{"url_path":"/sec/tpcs/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-25","source_url":"https://www.sec.gov/Archives/edgar/data/1328792/0001104659-26-077758-index.html","accession_number":"0001104659-26-077758","cik":"0001328792","ticker":"TPCS","issuer_name":"TECHPRECISION CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/1328792/0001104659-26-077758-index.html","primary_entity_key":"0001328792","primary_entity_name":"TECHPRECISION CORP"},"word_count":7508,"has_tables":true,"body_markdown":"Item 7.       Management’s Discussion and Analysis of Financial Condition and Results of Operations\n\n(dollars in thousands, except per share data)\n\nStatement Regarding Forward Looking Disclosure\n\nThe following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes, which appear elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K, 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 annual 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.\n\nThese forward-looking 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. As discussed below under *“Liquidity, Capital Resources, and Going Concern”,* certain events and conditions, when examined in the aggregate, indicate substantial doubt about our ability to continue as a going concern for at least one year beyond the date of the financial statements. Factors that could cause such outcomes and results to differ include, but are not limited to, risks and uncertainties arising from:\n\n●our reliance on individual purchase orders, rather than long-term contracts, to generate revenue;\n\n●our ability to balance the composition of our revenues and effectively control operating expenses;\n\n●external factors that may be outside of our control, including health emergencies, like epidemics or pandemics, geopolitical conflicts, price inflation, increasing interest rates, and supply-chain disruptions;\n\n●the availability of appropriate financing facilities impacting our operations, financial condition and/or liquidity;\n\n●our ability to receive contract awards through competitive bidding processes;\n\n23\n\n[Table of Contents](#TOC)\n\n●our ability to maintain standards to enable us to manufacture products to exacting specifications;\n\n●our ability to enter new markets for our services;\n\n●our reliance on a small number of customers for a significant percentage of our business;\n\n●competitive pressures in the markets we serve;\n\n●changes in the availability or cost of raw materials and energy for our production facilities;\n\n●restrictions on our ability to operate our business due to our outstanding indebtedness;\n\n●government tariffs, regulations and requirements;\n\n●pricing and business development difficulties;\n\n●changes in government spending on national defense;\n\n●our ability to make acquisitions and successfully integrate those acquisitions with our business;\n\n●our failure to maintain effective internal controls over financial reporting;\n\n●general industry and market conditions and growth rates, and\n\n●those risks discussed in “*Item 1A. Risk Factors*” and elsewhere in this Annual Report on Form 10-K, as well as those described in any other filings which we make with the SEC.\n\nAny 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 Annual Report on Form 10-K, except as required by applicable law. Investors should evaluate any statements made by us in light of these important factors.\n\n**Recent Developments**\n\n*Amendments to Loan Agreement*\n\nRanor, Inc. along with certain affiliates of the Company entered into the Loan Agreement with the Bank on August 25, 2021 under which, among other things, the Bank provided a revolving line of credit loan to the Borrowers (as defined below) which currently has a maximum principal amount of $4,500.\n\nSince March 31, 2026, Ranor and certain affiliates of the Company, collectively the “Borrowers”, entered into an additional amendment to the Loan Agreement which extended the maturity date of the Revolver Loan from May 15, 2026 to September 15, 2026.\n\nSee “Liquidity, Capital Resources and Going Concern—Bank Term and Revolver Loans” below, for a discussion of the amended debt agreement and its impact on the Company’s liquidity and on-going operations.\n\nOverview\n\nWe have two wholly owned subsidiaries that are each a reportable segment, Ranor and Stadco. Each reportable segment focuses on the manufacture and assembly of specific components, primarily for defense and other precision industrial customers.\n\nThe manufacturing operations of our Ranor subsidiary are situated on approximately 65 acres in North Central Massachusetts. Leveraging our 145,000 square foot facilities, Ranor provides a full range of custom solutions to transform material into precision finished welded components and precision finished machined components up to 100 tons: manufacturing engineering, materials management and traceability, high-precision heavy fabrication (in-house fabrication operations include cutting, press and roll forming,\n\n24\n\n[Table of Contents](#TOC)\n\nwelding, heat treating, assembly, blasting and painting), heavy high-precision machining (in-house machining operations include CNC programming, finishing, and assembly), QC inspection including portable CMM, NonDestructive Testing, and final packaging.\n\nAll manufacturing at Ranor is performed in accordance with customer requirements. Ranor is an ISO 9001:2015 certificate holder. Ranor is a U.S. defense-centric company with over 95% of its revenue in the defense sector. Ranor is registered and compliant with ITAR.