Techprecision Corp: Form 10-Q for the period ended Dec 31, 2025

Statement Regarding Forward Looking Disclosure

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes, which appear elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q, 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 quarterly 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 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:

• our reliance on individual purchase orders, rather than long-term contracts, to generate revenue;
• our ability to balance the composition of our revenue and effectively control operating expenses;
• external factors that may be outside of our control, including health emergencies, like epidemics or pandemics, conflicts in Eastern Europe and the Middle East, price inflation, increasing interest rates, and supply-chain inefficiencies;
• 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 tariffs, 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;
• our failure to maintain effective internal controls over financial reporting;
• general industry and market conditions and growth rates,
• unexpected costs, charges or expenses resulting from the recently terminated Stock Purchase Agreement; and
• those risks discussed in “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K, as well as those described in any other filings which we make with the SEC.

Overview

We 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.

The 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, welding, 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.

All 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.

The 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.

Our 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.

All manufacturing at Stadco is performed in accordance with customer requirements. Stadco is an AS 9100D and ISO 9001:2015 certificate holder and a NADCAP NonDestructive Testing certificate holder. Stadco is a U.S. defense-centric company with over 95% of its revenue in the defense sector. Stadco is registered and compliant with ITAR.

Custom Manufacturing

We 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.

We 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.

Changes 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.

We primarily serve customers in the defense and aerospace; secondarily in the precision industrial sectors. Within these sectors, we have manufactured custom components for US Navy submarines and aircraft carriers, USMC military helicopters, US defense and civilian aerospace programs.

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.

Recent Developments

Amendment to Amended and Restated Loan Agreement and to Second Amended and Restated Promissory Note

On January 12, 2026, Ranor and the other borrowers party thereto entered into a Thirteenth Amendment to Amended and Restated Loan Agreement and Eighth Amendment to Second Amended and Restated Promissory Note, or the “Thirteenth Admendment”, with Beacon Bank & Trust, successor by merger to Berkshire Bank, or the “Bank”. The Thirteenth Amendment, among other things, extends the maturity date of the Revolver Loan (as defined below) from January 16, 2026 to May 15, 2026.

Read about the Berkshire Bank Loans under the “Liquidity and Capital Resources” section below, for a discussion of the amended debt agreement and its impact on the Company’s liquidity and on-going operations.

Critical Accounting Policies and Estimates

The preparation of the condensed consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. 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 and income taxes. These estimates and assumptions require management’s most difficult, subjective or complex judgments. Actual results may vary under different assumptions or conditions.

We consider the principles and estimates applied for revenue recognition as one of our most critical accounting estimates. Our revenue can fluctuate from quarter-to-quarter as we measure revenue recognition over the duration of a project, or at the end of the project. The Company records most of its revenue over-time as it completes performance obligations or at a point-in-time, for example, at the delivery date, when control of the promised goods is transferred to the customer. Project volume for revenue recognized at a point-in-time is generally smaller, can fluctuate from period-to-period, and is difficult to forecast.

We measure progress for performance obligations satisfied over time using input methods such as labor hours expended. As a result, we review inputs and outputs and can estimate the remaining amounts of inputs needed to complete the work and therefore report an accurate amount of revenue each reporting period. The amount of revenue period-to-period will fluctuate based on project volume.

Our significant accounting policies are set forth in detail in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. There were no significant changes to our critical accounting policies during the three months ended December 31, 2025.

New Accounting Standards

See Note 2, Basis of Presentation and Significant Accounting Policies, in the Notes to the Unaudited Condensed Consolidated Financial Statements under “Item 1. Financial Statements”, for a discussion of recently adopted new accounting guidance.

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. It generally takes approximately twelve months or less to complete our manufacturing projects. However, contracts for larger complex components can take up to thirty-six months in general to complete. Units manufactured under the majority of our customer contracts have historically been delivered on time and with a positive gross margin. 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. Delays in any of these items 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.

