10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2019

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

For the transition period from __________________ to __________________

Commission File Number: 000-51378

TechPrecision Corporation

(Exact name of registrant as specified in its charter)

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

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

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

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

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

x Yes ¨ No

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

x Yes ¨ No

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

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

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

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

¨ Yes x No

The number of shares outstanding of the registrant’s common stock as of February 10, 2020 was 29,254,594.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME	4
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	5
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	21
ITEM 4.	CONTROLS AND PROCEDURES	21
PART II.	OTHER INFORMATION	22
ITEM 1.	LEGAL PROCEEDINGS	22
ITEM 6.	EXHIBITS	22
	SIGNATURES	23

2

PART I

ITEM 1. FINANCIAL STATEMENTS

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	December 31, 2019		March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,968,405	$	2,036,646
Accounts receivable		752,984		1,010,443
Contract assets		3,800,928		4,390,832
Inventories		1,512,082		1,240,315
Other current assets		794,387		498,059
Total current assets		8,828,786		9,176,295
Property, plant and equipment, net		4,347,796		4,860,609
Deferred income taxes		2,119,439		2,004,346
Other noncurrent assets, net		43,913		6,233
Total assets	$	15,339,934	$	16,047,483
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	470,619	$	609,082
Accrued expenses		981,255		753,499
Contract liabilities		828,762		740,947
Current portion of long-term debt		1,167,518		822,105
Total current liabilities		3,448,154		2,925,633
Long-term debt		2,481,948		3,410,542
Commitments and contingent liabilities (Note 13)
Stockholders’ Equity:
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 29,254,594 and 29,234,594 shares issued and outstanding, at December 31, 2019 and March 31, 2019		2,925		2,923
Additional paid in capital		8,781,971		8,693,106
Accumulated other comprehensive income		21,611		21,940
Retained earnings		603,325		993,339
Total stockholders’ equity		9,409,832		9,711,308
Total liabilities and stockholders’ equity	$	15,339,934	$	16,047,483

See accompanying notes to the condensed consolidated financial statements.

3

TECHPRECISION CORPORATION

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

	Three Months Ended December 31,						Nine Months Ended December 31,
	2019			2018			2019			2018
Net sales	$	3,667,276		$	4,270,396		$	11,075,620		$	11,990,404
Cost of sales		3,352,962			3,299,166			9,238,287			8,871,550
Gross profit		314,314			971,230			1,837,333			3,118,854
Selling, general and administrative		662,675			631,783			2,145,055			2,113,285
(Loss) income from operations		(348,361	)		339,447			(307,722	)		1,005,569
Other income		185			1,590			21,063			8,605
Interest expense		(69,328	)		(88,314	)		(218,447	)		(273,948	)
Total other expense, net		(69,143	)		(86,724	)		(197,384	)		(265,343	)
(Loss) income before income taxes		(417,504	)		252,723			(505,106	)		740,226
Income tax (benefit) expense		(97,734	)		34,701			(115,092	)		177,104
Net (loss) income	$	(319,770	)	$	218,022		$	(390,014	)	$	563,122
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments	$	9		$	18		$	(329	)	$	(2,402	)
Other comprehensive (loss) income, net of tax	$	9		$	18		$	(329	)	$	(2,402	)
Comprehensive (loss) income	$	(319,761	)	$	218,040		$	(390,343	)	$	560,720
Net (loss) income per share basic	$	(0.01	)	$	0.01		$	(0.01	)	$	0.02
Net (loss) income per share diluted	$	(0.01	)	$	0.01		$	(0.01	)	$	0.02
Weighted average number of shares outstanding:
Basic		29,254,594			28,858,560			29,254,230			28,835,957
Diluted		29,254,594			30,427,218			29,254,230			30,158,509

See accompanying notes to the condensed consolidated financial statements.

4

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

	Common Stock Outstanding		Par Value		Additional Paid in Capital			Accumulated Other Comprehensive Income			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity
Balance 3/31/2018		28,824,593	$	2,882	$	8,561,995		$	24,236		$	(576,617	)	$	8,012,496
Effect of adoption of ASC 606												19,647			19,647
Effect of adoption of ASU 2016-16												449,633			449,633
Stock based compensation						24,930									24,930
Net income												164,385			164,385
Foreign currency translation adjustment									(1,911	)					(1,911	)
Balance 6/30/2018		28,824,593	$	2,882	$	8,586,925		$	22,325		$	57,048		$	8,669,180
Stock based compensation						71,588									71,588
Net income												180,715			180,715
Foreign currency translation adjustment									(509	)					(509	)
Balance 9/30/2018		28,824,593	$	2,882	$	8,658,513		$	21,816		$	237,763		$	8,920,974
Shares issued under long-term incentive plan		125,000		13		122,487									122,500
Non-vested restricted stock						(112,291	)								(112,291	)
Net income												218,022			218,022
Foreign currency translation adjustment									18						18
Balance 12/31/2018		28,949,593	$	2,895	$	8,668,709		$	21,834		$	455,785		$	9,149,223
Balance 3/31/2019		29,234,594	$	2,923	$	8,693,106		$	21,940		$	993,339		$	9,711,308
Non-vested restricted stock						30,625									30,625
Shares issued under long-term incentive plan		20,000		2		7,198									7,200
Net income												220,777			220,777
Foreign currency translation adjustment									(179	)					(179	)
Balance 6/30/2019		29,254,594	$	2,925	$	8,730,929		$	21,761		$	1,214,116		$	9,969,731
Non-vested restricted stock						30,625									30,625
Net loss												(291,021	)		(291,021	)
Foreign currency translation adjustment									(159	)					(159	)
Balance 9/30/2019		29,254,594	$	2,925	$	8,761,554		$	21,602		$	923,095		$	9,709,176
Non-vested restricted stock						20,417									20,417
Net loss												(319,770	)		(319,770	)
Foreign currency translation adjustment									9						9
Balance 12/31/2019		29,254,594	$	2,925	$	8,781,971		$	21,611		$	603,325		$	9,409,832

See accompanying notes to the condensed consolidated financial statements.

5

TECHPRECISION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Nine Months Ended December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(390,014	)	$	563,122
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		548,038			558,571
Amortization of debt issue costs		31,280			43,638
Stock based compensation expense		81,667			106,727
Change in contract loss provision		216,039			24,541
Deferred income taxes		(115,092	)		177,104
Changes in operating assets and liabilities:
Accounts receivable		257,459			1,299,194
Inventories		(271,767	)		(1,004,145	)
Contract assets		589,904			(5,912,297	)
Other current assets		(296,328	)		(14,174	)
Other noncurrent assets		(9,419	)		(7,245	)
Accounts payable		(138,463	)		279,893
Accrued expenses		18,282			202,860
Contract liabilities		87,815			3,803,087
Net cash provided by operating activities		609,401			120,876
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(35,225	)		(402,880	)
Net cash used in investing activities		(35,225	)		(402,880	)
CASH FLOWS FROM FINANCING ACTIVITIES
Deferred loan costs		(32,209	)		--
Repayment of long-term debt		(610,515	)		(569,809	)
Net cash used in financing activities		(642,724	)		(569,809	)
Effect of exchange rate on cash and cash equivalents		307			628
Net decrease in cash and cash equivalents		(68,241	)		(851,185	)
Cash and cash equivalents, beginning of period		2,036,646			2,689,110
Cash and cash equivalents, end of period	$	1,968,405		$	1,837,925
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest	$	187,083		$	230,310
Income taxes	$	--		$	--

See accompanying notes to the condensed consolidated financial statements.

6

NOTES TO CONDENSED 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. TechPrecision, Ranor, and WCMC are collectively referred to as the “Company”, “we”, “us” or “our”.

We manufacture large scale fabricated and machined precision metal components and equipment. These products are used in a variety of markets including defense and aerospace, nuclear, medical, and precision industrial. We consider our business to consist of one segment - metal fabrication and precision machining. All of our operations and customers are located in the United States.

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019, the condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended December 31, 2019 and 2018, the condensed consolidated statements of stockholders’ equity for each of the three months ended June 30, 2019 and 2018, September 30, 2019 and 2018, and December 31, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2019 and 2018 are unaudited, but, in the opinion of management, include all adjustments that are necessary for a fair presentation of our financial statements for interim periods in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The results of operations for an interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements and related notes should be read in conjunction with the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, or the 2019 Form 10-K, filed with the SEC on June 27, 2019.

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, 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.

NOTE 3 - ACCOUNTING STANDARDS UPDATE

New Accounting Standards Recently Issued

In December, 2019, the Financial Accounting Standards Board, or FASB issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, expected to reduce cost and complexity related to the accounting for income taxes. This ASU removes specific exceptions to the general principles in Topic 740 under U.S. GAAP and eliminates the need to analyze certain exceptions in a given period. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company is currently evaluating the amendments in this update to determine the impact it may have on its financial statements and disclosures.

New Accounting Standards Recently Adopted

On April 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases, or Accounting Standards Codification 842 (ASC 842) and all the related amendments using the modified retrospective method. The comparative information has not been restated and continues to be reported under the lease accounting standard in effect for those periods.

7

The most significant effects of the standard on our condensed consolidated financial statements are (1) the recognition of new right-of-use asset and lease liability on our condensed consolidated balance sheet for an operating lease, and (2) new disclosures about our leasing activities (see Note 12). The adoption did not result in a cumulative-effect adjustment to retained earnings. The new standard did not have a material impact on our results of operations, balance sheet or cash flows.

We elected the practical expedients permitted under the transition guidance of the new standard that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The new lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations.

We also adopted the following ASUs effective April 1, 2019, none of which had a material impact to our financial statements or financial statement disclosures: ASU 2018-13 Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement, ASU 2018-07, Compensation - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, and ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

NOTE 4 - REVENUE

The Company generates its revenues from performance obligations completed under contracts with customers in three main market sectors: defense, energy and precision industrial. The period over which the Company performs is generally less than one year. The Company invoices and receives related payments based on performance progress not less frequently than monthly.

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

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

Net Sales by market	Defense		Energy		Industrial		Totals
Three months ended December 31, 2019	$	3,200,671	$	373,357	$	93,248	$	3,667,276
Three months ended December 31, 2018	$	4,196,944	$	33,790	$	39,662	$	4,270,396
Nine months ended December 31, 2019	$	9,725,635	$	450,914	$	899,071	$	11,075,620
Nine months ended December 31, 2018	$	11,507,854	$	267,794	$	214,756	$	11,990,404

Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Three months ended December 31, 2018	$	4,086,713	$	183,683	$	4,270,396
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620
Nine months ended December 31, 2018	$	11,314,599	$	675,805	$	11,990,404

As of December 31, 2019, the Company had $17.0 million of remaining performance obligations, of which $13.6 million were less than 50% complete. We would expect to recognize all of the remaining performance obligations as revenue within the next 24 months.

We are dependent each year on a small number of customers who generate a significant portion of our business. These customers change from year to year. The following table lists customers who accounted for more than 10% of our net sales:  

	Three months ended December 31, 2019					Three months ended December 31, 2018					Nine months ended December 31, 2019					Nine months ended December 31, 2018
Customer	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
A	$	1,215,737		33	%	$	1,124,294		26	%	$	2,320,485		21	%	$	2,117,342		18	%
B	$	727,084		20	%	$	1,008,264		24	%	$	1,825,213		16	%	$	2,609,284		22	%
C	$	404,062		11	%	$	*		*	%	$	1,790,311		16	%	$	*		*	%
D	$	*		*	%	$	*		*	%	$	1,148,242		10	%	$	*		*	%
E	$	*		*	%	$	1,183,208		28	%	$	1,136,146		10	%	$	4,293,047		36	%

*Less than 10% of total 

On our condensed consolidated balance sheet, contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In fiscal 2020, we recognized revenue of $0.6 million related to our contract liabilities at March 31, 2019. At December 31, 2019 contract assets consisted of the following:

8

Contract assets	Unbilled		Less: Progress payments		Total
December 31, 2019	$	8,870,887	$	5,069,959	$	3,800,928
March 31, 2019	$	9,324,361	$	4,933,529	$	4,390,832

NOTE 5 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year profit or loss before taxes, adjusted for the impact of discrete quarterly items. We recorded an income tax benefit of $115,092 for the nine months ended December 31, 2019. Income tax expense was $177,104 for the nine months ended December 31, 2018. The Company's effective tax rates for the nine months ended December 31, 2019 and 2018 were 22.8% and 23.9%, respectively.

The valuation allowance on deferred tax assets was approximately $1.7 million at December 31, 2019. We believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards and other deferred tax assets will not be realized. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

NOTE 6 - EARNINGS PER SHARE

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

	Three months ended December 31, 2019			Three months ended December 31, 2018		Nine months ended December 31, 2019			Nine months ended December 31, 2018
Basic EPS:
Net (loss) income	$	(319,770	)	$	218,022	$	(390,014	)	$	563,122
Weighted average shares		29,254,594			28,858,560		29,254,230			28,835,957
Basic (loss) income per share	$	(0.01	)	$	0.01	$	(0.01	)	$	0.02
Diluted EPS:
Net (loss) income	$	(319,770	)	$	218,022	$	(390,014	)	$	563,122
Dilutive effect of stock options		--			1,568,658		--			1,322,552
Diluted weighted average shares		29,254,594			30,427,218		29,254,230			30,158,509
Diluted (loss) income per share	$	(0.01	)	$	0.01	$	(0.01	)	$	0.02

All potential common stock equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three and nine months ended December 31, 2019, there were 2,967,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above. For the three and nine months ended December 31, 2018, there were 171,000 and 642,668, respectively, of potential common stock equivalents that were out-of-the-money and were not included in the EPS calculations above.

