TECHPRECISION CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

Statement Regarding Forward Looking Disclosure

The 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.

These 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

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and results may differ materially from what is expressed or forecasted in, or implied by, the forward-looking statements due to numerous risks and uncertainties. Factors that could cause such outcomes and results to differ include, but are not limited to, risks and uncertainties arising from:

? our reliance on individual purchase orders, rather than long-term contracts, to

generate revenue;

? our ability to balance the composition of our revenues and effectively control

operating expenses;

external factors, including the COVID-19 pandemic, Russia's invasion of

? Ukraine, high inflation and increasing interest rates, that may be outside of

our control;

? the impacts of the COVID-19 pandemic and government-imposed lockdowns in

response thereto;

? the availability of appropriate financing facilities impacting our operations,

financial condition and/or liquidity;

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

? our ability to maintain standards to enable us to manufacture products to

exacting specifications;

? our ability to enter new markets for our services;

? our reliance on a small number of customers for a significant percentage of our

business;

? competitive pressures in the markets we serve;

? changes in the availability or cost of raw materials and energy for our

production facilities;

? 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;

? unexpected costs, charges or expenses resulting from the recently completed

acquisition of Stadco; and

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.

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 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.

Overview

Through our two wholly-owned subsidiaries, Ranor and Stadco (acquired on August
25, 2021), each of which is a reportable segment, we offer a full range of
services required to transform raw materials into precision finished products.
Our manufacturing capabilities

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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. 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
contracts, 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 that require our services and products.

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

All the Company's operations, assets, and customers are located in the U.S.

Impact of COVID-19 Pandemic

At the beginning of calendar year 2020, the novel strain of coronavirus known as
COVID-19 spread worldwide, including to U.S jurisdictions where the Company does
business, and became a global pandemic. The United States Government declared a
national emergency and various state governments imposed "lockdown" and
"shelter-in-place" orders intended to reduce the spread of COVID-19 that have
severely restricted business, social activities and travel. The Governors of the
Commonwealth of Massachusetts and state of California, in which jurisdiction the
Company's manufacturing and executive offices are located, issued similar
emergency orders in March 2020. As a designated "COVID-19 Essential Service" we
continued our operations throughout the pendency of the orders.

Over the course of fiscal year 2021, fiscal 2022, and up to the date of this
Annual Report on Form 10-K, the COVID-19 pandemic has affected the Company's
customers, suppliers and labor force. With respect to customers, management
observed impacts from certain of its customers halting operations entirely for a
short period of time, shifting to remote work, and suspending on-site
inspections - which delays customer acceptance of completed work, the making of
milestone payments to us, and delivery of finished goods. With respect to
suppliers, the Company had seen lead-times for delivery of certain critical
supplies extended. Labor impacts have included a few issues related to employee
attendance such as voluntary avoidance of work out of fear of contracting the
coronavirus, certain employees becoming ill, and others self-quarantining as a
result of potential exposure to other individuals with symptoms of COVID-19.
 Although regular business activities have returned to normal, the Company
believes that the potential exists for other customer shutdowns or slowdowns to
occur in the future. Notwithstanding all the above, the impact on the Company's
production levels has been minor. However, if more employees were to become ill
in the future, the Company could again experience more disruption.

Nevertheless, our production facilities continue to operate much as they had
prior to the outbreak of the COVID-19 pandemic, other than the implementation of
enhanced safety measures intended to prevent the spread of the virus. The remote
working arrangements and travel restrictions imposed by applicable governmental
authorities have not impaired our ability to maintain operations. Our results of
operations and cash flows during the fiscal year ended March 31, 2022 and 2021
were not materially affected by the COVID-19 pandemic.

However, given the speed and frequency of continuously evolving developments
with respect to this pandemic, the extent to which COVID-19 may adversely impact
our business depends on future developments, which are highly uncertain and

unpredictable, including

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new information concerning the severity of the outbreak and the effectiveness of
actions globally to contain or mitigate its effects, we cannot reasonably
estimate the magnitude of future impact on our financial condition and results
of operations.

