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Executives

Brett Maas – Investor Relations

Leonard M. Anthony – Chairman and Principal Executive Officer

Richard F. Fitzgerald – Chief Financial Officer

Robert Francis – President and General Manager

Analysts

Walter Schenker – MAZ Partners LP

Anthony G. Polak – Aegis Capital Corp.

Ross Taylor – Somerset Capital Advisers LLC

TechPrecision Corporation (OTCQB:TPCS) F3Q2014 Earnings Conference Call February 12, 2014 4:30 PM ET

Operator

Good afternoon ladies and gentlemen and welcome to the TechPrecision Corporation, Third Quarter Fiscal 2014 Earnings Conference Call. During today’s presentation, all parties will be in listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions)

I would now like to turn the conference over to Mr. Brett Maas. Please go ahead sir.

Brett Maas

Thank you. On the call with us today are Leonard Anthony, Chairman of the Board of Directors and Principal Executive Officer; Rich Fitzgerald, Chief Financial Officer; and Bob Francis, President and General Manager of TechPrecision, Ranor Division. I’d like to mention that this call is being simulcast on the website at www.techprecision.com.

Before we begin, I would like to remind our listeners that management's remarks may contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your question.

Therefore, the company claims the protection of the Safe Harbor and forward-looking statements as contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and therefore we refer you to a more detailed discussion of risks and uncertainties in the company's financial filings with the SEC.

In addition, projections as to the company's future performance represents management's estimates as of today, February 12, 2014. TechPrecision assumes no obligation to revise or update these forward-looking statements.

With that out of the way, I would like to turn the call over to Leonard Anthony, Chairman of the Board and Principal Executive Officer, to provide opening remarks. Mr. Anthony?

Leonard M. Anthony

Great. Thanks, Brett, and good day to everyone and thanks for joining us. I’m pleased to report that we continue to make good progress and our efforts to complete a very challenging transition and turnaround at TechPrecision. While the progress is not yet evident in the [ph] financial results we’re reporting today, the financial results are in line with what we expected for the quarter and our operating performance on certain large orders and process has been outstanding.

Our backlog is strengthening, and we’re seeing positive indicators that the market customers that we’ve been pursuing for the past couple of years will finally mature into additional business.

Accordingly my confidence that fiscal 2015 and 2016 will be much better years for TechPrecision, has been increasing over the past few months. I will provide a bit more color and update on that progress in a minute, Rich will speak to the financial results and Bob Francis will provide an update on some near-term market opportunity.

In terms of the company’s progress, the $8.1 million purchase order that we announced just prior to our last earnings call for important customer at Precision Industrial segment is on plan to achieve the quality across in the deliveries, which will be completed by the end of May 2014. So ramp up in production level required for this order was significant, a, significant challenge for the team at Ranor and they have done a great job executing so far.

We are hopeful that our high quality and finally delivers on this order put us in a position for additional opportunity with this customer as the market for their product continues to grow. Another important customer Mevion Medical Systems recently achieved a critical milestone at the end of calendar 2013; it also increases our optimism with them.

In mid-December 2013, Mevion customers at St. Louis announced it was treating the first patient with MEVION S250 Proton Therapy System. This was a critical next step the rollout of the innovative cost effective and precise by with promises to greatly improve the treatment of specific types of the cancer. The MEVION S250 is the unique Proton therapy device designed to deliver precise doses of radiation while limiting unnecessary radiation to helping tissue.

Previously Proton therapy adoption was limited by the high cost of larger conventional system. But the MEVION S250 system offers significantly over capital on operating costs enabling a wider range of facilities to offer Proton therapy. TechPrecision has partnered with Mevion Systems since 2006 and in January 2013, we announced five-year agreement with them to exclusively produce the components for the S250 system.

Currently, there are 11 systems under active development in the U.S. alone. We expected our sales at Mevion will begin to increase as the MEVION S250 device begins to demonstrate the excess patient outcome with the lower cost profile than additional Proton Beam system.

