenants under their credit facility, and the Bank has not agreed to waive the non-compliance with the covenants. Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice. The Company has suffered recurring losses from operations, and the Company’s liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Philadelphia, Pennsylvania

July 15, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Leonard M. Anthony, certify that:

1.    I have reviewed this annual report on Form 10-K of TechPrecision Corporation for the year ended March 31, 2014;

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 annual 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 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 function):

                 a)                    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

                 b)                    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 15, 2014 /s/ Leonard M. Anthony Leonard M. Anthony Executive Chairman

EX-31.2

Exhibit 31.2

CERTIFICATION

 I, Richard F. Fitzgerald, certify that:  

1.    I have reviewed this annual report on Form 10-K of TechPrecision Corporation for the year ended March 31, 2014;

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 annual 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 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 function):

                 a)                    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

                 b)                    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 15, 2014	/s/ Richard F. Fitzgerald
	Richard F. Fitzgerald Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 10-K of TechPrecision Corporation (the “Company”) for the year ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leonard M. Anthony, the Executive Chairman, and I, Richard F. Fitzgerald, 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: July 15, 2014	/s/ Leonard M. Anthony Leonard M. Anthony Executive Chairman
Dated: July 15, 2014	/s/ Richard F. Fitzgerald
	Richard F. Fitzgerald Chief Financial Officer

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EARNINGS PER SHARE (EPS) (Tables)

12 Months Ended

Mar. 31, 2014

EARNINGS PER SHARE (EPS)

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

	March 31, 2014			March 31, 2013
Basic EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Weighted average shares	20,766,914			19,004,897
Basic Loss per share	$	(0.34	)	$	(0.13	)
Diluted EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Dilutive effect of convertible preferred stock, warrants and stock options	—			—
Diluted weighted average shares	20,766,914			19,004,897
Diluted Loss per share	$	(0.34	)	$	(0.13	)

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CAPITAL STOCK (Details) (USD $)	0 Months Ended	12 Months Ended				1 Months Ended	12 Months Ended
	Feb. 15, 2011	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Minimum item	Aug. 14, 2009 Warrant exchange agreement	Dec. 31, 2009 Series A convertible preferred stock	Mar. 31, 2014 Series A convertible preferred stock item	Mar. 31, 2013 Series A convertible preferred stock	Aug. 14, 2009 Series A convertible preferred stock	Mar. 31, 2014 Series A convertible preferred stock Minimum	Mar. 31, 2014 Series A convertible preferred stock Maximum	Sep. 11, 2009 Series A convertible preferred stock Warrant exchange agreement	Aug. 14, 2009 Series A convertible preferred stock Warrant exchange agreement	Mar. 31, 2014 Common stock
Capital stock
Number of authorized shares		10,000,000	10,000,000						9,890,980
Number of series of preferred stock				1			1
Conversion ratio prior to adjustment						1
Conversion ratio						1.3072
Effective conversion price (in dollars per share)						$ 0.218
Number of shares of common stock issuable upon conversion of convertible preferred stock							3,238,598	7,232,735
Beneficial ownership percentage upon conversion											4.90%
Dividends payable							$ 0							$ 0
Ownership percentage of shares outstanding needed for modification of stock agreement										75.00%
Required price per share upon liquidation							$ 0.285
Number of authorized shares before adoption of resolution									9,000,000
Number of shares issued							2,477,508	5,532,998				3,595,472
Shares of preferred stock agreed to be issued under warrant exchange agreement													3,595,472
Shares of common stock that can be purchased through warrants	100,000				9,320,000
Shares converted into common stock		3,994,133	1,502,984				3,055,490	1,502,984
Number of shares of common stock issued for converted preferred stock		3,055,490	1,964,694				3,994,134	1,964,694
Shares outstanding							2,477,508	5,532,998
Term of warrants	2 years
Warrants issued (in shares)	100,000
Exercise price of warrants (in dollars per share)	$ 1.65
Assumptions based on Black-Scholes options pricing formula
Risk free rate (as a percent)	0.30%
Volatility (as a percent)	79.00%
Expected term	1 year
Value of warrants upon exercise (in dollars per share)	$ 0.51
Fair value of warrants issuable (in dollars)	$ 51,428
Warrants outstanding (in shares)			0
Number of authorized common shares		90,000,000	90,000,000
Number of outstanding common shares		23,951,004	19,956,871

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ACCRUED EXPENSES (Details) (USD $)	Mar. 31, 2014	Mar. 31, 2013
ACCRUED EXPENSES
Accrued compensation	$ 320,419	$ 668,038
Interest rate swaps market value	231,783	388,982
Provision for contract losses	3,259,103	270,172
Other	81,723	547,732
Total	3,893,028	1,874,924
Losses in connection with customer purchase agreement included in provision for contract losses	$ 2,700,000

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STOCK BASED COMPENSATION (Details) (USD $)	12 Months Ended						0 Months Ended		12 Months Ended				0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Sep. 15, 2011	Aug. 05, 2010	Mar. 31, 2006	Dec. 05, 2012 Director	Jul. 02, 2012 Director item	Mar. 31, 2014 Director	Jul. 02, 2012 Director Awards vesting in six months	Jul. 02, 2012 Director Awards vesting in eighteen months	Mar. 31, 2014 Director Minimum item	Jun. 13, 2013 Executive Chairman	Jun. 13, 2013 Executives item	Jun. 13, 2013 Non-employee directors item	Mar. 19, 2014 Chief financial officer	Apr. 26, 2012 Employee
Share based compensation
Maximum number of shares authorized to be issued				3,300,000	3,000,000	1,000,000
Number of directors on a committee to administer the plan												2
Terms of options									5 years
Options granted (in shares)	580,000	120,000					50,000	10,000	50,000				100,000	300,000	200,000		50,000
Annual grants (in shares)									10,000
Exercise price of shares granted (in dollars per share)	$ 0.670	$ 0.820					$ 1.02	$ 0.61					$ 0.67	$ 0.67	$ 0.67		$ 0.70
Percentage of awards granted vesting immediately													33.00%
Vesting period								3 years							10 years	1 year	3 years
Awards granted (in shares)																180,000
Number of equal annual installments in which options will vest														3	3
Assumption used in valuation of stock options
Yield term of U.S. Treasury issues on which risk free interest rate is based	5 years
Expected term	6 years
Volatility rate, minimum (as a percent)	100.70%
Volatility rate, maximum (as a percent)	116.20%
Risk free interest rate, minimum (as a percent)	0.061%
Risk free interest rate, maximum (as a percent)	1.75%
Additional general disclosure
Common stock available for grant under plan (in shares)	1,547,006
Number Of Options
Outstanding at the beginning of the period (in shares)	2,484,000	2,415,666
Granted (in shares)	580,000	120,000					50,000	10,000	50,000				100,000	300,000	200,000		50,000
Forfeited (in shares)	(1,708,500)	(51,666)
Outstanding at the end of the period (in shares)	1,355,500	2,484,000	2,415,666
Vested or expected to vest at the end of the period (in shares)	1,355,500
Exercisable at the end of the period (in shares)	734,167
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 1.027	$ 1.040
Granted (in dollars per share)	$ 0.670	$ 0.820					$ 1.02	$ 0.61					$ 0.67	$ 0.67	$ 0.67		$ 0.70
Forfeited (in dollars per share)	$ 0.952	$ 1.150
Outstanding at the end of the period (in dollars per share)	$ 1.014	$ 1.027	$ 1.040
Vested or expected to vest at the end of the period (in dollars per share)	$ 1.014
Exercisable at the end of the period (in dollars per share)	$ 1.055
Aggregate Intrinsic Value
Outstanding at the end of the period	$ 329,025	$ 776,475	$ 107,375
Vested or expected to vest at the end of the period	329,025
Exercisable at the end of the period	189,525
Weighted Average Remaining Contractual Life
Outstanding at the end of the period	7 years 3 months 25 days	9 years 25 days	7 years 8 months 16 days
Vested or expected to vest at the end of the period	7 years 3 months 25 days
Exercisable at the end of the period	5 years 11 months 23 days
Additional information on stock options
Unrecognized compensation cost related to stock options	340,731
Period of recognition of unrecognized compensation expense	3 years
Fair value of shares vested	$ 244,655
Stock options outstanding but not vested, Number of Options
Outstanding at the beginning of the period (in shares)	854,334	1,489,000
Granted (in shares)	580,000	120,000					50,000	10,000	50,000				100,000	300,000	200,000		50,000
Vested (in shares)	(205,334)	(703,000)
Forfeited (in shares)	(607,667)	(51,666)
Outstanding at the end of the period (in shares)	621,333	854,334	1,489,000
Stock options outstanding but not vested, Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 1.249	$ 1.205
Granted (in dollars per share)	$ 0.670	$ 0.820					$ 1.02	$ 0.61					$ 0.67	$ 0.67	$ 0.67		$ 0.70
Vested (in dollars per share)	$ 1.783	$ 1.090
Forfeited (in dollars per share)	$ 1.191	$ 1.150
Outstanding at the end of the period (in dollars per share)	$ 0.967	$ 1.249	$ 1.205
Percentage of granted awards vesting over the specified period										50.00%	50.00%
Number of directors to whom stock options granted								2
Number of awards which will vest immediately							30,000

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OTHER CURRENT ASSETS (Details) (USD $)	Mar. 31, 2014	Mar. 31, 2013
OTHER CURRENT ASSETS
Payments advanced to suppliers	$ 196,534	$ 267,513
Prepaid insurance	229,727	187,086
Collateral deposits		1,032,348
Deferred loan costs, net of amortization		57,930
Other	34,984	33,607
Total	$ 461,245	$ 1,578,484

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ACCRUED EXPENSES (Tables)

12 Months Ended

Mar. 31, 2014

ACCRUED EXPENSES

Schedule of accrued expenses

	2014		2013
Accrued compensation	$	320,419	$	668,038
Interest rate swaps market value	231,783		388,982
Provision for contract losses	3,259,103		270,172
Other	81,723		547,732
Total	$	3,893,028	$	1,874,924

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SEGMENT INFORMATION (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014 item	Mar. 31, 2013
SEGMENT INFORMATION
Number of operating segments									1
SEGMENT INFORMATION
Net Sales	$ 3,608,000	$ 5,167,000	$ 5,196,000	$ 7,097,000	$ 9,955,000	$ 7,294,000	$ 8,079,000	$ 7,145,000	$ 21,068,063	$ 32,472,919
Property, Plant and Equipment, Net	6,489,212				7,300,248				6,489,212	7,300,248
United States
SEGMENT INFORMATION
Net Sales									20,848,081	29,146,085
Property, Plant and Equipment, Net	6,485,491				7,252,027				6,485,491	7,252,027
China
SEGMENT INFORMATION
Net Sales									219,982	3,326,834
Property, Plant and Equipment, Net	$ 3,721				$ 19,346				$ 3,721	$ 19,346

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SELECTED QUARTERLY INFORMATION (UNAUDITED)

12 Months Ended

Mar. 31, 2014

SELECTED QUARTERLY INFORMATION (UNAUDITED)

SELECTED QUARTERLY INFORMATION (UNAUDITED)

NOTE 18 - SELECTED QUARTERLY INFORMATION (UNAUDITED)

The following table sets forth certain unaudited quarterly data for each of the four quarters in the years ended March 31, 2014 and 2013. The data has been derived from our unaudited consolidated financial statements that, in management’s opinion, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of such information when read in conjunction with the Consolidated Financial Statements and Notes thereto.  Net Losses for each period include contract losses and unabsorbed overhead that increased cost of goods sold and lowered gross profit. The results of operations for any quarter are not necessarily indicative of the results of operations for any future period.

(in thousands, except for per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter (a)
Year ended March 31, 2014
Net sales	$	7,097		$	5,196		$	5,167		$	3,608
Gross profit (loss)	$	420		$	727		$	773		$	(2,651	)
Net Loss	$	(1,424	)	$	(819	)	$	(757	)	$	(4,095	)
Basic Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Diluted Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Year ended March 31, 2013
Net sales	$	7,145		$	8,079		$	7,294		$	9,955
Gross profit	$	1,105		$	1,938		$	1,884		$	1,631
Net Loss	$	(706	)	$	(45	)	$	(545	)	$	(1,115	)
Basic Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)
Diluted Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)

(a) Fourth quarter gross margin for the year ended March 31, 2014 includes $2.7 million for estimated contract losses (see Note 7).