\n\nThe manufacturing operations of our Stadco subsidiary are situated in an industrial self-contained multi-building complex comprised of approximately 183,000 square feet under roof in Los Angeles, California. Stadco manufactures large mission-critical components on several high-profile military aircraft, military helicopter, and military space programs. Stadco has been a critical supplier to a blue-chip customer base that includes some of the largest OEMs and prime contractors in the defense and aerospace industries. Stadco also manufactures tooling, molds, fixtures, jigs and dies used in the production of defense-centric aircraft components.\n\nOur Stadco subsidiary, similar to Ranor, provides a full range of custom solutions: manufacturing engineering, materials management and traceability, high-precision fabrication (in-house fabrication operations include waterjet cutting, press forming, welding, and assembly) and high-precision machining (in-house machining operations include CNC programming, finishing, and assembly), QC inspection including both fixed and portable CMM NonDestructive Testing, and final packaging. In addition, Stadco features a large electron beam welding cell, and two NonDestructive Testing work cells, a unique mission-critical technology set.\n\nAll manufacturing at Stadco is performed in accordance with customer requirements. Stadco is an AS 9100 D and ISO 9001:2015 certificate holder and a NADCAP NonDestructive Testing certificate holder. Stadco is a US defense-centric company with almost all of its revenue in the defense sector. Stadco is registered and compliant with ITAR.\n\n*Custom Manufacturing*\n\nWe manufacture a variety of components in accordance with our internal core competencies and external customer needs and requirements. We also provide manufacturing engineering services to assist customers in optimizing their engineering designs for manufacturability. We do not design the components we manufacture; we custom manufacture according to customer “build-to-print” requirements and specifications. Accordingly, we do not distribute the components that we manufacture on the open market, and we do not market any products. We do not own the intellectual property rights to any proprietary marketed product, and we do not manufacture in anticipation of orders. Our custom manufacturing operations do not commence on any project before we receive and accept a customer’s purchase order. We only accept contracts that cover specific components within the capability of our resources.\n\nWe primarily target repeating custom programs with relatively mature and stable designs in order to provide long-term solutions for our customers. The multi-unit work is repeat work or a single product with multiple quantity releases. Secondarily, our activities include a variety of both multi-unit and one-off requirements. The one-off work is typically either a prototype or a unique, one-of-a-kind component.\n\nChanges in regulations and market demand for our manufacturing expertise can be significant and sudden, and require us to adapt to the needs of the customers that we serve. Understanding this dynamic, we focus on the defense industry in order to reliably pivot with our defense customers to jointly develop the capability to transform our workforce to manufacture components in accordance with our own and our external customers’ changing requirements.\n\nWe primarily serve customers in defense and aerospace, secondarily in the precision industrial sectors. Within these sectors, we have manufactured custom components for U.S. Navy submarines and aircraft carriers, USMC military helicopters, U.S. defense and civilian aerospace programs.\n\nOur 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.\n\nCritical Accounting Policies and Estimates\n\nThe preparation of the 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\n\n25\n\n[Table of Contents](#TOC)\n\nfor 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, recovery of long-lived assets, and income taxes. These estimates and assumptions require management’s most difficult, subjective, or complex judgments. Actual results may differ under different assumptions or conditions.\n\nRevenue and Related Cost Recognition\n\nWe recognize revenue over time based on the transfer of control of the promised goods or services to the customer, or at a point in time. This transfer will occur over time when the Company’s performance does not create an asset that has an alternative use to the Company, and we have an enforceable right to payment for performance completed to date. Otherwise, control to the promised goods or services transfers to customers at a point in time.\n\nThe majority of the Company’s contracts have a single performance obligation and provide title to, or grant a security interest in, work-in-process to the customer. In addition, these contracts contain enforceable rights to payment, allowing the Company to recover both its cost and a reasonable margin on performance completed to date. The combination of these factors indicates that the customer controls the asset (and revenue is recognized) as the asset is created or enhanced. The Company measures progress for performance obligations satisfied over time using input methods (e.g., costs incurred, resources consumed, labor hours expended, time elapsed).