As I mentioned on prior calls, we have a growing pipeline of business in our advanced segments. But it is not expected to materially contribute to revenues for at least a few more quarters. We have developed and built Tier 1 and Tier 2 relationship with our customers and continue to seek opportunities in this sector. In addition over the past year, we have increased our business development efforts with large prime defense contractors.

We believe there are additional opportunities to secure increased outsourcing business as defense contractors are actively looking to increase outsource content and certainly expand a defense program. Taken in the aggregate, potential future business for Mevion as well as other customers within our Precision Industrial segment and our defense customers provides us with significant optimism for fiscal 2015, 2016, and beyond. While we remain focused on our near-term challenges, which essentially as we continue to find ways to bridge the gap [indiscernible] the expected great future.

In that regard, we’re continuing to assess reduce and eliminate all amount of essential cost. We’ve made numerous changes to control expenses, free up resources and increase our manufacturing efficiency.

Our cost reduction initiatives continue to produce results sequentially SG&A expenses remain relatively unchanged but decreased by almost 37% from the same period last year. Over the past three quarters, we believe we have scaled, consolidated SG&A to a rational base line.

Our most significant near term challenge is getting the company refinanced in a way that fits its potential and cash flow profile. Subsequent for the calendar year end, we had announced a Forbearance agreement effective through March 31, 2014 with our current Bank.

We are in discussion with several financing sources that anticipate having at least the proportion of new financing arrangement in place before the expiration of the Forbearance period.

The Forbearance agreement covers the period of the Bank’s Forbearance from April 1, 2013 through March 31, 2014, a detail for that agreement are included in the 8-K we filed with the SEC regarding that matter. We appreciate our Bank’s patience and continuing support during our difficult transition period.

Now I would like to turn the call over to Rich Fitzgerald to discuss our financial results for the third quarter. Rich?

Richard F. Fitzgerald

Thank you, Len. First I’ll cover operating results for Q3 of fiscal 2014 and then I’ll cover the nine-month, year-to-date results. For the three months period ended December 31, 2013 revenue was $5.2 million, compared with $7.3 million in the same fiscal quarter one year ago. Net sales decreased in the precision industrial market on lower shipments of medical components, production furnaces and pressure vessels partially offset by increased sales to enable maritime and energy related customers.

Net sales at our WCMC division in China decreased by $1.3 million primarily due to weaker demand for production furnaces in China. The decreases in net sales were flat in a regular order flow from customers that they gauge market demand for new and existing products.

Gross profit for the quarter ended December 31, 2013 was approximately $0.8 million or 15% of sales, compared to a gross profit of $1.9 million or 26% of sales in the fiscal third quarter of last year.

Gross margin in any reporting period is impacted by the mix of services we provide on projects completed within that period. Accordingly, there can be variability due to the project mix when comparing period over period or year-over-year margin results. Certain low margin projects and contract losses reduced margins within the quarter.

The majority of these contract losses are from the first units of turbine base components being manufactured for customer at our Ranor subsidiary. The contract loss situation is somewhat a consequent of order delays from our Navion customer and other projects, which were expected to be at higher volumes than they have been the last three quarters in response to a deferral of Navion order volume in fiscal 2014, we backed over the defense contract that has proven a more challenging than originally estimated.

Turning to operating expenses; selling, general and administrative expenses for the third quarter were $1.4 million, which compares with $2.3 million of SG&A incurred in the third quarter prior year. The overall $0.9 million reduction in SG&A related spending represents a 37% reduction compared with the comparable spending in Q3 of last year.

Reduced SG&A headcount resulted in lower spending for compensation of benefit travel and outside advisory as well as travel and outside advisory services in Q3 of the current fiscal year.

Net loss for the quarter ended December 31, 2013 was $0.8 million, or $0.04 per share basic and fully diluted. This is based upon $20.3 million shares basic and fully diluted outstanding for the third quarter this year and compares with the net loss of $0.5 million, or $0.03 per share basic and fully diluted in the prior year. Last year’s per share metrics are based upon $19.1 million basic and fully diluted weighted average shares outstanding. The net loss for the period ended – for the quarter ended December 31, 2013, included non-cash expenses of approximately $0.3 million.

