2013 Q4 Form 10-Q Financial Statement

#000095015914000065 Filed on February 13, 2014

View on sec.gov

Income Statement

Concept 2013 Q4 2013 Q1 2012 Q4
Revenue $5.167M $9.955M $7.294M
YoY Change -29.16% 63.76% -32.86%
Cost Of Revenue $4.395M $8.320M $5.410M
YoY Change -18.76% 36.84% -46.57%
Gross Profit $773.0K $1.631M $1.884M
YoY Change -58.97% 81450.0% 154.61%
Gross Profit Margin 14.96% 16.38% 25.83%
Selling, General & Admin $1.434M $1.940M $2.294M
YoY Change -37.48% -31.69% 19.22%
% of Gross Profit 185.53% 118.95% 121.75%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $240.0K $230.0K $194.9K
YoY Change 23.12% -25.81% 47.54%
% of Gross Profit 31.05% 14.1% 10.35%
Operating Expenses $1.434M $1.950M $2.294M
YoY Change -37.48% -31.1% 19.22%
Operating Profit -$661.5K -$319.0K -$409.7K
YoY Change 61.45% -88.72% -65.4%
Interest Expense $80.80K -$90.00K $64.92K
YoY Change 24.47% 80.0% -16.28%
% of Operating Profit
Other Income/Expense, Net -$96.20K $0.00 -$92.56K
YoY Change 3.93% 62.79%
Pretax Income -$757.7K -$410.0K -$502.3K
YoY Change 50.85% -85.76% -59.53%
Income Tax $0.00 $710.0K $43.22K
% Of Pretax Income
Net Earnings -$760.0K -$1.120M -$550.0K
YoY Change 38.18% -11.81% -52.1%
Net Earnings / Revenue -14.71% -11.25% -7.54%
Basic Earnings Per Share -$0.04 -$0.06 -$0.03
Diluted Earnings Per Share -$0.04 -$0.06 -$0.03
COMMON SHARES
Basic Shares Outstanding 20.27M shares 22.36M shares 19.09M shares
Diluted Shares Outstanding 20.27M shares 19.09M shares

Balance Sheet

Concept 2013 Q4 2013 Q1 2012 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $3.750M $3.080M $2.010M
YoY Change 86.57% 9.22% -34.95%
Cash & Equivalents $3.747M $3.075M $2.014M
Short-Term Investments
Other Short-Term Assets $1.675M $1.578M $1.712M
YoY Change -2.16% 6.16% 155.71%
Inventory $3.700M $4.650M $5.380M
Prepaid Expenses
Receivables $2.400M $4.331M $3.492M
Other Receivables $380.0K $370.0K $1.460M
Total Short-Term Assets $12.16M $14.27M $15.01M
YoY Change -18.99% -12.3% -7.11%
LONG-TERM ASSETS
Property, Plant & Equipment $6.693M $7.300M $7.250M
YoY Change -7.68% -1.29% -0.73%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $160.0K
YoY Change -58.97%
Total Long-Term Assets $6.692M $7.300M $7.410M
YoY Change -9.69% -6.22% -3.65%
TOTAL ASSETS
Total Short-Term Assets $12.16M $14.27M $15.01M
Total Long-Term Assets $6.692M $7.300M $7.410M
Total Assets $18.85M $21.57M $22.42M
YoY Change -15.91% -10.33% -5.99%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.023M $2.537M $2.449M
YoY Change -58.25% 86.33% 85.52%
Accrued Expenses $638.0K $1.875M $1.441M
YoY Change -55.73% -22.67% -18.1%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $500.0K $0.00
YoY Change
Long-Term Debt Due $5.200M $5.780M $940.0K
YoY Change 453.19% 325.0% -30.88%
Total Short-Term Liabilities $11.01M $11.18M $5.953M
YoY Change 84.91% 83.19% 25.21%
LONG-TERM LIABILITIES
Long-Term Debt $40.00K $30.00K $5.180M
YoY Change -99.23% -99.48% -10.84%
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities $40.00K $30.00K $5.180M
YoY Change -99.23% -99.48% -10.84%
TOTAL LIABILITIES
Total Short-Term Liabilities $11.01M $11.18M $5.953M
Total Long-Term Liabilities $40.00K $30.00K $5.180M
Total Liabilities $11.30M $11.47M $11.13M
YoY Change 1.53% -3.45% 4.31%
SHAREHOLDERS EQUITY
Retained Earnings $3.930M $5.045M
YoY Change -38.03% -33.7%
Common Stock $1.996K $1.956K
YoY Change 10.95% 11.71%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $7.550M $10.10M $11.29M
YoY Change
Total Liabilities & Shareholders Equity $18.85M $21.57M $22.42M
YoY Change -15.94% -10.33% -5.97%