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INCOME TAXES (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013
INCOME TAXES
Loss from operations before tax									$ (7,280,864)	$ (1,939,606)
Income tax (benefit) expense provision									(185,473)	472,331
Net loss	(4,095,000)	(757,000)	(819,000)	(1,424,000)	(1,115,000)	(545,000)	(45,000)	(706,000)	(7,095,391)	(2,411,937)
Current
Federal									28,450	(332,580)
State									702	12,987
Foreign									(214,625)	96,162
Total Current									(185,473)	(223,431)
Deferred
Federal										606,757
State										(47,458)
Foreign										136,463
Total Deferred										695,762
Income tax expense (benefit) provision									(185,473)	472,331
Reconciliation between income taxes computed at the federal statutory rate to the effective income tax rates applied to the net (loss) income
Federal statutory income tax rate (as a percent)									34.00%	34.00%
State income tax, net of federal benefit (as a percent)										1.00%
Change in valuation allowance (as a percent)									(32.00%)	(53.00%)
Stock based compensation (as a percent)									(1.00%)	(6.00%)
Other (as a percent)									2.00%
Effective income tax rate (as a percent)									3.00%	(24.00%)
Current Deferred Tax Assets:
Compensation	32,965				177,703				32,965	177,703
Allowance for doubtful accounts	9,866				9,824				9,866	9,824
Loss on uncompleted contracts	1,272,070				106,123				1,272,070	106,123
Net operating loss carryforward	30,145				30,145				30,145	30,145
Interest rate swaps	95,479				152,792				95,479	152,792
Other liabilities not currently deductible	310,089				341,726				310,089	341,726
Valuation allowance	(759,518)				(562,548)				(759,518)	(562,548)
Total Current Deferred Tax Asset	991,096				255,765				991,096	255,765
Noncurrent Deferred Tax Asset (Liability):
Share based compensation awards	369,880				323,734				369,880	323,734
Net operating loss carryforward	3,315,221				1,662,848				3,315,221	1,662,848
Valuation allowance	(3,647,070)				(1,062,741)				(3,647,070)	(1,062,741)
Total Noncurrent Deferred Tax Assets	38,031				923,841				38,031	923,841
Accelerated depreciation	(1,029,127)				(1,179,606)				(1,029,127)	(1,179,606)
Net Noncurrent Deferred Tax Asset (Liability)	(991,096)				(255,765)				(991,096)	(255,765)
U.S. operations
INCOME TAXES
Loss from operations before tax									(6,722,696)	(1,796,789)
Foreign operations
INCOME TAXES
Loss from operations before tax									$ (558,168)	$ (142,817)

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SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash and cash equivalents
Cash deposit with a large national China-based bank	$ 29,191	$ 482,630
Accounts receivable and allowance for doubtful accounts
Bad debt expense	0	0
Property, plant and equipment
Interest cost capitalized	0	0
Impairment of property, plant and equipment	$ 0	$ 0
Machinery and equipment | Minimum
Property, plant and equipment
Estimated useful lives	5 years
Machinery and equipment | Maximum
Property, plant and equipment
Estimated useful lives	15 years
Buildings
Property, plant and equipment
Estimated useful lives	30 years
Leasehold improvements | Minimum
Property, plant and equipment
Estimated useful lives	2 years
Leasehold improvements | Maximum
Property, plant and equipment
Estimated useful lives	5 years

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Tables) (Customer concentration)

12 Months Ended

Mar. 31, 2014

Receivable balance

Concentration of credit risk and major customers

Schedule of concentration of risk by factors

	March 31, 2014				March 31, 2013
Customer	Dollars		Percent		Dollars		Percent
A	$	750,146	33	%	$	915,632	21	%
B	$	312,576	14	%	$	—	—	%
C	$	255,360	11	%	$	—	—	%
D	$	—	—	%	$	2,379,078	55	%
E	$	—	—	%	$	516,174	12	%

Net sales

Concentration of credit risk and major customers

Schedule of concentration of risk by factors

	March 31, 2014				March 31, 2013
Customer	Dollars		Percent		Dollars		Percent
A	$	3,983,838	19	%	$	—	—	%
B	$	2,955,296	14	%	$	6,086,928	19	%
C	$	2,069,468	10	%	$	7,665,775	24	%
D	$	—	—	%	$	4,800,047	15	%

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RELATED PARTY TRANSACTIONS (Details) (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Related party transactions
Percentage of dilutive equity interest held by the common share holder	36.00%
WCMC | Affiliate of CSI
Related party transactions
Area of office space leased (in square feet)	1,000
Initial lease term	2 years
Annual rent	$ 17,000
CSI
Related party transactions
Percentage of dilutive equity interest held by the common share holder	5.00%
Payments for materials and manufacturing services	$ 0	$ 1,900,000

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SUBSEQUENT EVENTS (Details) (USD $)	12 Months Ended				0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Series A Convertible Preferred Stock	Mar. 31, 2013 Series A Convertible Preferred Stock	Jun. 25, 2014 Subsequent event Series A Convertible Preferred Stock	May 30, 2014 Subsequent event LSA	May 30, 2014 Subsequent event Loan agreement with bank	May 30, 2014 Subsequent event Utica LSA	Jun. 23, 2014 Subsequent event Ranor, Inc. Alexander Shen
Subsequent events
Aggregate principal amount								$ 4,150,000
Stated interest rate to be used as variable interest basis								7.50%
Interest margin (as a percent)								3.30%
Variable interest basis								six-month LIBOR interest rate
Maximum amount of debt that can be defaulted								5,000
Fees and associated costs paid						240,000
Repayment of debt							2,650,000
Loan proceeds retained for general corporate purposes						1,270,000
Annual base salary to be received to pursuant to the employment agreement									275,000
Black Scholes value at the time of grant of stock options awards granted									$ 250,000
Annual cash performance bonus as a percentage of base salary									50.00%
Shares converted into common stock	3,994,133	1,502,984	3,055,490	1,502,984	550,000
Number of shares of common stock issued for converted preferred stock	3,055,490	1,964,694	3,994,134	1,964,694	718,959

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OTHER NONCURRENT ASSETS (Details) (USD $)	Mar. 31, 2014
OTHER NONCURRENT ASSETS
Deferred loan costs, net of amortization	$ 105,395
Total	$ 105,395

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SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Mar. 31, 2014

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The accompanying consolidated financial statements include the accounts of TechPrecision, WCMC and Ranor. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles (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 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, 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. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.

Fair Value Measurements

We account for fair value of financial instruments under the Financial Accounting Standard Board’s (FASB) Accounting Standards Codification (ASC) authoritative guidance which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The FASB establishes a fair value hierarchy used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Inputs based upon quoted market prices for identical assets or liabilities in active markets at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and Level 3: Inputs that are management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments’ valuation.

In addition, we will measure fair value in an inactive or dislocated market based on facts and circumstances and significant management judgment.  We will use inputs based on management estimates or assumptions, or make adjustments to observable inputs to determine fair value when markets are not active and relevant observable inputs are not available.  The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as presented in the balance sheet, approximates fair value due to the short-term nature of these instruments.

Cash and cash equivalents

Holdings of highly liquid investments with maturities of three months or less, when purchased, are considered to be cash equivalents.  U.S. based deposits are maintained in a large regional bank. Our China subsidiary also maintains a bank account in a large national Bank in China subject to People’s Republic of China (PRC) banking regulations. Cash on deposit with a large national China-based bank was $29,191 and $482,630 at March 31, 2014 and 2013, respectively.

Foreign currency translation

The majority of our business is transacted in U.S. dollars; however, the functional currency of our China subsidiary is the local currency, the Chinese Yuan Renminbi. In accordance with ASC No. 830, Foreign Currency Matters (ASC 830), foreign currency translation adjustments of subsidiaries operating outside the U.S. are accumulated in other comprehensive income, a separate component of equity. Foreign currency transaction gains and losses are recognized in the determination of net income.

Accounts receivable and allowance for doubtful accounts

Accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Based on management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances which remain outstanding after  reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Current earnings are also charged with an allowance for sales returns based on historical experience. Historically, the level of uncollectible accounts has not been significant. There was no bad debt expense for the years ended March 31, 2014 and 2013.

Inventories

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

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are accounted for on the straight-line method based on estimated useful lives. The amortization of leasehold improvements is based on the shorter of the lease term or the useful life of the improvement. Amortization of assets recorded under capital leases is included under depreciation expense. Betterments and large renewals, which extend the life of the asset, are capitalized whereas maintenance and repairs and small renewals are expensed as incurred. The estimated useful lives are: machinery and equipment, 5-15 years; buildings, 30 years; and leasehold improvements, 2-5 years.

Interest is capitalized for assets that are constructed or otherwise produced for our own use, including assets constructed or produced for us by others for which deposits or progress payments have been made. Interest is capitalized to the date the assets are available and ready for use. When an asset is constructed in stages, interest is capitalized for each stage until it is available and ready for use. We use the interest rate incurred on funds borrowed specifically for the project. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized in fiscal 2014 and 2013.

In accordance with ASC No. 360, Property, Plant & Equipment (ASC 360), our property, plant and equipment is tested for impairment when triggering events occur, and if impaired, written-down to fair value based on either discounted cash flows or appraised values. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. There were no impairments for the years ended March 31, 2014 and 2013.

Operating Leases

Operating leases are charged to operations on a straight-line basis over the term of the lease. We lease our office facilities for various terms under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2017 and provide for renewal options ranging from three months to five years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

Derivative Financial Instruments

We are exposed to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we may periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with and for notional amounts equal to or less than the related underlying exposures. We do not purchase or hold any derivative financial instruments for speculation or trading purposes.

All derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent of holding them. At March 31, 2014, we had two interest rate swap transactions designated as cash flow hedges, each with an effective date of January 3, 2011. For our cash flow hedges, the effective portion of the derivative’s gain or loss is initially reported in Shareholders’ equity (as a component of accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The ineffective portion of the gain or loss of a cash flow hedge is reported in earnings immediately.

We formally document the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. We also formally assess, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions.

We will discontinue hedge accounting prospectively when we determine that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires, is sold, terminated, or exercised, or our management determines to remove the designation of a cash flow hedge. See Note 8 for additional disclosure related to interest rate swaps.

Convertible Preferred Stock and Warrants

We measured the fair value of the Series A Convertible Preferred Stock by the amount of cash that was received for their issuance. We have determined that the convertible preferred shares and warrants issued are equity instruments. The holders of the Series A Convertible Preferred Stock have no right higher than the common stockholders other than the liquidation preference in the event of liquidation of the Company.

Our warrants were excluded from derivative accounting because they were indexed to our unregistered common stock and are classified in stockholders’ equity. The majority of the warrants were exchanged for preferred stock on August 14, 2009. The remaining 112,500 warrants expired on September 1, 2010.

On February 15, 2011, we issued an additional 100,000 warrants to acquire common stock at an exercise price of $1.65/share. The warrants had a fair value of $51,428. The warrants outstanding terminated at the end of the exercise period on February 14, 2013.

Research and Development

We charge research and development costs associated with the design and development of new products to expense when incurred. We incurred no research and development expense in fiscal 2014 or 2013.

Selling, General, and Administrative

Selling, general and administrative (SG&A) expenses include items such as executive compensation, business travel and advertising costs. Advertising costs are nominal and expensed as incurred. Other general and administrative expenses include items for our administrative functions and include costs for items such as office rent, supplies, insurance, legal, accounting, tax, telephone and other outside services. SG&A consisted of the following as of March 31:

	2014		2013
Salaries and related expenses	$	3,634,538	$	4,460,708
Professional fees	1,165,523		1,793,282
Other general and administrative	1,312,848		1,906,994
Total Selling, General and Administrative	$	6,112,909	$	8,160,984

Stock Based Compensation

Stock based compensation represents the cost related to stock based awards granted to our board of directors and employees. We measure stock based compensation cost at the grant date based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. We estimate the fair value of stock options using a Black-Scholes valuation model.

Excess tax benefits of awards that are recognized in equity related to stock options exercises are reflected as financing cash inflows. Stock based compensation cost that has been included in (loss) income from operations amounted to $362,962 and $337,023 for the fiscal years ended 2014 and 2013, respectively. See Note 13 for additional disclosures related to stock based compensation.

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per common share is computed by dividing net income or loss by the weighted average number of shares outstanding during the year. Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of convertible preferred stock, stock options and warrants calculated using the treasury stock method. See Note 13 for additional disclosures related to stock based compensation.

Revenue Recognition

We account for revenues and earnings using the percentage-of-completion method of accounting. Under this method, we recognize contract revenue and gross profit as the work progresses, either as the products are produced and delivered, or as services are rendered. We determine progress toward completion on production contracts based on either input measures, such as labor hours incurred, or output measures, such as units delivered.

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability are recognized in the period in which the revisions are determined. Costs incurred on uncompleted contracts consist of labor, overhead, and materials.

We may combine contracts for accounting purposes when they are negotiated as a package with an overall profit margin objective. These essentially represent an agreement to do a single project for a single customer, involve interrelated construction activities with substantial common costs, and are performed concurrently or sequentially. When a group of contracts is combined, revenue and profit are earned during the performance of the combined contracts.

Costs allocable to undelivered units are reported in the consolidated balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, construction changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reliably estimated. Revenues from such claims are recorded only to the extent that contract costs relating to the claim have been incurred. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable.

When we can only estimate a range of revenues and costs, we use the most likely estimate within the range. If we cannot determine which estimate in the range is most likely, the amounts within the ranges that would result in the lowest profit margin (the lowest contract revenue estimate and the highest contract cost estimate) are used.

In some situations, it may be impractical for us to estimate either specific amounts or ranges of contract revenues and costs. However, if we can at least determine that we will not incur a loss, a zero profit model is adopted. The zero profit model results in the recognition of an equal amount of revenues and costs. This method is only used if more precise estimates cannot be made and its use is discontinued when such estimates are obtainable. When we obtain more precise estimates, the change is treated as a change in an accounting estimate.

Income Taxes

In accordance with ASC No. 740, Income Taxes (ASC 740), income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.     Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Recent Accounting Pronouncements

In June, 2014, the FASB issued ASU No. 2014-12, Compensation — Stock Compensation (Topic 718)- Accounting for Share-based Payments when Terms of an award Provide That a Performance Target Could be Achieved after the Requisite Service Period. The Amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating ASU 2014-12 to determine the impact on the Company’s consolidated results of operations, financial position or cash flows.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued, ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. The guidance substantially converges final standards on revenue recognition between the FASB and IASB providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The ASU is effective for annual reporting periods beginning after December 15, 2016. We are currently evaluating ASU 2014-09 to determine the impact it may have on our current practices.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted. The Company does not expect the adoption of ASU 2013-11 to have a significant impact on the Company’s financial statement presentation.

