
PART I Business TechPrecision manufactures precision metal components for defense, energy, and industrial sectors, operating on a build-to-print model with significant defense customer concentration - The company provides end-to-end services, transforming raw materials into precision finished products for customers in the defense, energy, and precision industrial markets11 - Operations are conducted on a "build-to-print" model, manufacturing products based on customer designs without owning intellectual property or manufacturing in anticipation of orders19 Net Sales by Industry Group (FY 2020 vs. FY 2019) | Industry Group | FY 2020 Sales ($ thousands) | FY 2020 Percent | FY 2019 Sales ($ thousands) | FY 2019 Percent | | :--- | :--- | :--- | :--- | :--- | | Defense | $13,368 | 83% | $15,060 | 90% | | Energy | $595 | 4% | $1,281 | 8% | | Precision Industrial | $2,044 | 13% | $361 | 2% | - The company experiences significant customer concentration, with the ten largest customers accounting for approximately 97% of total revenue in fiscal 2020 and 98% in fiscal 201934 - The company's order backlog increased to approximately $16.8 million at March 31, 2020, up from $12.6 million at March 31, 2019, expected to be delivered over the next two fiscal years38 - Designated an "Essential Service" during COVID-19, the company continued operations but faced impacts on customers, suppliers (extended lead times), and its labor force, securing a $1.32 million PPP loan in May 2020 to mitigate uncertainty232426 Risk Factors The company faces significant risks from competition, high customer concentration, reliance on purchase orders, COVID-19 impacts, single facility operations, and substantial indebtedness - The company is highly dependent on a small number of customers, with the largest customer accounting for 22% of revenue in FY2020 and the top three for 52% in FY2020 and 70% in FY201954 - The COVID-19 pandemic has negatively affected customers, suppliers, and the labor force, potentially leading to customer shutdowns, supply delays, and production disruptions, which could materially impact fiscal 2021 results5253 - A significant portion of revenue is derived from the defense industry (83% in fiscal 2020), making the company vulnerable to reductions or shifts in U.S. government defense spending74 - All manufacturing and production are conducted at a single facility in Westminster, Massachusetts, increasing exposure to business disruption from localized catastrophic events6465 - The company's level of indebtedness could impair its ability to operate, react to market changes, and fund operations, as a substantial portion of cash flow is dedicated to debt service89 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None115 Properties The company owns its 145,000 square foot office and manufacturing facility in Westminster, Massachusetts, which is collateral for its loans with Berkshire Bank - The company owns a 145,000 square foot office and manufacturing facility in Westminster, Massachusetts, adequate for current operations116 - The Westminster property is used as collateral to secure loans from Berkshire Bank116 Legal Proceedings The company agreed to a $495,000 settlement in a class-action lawsuit regarding a personal time off policy modification, pending court approval - A class-action lawsuit was filed by nine former employees of Ranor concerning a modification to the company's personal time off (PTO) policy in April 22014117 - On March 16, 2020, the parties agreed to a settlement of $495,000, to be paid within 60 days of court approval118 Mine Safety Disclosures This item is not applicable to the company - Not applicable to the registrant119 Information about our Executive Officers The company's executive officers are Alexander Shen (CEO) and Thomas Sammons (CFO), with brief biographies detailing their professional experience Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Alexander Shen | 58 | Chief Executive Officer | | Thomas Sammons | 65 | Chief Financial Officer | PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the OTCQB Market under "TPCS", with approximately 1,193 record holders, and no dividends are paid or anticipated due to loan restrictions - The company's common stock is traded on the OTCQB Market with the ticker symbol "TPCS"125 - As of May 26, 2020, there were approximately 1,193 record holders of common stock126 - The company has never paid dividends and does not plan to in the foreseeable future, with covenants in its Berkshire Bank loan agreement prohibiting dividend payments126 Selected Financial Data As a smaller reporting company, TechPrecision has elected not to provide