We evaluate the performance of our segments based upon, among other things, segment revenue, operating profit and loss, and certain key performance indicators. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, certain retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments.

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.

Corporate expenses include stock-based compensation, board of director compensation, and other corporate general expenses not allocated to the segments. Prior period segment data is restated to reflect changes in the allocation of corporate expenses to the segments.

Three Months Ended December 31, 2025 and 2024

The following table presents revenue, cost of revenue and gross profit, consolidated and by reportable segment:

(dollars in thousands)

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Revenue

Consolidated – Revenue was $7,094 for the three months ended December 31, 2025, a decrease of $528 or 7% lower when compared with revenue for the three months ended December 31, 2024. Our rate of progress fulfilling obligations decreased at Stadco in the third quarter and resulted in a 10% year-over-year decline.

Ranor – Revenue was $4,362 for the three months ended December 31, 2025, an increase of $52 or 1% higher when compared with the same period a year ago on a favorable customer project mix as project work has shifted among our defense customers.

Stadco – Revenue was $2,984 for the three months ended December 31, 2025, a decrease of $328 or 10% lower when compared with the three months ended December 31, 2024. Under a changing project mix, our rate of progress fulfilling obligations decreased in the third quarter and dampened revenue recognition. A revenue decrease under our military space program was offset in part by an increase under our military aircraft program when compared with the same period a year ago.

Gross Profit and Gross Margin

Consolidated – Cost of revenue consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of revenue for the three months ended December 31, 2025, was $6,713 or 1% higher when compared to the three months ended December 31, 2024. The cost of revenue at Ranor and Stadco increased by 10% and 2%, respectively. As a result, gross profit decreased by $610, or 62% when compared to the same period a year ago. Gross margin for the three months ended December 31, 2025 was 6% compared to 13% in the same period a year ago.

Ranor – Cost of revenue increased by $269 or 10%, when compared with the same period in the prior year, but gross profit increased by $35 or 2% when compared to the same period a year ago. Gross margin expanded and the mix of favorable customer projects remains steady.

Stadco – Gross profit was negative $1,166 for the three months ended December 31, 2025 an increase of $645 when compared with the same period a year ago. Cost of revenue increased by $65 or 2%, as throughput was impacted by project changeovers and a smaller number of available workdays due to calendar year-end holidays. Also, there was an increase in certain loss provisions when compared with the same period a year ago.

Selling, General and Administrative (SG&A) Expenses

(dollars in thousands)

Consolidated – Total selling, general and administrative expenses for the three months ended December 31, 2025, increased by $46, or 3%, as an increase in stock-based compensation more than offset a decrease in outside advisory and office costs.

Ranor – SG&A expense decreased by $96 as lower allocated outside advisory and office costs more than offset an increase for compensation, benefits, and payroll taxes.

Stadco – SG&A expense decreased by $228 on lower allocated compensation, outside advisory and office costs.

Corporate and unallocated – SG&A increased by $370 primarily on a one-time stock-based compensation award for certain non-employee directors. Refer to Note 6 – Stock-Based Compensation in the Notes to Condensed Consolidated Financial Statements.

Operating income (loss)

(dollars in thousands)

Consolidated – As a result of the foregoing, for the three months ended December 31, 2025, we reported an operating loss of $1,352, compared with an operating loss of $696 for the three months ended December 31, 2024. The change was primarily due to higher operating losses at Stadco and an increase in stock-based compensation.

Ranor – Operating income increased on lower manufacturing costs and a favorable project mix.

Stadco – Operating loss increased on lower revenue, slower throughput and manufacturing costs that increased by 2%.

Corporate and unallocated – Operating loss increased primarily due to an increase in stock-based compensation.

Other income (expense)

The following table presents other income (expense) for the three months ended:

Interest expense decreased by $14 when compared with the same period a year ago, as lower interest expense was incurred in connection with the Ranor term loan and Stadco term loan (each as defined below) and borrowings under our revolving line of credit with the Bank, or the “Revolver Loan”.