Paycheck Protection Program (PPP)

Considering the uncertainty caused by the COVID-19 pandemic, the Company
determined it was necessary to obtain additional funds. In this connection, as
previously disclosed, on May 8, 2020, the Company, through Ranor, issued a
promissory note payable to Berkshire Bank, or the PPP Note, evidencing an
unsecured loan in the amount of $1,317,100 made to Ranor by Berkshire Bank under
the PPP. The PPP was established under the federal Coronavirus Aid, Relief, and
Economic Security Act, or CARES Act, and is administered by the U.S. Small
Business Administration, or SBA. The loan to Ranor was made through Berkshire
Bank. The PPP Note provided for an interest rate of 1.00% per year with maturity
two years after the issuance date. Principal and accrued interest were payable
monthly in equal installments commencing on the date that is six months after
the date funds are first disbursed on the loan and continuing through the
maturity date, unless the PPP Note was forgiven. To be available for loan
forgiveness, the PPP Note may only be used for payroll costs, costs related to
certain group health care benefits and insurance premiums, rent payments,
utility payments, mortgage interest payments and interest payments on any other
debt obligation that were incurred before February 15, 2020. The Company applied
for loan forgiveness within the ten-month period on March 26, 2021.

On May 12, 2021, as authorized by Section 1106 of the CARES Act, the SBA
remitted to Berkshire Bank, the lender of record for the PPP loan, a payment of
principal and interest in the amounts of $1,317,000 and $13,207, respectively,
for forgiveness of the Company's PPP loan. The funds credited to the PPP loan
pay this loan off in full.

Strategy

We aim to establish our expertise in program and project management and develop
and expand a repeatable customer business model in all of our markets. We
concentrate our sales and marketing activities on customers under two main
industry groups: defense and precision industrial. Our strategy is to leverage
our core competence as a manufacturer of high-precision, large-scale metal
fabrications and machined components to optimize profitability of our current
business and expand with key customers in markets that have shown increasing
demand.

Defense

Our Ranor subsidiary performs precision fabrication and machining for the
defense and aerospace industries, delivering defense components meeting our
customers' stringent design specifications, as well as quality and safety
manufacturing standards specifically for defense component fabrication and
machining. Ranor has in recent years delivered critical components in support
of, among other projects, the U.S. Navy's Virginia-class fast attack submarine
program and Columbia-class ballistic missile submarine program. In addition, the
team at Ranor has successfully developed new, effective approaches to
fabrication that continue to be utilized at our facility and at our customer's
own defense component manufacturing facilities. We have endeavored to increase
our business development efforts with large prime defense contractors. Based
upon these efforts, we believe there are opportunities to secure additional
business with existing and new defense contractors who are actively looking to
increase outsourced content on certain defense programs over the next
several years, especially in connection with the submarine programs. We believe
that the military quality certifications Ranor maintains and its ability to
offer fabrication and manufacturing services at a single facility position it as
an attractive outsourcing partner for prime contractors looking to increase
outsourced production. Sales to defense market customers have generated the
largest proportion of our revenues for the last two fiscal years, and we expect
sales to defense customers to be our strongest market during fiscal 2023 as
well.

Our Stadco subsidiary manufactures large flight-critical components on several
high-profile commercial and military aircraft programs, including military
helicopters. It 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 provides tooling, customized molds, fixtures,
jigs and dies used in the production of aircraft components and has one of the
largest electron beam welding machines set up in the United States, allowing it
to weld thick pieces of titanium and other metals.

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Precision Industrial

The customers within this market are impacted primarily by general economic
conditions which may include changes in consumer consumption or demand for
commercial construction for infrastructure. We serve a number of different
customers in our precision industrial group. For example, we build components
for customers in the power generation markets. We also manufacture large-scale
medical device components for a customer in this group who installs their
proprietary systems at certain medical institutions.