Moving on to year-to-date results for the nine months ended December 31, 2013, consolidated sales decreased 22.5% to $17.5 million from the prior year’s reported sales of $22.5 million.

Turning to gross margin for the nine months ended December 31, 2013, gross margin was 11% or $1.9 million in gross profit, compared with gross profit margin of 22% or $4.9 million gross profit in the same period of fiscal 2013. Gross profit included the impact of contract losses aggregating $2 million on a – a majority of which were incurred on the initial unit turban base components we mentioned earlier at our Ranor facility. These components were initiated during the first quarter of fiscal 2014, and are expected to be completed in shift before the end of the first quarter of fiscal 2015.

Selling, general and administrative expenses for the nine months ended December 31, 2013, decreased to $4.7 million, or 27% of revenue from a level of $6.2 million, or 28% of revenues for the same nine months period in the prior year. This reflects the decrease of approximately $1.5 million, or 25% over last year’s SG&A level for the nine months period.

The decrease in SG&A expenses was primarily due to reduced spending of $0.7 million for compensation and benefits, $0.4 million for outside services, and $0.4 million for travel and business related expenses in fiscal 2014.

Net loss for the nine months ended December 31, 2013, was $3.0 million, or $0.15 a share basic and fully diluted. This is based upon $20.1 million shares basic and fully diluted outstanding and it compares to a net loss of $1.3 million, or $0.07 a share basic and fully diluted upon $18.1 million basic and fully diluted weighted average shares outstanding for the same nine months period last year. Net loss for the nine months period included non-cash expense of approximately $1 million.

Now for a cash flow recap, TechPrecision reported positive operating cash flow of $1.8 million for the period ended December 31, 2013, compared to a positive operating cash flow of $651,000 for the same period ended December 31, 2012.

During the nine months ended December 31, 2013, purchases of property, plant and equipment were $54,000 as compared to cash used in investing activities the prior year for property, plant and equipment of $395,000.

During the nine months ended 12/31/2013, the company paid down a net $1.1 million in long-term debt. Company’s revolving credit facility was also paid in full on July 31, 2012. As previously disclosed when the revolving credit facility expired on July 31, it was not renewed.

Turning to cash and balance sheet metrics as of December 31, 2013 cash and cash equivalents were $3.7 million compared to $3.1 million as of March 31, 2013. TechPrecision had positive working capital of $1.1 million after reclassifying all of the company’s $5.2 million in debt obligations this current liability. This compares with working capital of $3.1 million at March 31, 2013. You will find additional details on our filings submitted to the SEC.

Turning a little bit to the debt situation which we’re all tracking as governed by the Forbearance Agreement, we entered with our primary lender on January 16, 2014. We utilized $840,000 of collateral enhancement we had on deposit with our lender to retire certain debt facility aggregating $840,000.

With this off that now executed, we expect to conclude the March 31, 2014 quarter with total debt outstanding of approximately $4.3 million compared to $5.2 million of the total debt we’re reporting at the end of Q3. We also are in ongoing dialog with a number parties regarding the refinancing of our remaining debt facilities as called for under the Forbearance Agreement and we anticipate achieving progress on the refinancing efforts during the fourth quarter.

From the backlog perspective, our sales order backlog at December 31, 2013 was approximately $22.1 million compared with the backlog of $16.4 million reported at March 31, 2013. This is a positive trend in bookings and we look to build forward on it as we move forward.

With that brief financial recap, I’d now like to turn the call over to Bob Francis for an update on our operations at our Ranor division. Bob?

Robert Francis

Thanks, Rich. We will certainly discuss progress in some of our key verticals. As Len mentioned [indiscernible] world’s first MEVION S250 Proton Therapy System at the S. Lee Kling Proton Therapy Center at Barnes-Jewish Hospital in St. Louis.

