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OFFON

TECHPRECISION CORPORATION

(TPCS)
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TECHPRECISION CORP : Entry into a Material Definitive Agreement, Completion of Acquisition or Disposition of Assets, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K)

08/30/2021 | 04:07pm EDT

Item 1.01 Entry into a Material Definitive Agreement.




Stadco Lease


On August 25, 2021, in connection with and as a result of the Acquisition (as defined below) described in Item 2.01, TechPrecision Corporation (the "Company"), through STADCO, a California corporation ("Stadco") and the Company's wholly owned subsidiary acquired as a result of the Acquisition, became party to that certain Amended and Restated Standard Industrial/Commercial Single-Tenant Lease - Net (the "Stadco Lease") between Stadco and Broadway Company, LLC (the "Landlord"), with respect to the industrial warehouse and office facilities, including ancillary properties, consisting of approximately 182,544 square feet located at 1931 N. Broadway, Los Angeles, CA 90031 (the "Stadco Property"). Additionally, in connection with the Acquisition, Stadco entered into an amendment (the "Lease Amendment") to the Stadco Lease, effective as of August 24, 2021.

The term of the Stadco Lease will expire on June 30, 2030, unless sooner terminated in accordance with the terms of the Stadco Lease. Under the Lease Amendment, Stadco has agreed to pay $749,931.25 to settle the default amount of rent owed to the Landlord and Stadco's monthly base rent for the Stadco Property will be approximately $78,233.45 per month, with a 20% discount through November 30, 2022, in addition to certain payments for utilities, services and certain other additional rent items (including certain taxes, insurance premiums and operating expenses). Other than as described above, there is no relationship between Stadco and the Company, on the one hand, and the Landlord, on the other hand.

The Stadco Lease contains customary default provisions allowing the Landlord to terminate the Stadco Lease if Stadco fails to remedy a breach of its obligations under the Stadco Lease within the time period specified in the Stadco Lease, or upon certain events of bankruptcy or seizure or attachment of Stadco's assets or interest in the Stadco Lease. The Stadco Lease also contains other customary provisions for real property leases of this type.

The descriptions of the Stadco Lease and the Lease Amendment are qualified in their entirety by reference to the full text of the Stadco Lease and the Lease Amendment, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.

Five Crowns Agreement and Warrant

In connection with the Acquisition, the Company reached an agreement with Five Crowns Credit Partners, LLC ("Five Crowns"), the holder of a substantial number of Stadco securities. On August 25, 2021, the Company and Five Crowns entered into that certain Stock and Warrant Purchase Agreement (the "Five Crowns Agreement"), dated effective as of August 24, 2021, whereby Five Crowns agreed to sell its Stadco securities to Stadco New Acquisition, LLC, a wholly owned subsidiary of the Company ("Acquisition Sub"), in exchange for the issuance by the Company of (i) 600,000 shares of the Company's common stock (the "Five Crowns Shares") and (ii) a warrant to purchase 100,000 shares of the Company's common stock (the "Warrant"). The Company also agreed to reimburse Five Crowns for certain of its expenses in connection with the negotiation and closing of the Five Crowns Agreement, in an amount not to exceed $27,500.

Under the terms of the Five Crowns Agreement, if after one year following the closing of the transactions contemplated under the Five Crowns Agreement, the Company's stock price does not have an average closing price of at least $1.40 per share during the applicable measurement period, then the Company must (i) issue additional shares to Five Crowns that have an aggregate market value equal to the difference between the market value of the Five Crowns Shares and the value of the Five Crowns Shares if they had traded at $1.40 per share, (ii) pay such difference in cash or (iii) undertake any combination of the foregoing.

The Five Crowns Agreement contains customary representations and warranties, including representations from Five Crowns regarding its status as an "accredited investor," its investment purpose and its free and clear ownership of the Stadco securities it is selling, and representations from Acquisition Sub regarding its authorization and power to enter into the transaction, ability to conduct its business, absence of conflicts and compliance with law, among other things, as well as customary indemnification provisions. The Five Crowns Agreement closed concurrently with the closing of the Acquisition.

Upon closing of the Five Crowns Agreement, the Company issued the Warrant. The Warrant entitles the holder to purchase 100,000 shares of the Company's common stock at an exercise price of $1.43 per share. The Warrant will be immediately . . .

Item 2.01 Completion of Acquisition or Disposition of Assets.

On August 25, 2021 (the "Closing Date"), the Company completed its previously announced acquisition of Stadco, a company in the business of manufacturing high-precision parts, assemblies and tooling for aerospace, defense, research and commercial customers (the "Acquisition"), pursuant to that certain stock purchase agreement (as amended, the "SPA") with Acquisition Sub, Stadco, Stadco Acquisition, LLC ("Holdco") and each stockholder of Holdco. On the Closing Date, pursuant to the SPA, and upon the terms and subject to the conditions therein, the Company, through Acquisition Sub, acquired all of the issued and outstanding capital stock of Stadco from Holdco in exchange for the issuance of 666,666 shares of the Company's common stock to Holdco (the "Consideration Shares").

Also on the Closing Date, the Company completed its previously announced acquisition of certain indebtedness obligations of Stadco, in the original principal amount of $12.5 million, pursuant to that certain Amended and Restated Loan Purchase and Sale Agreement, dated as of April 23, 2021, among Acquisition Sub, Stadco, Stadco Acquisition LLC, Stadco Mexico, Inc and Sunflower Bank, N.A., as amended by Amendment to Amended and Restated Loan Purchase and Sale Agreement, dated as of June 28, 2021 (as amended, the "Loan Purchase Agreement"). On the Closing Date, Westminster, as assignee of Acquisition Sub, paid $7.9 million in the aggregate to Sunflower Bank, N.A., under the terms of the Loan Purchase Agreement, to purchase the indebtedness.

