10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to          

Commission file number 0-31313

BROADWIND ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	88-0409160
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

47 East Chicago Avenue, Suite 332, Naperville, IL 60540

(Address of principal executive offices)

(630) 637-0315

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

Number of shares of registrant’s common stock, par value $0.001, outstanding as of April 30, 2012: 139,854,757.

BROADWIND ENERGY, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Signatures		26

PART I.        FINANCIAL INFORMATION

Item 1.   Financial Statements

BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	March 31,			December 31,
	2012			2011
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,857		$	13,340
Restricted cash	404			876
Accounts receivable, net of allowance for doubtful accounts of $539 and $438 as of
March 31, 2012 and December 31, 2011, respectively	23,199			25,311
Inventories, net	32,368			23,355
Prepaid expenses and other current assets	3,350			4,033
Assets held for sale	8,050			8,052
Total current assets	78,228			74,967
Property and equipment, net	84,760			87,766
Intangible assets, net	8,999			9,214
Other assets	819			944
TOTAL ASSETS	$	172,806		$	172,891
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lines of credit and notes payable	$	1,586		$	1,566
Current maturities of long-term debt	604			636
Current portions of capital lease obligations	924			965
Accounts payable	24,945			17,358
Accrued liabilities	4,619			5,749
Customer deposits	14,600			17,328
Liabilities held for sale	4,583			4,833
Total current liabilities	51,861			48,435
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	4,598			4,797
Long-term capital lease obligations, net of current portions	827			975
Other	856			825
Total long-term liabilities	6,281			6,597
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding	—			—
Common stock, $0.001 par value; 150,000,000 shares authorized; 139,854,757 and 139,779,197
shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively	140			140
Additional paid-in capital	370,788			370,123
Accumulated deficit	(256,264		)	(252,404		)
Total stockholders’ equity	114,664			117,859
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	172,806		$	172,891

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2012			2011
Revenues	$	54,443		$	43,530
Cost of sales	51,822			40,951
Restructuring	389			—
Gross profit	2,232			2,579
OPERATING EXPENSES:
Selling, general and administrative	5,883			6,337
Intangible amortization	215			215
Restructuring	75			—
Total operating expenses	6,173			6,552
Operating loss	(3,941		)	(3,973		)
OTHER (EXPENSE) INCOME, net:
Interest expense, net	(262		)	(273		)
Other, net	363			210
Total other (expense) income, net	101			(63		)
Net loss from continuing operations before provision for income taxes	(3,840		)	(4,036		)
Provision for income taxes	20			17
LOSS FROM CONTINUING OPERATIONS	(3,860		)	(4,053		)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	—			(1,127		)
NET LOSS	$	(3,860	)	$	(5,180	)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations	$	(0.03	)	$	(0.04	)
Loss from discontinued operations	—			(0.01		)
Net loss	$	(0.03	)	$	(0.05	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted	139,796			107,108

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,860	)	$	(5,180	)
Loss from discontinued operations	—			1,127
Loss from continuing operations	(3,860		)	(4,053		)
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization expense	3,950			3,501
Stock-based compensation	665			369
Allowance for doubtful accounts	134			163
Common stock issued under defined contribution 401(k) plan	—			149
Loss on disposal of assets	23			82
Changes in operating assets and liabilities:
Accounts receivable	1,988			(1,213		)
Inventories	(9,007		)	984
Prepaid expenses and other current assets	932			(70		)
Accounts payable	7,588			(2,811		)
Accrued liabilities	(1,118		)	(41		)
Customer deposits	(2,729		)	12,247
Other non-current assets and liabilities	35			(136		)
Net cash (used in) provided by operating activities of continued operations	(1,399		)	9,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business	125			761
Purchases of available for sale securities	—			(102		)
Purchases of property and equipment	(715		)	(2,380		)
Proceeds from disposals of property and equipment	6			110
Decrease in restricted cash	472			—
Net cash used in investing activities of continued operations	(112		)	(1,611		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lines of credit and notes payable	(708		)	(467		)
Principal payments on capital leases	(264		)	(233		)
Net cash used in financing activities of continued operations	(972		)	(700		)
DISCONTINUED OPERATIONS:
Operating cash flows	—			(777		)
Investing cash flows	—			—
Financing cash flows	—			(83		)
Net cash used in discontinued operations	—			(860		)
Add: Cash balance of discontinued operations, beginning of period	—			530
Less: Cash balance of discontinued operations, end of period	—			—
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(2,483		)	6,530
CASH AND CASH EQUIVALENTS, beginning of the period	13,340			15,331
CASH AND CASH EQUIVALENTS, end of the period	$	10,857		$	21,861
Supplemental cash flow information:
Interest paid, net of capitalized interest	$	268		$	254
Income taxes paid	$	6		$	48
Non-cash investing and financing activities:
Issuance of restricted stock grants	$	409		$	146
Common stock issued under defined contribution 401(k) plan	$	—		$	149

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share and per share data)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2012. The December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2012 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Broadwind,” and the “Company” refer to Broadwind Energy, Inc., a Delaware corporation headquartered in Naperville, Illinois, and its wholly owned subsidiaries.