In December, the first patient was treated and they continued with two more patients since December. The first patient is a rare type of cancer and is a first person in the world to receive proton therapy using the system.

With this milestone complete, we expect Mevion will begin to – in full production expectations during the next 12 months to 18 months. We’re doing the significant amount of coding and see substantial opportunities as for our several defense contractors with many of these opportunities we get in fiscal year 2015 and continuing into future fiscal years.

We are expecting that we will see releasing orders before the end of Q4 fiscal year 2014, but we can’t guarantee this, we also expect – still on schedule to release larger missile programs during our fiscal year 2015.

The programs have provided the best future opportunities are at the top of Navy’s funding priority list and to continue to gain funding in the future. As once stated, the aggregate opportunity from Mevion and defense related customers is significant. But the timing for volume productions remain several quarters out and specific timing is challenging to predict.

In the near term, we are focused upon executing on the large and short-term contract we received in November 2013, this contract calls for all deliveries to be complete by May 2014. Due to this we’ve actually ramped-up the 50 temporary employees and we expect significant deliveries during Q4, fiscal year 2014 and Q1 fiscal year 2015.

Now, I will turn the call back over to Len for some additional remarks. Len?

Leonard M. Anthony

Yes, thanks Bob. Our fourth quarter 2014 should be materially better than the past several quarters do in large part of a large and short term projects that we have discussed today and we discussed in our last call. And based on our current backlog plus identified opportunities and cost reduction efforts we’re confident that fiscal year 2015 which begins April 1st, should show significant improvements versus fiscal 2014. Our focus for the next quarter is to execute the significant orders and process to complete a refinancing and book some additional 2015 orders.

We do remain confident the majority of the opportunities in our pipeline ultimately will translate into orders as we work to redirect the company strategically. Begin to thank our long-term shareholders for their patience, as we work through the initiatives.

And now I’d like to open the call up for question. Thanks.

Question-and-Answer Session

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) And we have a question from the line of Walter Schenker with MAZ Partners. Please go ahead.

Walter Schenker – MAZ Partners LP

I apologize if there is background noises I’m in a car. Basically two questions one on Mevion and one on the Sapphire Chambers, on Mevion you indicated they had a 11 units to get the exact nomenclature you have produced components for how many of those, at this point and give any senses to what’s your backlog is, that’s one question.

And secondly can you give us any, tell us about what $8 million of Sapphire Chambers produced in useable volume I realize it depends what you turn it into now you guys didn’t cut it and everything else. I think there is been an fair amount of questions has to if that might be position the equipment to fulfill very large plant only part what might be required, we produce Sapphire in a very large plant. Thank you.

Leonard M. Anthony

Sure. We’ll start with the Rich answering the Mevion question specifically. Yeah I’ll try to give you color on Mevion and I’ll invite Bob to fill some piece and regular contact with the Mevion team. Yes, that the Mevion backlog right now is about a $1.8 million we’d like to see that be much larger. Walter can you repeat the question.

Walter Schenker – MAZ Partners LP

Out of the 11 units.

Leonard M. Anthony

Out of the 11 units. Yes, if you look at their website and this is featured on the Mevion website they list a 11 centers under active development, it’s our believe that we have supplied components for a good number three or four of those units there are the most advanced, the rest of the those units under development tend to be in some form of zoning early construction and there is still an opportunity for us to get orders on those.

Their backlog as they’ve communicated includes more than just be a 11 units under development and those units are roughly 22 units we understand to be their backlog, from a standard point of the units that are most advanced in their development, obviously the Siteman Cancer which began treatment in December is the most advanced. Right behind that is Robert Wood Johnson, the Orlando facility and the Oklahoma facility that have received most if not all of the components for the system. Currently the Siteman center is the only one in clinical operation actively treating patients, but I think Bob illuminated the number of patients that have been treated. Bob, anything else?

Unidentified Company Representative

Hey Walter, can you make your line as we respond because your background noise is really loud.