NOTE 7 - STOCK-BASED COMPENSATION

The TechPrecision Corporation 2016 Equity Incentive Plan, or the 2016 Plan, authorizes the award of incentive and non-qualified stock options, restricted stock awards, restricted stock units, and performance awards to employees, directors, consultants, and other individuals who provide services to TechPrecision or its affiliates. The purpose of the 2016 Plan is to: (a) enable TechPrecision and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Subject to adjustment as provided in the 2016 Plan, the maximum number of shares of common stock that may be issued with respect to awards under the 2016 Plan is 5,000,000 shares (inclusive of awards issued under the 2006 Long-Term Incentive Plan, or the 2006 Plan, that remained outstanding as of the effective date of the 2016 Plan). Shares of our common stock subject to awards that expire unexercised or are otherwise forfeited shall again be available for awards under the 2016 Plan.

The fair value of the options we grant is estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The average dividend yield over the historical period for which volatility is computed is zero. The risk-free interest rate is selected based upon yields of U.S. Treasury issues. We used the simplified method for all grants to estimate the expected life of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. We account for award forfeitures as they occur. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. At December 31, 2019, there were 1,573,000 shares available for grant under the 2016 Plan.

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The following table summarizes information about options for the most recently completed periods:  

	Number Of			Weighted Average		Aggregate Intrinsic		Weighted Average Remaining Contractual Life
	Options			Exercise Price		Value		(in years)
Outstanding at 3/31/2018		3,394,668		$	0.417	$	698,200		6.72
Granted		150,000		$	0.800
Exercised		(365,000	)	$	0.271
Canceled		(241,668	)	$	1.226
Outstanding at 3/31/2019		2,938,000		$	0.416	$	1,869,200		6.74
Exercised		(20,000	)	$	0.360
Canceled		(1,000	)		--
Outstanding at 12/31/2019		2,917,000		$	0.416	$	3,888,325		6.32
Vested or expected to vest at 12/31/2019		2,917,000		$	0.416	$	3,888,325		6.32
Exercisable and vested at 12/31/2019		2,917,000		$	0.416	$	3,888,325		6.32

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. This amount changes based on the fair market value of the Company’s common stock. All of the options are vested and exercisable and the maximum contractual term is ten years for option grants.

On April 5, 2019, the Company issued 20,000 shares of the Company’s common stock, par value $0.0001 per share, pursuant to an option award exercised on March 20, 2019, granted previously under the Company’s 2016 Long-Term Incentive Plan. At December 31, 2019, there was no remaining unrecognized compensation cost related to stock options. Other information relating to stock options outstanding at December 31, 2019 is as follows: 

Range of Exercise Prices:	Options Outstanding		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$0.01-$1.00		2,820,000		6.84	$	0.37		2,820,000	$	0.37
$1.01-$1.96		97,000		1.43	$	1.84		97,000	$	1.84
Totals		2,917,000						2,917,000

Restricted Stock Awards

On December 7, 2018 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors and a total of 25,000 shares of restricted stock to our executive officers. The stock-based compensation expense of $122,500 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. On December 7, 2019, the shares of restricted stock fully vested and ceased to be subject to forfeiture, one year following the grant date. The aggregate fair value of the restricted stock expensed during the nine months ended December 31, 2019 was $81,667.

NOTE 8 - CONCENTRATION OF CREDIT RISK

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

10

At December 31, 2019, there were trade accounts receivable balances outstanding from eight customers comprising 98% of the total trade receivables balance. The following table sets forth information as to trade accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of: 

	December 31, 2019					March 31, 2019
Customer	Dollars		Percent			Dollars		Percent
A	$	183,821		24	%	$	246,019		24	%
B	$	149,500		20	%	$	*		*	%
C	$	132,453		18	%	$	*		*	%
D	$	81,780		11	%	$	*		*	%
E	$	78,430		10	%	$	339,032		34	%
F	$	*		*	%	$	244,500		24	%

*less than 10% of total

NOTE 9 - OTHER CURRENT ASSETS

	December 31, 2019		March 31, 2019
Payments advanced to suppliers	$	389,711	$	133,861
Prepaid insurance		273,034		203,601
Prepaid subscriptions		28,021		27,096
Prepaid taxes		35,207		31,707
Refundable AMT credits		60,841		60,841
Employee advances		628		15,380
Other		6,945		25,573
Total	$	794,387	$	498,059

NOTE 10 - ACCRUED EXPENSES 

	December 31, 2019		March 31, 2019
Accrued compensation	$	339,262	$	284,651
Provision for contract losses		273,831		57,792
Accrued professional fees		276,383		267,309
Accrued project costs		50,923		118,929
Other		40,856		24,818
Total	$	981,255	$	753,499

Accrued compensation includes amounts for bonuses, payroll and vacation and holiday pay. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in the provision are recorded in cost of sales. The provision for contract losses has increased by $0.2 million since March 31, 2019. Accrued project costs are estimates for certain project expenses during the reporting period.

NOTE 11 - DEBT 

	December 31, 2019		March 31, 2019
Berkshire Term Loan due December 2021	$	2,588,183	$	2,656,985
People’s Equipment Loan Facility due April 2021		1,073,373		1,606,953
Obligation under finance lease		25,279		33,411
Total debt	$	3,686,835	$	4,297,349
Less: debt issue costs unamortized	$	37,369	$	64,702
Total debt, net	$	3,649,466	$	4,232,647
Less: Current portion of long-term debt	$	1,167,518	$	822,105
Total long-term debt, net	$	2,481,948	$	3,410,542

11 

Berkshire Term Loan Facility

On December 21, 2016, TechPrecision, through Ranor, closed on a Loan Agreement, or the Berkshire Loan Agreement, with Berkshire Bank. Pursuant to the Berkshire Loan Agreement, Berkshire Bank made a term loan to Ranor in the amount of $2,850,000, or the Term Loan, and made available to Ranor a revolving line of credit in the amount of $1,000,000, or the Revolver Loan, and together with  the Term Loan, collectively, the Berkshire Loans.  The Berkshire Loans are secured by a first lien on all personal and real property of Ranor.  Payments on the Term Loan began on January 20, 2017 and will be made in 60 monthly installments of $19,260 each, inclusive of interest at a fixed rate of 5.21% per annum, with all outstanding principal and accrued interest due and payable on December 20, 2021.  A prepayment penalty will apply during the loan term but will not apply if a prepayment is made from either casualty loss insurance proceeds or a condemnation award applicable to any collateral or if a full prepayment is made during the 45-day period immediately preceding the maturity date.  Advances under the Revolver Loan were subject to a borrowing base equal to the lesser of (A) $1,000,000 and (B) the sum of (i) 80% of eligible accounts receivable, and (ii) the lesser of (a) 25% of eligible raw material inventory and (b) $250,000.  Advances made under the Revolver Loan bore interest at a variable rate equal to the one-month LIBOR plus 275 basis points.  Interest-only payments on advances made under the Revolver Loan will be payable monthly in arrears. Ranor’s obligations under the Berkshire Loan Agreement are guaranteed by TechPrecision. The Company pays, as consideration for the bank’s commitment to make advances under the Revolver Loan, a nonrefundable commitment fee equal to 0.25% per annum on the average daily difference between the amount of $1,000,000 and the aggregate amount of all advances made under the Revolver Loan as of each quarterly period.

On December 19, 2018, the Company entered into a Second Modification to Loan Agreement and First Modification and Allonge to Promissory Note with Berkshire Bank, or the Modification. The Modification amended and modified the Berkshire Loan Agreement, and the related Promissory Note dated December 20, 2016 made by Ranor in favor of Berkshire in the stated principal amount of $1,000,000. Under the terms of the Berkshire Loan Agreement and the related promissory note, Ranor was entitled to borrow up to $1,000,000 on a revolving basis. As of the date of the Modification, there were no amounts outstanding under the Revolver Loan. The maturity date of the Revolver Loan was originally December 20, 2018. Under the Modification, the maturity date of the Revolver Loan was extended until December 20, 2020. The Company paid $7,245 of expenses related to the execution of the Modification, which are classified as other noncurrent assets.

On December 23, 2019, TechPrecision, through Ranor, entered into a Third Modification to Loan Agreement, or the Third Modification, and an Amended and Restated Promissory Note with Berkshire Bank. Under the Third Modification, Ranor and Berkshire agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000. Advances under the Revolver Loan are now subject to the lesser of (a) $3,000,000 or (b) the sum of (i) 80% of eligible accounts receivable, plus (ii) the lesser of (x) 25% of Eligible Raw Material Inventory, and (y) $250,000, plus (iii) 50% of the Appraised Value of the Eligible Equipment. The loan agreement is available for refinancing existing indebtedness and for working capital and general corporate purposes. Additionally, the parties agreed to lower the interest rate on advances made under the Revolver Loan based on LIBOR. Prior to the Third Modification, interest accrued on advances made under the Revolver Loan at a variable rate equal to the one-month LIBOR plus 275 basis points.  Under the Third Modification, interest accrues on such advances at a variable rate equal to the one-month LIBOR plus 225 basis points.  The Third Modification contains customary LIBOR replacement provisions. 

The Third Modification also excludes the balance of the Revolver Loan from the Loan-to-Value Ratio covenant calculations and excludes the Company’s anticipated repayment of its obligations to People’s Capital and Leasing Corp from the calculation of the financial covenants. If the Company repays People’s in full in January 2020, the debt service requirements related to the People’s obligations will be eliminated for purposes of the Debt Service Coverage Ratio covenant calculations and the debt service related to the People’s financing will be eliminated from covenant testing starting with the December 31, 2019 covenant test. The Company paid $41,628 in costs related to the execution of the Third Modification, which are classified as other noncurrent assets. The maturity date of the Revolver Loan remains December 20, 2020, and all other material terms of the Loan Agreement and Line of Credit Note were unchanged.

The Berkshire Loans may be accelerated upon the occurrence of an “Event of Default” (as defined in the Berkshire Loan Agreement).  Events of Default include (i) the failure to pay any monthly installment payment before the tenth day following the due date of such payment; (ii) the failure of Ranor or TechPrecision to observe, perform or pay any obligations under the Berkshire Loan Agreement or any other obligation to Berkshire; (iii) the failure of Ranor or TechPrecision to pay any indebtedness in excess of $100,000 (other than the Berkshire Loans) when due; (iv) any representation or warranty of Ranor or TechPrecision in the Berkshire Loan Agreement and related documents, or the Loan Documents, being proven to have been incorrect, in any material respect, when made; (v) the failure of Ranor to discharge any attachment, levy or distraint on its property; (vi) any default by Ranor or TechPrecision under any of the collateral security documents executed in connection with the Berkshire Loan Agreement past any applicable grace period; (vii) the failure of Ranor or TechPrecision to file or pay taxes when due, unless such taxes are being contested in a manner permitted under the Loan Documents; (viii) a change in ownership or control of Ranor or change in management of Ranor where either the chief executive officer or chief financial officer as of December 21, 2016 is replaced without Berkshire Bank’s prior consent; (ix) Ranor or TechPrecision ceasing to do business as a going concern, making an assignment for the benefit of creditors, or commencing a bankruptcy or other similar insolvency proceeding; and (x) the entry of a judgment against Ranor or TechPrecision in excess of $150,000. Some of the Events of Default are subject to certain cure periods. Subject to the lapse of any applicable cure period, a default under the Berkshire Loans could cause the acceleration of all outstanding obligations under the Berkshire Loans.

12 

Pursuant to the Berkshire Loan Agreement, the Company covenants to cause its balance sheet leverage to be less than or equal to 2.50 to 1.00 for the fiscal year ending March 31, 2019 and each fiscal year end thereafter. The Berkshire Loan Agreement also contains a covenant whereby the Company is required to maintain a debt service coverage ratio, or DSCR, of at least 1.2 to 1.0 during the term of the Berkshire Loans.  The DSCR is measured at the end of each fiscal quarter of the Company.  The Company was in compliance with all of the financial covenants at December 31, 2019 and March 31, 2019. 

Also, Ranor’s annual capital expenditures cannot exceed $1,500,000 for the fiscal year ending March 31, 2020 and each fiscal year thereafter.  The Berkshire Loan Agreement contains an additional covenant whereby Ranor is required to maintain a loan to value ratio of not greater than 0.75 to 1.00, to be measured by appraisal not more frequently than one time during each 365-day period.

There were no amounts outstanding under the Revolver Loan at December 31, 2019 and March 31, 2019. Other unamortized debt issue costs at December 31, 2019 and March 31, 2019 were $23,549 and $32,982, respectively.

People’s Equipment Loan Facility

On April 26, 2016, TechPrecision, through Ranor, executed and closed a Master Loan and Security Agreement No. 4180, as supplemented with Schedule No. 001, or, together, the MLSA, with People’s.  The MLSA is dated and became effective as of March 31, 2016.  Loan proceeds were disbursed to Ranor on April 26, 2016.  Pursuant to the MLSA, People’s loaned $3,011,648 to Ranor, or the People’s Loan. The People’s Loan was secured by a first lien on certain machinery and equipment of Ranor, or the Equipment Collateral.  Payments on the People’s Loan were to be made in 60 monthly installments of $60,921 each, inclusive of interest at a fixed rate of 7.90% per annum.  The first monthly installment payment was paid on May 26, 2016.  A prepayment penalty applied during the first four years of the loan term.  Ranor’s obligations under the MLSA were guaranteed by TechPrecision.  The Company covenanted to maintain a DSCR of at least 1.5 to 1.0 during the term of the People’s Loan.  The DSCR was measured at the end of each fiscal year of the Company. The Company was in compliance with the DSCR at March 31, 2019. The People’s Loan was subjected to acceleration upon the occurrence of an “Event of Default” (as defined in the MLSA). Some of the Events of Default were subject to certain cure periods. The Company was in compliance with all of the financial covenants at March 31, 2019.

On October 4, 2016, TechPrecision and Ranor became committed to Schedule No. 002 to the MLSA, or Schedule 002. Pursuant to Schedule 002, People’s made an additional loan in the amount of $365,852, or the Additional People’s Loan, to Ranor upon the terms and conditions set forth in the MLSA and Schedule 002. Ranor was to repay the Additional People’s Loan in monthly installments of principal and interest of $7,399 over 60 months.  The Additional People’s Loan was guaranteed by TechPrecision pursuant to the original Corporate Guaranty from TechPrecision in favor of People’s dated March 31, 2016.  The Additional People’s Loan was secured by a security interest in certain machinery and equipment of Ranor as provided in Schedule 002.