Amortization of debt issue costs for the three months ended December 31, 2025 decreased by $12 when compared to three months ended December 31, 2024, due primarily to lower amortized issue costs in connection with revolver loan renewal.

Other income, net for the three months ended December 31, 2024 includes a $45 payment receipt for non - operating filming activities and other expense of $1.

Income Tax expense

For the three months ended December 31, 2025, there has been no change in our judgment about the realizability of deferred tax assets in future years, and, therefore, no expense or benefit provided for income taxes.

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 December 31, 2025 was approximately $6,000. 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.

Net loss

As a result of the foregoing, for the three months ended December 31, 2025, we recorded a net loss of $1,473, or $0.15 per share basic and fully diluted, compared with a net loss of $799, or $0.08 per share basic and fully diluted for the three months ended December 31, 2024.

Nine Months Ended December 31, 2025 and 2024

The following table presents revenue, cost of revenue and gross profit, consolidated and by reportable segment:

(dollars in thousands)

Revenue

Consolidated – Revenue was $23,559 for the nine months ended December 31, 2025, a decrease of $995 or 4% when compared to revenue for the nine months ended December 31, 2024. Project mix remains favorable at both Stadco and Ranor. Consolidated gross profit and gross margin expanded during the nine months ended December 31, 2025 when compared to the same period a year ago, but our rate of progress fulfilling obligations slowed in the third quarter and dampened revenue recognition at Stadco.

Ranor – Revenue was $13,032 for the nine months ended December 31, 2025, a decrease of $450 or 3% when compared to the same period a year ago. Our customer project mix remains favorable and has changed slightly from the same prior year period. Revenue increased due to work on new components for certain defense customers who were not part of the prior year nine month project mix, and decreased year-over-year with the other remaining defense customers who were part of the project mix for both comparable reporting periods.

The backlog at Ranor on December 31, 2025 was $22,755 as new orders continue to flow to us from our existing customer base of prime defense contractors.

Stadco – Revenue was $11,135 for the nine months ended December 31, 2025, compared with revenue of $11,139 for the nine months ended December 31, 2024, a decrease of $4. Revenue recognized on projects in the current fiscal year included more projects with higher revenue and gross margin when compared with the project mix a year ago.

Stadco’s backlog as of December 31, 2025 was $23,207 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.

Gross Profit and Gross Margin

Consolidated – Cost of revenue consists primarily of raw materials, parts, labor, overhead and subcontracting costs. Our cost of revenue for the nine months ended December 31, 2025, was $19,690, or 12% lower when compared to the nine months ended December 31, 2024. The decrease in cost of revenue was primarily the result of a favorable project mix at both Ranor and Stadco. As a result, gross profit increased by $1,625, or 72% when compared to the same period a year ago. Gross margin for the nine months ended December 31, 2025 was 16% compared to 9% in the same period a year ago.

Ranor – Gross profit increased by $982 or 23% when compared to the same period a year ago. Cost of revenue decreased by $933 or 10%, when compared with the same period in the prior year, as gross margin expanded under a favorable project mix.

Stadco – Gross profit was negative $1,379 for the nine months ended December 31, 2025, but our losses decreased by $643 when compared to the same period a year ago. Cost of revenue decreased by $1,145 or 9%, as we achieved productivity efficiencies with manufacturing during the nine months ended.

Selling, General and Administrative (SG&A) Expenses

(dollars in thousands)

Consolidated – Total selling, general and administrative expenses for the nine months ended December 31, 2025, decreased by $27, or 1%, as a decrease in office costs more than offset an increase in compensation and benefits.

Ranor – SG&A expense increased by $100 primarily for allocated compensation, benefits, and payroll taxes, reflecting staff additions to back-office support when compared with the same period a year ago.

Stadco – SG&A expense decreased by $215 primarily on a decrease in allocated outside advisory costs, offset in part by an increase in allocated compensation, benefits, and payroll taxes.