\n\nOur evaluation of whether revenue should be recognized over time requires significant judgment about whether the asset has an alternative use and whether the entity has an enforceable right to payment for performance completed to date. When any one of these factors is not present, the Company will recognize revenue at the point in time when control over the promised good or service transfers to the customer, i.e., when the customer has accepted the asset and taken physical possession of the product and has legal title, and the Company has a right to payment.\n\nWhen estimating contract costs, the Company takes into consideration a number of assumptions and estimates regarding risks related to technical requirements and scheduling. Management performs periodic reviews of the contracts to evaluate the underlying risks. Profit margin on any given project could increase if the Company is able to mitigate and retire such risks. Conversely, if the Company is not able to properly manage these risks, cost estimates may increase, resulting in a lower profit margin, or potentially, contract losses.\n\nThe cost estimation process requires significant judgment and is based upon the professional knowledge and experience of the Company’s engineers, program managers, and financial professionals. Factors considered in estimating the work to be completed and ultimate contract recovery include the availability, productivity, and cost of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect of any delays in performance, the availability and timing of funding from the customer, and the recoverability of any claims included in the estimates to complete. Costs allocable to undelivered units are reported as work in process, a component of inventory, in the consolidated balance sheet. Pre-contract fulfillment costs requiring capitalization are not material.\n\nChanges in job performance, job conditions, and estimated profitability are recognized in the period in which the revisions are determined. Costs incurred on uncompleted contracts consist of labor, overhead, and materials. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Our provision for losses at March 31, 2026 and 2025 was $357 and $463, respectively, with 95% and 88% of the totals related to customer projects at our Stadco reportable segment, and the remaining amounts at our Ranor segment.\n\n*Long-lived assets*\n\nIn accordance with Accounting Standards Codification (ASC) 360,*Property, Plant & Equipment*, our property, plant and equipment are tested for impairment whenever events or circumstances indicate the carrying amount of an asset may be impaired. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. If impaired, the asset is written down to fair value based on either discounted cash flows or appraised values.\n\nIn the fourth quarter of fiscal 2026, we determined that a history of operating losses at Stadco may indicate that the carrying value of the long-lived assets may not be recoverable. As such, we conducted a test for recoverability of long-lived assets at our Stadco segment and determined that the carrying value of the long-lived assets were not impaired.\n\n26\n\n[Table of Contents](#TOC)\n\nIncome Taxes\n\nWe provide for federal and state income taxes currently payable, as well as those deferred because of temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable. The effect of the change in the tax rates is recognized as income or expense in the period of the change. A valuation allowance is established, when necessary, to reduce deferred income taxes to the amount that is more likely than not to be realized.\n\nIn assessing the recoverability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. If we determine that it is more likely than not that certain future tax benefits may not be realized, a valuation allowance will be recorded against deferred tax assets that are unlikely to be realized. Realization of the remaining deferred tax assets will depend on the generation of sufficient taxable income in the appropriate jurisdiction, the reversal of deferred tax liabilities, tax planning strategies and other factors prior to the expiration date of the carryforwards. A change in the estimates used to make this determination could require a reduction in the valuation allowance for deferred tax assets if they become realizable.\n\nAccounting Pronouncements\n\nNew Accounting Standards\n\nSee Note 3, Accounting Standards Update, in the Notes to the Consolidated Financial Statements under “*Item 8. Financial Statements and Supplementary Data*”, for a discussion of recently adopted new accounting guidance and new accounting guidance not yet adopted.\n\nResults of Operations\n\nOur results of operations are affected by a number of external factors including the availability of raw materials, commodity prices (particularly steel), macroeconomic factors, including the availability of capital that may be needed by our customers, and political, regulatory, and legal conditions in the United States and in foreign markets. Generally, our product mix is made up of short-term contracts with a production timeline of twelve months, more or less. However, contracts for larger complex components can take up to thirty-six months to complete. Units manufactured under most of our customer contracts have historically been delivered on time and with a positive gross margin, with some exceptions. Our results of operations are also affected by our success in booking new contracts, the timing of revenue recognition, delays in customer acceptance 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. Also, our operating results may fluctuate quarter to quarter as we change over from completed projects to new projects.