Broadwind provides technologically advanced high-value products and services to energy, mining and infrastructure sector customers, primarily in the U.S. The Company’s most significant presence is within the U.S. wind industry, although it has increasingly diversified into other industrial markets in order to improve its capacity utilization and reduce its exposure to uncertainty related to the extension or renewal of tax incentives and other favorable governmental policies currently supporting the U.S. wind industry. The Company’s product and service portfolio provides its wind energy customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of component and service offerings. Outside of the wind market, the Company provides precision gearing and specialty weldments to a broad range of industrial customers for oil and gas, mining and other industrial applications.

Liquidity

The Company has a limited history of operations and has incurred operating losses since inception. The Company anticipates that current cash resources and cash to be generated from operations over the next twelve months will be adequate to meet the Company’s liquidity needs for at least the next twelve months. As discussed further in Note 8, “Debt and Credit Agreements” of these consolidated financial statements, the Company is obligated to make principal payments on outstanding debt totaling $2,190 during the next twelve months, has $4,583 of indebtedness associated with its Liabilities Held for Sale and is obligated to make purchases totaling $390 during the same period under the purchase commitments described in Note 15, “Commitments and Contingencies” of these consolidated financial statements.

In addition, please refer to Note 17, “Restructuring” of these consolidated financial statements for a discussion of the Company’s restructuring plan through 2013 which the Company initiated in the third quarter of 2011. The Company expects that a total of approximately $12,800 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that $4,000 will be non-cash expenditures. The Company anticipates that the remaining cash expenditures will be funded substantially by net proceeds from asset sales of $7,500, as well as anticipated cash flow savings of $5,500 annually from the restructuring efforts.

If assumptions regarding the Company’s restructuring efforts, sales and subsequent collections from several of the Company’s large customers, as well as revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may encounter cash flow and liquidity issues. Additional funding may not be available when needed or on terms acceptable to the Company, which could affect its overall operations. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, will likely require financial covenants or impose

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other restrictions on the Company. While the Company believes that it will continue to have sufficient cash flows to operate its businesses and meet its financial debt covenants, there can be no assurances that its operations will generate sufficient cash or that credit facilities will be available in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs.

NOTE 2 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2011, as follows:

	Three Months Ended
	March 31,
	2012			2011
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,860	)	$	(5,180	)
Weighted average number of common shares outstanding	139,795,666			107,108,072
Basic net loss per share	$	(0.03	)	$	(0.05	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,860	)	$	(5,180	)
Weighted average number of common shares outstanding	139,795,666			107,108,072
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—
Weighted average number of common shares outstanding	139,795,666			107,108,072
Diluted net loss per share	$	(0.03	)	$	(0.05	)

(1) Stock options and unvested restricted stock units granted and outstanding of 4,651,277 and 2,311,633 as of March 31, 2012 and 2011, respectively, are excluded from the computation of diluted earnings per share due to the anti-dilutive effect as a result of the Company’s net loss for these respective periods.

NOTE 3 — DISCONTINUED OPERATIONS

In March 2011, the Company completed the divestiture of its logistics business, through the sale of its wholly owned subsidiary Badger Transport, Inc. (“Badger”) to BTI Logistics, LLC (“BTI Logistics”). Proceeds from the sale included approximately $800 in cash, a $1,500 secured promissory note payable in quarterly installments of $125 beginning September 30, 2011, and 100,000 shares of Broadwind common stock held by the buyer. The purchase price is subject to final working capital adjustments and certain contingencies and indemnifications. In addition, BTI Logistics assumed approximately $2,600 of debt and capital leases, plus approximately $1,600 of operating lease obligations.

Results of operations for Badger, which are reflected as discontinued operations in the Company’s consolidated statements of income for the three months ended March 31, 2012 and 2011, were as follows:

	Three Months Ended
	March 31,
	2012		2011
Revenues	$	—	$	435
Loss before benefit for income taxes	—		(1,125		)
Income tax provision	—		2
Loss from discontinued operations	$	—	$	(1,127	)

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NOTE 4 — CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash and cash equivalents comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. The Company’s treasury policy is to invest excess cash in money market funds or other short-term investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s condensed consolidated statements of operations. As of March 31, 2012 and December 31, 2011, cash and cash equivalents totaled $10,857 and $13,340, respectively. These amounts consisted of cash balances and investments in municipal bonds with original maturities of three months or less.

Cash and cash equivalents consisted of the following as of March 31, 2012 and December 31, 2011:

	March 31,		December 31,
	2012		2011
Cash and cash equivalents:
Cash	$	10,149	$	11,127
Certificates of deposits	708		707
Municipal bonds	—		1,506
Total cash and cash equivalents	10,857		13,340

NOTE 5 — INVENTORIES

The components of inventories as of March 31, 2012 and December 31, 2011 are summarized as follows:

	March 31,			December 31,
	2012			2011
Raw materials	$	18,241		$	11,943
Work-in-process	10,479			7,437
Finished goods	4,468			4,921
	33,188			24,301
Less: Reserve for excess and obsolete inventory	(820		)	(946		)
Net inventories	$	32,368		$	23,355

NOTE 6 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of its Gearing subsidiary completed during 2007. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 8 to 20 years. The Company tests intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. During the first quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of March 31, 2012.