Corporate and unallocated – SG&A increased year-over-year, primarily on an increase for stock-based compensation of $482 and board fees for $25. That increase was offset in part by a decrease for breakup fees related to that change in fair value ($419) in connection with the terminated Votaw Precision Technologies, Inc., the “Votaw” acquisition, in the nine months ended December 31, 2024.

Operating income (loss)

(dollars in thousands)

Consolidated – As a result of the foregoing, for the nine months ended December 31, 2025, we reported an operating loss of $873 compared with operating loss of $2,525 for the nine months ended December 31, 2024. The change was primarily due to lower operating losses at Stadco and increased profitability at Ranor.

Ranor – Operating income and profit margins expanded on a lower manufacturing costs and improved productivity.

Stadco – Operating loss narrowed as manufacturing costs decreased on efficient throughput.

Corporate and unallocated – Operating loss decreased on that change in fair value ($419) in connection with the breakup fees for the terminated Votaw acquisition in fiscal 2025, offset in part by a total increase of $507 for stock based compensation and board fees.

Other Income (Expense)

The following table presents other income (expense) for the nine months ended:

Interest expense decreased by $7 when compared with the same period a year ago, as lower scheduled interest payments in connection with the Ranor Term Loan and the Stadco Term Loan more than offset an increase in interest expense under the Revolver Loan.

Amortization of debt issue costs for the nine months ended December 31, 2025 decreased by $11 for amortized issue costs in connection with both the Ranor Term Loan, the Stadco Term Loan and the Revolver Loan.

Other income for the nine months ended December 31, 2024, includes a $45 payment for non - operating filming activities, a vendor rebate for $11 and interest income.

Income Tax expense

For the nine months ended December 31, 2025, there has been no change in our judgment about the realizability of deferred tax assets in future years, and, therefore, no expense or benefit provided for income taxes.

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 December 31, 2025 was approximately $6,000. 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.

Net loss

As a result of the foregoing, for the nine months ended December 31, 2025, we recorded a net loss of $1,245, or $0.13 per share basic and fully diluted, compared with a net loss of $2,860, or $0.30 per share basic and fully diluted for the nine months ended December 31, 2024.

Liquidity, Capital Resources and Going Concern

Our liquidity is highly dependent on the availability of financing facilities and our ability to maintain gross profit and operating income. As of December 31, 2025, we had $747 in total available liquidity, consisting of $697 in undrawn capacity under our Revolver Loan and $50 in cash and cash equivalents. As of March 31, 2025, we had $1,451 in total available liquidity, consisting of $195 in cash and cash equivalents and $1,256 in undrawn capacity under our Revolver Loan. Our working capital was negative because of the reclassification of our long-term debt from noncurrent to current in the condensed consolidated balance sheet.

There was $2,926 and $3,150 outstanding under the Revolver Loan on December 31, 2025 and March 31, 2025, respectively. The Company pays interest at an adjusted SOFR - based rate. Interest - only payments on advances made under the Revolver Loan will continue to be payable monthly in arrears. Interest paid and accrued on advances made under the Revolver Loan during the nine months ended December 31, 2025 and 2024, totaled $153 and $146, respectively. The weighted average interest rate on December 31, 2025 and March 31, 2025 was 6.82% and 7.47%, respectively. The weighted average amount outstanding during the nine months ended December 31, 2025 was $2,966. Our working capital was negative on March 31, 2025 and December 31, 2025 because of the reclassification of our long-term debt from noncurrent to current in the condensed consolidated balance sheet. The table below presents selected liquidity and capital measures at the fiscal years ended:

(dollars in thousands)

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

(dollars in thousands)

Operating activities

Apart from our loan facilities, our primary sources of cash are from 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 mark progress with customer project milestones and the timing of progress payments.

Cash used in operating activities for the nine months ended December 31, 2025 and 2024 was $253 and $995, respectively. Non-cash adjustments to reconcile net loss to net cash used in operating activities for the nine months ended December 31, 2025 and 2024 totaled $2,732 and $2,806, respectively. For the nine months ended December 31, 2025 and 2024, we used $1,740 and $941 of cash, respectively, for changes in operating assets and liabilities.