In March 2013, the FASB issued ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 provides guidance for the treatment of the cumulative translation adjustment when an entity ceases to hold a controlling financial interest in a subsidiary or group of assets within a foreign entity. ASU 2013-05 is effective for interim and annual reporting periods beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

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SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	0 Months Ended	12 Months Ended
	Feb. 15, 2011	Mar. 31, 2014 item	Mar. 31, 2013	Sep. 01, 2010
Derivative Financial Instruments
Number of interest rate swap transactions		2
Convertible Preferred Stock and Warrants
Warrants expired (in shares)				112,500
Warrants issued to acquire common stock (in shares)	100,000
Exercise price of warrants (in dollars per share)	$ 1.65
Fair value of warrants	$ 51,428
Research and Development
Expense in connection with the design and development of new products		0	0
Selling, General, and Administrative
Salaries and related expenses		3,634,538	4,460,708
Professional fees		1,165,523	1,793,282
Other general and administrative		1,312,848	1,906,994
Total Selling, General and Administrative		6,112,909	8,160,984
Stock Based Compensation
Stock based compensation cost		$ 362,962	$ 337,023
Minimum
Operating leases
Renewal period of long-term, non-cancelable lease agreements		3 months
Maximum
Operating leases
Renewal period of long-term, non-cancelable lease agreements		5 years

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PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Mar. 31, 2014

PROPERTY, PLANT AND EQUIPMENT

Schedule of components of property, plant and equipment, net

	2014			2013
Land	$	110,113		$	110,113
Building and improvements	3,261,680			3,261,680
Machinery equipment, furniture and fixtures	8,889,051			8,826,050
Equipment under capital leases	65,568			46,378
Total property, plant and equipment	12,326,412			12,244,221
Less: accumulated depreciation	(5,837,200		)	(4,943,973		)
Total property, plant and equipment, net	$	6,489,212		$	7,300,248

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Mar. 31, 2014

SIGNIFICANT ACCOUNTING POLICIES

Schedule of selling, general, and administrative expenses

	2014		2013
Salaries and related expenses	$	3,634,538	$	4,460,708
Professional fees	1,165,523		1,793,282
Other general and administrative	1,312,848		1,906,994
Total Selling, General and Administrative	$	6,112,909	$	8,160,984

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013
Concentration of credit risk and major customers
Accounts receivable balance	$ 2,280,469				$ 4,330,637				$ 2,280,469	$ 4,330,637
Net sales	3,608,000	5,167,000	5,196,000	7,097,000	9,955,000	7,294,000	8,079,000	7,145,000	21,068,063	32,472,919
Receivable balance | Customer concentration
Concentration of credit risk and major customers
Number of major customers									3
Concentration risk percentage									58.00%
Receivable balance | Customer concentration | Customer A
Concentration of credit risk and major customers
Accounts receivable balance	750,146				915,632				750,146	915,632
Concentration risk percentage									33.00%	21.00%
Receivable balance | Customer concentration | Customer B
Concentration of credit risk and major customers
Accounts receivable balance	312,576								312,576
Concentration risk percentage									14.00%
Receivable balance | Customer concentration | Customer C
Concentration of credit risk and major customers
Accounts receivable balance	255,360								255,360
Concentration risk percentage									11.00%
Receivable balance | Customer concentration | Customer D
Concentration of credit risk and major customers
Accounts receivable balance					2,379,078					2,379,078
Concentration risk percentage										55.00%
Receivable balance | Customer concentration | Customer E
Concentration of credit risk and major customers
Accounts receivable balance					516,174					516,174
Concentration risk percentage										12.00%
Net sales | Customer concentration | Customer A
Concentration of credit risk and major customers
Net sales									3,983,838
Concentration risk percentage									19.00%
Net sales | Customer concentration | Customer B
Concentration of credit risk and major customers
Net sales									2,955,296	6,086,928
Concentration risk percentage									14.00%	19.00%
Net sales | Customer concentration | Customer C
Concentration of credit risk and major customers
Net sales									2,069,468	7,665,775
Concentration risk percentage									10.00%	24.00%
Net sales | Customer concentration | Customer D
Concentration of credit risk and major customers
Net sales										$ 4,800,047
Concentration risk percentage										15.00%

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PROPERTY, PLANT AND EQUIPMENT (Details) (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
PROPERTY, PLANT AND EQUIPMENT
Total property, plant and equipment	$ 12,326,412	$ 12,244,221
Less: accumulated depreciation	(5,837,200)	(4,943,973)
Total property, plant and equipment, net	6,489,212	7,300,248
Depreciation expense	895,528	804,564
Land
PROPERTY, PLANT AND EQUIPMENT
Total property, plant and equipment	110,113	110,113
Building and improvements
PROPERTY, PLANT AND EQUIPMENT
Total property, plant and equipment	3,261,680	3,261,680
Machinery equipment, furniture and fixtures
PROPERTY, PLANT AND EQUIPMENT
Total property, plant and equipment	8,889,051	8,826,050
Equipment under capital leases
PROPERTY, PLANT AND EQUIPMENT
Total property, plant and equipment	$ 65,568	$ 46,378

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COSTS INCURRED ON UNCOMPLETED CONTRACTS (Tables)

12 Months Ended

Mar. 31, 2014

COSTS INCURRED ON UNCOMPLETED CONTRACTS

Schedule of costs incurred on uncompleted contracts

	2014			2013
Cost incurred on uncompleted contracts, beginning balance	$	6,180,839		$	10,879,743
Total cost incurred on contracts during the year	25,579,089			21,215,441
Less cost of sales, during the year	(21,799,856		)	(25,914,345		)
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, beginning balance	$	1,882,546		$	6,969,717
Plus: Total billings incurred on contracts, during the year	23,887,587			27,385,748
Less: Contracts recognized as revenue, during the year	(21,068,063		)	(32,472,919		)
Billings on uncompleted contracts, ending balance	$	4,702,070		$	1,882,546
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, ending balance	4,702,070			1,882,546
Costs incurred on uncompleted contracts, in excess of progress billings	$	5,258,002		$	4,298,293

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Mar. 31, 2014

OTHER CURRENT ASSETS

Schedule of other current assets

	2014		2013
Payments advanced to suppliers	$	196,534	$	267,513
Prepaid insurance	229,727		187,086
Collateral deposits (see Note 8)	—		1,032,348
Deferred loan costs, net of amortization	—		57,930
Other	34,984		33,607
Total	$	461,245	$	1,578,484

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DESCRIPTION OF BUSINESS

12 Months Ended

Mar. 31, 2014

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 and Wuxi Critical Mechanical Components Co., Ltd., or WCMC, a wholly foreign owned enterprise (WFOE), to meet growing demand for local manufacturing of components in China. TechPrecision, WCMC and Ranor are collectively referred to as the “Company”, “we”, “us” or “our”.

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

The formation of WCMC was made in consultation with one of our largest customers in the Solar Energy industry, and was based on the forecasted demand for solar and nuclear energy components in Asia, and especially in China. During the third quarter of fiscal 2011, WCMC commenced organizational and start-up activities and production began during the fourth quarter of fiscal 2011, with initial production units shipped to our largest solar customer on March 31, 2011. Through our subcontractors, we have the capability and capacity to manufacture production furnaces for the Solar Energy industry and HEM Sapphire industry in both the U.S. and Asia.

Liquidity and Capital Resources

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants under our Loan and Security Agreement between Ranor and Santander Bank, or the Bank, dated February 24, 2006, or, as amended, the Loan Agreement, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013. The Loan Agreement was amended by the Forbearance and Modification Agreement, dated January 16, 2014, or the Forbearance Agreement. The Forbearance Agreement expired on March 31, 2014. The Bank did not agree to waive the non-compliance with the covenants at March 31, 2014. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon the termination date of the Forbearance Agreement. As a consequence, we classified all amounts under the Loan Agreement, $4.2 million at March 31, 2014, as a current liability. We entered into a Forbearance and Modification Agreement, dated May 30, 2013, or the Second Forbearance Agreement, pursuant to which the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014. On July 1, 2014, the Company and the Bank entered into a Forbearance and Modification Agreement, dated July 1, 2014, or the Third Forbearance Agreement. Under the Third Forbearance  Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014. We continue to make principal and interest payments pursuant to the terms of the Forbearance Agreement. If the Bank were to demand full repayment, we would be unable to pay the obligation as we do not have existing facilities or sufficient cash on hand to satisfy these obligations and would need to seek alternative financing.

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

We have incurred an operating loss of $7.1 million for the period ended March 31, 2014. At March 31, 2014, we had cash and cash equivalents of $1.1 million. Fiscal 2014 margins were impacted by approximately $4.9 million of new contract losses. We have recorded a provision for potential losses and, in one case, filed a demand for arbitration under a customer’s purchase agreement to recover all of our costs under the contract terms. We cannot be certain that we will be successful in recovering the full amount of our loss.

These factors raise substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we must secure long-term financing on terms consistent with our near-term business plans. In addition, we must increase our backlog and change the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects which do not efficiently use our manufacturing capacity, and reduce our operating expenses to be in line with current business conditions in order to increase profit margins and decrease the amount of cash used in operations. If successful in changing the composition of revenue and reducing costs, we expect that fiscal 2015 operating results will reflect positive cash flows. We plan to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.

The consolidated financial statements for the years ended March 31, 2014 and 2013 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total liabilities of $13.4 million at March 31, 2014 and to continue as a going concern is dependent upon the timely availability of long-term financing and successful execution of an operating plan. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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OTHER NONCURRENT ASSETS (Tables)

12 Months Ended

Mar. 31, 2014

OTHER NONCURRENT ASSETS

Schedule of other noncurrent assets

	2014		2013
Deferred loan costs, net of amortization	$	105,395	$	—
Total	$	105,395	$	—

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SELECTED QUARTERLY INFORMATION (UNAUDITED) (Tables)

12 Months Ended

Mar. 31, 2014

SELECTED QUARTERLY INFORMATION (UNAUDITED)

Schedule of certain unaudited quarterly data for each of the four quarters in the year

(in thousands, except for per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter (a)
Year ended March 31, 2014
Net sales	$	7,097		$	5,196		$	5,167		$	3,608
Gross profit (loss)	$	420		$	727		$	773		$	(2,651	)
Net Loss	$	(1,424	)	$	(819	)	$	(757	)	$	(4,095	)
Basic Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Diluted Loss per share	$	(0.07	)	$	(0.04	)	$	(0.04	)	$	(0.19	)
Year ended March 31, 2013
Net sales	$	7,145		$	8,079		$	7,294		$	9,955
Gross profit	$	1,105		$	1,938		$	1,884		$	1,631
Net Loss	$	(706	)	$	(45	)	$	(545	)	$	(1,115	)
Basic Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)
Diluted Loss per share	$	(0.04	)	$	(0.00	)	$	(0.03	)	$	(0.06	)

(a) Fourth quarter gross margin for the year ended March 31, 2014 includes $2.7 million for estimated contract losses (see Note 7).

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PROFIT SHARING PLAN (Details) (Ranor, Inc., USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Ranor, Inc.
PROFIT SHARING PLAN
Eligibility for employer matching contributions, period of service	90 days
Matching contributions made by the company	$ 12,413	$ 21,219

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2014	Mar. 31, 2013
Current assets:
Cash and cash equivalents	$ 1,086,701	$ 3,075,376
Accounts receivable, less allowance for doubtful accounts of $25,010 in 2014 and 2013	2,280,469	4,330,637
Costs incurred on uncompleted contracts, in excess of progress billings	5,258,002	4,298,293
Inventories- raw materials	293,326	354,516
Income taxes receivable	8,062	374,030
Current deferred taxes	991,096	255,765
Other current assets	461,245	1,578,484
Total current assets	10,378,901	14,267,101
Property, plant and equipment, net	6,489,212	7,300,248
Other noncurrent assets, net	105,395
Total assets	16,973,508	21,567,349
Current liabilities:
Accounts payable	2,888,385	2,537,060
Accrued expenses	3,893,028	1,874,924
Accrued taxes payable		232,624
Deferred revenues	1,461,689	253,813
Revolving credit facility		500,000
Debt	4,169,771	5,784,479
Total current liabilities	12,412,873	11,182,900
Long-term debt, including capital leases	38,071	31,108
Noncurrent deferred taxes	991,096	255,765
Commitments and contingent liabilities (see Note 16)
Stockholders' Equity:
Preferred stock- par value $.0001 per share, 10,000,000 shares authorized, of which 9,890,980 are designated as Series A Preferred Stock, with 2,477,508 and 5,532,998 shares issued and outstanding at March 31, 2014 and 2013, (liquidation preference of $706,090 and $1,576,904 at March 31, 2014 and 2013)	644,110	1,310,206
Common stock -par value $.0001 per share, authorized, 90,000,000 shares issued and outstanding, 23,951,004 shares at March 31, 2014 and 19,956,871 at March 31, 2013	2,395	1,996
Additional paid in capital	6,105,211	5,076,552
Accumulated other comprehensive loss	(55,097)	(221,418)
Retained earnings (accumulated deficit)	(3,165,151)	3,930,240
Total stockholders' equity	3,531,468	10,097,576
Total liabilities and stockholders' equity	$ 16,973,508	$ 21,567,349

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COSTS INCURRED ON UNCOMPLETED CONTRACTS (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013
Cost incurred on uncompleted contracts
Cost incurred on uncompleted contracts, beginning balance				$ 6,180,839				$ 10,879,743	$ 6,180,839	$ 10,879,743
Total cost incurred on contracts during the year									25,579,089	21,215,441
Less cost of sales, during the year									(21,799,856)	(25,914,345)
Cost incurred on uncompleted contracts, ending balance	9,960,072				6,180,839				9,960,072	6,180,839
Billings on uncompleted contracts
Billings on uncompleted contracts, beginning balance				1,882,546				6,969,717	1,882,546	6,969,717
Plus: Total billings incurred on contracts, during the year									23,887,587	27,385,748
Less: Contracts recognized as revenue, during the year	(3,608,000)	(5,167,000)	(5,196,000)	(7,097,000)	(9,955,000)	(7,294,000)	(8,079,000)	(7,145,000)	(21,068,063)	(32,472,919)
Billings on uncompleted contracts, ending balance	4,702,070				1,882,546				4,702,070	1,882,546
Cost incurred on uncompleted contracts
Cost incurred on uncompleted contracts, ending balance	9,960,072				6,180,839				9,960,072	6,180,839
Billings on uncompleted contracts, ending balance	4,702,070				1,882,546				4,702,070	1,882,546
Costs incurred on uncompleted contracts, in excess of progress billings	5,258,002				4,298,293				5,258,002	4,298,293
Deferred revenues	$ 1,461,689				$ 253,813				$ 1,461,689	$ 253,813

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Other comprehensive income (loss), tax	$ 0	$ (4,672)

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EARNINGS PER SHARE (EPS) (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013
Basic EPS
Net Loss (in dollars)	$ (4,095,000)	$ (757,000)	$ (819,000)	$ (1,424,000)	$ (1,115,000)	$ (545,000)	$ (45,000)	$ (706,000)	$ (7,095,391)	$ (2,411,937)
Weighted average number of shares outstanding (basic) (in shares)									20,766,914	19,004,897
Basic Loss per share (in dollars per share)	$ (0.19)	$ (0.04)	$ (0.04)	$ (0.07)	$ (0.06)	$ (0.03)	$ 0.00	$ (0.04)	$ (0.34)	$ (0.13)
Diluted EPS
Net Loss (in dollars)	$ (4,095,000)	$ (757,000)	$ (819,000)	$ (1,424,000)	$ (1,115,000)	$ (545,000)	$ (45,000)	$ (706,000)	$ (7,095,391)	$ (2,411,937)
Diluted weighted average shares									20,766,914	19,004,897
Diluted Loss per share (in dollars per share)	$ (0.19)	$ (0.04)	$ (0.04)	$ (0.07)	$ (0.06)	$ (0.03)	$ 0.00	$ (0.04)	$ (0.34)	$ (0.13)
Antidilutive securities excluded from computation of earnings per share amount (in shares)									4,801,246	5,594,949