The power generation businesses among our energy market customers are impacted
by pricing and demand for various forms of energy (e.g., coal, natural gas, oil,
and nuclear). Our nuclear customers are typically dependent upon the need for
new construction, maintenance, and overhaul and repair by nuclear energy
providers. Also, changes in regulation may impact demand and supply. As such, we
cannot assure that we will be able to develop any significant business from the
nuclear industry. However, because of our manufacturing capabilities required to
produce components for new nuclear power plants and our historic relationships
with suppliers in the nuclear power industry, we believe that we are positioned
to benefit from any increased demand in the nuclear sector.

Critical Accounting Policies and Estimates

The 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 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, recovery of long-lived assets, income taxes. These estimates and
assumptions require management's most difficult, subjective or complex
judgments. Actual results may differ under different assumptions or conditions.

Revenue and Related Cost Recognition

We 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.

The 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).

Our 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.

When 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.

The 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

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reported as work in process, a component of inventory, in the consolidated balance sheet. Pre-contract fulfillment costs requiring capitalization are not material.

Changes in job performance, job conditions, and estimated profitability are
recognized in the period in which the revisions are determined. Costs incurred
on uncompleted contracts consist of labor, overhead, and materials. 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, 2022 was $0.3
million, with approximately 85% of that total related to customer projects at
our Stadco reportable segment, and the other 15% at our Ranor reportable
segment. We assumed approximately $0.4 million in loss provisions at the August
25, 2021 acquisition date, and have since seen a 25% reduction in the provision.

Income Taxes

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

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

As of March 31, 2022, our federal net operating loss carryforward was approximately $17.1 million. U.S. tax laws limit the time during which these carryforwards may be applied against future taxes.

The Company has recorded a net deferred tax asset of $2.1 million, which
includes the benefit of $2.0 million in loss carryforwards. Realization is
dependent on generating sufficient taxable income prior to the expiration of the
loss carryforwards. Although the realization is not assured, management believes
it is more likely than not that the deferred tax assets will be realized. The
amount of the deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.

Accounting Pronouncements

New Accounting Standards

See Note 17, 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.

Results of Operations

Our results of operations are affected by a number of external factors including
the availability of raw materials, commodity prices (particularly steel),
macroeconomic factors, including the availability of capital that may be needed
by our customers, and political, regulatory and legal conditions in the United
States and 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 the majority 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 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

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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.

We evaluate the performance of our segments based upon, among other things,
segment net sales and operating profit. Segment operating profit excludes
general corporate costs, which include executive and director compensation,
stock-based compensation, certain pension and other retirement benefit costs,
and other corporate facilities and administrative expenses not allocated to the
segments. Also excluded are items that we consider not representative of ongoing
operations, such as the unallocated PPP loan forgiveness.

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 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.

Percentages in the following tables and throughout this "Results of Operations" section may reflect rounding adjustments.

Fiscal Years Ended March 31, 2022 and 2021

The following table presents net sales, gross profit and gross margin, consolidated and by reportable segment:

                                               2022                      2021                     Changes
                                                  Percent of                Percent of                 Percent of
(dollars in thousands)                 Amount     Net sales      Amount     Net sales      Amount      Net sales
Ranor                                 $ 14,581           100 %  $ 15,596           100 %  $ (1,015)           (7) %
Stadco                                   7,756           100 %         -             - %      7,756            nm %
Intersegment elimination                  (54)             - %         -             - %       (54)            nm %
Net sales                             $ 22,283           100 %  $ 15,596           100 %  $   6,687            43 %
Ranor                                 $ 11,131            76 %  $ 12,132            78 %  $ (1,001)           (8) %
Stadco                                   7,775           101 %         -               %      7,775            nm %
Cost of sales                         $ 18,906            85 %  $ 12,132            78 %  $   6,775            56 %
Ranor                                 $  3,450            24 %  $  3,464            22 %  $    (14)             - %
Stadco                                    (73)           (1) %         -             - %       (73)            nm %
Gross profit                          $  3,377            15 %  $  3,464            22 %  $      87             3 %


nm - not meaningful

Net Sales

Consolidated - Net sales were $22.3 million for fiscal 2022, or 43% higher when
compared to consolidated net sales of $15.6 million for fiscal 2021. Net sales
in defense markets increased by $8.1 million when compared to fiscal 2021, due
primarily to the new Stadco business acquisition, which made up $7.7 million of
the increase.