\n\nWe evaluate the performance of our segments based upon, among other things, segment revenue and operating profit. Segment operating profit excludes general corporate costs, which include director compensation, stock-based compensation, certain pension and other retirement benefit costs, and other corporate administrative expenses not allocated to the segments. Also excluded are items that we consider not representative of ongoing operations, such as acquisition due diligence costs and termination fees.\n\nKey Performance Indicators\n\nWhile 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 titled “*EBITDA Non-GAAP Financial Measure*” below for further discussion of these financial measures, including the reasons why we use such financial measures and reconciliations of such financial measures to the most directly comparable U.S. GAAP financial measures.\n\nCorporate expenses include stock-based compensation, board of director compensation, and other corporate general expenses not allocated to the segments.\n\nPercentages in the following tables and throughout this *“Results of Operations”* section may reflect rounding adjustments.\n\n27\n\n[Table of Contents](#TOC)\n\nFiscal Years Ended March 31, 2026 and 2025\n\nThe following table presents revenue, cost of revenue, gross profit (loss), consolidated and by reportable segment:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\n  ​ ​ ​\n\n**Changes**\n\n \n\n​\n\n​\n\n​\n\n​\n\n**Percent of**\n\n​\n\n​\n\n​\n\n**Percent of**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n*(dollars in thousands)*\n\n​\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Revenue**\n\n​\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Revenue**\n\n​\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Percent**\n\n** **\n\n**Revenue**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRanor\n\n​\n\n$\n\n16,946\n\n​\n\n54\n\n%  \n\n$\n\n18,165\n\n​\n\n53\n\n%  \n\n$\n\n(1,219)\n\n​\n\n(7)\n\n%\n\nStadco\n\n​\n\n​\n\n15,306\n\n​\n\n48\n\n%  \n\n​\n\n15,998\n\n​\n\n47\n\n%  \n\n​\n\n(692)\n\n​\n\n(4)\n\n%\n\nIntersegment elimination\n\n​\n\n​\n\n(608)\n\n​\n\n(2)\n\n%  \n\n​\n\n(132)\n\n​\n\n—\n\n%  \n\n​\n\n(476)\n\n​\n\n(361)\n\n%\n\nConsolidated Revenue\n\n​\n\n$\n\n31,644\n\n​\n\n100\n\n%  \n\n$\n\n34,031\n\n​\n\n100\n\n%  \n\n$\n\n(2,387)\n\n​\n\n(7)\n\n%\n\n**Cost of Revenue**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRanor\n\n​\n\n$\n\n11,119\n\n​\n\n35\n\n%  \n\n$\n\n12,623\n\n​\n\n37\n\n%  \n\n$\n\n(1,504)\n\n​\n\n(12)\n\n%\n\nStadco\n\n​\n\n​\n\n16,158\n\n​\n\n51\n\n%  \n\n​\n\n17,211\n\n​\n\n50\n\n%  \n\n​\n\n(1,053)\n\n​\n\n(6)\n\n%\n\nIntersegment elimination\n\n​\n\n​\n\n(608)\n\n​\n\n(2)\n\n%\n\n​\n\n(132)\n\n​\n\n—\n\n%  \n\n​\n\n(476)\n\n​\n\n(361)\n\n%\n\nConsolidated Cost of Revenue\n\n​\n\n$\n\n26,669\n\n​\n\n84\n\n%  \n\n$\n\n29,702\n\n​\n\n87\n\n%  \n\n$\n\n(3,033)\n\n​\n\n(10)\n\n%\n\n**Gross Profit (Loss)**1\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRanor\n\n​\n\n$\n\n6,324\n\n​\n\n20\n\n%  \n\n$\n\n5,674\n\n​\n\n16\n\n%  \n\n$\n\n650\n\n​\n\n11\n\n%\n\nStadco\n\n​\n\n​\n\n(1,349)\n\n​\n\n(4)\n\n%  \n\n​\n\n(1,345)\n\n​\n\n(3)\n\n%  \n\n​\n\n(4)\n\n​\n\n—\n\n%\n\nConsolidated Gross profit\n\n​\n\n$\n\n4,975\n\n​\n\n16\n\n%  \n\n$\n\n4,329\n\n​\n\n13\n\n%  \n\n$\n\n646\n\n​\n\n15\n\n%\n\n1\n\n*net of intersegment eliminations*\n\nRevenue\n\n*Consolidated –*Revenue was $31,644 for the fiscal year ended March 31, 2026, a decrease of $2,387 or 7% when compared to revenue for the fiscal year ended March 31, 2025. Consolidated gross profit increased by 15% and gross margin expanded to 16% during the fiscal year ended March 31, 2026. Changes in our project mix dampened revenue as our rate of progress fulfilling obligations slowed.\n\n*Ranor –*Revenue was $16,946 for the fiscal year ended March 31, 2026, a decrease of $1,219 or 7% when compared to the same period a year ago. The customer project mix remains favorable but has changed from the same prior year period, as a different set of defense customers made up a significant portion of our revenue stream in fiscal 2026.\n\nThe backlog at Ranor on March 31, 2026 was $29,405 as new orders continue to flow to us from our existing customer base of prime defense contractors.\n\n*Stadco –*Revenue was $15,306 for the fiscal year ended March 31, 2026, compared with revenue of $15,998 for the fiscal year ended March 31, 2025, a decrease of $692 or 4%. The customer project mix changed from the same prior year period, as a different set of defense customers made up a significant portion of our revenue stream in fiscal 2026.\n\nStadco’s backlog as of March 31, 2026 was $22,793 as new orders for components related to a variety of programs, including military aircraft, military helicopter, and military space programs, continue to flow to us from our existing customer base of prime defense contractors.\n\n**Cost of Revenue and Gross Profit**\n\n*Consolidated –*Cost of revenue consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of revenue for the fiscal year ended March 31, 2026, was $26,669, or 10% lower when compared to the fiscal year ended March 31, 2025. Gross profit increased by $646, or 15% and gross margin expanded to 16% compared with 13% in the same period a year ago. Our project mix remains favorable but has changed when compared with the same period a year ago.\n\n*Ranor* –**Gross profit increased by $650 or 11% when compared to the same period a year ago, and gross margin expanded as cost of revenue decreased by $1,504 or 12%. Ranor had a favorable project mix in fiscal 2026 but with a different mix of customer products that resulted in a favorable materials variance with more direct labor hours utilized.