Robert Francis

Can’t get.

Richard F. Fitzgerald

Thank you.

Robert Francis

Yes, just confirming you said Rich, we’ve delivered the units through the fourth systems for Mevion. We’re currently manufacturing for the fifth and sixth systems and have delivered some parts for the fifth system. As far as the treatment goes they have treated three patients and are actually in the fourth and possibly the fifth, we haven’t got any confirmation with the patients yet. As far as the chambers gone I don’t know if you want me to answer some of that.

Walter Schenker – MAZ Partners LP

I’ll take that Bob but just one more thing on that beyond I think would be helpful for all investors and that is in terms of each one of these units, what is the size of the order that we would see in dollar to each unit. Do you have any sense I mean could you give us a range of what that is?

Robert Francis

For us we’re targeting between $2 million and $2.5 million per system that we deliver to them.

Walter Schenker – MAZ Partners LP

Okay, good.

Richard F. Fitzgerald

Then in terms of the Sapphire, Walter’s question was the perspective, what the $8.1 million worth of stuff that we’re making might produce in terms of Sapphire and frankly we don’t know what that would be and we can’t tell you. We think we’re – only a small portion of the total facility that’s being constructed.

Walter Schenker – MAZ Partners LP

Okay, thank you.

Richard F. Fitzgerald

Sure.

Operator

(Operator Instructions) And we have the question from Tony Polak with Aegis. Please go ahead.

Anthony G. Polak – Aegis Capital Corp.

Good afternoon.

Richard F. Fitzgerald

Good afternoon.

Anthony G. Polak – Aegis Capital Corp.

Could you give us a little feel on nuclear whether there is any business coming up on that?

Richard F. Fitzgerald

Yes, Bob maybe you could talk about that one.

Robert Francis

I’m sorry, what was the question?

Anthony G. Polak – Aegis Capital Corp.

The question on nuclear.

Robert Francis

Nuclear, we continue to see some strong orders from Westinghouse and we’ve been doing well with that customer and they appear to be getting into little more of an outsourcing situation because of their role, and they also – we know coding more overseas that might want to – thus being able to enjoy some other business there, we’ve also been pursuing several other customers in that arena.

We have been doing with AOS for the past couple of years and just in the process of completing delivery on the third and fourth AOS-100 Casks, which are used for transportation of nuclear materials and really want the materials and we’re in the process between now at the end of the fourth quarter also completing the first two AOS-50 Cask and we’re hopeful, we don’t have good backlog yet for next year and that we’re hopeful if those will get into service and the NRC will seek that to I would say demand or exact these caskets used for all that transport in the future.

Richard F. Fitzgerald

Another way to answer that Tony is roughly about 10% of our backlog is nuclear related the backlog we reported at the end of December.

Anthony G. Polak – Aegis Capital Corp.

Right. Could you give us an idea what the breakdown of the backlog is?

Richard F. Fitzgerald

Yes its roughly about 28% to 30% defense and then the remainder precision industrial.

Anthony G. Polak – Aegis Capital Corp.

Okay. Could you give us little more clarity on the preferred stock keep slowing down is that because you’re paying that all or because it’s convertible into common and then they have been selling?

Richard F. Fitzgerald

Yes thanks for that question Tony. Yes there is no coupon on the preferred, it is convertible in to common but it is only convertible in to common to a level where the holder once the holder achieves 4.9% of the common stock outstanding they’re locked out from any further conversions and there is somewhat of a meter on the pace at which they can convert and we and they obviously monitor that at each conversion.

You can see that during the third quarter there was a number of conversions executed by that holder and then you can also see in the subsequent event but now that there is a number of conversions that were orchestrated in January and February subsequent to the close of the third quarter, we’ve reported that volume. So at the end as we sit here on this call today, there is roughly $2.9 million of the preferred outstanding and that converts in to common at a rate of 1.307189 kind of. So that’s what remains out there but there has been a sizable amount of conversions over the last two, three months.

Anthony G. Polak – Aegis Capital Corp.