Ranor - Net sales were $14.6 million for fiscal 2022, or 7% lower when compared
to net sales in fiscal 2021. Net sales to industrial markets decreased by $1.5
million when compared with fiscal 2021 due to lower project activity in the
precision industrial sector as the Company replenishes backlog following a
period of above normal revenue. We have repeat business in this sector, but the
order flow can be uneven and difficult to forecast. Our defense backlog for
Ranor remains strong as new orders for components related to a variety of
programs continue to flow down from our existing customer base of prime defense
contractors. Ranor had remaining performance obligations, or backlog, of $24.0
million that is expected to be delivered over the next 36 months.

Stadco - Net sales were $7.8 million for fiscal 2022, with 99% of that total
revenue for customers in the defense markets. Our defense backlog for Stadco is
strong as new orders for components related to a variety of programs, including
components for the Sikorsky

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heavy lift helicopters. Stadco had remaining performance obligations, or backlog, of $23.3 million that is expected to be delivered over the next 36 months.

Gross Profit and Gross Margin

Consolidated - Cost of sales consists primarily of raw materials, parts, labor,
overhead and subcontracting costs. Our cost of sales for the fiscal year ended
March 31, 2022 were $6.8 million higher when compared to the fiscal year ended
March 31, 2021. The increase in cost of sales and lower gross margin was
primarily the result of an unfavorable production mix and under-absorbed factory
overhead. Gross profit was $3.4 million for fiscal year 2022, compared to $3.5
million in fiscal year 2021. Gross margin was 15.2% for the fiscal year ended
March 31, 2022 and 22.1% for the fiscal year ended March 31, 2021.

Ranor - The gross margin improved year over year. Through December 31, 2021,
Ranor experienced a period of slowly rising labor costs and under absorbed
overhead since the first month of the fiscal year which was amplified by an
unfavorable production mix as a result of a lower number of available production
hours during the third quarter of fiscal 2022. However, this set of unfavorable
conditions was more than offset by a productive fourth quarter of accelerating
project progress that resulted in better overhead absorption rates on higher
revenue recognized over-time. We expect this trend to continue in fiscal 2023.

Stadco - The gross margin turned negative to 1.0% at the end of the fiscal year
as new project startups and associated production activities in the fourth
quarter resulted in unfavorable throughput and an increase in under-absorbed
overhead. We expect improvements in gross margin for fiscal 2023 as the new
projects make progress to completion and the Stadco business is fully
integrated.

Selling, General and Administrative (SG&A) Expenses

                                               2022                     2021                  Changes
                                                  Percent of               Percent of
(dollars in thousands)                 Amount     Net Sales     Amount     Net Sales     Amount     Percent
Ranor                                  $ 2,488            11 %  $ 1,885            12 %  $   603         32 %
Stadco                                   1,052             5 %        -             - %    1,052         nm %
Corporate and unallocated                1,398             6 %      956             6 %      442         46 %
Consolidated SG&A                      $ 4,938            22 %  $ 2,841            18 %  $ 2,097         74 %


nm - not meaningful

Consolidated - Total selling, general and administrative expenses for the fiscal
year ended March 31, 2022, increased by $2.1 million, or 74% as the Company
completed its acquisition of Stadco and business travel returned to pre-pandemic
levels.

Ranor - Advisory fees, travel expenses and other office costs increased by a total of $0.6 million due to a return to pre-pandemic travel and business activity.

Stadco - The increase was primarily due to the inclusion of Stadco operations since August 25, 2021.

Corporate and unallocated - Outside advisory fees increased by $0.4 million year
over year. While we expect certain of these costs to recur as a normal part of
our business, a portion of the outside advisory fees related to the acquisition
should not recur in fiscal 2023, absent an additional acquisition.