On December 21, 2016, TechPrecision and Ranor closed on an Amendment to the MLSA, or the MLSA Amendment, with People’s. The MLSA Amendment, dated as of December 20, 2016, amended the definition of “Permitted Liens” under the MLSA to include the liens held by Berkshire Bank pursuant to the terms of the Berkshire Loan Agreement and to delete the reference to the liens held by a former creditor of the Company.

Unamortized debt issue costs at December 31, 2019 and March 31, 2019, were $13,820 and 31,720, respectively.

Collateral securing the above obligations comprised all personal and real property of TechPrecision and Ranor, including cash, accounts receivable, inventories, equipment, financial and intangible assets.

On January 16 and 17, 2020, the Company paid off its remaining debt obligation related to the People’s Equipment Loan Facility. See Note 14 for information regarding this transaction.

Finance Lease

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

NOTE 12 – LEASES

We were a party to an operating lease that expired under the contract terms in October 2019. Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased, or right-of-use assets in finance lease arrangements are reported in net property, plant and equipment on our condensed consolidated balance sheet. The following table lists our right-of-use assets and liabilities on our condensed consolidated balance at:

	December 31, 2019
Finance lease:
Property, plant and equipment	$	54,376
Accumulated depreciation		32,626
Net property, plant and equipment	$	21,750
Current portion of long-term debt	$	11,617
Long-term debt	$	13,662
Total finance lease liabilities	$	25,279

13 

Future payments for our finance lease follows by fiscal year: 2020: $3,300, 2021: $13,200 and 2022: $11,000. The amount representing finance lease interest is $2,221. Other supplemental information regarding our leases are contained in the following tables: 

Components of lease expense for the period ended:	December 31, 2019
Operating lease amortization	$	1,756
Operating lease interest	$	83
Finance lease amortization	$	8,132
Finance lease interest	$	1,768

Weighted average lease term and discount rate at:	December 31, 2019
Lease term (years)		2.08
Lease rate		8	%

Supplemental cash flow information related to leases for the period ended:	December 31, 2019
Cash used in operating activities	$	1,768
Cash used in financing activities	$	8,132

NOTE 13 - COMMITMENTS

Retirement Benefits

Ranor has a defined contribution and savings plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. The Company contributed $60,269 and $61,251 in the nine months ended December 31, 2019 and 2018, respectively.

NOTE 14 – SUBSEQUENT EVENTS

On January 16, 2020, TechPrecision through Ranor repaid in full Ranor’s indebtedness under Schedule No. 002, to the MLSA. Under Schedule 002 to the MSLA, Ranor had borrowed an initial principal amount of $365,852, secured by certain machinery and equipment. The loan was required to be repaid in monthly installments of principal and interest of $7,399 over 60 months. Upon the payment of approximately $147,000, which amount included a 1% prepayment penalty of approximately $1,400, all commitments under Schedule 002 to the MSLA were terminated, and People’s discharged and released all guarantees and liens existing in connection with such loan, thereby terminating such loan agreement schedule.

On January 17, 2020, the Company, through Ranor, repaid in full Ranor’s indebtedness under Schedule 001 to the MSLA. Under Schedule 001 to the MSLA, Ranor had borrowed an initial principal amount of $3,011,648, secured by certain machinery and equipment. The loan was required to be repaid in 60 monthly installments of $60,921 each, inclusive of interest at a fixed rate of 7.90% per annum. Upon the payment of approximately $936,000, which amount included a 1% prepayment penalty of approximately $9,200, all commitments under Schedule 001 to the MSLA were terminated, and People’s discharged and released all guarantees and liens existing in connection with such loan, thereby terminating such loan agreement schedule. As all previously outstanding obligations under the MSLA have been satisfied in full, Ranor is no longer bound by any material terms of the MSLA.

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

Statement Regarding Forward Looking Disclosure

The following discussion of the results of our operations and financial condition should be read in conjunction with our condensed consolidated financial statements and the related notes, which appear elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q, including this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may contain predictive or “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of current or historical fact contained in this quarterly report, including statements that express our intentions, plans, objectives, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “should,” “would” and similar expressions, as they relate to us, are intended to identify forward-looking statements.

14 

These statements are based on current expectations, estimates and projections made by management about our business, our industry and other conditions affecting our financial condition, results of operations or business prospects. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, the forward-looking statements due to numerous risks and uncertainties. Factors that could cause such outcomes and results to differ include, but are not limited to, risks and uncertainties arising from:

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

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

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

· our ability to receive contract awards through competitive bidding processes;

· our ability to maintain standards to enable us to manufacture products to exacting specifications;

· our ability to enter new markets for our services;

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

· competitive pressures in the markets we serve;

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

· operating in a single geographic location;

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

· government regulations and requirements;

· pricing and business development difficulties;

· changes in government spending on national defense;

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

· general industry and market conditions and growth rates;

· general economic conditions; and

· those risks discussed in “Item 1A. Risk Factors” and elsewhere in our 2019 Annual Report on Form 10-K, as well as those described in any other filings which we make with the SEC.

Any forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. Investors should evaluate any statements made by us in light of these important factors.

Overview

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

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

Because our revenues are derived from the sale of goods manufactured pursuant to a contract, and we do not sell from inventory, it is necessary for us to constantly seek new contracts. There may be a time lag between our completion of one contract and commencement of work on another contract. During such periods, we may continue to incur overhead expense but with lower revenue resulting in lower operating margins. Furthermore, changes in either the scope of an existing contract or related delivery schedules may impact the revenue we receive under the contract and the allocation of manpower. Although we provide manufacturing services for large governmental programs, we usually do not work directly for the government or its agencies. Rather, we perform our services for large governmental contractors. Our business is dependent in part on the continuation of governmental programs which require our services and products.

15 

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

All of our sales recorded for the nine months ended December 31, 2019 were generated in the U.S. We have experienced, and continue to experience, customer concentration. For the nine months ended December 31, 2019 and 2018, our largest customer accounted for approximately 21% and 36% of reported net sales, respectively. For the nine months ended December 31, 2019, we had five customers which accounted for approximately 74% of our revenue, in the aggregate. Our sales order backlog at December 31, 2019 and March 31, 2019 was approximately $17.0 million and $12.6 million, respectively.

For the nine months ended December 31, 2019, our net sales were $11.1 million compared with net sales of $12.0 million for the nine months ended December 31, 2018.  Our gross margin for the nine months ended December 31, 2019 and 2018 was 16.6% and 26.0%, respectively. Our gross margin for the nine months ended December 31, 2019 was impacted by higher cost of sales primarily due to cost overruns on certain customer projects. We generated $0.6 million of cash from operating activities in the nine months ended December 31, 2019 and had a cash balance of $2.0 million at December 31, 2019.

Critical Accounting Policies

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

Our significant accounting policies are set forth in detail in Note 2 to the consolidated financial statements included in the 2019 Annual Report on Form 10-K. We consider the policies relating to revenue recognition to be a critical accounting policy. There have been no significant changes to our critical accounting policies during the nine months ended December 31, 2019.

Accounting Pronouncements

New Accounting Standards

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

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. Generally, our product mix is made up of short-term contracts with a production timeline of less than twelve months. Units manufactured under the majority 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, the timing of revenue recognition, delays in customer acceptances of our products, delays in deliveries of ordered products and our rate of progress fulfilling obligations under our contracts. A delay in deliveries or cancellations of orders could have an unfavorable impact on liquidity, cause us to have inventories in excess of our short-term needs, and delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog.

Key Performance Indicators

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

16

Three Months Ended December 31, 2019 and 2018

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

	2019						2018						Changes
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	3,667			100	%	$	4,270			100	%	$	(603	)		(14	)%
Cost of sales		3,353			91	%		3,299			77	%		54			2	%
Gross profit		314			9	%		971			23	%		(657	)		(68	)%
Selling, general and administrative		663			18	%		632			15	%		31			5	%
(Loss) income from operations		(349	)		(9	)%		339			8	%		(688	)		(203	)%
Other expense, net		(69	)		(2	)%		(86	)		(2	)%		17			20	%
(Loss) income before taxes		(418	)		(11	)%		253			6	%		(671	)		(265	)%
Income tax (benefit) expense		(98	)		(3	)%		35			1	%		(133	)		(382	)%
Net (loss) income	$	(320	)		(8	)%	$	218			5	%	$	(538	)		(247	)%

Net Sales

Net sales were $3.7 million for the three months ended December 31, 2019, or 14% lower when compared to net sales for the three months ended December 31, 2018 of $4.3 million. Changes in net sales generally reflect a different product mix and project volume when comparing the current and prior periods. 

Net sales to defense customers decreased by $1.0 million when compared to the three months ended December 31, 2018. Defense market revenue was lower due to a product mix that includes certain low margin customer projects when compared with a higher margin product mix in the same quarter a year ago. Increases in estimated hours to complete these certain low margin projects continued to dampen revenue recognition. Net sales in energy and industrial markets increased by $0.3 million and $0.1 million, respectively.

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of sales were $3.4 million for the three months ended December 31, 2019, compared to $3.3 million for the three months ended December 31, 2018. Gross profit was $0.3 million or a $0.7 million decrease when compared to the three months ended December 31, 2018. As a result, gross margin was 8.6% for the three months ended December 31, 2019, compared to 22.7% for the three months ended December 31, 2018.

An increase in the loss provision for certain customer projects had a negative impact on gross profit and gross margin as more labor hours were used on less profitable projects. We incurred an additional $0.3 million in cost overruns in the third quarter of fiscal 2020.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the three months ended December 31, 2019 increased by $30,892 when compared to the three months ended December 31, 2018, due primarily to an increase in professional fees for accounting and legal services.

Other Expense, net

Interest expense and debt cost amortization was lower for the three months ended December 31, 2019 when compared to the three months ended December 31, 2018, and, absent any changes to outstanding indebtedness, will continue to decrease as we amortize debt principal to maturity. The following table reflects other income, interest expense and amortization of debt issue costs for the three months ended:

	December 31, 2019			December 31, 2018			$ Change			% Change
Other income, net	$	185		$	1,590		$	(1,405	)		(88	)%
Interest expense	$	(58,817	)	$	(74,523	)	$	15,706			21	%
Amortization of debt issue costs	$	(10,511	)	$	(13,791	)	$	3,280			24	%

17

Income Taxes

As a result of the foregoing, principally our lower net sales and cost of sales, the Company reported a pretax loss and recorded a tax benefit of $97,734 for the three months ended December 31, 2019. For the three months ended December 31, 2018 we recorded tax expense of $34,701.

Net (Loss) Income

As a result of the foregoing, for the three months ended December 31, 2019, we recorded net loss of $0.3 million compared with net income of $0.2 million for the three months ended December 31, 2018.

Nine Months Ended December 31, 2019 and 2018

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

	2019						2018						Changes
(dollars in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Net sales	$	11,075			100	%	$	11,990			100	%	$	(915	)		(8	)%
Cost of sales		9,238			83	%		8,872			74	%		366			4	%
Gross profit		1,837			17	%		3,118			26	%		(1,281	)		(41	)%
Selling, general and administrative		2,145			19	%		2,113			18	%		32			2	%
(Loss) income from operations		(308	)		(3	)%		1,005			8	%		(1,313	)		(131	)%
Other expense, net		(197	)		(2	)%		(265	)		(2	)%		68			26	%
(Loss) income before taxes		(505	)		(5	)%		740			6	%		(1,245	)		(168	)%
Income tax (benefit) expense		(115	)		(1	)%		177			1	%		(292	)		(165	)%
Net (loss) income	$	(390	)		(4	)%	$	563			5	%	$	(953	)		(169	)%

Net Sales

Changes in net sales generally reflect a different product mix and project volume when comparing the current and prior periods. Net sales were $11.1 million for the nine months ended December 31, 2019, or 8% lower when compared to net sales for the nine months ended December 31, 2018 of $12.0 million. Net sales in defense markets decreased by $1.8 million when compared to the nine months ended December 31, 2018.

The Company records most of its revenue over time as it completes performance obligations. We measure progress for performance obligations satisfied over time using input methods (e.g., labor hours expended and time elapsed). Our current product mix includes certain customer projects with little or no margin which has consumed a higher number of actual labor hours than originally estimated to complete. The higher actual labor hours had the effect of consuming hours that could have been allocated to higher margin projects. This set of conditions has had a negative impact on revenue recognition and cost of sales primarily in our defense markets during the nine months ended December 31, 2019. Our defense backlog, however, remains strong as new orders for components continue to flow from prime defense contractors.

For the nine months ended December 31, 2019, revenue in energy and precision industrial markets increased by $0.2 million and $0.7 million, respectively.

Remaining performance obligations reflect future revenue that will be recorded in subsequent periods as projects in progress are completed. At December 31, 2019, the Company had $17.0 million of remaining performance obligations, an increase of $2.9 million when compared with December 31, 2018.  

Cost of Sales and Gross Margin

Cost of sales consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of sales for the nine months ended December 31, 2019 were $9.2 million compared to $8.9 million for the nine months ended December 31, 2018. Gross profit decreased by $1.3 million to $1.8 million. Gross margin was lower at 16.6% for the nine months ended December 31, 2019 compared to 26.0% for the nine months ended December 31, 2018.

18

In the nine months ended December 31, 2019, gross profit and gross margin were impacted by an increase of $0.7 million in cost of sales for potential losses on certain customer projects. The fiscal 2020 nine month period was also marked by a higher number of new project startup activities, and a higher number of labor allocated to less profitable projects.

Selling, General and Administrative Expenses

Total selling, general and administrative expenses for the nine months ended December 31, 2019 were up slightly due primarily to an increase in professional fees, almost entirely offset by a decrease in salary expense when compared to the nine months ended December 31, 2018.