Right. So it’s about $3.8 million left on that shares possible?

Richard F. Fitzgerald

If you apply the conversion factor, yes.

Anthony G. Polak – Aegis Capital Corp.

Okay thank you.

Richard F. Fitzgerald

Thank you.

Operator

Our next question is from Ross Taylor with Somerset Capital. Please go ahead.

Ross Taylor – Somerset Capital Advisers LLC

Gentlemen, could you give us more background on the navy contract where we stand you said it is a portion of your backlog but basically how many [indiscernible] accounted for in your backlog if any at this point?

Richard F. Fitzgerald

Well we currently executing our, block 3 for the content that we have from our customers and that will continue the block 3 deliveries will continue through fiscal year 2015, where I spoke up earlier is block 4 and block 4 funding we understand our times that received it and they have told us that they are going to be going out for best and final offers between now and the end of March next replacing the orders and tenders are placed in March and that remains to be seen then we will do that but that Block 4 is for eight to nine subs worth of material and we certainly were expecting we would able to enjoy the same parts than we have on Block 3 or Block 4 and that would be work that we continue through calendar year 2018, 2019 in that ballpark.

Richard F. Fitzgerald

And on a per step basis what kind of value are you carrying per step if you carry this contract?

Leonard M. Anthony

It’s a price tag for Virginia-class sub business north of $2 billion, so we are a small piece of the total cost of that sub.

Ross Taylor - Somerset Capital Advisers LLC

How small and try to figure out certainly what it is?

Robert Francis

I would tell you that currently we’re carrying 25% to 28% of our backlog is maritime related including the sub.

Ross Taylor - Somerset Capital Advisers LLC

Okay. And how many subs are in that backlog right now?

Robert Francis

The way the orders come to us, you can’t necessarily discern that. We’re making the component and the primes are putting them into the ultimate deliverable to the government.

Ross Taylor - Somerset Capital Advisers LLC

Okay. I mean I just kind of get an idea of, do you sell $1 million per sub, $500,000 per sub, $3 million per sub, and then also looking forward, do you see the ability to significantly increase that and to what kind of magnitude?

Robert Francis

What – yeah, I…

Leonard Anthony

I would say per sub we’re in the $502 million, I think there is a very good range across all the products that we produce for them. When we do our competition for each of the products that we have, and we’ve done fairly well with our customers on that. And I would expect that we would be able to reach that level in block four and finishing up a little bit more beyond that.

Ross Taylor - Somerset Capital Advisers LLC

Okay. And well, have also can you talk about basically listen forward the next six months or so free cash generation, you actually have a fair mount of cash in the balance sheet at this point in time without a refi, you are now booking with working capital line, so it looks like you are carrying property a little bit more cash and you might otherwise need to carry in the future. But just the one particular contract coming up, I would suspect that you should be able to generate a fair mount of free cash flow at a time.

Leonard Anthony

Yeah, the way it’s going to work for us is initially the cash is going to get work down pretty quick, because that’s a very significant contract all that’s happening very rapidly, it’s going to be out and complete by the end of May. So there is going to be a period here we kind of burn up the cash that we generate free cash flow over the kind of probably first and second quarters of the next fiscal year. and we expected to be fairly material in terms of its cash generation ability.

Ross Taylor - Somerset Capital Advisers LLC

Okay. And what’s your hold up on the refi?

Leonard M. Anthony

Well, I don’t – I wouldn’t necessarily describe where we are as a hold up. I think as we have talked before what we have been trying to work our way through is first and get ourselves in a better position from a backlog perspective and an outlook perspective. So that as we talk the potential source of the capital we were talking about our rates, cost of financing more significant dilution for existing holders.

So, we’ve made that kind of progress I think and we’re in the process of examining several term sheet, several authority proposals, and again, as we have indicated we would expect to do something relatively soon, and we have a desire to do it sooner or rather than later as we proceed through this significant order, because as that said we will be burning up liquidity and we want to be in a stronger position going forward, both for that order and for the direct business that we hope to book.