\n\n28\n\n[Table of Contents](#TOC)\n\n*Stadco* –**Gross profit was negative $1,349 for the fiscal year ended March 31, 2026, slightly higher when compared to the same period a year ago, as Stadco continues to work through certain unfavorable legacy contracts and first article parts. Cost of revenue decreased by $1,053 or 6% on a favorable materials variance and less direct labor hours utilized. Also, repairs and maintenance costs, which had a negative impact on manufacturing during fiscal 2025, decreased by 28% in fiscal 2026.\n\nSelling, General and Administrative (SG&A) Expenses\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**2026**\n\n​\n\n**2025**\n\n​\n\n**Changes**\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Percent of**\n\n​\n\n​\n\n​\n\n​\n\n**Percent of**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n*(dollars in thousands)*\n\n  ​ ​ ​ ​\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Revenue**\n\n**  ​ ​ ​**\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Revenue**\n\n**  ​ ​ ​**\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Percent**\n\n \n\nRanor\n\n​\n\n$\n\n2,552\n\n​\n\n8\n\n%  \n\n$\n\n2,545\n\n​\n\n7\n\n%  \n\n$\n\n7\n\n​\n\n—\n\n%\n\nStadco\n\n​\n\n​\n\n2,788\n\n​\n\n9\n\n%  \n\n​\n\n3,298\n\n​\n\n10\n\n%  \n\n​\n\n(510)\n\n​\n\n(15)\n\n%\n\nCorporate and unallocated\n\n​\n\n​\n\n702\n\n​\n\n2\n\n%  \n\n​\n\n644\n\n​\n\n2\n\n%  \n\n​\n\n58\n\n​\n\n9\n\n%\n\nConsolidated SG&A\n\n​\n\n$\n\n6,042\n\n​\n\n19\n\n%  \n\n$\n\n6,487\n\n​\n\n19\n\n%  \n\n$\n\n(445)\n\n​\n\n(7)\n\n%\n\n​\n\n*Consolidated* – Total selling, general and administrative expenses for the fiscal year ended March 31, 2026, decreased by $445, or 7%, as a decrease in professional fees and office costs more than offset an increase in compensation and benefits.\n\n*Ranor*– SG&A expense increased by $7 primarily as an increase in compensation costs for staff additions slightly offset a decrease in professional fees and other office expenses.\n\n*Stadco* – SG&A expense decreased by $510 primarily on a decrease in professional fees and office costs.\n\n*Corporate and unallocated* – SG&A increased year-over-year primarily on an increase in stock-based compensation. That increase was offset in part a change in fair value ($419) for a breakup fee in connection with the terminated acquisition of Votaw Precision Technologies, Inc., or the “Votaw acquisition” which was evident in fiscal 2025. There were no breakup fees recorded in fiscal 2026.\n\n**Operating (loss) income**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\n  ​ ​ ​\n\n**Changes**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Percent of**\n\n**  ​ ​ ​**\n\n​\n\n​\n\n  ​ ​ ​\n\n**Percent of**\n\n​\n\n​\n\n​\n\n  ​ ​ ​\n\n​\n\n​\n\n*(dollars in thousands)*\n\n​\n\n**Amount**\n\n​\n\n**Revenue**\n\n​\n\n**Amount**\n\n​\n\n**Revenue**\n\n​\n\n**Amount**\n\n​\n\n**Percent**\n\n​\n\nRanor\n\n​\n\n$\n\n3,772\n\n​\n\n12\n\n%  \n\n$\n\n3,129\n\n​\n\n9\n\n%  \n\n$\n\n643\n\n​\n\n21\n\n%\n\nStadco\n\n \n\n​\n\n(4,137)\n\n​\n\n(13)\n\n%  \n\n​\n\n(4,643)\n\n​\n\n(13)\n\n%  \n\n​\n\n506\n\n​\n\n11\n\n%\n\nCorporate and unallocated\n\n \n\n​\n\n(702)\n\n​\n\n(2)\n\n%  \n\n​\n\n(644)\n\n​\n\n(2)\n\n%  \n\n​\n\n(58)\n\n​\n\n(9)\n\n%\n\nOperating loss\n\n​\n\n$\n\n(1,067)\n\n​\n\n(3)\n\n%  \n\n$\n\n(2,158)\n\n​\n\n(6)\n\n%  \n\n$\n\n1,091\n\n​\n\n51\n\n%\n\n​\n\n*Consolidated*–**As a result of the foregoing, for the fiscal year ended March 31, 2026, we reported an operating loss of $1,067 compared with operating loss of $2,158 for the fiscal year ended March 31, 2025. The change was primarily due to higher operating income at Ranor and lower operating losses at Stadco.\n\n*Ranor –* Operating income increased, as profit margins expanded on lower manufacturing costs and improved productivity.\n\n*Stadco –* Operating loss decreased primarily on lower SG&A expenses.\n\n*Corporate and unallocated –*Operating loss increased as an increase in stock-based compensation more than offset a decrease in costs related to the Votaw acquisition.\n\n**Other Income (Expense), net**\n\nThe following table presents other income (expense) for the fiscal years ended March 31:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n*(dollars in thousands)*\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\n**  ​ ​ ​**\n\n**$ Change**\n\n**  ​ ​ ​**\n\n**% Change**\n\n** **\n\nOther expense, net\n\n​\n\n$\n\n(81)\n\n​\n\n$\n\n(51)\n\n​\n\n$\n\n(30)\n\n \n\n(60)\n\n%\n\nInterest expense\n\n​\n\n$\n\n(415)\n\n​\n\n$\n\n(438)\n\n​\n\n$\n\n23\n\n \n\n5\n\n%\n\nAmortization of debt issue costs\n\n​\n\n$\n\n(70)\n\n​\n\n$\n\n(103)\n\n​\n\n$\n\n33\n\n \n\n32\n\n%\n\n​\n\n29\n\n[Table of Contents](#TOC)\n\nOther expense, net, for the fiscal year ended March 31, 2026, includes a write-off of $83 for costs in connection with refinancing activities and other interest income of $2. Other expense for the fiscal year ended March 31, 2025, includes a payment of $108 to investors as liquidated damages plus interest for a late registration filing in connection with the July 2024 private placement. That payment more than offset other income of $45 from non-operating filming activities, plus a vendor rebate and other interest income.\n\nInterest expense decreased by $23 when compared with the same period a year ago, primarily on lower scheduled interest payments for the Ranor and Stadco Term Loans.\n\nAmortization of debt issue costs for the fiscal year ended March 31, 2026 decreased by 32% on lower amortization in connection with the debt issue costs.