the information required by this item - The company, as a smaller reporting company, has opted out of providing selected financial data128 Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2020 net sales decreased to $16.0 million, resulting in a net loss of $0.3 million due to lower gross margin, with anticipated COVID-19 impacts in fiscal 2021 and liquidity from operations and a PPP loan Results of Operations Fiscal 2020 saw net sales decrease 4% to $16.0 million, gross profit fall 32% to $3.1 million (margin 19.6%), leading to an operating loss of $0.1 million and a net loss of $0.3 million Consolidated Statement of Operations Summary (FY 2020 vs. FY 2019) | (in thousands) | FY 2020 | FY 2019 | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $16,007 | $16,703 | $(696) | (4)% | | Gross profit | $3,139 | $4,585 | $(1,446) | (32)% | | Operating (loss) income | $(142) | $1,838 | $(1,980) | (108)% | | Net (loss) income | $(342) | $1,101 | $(1,443) | (131)% | - Net sales decreased by 4% in fiscal 2020, driven by a $1.7 million decline in the defense market and a $0.7 million decline in the energy market, partially offset by a $1.7 million increase in the industrial market166 - Gross margin decreased from 27.6% in fiscal 2019 to 19.6% in fiscal 2020, primarily due to $1.0 million in cost overruns on certain customer projects and a higher allocation of labor to less profitable projects169170 - A provision of $495,000 was recorded for a claims settlement related to a civil action brought by former employees concerning a paid time-off program172 Liquidity and Capital Resources As of March 31, 2020, the company had $0.9 million in cash and $5.6 million in working capital, with $0.7 million net cash from operations, and secured a $1.3 million PPP loan post-year-end Selected Liquidity and Capital Measures (as of March 31) | (in thousands) | 2020 | 2019 | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $931 | $2,037 | $(1,106) | | Working capital | $5,595 | $6,250 | $(655) | | Total debt | $2,587 | $4,297 | $(1,710) | - In January 2020, the company repaid in full its indebtedness under two loan schedules with People's Capital and Leasing Corp., terminating the agreements177178 - In December 2019, the company modified its loan agreement with Berkshire Bank, increasing the maximum principal on its Revolver Loan from $1.0 million to $3.0 million and lowering the interest rate183184 - Subsequent to fiscal year-end, on May 8, 2020, the company obtained a $1,317,100 unsecured loan under the Paycheck Protection Program (PPP) to mitigate uncertainty caused by the COVID-19 pandemic181 Contractual Obligations as of March 31, 2020 | (in thousands) | Total ($ thousands) | Less than 1 Year ($ thousands) | 1-3 Years ($ thousands) | | :--- | :--- | :--- | :--- | | Debt obligations | $2,587 | $110 | $2,477 | | Interest on debt | $233 | $135 | $98 | | Purchase obligations | $1,095 | $1,095 | - | | Claims settlement | $495 | $495 | - | | Total | $4,794 | $2,219 | $2,575 | EBITDA Non-GAAP Financial Measure The company uses EBITDA, a non-GAAP measure, to evaluate operating performance, reporting $0.6 million for fiscal 2020, a significant decrease from $2.6 million in fiscal 2019 Reconciliation of Net (Loss) Income to EBITDA | (in thousands) | March 31, 2020 | March 31, 2019 | | :--- | :--- | :--- | | Net (loss) income | $(342) | $1,101 | | Income tax (benefit) expense | (73) | 423 | | Interest expense | 296 | 355 | | Depreciation | 718 | 750 | | EBITDA | $599 | $2,629 | Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, TechPrecision has elected not to provide the information required by this item - The company, as a smaller reporting company, has opted out of providing quantitative and qualitative disclosures about market risk196 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal years 2020 and 2019, including the independent auditor's report and detailed notes on accounting policies Consolidated Balance Sheets As of March 31, 2020, total assets were $14.6 million (down from $16.0 million in 2019), total liabilities decreased to $5.1 million (from $6.3 million), and stockholders' equity was $9.5 million Consolidated Balance Sheet Summary (as of March 31) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Assets | | | | Total current assets | $8,250 | $9,176 | | Total assets | $14,580 | $16,047 | | Liabilities & Equity | | | | Total current liabilities | $2,654 | $2,926 | | Total liabilities | $5,111 | $6,336 | | Total stockholders' equity | $9,469 | $9,711 | | Total liabilities and stockholders' equity | $14,580 | $16,047 | Consolidated Statements of Operations and Comprehensive (Loss) Income Fiscal 2020 