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As of March 31, 2012 and December 31, 2011, the cost basis, accumulated amortization, impairment charge and net book value of intangible assets were as follows:

	March 31, 2012									December 31, 2011
								Net									Net
	Cost		Accumulated			Impairment		Book		Cost		Accumulated			Impairment		Book
	Basis		Amortization			Charge		Value		Basis		Amortization			Charge		Value
Intangible assets:
Customer relationships	$	3,979	$	(1,199	)	$	—	$	2,780	$	3,979	$	(1,084	)	$	—	$	2,895
Trade names	7,999		(1,780		)	—		6,219		7,999		(1,680		)	—		6,319
Intangible assets	$	11,978	$	(2,979	)	$	—	$	8,999	$	11,978	$	(2,764	)	$	—	$	9,214

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2012 and December 31, 2011 consisted of the following:

	March 31,		December 31,
	2012		2011
Accrued payroll and benefits	$	1,920	$	2,762
Accrued property taxes	293		250
Income taxes payable	393		386
Accrued professional fees	485		433
Accrued warranty liability	924		983
Accrued other	604		935
Total accrued liabilities	$	4,619	$	5,749

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2012 and December 31, 2011 consisted of the following:

	March 31,			December 31,
	2012			2011
Term loans and notes payable	$	6,788		$	6,999
Less: Current portion	(2,190		)	(2,202		)
Long-term debt, net of current maturities	$	4,598		$	4,797

Credit Facilities

Investors Community Bank Loans

On April 7, 2008, the Company’s wholly-owned subsidiary R.B.A. Inc. (“RBA”) executed four promissory notes with Investors Community Bank (“ICB”) in the aggregate principal amount of approximately $3,781. Three of these notes were term notes, with initial principal balances totaling $2,049, bearing interest at fixed rates ranging from 5.65% to 6.85% per annum, with maturities ranging from October 2012 to April 2013 (collectively, the “ICB Notes”). The fourth note was a line of credit note, which has been repaid in full.

Pursuant to the merger of RBA into the Company’s wholly-owned subsidiary Broadwind Towers, Inc. (f/k/a Tower Tech Systems Inc.) (“Broadwind Towers”) on December 31, 2009, the loans evidenced by the ICB Notes (collectively, the “ICB Loans”) were modified pursuant to a Master Amendment among ICB, Broadwind Towers and the Company (as guarantor) (the “Master Amendment”). Under the terms of the Master Amendment, Broadwind Towers agreed to a number of security and financial covenants. As the outstanding balances under the ICB Loans have declined, certain of these requirements have been removed through subsequent amendments to the Master Amendment. The remaining security requirements are that Broadwind Towers maintain a

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depository relationship of not less than $700 with ICB and maintain a debt service ratio of not less than 1.25 to 1.0 at all times. The ICB Loans are also secured by a mortgage on a facility owned by Broadwind Towers in Clintonville, Wisconsin, and by a guarantee from the Company. As of March 31, 2012, (i) the total amount of outstanding indebtedness under the ICB Notes was $1,031, (ii) the effective per annum interest rate under the ICB Notes was 5.72%, and (iii) Broadwind Towers was in compliance with all covenants under the documents evidencing and securing the ICB Loans.

Great Western Bank Loan

On April 28, 2009, Broadwind Towers entered into a Construction Loan Agreement with Great Western Bank (“GWB”), pursuant to which GWB agreed to provide up to $10,000 in financing (the “Construction Loan”) to fund construction of Broadwind Towers’ wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”). Pursuant to a Change in Terms Agreement dated April 5, 2010 between GWB and Broadwind Towers, the Construction Loan was converted to a term loan (the “GWB Term Loan”) providing for monthly payments of principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500, and changing the per annum interest rate to 8.5%.

The GWB Term Loan is secured by a first mortgage on the Brandon Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement, each between Broadwind Towers and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The GWB Term Loan contains representations, warranties and covenants that are customary for a term financing arrangement and contains no financial covenants. As of March 31, 2012, the total outstanding indebtedness under the GWB Term Loan was $4,583, which is recorded as Liabilities Held for Sale within the consolidated balance sheet in light of the Company having initiated a process to sell the Brandon Facility.

Wells Fargo Account Purchase Agreements

On September 29, 2010, the Company’s wholly-owned subsidiaries Broadwind Towers, Brad Foote Gear Works, Inc. (“Brad Foote”), Broadwind Services, LLC f/k/a Energy Maintenance Service, LLC (“Broadwind Services”) (collectively, the “Subsidiaries”), and Badger entered into account purchase agreements (the “AP Agreements”) with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. (“Wells Fargo”). Under the AP Agreements, when requested by the Company, Wells Fargo will advance funds against certain receivables arising from sales of the Subsidiaries’ products and services. In connection with the entry into the AP Agreements, the Company and each Subsidiary executed guaranties (including cross-guaranties) in favor of Wells Fargo. With respect to the Subsidiaries, the AP Agreements contain provisions providing for cross-defaults and cross-collateralization. In addition, each Subsidiary has granted to Wells Fargo a security interest against all financed receivables and related collateral. Prior to entering into the AP Agreements, there was no material relationship between the Company, the Subsidiaries and Wells Fargo.