And beyond that Ross, as you know, and as team last year, we reported in 10-K that we have material weakness in internal control over financial reporting we’re working to remediate that, we’re trying to put in place new financing. That also give us an opportunity to eliminate the going concern opinion that we have had. So we’re trying to pull all the pieces together in a logical way, so that we not only get liquidity at financing we need, but it helps us build a better company and want the customers feel much more comfortable with they make that.

Ross Taylor - Somerset Capital Advisers LLC

Okay. As a substantial holder we would agree, but we also think that getting it done, getting with that going concern overhang is an important step to moving the stock forward and getting value recognition by the market.

Leonard M. Anthony

Yes, while we completely agree with you and just to be clear simply getting a financing in place does not necessarily overcome the going churn issue. It’s going to be somewhat based on our ability to achieve recent forecast and then your examination of our outlook and kind of the risk associated with that. So, there is more work to do and just the financing.

Ross Taylor - Somerset Capital Advisers LLC

So, we understand, but obviously the financing is once that is done and done at a reasonable level, I think from the market perspective it takes away that risk?

Robert Francis

We’re right there with you – and Rich understands as soon as we finish this call, the priority is the refinancing that, but Len promising happening to the train so I get right on it.

Ross Taylor - Somerset Capital Advisers LLC

Good luck. Thank you, gentlemen.

Leonard M. Anthony

Thank you, Ross.

Operator

Our next question is from Alan Reacher with Private Investor. Please go ahead.

Unidentified Analyst

Gentlemen thank you for doing a good job of shrinking expenses last quarter, but seems to me its top line issue more than anything else after the short-term refinancing things out of the way. Could you provide a little color on what if anything you expect with regard to follow-up from the $8 million Sapphire Chamber order that’s in progress right now there’s been speculation that just a small fraction of what the ultimate requirements would be for this end customer?

Leonard M. Anthony

Yes, we have no knowledge of that and clearly that the end user is not about say what they’re plan is, they’re pretty secretive about those sorts of thing so. We don’t know, but we read the articles and we acknowledge to the products, the Sapphire products and if you had an iPhone and dropped kind of see what happens we understand the potential value here.

So, we think the significant upside opportunity in my earlier comments what I get with our focus is on trying to be the very best supplier of the products that we can supply into this project. Because, we think that will be the key and satisfying the ultimate customer and putting that’s in a favorable position as they began to use this product in more devices and not only phones maybe some other things that they look forward.

So, we believe that this kind of a sensible order for us to pursue, for us to bring as oppose to making it in China bring into the U.S. where we can make it that the absolute highest quality and we have the best production control so that we have kindly shipments for them. And therefore, we are working really hard bottom line, the position our self is best possible that we believe without any specific knowledge, but there is a huge outside opportunity. But, we can measure it, we don’t know where it is, we don’t know when it what else might come out of it. We think we’re doing what we can do to be best position to capitalize on it. We read the article just like you did and it gives us great encouragement.

Unidentified Analyst

But now preliminary discussions with GT with respect to follow on?

Leonard M. Anthony

No, just to be clear again that there is you read the article for ultimate customers there is not a lot of communication and there won’t to be. For many of those folks about what they are plans are kind of net cash, but this will happened when it happened. And the way you’ll see it in our business as you’ll see it in our backlog if we get more opportunities.

Unidentified Analyst

Thank you, keep up the good work.

Leonard M. Anthony

Thanks.

Operator

And there are no questions at this time. Please continue with any closing statements.

Leonard Anthony

Well, first of all thanks for the questions we did get. Thank you all very much for your time and attention in your investment in TechPrecision and continued opportunity to work for you. We’ll keep you updated and we make progress with the redirection of the company and stay tune for announcements on the refinancing and other matters as we completed. Thank you very much.

Operator

Ladies and gentlemen, that does conclude the TechPrecision Corporation third quarter fiscal 2014 earnings conference call. Thank for your participation. And you may now disconnect.

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