Other Expense, net

Interest expense and debt cost amortization was lower for the nine months ended December 31, 2019 when compared to the nine months ended December 31, 2018, and, absent any changes to our outstanding indebtedness, will continue to decrease as we amortize debt principal to maturity. Other income, net for the nine months ended December 31, 2019 includes proceeds from the sale of machinery and equipment for $16,000. The following table reflects other income, interest expense and amortization of debt issue costs for the nine months ended:

	December 31, 2019			December 31, 2018			$ Change		% Change
Other income, net	$	21,063		$	8,605		$	12,458		145	%
Interest expense	$	(187,167	)	$	(230,310	)	$	43,143		19	%
Amortization of debt issue costs	$	(31,280	)	$	(43,638	)	$	12,358		28	%

Income Taxes

For the nine months ended December 31, 2019 we recorded a tax benefit of $0.1 million compared to tax expense of $0.2 million for the nine months ended December 31, 2018. The tax benefit for the nine months ended December 31, 2019 was primarily the result of a pretax loss recorded for the period in all tax jurisdictions. Our effective tax rate for the first nine months of fiscal 2020 was 22.8%.

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. 

The valuation allowance on deferred tax assets at December 31, 2019 was approximately $1.7 million. We believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards and other deferred tax assets will not be realized. In recognition of this risk, we continue to provide a valuation allowance on these items. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

Net (Loss) Income

As a result of the foregoing, for the nine months ended December 31, 2019, we recorded net loss of $0.4 million compared with net income of $0.6 million for the nine months ended December 31, 2018.

Liquidity and Capital Resources

On December 23, 2019 we entered into a Third Modification to Loan Agreement, or the Third Modification, and an Amended and Restated Promissory Note with Berkshire Bank. The Third Modification amends and modifies the Loan Agreement between Ranor and Berkshire Bank dated December 20, 2016, as amended by the First Modification to Loan Agreement dated June 6, 2018 and the Second Modification to Loan Agreement and First Modification and Allonge to Promissory Note dated December 19, 2018.

Under the Third Modification, Ranor and Berkshire Bank agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000, which is available for refinancing existing indebtedness and for working capital and general corporate purposes. Additionally, the parties agreed to lower the interest rate on advances made under the Revolver Loan based on LIBOR. Prior to the Third Modification, interest accrued on advances made under the Revolver Loan at a variable rate equal to the one-month LIBOR plus 275 basis points.  Under the Third Modification, interest accrues on such advances at a variable rate equal to the one-month LIBOR plus 225 basis points.  The Third Modification contains customary LIBOR replacement provisions.

19

The maturity date of the Revolver Loan remains December 20, 2020, and all other material terms of the Loan Agreement and Line of Credit Note were unchanged.

At December 31, 2019, we had cash and cash equivalents of $2.0 million and working capital of $5.4 million. In January 2020, the Company used $1.1 million from available cash and repaid in full its capital equipment obligation with Peoples Capital. This payment reduced our total debt obligations to $2.6 million at January 17, 2020 from $3.7 million at December 31, 2019.

We believe our available cash plus cash provided from operations will be sufficient to fund our operations, capital expenditures and principal and interest payments under our debt obligations through the 12 months from the issuance date of our financial statements. We also have a Revolver Loan with Berkshire Bank available as a resource, if necessary. The table below presents selected liquidity and capital measures for the periods ended:

(dollars in thousands)	December 31, 2019		March 31, 2019		Change Amount
Cash and cash equivalents	$	1,968	$	2,037	$	(69	)
Working capital	$	5,381	$	6,250	$	(869	)
Total debt	$	3,687	$	4,297	$	(610	)
Total stockholders’ equity	$	9,410	$	9,711	$	(301	)

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

(dollars in thousands)	December 31, 2019			December 31, 2018			Change Amount
Cash flows provided by (used in):
Operating activities	$	609		$	121		$	488
Investing activities		(35	)		(403	)		368
Financing activities		(642	)		(570	)		(72	)
Net decrease in cash	$	(68	)	$	(852	)	$	784

Operating activities

Our primary sources of cash are from accounts receivable collections, customer advance payments and project progress payments. Our customers make advance payments and progress payments under the terms of each manufacturing contract. Our cash flows can fluctuate significantly from period to period as the composition of our receivables collections mix changes between advance payments and customer payments made after shipment of finished goods. We use cash to pay suppliers, employee wages and benefits, and interest and taxes.

Cash provided by operations for the nine months ended December 31, 2019 and 2018 was $0.6 million and $0.1 million, reflecting a change of $0.5 million. Favorable timing with customer advance payments and progress payments resulted in higher amounts of cash generated for the nine months ended December 31, 2019. The nine months ended December 31, 2019 was marked by an increase in project startup activity which resulted in more cash collected from customer advances and progress payments. At December 31, 2018, the Company had fewer sales orders in production, which led to a slower cash build at the end of the first nine months of fiscal 2019.

Investing activities

We anticipate that we will continue to make small investments in new factory machinery and equipment over the next calendar year. Net cash used in investing activities totaled $35,225 for the nine months ended December 31, 2019. We expended $0.4 million for new factory machinery and equipment for the nine months ended December 31, 2018.

Financing activities

We used $0.6 million of cash in financing activities for the nine months ended December 31, 2019 and 2018 for monthly principal payments in connection with our debt obligations.

All of the above activity resulted in a net decrease in cash of $0.1 million for the nine months ended December 31, 2019 compared with a decrease in cash of $0.9 million for the nine months ended December 31, 2018.

20

Off-Balance Sheet Arrangements

We do not currently have, and have not had any off-balance sheet assets, liabilities or arrangements at December 31, 2019.

EBITDA Non-GAAP Financial Measure

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

We define EBITDA as net (loss) income plus interest, income taxes, depreciation and amortization. The following table provides a reconciliation of EBITDA to net income, the most directly comparable GAAP measure reported in our condensed consolidated financial statements for the three and nine months ended: 

	Three Months ended December 31,								Nine Months ended December 31,
(dollars in thousands)	2019			2018		change			2019			2018		Change
Net (loss) income	$	(320	)	$	218	$	(538	)	$	(390	)	$	563	$	(953	)
Income tax (benefit) expense		(98	)		35		(133	)		(115	)		177		(292	)
Interest expense (1)		69			88		(19	)		218			274		(56	)
Depreciation		168			187		(19	)		548			559		(11	)
EBITDA	$	(181	)	$	528	$	(709	)	$	261		$	1,573	$	(1,312	)

(1) Includes amortization of debt issue costs.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

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

As of the end of the period covered by this report, an evaluation was carried out, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2019, our disclosure controls and procedures were effective at a reasonable assurance level.

Inherent Limitations Over Internal Controls

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

21

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

Changes in Internal Control over Financial Reporting

For the quarter ended December 31, 2019, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information.

Item 1. Legal Proceedings.

Class Action Lawsuit

On or about February 26, 2016, nine former employees, or plaintiffs, of Ranor filed a complaint in the Massachusetts Superior Court, Worcester County, against Ranor and certain former and current executive officers of Ranor, alleging violations of the Massachusetts Wage Act, breach of contract and conversion based on a modification made to Ranor’s personal time off policy. Plaintiffs claim that Ranor’s modification to its personal time off, or PTO, policy in April 2014 caused these employees to forfeit earned PTO. Plaintiffs purport to assert their claims on behalf of a class of all current and former employees of Ranor who were affected by the modification to Ranor’s PTO policy. In 2018, plaintiffs’ motion for class certification was granted. In September 2019, cross-motions for summary judgment were made by Ranor and the plaintiffs, and oral arguments were heard by the court on such motions in December 2019. On February 12, 2020, the court denied both parties’ motions for summary judgement.

Item 6. Exhibits

Exhibit Index

Exhibit No.	Description
3.1	Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to our registration statement on Form SB-2, filed with the Commission on August 28, 2006).
3.2	Amended and Restated By-laws of the Registrant (incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on February 3, 2014).
3.3	Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed with the Commission on March 3, 2006).
3.4	Certificate of Amendment to Certificate of Designation for Series A Convertible Preferred Stock of the Registrant (incorporated herein by reference to Exhibit 3.5 to our Quarterly Report on Form 10-Q, filed with the Commission on November 12, 2009).
10.1	Third Modification to Loan Agreement, dated December 23, 2019, between Ranor, Inc. and Berkshire Bank (incorporated by reference to our Current Report on Form 8-K filed with the Commission on December 30, 2019).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from this Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at December 31, 2019 and March 31, 2019; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended December 31, 2019 and 2018; (iii) the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2019 and 2018; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months  ended December 31, 2019 and 2018; and (v) the Notes to the Condensed Consolidated Financial Statements.

22

SIGNATURES

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

		TechPrecision Corporation
February 13, 2020	By:	/s/ Thomas Sammons
		Thomas Sammons
		Chief Financial Officer
		(duly authority signatory and principal financial officer)

23

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Alexander Shen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TechPrecision Corporation;

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

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

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

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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

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

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

Dated: February 13, 2020	/s/ Alexander Shen
	Alexander Shen
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas Sammons, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TechPrecision Corporation;

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

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

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

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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

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

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

Dated: February13, 2020	/s/ Thomas Sammons
	Thomas Sammons
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of TechPrecision Corporation (the “Company”) for the quarter ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alexander Shen, the Chief Executive Officer of the Company, and I, Thomas Sammons, the Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Dated: February 13, 2020	/s/ Alexander Shen
	Alexander Shen
	Chief Executive Officer
Dated: February 13, 2020	/s/ Thomas Sammons
	Thomas Sammons
	Chief Financial Officer

XML

DEBT - Long-term Debt (Details) - USD ($)	Dec. 31, 2019	Mar. 31, 2019
Long-term Debt
Total debt	$ 3,686,835	$ 4,297,349
Less: debt issue costs unamortized	37,369	64,702
Total debt, net	3,649,466	4,232,647
Less: Current portion of long-term debt	1,167,518	822,105
Total long-term debt, net	2,481,948	3,410,542
Berkshire Term Loan due January 2022
Long-term Debt
Total debt	2,588,183	2,656,985
Peoples Equipment Loan Facility Due April 2021
Long-term Debt
Total debt	1,073,373	1,606,953
Obligation under finance lease
Long-term Debt
Total debt	25,279
Total debt	25,279	$ 33,411
Less: Current portion of long-term debt	11,617
Total long-term debt, net	$ 13,662

XML

LEASES - Supplemental Information of leases (Details)	9 Months Ended
	Dec. 31, 2019 USD ($)
LEASES
Operating lease amortization	$ 1,756
Operating lease interest	83
Finance lease amortization	8,132
Finance lease interest	$ 1,768
Lease term (years)	2 years 29 days
Lease rate	8.00%

XML

OTHER CURRENT ASSETS (Tables)

9 Months Ended

Dec. 31, 2019

OTHER CURRENT ASSETS

Schedule of other current assets

	December 31, 2019		March 31, 2019
Payments advanced to suppliers	$	389,711	$	133,861
Prepaid insurance		273,034		203,601
Prepaid subscriptions		28,021		27,096
Prepaid taxes		35,207		31,707
Refundable AMT credits		60,841		60,841
Employee advances		628		15,380
Other		6,945		25,573
Total	$	794,387	$	498,059

XML

REVENUE (Tables)

9 Months Ended

Dec. 31, 2019

Schedule of Disaggregation of Revenue

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

Net Sales by market	Defense		Energy		Industrial		Totals
Three months ended December 31, 2019	$	3,200,671	$	373,357	$	93,248	$	3,667,276
Three months ended December 31, 2018	$	4,196,944	$	33,790	$	39,662	$	4,270,396
Nine months ended December 31, 2019	$	9,725,635	$	450,914	$	899,071	$	11,075,620
Nine months ended December 31, 2018	$	11,507,854	$	267,794	$	214,756	$	11,990,404

Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Three months ended December 31, 2018	$	4,086,713	$	183,683	$	4,270,396
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620
Nine months ended December 31, 2018	$	11,314,599	$	675,805	$	11,990,404

Schedule of Contract Assets

At December 31, 2019 contract assets consisted of the following:

			Less: Progress
Contract assets	Unbilled		payments		Total
December 31, 2019	$	8,870,887	$	5,069,959	$	3,800,928
March 31, 2019	$	9,324,361	$	4,933,529	$	4,390,832

Sales [Member]

Schedules of Concentration of Risk, by Risk Factor

	Three months ended				Three months ended				Nine months ended				Nine months ended
	December 31, 2019				December 31, 2018				December 31, 2019				December 31, 2018
Customer	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
A	$	1,215,737	33	%	$	1,124,294	26	%	$	2,320,485	21	%	$	2,117,342	18	%
B	$	727,084	20	%	$	1,008,264	24	%	$	1,825,213	16	%	$	2,609,284	22	%
C	$	404,062	11	%	$	*	*	%	$	1,790,311	16	%	$	*	*	%
D	$	*	*	%	$	*	*	%	$	1,148,242	10	%	$	*	*	%
E	$	*	*	%	$	1,183,208	28	%	$	1,136,146	10	%	$	4,293,047	36	%

XML

REVENUE - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2019
REVENUE
Revenue, Remaining Performance Obligation, Amount		$ 17.0
Revenue Remaining Performance Obligation Completed Less Than 50		$ 13.6
Revenue, Remaining Performance Obligation, Percentage		50.00%
Revenue Recognized By Contract Liabilities	$ 0.6

XML

STOCK-BASED COMPENSATION - Stock Options Outstanding By Exercise Price (Details)	9 Months Ended
	Dec. 31, 2019 $ / shares shares
Stock Based Compensation By Exercise Price Range
Options Outstanding	2,917,000
Options Exercisable	2,917,000
Range One
Stock Based Compensation By Exercise Price Range
Options Outstanding	2,820,000
Options Outstanding, Weighted Average Remaining Contractual Term	6 years 10 months 2 days
Options Outstanding, Weighted Average Exercise Price | $ / shares	$ 0.37
Options Exercisable	2,820,000
Options Exercisable, Weighted Average Exercise Price | $ / shares	$ 0.37
Range Two
Stock Based Compensation By Exercise Price Range
Options Outstanding	97,000
Options Outstanding, Weighted Average Remaining Contractual Term	1 year 5 months 5 days
Options Outstanding, Weighted Average Exercise Price | $ / shares	$ 1.84
Options Exercisable	97,000
Options Exercisable, Weighted Average Exercise Price | $ / shares	$ 1.84