net sales were $16.0 million, gross profit $3.1 million, resulting in an operating loss of $141,284 and a net loss of $341,569 (($0.01) per share), a significant decrease from fiscal 2019 Consolidated Statement of Operations Summary (Year Ended March 31) | (in thousands, except per share data) | 2020 | 2019 | | :--- | :--- | :--- | | Net sales | $16,007 | $16,703 | | Gross profit | $3,139 | $4,584 | | (Loss) income from operations | $(141) | $1,838 | | Net (loss) income | $(342) | $1,101 | | Net (loss) income per share – diluted | $(0.01) | $0.04 | Consolidated Statements of Cash Flows Fiscal 2020 saw $0.7 million net cash from operations, $40,000 used in investing, and $1.7 million used in financing (debt repayment), leading to a $1.1 million net decrease in cash and a $0.9 million year-end balance Consolidated Statement of Cash Flows Summary (Year Ended March 31) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $677 | $531 | | Net cash used in investing activities | $(40) | $(411) | | Net cash used in financing activities | $(1,743) | $(773) | | Net decrease in cash and cash equivalents | $(1,106) | $(652) | | Cash and cash equivalents, end of period | $931 | $2,037 | Notes to Consolidated Financial Statements Notes detail accounting policies, revenue recognition (ASC 606), $7.5 million federal net operating loss carryforwards, debt facilities, stock-based compensation, a $495,000 legal settlement, and a subsequent $1.3 million PPP loan - The company recognizes the majority of its revenue over time, using an inputs methodology based on estimated labor hours to measure performance progress, with $12.6 million of revenue recognized over-time and $3.4 million at a point-in-time in fiscal 2020227247 - As of March 31, 2020, the company had federal net operating loss carryforwards of approximately $7.5 million, which begin to expire in 2026254 - In January 2020, the company repaid in full its equipment loan facility with People's Capital and Leasing Corp288289 - Subsequent to the fiscal year-end, on May 8, 2020, the company's subsidiary Ranor received a loan of $1,317,100 under the Paycheck Protection Program (PPP)299 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None302 Controls and Procedures As of March 31, 2020, the CEO and CFO concluded that disclosure controls and internal control over financial reporting were effective, with no material changes reported - Management, including the CEO and CFO, concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective at a reasonable assurance level304 - Management assessed the effectiveness of internal control over financial reporting based on the 2013 COSO framework and concluded that it was effective as of March 31, 2020307 - There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2020 that materially affected, or are reasonably likely to materially affect, internal controls308 Other Information This item is not applicable - Not Applicable309 PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, audit committee, and code of ethics is incorporated by reference from the 2020 Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2020 Annual Meeting of Stockholders Proxy Statement311 Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2020 Annual Meeting of Stockholders Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2020 Annual Meeting of Stockholders Proxy Statement312 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's 2020 Annual Meeting of Stockholders Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2020 Annual Meeting of Stockholders Proxy Statement313 Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2020 Annual Meeting of Stockholders Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2020 Annual Meeting of Stockholders Proxy Statement314 Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's 2020 Annual Meeting of Stockholders Proxy Statement - Information required by this item is incorporated by reference from the registrant's 2020 Annual Meeting of Stockholders Proxy Statement315 PART IV Exhibits and Financial Statement Schedules This section lists financial statements and exhibits filed as part of the Form 10-K report, with financial statement schedules omitted as not applicable - This section lists the financial statements included in Item 8 and states that financial statement schedules have been omitted because they are not applicable or the required information is included elsewhere317 - An index of exhibits filed with the report is provided, including corporate governance documents, material contracts, and certifications318319 Form 10-K Summary The company reports that there is no Form 10-K summary - None321