\n\n**Income Taxes**\n\nDuring the fiscal year ended March 31, 2026, there has been no change in our judgment about the realizability of deferred tax assets in future years. For the fiscal year ended March 31, 2026 and 2025, the Company recorded tax expense and tax benefit of $31 and $2, respectively.\n\nDeferred 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 valuation allowance on deferred tax assets at March 31, 2026 and 2025 was $6,200 and $5,722, respectively. We believe that it is more likely than not that the benefit from certain state NOL carryforwards and other deferred tax assets will not be realized. The assessment was based on the weight of negative evidence at the balance sheet date, our recent operating losses and unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels. In recognition of this risk, we continue to provide a valuation allowance on these items.\n\n**Net Loss**\n\nAs a result of the foregoing, for fiscal 2026, we recorded a net loss of $1,664, or $0.17 per share basic and fully diluted, compared with a net loss of $2,748, or $0.29 per share basic and fully diluted in fiscal 2025.\n\n**Liquidity, Capital Resources and Going Concern**\n\nOur liquidity is highly dependent on the availability of financing facilities and our ability to maintain gross profit and operating income. As of March 31, 2026, we had $1,485 in total available liquidity, consisting of $431 in cash, and $1,054 in undrawn capacity under our Revolver Loan. As of March 31, 2025, we had $1,451 in total available liquidity, consisting of $195 in cash and $1,256 in undrawn capacity under our Revolver Loan.\n\nThere was $3,446 and $3,150 outstanding under the Revolver Loan on March 31, 2026 and 2025, respectively. The Company pays interest at an adjusted SOFR - based rate. Interest - only payments on advances made under the Revolver Loan are payable monthly in arrears. Interest paid and accrued on advances made under the Revolver Loan during fiscal 2026 and 2025, totaled $200 and $197, respectively. The weighted average interest rate on March 31, 2026 and 2025 was 6.70% and 7.47%, respectively. The average amount outstanding during the fiscal year ended March 31, 2026 and 2025 was $2,983 and $2,600, respectively. At March 31, 2026 our working capital was negative $441 because of the reclassification of our long-term debt from noncurrent to current in the consolidated balance sheet. The table below presents selected liquidity and capital measures on:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**Change**\n\n*(dollars in thousands)*\n\n​\n\n**2026**\n\n​\n\n**2025**\n\n​\n\n**Amount**\n\nCash\n\n​\n\n$\n\n431\n\n​\n\n$\n\n195\n\n​\n\n$\n\n236\n\nWorking capital\n\n​\n\n$\n\n(441)\n\n​\n\n$\n\n(1,570)\n\n​\n\n$\n\n1,129\n\nTotal debt\n\n​\n\n$\n\n7,037\n\n​\n\n$\n\n7,424\n\n​\n\n$\n\n(387)\n\nTotal stockholders’ equity\n\n​\n\n$\n\n7,673\n\n​\n\n$\n\n8,740\n\n​\n\n$\n\n(1,067)\n\n​\n\n30\n\n[Table of Contents](#TOC)\n\nThe next table summarizes changes in cash by primary component in the cash flows statements for the fiscal years ended:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**Change**\n\n*(dollars in thousands)*\n\n​\n\n**2026**\n\n​\n\n**2025**\n\n​\n\n**Amount**\n\nOperating activities\n\n​\n\n$\n\n6\n\n​\n\n$\n\n(599)\n\n​\n\n$\n\n605\n\nInvesting activities\n\n​\n\n \n\n868\n\n​\n\n \n\n(1,081)\n\n​\n\n \n\n1,949\n\nFinancing activities\n\n​\n\n \n\n(638)\n\n​\n\n \n\n1,737\n\n​\n\n \n\n(2,375)\n\nNet increase in cash\n\n​\n\n$\n\n236\n\n​\n\n$\n\n57\n\n​\n\n$\n\n179\n\n​\n\n*Operating activities*\n\nApart from our loan facilities, our primary sources of cash are provided by customer revenue, customer contract advances, and associated accounts receivable collections. Many of our customers make advance payments and progress payments under the terms of each manufacturing contract. The composition of our accounts receivable collections mix changes between advance payments and customer payments made after shipment of finished goods. Our cash flows can fluctuate from period to period as we make progress with customer project milestones and the timing of progress payments.\n\nCash provided by operating activities for the fiscal year ended March 31, 2026 was $6, and cash used in operating activities for the fiscal year ended March 31, 2025 was $599. Net loss adjusted by our non-cash items provided $1,865 and $813 for the fiscal years ended March 31, 2026 and 2025, respectively. For the fiscal year ended March 31, 2026 and 2025, we used $1,859 and $1,412 of cash, respectively, for changes in operating assets and liabilities.\n\n*Investing activities*\n\nIn fiscal 2026 we invested $3,265 in new factory machinery and equipment and were reimbursed for $4,133 of certain purchases under a supplier development fund.\n\nIn fiscal 2025 we invested $4,122 in new factory machinery and equipment and were reimbursed for $3,041 of certain purchases under a supplier development fund.\n\nWe are subject to certain financial debt covenants and may not spend more than $1,500 on new machinery and equipment during any single fiscal year tested on an annual basis at the end of each fiscal year. We estimate that our spending on new machinery and equipment in fiscal 2027, including supplier development funding, will exceed that spending limitation.\n\n*Financing activities*\n\nIn fiscal 2026 we drew down $18,236 of proceeds under the Revolver Loan and repaid $17,940 during the same period. We also used $695 in cash to pay down debt principal and make periodic lease payments. We also used $239 in cash in connection with refinancing activities and the Revolver Loan renewals.