Operating (loss) income

                                               2022                     2021                  Changes
                                                  Percent of              Percent of
(dollars in thousands)                 Amount      net sales    Amount     net sales     Amount     Percent
Ranor                                 $     961            4 %  $ 1,579           10 %  $   (618)      (39) %
Stadco                                  (1,124)          (5) %        -            - %    (1,124)        nm %

Corporate and unallocated               (1,398)          (6) %    (956)    

     (6) %      (442)      (46) %
Operating (loss) income               $ (1,561)          (7) %  $   623            4 %  $ (2,184)     (351) %


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nm - not meaningful

Consolidated - As a result of the foregoing, the Stadco integration and reduced
profitability at Ranor, we reported an operating loss of $1.6 million at the
Company compared to operating income of $0.6 million in fiscal 2021.

Ranor - Operating income was $0.6 million lower compared to fiscal 2021, due
primarily to higher SG&A costs for outside advisory fees, travel expenses and
other office costs in fiscal 2022.

Stadco - New project startups and related production activities resulted in unfavorable throughput, higher unabsorbed overhead and operating losses of $1.1 million. We expect better throughput and overhead absorption in fiscal 2023.

Corporate and unallocated - Corporate expenses were higher in fiscal 2022, primarily from outside advisory fees ($0.7 million) in connection with the Stadco acquisition.

Other (Expense) Income, net

The following table presents other (expense) income for the fiscal years ended
March 31:

                                       2022           2021         $ Change     % Change
Other (expense) income, net         $  (28,385)    $     4,600    $ (32,985)          nm
Interest expense                    $ (221,125)    $ (150,938)    $

(70,187) (47) % Amortization of debt issue costs $ (48,251) $ (51,399) $ 3,148

           6 %


nm - not meaningful

Interest expense was higher for the fiscal year ended March 31, 2022. The
increase in interest expense was due primarily to borrowings under the new
Stadco Term Loan (as defined below) and higher amounts borrowed under the
revolver loan. On March 31, 2022, there was $1.3 million outstanding under the
revolver loan. On March 31, 2021, there were no amounts outstanding under the
revolver loan. We expect to see higher interest expense in fiscal 2023 due to
the higher levels of debt incurred since the Stadco acquisition.

Amortization of debt issue costs were slightly lower for the fiscal year ended
March 31, 2022. New amortization periods commenced in fiscal 2022 for costs
incurred for the extended Ranor loan, and for the new Stadco loan. As a result,
we expect to see higher amortization expense in fiscal 2023.

Other expense, net, in the table above, includes an expense accrual for
contingent consideration of $63,436 in connection with the Stadco acquisition.
This expense was offset in part by other income of $22,011 from the WCMC
dissolution, and a return of a retainer fee for $10,000 previously paid for
outside advisory fees in connection with a class action litigation settlement in
fiscal 2021.

PPP Loan Forgiveness

On May 12, 2021, as authorized by Section 1106 of the CARES Act, the SBA remitted to Berkshire Bank, the lender of record, a payment of principal in the amount of $1,317,100, for forgiveness of the Company's PPP loan. The funds credited to the PPP loan paid this loan off in full.

Income Taxes

For fiscal year 2022 the Company recorded a tax benefit of $192,355, a result of lower taxable income. In fiscal 2021, the Company recorded tax expense of $104,880.

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
valuation allowance on deferred tax assets at March 31, 2022 was approximately
$2.0 million. 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. 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

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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 fiscal 2022, we recorded net loss of $349,834, or $0.01 per share basic and fully diluted, compared with net income of $320,631, or $0.01 per share basic and fully diluted in fiscal 2021.

Liquidity and Capital Resources

On August 25, 2021, we completed the acquisition of Stadco, closed on a private
placement financing and closed on a new loan with Berkshire Bank. In connection
with the acquisition, we raised $3.5 million of cash by selling 3,202,727 shares
of common stock at $1.10 per share via a private placement financing, sourced
$4.0 million in new debt with Berkshire bank, drew down $0.1 million under our
existing revolver loan and sourced $1.8 million from available cash. We issued
1.5 million shares of our common stock and warrants to satisfy Stadco's
indebtedness to its shareholders and certain other debt holders and acquired all
outstanding shares of Stadco.