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INCOME TAXES (Tables)

12 Months Ended

Mar. 31, 2014

INCOME TAXES

Schedule of loss from continuing operations by location, and the provision and benefit for income taxes and the effective tax rate

	2014			2013
U.S. operations	$	(6,722,696	)	$	(1,796,789	)
Foreign operations	(558,168		)	(142,817		)
Loss from operations before tax	(7,280,864		)	(1,939,606		)
Income tax (benefit) expense provision	(185,473		)	472,331
Net Loss	$	(7,095,391	)	$	(2,411,937	)

Schedule of components of the provision (benefit) for income taxes

	2014			2013
Current
Federal	$	28,450		$	(332,580	)
State	702			12,987
Foreign	(214,625		)	96,162
Total Current	(185,473		)	(223,431		)
Deferred
Federal	—			606,757
State	—			(47,458		)
Foreign	—			136,463
Total Deferred	—			695,762
Income tax expense (benefit) provision	$	(185,473	)	$	472,331

Schedule of reconciliation between income taxes computed at the federal statutory rate to the effective income tax rates applied to the net loss reported in the Consolidated Statements of Operations and Other Comprehensive Loss

	2014		2013
Federal statutory income tax rate	34	%	34	%
State income tax, net of federal benefit	—	%	1	%
Change in valuation allowance	(32	)%	(53	)%
Stock based compensation	(1	)%	(6	)%
Other	2	%	—	%
Effective income tax rate	3	%	(24	)%

Summary of the components of deferred income tax assets and liabilities

	2014			2013
Current Deferred Tax Assets:
Compensation	$	32,965		$	177,703
Allowance for doubtful accounts	9,866			9,824
Loss on uncompleted contracts	1,272,070			106,123
Net operating loss carryforward	30,145			30,145
Interest rate swaps	95,479			152,792
Other liabilities not currently deductible	310,089			341,726
Valuation allowance	(759,518		)	(562,548		)
Total Current Deferred Tax Asset	$	991,096		$	255,765
Noncurrent Deferred Tax Asset (Liability):
Share based compensation awards	369,880			323,734
Net operating loss carryforward	3,315,221			1,662,848
Valuation allowance	(3,647,070		)	(1,062,741		)
Total Noncurrent Deferred Tax Assets	$	38,031		$	923,841
Accelerated depreciation	(1,029,127		)	(1,179,606		)
Net Noncurrent Deferred Tax Asset (Liability)	$	(991,096	)	$	(255,765	)
Net Deferred Tax Asset	$	—		$	—

Summary of carryforwards of net operating losses and tax credits

The following table summarizes carryforwards of net operating losses and tax credits as of March 31, 2014:

	Amount		Begins to Expire:
Federal net operating losses	$	5,865,609	2025
Federal alternative minimum tax credits	$	76,185	Indefinite
State net operating losses	$	20,016,690	2032

Schedule of reconciliation of unrecognized tax benefits

Unrecognized tax benefits at March 31, 2013	$	17,206
Increases based on tax positions related to 2014	—
Increases based on tax positions prior to 2014	702
Decreases from expiration of statute of limitations	—
Unrecognized tax benefits at March 31, 2014	$	17,908

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SEGMENT INFORMATION

12 Months Ended

Mar. 31, 2014

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 15 — SEGMENT INFORMATION

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

	Net Sales				Property, Plant and Equipment, Net
	2014		2013		2014		2013
United States	$	20,848,081	$	29,146,085	$	6,485,491	$	7,252,027
China	$	219,982	$	3,326,834	$	3,721	$	19,346

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STOCK BASED COMPENSATION (Tables)

12 Months Ended

Mar. 31, 2014

STOCK BASED COMPENSATION

Summary of information about options for the most recent annual income statements presented

	Number Of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding at 3/31/2012	2,415,666		$	1.040	$	107,375	7.71
Granted	120,000		$	0.820
Forfeited	(51,666	)	$	1.150
Exercised	—		—
Outstanding at 3/31/2013	2,484,000		$	1.027	$	776,475	9.07
Granted	580,000		$	0.670
Forfeited	(1,708,500	)	$	0.952
Outstanding at 3/31/2014	1,355,500		$	1.014	$	329,025	7.32
Vested or expected to vest 3/31/2014	1,355,500		$	1.014	$	329,025	7.32
Exercisable at 3/31/2014	734,167		$	1.055	$	189,525	5.98

Summary of status of stock options outstanding but not vested

	Number of Options		Weighted Average
Outstanding at 3/31/2012	1,489,000		$	1.205
Granted	120,000		$	0.820
Forfeited	(51,666	)	$	1.150
Vested	(703,000	)	$	1.090
Outstanding at 3/31/2013	854,334		$	1.249
Granted	580,000		$	0.670
Forfeited	(607,667	)	$	1.191
Vested	(205,334	)	$	1.783
Outstanding at 3/31/2014	621,333		$	0.967

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EARNINGS PER SHARE (EPS)

12 Months Ended

Mar. 31, 2014

EARNINGS PER SHARE (EPS)

EARNINGS PER SHARE (EPS)

NOTE 17 - EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing reported earnings available to stockholders by the weighted average shares outstanding. Diluted EPS also includes the effect of dilutive potential common shares. 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.

	March 31, 2014			March 31, 2013
Basic EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Weighted average shares	20,766,914			19,004,897
Basic Loss per share	$	(0.34	)	$	(0.13	)
Diluted EPS
Net Loss	$	(7,095,391	)	$	(2,411,937	)
Dilutive effect of convertible preferred stock, warrants and stock options	—			—
Diluted weighted average shares	20,766,914			19,004,897
Diluted Loss per share	$	(0.34	)	$	(0.13	)

All potential common share equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the period ended March 31, 2014 and 2013, there were 4,801,246 and 5,594,949, respectively, of potentially anti-dilutive stock options, warrants and convertible preferred stock, none of which were included in the EPS calculations above.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (7,095,391)	$ (2,411,937)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	953,428	846,012
Loss on sale of equipment	882
Stock based compensation expense	362,962	337,023
Deferred income taxes		695,762
Provision for contract losses	2,988,931	270,172
Changes in operating assets and liabilities:
Accounts receivable	2,056,509	572,786
Costs incurred on uncompleted contracts, in excess of progress billings	(959,709)	(388,267)
Inventories - raw materials	62,220	19,985
Other current assets	1,059,350	(75,540)
Taxes receivable	365,968	1,824,262
Other noncurrent assets	(105,395)	212,700
Accounts payable	357,115	1,171,600
Accrued expenses	(818,858)	(822,450)
Accrued taxes payable	(232,624)	72,638
Deferred revenues	1,207,223	(545,600)
Net cash provided by operating activities	202,611	1,779,146
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(64,895)	(663,185)
Net cash used in investing activities	(64,895)	(663,185)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings of short-term debt		500,000
Repayment of long-term debt	(2,126,935)	(1,366,017)
Net cash used in financing activities	(2,126,935)	(866,017)
Effect of exchange rate on cash and cash equivalents	544	1,947
Net (decrease) increase in cash and cash equivalents	(1,988,675)	251,891
Cash and cash equivalents, beginning of period	3,075,376	2,823,485
Cash and cash equivalents, end of period	1,086,701	3,075,376
Cash paid during the year for:
Interest expense	385,767	268,351
SUPPLEMENTAL INFORMATION - NONCASH INVESTING AND FINANCING TRANSACTIONS:
Common stock issued in conversion of Series A Convertible Preferred Stock (in shares)	3,055,490	1,964,694
Series A Convertible Preferred Stock converted (in shares)	3,994,133	1,502,984
Liability recorded for fair value of an interest rate swap contract in connection with a tax exempt bond	231,784	388,982
Tax on liability recorded for fair value of an interest rate swap contract in connection with a tax exempt bond	0	0
Capital lease arrangement for new office equipment		$ 46,378

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Mar. 31, 2013
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 25,010	$ 25,010
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	23,951,004	19,956,871
Common stock, shares outstanding	23,951,004	19,956,871
Series A Convertible Preferred Stock
Preferred stock, designated as Series A Convertible Preferred Stock	9,890,980	9,890,980
Preferred stock, shares issued	2,477,508	5,532,998
Preferred stock, shares outstanding	2,477,508	5,532,998
Preferred stock, liquidation preference (in dollars)	$ 706,090	$ 1,576,904

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RELATED PARTY TRANSACTIONS

12 Months Ended

Mar. 31, 2014

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 10- RELATED PARTY TRANSACTIONS

WCMC leased approximately 1,000 sq. ft. of office space from an affiliate of Cleantech Solutions International, or CSI, to serve as its primary corporate offices in Wuxi, China. The lease had an initial two-year term and rent under the lease with the CSI affiliate is approximately $17,000 on an annual basis. This lease expired on November 15, 2013 and was not renewed. In addition to having leased property from an affiliate of CSI, we subcontract fabrication and machining services from CSI through their manufacturing facility in Wuxi, China and such subcontracted services are overseen by our personnel co-located at CSI in Wuxi, China.

We view CSI as a related party because a holder of an approximate 5% fully diluted equity interest in CSI, also holds an approximate 36% fully diluted equity interest in us. WCMC is also subcontracting manufacturing services from other Chinese manufacturing companies on comparable terms as those it has with CSI. We paid $1.9 million to CSI for materials and manufacturing services in fiscal 2013. There were no payments made to CSI in fiscal 2014.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2014	Jul. 07, 2014	Sep. 30, 2013
Document and Entity Information
Entity Registrant Name	TECHPRECISION CORP
Entity Central Index Key	0001328792
Document Type	10-K
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 10.1
Entity Common Stock, Shares Outstanding		24,669,958
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

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PROFIT SHARING PLAN

12 Months Ended

Mar. 31, 2014

PROFIT SHARING PLAN

PROFIT SHARING PLAN

NOTE 11 - PROFIT SHARING PLAN

Ranor has a 401(k) profit sharing plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. Our contributions were $12,413 and $21,219 for the years ended March 31, 2014 and 2013, respectively.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $)	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Net sales	$ 21,068,063	$ 32,472,919
Cost of sales	21,799,856	25,914,345
Gross (loss) profit	(731,793)	6,558,574
Selling, general and administrative	6,112,909	8,160,984
Loss from operations	(6,844,702)	(1,602,410)
Other income (expense)	874	(29,586)
Interest expense	(440,634)	(309,799)
Interest income	3,598	2,189
Total other expense, net	(436,162)	(337,196)
Loss before income taxes	(7,280,864)	(1,939,606)
Income tax (benefit) expense	(185,473)	472,331
Net loss	(7,095,391)	(2,411,937)
Other comprehensive income (loss), before tax:
Change in unrealized loss on cash flow hedges	157,197	(13,470)
Foreign currency translation adjustments	9,124	10,964
Other comprehensive income (loss), before tax	166,321	(2,506)
Net tax benefit of other comprehensive income (loss) items		(4,672)
Comprehensive loss	$ (6,929,070)	$ (2,409,771)
Net loss per share (basic) (in dollars per share)	$ (0.34)	$ (0.13)
Net loss per share (diluted) (in dollars per share)	$ (0.34)	$ (0.13)
Weighted average number of shares outstanding (basic) (in shares)	20,766,914	19,004,897
Weighted average number of shares outstanding (diluted) (in shares)	20,766,914	19,004,897

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OTHER CURRENT ASSETS

12 Months Ended

Mar. 31, 2014

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

NOTE 5 — OTHER CURRENT ASSETS

Other current assets included the following as of March 31:

	2014		2013
Payments advanced to suppliers	$	196,534	$	267,513
Prepaid insurance	229,727		187,086
Collateral deposits (see Note 8)	—		1,032,348
Deferred loan costs, net of amortization	—		57,930
Other	34,984		33,607
Total	$	461,245	$	1,578,484

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COSTS INCURRED ON UNCOMPLETED CONTRACTS

12 Months Ended

Mar. 31, 2014

COSTS INCURRED ON UNCOMPLETED CONTRACTS

COSTS INCURRED ON UNCOMPLETED CONTRACTS

NOTE 4 - COSTS INCURRED ON UNCOMPLETED CONTRACTS

The following table sets forth information as to costs incurred on uncompleted contracts as of March 31:

	2014			2013
Cost incurred on uncompleted contracts, beginning balance	$	6,180,839		$	10,879,743
Total cost incurred on contracts during the year	25,579,089			21,215,441
Less cost of sales, during the year	(21,799,856		)	(25,914,345		)
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, beginning balance	$	1,882,546		$	6,969,717
Plus: Total billings incurred on contracts, during the year	23,887,587			27,385,748
Less: Contracts recognized as revenue, during the year	(21,068,063		)	(32,472,919		)
Billings on uncompleted contracts, ending balance	$	4,702,070		$	1,882,546
Cost incurred on uncompleted contracts, ending balance	$	9,960,072		$	6,180,839
Billings on uncompleted contracts, ending balance	4,702,070			1,882,546
Costs incurred on uncompleted contracts, in excess of progress billings	$	5,258,002		$	4,298,293

Contract costs consist primarily of labor and materials and related overhead, to the extent that such costs are recoverable. Revenues associated with these contracts are recorded only when the amount of recovery can be estimated reliably and realization is probable. As of March 31, 2014 and 2013, we had deferred revenues totaling $1,461,689 and $253,813, respectively. Deferred revenues represent customer prepayments on their contracts and completed contracts on which all revenue recognition criteria were not met.   We record provisions for losses within costs of sales in our consolidated statement of operations and comprehensive (loss) income. We also receive advance billings and deposits representing down payments for acquisition of materials and progress payments on contracts. The agreements with our customers allow us to offset the progress payments against the costs incurred.