The foregoing descriptions of the Acquisition, the SPA and the Loan Purchase Agreement in this Item 2.01 do not purport to be complete and are qualified in their entirety by reference to each of (i) the SPA, a copy of which was filed as Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 20, 2020, and Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 3, 2021, and (ii) the Loan Purchase Agreement, which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 23, 2021, and Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2021, each of which is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an

           Off-Balance Sheet Arrangement of a Registrant.



The information set forth in Item 1.01 hereof under "Stadco Lease" and "Amended and Restated Loan Agreement" is incorporated by reference into this Item 2.03.

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in Item 2.01 hereof is incorporated by reference into this Item 3.02. In accordance with the SPA, the consideration for the Acquisition consisted of the Consideration Shares and such number of additional shares of common stock of the Company that the Company may issue in the future should the value of the Consideration Shares, as measured by recent trading prices for the Company's common stock, fall below the target value. The Consideration Shares and any such additional shares of common stock were or will be issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or Regulation D promulgated thereunder.

The information set forth in Item 1.01 hereof under "Five Crowns Stock and Warrant Purchase Agreement," "Debt Conversion Agreements" and "PIPE Financing" is incorporated by reference into this Item 3.02. The offer and sale of the shares of the Company's common stock issued pursuant to the Five Crowns Agreement, the Five Crowns Warrant, the Debt Conversion Agreements and the PIPE Agreement will not be registered under the Securities Act, in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Item 7.01 Regulation FD Disclosure.

On the Closing Date, the Company issued a press release announcing the closing of the Acquisition, a copy of which is furnished herewith as Exhibit 99.1 and is incorporated in this Item 7.01 of Form 8-K by reference. The information in this Item 7.01 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

Financial statements of the acquired business are not included in this Current Report on Form 8-K. Such financial statements will be filed by amendment not later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.

(b) Pro Forma Financial Information.

Pro forma financial information relative to the acquired business is not included in this Current Report on Form 8-K. Such pro forma financial information will be filed by amendment not later than 71 calendar days after the date that this Current Report on Form 8-K is required to be filed.










(d)    Exhibits



Exhibit
Number      Description
  2.1*        Stock Purchase Agreement among TechPrecision Corporation, Stadco New
            Acquisition, LLC, Stadco, Stadco Acquisition, LLC and the stockholders
            of Stadco, dated as of October 16, 2020 (incorporated by reference to
            Exhibit 2.1 to Form 8-K filed October 20, 2020).
  2.2         Third Amendment to Stock Purchase Agreement, dated as of July 20,
            2021, among TechPrecision Corporation, Stadco New Acquisition, LLC,
            STADCO, Stadco Acquisition, LLC and Douglas A. Paletz, as stockholders'
            representative (incorporated by reference to Exhibit 2.1 to Form 8-K
            filed July 26, 2021).
  10.1        Amended and Restated Standard Industrial/Commercial Single-Tenant
            Lease - Net, dated July 1, 2010, between the Landlord and Stadco
  10.2*       Amendment to the Amended and Restated Standard Industrial/Commercial
            Single-Tenant Lease - Net, effective as of August 24, 2021, between the
            Stadco and the Landord.
  10.3        Amended and Restated Loan Purchase and Sale Agreement, dated as of
            April 23, 2021, between Stadco New Acquisition, LLC and Sunflower Bank,
            N.A. (incorporated by reference to Exhibit 10.1 to Form 8-K filed April
            29, 2021).
  10.4        Amendment to Amended and Restated Loan Purchase and Sale Agreement,
            dated as of June 28, 2021, between Stadco New Acquisition, LLC, STADCO,
            Stadco Acquisition LLC and Stadco Mexico, Inc. and Sunflower Bank, N.A.
            (incorporated by reference to Exhibit 10.1 to Form 8-K filed June 29,
            2021).
  10.5*       Stock and Warrant Purchase Agreement, dated effective as of August 24,
            2021, among TechPrecision Corporation, Stadco New Acquisition, LLC and
            Five Crowns Credit Partners, LLC
  10.6*       Warrant, issued as of August 25, 2021, by TechPrecision Corporation to
            Five Crowns Capital, LLC.
  10.7        Debt Conversion Agreement, dated as of August 25, 2021, among
            TechPrecision Corporation, Stadco and Douglas A. Paletz.
  10.8        Debt Conversion Agreement, dated as of August 25, 2021, among
            TechPrecision Corporation, Stadco and Babak Parsi.
  10.9        Debt Conversion Agreement, dated as of August 25 2021, among
            TechPrecision Corporation, Stadco and Vanguard Electronic Company.
  10.10       Form of PIPE Agreement.
  10.11       Amended and Restated Loan Agreement, dated as of August 25, 2021,
            among Ranor, Inc., Stadco New Acquisition, LLC, Westminster Credit
            Holdings, LLC, STADCO and Berkshire Bank.
  99.1        Press Release, dated as of August 26, 2021.
104         Cover Page Interactive Data File (the cover page XBRL tags are embedded
            within the inline XBRL document)



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

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 15,6 M - -
Net income 2021 0,32 M - -
Net Debt 2021 1,69 M - -
P/E ratio 2021 127x
Yield 2021 -
Capitalization 73,0 M 73,0 M -
EV / Sales 2020 2,43x
EV / Sales 2021 2,51x
Nbr of Employees 93
Free-Float 87,2%
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Managers and Directors
Alexander Shen Chief Executive Officer
Thomas C. Sammons Chief Financial Officer
Richard S. McGowan Non-Executive Chairman
Andrew A. Levy Independent Director
Robert A. Crisafulli Independent Director
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