In addition, we purchased Stadco's loan from Sunflower Bank, for a total amount
of $7.9 million in cash. Concurrent with the closing of the Stadco acquisition,
we entered into an amended and restated loan agreement with Berkshire
Bank. Under the amended facility, our term loan in the original principal amount
of $2.85 million, of which $2.4 million remains outstanding, will remain, and we
will have access to a revolving line of credit of up to $5.0 million, and
borrowed $4.0 million under a new term loan with Berkshire bank.

There was a balloon payment of approximately $2.3 million due on June 16, 2022,
under the Ranor Term Loan (as defined below) with Berkshire Bank. On June 16,
2022, Ranor and certain affiliates of the Company entered into a Third Amendment
to the Amended and Restated Loan Agreement and Third Amendment to Promissory
Note to further extend the maturity date of the Ranor Term Loan to September 16,
2022. Until then, the Company will continue to pay down principal and make
interest payments in the ordinary course. We expect to commence negotiations of
a further amended and restated loan agreement to refinance that debt with
Berkshire Bank prior to the new maturity date.

We intend to refinance that Ranor Term Loan on terms similar to the current loan
and using the proceeds to pay down certain existing debt obligations to lower
our debt service requirements. Under this plan, we expect to reduce the risk of
potential noncompliance with our debt covenants. However, there can be no
assurance that we will be successful in negotiating for these terms with
Berkshire Bank or any other lender.

In addition to the cash commitments required under our financing arrangements
with Berkshire Bank, we also anticipate that we will spend approximately $1.3
million in new factory machinery and equipment during fiscal 2023.

At March 31, 2022, we had cash and cash equivalents of $1.1 million and working
capital of $2.8 million, a decrease when compared to March 31, 2021. We believe
our available cash, plus cash expected to be provided by operations, Employee
Retention Credit cash refunds, and borrowing capacity available under the
revolver loan will be sufficient to fund our operations, expected capital
expenditures, and principal and interest payments under our lease and debt
obligations through the next 12 months from the issuance date of our financial
statements. Our revolver loan matures in December 2022 and will not be available
to provide liquidity unless it is renewed. The Company intends to renew the
revolver loan with Berkshire Bank or another lender. There was $1.3 million
outstanding under the revolver loan at March 31, 2022. Unused borrowing capacity
at March 31, 2022 was approximately $2.8 million.

In order for us to continue operations beyond the next twelve months and be able
to discharge our liabilities and commitments in the normal course of business,
we must secure long-term financing on terms consistent with our near-term
business plans. In addition, we must change the composition of our revenues at
Stadco to focus on recurring profitable projects which efficiently use our
manufacturing capacity and reduce our operating expenses to be in line with
current business conditions in order to increase profit margins and decrease the
amount of cash used in operations. These factors raise substantial doubt about
our ability to continue as a going concern. If successful in changing the
composition of projects and reducing costs, we expect that fiscal 2023 operating
results will reflect positive cash flows. We plan to closely monitor our
expenses and, if required, will reduce operating costs and capital spending

to
enhance liquidity.

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The table below presents selected liquidity and capital measures at the
fiscal years ended:

                               March 31,      March 31,      Change
(dollars in thousands)           2022           2021         Amount
Cash and cash equivalents     $     1,052    $     2,131    $ (1,079)
Working capital               $     2,753    $     5,202    $ (2,449)
Total debt                    $     7,356    $     3,829    $   3,527
Total stockholders' equity    $    15,264    $     9,942    $   5,322

The next table summarizes changes in cash by primary component in the cash flows statements for the fiscal years ended:

                                   March 31,      March 31,      Change
(dollars in thousands)                2022          2021         Amount
Operating activities               $      258    $       636    $   (378)
Investing activities                  (8,735)          (608)      (8,127)
Financing activities                    7,398          1,172        6,226

Net (decrease) increase in cash $ (1,079) $ 1,200 $ (2,279)

Operating activities

Apart from our loan facilities, our primary sources of cash are from accounts
receivable collections. 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 we mark progress with customer
projects and the composition of our receivables collections mix changes between
advance payments and customer payments made after shipment of finished goods.