\n\nWe drew down $13,876 of proceeds under our Revolver Loan during fiscal 2025 and repaid $13,511 during the same period. We also used $663 of cash to pay down debt principal and make periodic lease payments and financed the purchase of certain equipment at Stadco for $65.\n\nIn fiscal 2025, the Company sold 666,100 shares of the Company’s common stock, par value $0.0001 per share, and 666,100 common stock purchase warrants to purchase 666,100 shares of Common Stock in a private placement at an aggregate purchase price of $2,299. Placement agent’s fees in connection with the offering totaled $247.\n\nAll of the above activity resulted in a net increase in cash of $236 and $57 for fiscal 2026 and 2025, respectively.\n\n*Bank Term and Revolver Loans*\n\nOn August 25, 2021, the Company entered into the Loan Agreement. Under the Loan Agreement, the Bank provided the Ranor Term Loan and the Revolver Loan. In addition, the Bank provided the term loan in the original amount of $4,000, or the “Stadco Term Loan.” The proceeds of the original term loan of $2,850, or the “Ranor Term Loan,” were used to refinance existing mortgage debt of Ranor. The proceeds of the Revolver Loan are used for working capital and general corporate purposes of the Company. Payments for the\n\n31\n\n[Table of Contents](#TOC)\n\noriginal Ranor Term Loan began on January 20, 2017, and until the facility was amended in December 2022, the Company paid monthly installments of $19 each, inclusive of interest at a fixed rate of 5.21% per annum.\n\nThe proceeds of the Stadco Term Loan were used to support the acquisition of Stadco and refinance existing indebtedness of Stadco. Interest on the Stadco Term Loan is due on unpaid balances beginning on August 25, 2021, at a fixed rate per annum equal to the 7-year Federal Home Loan Bank of Boston Classic Advance Rate plus 2.25%. Since September 25, 2021, and on the 25th day of each month thereafter, Stadco has made and will continue to make monthly payments of principal and interest in the amount of $54 each, with all outstanding principal and accrued interest due and payable on August 25, 2028.\n\nThe Borrowers agree that their combined annual capital expenditures shall not exceed $1,500. Compliance shall be tested annually. On June 12, 2023, the Company and the Bank executed a waiver under which the Bank waived the Company’s noncompliance with the capital expenditure limit and acknowledged that specified capital expenditures can be excluded from the calculation of the Borrowers combined annual expenditures for the fiscal year ended March 31, 2024. For the fiscal years ended March 31, 2026 and 2025, the Company, including specified capital expenditures, exceeded combined annual capital expenditures of $1,500.\n\nBetween December 20, 2021 and January 16, 2026, Ranor and certain affiliates of the Company entered into thirteen separate amendments to the Loan Agreement to, among other things, extend the maturity date of the Ranor Term Loan and Revolver Loan to December 15, 2027 and May 15, 2026, respectively. In addition, the amendments (i) limited the use of proceeds from the Revolver Loan by the Company or its affiliates to $2,000 in the aggregate for due diligence and related professional costs incurred on or prior to May 10, 2024 in connection with any acquisitions, (ii) amended the maximum principal amount of the Revolver Loan from $5,000 to $4,500; (iii) made certain changes to the amount and methods of valuation of equipment securing repayment of the borrowed funds, and (iv) effective June 1, 2024, increased the Term SOFR Margin (as defined in the Amendment) used to calculate the interest rate from 2.25% per annum to 2.50% per annum. The interest rate on the Ranor Term Loan is 6.05%, the monthly payment on the Ranor Term Loan is $17 with benchmark SOFR-based pricing conventions.\n\nOn May 13, 2026, Ranor and the other borrowers entered into a fourteenth amendment to the Loan Agreement, which among other things, extended the maturity date of the Revolver Loan from May 15, 2026 to September 15, 2026.\n\nAs a result of the Borrowers’ failure to satisfy the required Balance Sheet Leverage Ratio for the twelve (12) month period ending March 31, 2026, as set forth in the Loan Agreement, or the “Existing Default”, the Borrowers acknowledge that a certain Event of Default has occurred and is continuing under the Loan Agreement. The borrowers further acknowledge that the sixth amendment to the Loan Agreement constitutes written notice pursuant to the loan documents of such Existing Default. Regardless of entering into the most recent amendment to the Loan Agreement or any discussions between the Borrowers and the Bank, the Bank expressly reserves any and all rights and remedies available to it under the loan documents, and under applicable law, including, without limitation, its right to choose to accelerate and demand the outstanding indebtedness evidenced by the loan documents and seek immediate repayment in full, and institute the default rate of interest as of the date of the occurrence of the default or at any time thereafter, as a result of any default or event of default, including, without limitation, the Existing Default, that has arisen or may arise. No such discussions or the entering into the most recent amendment to the Loan Agreement shall imply any course of conduct or any agreement on the part of the Bank to waive any of its rights and remedies or to forbear from taking any action authorized by the loan documents or by applicable law while discussions continue.