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LEASES

9 Months Ended

Dec. 31, 2019

LEASES

LEASES

NOTE 12 – LEASES

We were a party to an operating lease that expired under the contract terms in October 2019. Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased, or right-of-use assets in finance lease arrangements are reported in net property, plant and equipment on our condensed consolidated balance sheet. The following table lists our right-of-use assets and liabilities on our condensed consolidated balance at:

	December 31,
Finance lease:	2019
Property, plant and equipment	$	54,376
Accumulated depreciation		32,626
Net property, plant and equipment	$	21,750
Current portion of long-term debt	$	11,617
Long-term debt	$	13,662
Total finance lease liabilities	$	25,279

Future payments for our finance lease follows by fiscal year: 2020: $3,300, 2021: $13,200 and 2022: $11,000. The amount representing finance lease interest is $2,221.  Other supplemental information regarding our leases are contained in the following tables:

	December 31,
Components of lease expense for the period ended:	2019
Operating lease amortization	$	1,756
Operating lease interest	$	83
Finance lease amortization	$	8,132
Finance lease interest	$	1,768

	December 31,
Weighted average lease term and discount rate at:	2019
Lease term (years)	2.08
Lease rate	8	%

	December 31,
Supplemental cash flow information related to leases for the period ended:	2019
Cash used in operating activities	$	1,768
Cash used in financing activities	$	8,132

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CONCENTRATION OF CREDIT RISK

9 Months Ended

Dec. 31, 2019

CONCENTRATION OF CREDIT RISK

CONCENTRATION OF CREDIT RISK

NOTE 8 - CONCENTRATION OF CREDIT RISK

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

At December 31, 2019, there were trade accounts receivable balances outstanding from eight customers comprising 98% of the total trade receivables balance. The following table sets forth information as to trade accounts receivable from customers who accounted for more than 10% of our accounts receivable balance as of:

	December 31, 2019				March 31, 2019
Customer	Dollars		Percent		Dollars		Percent
A	$	183,821	24	%	$	246,019	24	%
B	$	149,500	20	%	$	*	*	%
C	$	132,453	18	%	$	*	*	%
D	$	81,780	11	%	$	*	*	%
E	$	78,430	10	%	$	339,032	34	%
F	$	*	*	%	$	244,500	24	%

*less than 10% of total

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REVENUE

9 Months Ended

Dec. 31, 2019

REVENUE

REVENUE

NOTE 4 - REVENUE

The Company generates its revenues from performance obligations completed under contracts with customers in three main market sectors: defense, energy and precision industrial. The period over which the Company performs is generally less than one year. The Company invoices and receives related payments based on performance progress not less frequently than monthly.

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

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

Net Sales by market	Defense		Energy		Industrial		Totals
Three months ended December 31, 2019	$	3,200,671	$	373,357	$	93,248	$	3,667,276
Three months ended December 31, 2018	$	4,196,944	$	33,790	$	39,662	$	4,270,396
Nine months ended December 31, 2019	$	9,725,635	$	450,914	$	899,071	$	11,075,620
Nine months ended December 31, 2018	$	11,507,854	$	267,794	$	214,756	$	11,990,404

Net Sales by contract type	Over-time		Point-in-time		Totals
Three months ended December 31, 2019	$	3,439,367	$	227,909	$	3,667,276
Three months ended December 31, 2018	$	4,086,713	$	183,683	$	4,270,396
Nine months ended December 31, 2019	$	9,104,395	$	1,971,225	$	11,075,620
Nine months ended December 31, 2018	$	11,314,599	$	675,805	$	11,990,404

As of December 31, 2019, the Company had $17.0 million of remaining performance obligations, of which $13.6 million were less than 50% complete. We would expect to recognize all of the remaining performance obligations as revenue within the next 24 months.

We are dependent each year on a small number of customers who generate a significant portion of our business. These customers change from year to year. The following table lists customers who accounted for more than 10% of our net sales: 

	Three months ended				Three months ended				Nine months ended				Nine months ended
	December 31, 2019				December 31, 2018				December 31, 2019				December 31, 2018
Customer	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
A	$	1,215,737	33	%	$	1,124,294	26	%	$	2,320,485	21	%	$	2,117,342	18	%
B	$	727,084	20	%	$	1,008,264	24	%	$	1,825,213	16	%	$	2,609,284	22	%
C	$	404,062	11	%	$	*	*	%	$	1,790,311	16	%	$	*	*	%
D	$	*	*	%	$	*	*	%	$	1,148,242	10	%	$	*	*	%
E	$	*	*	%	$	1,183,208	28	%	$	1,136,146	10	%	$	4,293,047	36	%

*Less than 10% of total

On our condensed consolidated balance sheet, contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. In fiscal 2020, we recognized revenue of $0.6 million related to our contract liabilities at March 31, 2019. At December 31, 2019 contract assets consisted of the following:

			Less: Progress
Contract assets	Unbilled		payments		Total
December 31, 2019	$	8,870,887	$	5,069,959	$	3,800,928
March 31, 2019	$	9,324,361	$	4,933,529	$	4,390,832

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (390,014)	$ 563,122
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	548,038	558,571
Amortization of debt issue costs	31,280	43,638
Stock based compensation expense	81,667	106,727
Change in contract loss provision	216,039	24,541
Deferred income taxes	(115,092)	177,104
Changes in operating assets and liabilities:
Accounts receivable	257,459	1,299,194
Inventories	(271,767)	(1,004,145)
Contract assets	589,904	(5,912,297)
Other current assets	(296,328)	(14,174)
Other noncurrent assets	(9,419)	(7,245)
Accounts payable	(138,463)	279,893
Accrued expenses	18,282	202,860
Contract liabilities	87,815	3,803,087
Net cash provided by (used in) operating activities	609,401	120,876
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(35,225)	(402,880)
Net cash used in investing activities	(35,225)	(402,880)
CASH FLOWS FROM FINANCING ACTIVITIES
Deferred loan costs	(32,209)	0
Repayment of long-term debt	(610,515)	(569,809)
Net cash used in financing activities	(642,724)	(569,809)
Effect of exchange rate on cash and cash equivalents	307	628
Net decrease in cash and cash equivalents	(68,241)	(851,185)
Cash and cash equivalents, beginning of period	2,036,646	2,689,110
Cash and cash equivalents, end of period	1,968,405	1,837,925
Cash paid during the year for:
Interest	187,083	230,310
Income taxes	$ 0	$ 0

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2019	Mar. 31, 2019
Current assets:
Cash and cash equivalents	$ 1,968,405	$ 2,036,646
Accounts receivable	752,984	1,010,443
Contract assets	3,800,928	4,390,832
Inventories	1,512,082	1,240,315
Other current assets	794,387	498,059
Total current assets	8,828,786	9,176,295
Property, plant and equipment, net	4,347,796	4,860,609
Deferred income taxes	2,119,439	2,004,346
Other noncurrent assets, net	43,913	6,233
Total assets	15,339,934	16,047,483
Current liabilities:
Accounts payable	470,619	609,082
Accrued expenses	981,255	753,499
Contract liabilities	828,762	740,947
Current portion of long-term debt	1,167,518	822,105
Total current liabilities	3,448,154	2,925,633
Long-term debt	2,481,948	3,410,542
Commitments and contingent liabilities ( Note 13)
Stockholders' Equity:
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 29,254,594 and 29,234,594 shares issued and outstanding, at December 31, 2019 and March 31, 2019	2,925	2,923
Additional paid in capital	8,781,971	8,693,106
Accumulated other comprehensive income	21,611	21,940
Retained earnings	603,325	993,339
Total stockholders' equity	9,409,832	9,711,308
Total liabilities and stockholders' equity	$ 15,339,934	$ 16,047,483

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REVENUE - Contract Assests and Contract Liabilities (Details) - USD ($)	Dec. 31, 2019	Mar. 31, 2019
Contract assets	$ 3,800,928	$ 4,390,832
Unbilled
Contract assets	8,870,887	9,324,361
Less: Progress payments
Contract assets	$ 5,069,959	$ 4,933,529

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STOCK-BASED COMPENSATION - Stock Option Activity (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2019	Mar. 31, 2018
Number Of Options
Outstanding at the beginning of the period (in shares)	2,938,000	3,394,668
Granted (in shares)		150,000
Exercised (in shares)	(20,000)	(365,000)
Canceled (in shares)	(1,000)	(241,668)
Outstanding at the end of the period (in shares)	2,917,000	2,938,000	3,394,668
Vested or expected to vest at the end of the period (in shares)	2,917,000
Exercisable and vested at the end of the period (in shares)	2,917,000
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 0.416	$ 0.417
Granted (in dollars per share)		0.800
Exercised (in shares)	0.360	0.271
Canceled (in dollars per share)	0.000	1.226
Outstanding at the end of the period (in dollars per share)	0.416	$ 0.416	$ 0.417
Vested or expected to vest at the end of the period (in dollars per share)	0.416
Exercisable and vested at the end of the period (in dollars per share)	$ 0.416
Aggregate Intrinsic Value
Outstanding Value	$ 3,888,325	$ 1,869,200	$ 698,200
Vested or expected to vest at the end of the period	3,888,325
Exercisable and vested at the end of the period	$ 3,888,325
Weighted Average Remaining Contractual Life
Outstanding at the end of the period	6 years 3 months 26 days	6 years 8 months 27 days	6 years 8 months 19 days
Vested or expected to vest at the end of the period	6 years 3 months 26 days
Exercisable and vested at the end of the period	6 years 3 months 26 days

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OTHER CURRENT ASSETS

9 Months Ended

Dec. 31, 2019

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

NOTE 9 - OTHER CURRENT ASSETS

	December 31, 2019		March 31, 2019
Payments advanced to suppliers	$	389,711	$	133,861
Prepaid insurance		273,034		203,601
Prepaid subscriptions		28,021		27,096
Prepaid taxes		35,207		31,707
Refundable AMT credits		60,841		60,841
Employee advances		628		15,380
Other		6,945		25,573
Total	$	794,387	$	498,059

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INCOME TAXES

9 Months Ended

Dec. 31, 2019

INCOME TAXES

INCOME TAXES

NOTE 5 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740, Income Taxes.  The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year profit or loss before taxes, adjusted for the impact of discrete quarterly items. We recorded an income tax benefit of $115,092 for the nine months ended December 31, 2019. Income tax expense was $177,104 for the nine months ended December 31, 2018. The Company's effective tax rates for the nine months ended December 31, 2019 and 2018 were 22.8% and 23.9%, respectively.

The valuation allowance on deferred tax assets was approximately $1.7 million at December 31, 2019. We believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards and other deferred tax assets will not be realized. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.

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COMMITMENTS

9 Months Ended

Dec. 31, 2019

COMMITMENTS

COMMITMENTS

NOTE 13 - COMMITMENTS

Retirement Benefits

Ranor has a defined contribution and savings plan that covers substantially all Ranor employees who have completed 90 days of service. Ranor retains the option to match employee contributions. The Company contributed $60,269 and $61,251 in the nine months ended December 31, 2019 and 2018, respectively.

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DESCRIPTION OF BUSINESS

9 Months Ended

Dec. 31, 2019

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. TechPrecision, Ranor, and WCMC are collectively referred to as the “Company”, “we”, “us” or “our”.

We manufacture large scale fabricated and machined precision metal components and equipment. These products are used in a variety of markets including defense and aerospace, nuclear, medical, and precision industrial. We consider our business to consist of one segment - metal fabrication and precision machining. All of our operations and customers are located in the United States.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Mar. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	29,254,594	29,234,594
Common stock, shares outstanding	29,254,594	29,234,594

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ACCRUED EXPENSES - Additional information (Details) $ in Millions	9 Months Ended
	Dec. 31, 2019 USD ($)
ACCRUED EXPENSES
Change in provision of contract loss	$ 0.2

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LEASES - Finance lease (Details) - USD ($)	Dec. 31, 2019	Mar. 31, 2019
Net property, plant and equipment	$ 4,347,796	$ 4,860,609
Current portion of long-term debt	1,167,518	822,105
Total long-term debt, net	2,481,948	$ 3,410,542
Obligation under finance lease
Current portion of long-term debt	11,617
Total long-term debt, net	13,662
Total finance lease liabilities	25,279
Assets Held under Capital Leases [Member]
Property, plant and equipment	54,376
Accumulated depreciation	32,626
Net property, plant and equipment	$ 21,750

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ACCRUED EXPENSES (Tables)

9 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

Schedule of accrued expenses

	December 31, 2019		March 31, 2019
Accrued compensation	$	339,262	$	284,651
Provision for contract losses		273,831		57,792
Accrued professional fees		276,383		267,309
Accrued project costs		50,923		118,929
Other		40,856		24,818
Total	$	981,255	$	753,499

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EARNINGS PER SHARE (Tables)

9 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

Schedule of Basic and Diluted earnings per share

	Three months		Three months		Nine months		Nine months
	ended		ended		ended		ended
	December 31,		December 31,		December 31,		December 31,
	2019		2018		2019		2018
Basic EPS:
Net (loss) income	$	(319,770)	$	218,022	$	(390,014)	$	563,122
Weighted average shares		29,254,594		28,858,560		29,254,230		28,835,957
Basic (loss) income per share	$	(0.01)	$	0.01	$	(0.01)	$	0.02
Diluted EPS:
Net (loss) income	$	(319,770)	$	218,022	$	(390,014)	$	563,122
Dilutive effect of stock options		—		1,568,658		—		1,322,552
Diluted weighted average shares		29,254,594		30,427,218		29,254,230		30,158,509
Diluted (loss) income per share	$	(0.01)	$	0.01	$	(0.01)	$	0.02