Cash provided by operating activities for the fiscal year ended March 31, 2022
was approximately $258,000, as operating cash inflows exceeded outflows in the
fourth quarter as work on new projects commenced and customer cash collections
increased. Cash outlays for the fiscal year ended March 31, 2022 includes a
payment of $0.5 million to plaintiffs for a court approved final class action
settlement, and $0.7 million of cash used to pay past due rent on the Stadco
property and buildings.

Overall, fiscal 2022 was marked by favorable project performance progress and
delivery schedules which led to timely customer payments. After a slower third
quarter, fourth quarter project activity at Ranor returned to normal levels as
customers made advance payments and progress payments for projects started in
December 2021.

Cash provided by operations for fiscal 2021 was $0.6 million. Favorable timing
with customer advance payments and progress payments resulted in higher amounts
of cash generated in the fourth quarter of fiscal 2021.

Investing activities

We purchased Stadco's outstanding debt from Sunflower Bank, for $7.8 million,
net of cash acquired. We also invested approximately $0.9 million in new factory
machinery and equipment in fiscal 2022, and we estimate that we will spend
approximately $1.3 million for new machinery and equipment in fiscal 2023.

We invested approximately $0.6 million in new factory machinery and equipment in fiscal 2021.

Financing activities

We sourced $3.5 million of cash by selling 3,202,727 shares of common stock at
$1.10 per share in a private placement financing and $4.0 million in new debt
with Berkshire bank. In addition, we drew down $4.6 million under the revolver
loan used to fund the acquisition and operating activities since August 25, 2021
and repaid $3.3 million through the end of March 31, 2022.

We used $0.5 million of cash to make periodic lease payments and pay off certain
lease and debt obligations, and $0.9 million of cash to pay private placement
closing costs, debt issue costs, and repay debt principal.

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All of the above activity resulted in a net decrease in cash of $1.1 million for
the fiscal year ended March 31, 2022 compared with a net increase in cash of
$1.2 million for the fiscal year ended March 31, 2021.

For the fiscal year ended March 31, 2021, we made principal payments of $0.1
million in connection with our term debt and finance lease obligations. On
May 8, 2020, we borrowed $1.3 million under the CARES Act payroll protection
program. On April 3, 2020 we borrowed $1.0 million under our Revolver loan, then
paid down $1.0 million in principal on June 30, 2020.

Berkshire Bank Loans

On August 25, 2021, the Company entered into an amended and restated loan
agreement with Berkshire Bank, or the "Loan Agreement". Under the Loan
Agreement, Berkshire Bank continues as lender of the original term loan to Ranor
in the principal amount of $2.85 million, or the "Ranor Term Loan" and the
revolving line of credit, or the "Revolver Loan". In addition, Berkshire Bank
provided to Stadco a term loan in the original amount of $4.0 million, or the
"Stadco Term Loan". The proceeds of the original Ranor Term Loan of $2.85
million were previously 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. The proceeds of the Stadco Term Loan were to be used to
support the acquisition of Stadco and refinance existing indebtedness of Stadco.

Payments for the original Ranor Term Loan began on January 20, 2017 and are 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 the maturity date. As amended, the Ranor Term Loan matured on
June 16, 2022, with a balloon payment of approximately $2.3 million due under
the terms of the Loan Agreement with Berkshire Bank.

On June 16, 2022, Ranor and certain affiliates of the Company entered into a
Third Amendment to Amended and Restated Loan Agreement and Third Amendment to
Promissory Note to further extend the maturity date of the Ranor Term Loan to
September 16, 2022. We expect to commence negotiations of a further amended and
restated loan agreement to refinance that debt with Berkshire Bank prior to

the
new maturity date.