Under the terms of the AP Agreements, when requested by the Company, Wells Fargo will advance approximately 80% of the face value of eligible receivables to the Subsidiaries. Wells Fargo will have full recourse to the Subsidiaries for collection of the financed receivables. The aggregate facility limit of the AP Agreements is $10,000. For Wells Fargo’s services under the AP Agreements, the Subsidiaries have agreed to pay Wells Fargo (i) a floating discount fee of the then-prevailing LIBOR plus 3.75% per annum on the sum of the outstanding financed accounts, (ii) an annual facility fee of 1% of the aggregate facility limit, and (iii) an annual unused line fee of 0.042% on the portion of the credit facility which is unused. The initial term of the AP Agreements ends on September 29, 2013. If the AP Agreements are terminated prior to this date, an early termination fee of up to 2% of the aggregate facility limit may apply. On October 19, 2011 the AP Agreements were amended to modify the month-end minimum total cash balance requirement from $5,000 to the greater of $2,000 or the outstanding purchased amount, not to exceed $5,000.

In connection with the sale of Badger to a third party purchaser in March 2011, the AP Agreement between Badger and Wells Fargo and the guaranty provided by Badger to Wells Fargo with respect to the other AP Agreements were each terminated, pursuant to an Omnibus Amendment to Account Purchase Agreements and Guaranties dated as of March 4, 2011, by and among the Company, the Subsidiaries and Wells Fargo.

During the first quarter of 2012 the Company financed approximately $4,238 of accounts receivable with Wells Fargo. At March 31, 2012, $2,917 of financed receivables remained outstanding, and the Subsidiaries had the ability to draw up to an additional $7,083.

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the “Settlement Agreement”) with the former owners of Brad Foote, including J. Cameron Drecoll, who served as the Company’s Chief Executive Officer and a member of its Board of

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Directors until December 1, 2010. The Settlement Agreement related to the post-closing escrow established in connection with the Company’s acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other terms, the Company issued three promissory notes to the former owners in the aggregate principal amount of $3,000 (the “Selling Shareholder Notes”). The Selling Shareholder Notes issued to the former owners other than Mr. Drecoll mature on May 28, 2012 and bear interest at a rate of 7% per annum, with interest payments due quarterly. The Selling Shareholder Note issued to Mr. Drecoll in the principal amount of $2,320 pursuant to the terms of the Settlement Agreement (the “Drecoll Note”) also was originally scheduled to mature on May 28, 2012 and bore interest at a rate of 7% per annum, with interest payments due quarterly; however, effective as of July 1, 2011, the Drecoll Note was amended and restated to effect the following modifications: (i) the maturity date was changed to January 10, 2014; (ii) the interest rate was changed to 9% per annum; and (iii) the payment schedule was changed to quarterly payments of principal and interest, such that the Drecoll Note is now self-amortizing with payments that commenced in the fourth quarter of 2011. The Company agreed to pay Mr. Drecoll a restructuring fee in the amount of $10 in connection with the restructuring of the Drecoll Note. As of March 31, 2012, principal of $2,576 and accrued interest of $55 were outstanding under the Selling Shareholder Notes.

Other

Included in Long Term Debt, Net of Current Maturities is $2,280 associated with the New Markets Tax Credit Agreement described further in Note 16, “New Markets Tax Credit” of these consolidated financial statements.

NOTE 9 — FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

Assets measured at fair value on a nonrecurring basis

The fair value measurement approach for long-lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of the Company’s future operating results, the implied fair value of these assets using an income approach by preparing a discounted cash flow analysis and a market-based approach based on the Company’s market capitalization, and other subjective assumptions. During the first quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of March 31, 2012.

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of March 31, 2012, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended March 31, 2012, the Company

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recorded a provision for income taxes of $20 from continuing operations compared to a provision for income taxes of $17 from continuing operations during the three months ended March 31, 2011. The increase in the provision for income taxes during the three months ended March 31, 2012, was primarily attributable to a change in state apportionment rates that caused a modest change in the current state taxes computed based upon gross margin.

The Company files income tax returns in U.S. federal and state jurisdictions. As of March 2012, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2011, the Company had federal net operating loss carryforwards of $136,189 expiring in various years through 2031. The majority of the federal net operating loss carryforwards will expire in 2028, 2029, 2030 and 2031. As of December 31, 2011, the Company also had unapportioned state net operating losses in the aggregate of approximately $136,189 expiring in various years through 2031.