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COMMITMENTS

12 Months Ended

Mar. 31, 2014

COMMITMENTS

COMMITMENTS

NOTE 16 — COMMITMENTS

Leases

On November 17, 2010, we entered into a lease agreement to lease approximately 3,200 square feet of office space in Center Valley, Pennsylvania to be used as our corporate headquarters.  We took possession of the office space on April 1, 2011.  Under the Lease, our payment obligations were deferred until the fifth month after it takes possession, at which time we began to pay annual rent in equal monthly installments, subject to upward adjustments during each subsequent year of the term of the Lease.  In addition to Base Rent, we will pay to the Landlord certain operating expenses and other fees in accordance with the terms of the Lease.  Payment of Base Rent and other fees under the Lease may be accelerated if we fail to satisfy our payment obligations in a timely manner, or otherwise default on our obligations under the Lease. The Lease expires sixty-four months after the date of the Lease. We may elect to renew the lease for an additional five-year term. The Lease contains customary representations and covenants regarding occupancy, maintenance and care of the Property. At March 31, 2014 we recorded a liability for deferred rent of $12,778 reflecting the difference between the expense recorded in the consolidated statement of operations and the monthly rent cash payments paid to the lessor.

On November 15, 2013 we entered into a new lease agreement for approximately 1,000 sq. ft. of office space in Wuxi, China. The annual rental cost is approximately $4,000 and the lease expires on November 26, 2014. The lease can be renewed thereafter on an annual basis.

Rent expense for all operating leases for the fiscal years ended March 31, 2014 and 2013 was $104,047 and $138,765, respectively.

Future minimum lease payments required under non-cancellable operating leases in the aggregate, at March 31, 2014, totaled $150,314. The totals for each annual period ended on March 31 were: 2015- $64,954, 2016- $63,624 and 2017- $21,736.

As of March 31, 2014, we had $0.7 million in purchase obligations outstanding, which primarily consisted of contractual commitments to purchase raw materials and supplies at fixed prices.

Employment Agreements

We have employment agreements with our executive officers. Such agreements provide for minimum salary levels, adjusted annually, as well as for incentive bonuses that are payable if specified company goals are attained. The aggregate annual commitment at March 31, 2014 for future salaries during the next fiscal year 2015, excluding bonuses, was approximately $0.9 million.

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CAPITAL STOCK

12 Months Ended

Mar. 31, 2014

CAPITAL STOCK

CAPITAL STOCK

NOTE 12 - CAPITAL STOCK

Preferred Stock

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

Each share of Series A Convertible Preferred Stock was initially convertible into one share of common stock. As a result of the failure of us to meet certain levels of earnings before interest, taxes, depreciation and amortization for the years ended March 31, 2006 and 2007, the conversion rate changed, and, at December 31, 2009, each share of Series A Convertible Preferred Stock was convertible into 1.3072 shares of common stock, with an effective conversion price of $0.218.  Based on the current conversion ratio, there were 3,238,598 and 7,232,735 common shares underlying the Series A Convertible Preferred Stock as of March 31, 2014 and 2013, respectively.

In addition to the conversion rights described above, the certificate of designation for the Series A Convertible Preferred Stock provides that the holder of the series A preferred stock or its affiliates will not be entitled to convert the Series A Convertible Preferred Stock into shares of common stock or exercise warrants to the extent that such conversion or exercise would result in beneficial ownership by the investor and its affiliates of more than 4.9% of the shares of common stock outstanding after such exercise or conversion. This provision cannot be amended. No dividends are payable with respect to the Series A Convertible Preferred Stock and no dividends are payable on common stock while Series A Convertible Preferred Stock is outstanding. The common stock will not be redeemed while preferred stock is outstanding.

The holders of the Series A Convertible Preferred Stock have no voting rights. However, so long as any shares of Series A Convertible Preferred Stock are outstanding, we shall not, without the affirmative approval of the holders of 75% of the outstanding shares of Series A Convertible Preferred Stock then outstanding, (a) alter or change adversely the powers, preferences or rights given to the Series A Convertible Preferred Stock, (b) authorize or create any class of stock ranking as to dividends or distribution of assets upon liquidation senior to or otherwise pari passu with the Series A Convertible Preferred Stock, or any of preferred stock possessing greater voting rights or the right to convert at a more favorable price than the Series A Convertible Preferred Stock, (c) amend our certificate of incorporation or other charter documents in breach of any of the provisions hereof, (d) increase the authorized number of shares of Series A Convertible Preferred Stock, or (e) enter into any agreement with respect to the foregoing.

Upon any liquidation we will be required to pay $0.285 for each share of Series A Convertible Preferred Stock. The payment will be made before any payment to holders of any junior securities and after payment to holders of securities that are senior to the Series A Convertible Preferred Stock.

Under the terms of the purchase agreement, the investor has the right of first refusal in the event that we seek to raise additional funds through a private placement of securities, other than certain exempt issuances. The percentage of shares that an investor may acquire is based on the ratio of shares held by the investor plus the number of shares issuable upon conversion of Series A Convertible Preferred Stock owned by the investor to the total of such shares.

On August 14, 2009, our board of directors adopted a resolution authorizing and directing that the designated shares of Series A Convertible Preferred Stock be increased from 9,000,000 to 9,890,980.

On August 14, 2009, we entered into a warrant exchange agreement pursuant to which we agreed to issue 3,595,472 shares of Series A Convertible Preferred Stock to certain investors in exchange for warrants to purchase 9,320,000 shares of common stock. Effective September 11, 2009, the warrants were surrendered to us, we filed an amendment to its certificate of designation relating to its Series A Convertible Preferred Stock to increase the number of designated shares of Series A Convertible Preferred Stock, and the 3,595,472 shares of Series A Convertible Preferred Stock were issued pursuant to the terms of the warrant exchange agreement.  All warrants surrendered in connection with the warrant exchange were cancelled.

During the fiscal year ended March 31, 2014 and 2013, 3,055,490 and 1,502,984 shares of Series A Convertible Preferred Stock were converted into 3,994,134 and 1,964,694 shares of common stock, respectively. We had 2,477,508 and 5,532,998 shares of Series A Convertible Preferred Stock outstanding at March 31, 2014 and 2013, respectively.

Common Stock Purchase Warrants

On February 15, 2011, we entered into a contract with a third party pursuant to which we issued two-year warrants to purchase 100,000 shares of common stock at an exercise price of $1.65 per share. Using the Black-Scholes options pricing formula assuming a risk free rate of 0.30%, volatility of 79%, an expected term of one year, and the price of the common stock on February 15, 2011 of $1.65 per share, the value of the warrant was calculated at $51,428, or $0.51 per share issuable upon exercise of the warrant. Since the warrant permitted delivery of unregistered shares, we have control in settling the contract by issuing equity.

The cost of warrants was charged to selling, general and administrative. The warrants expired on February 14, 2013 and at March 31, 2013 there were no warrants outstanding.

Common Stock

We had 90,000,000 authorized common shares at March 31, 2014 and 2013.  We had 23,951,004 shares of common stock outstanding at March 31, 2014, and 19,956,871 shares of common stock outstanding at March 31, 2013. In fiscal 2014, we issued 3,994,134 shares of common stock in connection with a Series A Convertible Preferred Stock conversions. In fiscal 2013, we issued 1,964,694 shares of common stock in connection with a Series A Convertible Preferred Stock conversions.

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DEBT

12 Months Ended

Mar. 31, 2014

DEBT

DEBT

NOTE 8 — DEBT

Debt obligations outstanding were classified as of March 31:

	2014		2013
Sovereign Bank Capital expenditure note due November 2014	$	—	$	306,432
Sovereign Bank Staged advance note due March 2016	—		333,850
MDFA Series A Bonds due January 2021	3,559,375		3,789,583
MDFA Series B Bonds due January 2018	599,634		1,346,429
Obligations under capital leases	10,762		8,185
Total Short-term debt	$	4,169,771	5,784,479
Long-term debt, obligations under capital leases	38,071		31,108
Total Debt	$	4,207,842	$	5,815,587

Loan Agreement

On February 24, 2006, we entered into the Loan Agreement, with the Bank which has since been amended as further described below. Pursuant to the Loan Agreement, as amended, the Bank provided us with a secured term loan of $4.0 million, or the Term Note, and a revolving line of credit of up to $2.0 million, or Revolving Note. The Term Note was paid off in full on March 1, 2013. On January 29, 2007, the Loan Agreement was amended, adding a capital expenditure line of credit facility of $3.0 million, or Capital Expenditure Note. On March 29, 2010, the Bank agreed to extend to us a loan facility, or Staged Advance Note, in the amount of up to $1.9 million for the purpose of acquiring a gantry mill machine.

MDFA Series A and B Bonds

On December 30, 2010, we completed a $6.2 million tax exempt bond financing with the Massachusetts Development Finance Authority, or the MDFA, pursuant to which the MDFA sold to the Bank MDFA Revenue Bonds, Ranor Issue, Series 2010A in the original aggregate principal amount of $4.25 million, or Series A Bonds, and MDFA Revenue Bonds, Ranor Issue, Series 2010B in the original aggregate principal amount of $1.95 million, or Series B Bonds together with the Series A Bonds, the Bonds. The proceeds of such sales were loaned to us under the terms of a Mortgage Loan and Security Agreement, dated as of December 1, 2010, by and among us, MDFA and the Bank (as Bond owner and Disbursing Agent), or the MLSA.

In connection with the December 30, 2010 bond financing, we executed an Eighth Amendment to the Loan Agreement, or Eighth Amendment. The Eighth Amendment incorporated borrowing of the Bond proceeds into the borrowings covered by the Loan Agreement. The MLSA provides for customary events of default, including any event of default under the Loan Agreement described above. Subject to lapse of any applicable cure period, a default under the MLSA would cause the acceleration of all of our outstanding obligations under the MLSA. Under the MLSA and the Eighth Amendment, we were required, as of the end of each fiscal quarter, to meet certain financial covenants applicable while the Bonds remain outstanding, including, among other things, that the ratio of earnings available to cover fixed charges will be greater than or equal to 120%; the interest coverage ratio will equal or exceed 2:1; and that our leverage ratio will be less than or equal to 3:1.

The proceeds from the sale of the Series A Bonds were used to finance the Ranor facility acquisition and 19,500 sq. ft. expansion of Ranor’s manufacturing facility in Westminster, Massachusetts, and the proceeds from the sale of the Series B Bonds were used to finance acquisitions of qualifying manufacturing equipment installed at the Westminster facility.

Under the MLSA and related documents, the Westminster facility secures, and we further guarantee, Ranor’s obligations to the Bank and subsequent holders of the Bonds. The initial rate of interest on the Bonds was 1.96% for a period from the bond date to and including January 31, 2011, and the interest rate thereafter is 65% times the sum of 275 basis points plus one-month LIBOR. We are required to make monthly payments of $17,708 and $23,214 with respect to the Loans beginning on February 1, 2011 until the maturity date or earlier redemption of each Bond. The Series A Bonds and the Series B Bonds will mature on January 1, 2021 and January 1, 2018, respectively. The Bonds are redeemable pursuant to the MLSA prior to maturity, in whole or in part, on any payment date in accordance with the terms of the MLSA.

In connection with the Bond financing, we and the Bank entered into the International Swap and Derivatives Association, Inc. 2002 Master Agreement, dated December 30, 2010, or ISDA Master Agreement, pursuant to which the variable interest rates applicable to the Bonds were swapped for fixed interest rates of 4.14% on the Series A Bonds and 3.63% on the Series B Bonds. Under the ISDA Master Agreement, we and the Bank entered into two swap transactions, each with an effective date of January 3, 2011. The notional amount of outstanding fair value interest rate swaps totaled $4.6 and $5.1 million at March 31, 2014 and 2013, respectively. These derivative instruments, which are designated as cash flow hedges, are carried on our consolidated balance sheet at fair value with the effective portion of the gain or loss on the derivative reported in stockholders’ equity as a component of accumulated other comprehensive loss and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The swaps will terminate on January 4, 2021 and January 2, 2018, respectively. The fair value of the interest rate swaps contracts were measured using market based level 2 inputs. The method employed to calculate the values conforms to the industry convention for calculation of such values. The swap’s market value can be calculated any time by comparing the fixed rate set at the inception of the transaction and the “swap replacement rate,” which represents the market rate for an offsetting interest rate swap with the same Notional Amounts and final maturity date. The market value is then determined by calculating the present value interest differential between the contractual swap and the replacement swap. The termination value is the sum of the present value interest differential as described above plus the accrued interest due at termination.

Revolving Note:

We and the Bank agreed to extend the maturity date of the revolving credit facility to July 29, 2012 under the Ninth Amendment to the Loan Agreement. The maturity date of the revolving credit facility was extended to January 31, 2013 under the Eleventh Amendment, and was extended further to July 31, 2013 under the Twelfth Amendment. The Revolving Note bears interest at a variable rate determined as the Prime Rate, plus 1.5% annually on any outstanding balance. We pay an unused credit line fee of 0.25% on the average unused credit line amount in the previous month. The borrowing limit on the Revolving Note is limited to the sum of 70% of our eligible accounts receivable plus 40% of eligible inventory up to a maximum borrowing limit of $2.0 million. There was $500,000 borrowed and outstanding under this facility as of March 31, 2013. As of March 31, 2013, $1.5 million was available under this facility. In July 2013, we repaid the $500,000 borrowed under the Revolving Note. This facility expired by its terms on July 31, 2013 and was not renewed by the Bank.

Capital Expenditure Note:

The initial borrowing limit under the Capital Expenditure Note was $0.5 million and has been amended several times resulting in a borrowing limit of $3.0 million. On November 30, 2009, we elected not to renew this facility when it terminated. Borrowings outstanding under this facility were converted to a note when the facility terminated. The current rate of interest is LIBOR plus 3%. Principal and interest payments are due monthly based on a five year amortization schedule. The application of cash from the restricted cash collateral account was used to pay off this obligation on January 16, 2014.

Staged Advance Note:

The Bank made certain loans to us limited to a cap of $1.9 million for the purpose of acquiring a gantry mill machine. The machine serves as collateral for the loan. The total aggregate amount of advances under this agreement could not exceed 80% of the actual purchase price of the gantry mill machine. All advances provided for a payment of interest only monthly through February 28, 2011, and thereafter, no further borrowings were permitted under this facility. The current interest rate is LIBOR plus 4%. Beginning on April 1, 2011, we were obligated to pay principal and interest sufficient to amortize the outstanding balance on a five year schedule. The application of cash from our restricted cash collateral account was used to pay off this obligation on January 16, 2014.

Capital Lease:

We leased certain office equipment under a non-cancelable capital lease that expired in April 2012.  We entered into a new capital lease in April 2012 in the amount of $46,378 for certain office equipment. The lease term is for 63 months, bears interest at 6.0% and requires monthly payments of principal and interest of $860. This lease was amended in fiscal 2014 when we purchased another replacement copier at Ranor. The revised lease term was extended by nine months and will expire in March 2018. The amount of the lease recorded in property, plant and equipment, net was $46,420 and $37,544 as of March 31, 2014 and 2013.