Berkshire Bank made available to Ranor a revolving line of credit with,
following certain modifications, a maximum principal amount available of $5.0
million. The Company made a total of $4.6 million in drawdowns under the
Revolver Loan during fiscal 2022 and repaid $3.3 million of that principal
during the same fiscal year period. There was $1.3 million outstanding under the
Revolver Loan at March 31, 2022. Interest-only payments on advances made under
the Revolver Loan during the fiscal year ended March 31, 2022 totaled $16,368 at
a weighted average interest rate of 2.75%. Unused borrowing capacity at
March 31, 2022 was approximately $2.8 million.

On August 25, 2021, Stadco borrowed $4,000,000 from Berkshire Bank under the
Stadco Term Loan. 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 make monthly payments of principal and interest in the amount of
$54,390 each, with all outstanding principal and accrued interest due and
payable on August 25, 2028.

Small Business Administration Loan

On May 8, 2020, the Company, through its wholly owned subsidiary Ranor, Inc.,
issued a promissory note evidencing an unsecured PPP loan in the amount of
$1,317,100 made to Ranor under the CARES Act. This PPP loan was made through
Berkshire Bank.

Under the terms of the CARES Act, PPP loan recipients can apply for and be
granted forgiveness for all or a portion of loans granted under the PPP, with
such forgiveness to be determined, subject to limitations, based on the use of
the loan proceeds for payment of payroll costs, certain group health care
benefits and insurance premiums, and any payments of mortgage interest, rent,
and utilities.

The Company applied for loan forgiveness with the SBA under the Paycheck
Protection Program on March 26, 2021. On May 12, 2021, as authorized by Section
1106 of the CARES Act, the SBA remitted to Berkshire Bank, the lender of record,
a payment of principal and interest in the amount of $1,317,100 and $13,207,
respectively, for forgiveness of the Company's PPP loan. The funds credited to
the PPP loan paid this loan off in full. Loan forgiveness is recorded as a gain
under other income and expense in the consolidated statement of operations. The
Company applied for loan forgiveness with the SBA under the Paycheck Protection
Program on March 26, 2021.

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Commitments and Contractual Obligations

The 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 at March 31, 2022:

We enter into various commitments with suppliers for the purchase of raw

materials and work supplies. In accordance with U.S. GAAP, these purchase

obligations are not reflected in the accompanying consolidated balance sheets. ? Our outstanding unconditional contractual commitments, including for the

purchase of raw materials and supplies goods, totaled $5.8 million, all of it

due to be paid in fiscal 2023. These purchase commitments are in the normal

course of business.

Our long-term debt obligations, including fixed and variable-rate debt, totaled ? $7.4 million, with $4.2 million due in fiscal 2023, $0.5 million due in 2024

and $0.6 million due in 2025.

Our operating lease obligation of $7.6 million is for land and buildings at our ? Stadco operation through 2030; $0.8 million is due in fiscal 2023, $0.9 million

due in 2024 and $0.9 million due in 2025.

We believe our available cash, plus cash expected to be provided by operations
and borrowing capacity available under the revolver loan (until December 2022
when the Company expects to refinance) and Employee Retention Credit cash
refunds will be sufficient to fund our operations, expected capital
expenditures, and principal and interest payments under our lease and debt
obligations through the next 12 months from the issuance date of our financial
statements.

EBITDA Non-GAAP Financial Measure

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

We define EBITDA as net income plus interest, income taxes, depreciation, and
amortization. Net loss was $0.3 million for the fiscal year ended March 31,
2022, as compared to net income of $0.3 million for the year ended March 31,
2021. EBITDA, a non-GAAP financial measure, was $1.1 million for the year ended
March 31, 2022, as compared to $1.3 million for the year ended March 31, 2021.
The following table provides a reconciliation of EBITDA to net income, the most
directly comparable U.S. GAAP measure reported in our consolidated financial
statements for the fiscal years ended:

                                   March 31,      March 31,     Change
(dollars in thousands)               2022           2021        Amount
Net (loss) income                 $     (350)    $       321    $ (671)
Income tax (benefit) provision          (192)            105      (297)
Interest expense (1)                      269            202         67
Depreciation and amortization           1,460            704        756
EBITDA                            $     1,187    $     1,332    $ (145)

(1) Includes amortization of debt issue costs.

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