Investing activities

For the nine months ended December 31, 2025 and 2024, we invested $3,255 and $2,796, respectively, in new factory machinery and equipment. We were reimbursed for certain purchases under a supplier development fund during the nine months ended December 31, 2025 and 2024 for $4,133 and $2,566, respectively.

Financing activities

We drew down $13,731 under our Revolver Loan during the nine months ended December 31, 2025, and repaid $13,955 during the same period. We also used $546 of cash to pay down debt principal, periodic lease payments, and debt issue costs to renew the Revolver Loan.

For the nine months ended December 31, 2024, we drew down $10,526 under the Revolver Loan and repaid $10,381 during the same period. We used $546 of cash to pay down debt principal, make periodic lease payments, and pay debt issue costs to renew the Revolver Loan. We also financed the purchase of certain equipment for $65.

On July 3, 2024, the Company sold 521,800 shares of the Company’s common stock, par value $0.0001 per share, and 521,800 common stock purchase warrants to purchase 521,800 shares of Common Stock in a private placement at an aggregate purchase price of $1,801. Placement agent’s fees in connection with the offering totaled $213.

All of the above activity resulted in a net decrease in cash of $145 for the nine months ended December 31, 2025 compared with a net increase in cash of $27 for the nine months ended December 31, 2024.

Bank Term Loans

On August 25, 2021, the Company entered into an amended and restated loan agreement with Berkshire Bank (as amended to date, the “Loan Agreement”). Under the Loan Agreement, the Bank will continue to provide the Ranor Term Loan and the Revolver Loan. In addition, the Bank provided a term loan to Stadco, the “Stadco Term Loan” in the original amount of $4,000. The proceeds of the original loan by the Bank to Ranor, the “Ranor Term Loan” of $2,850 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 used to support the acquisition of Stadco and refinance existing indebtedness of Stadco.

Since September 25, 2021 and on the 25th day of each month thereafter, Stadco has made 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. Interest on the Stadco Term Loan is due on unpaid balances at a fixed rate per annum equal to the 7-year Federal Home Loan Bank of Boston Classic Advance Rate plus 2.25%.

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.

Since December 20, 2021, Ranor and certain affiliates of the Company entered into thirteen separate amendments to the Amended and Restated Loan Agreement and First Amendment to Promissory Note 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.

As a result of Borrowers’ failure to satisfy certain debt covenants as of December 31, 2025 as set forth in the Loan Agreement, the borrowers acknowledge that a certain Event of Default has occurred and is continuing under the Loan Agreement. The Lender expressly reserves any and all rights and remedies available to it under the Loan Documents, the Collateral 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.

There was $6,677 and $7,387 outstanding under the Loan Agreement on December 31, 2025 and March 31, 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.

The Company is exploring 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.

In 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 financing by May 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.

The 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 condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.

Collateral securing all the above obligations comprises all personal and real property of the Company, including cash, accounts receivable, inventories, equipment, and financial assets.

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 on December 31, 2025:

• Our debt obligations, including fixed and variable-rate debt, totaled $6,692, and, because of current debt covenant violations, are classified as current in the condensed consolidated balance sheets.
• We enter into various commitments with suppliers for the purchase of raw materials and work supplies. Our outstanding unconditional contractual commitments, including for the purchase of raw materials and supplies goods, totaled approximately $4,758, all of it due to be paid within the next twelve months. These purchase commitments are in the normal course of business.
• We also have $9,825 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.
• Our operating lease obligations, including imputed interest, totaled $4,146 for buildings through 2030, with approximately $939 due annually for each of the next four years, and $391 in year five.

There are no off-balance sheet arrangements as of December 31, 2025.

EBITDA Non-GAAP Financial Measure

To complement our condensed consolidated statements of operations and condensed consolidated statements of cash flows, we use EBITDA, a non-GAAP financial measure. Net 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.