The Company does not anticipate that there will be a material change in the total amount of its unrecognized tax benefits within the next twelve months. However, the Company has also considered the effect of U.S. Internal Revenue Code (“IRC”) Section 382 on its ability to utilize existing net operating losses. Under IRC Section 382, the use of net operating loss carryforwards and other tax credit carryforwards may be limited if a change in ownership of a company occurs. If it is determined that due to transactions involving the Company’s shares owned by its five percent shareholders a change of ownership has occurred under the provisions of IRC Section 382, the Company’s net operating loss carryforwards could be subject to significant limitations. Application of IRC Section 382 is complex and requires continuous evaluation and the Company’s current net operating loss carryforwards may be subject to significant future limitation.

As of March 31, 2012, the Company has $426 of unrecognized tax benefits, all of which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company has accrued interest and penalties of $140 as of March 31, 2012. As of December 31, 2011, the Company had unrecognized tax benefits of $417, of which, $131 represented accrued interest and penalties.  The change in unrecognized tax benefits is due to the additional accrual of interest for the period ended March 31, 2012 of $9, compared to $9 for the period ended March 31, 2011.

NOTE 11 — SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

2007 Equity Incentive Plan

The Company grants incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Company’s Board of Directors in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. Specifically, (i) the 2007 EIP was amended by the Company’s stockholders in June 2009 to increase the number of shares of common stock authorized for issuance under the 2007 EIP, (ii) the 2007 EIP was further amended and restated in March 2011 by the Company’s Board of Directors to limit share recycling under the 2007 EIP, to include a minimum vesting period for time-vesting restricted stock awards and restricted stock units and to add a clawback provision, and (iii) the 2007 EIP was further amended at the Company’s Annual Meeting of Stockholders on May 4, 2012 to increase the number of shares of common stock authorized for issuance under the 2007 EIP to provide sufficient authorized shares to settle certain awards granted in December 2011. As amended, the 2007 EIP reserves 6,910,510 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of March 31, 2012, the Company had reserved 1,250,636 shares for the exercise of stock options outstanding, 3,400,641 shares for restricted stock unit awards outstanding and 256,513 additional shares for future stock awards under the 2007 EIP. As of March 31, 2012, 592,210 shares of common stock reserved for stock options and restricted stock unit awards under the 2007 EIP have been issued in the form of common stock.

2012 Equity Incentive Plan

On March 8, 2012, the Company’s Board of Directors approved the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP” and together with the 2007 EIP, the “Equity Incentive Plans”), and at the Company’s Annual Meeting of Stockholders on May 4, 2012, the Company’s stockholders approved the adoption of the 2012 EIP. The purposes of the 2012 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2012 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2012 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and restricted stock units; and (v) performance awards. As of March 31, 2012, the Company had not reserved any shares for awards under the 2012 EIP and no shares had been issued in the form of common stock.

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Stock Options.  The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. If a plan participant’s employment is terminated during the vesting period, he or she forfeits the right to unvested stock option awards. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units.  The granting of restricted stock units is provided for under the Equity Incentive Plans. Restricted stock units generally vest on the anniversary of the grant date, with vesting terms that range from immediate vesting to five years from the date of grant. The fair value of each unit granted is equal to the closing price of the Company’s common stock on the date of grant and is expensed ratably over the vesting term of the restricted stock unit award. If a plan participant’s employment is terminated during the vesting period, he or she forfeits the right to any unvested portion of the restricted stock units.

The following table summarizes stock option activity during the three months ended March 31, 2012 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2011	1,275,115		$	6.01
Granted	—		$	—
Exercised	—		$	—
Forfeited	(24,479	)	$	5.98
Expired	—		$	—
Outstanding as of March 31, 2012	1,250,636		$	6.01
Exercisable as of March 31, 2012	1,072,237		$	6.30

The following table summarizes restricted stock unit activity during the three months ended March 31, 2012 under the Equity Incentive Plans, as follows:

	Number of Units		Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2011	3,646,299		$	1.32
Granted	—		$	—
Vested	(111,149	)	$	2.15
Forfeited	(134,509	)	$	1.42
Outstanding as of March 31, 2012	3,400,641		$	1.28

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. There were no stock options issued in the first quarter of 2012. The weighted average fair value per share of stock option awards granted during the three months ended March 31, 2011 and the assumptions used to value these stock options, are as follows:

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	Three Months Ended March 31,
	2012	2011
Dividend yield	—	—
Risk-free interest rate	—	2.6		%
Weighted average volatility	—	96.1		%
Expected life (in years)	—	6.3
Weighted average grant date fair value per share of options granted	—	$	1.05

Dividend yield is zero as the Company currently does not pay a dividend.

Risk-free rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the award.

During the three months ended March 31, 2011, the Company utilized a standard volatility assumption of 96.1% for estimating the fair value of stock options awarded based on comparable volatility averages for the energy related sector.

The expected life of each stock option award granted is derived using the “simplified method” for estimating the expected term of a “vanilla-option” in accordance with Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment,” as amended by SAB No. 110, “Share-Based Payment.” The fair value of each unit of restricted stock is equal to the fair market value of the Company’s common stock as of the date of grant.