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DEBT

9 Months Ended

Dec. 31, 2019

DEBT

DEBT

NOTE 11 – DEBT

	December 31, 2019		March 31, 2019
Berkshire Term Loan due December 2021	$	2,588,183	$	2,656,985
People’s Equipment Loan Facility due April 2021		1,073,373		1,606,953
Obligation under finance lease		25,279		33,411
Total debt	$	3,686,835	$	4,297,349
Less: debt issue costs unamortized	$	37,369	$	64,702
Total debt, net	$	3,649,466	$	4,232,647
Less: Current portion of long-term debt	$	1,167,518	$	822,105
Total long-term debt, net	$	2,481,948	$	3,410,542

Berkshire Term Loan Facility

On December 21, 2016, TechPrecision, through Ranor, closed on a Loan Agreement, or the Berkshire Loan Agreement,  with Berkshire Bank. Pursuant to the Berkshire Loan Agreement, Berkshire Bank made a term loan to Ranor in the amount of $2,850,000, or the Term Loan, and made available to Ranor a revolving line of credit in the amount of $1,000,000, or the Revolver Loan, and together with the Term Loan, collectively, the Berkshire Loans. The Berkshire Loans are secured by a first lien on all personal and real property of Ranor. Payments on the Term Loan began on January 20, 2017 and will be made in 60 monthly installments of $19,260 each, inclusive of interest at a fixed rate of 5.21% per annum, with all outstanding principal and accrued interest due and payable on December 20, 2021. A prepayment penalty will apply during the loan term but will not apply if a prepayment is made from either casualty loss insurance proceeds or a condemnation award applicable to any collateral or if a full prepayment is made during the 45-day period immediately preceding the maturity date.  Advances under the Revolver Loan were subject to a borrowing base equal to the lesser of (A) $1,000,000 and (B) the sum of (i) 80% of eligible accounts receivable, and (ii) the lesser of (a) 25% of eligible raw material inventory and (b) $250,000.  Advances made under the Revolver Loan bore interest at a variable rate equal to the one-month LIBOR plus 275 basis points.  Interest-only payments on advances made under the Revolver Loan will be payable monthly in arrears. Ranor’s obligations under the Berkshire Loan Agreement are guaranteed by TechPrecision. The Company pays, as consideration for the bank’s commitment to make advances under the Revolver Loan, a nonrefundable commitment fee equal to 0.25% per annum on the average daily difference between the amount of $1,000,000 and the aggregate amount of all advances made under the Revolver Loan as of each quarterly period.

On December 19, 2018, the Company entered into a Second Modification to Loan Agreement and First Modification and Allonge to Promissory Note with Berkshire Bank, or the Modification. The Modification amended and modified the Berkshire Loan Agreement, and the related Promissory Note dated December 20, 2016 made by Ranor in favor of Berkshire in the stated principal amount of $1,000,000. Under the terms of the Berkshire Loan Agreement and the related promissory note, Ranor was entitled to borrow up to $1,000,000 on a revolving basis. As of the date of the Modification, there were no amounts outstanding under the Revolver Loan. The maturity date of the Revolver Loan was originally December 20, 2018. Under the Modification, the maturity date of the Revolver Loan was extended until December 20, 2020. The Company paid $7,245 of expenses related to the execution of the Modification, which are classified as other noncurrent assets.

On December 23, 2019, TechPrecision, through Ranor, entered into a Third Modification to Loan Agreement , or the Third Modification, and an Amended and Restated Promissory Note with Berkshire Bank. Under the Third Modification, Ranor and Berkshire agreed to increase the maximum principal amount available under the Revolver Loan from $1,000,000 to $3,000,000. Advances under the Revolver Loan are now subject to the lesser of (a) $3,000,000 or (b) the sum of (i) 80% of eligible accounts receivable, plus (ii) the lesser of (x) 25% of Eligible Raw Material Inventory, and (y) $250,000, plus (iii) 50% of the Appraised Value of the Eligible Equipment. The loan agreement is available for refinancing existing indebtedness and for working capital and general corporate purposes. Additionally, the parties agreed to lower the interest rate on advances made under the Revolver Loan based on LIBOR. Prior to the Third Modification, interest accrued on advances made under the Revolver Loan at a variable rate equal to the one-month LIBOR plus 275 basis points.  Under the Third Modification, interest accrues on such advances at a variable rate equal to the one-month LIBOR plus 225 basis points.  The Third Modification contains customary LIBOR replacement provisions.

The Third Modification also excludes the balance of the Revolver Loan from the Loan-to-Value Ratio covenant calculations and excludes the Company’s anticipated repayment of its obligations to People’s Capital and Leasing Corp from the calculation of the financial covenants. If the Company repays People’s in full in January 2020, the debt service requirements related to the People’s obligations will be eliminated for purposes of the Debt Service Coverage Ratio covenant calculations and the debt service related to the People’s financing will be eliminated from covenant testing starting with the December 31, 2019 covenant test. The Company paid $41,628 in costs related to the execution of the Third Modification, which are classified as other noncurrent assets. The maturity date of the Revolver Loan remains December 20, 2020, and all other material terms of the Loan Agreement and Line of Credit Note were unchanged.

The Berkshire Loans may be accelerated upon the occurrence of an “Event of Default” (as defined in the Berkshire Loan Agreement).  Events of Default include (i) the failure to pay any monthly installment payment before the tenth day following the due date of such payment; (ii) the failure of Ranor or TechPrecision to observe, perform or pay any obligations under the Berkshire Loan Agreement or any other obligation to Berkshire; (iii) the failure of Ranor or TechPrecision to pay any indebtedness in excess of $100,000 (other than the Berkshire Loans) when due; (iv) any representation or warranty of Ranor or TechPrecision in the Berkshire Loan Agreement and related documents, or the Loan Documents, being proven to have been incorrect, in any material respect, when made; (v) the failure of Ranor to discharge any attachment, levy or distraint on its property; (vi) any default by Ranor or TechPrecision under any of the collateral security documents executed in connection with the Berkshire Loan Agreement past any applicable grace period; (vii) the failure of Ranor or TechPrecision to file or pay taxes when due, unless such taxes are being contested in a manner permitted under the Loan Documents; (viii) a change in ownership or control of Ranor or change in management of Ranor where either the chief executive officer or chief financial officer as of December 21, 2016 is replaced without Berkshire Bank’s prior consent; (ix) Ranor or TechPrecision ceasing to do business as a going concern, making an assignment for the benefit of creditors, or commencing a bankruptcy or other similar insolvency proceeding; and (x) the entry of a judgment against Ranor or TechPrecision in excess of $150,000. Some of the Events of Default are subject to certain cure periods. Subject to the lapse of any applicable cure period, a default under the Berkshire Loans could cause the acceleration of all outstanding obligations under the Berkshire Loans. 

Pursuant to the Berkshire Loan Agreement, the Company covenants to cause its balance sheet leverage to be less than or equal to 2.50 to 1.00 for the fiscal year ending March 31, 2019 and each fiscal year end thereafter. The Berkshire Loan Agreement also contains a covenant whereby the Company is required to maintain a debt service coverage ratio, or DSCR, of at least 1.2 to 1.0 during the term of the Berkshire Loans.  The DSCR is measured at the end of each fiscal quarter of the Company.  The Company was in compliance with all of the financial covenants at December 31, 2019 and March 31, 2019.

Also, Ranor’s annual capital expenditures cannot exceed $1,500,000 for the fiscal year ending March 31, 2020 and each fiscal year thereafter. The Berkshire Loan Agreement contains an additional covenant whereby Ranor is required to maintain a loan to value ratio of not greater than 0.75 to 1.00, to be measured by appraisal not more frequently than one time during each 365-day period.

There were no amounts outstanding under the Revolver Loan at December 31, 2019 and March 31, 2019. Other unamortized debt issue costs at December 31, 2019 and March 31, 2019 were $23,549 and $32,982, respectively.

People’s Equipment Loan Facility

On April 26, 2016, TechPrecision, through Ranor, executed and closed a Master Loan and Security Agreement No. 4180, as supplemented with Schedule No. 001, or, together, the MLSA, with People’s. The MLSA is dated and became effective as of March 31, 2016.  Loan proceeds were disbursed to Ranor on April 26, 2016.  Pursuant to the MLSA, People’s loaned $3,011,648 to Ranor, or the People’s Loan. The People’s Loan was secured by a first lien on certain machinery and equipment of Ranor, or the Equipment Collateral.  Payments on the People’s Loan were to be made in 60 monthly installments of $60,921 each, inclusive of interest at a fixed rate of 7.90% per annum. The first monthly installment payment was paid on May 26, 2016.  A prepayment penalty applied during the first four years of the loan term.  Ranor’s obligations under the MLSA were guaranteed by TechPrecision.  The Company covenanted to maintain a DSCR of at least 1.5 to 1.0 during the term of the People’s Loan.  The DSCR was measured at the end of each fiscal year of the Company. The Company was in compliance with the DSCR at March 31, 2019. The People’s Loan was subjected to acceleration upon the occurrence of an “Event of Default” (as defined in the MLSA). Some of the Events of Default were subject to certain cure periods. The Company was in compliance with all of the financial covenants at March 31, 2019.

On October 4, 2016, TechPrecision and Ranor became committed to Schedule No. 002 to the MLSA, or Schedule 002. Pursuant to Schedule 002, People’s made an additional loan in the amount of $365,852, or the Additional People’s Loan, to Ranor upon the terms and conditions set forth in the MLSA and Schedule 002. Ranor was to repay the Additional People’s Loan in monthly installments of principal and interest of $7,399 over 60 months.  The Additional People’s Loan was guaranteed by TechPrecision pursuant to the original Corporate Guaranty from TechPrecision in favor of People’s dated March 31, 2016.  The Additional People’s Loan was secured by a security interest in certain machinery and equipment of Ranor as provided in Schedule 002.

On December 21, 2016, TechPrecision and Ranor closed on an Amendment to the MLSA, or the MLSA Amendment, with People’s. The MLSA Amendment, dated as of December 20, 2016, amended the definition of “Permitted Liens” under the MLSA to include the liens held by Berkshire Bank pursuant to the terms of the Berkshire Loan Agreement and to delete the reference to the liens held by a former creditor of the Company.

Unamortized debt issue costs at December 31, 2019 and March 31, 2019, were $13,820 and 31,720, respectively.

Collateral securing the above obligations comprised all personal and real property of TechPrecision and Ranor, including cash, accounts receivable, inventories, equipment, financial and intangible assets.

On January 16 and 17, 2020, the Company paid off its remaining debt obligation related to the People’s Equipment Loan Facility. See Note 14 for information regarding this transaction.

Finance Lease

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

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STOCK-BASED COMPENSATION

9 Months Ended

Dec. 31, 2019

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 7 – STOCK-BASED COMPENSATION

The TechPrecision Corporation 2016 Equity Incentive Plan, or the 2016 Plan, authorizes the award of incentive and non-qualified stock options, restricted stock awards, restricted stock units, and performance awards to employees, directors, consultants, and other individuals who provide services to TechPrecision or its affiliates. The purpose of the 2016 Plan is to: (a) enable TechPrecision and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Subject to adjustment as provided in the 2016 Plan, the maximum number of shares of common stock that may be issued with respect to awards under the 2016 Plan is 5,000,000 shares (inclusive of awards issued under the 2006 Long-Term Incentive Plan, or the 2006 Plan, that remained outstanding as of the effective date of the 2016 Plan). Shares of our common stock subject to awards that expire unexercised or are otherwise forfeited shall again be available for awards under the 2016 Plan.

The fair value of the options we grant is estimated using the Black-Scholes option-pricing model based on the closing stock prices at the grant date and the weighted average assumptions specific to the underlying options. Expected volatility assumptions are based on the historical volatility of our common stock. The average dividend yield over the historical period for which volatility is computed is zero. The risk-free interest rate is selected based upon yields of U.S. Treasury issues. We used the simplified method for all grants to estimate the expected life of the option. We assume that stock options will be exercised evenly over the period from vesting until the awards expire. We account for award forfeitures as they occur. As such, the assumed period for each vesting tranche is computed separately and then averaged together to determine the expected term for the award. At December 31, 2019, there were 1,573,000 shares available for grant under the 2016 Plan.

The following table summarizes information about options for the most recently completed periods:

						Weighted
						Average
		Weighted		Aggregate		Remaining
	Number Of	Average		Intrinsic		Contractual Life
	Options	Exercise Price		Value		(in years)
Outstanding at 3/31/2018	3,394,668	$	0.417	$	698,200	6.72
Granted	150,000	$	0.800
Exercised	(365,000)	$	0.271
Canceled	(241,668)	$	1.226
Outstanding at 3/31/2019	2,938,000	$	0.416	$	1,869,200	6.74
Exercised	(20,000)	$	0.360
Canceled	(1,000)		—
Outstanding at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32
Vested or expected to vest at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32
Exercisable and vested at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. This amount changes based on the fair market value of the Company’s common stock. All of the options are vested and exercisable and the maximum contractual term is ten years for option grants.

On April 5, 2019, the Company issued 20,000 shares of the Company’s common stock, par value $0.0001 per share, pursuant to an option award exercised on March 20, 2019, granted previously under the Company’s 2016 Long-Term Incentive Plan. At December 31, 2019, there was no remaining unrecognized compensation cost related to stock options. Other information relating to stock options outstanding at December 31, 2019 is as follows:

		Weighted
		Average
		Remaining	Weighted			Weighted
	Options	Contractual	Average		Options	Average
Range of Exercise Prices:	Outstanding	Term	Exercise Price		Exercisable	Exercise Price
$0.01‑$1.00	2,820,000	6.84	$	0.37	2,820,000	$	0.37
$1.01‑$1.96	97,000	1.43	$	1.84	97,000	$	1.84
Totals	2,917,000				2,917,000

Restricted Stock Awards

On December 7, 2018 we granted a total of 100,000 shares of restricted stock under the 2016 Plan to the board of directors and a total of 25,000 shares of restricted stock to our executive officers. The stock-based compensation expense of $122,500 for service-based restricted stock was measured at fair value on the date of grant based on the number of shares expected to vest and the quoted market price of the Company’s common stock. On December 7, 2019, the shares of restricted stock fully vested and ceased to be subject to forfeiture, one year following the grant date. The aggregate fair value of the restricted stock expensed during the nine months ended December 31, 2019 was  $81,667.