We define EBITDA as net loss plus interest, income taxes, depreciation, and amortization. For the three and nine months ended December 31, 2025 and 2024, net loss was $1,473 and $1,245, and $799 and $2,860, respectively. The following table provides a reconciliation of EBITDA to net loss, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements for the following periods:

(dollars in thousands)

(1) Includes amortization of debt issue costs.

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are controls and procedures that are designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and includes controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report, an evaluation was carried out, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting described below.

Management’s Responsibility for Internal Controls

The Company’s internal control over financial reporting is designed under the supervision of our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations Over Internal Controls

Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weaknesses

We identified five material weaknesses in our internal control over financial reporting as of March 31, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the preparation of our financial statements for our Annual Report on Form 10-K, for the fiscal year ended March 31, 2025, management identified the following material weaknesses that have not been remediated as of December 31, 2025:

1) Purchase accounting - we did not maintain proper controls, processes and procedures over the initial purchase accounting and the fair value accounting associated with our acquisition of Stadco in the fiscal year ended March 31, 2022 that were adequately designed, documented, and executed to support the accurate and timely reporting of our financial results regarding the initial purchase accounting and the fair value accounting associated with the Stadco acquisition.

2) Tax accounting - in fiscal 2023 and fiscal 2024 we did not maintain a sufficient complement of tax accounting personnel necessary to perform management review controls related to activities for extracting information to determine the valuation allowance at Stadco on a timely basis. Because of this material weakness, in fiscal 2023, we made a late or post-closing adjustment to our valuation allowance while preparing the consolidated financial statements and footnotes included in the Annual Report on Form 10-K. These conditions also led to certain omissions in the assessment of the valuation allowance during the third and fourth quarter of fiscal 2024.

3) Stadco accounting - we did not maintain a sufficient complement of resources and expertise on the Stadco accounting staff necessary to consistently perform management review controls over financial information and complete account reconciliations on a timely basis, to ensure all transactions are accurately captured and recorded prior to closing the books. The demand on our accounting resources is significant due to the manual nature of controls necessary to maintain effective control over Stadco’s legacy system. As a result of this material weakness, we made several post-closing adjustments for percentage-of-completion (POC) revenue projects. The adjustment corrected inputs for project revenues and costs in progress at Stadco, as the initial and correcting journal entries were not reconciled and posted in a timely manner during the year end reporting cycle. Because of the foregoing reasons, extra time was required to complete certain items with respect to the financial statement preparation, closing and review process for the year ended March 31, 2025 and 2024.

4) Accounting for impairment of long-lived assets - in the fourth quarter of fiscal 2025 we engaged a third-party specialist to perform an impairment test on the recoverability of long-lived assets triggered by a history of operating losses at Stadco. Because of our inability to close the Stadco books in a timely manner, extra time was required to complete certain tasks with respect to the impairment test, and we were not able to execute a timely management review of the valuation report. Because of this material weakness, we made a late journal entry to our general ledger which was subsequently reversed while preparing the consolidated financial statements and footnotes included in the Annual Report on Form 10-K. The demand on corporate accounting resources is significant due to the manual nature of controls necessary to maintain effective control over Stadco’s legacy accounting system and intensifies during the quarterly closings.

5) Segregation of duties – Duties are logically divided among people and processes to mitigate risks and meet financial reporting objectives. Inadequate segregation of duties could result in misappropriation of assets or intentional misstatements in the financial statements. Management performs an annual assessment including planning, scoping, documentation, and testing of controls. As a result of the assessment, we discovered that in fiscal 2025, we operated for a brief period when our interim CFO/Controller assumed roles as a reviewer and journal entry preparer with access to the general ledger and other financial reporting programs and spreadsheets. These conditions were temporary and existed during a brief period as the Company transitioned to our new CFO on March 31, 2025.

Notwithstanding the material weaknesses, management believes the condensed consolidated financial statements included in this Quarterly Annual Report on Form 10-Q present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.