The Company utilized a forfeiture rate of 25% during the three months ended March 31, 2011 for estimating the forfeitures of stock options granted.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2012 and 2011, as follows:

	Three Months Ended March 31,
	2012		2011
Share-based compensation expense:
Selling, general and administrative	$	665	$	369
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	665	$	369
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.00	$	0.00

(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the three months ended March 31, 2012 and 2011. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

(2) Diluted earnings per share for the three months ended March 31, 2012 and 2011 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented.

As of March 31, 2012, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and restricted stock units, in the amount of approximately $3,484 will be recognized through the year 2016. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

NOTE 12 — LEGAL PROCEEDINGS

Shareholder Lawsuits

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of Illinois, Eastern Division, against the Company and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff has been

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appointed and an amended complaint was filed on September 13, 2011. The amended complaint names as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint seeks to allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and/or Section 20(a) of the Exchange Act by issuing or causing to be issued a series of allegedly false and/or misleading statements concerning the Company’s financial results, operations, and prospects, including with respect to the January 2010 secondary public offering of the Company’s common stock. The plaintiffs allege that the Company’s statements were false and misleading because, among other things, the Company’s reported financial results during the class period allegedly violated generally accepted accounting principles because they failed to reflect the impairment of goodwill and other intangible assets, and the Company allegedly failed to disclose known trends and other information regarding certain customer relationships at Brad Foote. In support of their claims, the plaintiffs rely in part upon six alleged confidential informants, all of whom are alleged to be former employees of the Company. On November 18, 2011, the Company filed a motion to dismiss.  On April 19, 2012, the Court granted in part and denied in part the Company’s motion. The Court dismissed all claims with prejudice against each of the named current and former officers except for J. Cameron Drecoll and held that the plaintiffs had failed to state a claim for any alleged misstatements made after March 19, 2010. In addition, the Court dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The Court denied the motion with respect to certain of the claims asserted against the Company and Mr. Drecoll. The Company will be filing its answer and intends to vigorously defend the remaining claims asserted against it. Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against certain of the Company’s current and former officers and directors, and certain Tontine entities, seeking to challenge alleged breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of the Company’s common stock. One of the lawsuits also alleges that certain directors violated Section 14(a) of the Exchange Act in connection with the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders. Two of the matters pending in the federal court have been consolidated and the Company filed a motion to dismiss these matters on September 19, 2011, which is now fully briefed and awaiting a ruling. The Company has received a request from the Tontine defendants for indemnification in the derivative suits and the class action lawsuit and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. The Company maintains directors and officers liability insurance, however, the costs of indemnification for Mr. Gendell and/or Tontine would not be covered by any Company insurance policy. Because of the preliminary nature of these lawsuits, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

SEC Inquiry

In August 2011, the Company received a subpoena from the United States Securities and Exchange Commission (“SEC”) seeking documents and other records related to certain accounting practices at Brad Foote. The subpoena was issued in connection with an informal inquiry that the Company received from the SEC in November 2010 arising out of a whistleblower complaint received by the SEC related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been providing information to the SEC in response to the informal inquiry and subpoena. The Company cannot currently predict the outcome of this investigation. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. The Company has received a request from Tontine for indemnification of expenses incurred in connection with an SEC subpoena and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Environmental

The Company is aware of a grand jury investigation commenced by the United States Attorney’s Office, Northern District of Illinois, for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency entered and conducted a search of one of Brad Foote’s facilities in Cicero, Illinois, in connection with the alleged improper disposal of industrial wastewater to the sewer. Also on or about February 15, 2011, in connection with the same matter, the Company received two grand jury subpoenas requesting testimony and the production of certain documents relating to the Brad Foote facility’s past compliance with certain environmental laws and regulations relating to the generation, discharge and disposal of wastewater from certain of its processes between 2004 and the present. On or about February 23, 2011, the Company received another grand jury subpoena relating to the same investigation, requesting testimony and the production of certain other documents relating to certain of the Brad Foote facility’s employees, environmental and manufacturing processes, and disposal practices. The Company has produced e-mails, reports and correspondence as requested, and completed its response to these subpoenas on August 17, 2011.  The Company does not currently have information as to when the investigation may be concluded, and is also conducting an internal investigation of any possible non-compliance. The Company has also voluntarily instituted corrective measures at the Brad Foote facility, including changes to its wastewater disposal practices.  At this time, the Company has been advised that Brad Foote is a target of the investigation, but no fines or penalties have been suggested.  There can be no assurances that the conclusion of the investigation will not result in a determination that applicable environmental, health and safety

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laws and regulations were violated at the Brad Foote facility. Any violations found, or any criminal or civil fines, penalties and/or other sanctions imposed could be substantial and materially and adversely affect the Company. The Company had recorded a liability of $675 at December 31, 2010, which represented the low end of its estimate of remediation-related costs and expenses; as of March 31, 2012, those initial costs have been incurred, and additional costs have been expensed as incurred. No additional remediation related expenses are anticipated or have been accrued; however, the outcome of the investigation, the liability in connection therewith, and the impact to the Company’s operations cannot be predicted at this time. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial position or liquidity. It is possible that if one or more of the matters described above were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s cash flows in the periods the Company would be required to pay such liability.