Cashflow Statement

Concept 2013 Q4 2013 Q1 2012 Q4
OPERATING ACTIVITIES
Net Income -$760.0K -$1.120M -$550.0K
YoY Change 38.18% -11.81% -52.1%
Depreciation, Depletion And Amortization $240.0K $230.0K $194.9K
YoY Change 23.12% -25.81% 47.54%
Cash From Operating Activities $2.440M $1.130M $570.0K
YoY Change 328.07% 1030.0% -131.84%
INVESTING ACTIVITIES
Capital Expenditures $0.00 -$260.0K -$320.0K
YoY Change -100.0% -23.53%
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities $0.00 -$260.0K -$320.0K
YoY Change -100.0% -23.53%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -220.0K 200.0K -390.0K
YoY Change -43.59% -766.67% 11.43%
NET CHANGE
Cash From Operating Activities 2.440M 1.130M 570.0K
Cash From Investing Activities 0.000 -260.0K -320.0K
Cash From Financing Activities -220.0K 200.0K -390.0K
Net Change In Cash 2.220M 1.070M -140.0K
YoY Change -1685.71% -496.3% -93.46%
FREE CASH FLOW
Cash From Operating Activities $2.440M $1.130M $570.0K
Capital Expenditures $0.00 -$260.0K -$320.0K
Free Cash Flow $2.440M $1.390M $890.0K
YoY Change 174.16% 215.91% -149.72%