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REVENUE - Disaggregated basis (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer, Including Assessed Tax	$ 3,667,276	$ 4,270,396	$ 11,075,620	$ 11,990,404
Over-time
Revenue from Contract with Customer, Including Assessed Tax	3,439,367	4,086,713	9,104,395	11,314,599
Point-in-time
Revenue from Contract with Customer, Including Assessed Tax	227,909	183,683	1,971,225	675,805
Defense
Revenue from Contract with Customer, Including Assessed Tax	3,200,671	4,196,944	9,725,635	11,507,854
Energy
Revenue from Contract with Customer, Including Assessed Tax	373,357	33,790	450,914	267,794
Industrial
Revenue from Contract with Customer, Including Assessed Tax	$ 93,248	$ 39,662	$ 899,071	$ 214,756

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INCOME TAXES - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES
Income tax (benefit) expense	$ (97,734)	$ 34,701	$ (115,092)	$ 177,104
Effective Income Tax Rate Reconciliation, Percent			22.80%	23.90%
Deferred Tax Assets, Valuation Allowance	$ 1,700,000		$ 1,700,000

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STOCK-BASED COMPENSATION - Summary (Details) - USD ($)			9 Months Ended		12 Months Ended
	Apr. 05, 2019	Dec. 07, 2018	Dec. 31, 2019	Dec. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Assumption used in valuation of stock options
Share-based Compensation			$ 81,667	$ 106,727
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term			6 years 3 months 26 days		6 years 8 months 27 days	6 years 8 months 19 days
Common Stock, Par or Stated Value Per Share			$ 0.0001		$ 0.0001
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			20,000		365,000
Restricted Stock [Member]
Assumption used in valuation of stock options
Share-based Compensation			$ 81,667
Stock based compensation cost		$ 122,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		100,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		25,000
2016 Plan
Assumption used in valuation of stock options
Shares available for grant			1,573,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			5,000,000
Common Stock, Par or Stated Value Per Share	$ 0.0001
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	20,000
Maximum
Assumption used in valuation of stock options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term			10 years

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SUBSEQUENT EVENTS (Details) - USD ($)			1 Months Ended		9 Months Ended
	Jan. 17, 2020	Jan. 16, 2020	Oct. 04, 2016	Apr. 26, 2016	Dec. 31, 2019	Dec. 31, 2018
Subsequent Event [Line Items]
Debt instrument, prepaid					$ 610,515	$ 569,809
MLSA | Secured Term Loan
Subsequent Event [Line Items]
Debt Instrument, Face Amount			$ 365,852
Debt Instrument, Term			60 months	60 months
Debt instrument, prepaid			$ 7,399
Subsequent Event [Member] | MLSA | Secured Term Loan | Ranor, Inc.
Subsequent Event [Line Items]
Debt Instrument, Face Amount	$ 3,011,648	$ 365,852
Debt Instrument, Periodic Payment	$ 60,921	$ 7,399
Debt Instrument, Term	60 months	60 months
Debt Instrument, Interest Rate, Stated Percentage	7.90%
Debt instrument, prepaid	$ 936,000	$ 147,000
Debt instrument, prepayment penalty rate (as a percent)	1.00%	1.00%
Debt instrument, prepayment penalty amount	$ 9,200	$ 1,400

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ACCOUNTING STANDARDS UPDATE

9 Months Ended

Dec. 31, 2019

ACCOUNTING STANDARDS UPDATE

ACCOUNTING STANDARDS UPDATE

NOTE 3 - ACCOUNTING STANDARDS UPDATE

New Accounting Standards Recently Issued

In December, 2019, the Financial Accounting Standards Board, or FASB issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, expected to reduce cost and complexity related to the accounting for income taxes. This ASU removes specific exceptions to the general principles in Topic 740 under U.S. GAAP and eliminates the need to analyze certain exceptions in a given period. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company is currently evaluating the amendments in this update to determine the impact it may have on its financial statements and disclosures.

New Accounting Standards Recently Adopted

On April 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases, or Accounting Standards Codification 842 (ASC 842) and all the related amendments using the modified retrospective method. The comparative information has not been restated and continues to be reported under the lease accounting standard in effect for those periods.

The most significant effects of the standard on our condensed consolidated financial statements are (1) the recognition of new right-of-use asset and lease liability on our condensed consolidated balance sheet for an operating lease, and (2) new disclosures about our leasing activities (see Note 12). The adoption did not result in a cumulative-effect adjustment to retained earnings. The new standard did not have a material impact on our results of operations, balance sheet or cash flows.

We elected the practical expedients permitted under the transition guidance of the new standard that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard.  The new lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations.

We also adopted the following ASUs effective April 1, 2019, none of which had a material impact to our financial statements or financial statement disclosures: ASU 2018-13 Fair Value Measurement - Changes to the Disclosure Requirements for Fair Value Measurement, ASU 2018-07, Compensation - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, and ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Accumulated Deficit)	Total
Balance at Mar. 31, 2018	$ 2,882	$ 8,561,995	$ 24,236	$ (576,617)	$ 8,012,496
Balance (in shares) at Mar. 31, 2018	28,824,593
Effect of adoption of ASC 606 | Accounting Standards Update 2014-09 [Member]				19,647	19,647
Effect of adoption of ASU 201616 | Accounting Standards Update 2016-06 [Member]				449,633	449,633
Stock based compensation		24,930			24,930
Net (loss) income	$ 0	0	0	164,385	164,385
Foreign currency translation adjustment			(1,911)		(1,911)
Balance at Jun. 30, 2018	$ 2,882	8,586,925	22,325	57,048	8,669,180
Balance (in shares) at Jun. 30, 2018	28,824,593
Balance at Mar. 31, 2018	$ 2,882	8,561,995	24,236	(576,617)	8,012,496
Balance (in shares) at Mar. 31, 2018	28,824,593
Net (loss) income					563,122
Balance at Dec. 31, 2018	$ 2,895	8,668,709	21,834	455,785	9,149,223
Balance (in shares) at Dec. 31, 2018	28,949,593
Balance at Jun. 30, 2018	$ 2,882	8,586,925	22,325	57,048	8,669,180
Balance (in shares) at Jun. 30, 2018	28,824,593
Stock based compensation		71,588			71,588
Net (loss) income	$ 0	0	0	180,715	180,715
Foreign currency translation adjustment			(509)		(509)
Balance at Sep. 30, 2018	$ 2,882	8,658,513	21,816	237,763	8,920,974
Balance (in shares) at Sep. 30, 2018	28,824,593
Non-vested restricted stock		(112,291)			(112,291)
Shares issued under long-term incentive plan	$ 13	122,487			122,500
Shares issued under long-term incentive plan (in shares)	125,000
Net (loss) income				218,022	218,022
Foreign currency translation adjustment			18		18
Balance at Dec. 31, 2018	$ 2,895	8,668,709	21,834	455,785	9,149,223
Balance (in shares) at Dec. 31, 2018	28,949,593
Balance at Mar. 31, 2019	$ 2,923	8,693,106	21,940	993,339	9,711,308
Balance (in shares) at Mar. 31, 2019	29,234,594
Non-vested restricted stock		30,625			30,625
Shares issued under long-term incentive plan	$ 2	7,198			7,200
Shares issued under long-term incentive plan (in shares)	20,000
Net (loss) income				220,777	220,777
Foreign currency translation adjustment			(179)		(179)
Balance at Jun. 30, 2019	$ 2,925	8,730,929	21,761	1,214,116	9,969,731
Balance (in shares) at Jun. 30, 2019	29,254,594
Balance at Mar. 31, 2019	$ 2,923	8,693,106	21,940	993,339	9,711,308
Balance (in shares) at Mar. 31, 2019	29,234,594
Net (loss) income					(390,014)
Balance at Dec. 31, 2019	$ 2,925	8,781,971	21,611	603,325	9,409,832
Balance (in shares) at Dec. 31, 2019	29,254,594
Balance at Jun. 30, 2019	$ 2,925	8,730,929	21,761	1,214,116	9,969,731
Balance (in shares) at Jun. 30, 2019	29,254,594
Non-vested restricted stock		30,625			30,625
Net (loss) income				(291,021)	(291,021)
Foreign currency translation adjustment			(159)		(159)
Balance at Sep. 30, 2019	$ 2,925	8,761,554	21,602	923,095	9,709,176
Balance (in shares) at Sep. 30, 2019	29,254,594
Non-vested restricted stock		20,417			20,417
Net (loss) income				(319,770)	(319,770)
Foreign currency translation adjustment			9		9
Balance at Dec. 31, 2019	$ 2,925	$ 8,781,971	$ 21,611	$ 603,325	$ 9,409,832
Balance (in shares) at Dec. 31, 2019	29,254,594

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Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2019	Feb. 10, 2020
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Registrant Name	TECHPRECISION CORP
Entity Central Index Key	0001328792
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Title of 12(b) Security	None
Trading Symbol	TPCS
Security Exchange Name	NONE
Entity Address, State or Province	MA
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		29,254,594

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OTHER CURRENT ASSETS (Details) - USD ($)	Dec. 31, 2019	Mar. 31, 2019
OTHER CURRENT ASSETS
Payments advanced to suppliers	$ 389,711	$ 133,861
Prepaid insurance	273,034	203,601
Prepaid subscriptions	28,021	27,096
Prepaid taxes	35,207	31,707
Refundable AMT credits	60,841	60,841
Employee advances	628	15,380
Other	6,945	25,573
Totals	$ 794,387	$ 498,059

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DEBT - Berkshire Bank & Trust Company Loan Facility (Details)			1 Months Ended		9 Months Ended	12 Months Ended
	Dec. 23, 2019 USD ($)	Dec. 22, 2019	Dec. 19, 2019 USD ($)	Dec. 21, 2016 USD ($)	Dec. 31, 2019 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 1,000,000
Nonrefundable Commitment Fee, Percentage					0.25%
payment related to execution of modification			$ 7,245
Berkshire Loan
Debt Instrument [Line Items]
Debt Instrument Debt Service Coverage Ratio Threshold							1.2
Debt Instrument Covenant Leverage Ratio Year One							2.50
Execution Costs Classified As Other Noncurrent Assets	$ 41,628
Debt Instrument Covenant Maximum Capital Expenditures To Be Incurred Year Four And Thereafter						$ 1,500,000
Debt Instrument Covenant Loan To Value Ratio							0.75
Debt Instrument Covenant Trailing Period For Measurement Of Loan To Value Ratio							365 days
Unamortized Debt Issuance Expense					$ 23,549		$ 32,982
Berkshire Loan | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum Amount Of Borrowing Base Required To Grant Loan Advance				$ 1,000,000
Debt Instrument Percentage Of Accounts Receivable Used For Determination Of Aggregate Amount Of Advances				80.00%
Debt Instrument Percentage Of Eligible Raw Material Used For Determination Of Aggregate Amount Of Advances				25.00%
Amount Included In Sum To Calculate Maximum Borrowing Base				$ 250,000
Debt Instrument, Description of Variable Rate Basis					one-month LIBOR plus 275 basis points
Berkshire Loan | Secured Term Loan
Debt Instrument [Line Items]
Debt Instrument, Term				60 months
Debt Instrument, Periodic Payment				$ 19,260
Debt Instrument Prepayment Period				45 days
Debt Instrument, Interest Rate, Stated Percentage				5.21%
Berkshire Loan | Restated Promissory Note
Debt Instrument [Line Items]
Maximum Amount Of Borrowing Base Required To Grant Loan Advance	$ 3,000,000
Debt Instrument Percentage Of Accounts Receivable Used For Determination Of Aggregate Amount Of Advances	80.00%
Debt Instrument Percentage Of Eligible Raw Material Used For Determination Of Aggregate Amount Of Advances	25.00%
Amount Included In Sum To Calculate Maximum Borrowing Base	$ 250,000
Debt Instrument Percentage Of Appraised Value Of Equipment For Determination Of Aggregate Amount Of Advances	50.00%
Debt Instrument, Description of Variable Rate Basis	one-month LIBOR plus 225 basis points	one-month LIBOR plus 275 basis points
Berkshire Loan | Ranor, Inc.
Debt Instrument [Line Items]
Debt Instrument Event Of Default Excess Of Indebtedness				$ 100,000
Debt Instrument Event Of Default In Excess Of Entry Of Judgment				150,000
Berkshire Loan | Ranor, Inc. | Revolving Credit Facility
Debt Instrument [Line Items]
Debt Instrument, Face Amount				2,850,000
Berkshire Loan | Ranor, Inc. | Secured Term Loan
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 1,000,000
Ranor and Berkshire | Minimum
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 1,000,000
Ranor and Berkshire | Maximum
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 3,000,000

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LEASES - Supplemental Cash Flow Information (Details)	9 Months Ended
	Dec. 31, 2019 USD ($)
LEASES
Cash used in operating activities	$ 1,768
Cash used in financing activities	$ 8,132

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LEASES (Tables)

9 Months Ended

Dec. 31, 2019

LEASES

Schedule of Right of use assets and liabilities

The following table lists our right-of-use assets and liabilities on our condensed consolidated balance at:

	December 31,
Finance lease:	2019
Property, plant and equipment	$	54,376
Accumulated depreciation		32,626
Net property, plant and equipment	$	21,750
Current portion of long-term debt	$	11,617
Long-term debt	$	13,662
Total finance lease liabilities	$	25,279

Schedule of Supplemental Information of leases

Other supplemental information regarding our leases are contained in the following tables:

	December 31,
Components of lease expense for the period ended:	2019
Operating lease amortization	$	1,756
Operating lease interest	$	83
Finance lease amortization	$	8,132
Finance lease interest	$	1,768

	December 31,
Weighted average lease term and discount rate at:	2019
Lease term (years)	2.08
Lease rate	8	%

Schedule of Supplemental Cash flow information

	December 31,
Supplemental cash flow information related to leases for the period ended:	2019
Cash used in operating activities	$	1,768
Cash used in financing activities	$	8,132

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CONCENTRATION OF CREDIT RISK (Tables)

9 Months Ended

Dec. 31, 2019

Accounts Receivable

Concentration of credit risk and major customers

Schedule of concentration of risk by factors

	December 31, 2019				March 31, 2019
Customer	Dollars		Percent		Dollars		Percent
A	$	183,821	24	%	$	246,019	24	%
B	$	149,500	20	%	$	*	*	%
C	$	132,453	18	%	$	*	*	%
D	$	81,780	11	%	$	*	*	%
E	$	78,430	10	%	$	339,032	34	%
F	$	*	*	%	$	244,500	24	%

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Dec. 31, 2019

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019, the condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended December 31, 2019 and 2018, the condensed consolidated statements of stockholders’ equity for each of the three months ended June 30, 2019 and 2018, September 30, 2019 and 2018, and December 31, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2019 and 2018 are unaudited, but, in the opinion of management, include all adjustments that are necessary for a fair presentation of our financial statements for interim periods in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The results of operations for an interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements and related notes should be read in conjunction with the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, or the 2019 Form 10-K, filed with the SEC on June 27, 2019.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, 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.