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its consolidated financial statements.

NOTE 14 — SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products and services offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker. The Company’s segments and their product and service offerings are summarized below:

Towers and Weldments

The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for 2 megawatt (“MW”) and larger wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of approximately 500 towers, sufficient to support turbines generating more than 1,200 MW of power. This product segment also encompasses the manufacture of specialty fabrications and specialty weldments for mining and other industrial customers.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Services

The Company offers a comprehensive range of services, primarily to wind farm developers and operators. The Company specializes in non-routine maintenance services for both kilowatt and megawatt turbines. The Company also offers comprehensive field services to the wind industry. The Company is increasingly focusing its efforts on the identification and/or development of product and service offerings which will improve the reliability and efficiency of wind turbines, and therefore enhance the economic benefits to its customers. The Company provides wind services across the U.S., with primary service locations in South Dakota and Texas. In February 2011, the Company put into operation its dedicated drivetrain service center in Abilene, Texas, which is focused on servicing the growing installed base of MW wind turbines as they come off warranty and, to a limited extent, industrial gearboxes requiring precision repair and testing.

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Corporate and Other

“Corporate and Other” is comprised of adjustments to reconcile segment results to consolidated results, which primarily includes corporate administrative expenses and intercompany eliminations.

Summary financial information by reportable segment for the three months ended March 31, 2012 and 2011 was as follows:

	Revenues						Operating (Loss) Profit
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2012			2011			2012			2011
Segments:
Towers and Weldments	$	35,169		$	28,170		$	1,005		$	2,420
Gearing	16,032			13,553			(1,121		)	(2,397		)
Services	3,442			1,828			(1,623		)	(1,354		)
Corporate and Other (1)	(200		)	(21		)	(2,202		)	(2,642		)
	$	54,443		$	43,530		$	(3,941	)	$	(3,973	)

	Depreciation and Amortization				Capital Expenditures
	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2012		2011		2012		2011
Segments:
Towers and Weldments	$	876	$	879	$	31	$	105
Gearing	2,672		2,522		365		262
Services	385		56		242		1,995
Corporate and Other (1)	17		44		77		18
	$	3,950	$	3,501	$	715	$	2,380

	Total Assets as of
	March 31,		December 31,
	2012		2011
Segments:
Towers and Weldments	$	73,832	$	69,235
Gearing	72,825		72,699
Services	15,070		16,743
Assets held for sale	8,050		8,052
Corporate and Other (1)	3,029		6,162
	$	172,806	$	172,891

(1) “Corporate and Other” includes the assets and selling, general and administrative expenses of the Company’s corporate office, in addition to intercompany eliminations.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company completed construction of a wind tower manufacturing facility in Brandon, South Dakota, in the first quarter of 2010, but has not commenced production at this facility. During 2010 the Company concluded that it would be difficult or impossible to operate this facility in a profitable or cost-effective manner in light of the expected mid-term demand for wind towers. In connection with this determination, during the fourth quarter of 2010, the Company recorded an impairment charge of $13,326 to reduce the carrying value of the assets to fair value. The Company currently has purchase commitments totaling approximately $390 outstanding related to this facility.  In the third quarter of 2011, the Company initiated a process to sell the facility and reclassified the facility, and the related indebtedness, to Assets Held for Sale and Liabilities Held for Sale, respectively (see Note 17, “Restructuring” of these financial statements).

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use,

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handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws can also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners, operators and/or users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

Warranty Liability

The Company provides warranty terms that range from one to seven years for various products and services supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of March 31, 2012 and 2011, estimated product warranty liability was $924 and $919 respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets.

The changes in the carrying amount of the Company’s total product warranty liability for the three months ended March 31, 2012 and 2011 were as follows:

	March 31,			March 31,
	2012			2011
Balance, beginning of period	$	983		$	1,071
Warranty expense	(9		)	47
Warranty claims	(50		)	(199		)
Balance, end of period	$	924		$	919

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its accounts receivable. These factors include individual customer circumstances, history with the Company and other relevant criteria.

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the three months ended March 31, 2012 and 2011 consists of the following:

	For the three months ended March 31,
	2012			2011
Balance at beginning of year	$	438		$	489
Bad debt expense	132			154
Write-offs	(31		)	—
Balance at end of period	$	539		$	643

Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question.

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Other

As of March 31, 2012, approximately 22% of the Company’s employees were covered by two collective bargaining agreements with local unions in Cicero, Illinois and Neville Island, Pennsylvania. The collective bargaining agreements with the Company’s Cicero and Neville Island unions are scheduled to remain in effect through February 2014 and October 2012, respectively. The Company considers its union and employee relations to be satisfactory.

The sale price of the Company’s Badger subsidiary to BTI Logistics is subject to final working capital adjustments, certain contingencies and indemnifications.