The maturities of all of our debt including the capital lease are as follows: 2015: $4,169,771; 2016: $11,426; 2017: $12,130; 2018: $10,596; and 2019: $3,919.

Loan Agreement Amendments

On February 14, 2013, we executed a Twelfth Amendment and obtained a waiver for failure to comply with the fixed charge coverage ratio and the interest coverage ratio covenants at December 31, 2012. The actual fixed charge ratio at December 31, 2012 was negative 41% and the actual interest coverage ratio was negative 256% as we reported an operating loss for the three months ended December 31, 2012. The leverage ratio covenant remained in effect (and must not be greater than 2:1).

We were in compliance with the leverage ratio covenant at December 31, 2012, as the actual leverage ratio was 1:1. The Twelfth Amendment revised the covenant to provide that the ratio of earnings available to cover fixed charges and the interest ratio coverage covenant testing will resume at March 31, 2013 on a trailing three month basis, and continue at June 30, 2013 on a trailing six month basis, at September 30, 2013 on a trailing nine month basis, and quarterly thereafter on a trailing twelve month basis beginning at December 31, 2013. Also, in connection with the Twelfth Amendment, we paid the Bank a fee of $7,500 and were required to continue to maintain a collateral deposit of $840,000 to cover estimated principal and interest on its obligation. The $840,000 collateral was included in other current assets at March 31, 2013.

At March 31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants, and the Bank did not agree to waive the non-compliance with the covenants. In addition, the Bank did not renew the revolving credit facility which expired on July 31, 2013. Since we were in default, the Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, we classified all amounts under the Loan Agreement ($5.8 million) as a current liability at March 31, 2013. The actual fixed charge ratio at March 31, 2013 was negative 81% and the actual interest coverage ratio was negative 351% as we reported an operating loss for the three months ended March 31, 2013. The leverage ratio covenant remained in effect (and must not be greater than 2:1). We were in compliance with the leverage ratio covenant at March 31, 2013, as the actual leverage ratio was 1:1.

Forbearance Agreement

On January 16, 2014, we entered into a forbearance and modification agreement with the Bank, in connection with the Loan and Security Agreement, dated as of February 24, 2006, between Ranor, Inc. and Sovereign Bank, as supplemented and amended. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreements until March 31, 2014.

The Loan Agreement consists of a secured term loan of $4.0 million, a revolving line of credit of $2.0 million and a capital expenditure line of credit facility of $3.0 million.  Additionally, in connection with the $6.2 million tax exempt bond financing with the Massachusetts Development Finance Authority, or the MDFA, in December 2010, the MDFA sold to the Bank MDFA Revenue Bonds, Ranor Issue, Series 2010A in the original aggregate principal amount of $4.25 million and MDFA Revenue Bonds, Ranor Issue, Series 2010B in the original aggregate principal amount of $1.95 million, the proceeds of which were loaned to the Company under the terms of a Mortgage Loan and Security Agreement, dated as of December 1, 2010, by and among the Company, MDFA and the Bank (as Bond owner and Disbursing Agent).  The $4.0 million secured term loan matured with final payment made on March 1, 2013 and the revolving credit line expired on July 31, 2013, and was not renewed by the Bank.   At January 16, 2014, the outstanding balances on the capital expenditure line of credit facility, Series A Bonds and Series B Bonds were $394,329, $3,612,500 and $1,114,285, respectively.

In consideration for the granting of the Forbearance Agreement, we agreed to: (i) have paid in full all interest and fees accrued under the Loan Agreement and other related documents through December 31, 2013 (at such interest rate and in accordance with the terms therein); (ii) reimburse the Bank for appraisal costs in the amount of $11,240; (iii) an increase in the interest rate of 2% for the Series A Bonds and the Series B Bonds to 5.6% and 6%, respectively, during the Forbearance Period; (iv) the application of $394,329 and $445,671 of the Company’s restricted cash collateral deposit of $840,000 to pay off certain obligations under the Loan Agreement described above and the Series B Bonds respectively and (v) pay a forbearance fee of 3% of the net outstanding balance due from the Obligors to the Bank, which amounts to $128,433 due in installments during the Forbearance Period.

During the Forbearance Period, we agreed to comply with the terms, covenants and provisions in the Loan Agreement and related documents, as amended by the Forbearance Agreement.  The Forbearance Agreement amends the Loan Agreement to, among other things, prohibit the Company’s Leverage Ratio  (as such term is defined in the Loan Agreement) to be greater than 1.75 to 1.0.  We were not in compliance with the leverage ratio covenant at March 31, 2014, as the actual leverage ratio was 3.8:1.0. In the event that we fail to complete a refinancing of the current outstanding obligations by the completion of the Forbearance Period, the interest rate on outstanding obligations will convert to the Default Interest Rate (as such term is defined in the Loan Agreement). We have entered into two subsequent forbearance agreement subsequent to March 31, 2014 which extended the period to first June 30, 2014, then to July 31, 2014. The Company is engaged in discussions with potential alternative financing sources to secure a new financing arrangement to, among other things, replace the financing provided by the Loan and Security Agreement between Ranor and Santander Bank, dated February 24, 2006 (See Note 1 and Note 19).

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SELECTED QUARTERLY INFORMATION (UNAUDITED) (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013
SELECTED QUARTERLY INFORMATION
Net sales	$ 3,608,000	$ 5,167,000	$ 5,196,000	$ 7,097,000	$ 9,955,000	$ 7,294,000	$ 8,079,000	$ 7,145,000	$ 21,068,063	$ 32,472,919
Gross profit (loss)	(2,651,000)	773,000	727,000	420,000	1,631,000	1,884,000	1,938,000	1,105,000	(731,793)	6,558,574
Net loss	$ (4,095,000)	$ (757,000)	$ (819,000)	$ (1,424,000)	$ (1,115,000)	$ (545,000)	$ (45,000)	$ (706,000)	$ (7,095,391)	$ (2,411,937)
Basic Loss per share (in dollars per share)	$ (0.19)	$ (0.04)	$ (0.04)	$ (0.07)	$ (0.06)	$ (0.03)	$ 0.00	$ (0.04)	$ (0.34)	$ (0.13)
Diluted Loss per share (in dollars per share)	$ (0.19)	$ (0.04)	$ (0.04)	$ (0.07)	$ (0.06)	$ (0.03)	$ 0.00	$ (0.04)	$ (0.34)	$ (0.13)

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OTHER NONCURRENT ASSETS

12 Months Ended

Mar. 31, 2014

OTHER NONCURRENT ASSETS

OTHER NONCURRENT ASSETS

NOTE 6 — OTHER NONCURRENT ASSETS

Other noncurrent assets included the following as of March 31:

	2014		2013
Deferred loan costs, net of amortization	$	105,395	$	—
Total	$	105,395	$	—

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ACCRUED EXPENSES

12 Months Ended

Mar. 31, 2014

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 7 - ACCRUED EXPENSES

Accrued expenses included the following as of March 31:

	2014		2013
Accrued compensation	$	320,419	$	668,038
Interest rate swaps market value	231,783		388,982
Provision for contract losses	3,259,103		270,172
Other	81,723		547,732
Total	$	3,893,028	$	1,874,924

Our loss provision includes approximately $2.7 million for estimated contract losses in connection with a certain customer purchase agreement. We filed a demand for arbitration under the contract to recover damages, together with attorney’s fees, interest and costs subsequent to the customer’s request to reduce the number of units ordered under the purchase agreement (See Note 19).

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INCOME TAXES

12 Months Ended

Mar. 31, 2014

INCOME TAXES

INCOME TAXES

NOTE 9 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The following table reflects loss from continuing operations by location, and the provision and benefit for income taxes and the effective tax rate for fiscal:

	2014			2013
U.S. operations	$	(6,722,696	)	$	(1,796,789	)
Foreign operations	(558,168		)	(142,817		)
Loss from operations before tax	(7,280,864		)	(1,939,606		)
Income tax (benefit) expense provision	(185,473		)	472,331
Net Loss	$	(7,095,391	)	$	(2,411,937	)

The provision (benefit) for income taxes consists of the following as of March 31:

	2014			2013
Current
Federal	$	28,450		$	(332,580	)
State	702			12,987
Foreign	(214,625		)	96,162
Total Current	(185,473		)	(223,431		)
Deferred
Federal	—			606,757
State	—			(47,458		)
Foreign	—			136,463
Total Deferred	—			695,762
Income tax expense (benefit) provision	$	(185,473	)	$	472,331

Reconciliation between income taxes computed at the federal statutory rate for fiscal years ended March 31, 2014 and 2013 to the effective income tax rates applied to the net loss reported in the Consolidated Statements of Operations and Other Comprehensive Loss:

	2014		2013
Federal statutory income tax rate	34	%	34	%
State income tax, net of federal benefit	—	%	1	%
Change in valuation allowance	(32	)%	(53	)%
Stock based compensation	(1	)%	(6	)%
Other	2	%	—	%
Effective income tax rate	3	%	(24	)%

The following table summarizes the components of deferred income tax assets and liabilities:

	2014			2013
Current Deferred Tax Assets:
Compensation	$	32,965		$	177,703
Allowance for doubtful accounts	9,866			9,824
Loss on uncompleted contracts	1,272,070			106,123
Net operating loss carryforward	30,145			30,145
Interest rate swaps	95,479			152,792
Other liabilities not currently deductible	310,089			341,726
Valuation allowance	(759,518		)	(562,548		)
Total Current Deferred Tax Asset	$	991,096		$	255,765
Noncurrent Deferred Tax Asset (Liability):
Share based compensation awards	369,880			323,734
Net operating loss carryforward	3,315,221			1,662,848
Valuation allowance	(3,647,070		)	(1,062,741		)
Total Noncurrent Deferred Tax Assets	$	38,031		$	923,841
Accelerated depreciation	(1,029,127		)	(1,179,606		)
Net Noncurrent Deferred Tax Asset (Liability)	$	(991,096	)	$	(255,765	)
Net Deferred Tax Asset	$	—		$	—

In assessing the recoverability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  We have determined that it is more likely than not that certain future tax benefits may not be realized.  Accordingly, a valuation allowance has been recorded against deferred tax assets that are unlikely to be realized.  Realization of the remaining deferred tax assets will depend on the generation of sufficient taxable income in the appropriate jurisdiction, the reversal of deferred tax liabilities, tax planning strategies and other factors prior to the expiration date of the carryforwards.  A change in the estimates used to make this determination could require an increase in deferred tax assets if they become realizable.

The following table summarizes carryforwards of net operating losses and tax credits as of March 31, 2014:

	Amount		Begins to Expire:
Federal net operating losses	$	5,865,609	2025
Federal alternative minimum tax credits	$	76,185	Indefinite
State net operating losses	$	20,016,690	2032

The Internal Revenue Code provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes that could limit our ability to utilize these carryforwards on a yearly basis. We experienced an ownership change in connection with the acquisition of Ranor. Accordingly, our ability to utilize certain carryforwards is limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, we may not be able to take full advantage of these carryforwards for Federal or state income tax purposes.

The following table provides a reconciliation of our unrecognized tax benefits as of March 31, 2014:

Unrecognized tax benefits at March 31, 2013	$	17,206
Increases based on tax positions related to 2014	—
Increases based on tax positions prior to 2014	702
Decreases from expiration of statute of limitations	—
Unrecognized tax benefits at March 31, 2014	$	17,908

We recognized $702 in interest expense related to uncertain tax positions in the tax provision (benefit) on the Consolidated Statements of Operations and Other Comprehensive Income (Loss). We have not accrued any penalties with respect to uncertain tax positions.

We file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Our foreign subsidiary files separate income tax returns in the foreign jurisdiction in which it is located.  Tax years 2010 and forward remain open for examination.  We recognize interest and penalties accrued related to income tax liabilities in selling, general and administrative expense in its Consolidated Statements of Operations.

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DEBT (Tables)

12 Months Ended

Mar. 31, 2014

DEBT

Schedule of outstanding debt obligations

	2014		2013
Sovereign Bank Capital expenditure note due November 2014	$	—	$	306,432
Sovereign Bank Staged advance note due March 2016	—		333,850
MDFA Series A Bonds due January 2021	3,559,375		3,789,583
MDFA Series B Bonds due January 2018	599,634		1,346,429
Obligations under capital leases	10,762		8,185
Total Short-term debt	$	4,169,771	5,784,479
Long-term debt, obligations under capital leases	38,071		31,108
Total Debt	$	4,207,842	$	5,815,587

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INCOME TAXES (Details 2) (USD $)	12 Months Ended
	Mar. 31, 2014
Changes in unrecognized tax benefits
Unrecognized tax benefits as of the beginning of the period	$ 17,206
Increases based on tax positions prior to 2014	702
Unrecognized tax benefits as of the end of the period	17,908
Other disclosure related to uncertain tax positions
Interest expense related to uncertain tax positions	702
Federal
Carryforwards of net operating losses and tax credits
Net operating losses	5,865,609
Alternative minimum tax credits	76,185
State
Carryforwards of net operating losses and tax credits
Net operating losses	$ 20,016,690

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CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

12 Months Ended

Mar. 31, 2014

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

NOTE 14 - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

We maintain bank account balances, which, at times, may exceed 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 March 31, 2014, there were accounts receivable balances outstanding from three customers comprising 58% of the total receivables balance.

The following table sets forth information as to accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of:

	March 31, 2014				March 31, 2013
Customer	Dollars		Percent		Dollars		Percent
A	$	750,146	33	%	$	915,632	21	%
B	$	312,576	14	%	$	—	—	%
C	$	255,360	11	%	$	—	—	%
D	$	—	—	%	$	2,379,078	55	%
E	$	—	—	%	$	516,174	12	%

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

	March 31, 2014				March 31, 2013
Customer	Dollars		Percent		Dollars		Percent
A	$	3,983,838	19	%	$	—	—	%
B	$	2,955,296	14	%	$	6,086,928	19	%
C	$	2,069,468	10	%	$	7,665,775	24	%
D	$	—	—	%	$	4,800,047	15	%

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SUBSEQUENT EVENTS

12 Months Ended

Mar. 31, 2014

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 19 — SUBSEQUENT EVENTS

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

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

In connection with the execution of the LSA, the Company paid approximately $0.24 million in fees and associated costs and utilized approximately $2.65 million to pay off debt obligations owed to the Bank under the Loan Agreement described below.  Additionally, the Company retained approximately $1.27 million for general corporate purposes.