\n\nThere was $7,031 and $7,387 outstanding under the Loan Agreement on March 31, 2026 and 2025, respectively. Without a waiver, the lender has the right, but not the obligation, to demand repayment from the Company for noncompliance with the debt covenants. In addition, the Bank retains the right to act on covenant violations that occur after the date of delivery of any waiver. The lender has not granted us a waiver. As such, we need to seek alternative financing to pay these obligations as the Company does not have existing facilities or sufficient cash on hand to satisfy these obligations. It is also probable that the Company will not be in compliance with the same debt covenants at subsequent measurement dates within the next twelve months. As a result of the above, all of our long-term debt has been classified as current in our consolidated balance sheet.\n\nOn July 3, 2024, the Company entered into a Security Purchase Agreement with certain accredited investors, pursuant to which the Company sold common stock and warrants in a private placement at an aggregate purchase price of $2,299. The combined purchase price for one share of common stock and one warrant was $3.45. The purpose of the sale of the common stock and warrants was to raise working capital for use by the Company.\n\nThe Company continues to explore various means of strengthening its liquidity position and ensuring compliance with its debt financing covenants by making Stadco operations profitable, renewing our revolver loan, or entering into alternative debt facilities.\n\nIn order for us to continue operations beyond the next twelve months from the date of issuance of the financial statements and to be able to discharge our liabilities and commitments in the normal course of business, we must renew our revolver loan or seek alternative\n\n32\n\n[Table of Contents](#TOC)\n\nfinancing by September 15, 2026. We must mitigate our recurring operating losses at our Stadco subsidiary, efficiently increase utilization of our manufacturing capacity at Stadco and improve the manufacturing process. We plan to closely monitor our expenses and, if required, will reduce operating costs to enhance liquidity.\n\nThe uncertainty associated with the recurring operating losses at Stadco, the revolver loan renewal, the need for alternative financing, and compliance with debt covenants at subsequent measurement dates raise substantial doubt about our ability to continue as a going concern for at least one-year after the date the consolidated financial statements included in this Annual Report on Form 10-K are issued.\n\nCollateral securing all the above obligations comprises all personal and real property of the Company, including cash, accounts receivable, inventories, equipment, and financial assets.\n\n**Commitments and Contractual Obligations**\n\nThe following contractual obligations associated with our normal business activities are expected to result in cash payments in future periods, and include the following material items on March 31, 2026:\n\n●Our debt obligations under the bank loan agreement, including fixed and variable-rate debt, totaled $7,031, and, because of debt covenant violations, are classified as current in the consolidated balance sheets.\n\n●We enter into various commitments with suppliers for the purchase of raw materials and work supplies. Our outstanding unconditional contractual commitments, including the purchase of raw materials and supplies goods, totaled $2,805, all of it due to be incurred and paid within the next twelve months.\n\n●We also have $13,247 in purchase obligations outstanding for the purchase of machinery and equipment under an arrangement with a certain customer where the Company is reimbursed in full for all purchases.\n\n●Our operating lease obligations, including imputed interest, totaled $3,912 for buildings through 2030, with $939 due annually for each of the next four years and $156 in year six.\n\nThere were no off-balance sheet arrangements as of March 31, 2026.\n\nEBITDA Non-GAAP Financial Measure\n\nTo complement our consolidated statements of operations and consolidated statements of cash flows, we use EBITDA, a non-GAAP financial measure. Net income (loss) 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 U.S. GAAP.\n\nWe define EBITDA as net income (loss) plus interest, income taxes, depreciation, and amortization. Net loss was $1,664 for the fiscal year ended March 31, 2026, as compared to net loss of $2,748 for the year ended March 31, 2025. EBITDA, a non-GAAP financial measure, was $1,646 for the year ended March 31, 2026, compared to $587 for the year ended March 31, 2025. The following table provides a reconciliation of EBITDA to net loss, the most directly comparable U.S. GAAP measure reported in our consolidated financial statements for the fiscal years ended:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**March 31, **\n\n**  ​ ​ ​**\n\n**Change**\n\n*(dollars in thousands)*\n\n​\n\n**2026**\n\n​\n\n**2025**\n\n​\n\n**Amount**\n\nNet loss\n\n​\n\n$\n\n(1,664)\n\n​\n\n$\n\n(2,748)\n\n​\n\n$\n\n1,084\n\nIncome tax expense (benefit)\n\n​\n\n \n\n31\n\n​\n\n​\n\n(2)\n\n​\n\n​\n\n33\n\nInterest expense *(1)*\n\n​\n\n \n\n485\n\n​\n\n \n\n541\n\n​\n\n \n\n(56)\n\nDepreciation and amortization\n\n​\n\n \n\n2,794\n\n​\n\n \n\n2,796\n\n​\n\n \n\n(2)\n\nEBITDA\n\n​\n\n$\n\n1,646\n\n​\n\n$\n\n587\n\n​\n\n$\n\n1,059\n\n(1)*Includes amortization of debt issue costs.*"}