Remediation of the Material Weaknesses

For the fiscal year ended March 31, 2025, we reviewed our entity level controls, staffing requirements and the cost/benefit for remediating our material weaknesses. In fiscal 2024, our management, with the oversight of our audit committee, began to implement a plan and take measures in order to remediate the underlying causes of the material weaknesses through the development and implementation of a thorough review of our procedures, policies, processes, and review controls to gain additional assurance regarding the remediation our accounting for acquisitions, income taxes, closing cycle time at Stadco, impairment of long-lived assets, and segregation of duties. This remediation process has not been completed, and the following is an update through the end of December 31, 2025:

1) Purchase accounting - The Company enhanced its working framework with a memorandum that depicts a clear, explicit roadmap for the purchase accounting guidance at every step. We will follow that roadmap and will implement new controls as required. We engaged a third-party specialist in July 2023 with the requisite knowledge to perform all required valuations and accounting for business combinations. That specialist worked with the Company on all the pre-acquisition activities, or due diligence, in connection with the terminated Votaw acquisition. The specialist was hired primarily to assure that certain accounting issues that arose in the Stadco acquisition would not re-occur with the purchase accounting for the acquisition of Votaw. In fiscal 2026, management will enhance its policy, procedures and process level controls on how it gathers and analyzes relevant facts and circumstances in connection with all complex business transactions. We will document the required evidence that needs to be maintained for each existing and new internal control, and communicate the requirements to key stakeholders. We will review and test our controls and procedures before making a final validation on operating effectiveness.

2) Tax accounting - Management’s plan required that it utilize a tax specialist with the requisite knowledge and resources to perform the required basic and detailed tax calculations so that all the parties can make a timely assessment of the Company’s tax provision. The Company engaged a new tax specialist in July 2023, and that tax specialist now prepares our interim and annual tax provisions, ensuring proper makeup and quarterly reviews of our deferred tax assets and liabilities and valuation allowance requirements. Management plans to review our controls and procedures for at least one more quarter in fiscal 2026 before making a final validation on operating effectiveness.

3) Stadco accounting - For the fiscal year ended March 31, 2025, we reviewed our entity level controls, staffing requirements and the cost/benefit for upgrading our legacy systems and accounting staff at Stadco. As a result of this review, we continue to transition the accounting function to the CFO office in Massachusetts, where expert and experienced personnel are in-place to execute a plan to a) improve the effectiveness and efficiency of the accounting operation, ensuring a timely closing cycle, b) improve the reliability of financial reporting, and c) ensure continued compliance with generally accepted accounting principles and applicable laws and regulations. We implemented these measures during fiscal 2024 and 2025, and we will monitor progress during fiscal 2026 as we facilitate remediation of the material weakness.

4) Accounting for impairment of long-lived assets - We will continue to engage a third-party specialist with the requisite knowledge to perform all required testing in connection with the impairment of long-lived assets. This specialist worked with the Company on acquisition activities in connection with the Stadco purchase. We identified the late journal entry as a control gap, i.e., the controls design was effective but did not operate as designed. Management will develop and implement a formal policy with related procedures to supplement existing controls to ensure a timely evaluation of triggering events and changes in circumstances that may indicate an impairment of long-lived assets. We will review and test the process again during the next impairment testing date before making a final validation on operating effectiveness.

5) Segregation of duties - This conflict has been resolved with the hiring of a new CFO on March 31, 2025, as duties are properly segregated under the CFO and controller’s office. We will continue to assess scoping, documentation, and testing of controls under the financial reporting function during the next fiscal year before making a final validation on operating effectiveness.

Management believes that the above actions continue the process of remediation for the material weakness as disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. We can provide no assurance as to when the remediation of these material weaknesses will be completed to provide for an effective control environment.

We have identified and will continue to strengthen our internal control over financial reporting. We are committed to continually improving our internal control process and will diligently review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may decide that additional measures are necessary to address control deficiencies.

Changes in Internal Control over Financial Reporting

Except as disclosed under “Management’s Remediation Plan”, for the quarter ended December 31, 2025, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.