On May 30, 2014, the Company and the Bank entered into a new forbearance and modification agreement. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing retroactively on April 1, 2014 and extending until no later than June 30, 2014.

On May 29, 2014, the Company filed a Demand for Arbitration against a customer, GTAT Corporation, for breach of contractual duties set forth pursuant to Rule R-4 of the Commercial Rules of the American Arbitration Association in accordance with the Terms and Conditions of the purchase agreement, dated November 8, 2013, between the parties. The claim was filed by the Company in response to GTAT Corporation’s request in April to reduce the number of units ordered under the purchase agreement. The basis for the Company’s claim is detrimental reliance on the purchase order and subsequent modifications by the respondent during the course of production as evidenced by its purchased materials, personnel hires, units shipped, and other incurred costs. The parties negotiated but were not able to resolve the dispute under the terms of the contract. As such, the Company submitted the dispute to binding arbitration. The Company seeks to recover damages, together with attorney’s fees, interest and costs.

On June 23, 2014, Alexander Shen was appointed as President of our Ranor, Inc. subsidiary.  Pursuant to the Shen Employment Agreement, Mr. Shen will: (i) receive an annual base salary of $275,000; (ii) receive an award of stock options to purchase shares of the Company’s common stock, granted pursuant to the 2006 Plan, as amended, with a Black Scholes value of $250,000 at the time of grant; and (iii) be eligible for an annual cash performance bonus of up to 50% of base salary, subject to goals and objectives set by the Board of Directors of the Company.  Under the Shen Employment Agreement, Mr. Shen also will be eligible to participate in the Company’s benefits provided to other senior executives as well as benefits available to Company employees generally.

On June 25, 2014, in connection with a shareholder transaction, Series A Convertible Preferred Stock of 550,000 shares were converted into 718,959 shares of common stock.

On July 1, 2014, the Company and the Bank entered into a new forbearance and modification agreement. Under the Forbearance Agreement, the Bank has agreed to forbear from exercising certain of its rights and remedies arising as a result of the Company’s non-compliance with certain financial covenants under the Loan Agreement commencing on July 1, 2014 and extending until no later than July 31, 2014.

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DEBT (Details) (USD $)	12 Months Ended		0 Months Ended		12 Months Ended		12 Months Ended					1 Months Ended				3 Months Ended		12 Months Ended					12 Months Ended			0 Months Ended	12 Months Ended			12 Months Ended			12 Months Ended				12 Months Ended			0 Months Ended		1 Months Ended		12 Months Ended			0 Months Ended			1 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2014 item	Jan. 16, 2014 Debt Forbearance and Modification Agreement	Mar. 31, 2014 Debt Forbearance and Modification Agreement	Mar. 31, 2014 Subsequent event Debt Forbearance and Modification Agreement item	Jan. 16, 2014 Minimum Debt Forbearance and Modification Agreement	Mar. 31, 2014 MLSA and Eighth Amendment Minimum	Mar. 31, 2014 MLSA and Eighth Amendment Maximum	Mar. 31, 2014 ISDA Master Agreement	Mar. 31, 2013 ISDA Master Agreement	Jan. 03, 2011 ISDA Master Agreement item	Dec. 31, 2013 Twelfth Amendment	Sep. 30, 2013 Twelfth Amendment	Jun. 30, 2013 Twelfth Amendment	Mar. 31, 2013 Twelfth Amendment	Mar. 31, 2013 Twelfth Amendment	Dec. 31, 2012 Twelfth Amendment	Mar. 31, 2014 Twelfth Amendment	Mar. 31, 2013 Twelfth Amendment	Feb. 14, 2013 Twelfth Amendment	Mar. 31, 2014 Twelfth Amendment Debt Forbearance and Modification Agreement	Mar. 31, 2013 Twelfth Amendment Other current assets	Mar. 31, 2014 Twelfth Amendment Maximum	Feb. 24, 2006 Sovereign Bank Secured Term Note due March, 2013	Jan. 16, 2014 Sovereign Bank Secured Term Note due March, 2013 Debt Forbearance and Modification Agreement	Jan. 29, 2007 Sovereign Bank Capital expenditure note due November 2014	Mar. 31, 2014 Sovereign Bank Capital expenditure note due November 2014	Mar. 31, 2013 Sovereign Bank Capital expenditure note due November 2014	Jan. 16, 2014 Sovereign Bank Capital expenditure note due November 2014 Debt Forbearance and Modification Agreement	Mar. 31, 2014 Sovereign Bank staged advance note due March 2016	Mar. 31, 2013 Sovereign Bank staged advance note due March 2016	Mar. 29, 2010 Sovereign Bank staged advance note due March 2016	Mar. 31, 2014 Sovereign Bank staged advance note due March 2016 Maximum	Mar. 31, 2014 Bonds financing	Jan. 31, 2011 Bonds financing	Dec. 30, 2010 Bonds financing	Mar. 31, 2014 MDFA Series A Bonds due January 2021	Mar. 31, 2013 MDFA Series A Bonds due January 2021	Dec. 30, 2010 MDFA Series A Bonds due January 2021	Jan. 16, 2014 MDFA Series A Bonds due January 2021 Debt Forbearance and Modification Agreement	Mar. 31, 2014 MDFA Series A Bonds due January 2021 Debt Forbearance and Modification Agreement	Dec. 31, 2010 MDFA Series A Bonds due January 2021 Ranor Inc. sqft	Mar. 31, 2014 MDFA Series A Bonds due January 2021 ISDA Master Agreement	Mar. 31, 2014 MDFA Series B Bonds due January 2018	Mar. 31, 2013 MDFA Series B Bonds due January 2018	Dec. 30, 2010 MDFA Series B Bonds due January 2018	Jan. 16, 2014 MDFA Series B Bonds due January 2018 Debt Forbearance and Modification Agreement	Mar. 31, 2014 MDFA Series B Bonds due January 2018 Debt Forbearance and Modification Agreement	Mar. 31, 2014 MDFA Series B Bonds due January 2018 ISDA Master Agreement	Apr. 30, 2012 Long-term obligations under capital leases	Mar. 31, 2014 Long-term obligations under capital leases	Mar. 31, 2013 Long-term obligations under capital leases	Jul. 31, 2013 Revolving Note	Mar. 31, 2014 Revolving Note	Mar. 31, 2013 Revolving Note	Feb. 24, 2006 Revolving Note	Jan. 16, 2014 Revolving Note Debt Forbearance and Modification Agreement
Debt and capital lease obligations
Total Short-term debt	$ 5,784,479	$ 4,169,771																										$ 306,432			$ 333,850						$ 3,559,375	$ 3,789,583						$ 599,634	$ 1,346,429						$ 10,762	$ 8,185
Long-term debt, obligations under capital leases	31,108	38,071
Total Debt	5,815,587	4,207,842
Aggregate principal amount																								4,000,000	4,000,000											6,200,000			4,250,000	4,250,000						1,950,000	1,950,000
Maximum borrowings																										3,000,000	3,000,000		3,000,000	1,900,000		1,900,000																						2,000,000		2,000,000	2,000,000
Ratio of earnings to cover fixed charges (as a percent)							120.00%									(81.00%)	(41.00%)
Actual ratio of earnings to cover interest charges (as a percent)																(351.00%)	(256.00%)
Interest coverage ratio that must be exceeded							2
Leverage ratio covenant								3															2
Actual leverage ratio				3.8		1.75									1	1	1		1
Interest rate (as a percent)																																			1.96%						5.60%							6.00%
Variable interest basis																											LIBOR			LIBOR				one-month LIBOR																				Prime Rate
Interest margin (as a percent)																														4.00%				2.75%																				1.50%
Effective interest rate at end of period (as a percent)																											3.00%
Amount borrowed and outstanding under the facility																													394,329											3,612,500							1,114,285								500,000
Current monthly debt principal amount																																					17,708							23,214
Additional cash collateral in restricted cash account																				840,000		840,000
Period of written notice to accelerate payment of the debt in full in case of default																		60 days	60 days
Amounts reclassified as a current liability due to default, under the loan and security agreement	5,800,000														5,800,000	5,800,000			5,800,000		4,200,000
Trailing period used for quarterly determination of the ratio of earnings available to cover fixed charges and the interest ratio coverage under the terms of the loan covenants												12 months	9 months	6 months	3 months
Bank fee paid																				7,500
Area of land financed for expansion (in square feet)																																										19,500
Interest rate percentage multiplier																																		65.00%
Fixed interest rate (as a percent)																																											4.14%						3.63%
Number of interest rate swap transactions		2									2
Notional amount of interest rate swap cash flow hedges									4,600,000	5,100,000
Borrowing limit as a percentage of accounts receivable																																																						70.00%
Borrowing limit as a percentage of inventory																																																						40.00%
Funds available for borrowing																														0																									1,500,000
Amount of Revolving Note repaid																																																					500,000
Unused borrowing capacity fee as a percentage of average unused credit line amount of previous month																																																						0.25%
Initial maximum loan amount																										500,000
Period of amortization of debt instrument																											5 years			5 years
Percentage of purchase price of gantry mill machine used for determination of aggregate amount of advances																																	80.00%
Capital lease arrangement for new office equipment	46,378																																																	46,378
Amount of the lease recorded in property, plant and equipment, net																																																			46,420	37,544
Capital lease term																																																		63 months
Capital lease term extension																																																			9 months
Capital lease interest rate (as a percent)																																																			6.00%
Capital lease monthly payment																																																			860
Maturities of the long-term debt, including the capital lease
2015		4,169,771
2016		11,426
2017		12,130
2018		10,596
2019		3,919
Reimbursement of appraisal costs due to the bank			11,240
Increase in interest rate (as a percent)																																								2.00%
Repayment of debt																																								394,329							445,671
Restricted cash collateral deposit applied to pay off obligation under the forbearance agreement			(840,000)
Forbearance fees (as a percent)			3.00%
Amount of forbearance fee payable in installments			$ 128,433
Number of forbearance agreement entered					2

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DESCRIPTION OF BUSINESS (Details) (USD $)	3 Months Ended								12 Months Ended			12 Months Ended		0 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2014 Twelfth Amendment	Mar. 31, 2013 Twelfth Amendment	May 30, 2014 Subsequent event LSA Utica	Mar. 31, 2014 Debt Forbearance and Modification Agreement Twelfth Amendment
DESCRIPTION OF BUSINESS
Period of written notice to accelerate payment of the debt in full in case of default												60 days	60 days
Amounts reclassified as a current liability due to default, under the loan and security agreement					$ 5,800,000					$ 5,800,000			$ 5,800,000		$ 4,200,000
Amount borrowed														4,150,000
Stated interest rate to be used as variable interest basis														7.50%
Interest margin (as a percent)														3.30%
Variable interest basis														six-month LIBOR interest rate
Operating losses	4,095,000	757,000	819,000	1,424,000	1,115,000	545,000	45,000	706,000	7,095,391	2,411,937
Cash and cash equivalents	1,086,701				3,075,376				1,086,701	3,075,376	2,823,485
New contract losses									4,900,000
Total liabilities	$ 13,400,000								$ 13,400,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)	Total	Preferred Stock	Warrants Outstanding	Common Stock	Additional Paid in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (accumulated deficit)
Balance at Mar. 31, 2012	$ 12,170,324	$ 1,637,857	$ 100,000	$ 1,799	$ 4,412,075	$ (223,584)	$ 6,342,177
Balance (in shares) at Mar. 31, 2012		7,035,982		17,992,177
Increase (Decrease) in Stockholders' Equity
Warrants expired (in shares)			(100,000)
Share based compensation	337,023				337,023
Conversion of preferred stock		(327,651)		197	327,454
Conversion of preferred stock (in shares)		(1,502,984)		1,964,694
Net loss	(2,411,937)						(2,411,937)
Other comprehensive loss, net of tax benefit, ($0) and ($4,672) for the year 2014, 2013, respectively	2,166					2,166
Balance at Mar. 31, 2013	10,097,576	1,310,206		1,996	5,076,552	(221,418)	3,930,240
Balance (in shares) at Mar. 31, 2013		5,532,998		19,956,871
Increase (Decrease) in Stockholders' Equity
Share based compensation	362,962				362,962
Conversion of preferred stock		(666,096)		399	665,697
Conversion of preferred stock (in shares)		(3,055,490)		3,994,133
Net loss	(7,095,391)						(7,095,391)
Other comprehensive loss, net of tax benefit, ($0) and ($4,672) for the year 2014, 2013, respectively	166,321					166,321
Balance at Mar. 31, 2014	$ 3,531,468	$ 644,110		$ 2,395	$ 6,105,211	$ (55,097)	$ (3,165,151)
Balance (in shares) at Mar. 31, 2014		2,477,508		23,951,004

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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Mar. 31, 2014

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following as of March 31:

	2014			2013
Land	$	110,113		$	110,113
Building and improvements	3,261,680			3,261,680
Machinery equipment, furniture and fixtures	8,889,051			8,826,050
Equipment under capital leases	65,568			46,378
Total property, plant and equipment	12,326,412			12,244,221
Less: accumulated depreciation	(5,837,200		)	(4,943,973		)
Total property, plant and equipment, net	$	6,489,212		$	7,300,248

Depreciation expense for the years ended March 31, 2014 and 2013 was $895,528 and $804,564, respectively.

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COMMITMENTS (Details) (USD $)	12 Months Ended		0 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Nov. 15, 2013 Wuxi, China sqft	Mar. 31, 2014 Wuxi, China	Nov. 30, 2010 Lease agreement Center Valley, Pennsylvania sqft	Mar. 31, 2014 Lease agreement Center Valley, Pennsylvania
Commitments
Area of land leased (in square feet)			1,000		3,200
Term of lease					64 months
Additional period of renewal of lease					5 years
Deferred rent						$ 12,778
Annual rental cost				4,000
Rent expense for operating lease	104,047	138,765
Future minimum lease payments required under non-cancelable operating leases
Total	150,314
2015	64,954
2016	63,624
2017	21,736
Contractual commitments
Purchase obligations outstanding to purchase raw materials and supplies at fixed prices	700,000
Employment agreements
Aggregate annual commitment for future salaries during the next fiscal year 2014	$ 900,000

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Mar. 31, 2014

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The accompanying consolidated financial statements include the accounts of TechPrecision, WCMC and Ranor. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles (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 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, 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. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.

