TPCS

Business Context and Reporting Period

TechPrecision Corporation (TPCS) is a custom manufacturer of precision, large-scale fabrication and machined metal structural components, primarily serving the defense and precision industrial sectors. The company operates through two reportable segments: Ranor (Massachusetts) and Stadco (California). This summary covers the quarterly period ended December 31, 2025 (Q3 2025), and the nine-month period ended December 31, 2025.

Key Financial Metrics

Note: All figures in millions unless otherwise noted. Available liquidity includes cash and undrawn revolver capacity.

Material Changes vs. Prior Period

• Revenue Decline: Q3 revenue decreased 7% year-over-year, driven primarily by a 10% decline at the Stadco segment due to slower project progress and a changing project mix. Ranor revenue remained relatively flat (+1%).
• Margin Compression: Q3 gross margin contracted significantly to 5.4% from 13.0% in the prior year. Stadco reported a negative gross profit of $(1.17) million in Q3, compared to $(0.52) million in Q3 2024, due to project changeovers, holiday impacts, and increased loss provisions.
• Operating Loss: The consolidated operating loss widened to $(1.35) million in Q3 from $(0.70) million in Q3 2024. This was exacerbated by a one-time stock-based compensation award to non-employee directors ($0.31 million) and continued operating losses at Stadco.
• Segment Performance: While Ranor generated operating income of $0.91 million in Q3, Stadco's operating loss deepened to $(1.85) million. Over the nine-month period, consolidated operating loss improved significantly to $(0.87) million from $(2.53) million, aided by improved profitability at Ranor and reduced losses at Stadco.

Outlook, Risks, and Contingencies

Going Concern and Liquidity

The filing raises substantial doubt about the company's ability to continue as a going concern for at least one year. Key factors include:

• Covenant Violations: The company failed to satisfy the balance sheet leverage covenant as of December 31, 2025, and previously failed the debt service coverage ratio. Consequently, all long-term debt has been reclassified as current.
• Default Status: An event of default has occurred and is continuing under the Loan Agreement with Beacon Bank & Trust. The lender has not granted a waiver and retains the right to accelerate repayment.
• Financing Needs: The company must renew its Revolver Loan or secure alternative financing by May 15, 2026 (extended from January 2026 via a recent amendment). Without this, the company lacks sufficient cash to satisfy obligations.

Management Commentary

Management plans to mitigate risks by making Stadco operations profitable, increasing manufacturing utilization, and reducing operating costs. The company is actively exploring alternative financing facilities.

Internal Controls

Management concluded that disclosure controls and procedures were not effective due to five material weaknesses in internal control over financial reporting, including issues with purchase accounting, tax accounting, Stadco accounting processes, impairment testing, and segregation of duties. Remediation efforts are ongoing but not yet complete.

Investor Verification Checklist

• Debt Covenant Status: Verify if a waiver has been obtained from Beacon Bank & Trust regarding the balance sheet leverage covenant violation.
• Financing Renewal: Confirm the status of the Revolver Loan renewal or alternative financing arrangements required by May 15, 2026.
• Stadco Turnaround: Monitor the trajectory of Stadco's gross margin and operating loss, which are currently negative and driving consolidated losses.
• Internal Control Remediation: Review progress on remediation of the five identified material weaknesses, particularly regarding the Stadco accounting legacy system and tax provisions.
• Cash Burn: Assess the sustainability of the current cash position ($50k) against operating cash outflows and debt service requirements.