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LEASES - Additional Information (Details)	Dec. 31, 2019 USD ($)
LEASES
Long-term Debt and Capital Lease Obligations, Maturities, Repayments of Principal Remainder of Fiscal Year	$ 3,300
Long-term Debt and Capital Lease Obligations, Maturities, Repayments of Principal in Year Two	13,200
Long-term Debt and Capital Lease Obligations, Maturities, Repayments of Principal in Year Three	11,000
Capital Leases, Future Minimum Payments, Interest Included in Payments	$ 2,221

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ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2019	Mar. 31, 2019
ACCRUED EXPENSES
Accrued compensation	$ 339,262	$ 284,651
Provision for contract losses	273,831	57,792
Accrued professional fees	276,383	267,309
Accrued project costs	50,923	118,929
Other	40,856	24,818
Total	$ 981,255	$ 753,499

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DEBT - People's Capital and Leasing Corp. Equipment Loan Facility (Details)	1 Months Ended		9 Months Ended
	Oct. 04, 2016 USD ($)	Apr. 26, 2016 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Mar. 31, 2019 USD ($)
Debt Instrument [Line Items]
Repayments of Long-term Debt			$ 610,515	$ 569,809
Peoples Capital And Leasing Corp [Member]
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense			$ 13,820		$ 31,720
MLSA | Secured Term Loan
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 365,852
Debt Instrument, Term	60 months	60 months
Repayments of Long-term Debt	$ 7,399
MLSA | Peoples Capital And Leasing Corp [Member]
Debt Instrument [Line Items]
Debt Instrument Debt Service Coverage Ratio Threshold		1.5
MLSA | Peoples Capital And Leasing Corp [Member] | Secured Term Loan
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		7.90%
Debt Instrument, Periodic Payment		$ 60,921
MLSA | Peoples Capital And Leasing Corp [Member] | Secured Term Loan | Ranor, Inc.
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 3,011,648

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Dec. 31, 2019

STOCK-BASED COMPENSATION

Schedule of options

						Weighted
						Average
		Weighted		Aggregate		Remaining
	Number Of	Average		Intrinsic		Contractual Life
	Options	Exercise Price		Value		(in years)
Outstanding at 3/31/2018	3,394,668	$	0.417	$	698,200	6.72
Granted	150,000	$	0.800
Exercised	(365,000)	$	0.271
Canceled	(241,668)	$	1.226
Outstanding at 3/31/2019	2,938,000	$	0.416	$	1,869,200	6.74
Exercised	(20,000)	$	0.360
Canceled	(1,000)		—
Outstanding at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32
Vested or expected to vest at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32
Exercisable and vested at 12/31/2019	2,917,000	$	0.416	$	3,888,325	6.32

Schedule of exercise price range

		Weighted
		Average
		Remaining	Weighted			Weighted
	Options	Contractual	Average		Options	Average
Range of Exercise Prices:	Outstanding	Term	Exercise Price		Exercisable	Exercise Price
$0.01‑$1.00	2,820,000	6.84	$	0.37	2,820,000	$	0.37
$1.01‑$1.96	97,000	1.43	$	1.84	97,000	$	1.84
Totals	2,917,000				2,917,000

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SUBSEQUENT EVENTS

9 Months Ended

Dec. 31, 2019

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

On January 16, 2020, TechPrecision through Ranor repaid in full Ranor’s indebtedness under Schedule No. 002, to the MLSA. Under Schedule 002 to the MSLA, Ranor had borrowed an initial principal amount of $365,852, secured by certain machinery and equipment. The loan was required to be repaid in monthly installments of principal and interest of $7,399 over 60 months. Upon the payment of approximately $147,000, which amount included a 1% prepayment penalty of approximately $1,400, all commitments under Schedule 002 to the MSLA were terminated, and People’s discharged and released all guarantees and liens existing in connection with such loan, thereby terminating such loan agreement schedule.

On January 17, 2020, the Company, through Ranor, repaid in full Ranor’s indebtedness under Schedule 001 to the MSLA. Under Schedule 001 to the MSLA, Ranor had borrowed an initial principal amount of $3,011,648, secured by certain machinery and equipment. The loan was required to be repaid in 60 monthly installments of $60,921 each, inclusive of interest at a fixed rate of 7.90% per annum. Upon the payment of approximately $936,000, which amount included a 1% prepayment penalty of approximately $9,200, all commitments under Schedule 001 to the MSLA were terminated, and People’s discharged and released all guarantees and liens existing in connection with such loan, thereby terminating such loan agreement schedule. As all previously outstanding obligations under the MSLA have been satisfied in full, Ranor is no longer bound by any material terms of the MSLA.

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DEBT (Tables)

9 Months Ended

Dec. 31, 2019

DEBT

Schedule of outstanding debt obligations

	December 31, 2019		March 31, 2019
Berkshire Term Loan due December 2021	$	2,588,183	$	2,656,985
People’s Equipment Loan Facility due April 2021		1,073,373		1,606,953
Obligation under finance lease		25,279		33,411
Total debt	$	3,686,835	$	4,297,349
Less: debt issue costs unamortized	$	37,369	$	64,702
Total debt, net	$	3,649,466	$	4,232,647
Less: Current portion of long-term debt	$	1,167,518	$	822,105
Total long-term debt, net	$	2,481,948	$	3,410,542

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ACCRUED EXPENSES

9 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 10 - ACCRUED EXPENSES

	December 31, 2019		March 31, 2019
Accrued compensation	$	339,262	$	284,651
Provision for contract losses		273,831		57,792
Accrued professional fees		276,383		267,309
Accrued project costs		50,923		118,929
Other		40,856		24,818
Total	$	981,255	$	753,499

Accrued compensation includes amounts for bonuses, payroll and vacation and holiday pay. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in the provision are recorded in cost of sales. The provision for contract losses has increased by $0.2 million since March 31, 2019. Accrued project costs are estimates for certain project expenses during the reporting period.

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EARNINGS PER SHARE

9 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 6 - EARNINGS PER SHARE

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

	Three months		Three months		Nine months		Nine months
	ended		ended		ended		ended
	December 31,		December 31,		December 31,		December 31,
	2019		2018		2019		2018
Basic EPS:
Net (loss) income	$	(319,770)	$	218,022	$	(390,014)	$	563,122
Weighted average shares		29,254,594		28,858,560		29,254,230		28,835,957
Basic (loss) income per share	$	(0.01)	$	0.01	$	(0.01)	$	0.02
Diluted EPS:
Net (loss) income	$	(319,770)	$	218,022	$	(390,014)	$	563,122
Dilutive effect of stock options		—		1,568,658		—		1,322,552
Diluted weighted average shares		29,254,594		30,427,218		29,254,230		30,158,509
Diluted (loss) income per share	$	(0.01)	$	0.01	$	(0.01)	$	0.02

All potential common stock equivalents that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three and nine months ended December 31, 2019, there were 2,967,000 of potentially anti-dilutive stock options, none of which were included in the EPS calculations above. For the three and nine months ended December 31, 2018, there were 171,000 and 642,668, respectively, of potential common stock equivalents that were out-of-the-money and were not included in the EPS calculations above.

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CONCENTRATION OF CREDIT RISK (Details) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2019
Concentration of credit risk and major customers
Accounts receivable	$ 752,984	$ 1,010,443
Accounts Receivable | Customer Concentration Risk | Customer A
Concentration of credit risk and major customers
Accounts receivable	$ 183,821	$ 246,019
Concentration risk percentage	24.00%	24.00%
Accounts Receivable | Customer Concentration Risk | Customer B
Concentration of credit risk and major customers
Accounts receivable	$ 149,500
Concentration risk percentage	20.00%
Accounts Receivable | Customer Concentration Risk | Customer C
Concentration of credit risk and major customers
Accounts receivable	$ 132,453
Concentration risk percentage	18.00%
Accounts Receivable | Customer Concentration Risk | Customer D
Concentration of credit risk and major customers
Accounts receivable	$ 81,780
Concentration risk percentage	11.00%
Accounts Receivable | Customer Concentration Risk | Customer E
Concentration of credit risk and major customers
Accounts receivable	$ 78,430	$ 339,032
Concentration risk percentage	10.00%	34.00%
Accounts Receivable | Customer Concentration Risk | Customer F
Concentration of credit risk and major customers
Accounts receivable		$ 244,500
Concentration risk percentage		24.00%
Trade Receivables
Concentration of credit risk and major customers
Concentration risk percentage	98.00%

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REVENUE - Net sales from customers (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Revenues	$ 3,667,276	$ 4,270,396	$ 11,075,620	$ 11,990,404
Customer A | Sales Revenue, Net
Revenues	$ 1,215,737	$ 1,124,294	$ 2,320,485	$ 2,117,342
Concentration risk percentage	33.00%	26.00%	21.00%	18.00%
Customer B | Sales Revenue, Net
Revenues	$ 727,084	$ 1,008,264	$ 1,825,213	$ 2,609,284
Concentration risk percentage	20.00%	24.00%	16.00%	22.00%
Customer C | Sales Revenue, Net
Revenues	$ 404,062		$ 1,790,311
Concentration risk percentage	11.00%		16.00%
Customer D | Sales Revenue, Net
Revenues			$ 1,148,242
Concentration risk percentage			10.00%
Customer E | Sales Revenue, Net
Revenues		$ 1,183,208	$ 1,136,146	$ 4,293,047
Concentration risk percentage		28.00%	10.00%	36.00%

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EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended						9 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2019	Dec. 31, 2018
Basic EPS:
Net (loss) income	$ (319,770)	$ (291,021)	$ 220,777	$ 218,022	$ 180,715	$ 164,385	$ (390,014)	$ 563,122
Weighted average shares	29,254,594			28,858,560			29,254,230	28,835,957
Basic (loss) income per share	$ (0.01)			$ 0.01			$ (0.01)	$ 0.02
Diluted EPS:
Net (loss) income	$ (319,770)	$ (291,021)	$ 220,777	$ 218,022	$ 180,715	$ 164,385	$ (390,014)	$ 563,122
Dilutive effect of stock options				1,568,658				1,322,552
Diluted weighted average shares	29,254,594			30,427,218			29,254,230	30,158,509
Net (loss) income per share diluted	$ (0.01)			$ 0.01			$ (0.01)	$ 0.02
Antidilutive securities excluded from computation of earnings per share amount (in shares)	2,967,000			171,000			2,967,000	642,668

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COMMITMENTS (Details) - USD ($)	9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
COMMITMENTS
Defined Contribution Plan, Cost	$ 60,269	$ 61,251

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
Net sales	$ 3,667,276	$ 4,270,396	$ 11,075,620	$ 11,990,404
Cost of sales	3,352,962	3,299,166	9,238,287	8,871,550
Gross profit	314,314	971,230	1,837,333	3,118,854
Selling, general and administrative	662,675	631,783	2,145,055	2,113,285
(Loss) income from operations	(348,361)	339,447	(307,722)	1,005,569
Other income	185	1,590	21,063	8,605
Interest expense	(69,328)	(88,314)	(218,447)	(273,948)
Total other expense, net	(69,143)	(86,724)	(197,384)	(265,343)
(Loss) income before income taxes	(417,504)	252,723	(505,106)	740,226
Income tax (benefit) expense	(97,734)	34,701	(115,092)	177,104
Net (loss) income	(319,770)	218,022	(390,014)	563,122
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments	9	18	(329)	(2,402)
Other comprehensive (loss) income, net of tax	9	18	(329)	(2,402)
Comprehensive (loss) income	$ (319,761)	$ 218,040	$ (390,343)	$ 560,720
Net (loss) income per share basic	$ (0.01)	$ 0.01	$ (0.01)	$ 0.02
Net (loss) income per share diluted	$ (0.01)	$ 0.01	$ (0.01)	$ 0.02
Weighted average number of shares outstanding - Basic	29,254,594	28,858,560	29,254,230	28,835,957
Weighted average number of shares outstanding - Diluted	29,254,594	30,427,218	29,254,230	30,158,509

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Dec. 31, 2019

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation - The accompanying condensed consolidated financial statements include the accounts of TechPrecision, Ranor and WCMC. Intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019, the condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended December 31, 2019 and 2018, the condensed consolidated statements of stockholders’ equity for each of the three months ended June 30, 2019 and 2018, September 30, 2019 and 2018, and December 31, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended December 31, 2019 and 2018 are unaudited, but, in the opinion of management, include all adjustments that are necessary for a fair presentation of our financial statements for interim periods in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The results of operations for an interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.

These notes to the condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for Quarterly Reports on Form 10-Q. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited financial statements and related notes should be read in conjunction with the consolidated financial statements included with our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, or the 2019 Form 10-K, filed with the SEC on June 27, 2019.

Use of Estimates in the Preparation of Financial Statements - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. We continually evaluate our estimates, including those related to contract accounting, accounts receivable, inventories, 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.