Fair Value Measurements

Fair Value Measurements

We account for fair value of financial instruments under the Financial Accounting Standard Board’s (FASB) Accounting Standards Codification (ASC) authoritative guidance which defines fair value and establishes a framework to measure fair value and the related disclosures about fair value measurements. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The FASB establishes a fair value hierarchy used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Inputs based upon quoted market prices for identical assets or liabilities in active markets at the measurement date; Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and Level 3: Inputs that are management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments’ valuation.

In addition, we will measure fair value in an inactive or dislocated market based on facts and circumstances and significant management judgment.  We will use inputs based on management estimates or assumptions, or make adjustments to observable inputs to determine fair value when markets are not active and relevant observable inputs are not available.  The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as presented in the balance sheet, approximates fair value due to the short-term nature of these instruments.

Cash and cash equivalents

Cash and cash equivalents

Holdings of highly liquid investments with maturities of three months or less, when purchased, are considered to be cash equivalents.  U.S. based deposits are maintained in a large regional bank. Our China subsidiary also maintains a bank account in a large national Bank in China subject to People’s Republic of China (PRC) banking regulations. Cash on deposit with a large national China-based bank was $29,191 and $482,630 at March 31, 2014 and 2013, respectively.

Foreign currency translation

Foreign currency translation

The majority of our business is transacted in U.S. dollars; however, the functional currency of our China subsidiary is the local currency, the Chinese Yuan Renminbi. In accordance with ASC No. 830, Foreign Currency Matters (ASC 830), foreign currency translation adjustments of subsidiaries operating outside the U.S. are accumulated in other comprehensive income, a separate component of equity. Foreign currency transaction gains and losses are recognized in the determination of net income.

Accounts receivable and allowance for doubtful accounts

Accounts receivable and allowance for doubtful accounts

Accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Based on management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances which remain outstanding after  reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Current earnings are also charged with an allowance for sales returns based on historical experience. Historically, the level of uncollectible accounts has not been significant. There was no bad debt expense for the years ended March 31, 2014 and 2013.

Inventories

Inventories

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

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are accounted for on the straight-line method based on estimated useful lives. The amortization of leasehold improvements is based on the shorter of the lease term or the useful life of the improvement. Amortization of assets recorded under capital leases is included under depreciation expense. Betterments and large renewals, which extend the life of the asset, are capitalized whereas maintenance and repairs and small renewals are expensed as incurred. The estimated useful lives are: machinery and equipment, 5-15 years; buildings, 30 years; and leasehold improvements, 2-5 years.

Interest is capitalized for assets that are constructed or otherwise produced for our own use, including assets constructed or produced for us by others for which deposits or progress payments have been made. Interest is capitalized to the date the assets are available and ready for use. When an asset is constructed in stages, interest is capitalized for each stage until it is available and ready for use. We use the interest rate incurred on funds borrowed specifically for the project. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. There was no interest cost capitalized in fiscal 2014 and 2013.

In accordance with ASC No. 360, Property, Plant & Equipment (ASC 360), our property, plant and equipment is tested for impairment when triggering events occur, and if impaired, written-down to fair value based on either discounted cash flows or appraised values. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. There were no impairments for the years ended March 31, 2014 and 2013.

Operating Leases

Operating Leases

Operating leases are charged to operations on a straight-line basis over the term of the lease. We lease our office facilities for various terms under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2017 and provide for renewal options ranging from three months to five years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

Derivative Financial Instruments

Derivative Financial Instruments

We are exposed to various risks such as fluctuating interest rates, foreign exchange rates and increasing commodity prices. To manage these market risks, we may periodically enter into derivative financial instruments such as interest rate swaps, options and foreign exchange contracts for periods consistent with and for notional amounts equal to or less than the related underlying exposures. We do not purchase or hold any derivative financial instruments for speculation or trading purposes.

All derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent of holding them. At March 31, 2014, we had two interest rate swap transactions designated as cash flow hedges, each with an effective date of January 3, 2011. For our cash flow hedges, the effective portion of the derivative’s gain or loss is initially reported in Shareholders’ equity (as a component of accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. The ineffective portion of the gain or loss of a cash flow hedge is reported in earnings immediately.

We formally document the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. We also formally assess, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions.

We will discontinue hedge accounting prospectively when we determine that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires, is sold, terminated, or exercised, or our management determines to remove the designation of a cash flow hedge. See Note 8 for additional disclosure related to interest rate swaps.

Convertible Preferred Stock and Warrants

Convertible Preferred Stock and Warrants

We measured the fair value of the Series A Convertible Preferred Stock by the amount of cash that was received for their issuance. We have determined that the convertible preferred shares and warrants issued are equity instruments. The holders of the Series A Convertible Preferred Stock have no right higher than the common stockholders other than the liquidation preference in the event of liquidation of the Company.

Our warrants were excluded from derivative accounting because they were indexed to our unregistered common stock and are classified in stockholders’ equity. The majority of the warrants were exchanged for preferred stock on August 14, 2009. The remaining 112,500 warrants expired on September 1, 2010.

On February 15, 2011, we issued an additional 100,000 warrants to acquire common stock at an exercise price of $1.65/share. The warrants had a fair value of $51,428. The warrants outstanding terminated at the end of the exercise period on February 14, 2013.

Research and Development

Research and Development

We charge research and development costs associated with the design and development of new products to expense when incurred. We incurred no research and development expense in fiscal 2014 or 2013.

Selling, General, and Administrative

Selling, General, and Administrative

Selling, general and administrative (SG&A) expenses include items such as executive compensation, business travel and advertising costs. Advertising costs are nominal and expensed as incurred. Other general and administrative expenses include items for our administrative functions and include costs for items such as office rent, supplies, insurance, legal, accounting, tax, telephone and other outside services. SG&A consisted of the following as of March 31:

	2014		2013
Salaries and related expenses	$	3,634,538	$	4,460,708
Professional fees	1,165,523		1,793,282
Other general and administrative	1,312,848		1,906,994
Total Selling, General and Administrative	$	6,112,909	$	8,160,984

Stock Based Compensation

Stock Based Compensation

Stock based compensation represents the cost related to stock based awards granted to our board of directors and employees. We measure stock based compensation cost at the grant date based on the estimated fair value of the award and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the requisite service period. We estimate the fair value of stock options using a Black-Scholes valuation model.

Excess tax benefits of awards that are recognized in equity related to stock options exercises are reflected as financing cash inflows. Stock based compensation cost that has been included in (loss) income from operations amounted to $362,962 and $337,023 for the fiscal years ended 2014 and 2013, respectively. See Note 13 for additional disclosures related to stock based compensation.

Net Income (Loss) per Share of Common Stock

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per common share is computed by dividing net income or loss by the weighted average number of shares outstanding during the year. Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of convertible preferred stock, stock options and warrants calculated using the treasury stock method. See Note 13 for additional disclosures related to stock based compensation.

Revenue Recognition

Revenue Recognition

We account for revenues and earnings using the percentage-of-completion method of accounting. Under this method, we recognize contract revenue and gross profit as the work progresses, either as the products are produced and delivered, or as services are rendered. We determine progress toward completion on production contracts based on either input measures, such as labor hours incurred, or output measures, such as units delivered.

Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability are recognized in the period in which the revisions are determined. Costs incurred on uncompleted contracts consist of labor, overhead, and materials.

We may combine contracts for accounting purposes when they are negotiated as a package with an overall profit margin objective. These essentially represent an agreement to do a single project for a single customer, involve interrelated construction activities with substantial common costs, and are performed concurrently or sequentially. When a group of contracts is combined, revenue and profit are earned during the performance of the combined contracts.

Costs allocable to undelivered units are reported in the consolidated balance sheet as costs incurred on uncompleted contracts. Amounts in excess of agreed upon contract price for customer directed changes, construction changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reliably estimated. Revenues from such claims are recorded only to the extent that contract costs relating to the claim have been incurred. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable.

When we can only estimate a range of revenues and costs, we use the most likely estimate within the range. If we cannot determine which estimate in the range is most likely, the amounts within the ranges that would result in the lowest profit margin (the lowest contract revenue estimate and the highest contract cost estimate) are used.

In some situations, it may be impractical for us to estimate either specific amounts or ranges of contract revenues and costs. However, if we can at least determine that we will not incur a loss, a zero profit model is adopted. The zero profit model results in the recognition of an equal amount of revenues and costs. This method is only used if more precise estimates cannot be made and its use is discontinued when such estimates are obtainable. When we obtain more precise estimates, the change is treated as a change in an accounting estimate.

Income Taxes

Income Taxes

In accordance with ASC No. 740, Income Taxes (ASC 740), income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.     Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June, 2014, the FASB issued ASU No. 2014-12, Compensation — Stock Compensation (Topic 718)- Accounting for Share-based Payments when Terms of an award Provide That a Performance Target Could be Achieved after the Requisite Service Period. The Amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating ASU 2014-12 to determine the impact on the Company’s consolidated results of operations, financial position or cash flows.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued, ASU 2014-09 (Topic 606) Revenue from Contracts with Customers. The guidance substantially converges final standards on revenue recognition between the FASB and IASB providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The ASU is effective for annual reporting periods beginning after December 15, 2016. We are currently evaluating ASU 2014-09 to determine the impact it may have on our current practices.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013, with early adoption permitted. The Company does not expect the adoption of ASU 2013-11 to have a significant impact on the Company’s financial statement presentation.

In March 2013, the FASB issued ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 provides guidance for the treatment of the cumulative translation adjustment when an entity ceases to hold a controlling financial interest in a subsidiary or group of assets within a foreign entity. ASU 2013-05 is effective for interim and annual reporting periods beginning after December 15, 2013. The Company does not expect the adoption of ASU 2013-05 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

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SEGMENT INFORMATION (Tables)

12 Months Ended

Mar. 31, 2014

SEGMENT INFORMATION

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

	Net Sales				Property, Plant and Equipment, Net
	2014		2013		2014		2013
United States	$	20,848,081	$	29,146,085	$	6,485,491	$	7,252,027
China	$	219,982	$	3,326,834	$	3,721	$	19,346

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STOCK BASED COMPENSATION

12 Months Ended

Mar. 31, 2014

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE 13 - STOCK BASED COMPENSATION

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

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

On April 26, 2012, we granted employee stock options for 50,000 shares of common stock at an exercise price of $0.70 per share, the fair market value on the date of grant. The options will vest in equal amounts over three years on the anniversary of the grant date.

On July 2, 2012, we granted stock options to two directors to purchase 10,000 shares of common stock each at an exercise price of $0.61 per share, the fair market value on the date of grant, pursuant to the plan provision following the third anniversary date of each director’s first election to the board. Fifty percent of the shares will vest in six months and 50% in eighteen months from the grant date, respectively.

On December 5, 2012, we granted stock options to a new member of our board of directors to purchase 50,000 shares of common stock each at an exercise price of $1.02 per share, the fair market value on the date of grant. Thirty thousand shares will vest immediately, with the remaining options vesting in equal amounts on the second and third year anniversary of the grant date.

On June 13, 2013, we granted stock options to our Executive Chairman to purchase 100,000 shares of common stock each at an exercise price of $0.67 per share, the fair market value on the date of grant. One third of the share grant will vest immediately, with the remaining options vesting in equal amounts on the second and third year anniversary of the grant date.

On June 13, 2013, we granted stock options to our senior management team to purchase 300,000 shares of common stock at an exercise price of $0.67 per share, the fair market value on the date of grant. The options will vest in equal amounts over three years on the anniversary of the grant date.

On March 19, 2014, the Board approved 180,000 restricted common stock grants to the CFO and other members of the Company’s finance team in recognition of their service to the Company. Assuming the employees remain employed by the Company at the time of each vesting event, vesting shall occur upon the timely completion of a new financing that provides adequate liquidity to the Company for one year; upon timely filing of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 with no material weaknesses; and upon one year from the date of grant.

The fair value was estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The risk-free interest rate was selected based upon yields of five-year U.S. Treasury issues. We use the simplified method for all grants to estimate the expected term of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. Because of our limited stock exercise activity we did not rely on our historical exercise data. The assumptions utilized for option grants during the periods presented ranged from 100.7% to 116.2% for volatility, a risk free interest rate of 0.061% to 1.750%, and expected term of approximately six years. At March 31, 2014, 1,547,006 shares of common stock were available for grant under the Plan.

The following table summarizes information about options for the most recent annual income statements presented:

	Number Of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding at 3/31/2012	2,415,666		$	1.040	$	107,375	7.71
Granted	120,000		$	0.820
Forfeited	(51,666	)	$	1.150
Exercised	—		—
Outstanding at 3/31/2013	2,484,000		$	1.027	$	776,475	9.07
Granted	580,000		$	0.670
Forfeited	(1,708,500	)	$	0.952
Outstanding at 3/31/2014	1,355,500		$	1.014	$	329,025	7.32
Vested or expected to vest 3/31/2014	1,355,500		$	1.014	$	329,025	7.32
Exercisable at 3/31/2014	734,167		$	1.055	$	189,525	5.98

At March 31, 2014 there was $340,731 of total unrecognized compensation cost related to stock options. These costs are expected to be recognized over the next three years. The total fair value of shares vested during the year was $244,655.

The following table summarizes the status of our stock options outstanding but not vested for the year ended March 31, 2014:

	Number of Options		Weighted Average
Outstanding at 3/31/2012	1,489,000		$	1.205
Granted	120,000		$	0.820
Forfeited	(51,666	)	$	1.150
Vested	(703,000	)	$	1.090
Outstanding at 3/31/2013	854,334		$	1.249
Granted	580,000		$	0.670
Forfeited	(607,667	)	$	1.191
Vested	(205,334	)	$	1.783
Outstanding at 3/31/2014	621,333		$	0.967

We made a discretionary grant outside of the Plan on June 13, 2013 of 200,000 options at an exercise price of $0.67 per share, the fair market value on the date of grant, to our non-employee directors in recognition of their additional services while we seek a permanent chief executive officer. The options have a term of ten years and will vest in three equal installment amounts on each of the grant date and first anniversaries of the grants and are subject to continuous service as members of the board through the second anniversary of the grant date. Although the grants were made outside of the Plan, the terms of the options are the same as those issued under the Plan.