Facts In Submission

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<div style="font-size:10.0pt;font-family:Times New Roman;"> <p style="MARGIN: 0in 0in 0pt;"><b><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2">NOTE 1 - DESCRIPTION OF BUSINESS</font></b></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">TechPrecision Corporation is a custom manufacturer of large scale metal fabricated and machined precision components and equipment. We offer a full range of services required to transform metallic raw materials into precise finished products. We sell these finished products to customers in three main industry groups: naval/maritime, energy and precision industrial. These products are used in a variety of markets including the alternative energy, medical, nuclear, defense, commercial, and aerospace industries.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">We are a Delaware corporation organized in February&#160;2005 under the name Lounsberry Holdings II,&#160;Inc. The name was changed to TechPrecision Corporation on March&#160;6, 2006. TechPrecision is the parent company of Ranor,&#160;Inc., or Ranor, a Delaware corporation. On November&#160;4, 2010, TechPrecision announced it completed the formation of a wholly foreign owned enterprise (WFOE), under the laws of the People&#8217;s Republic of China, Wuxi Critical Mechanical Components Co.,&#160;Ltd., or WCMC, to meet growing demand for local manufacturing of components in China. TechPrecision, WCMC and Ranor are collectively referred to as the &#8220;Company,&#8221; &#8220;we,&#8221; &#8220;us&#8221; or &#8220;our.&#8221;</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><b><i><font style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2">Liquidity and Capital Resources</font></i></b></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">At December&#160;31, 2013, we were in default and continue to be in default with the Loan and Security Agreement between Ranor and Santander Bank, (formerly Sovereign Bank) or the Bank, dated February&#160;24, 2006, as amended, or the Loan Agreement. At March&#160;31, 2013, we were not in compliance with the fixed charges and interest coverage financial covenants under the Loan Agreement, and the Bank did not agree to waive our non-compliance with the covenants. As a result, we were in default at March&#160;31, 2013. In addition, the Bank did not renew the revolving credit facility which expired on July&#160;31, 2013. The Bank had the right to accelerate payment of the debt in full upon 60 days written notice. As a consequence, all amounts under the Loan Agreement are classified as a current liability at December&#160;31, 2013 ($5.2 million) and March&#160;31, 2013 ($5.8 million).</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">On January&#160;16, 2014, we signed a Debt Forbearance and Modification Agreement, or Forbearance Agreement, with the Bank. Under the terms of the Forbearance Agreement, the Bank agreed to forbear from accelerating the principal payment in full until the forbearance termination date on March&#160;31, 2014. In consideration for the granting of the Forbearance Agreement, we agreed, among other things, to: (i)&#160;have paid in full all interest and fees accrued under the Loan Agreement and other related documents through December&#160;31, 2013 (at such interest rate and in accordance with the terms therein); (ii)&#160;reimburse the Bank for appraisal costs in the amount of $11,240; (iii)&#160;an increase in the interest rate of 2% for the MDFA Revenue Bonds, Ranor Issue, Series&#160;2010A in the original aggregate principal amount of $4.25 million, or Series&#160;A Bonds, and the MDFA Revenue Bonds, Ranor Issue, Series&#160;2010B in the original aggregate principal amount of $1.95 million, or Series&#160;B Bonds, to 5.6% and 6%, respectively, until March&#160;31, 2014; (iv)&#160;the application of $394,329 and $445,671 of the Company&#8217;s restricted cash collateral deposit of $840,000 to pay off certain obligations under the Loan Agreement described above and the Series&#160;B Bonds respectively and (v)&#160;pay a forbearance fee of 3% of the net outstanding balance due from us to the Bank, which amounts to $128,433 due in installments until March&#160;31, 2014.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">The Forbearance Agreement amends the Loan Agreement to, among other things, prohibit the Company&#8217;s Leverage Ratio (as such term is defined in the Loan agreement) to be greater than 1.75 to 1.0.&#160; In the event we fail to complete a refinancing of the current outstanding obligations by March&#160;31, 2014, the interest rate on outstanding obligations will convert to the Default Interest Rate. Default Interest Rates as of April&#160;1, 2014 on the Series&#160;A and B Bonds would be 9.14% and 8.63%, respectively.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">We have incurred net losses of $3.0 million for the first nine months of the year ending March&#160;31, 2014, or fiscal 2014, and $2.4 million and $2.1 million for the annual periods ended March&#160;31, 2013 and 2012, respectively. At December&#160;31, 2013 we had cash and cash equivalents of $3.7 million of which $0.1 million is located in China and which we may not be able to repatriate for use in the U.S. without undue cost or expense if at all. We borrowed $0.5 million under our revolving line of credit during the quarter ended March&#160;31, 2013, and repaid this borrowing in full in July&#160;2013.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">These factors raise substantial doubt about our ability to continue as a going concern. 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 business plans. In addition, we must increase our backlog and change the composition of our revenues to focus on recurring unit of delivery projects rather than custom first article and prototyping projects which, in the past, were not an efficient use of 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. If we are successful in changing the composition of revenue and reducing costs, we expect that fiscal 2014 operating results will reflect positive operating cash flows. We have significantly reduced our selling, general and administrative expenses over the past nine months, and, if necessary, will continue to reduce operating costs and capital spending to enhance liquidity.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> <p style="MARGIN: 0in 0in 0pt;"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2">The condensed consolidated financial statements for the three and nine months ended December&#160;31, 2013 and the year ended March&#160;31, 2013, or fiscal 2013, were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should we be required to liquidate assets. Our ability to satisfy our total current liabilities of $11.0 million at December&#160;31, 2013 and to continue as a going concern is dependent upon the availability of and our ability to timely secure long-term financing and the successful execution of our operating plan. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.</font></p> <p style="MARGIN: 0in 0in 0pt;">&#160;</p> </div>
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