On July 20, 2011, the Company entered into a strategic financing agreement including the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity and Capital One, National Association (“Capital One”). This agreement allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program, see Note 16, “New Markets Tax Credit Transaction” of these consolidated financial statements. Under the New Markets Tax Credit program, the gross loan and investment in the Company’s Abilene, Texas gearbox refurbishment facility (the “Gearbox Facility”) of $10,000 generates $3,900 in tax credits over a period of seven years, which the financing agreement makes available to Capital One. The Gearbox Facility must operate and be in compliance with the terms and conditions of the agreement during the seven year compliance period, or the Company may be liable for the recapture of $3,900 in tax credits to which Capital One is otherwise entitled. The Company does not anticipate any credit recaptures will be required in connection with this arrangement.

NOTE 16 — NEW MARKETS TAX CREDIT TRANSACTION

On July 20, 2011, the Company received $2,280 in proceeds via a transaction involving tax credits linked to the Company’s capital investment in the Gearbox Facility. The transaction qualifies under the NMTC program and included a gross loan from AMCREF to Broadwind Services in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF Investor VIII, LLC, with a term of fifteen years and interest payable at the rate of 2.5% per annum.

The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The program could generate $3,900 in tax credits which the Company has made available under the structure by passing them through to Capital One. Most of the proceeds have been applied to the Company’s recent investment in the Gearbox Facility assets and operating costs, as permitted under this program; the March 31, 2012 consolidated balance sheet has $174 in cash classified as restricted cash related to this arrangement which has yet to be used under this program.

The Gearbox Facility must operate and be in compliance with various regulations and restrictions for seven years to comply with terms of the agreement, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. The NMTC program tax credits are subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate any tax credit recapture events or that it will be required to make a payment to Capital One under the indemnification agreement.

The Capital One contribution has been included in the Company’s consolidated balance sheet at March 31, 2012. This transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest. Capital One may exercise an option to put its investment and receive $130 from the Company. If Capital One does not exercise its put option, the Company can exercise a call option at the then fair market value of the call. The Company believes that Capital One will exercise the put option in 2018 at the end of the recapture period. The Capital One contribution other than the amount allocated to the put obligation will be recognized as income only after the put/call is exercised and when Capital One has no ongoing interest. However, there is no legal obligation for Capital One to exercise the put, and the Company has attributed only an insignificant value to the put option included in this structure.

The Company has determined that two pass-through financing entities created under this structure are variable interest entities (“VIE’s”). The ongoing activities of the VIE’s—collecting and remitting interest and fees and complying with NMTC requirements—were considered in the initial design of the transaction and are not expected to significantly affect economic performance throughout the life of the VIE’s. Management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIE’s. The Company has concluded that it is required to consolidate the VIE’s because the Company has both (i) the power to direct those matters that most significantly impact the activities of the VIE and (ii) the obligation to absorb losses or the right to receive benefits of the VIE.

17

The $262 of issue costs paid to third parties are recorded as prepaid expenses, and are being amortized over the expected seven year term of the NMTC arrangement. Capital One’s net contribution of $2,280 is included in Long Term Debt, Net of Current Maturities in the consolidated balance sheet. Incremental costs to maintain the structure during the compliance period will be recognized as they are incurred.

NOTE 17 — RESTRUCTURING

During the third quarter of 2011, the Company conducted a review of its business strategies and product plans based on the outlook for the economy at large, the forecast for the industries it serves, and its business environment. The Company concluded that its manufacturing footprint and fixed cost base are too large and expensive for its medium-term needs and has begun restructuring its facility capacity and its management structure to consolidate and increase the efficiencies of its operations.

The Company plans to reduce its facility footprint by at least 30% through the sale and/or closure during the next fifteen months of facilities comprising a total of approximately 400,000 square feet. The Company believes the remaining locations will be sufficient to support its Towers and Weldments, Gearing, Services and general corporate and administrative activities, while allowing for growth for the next several years.

As part of this plan, in the third quarter of 2011, the Company determined that the Brandon Facility should be sold, and as a result the Company has reclassified the land, building and fixtures valued at $8,000 from Property and Equipment to Assets Held for Sale. In addition, the related indebtedness associated with the Brandon Facility of $4,583 has been reclassified from Long-Term Debt Net of Current Maturities and Current Maturities of Long-Term Debt to Liabilities Held for Sale. The Company expects that this sale will be completed in the next twelve months. The Company had previously recorded an impairment charge of $13,326 in the fourth quarter of 2010 to bring these assets to fair value; no further impairment charges were recorded.

Additional restructuring plans were approved in the fourth quarter of 2011. The Company expects to incur a total of $12,800 of expenses to implement its restructuring plan. Of the total projected expenses, the Company anticipates $4,000 will consist of non-cash expenditures. The Company expects the remaining cash expenditures will be funded substantially by net proceeds from asset sales of $7,500. The table below details the Company’s total expected restructuring charges as of March 31, 2012:

	2011			Q1 ‘12			Total
	Actual			Actual			Projected
Capital Expenditures	$	(5	)	$	(262	)	$	(4,900	)
Cash Expense
Cost of Sales	(131		)	(95		)	(2,800		)
Selling, general, and administrative expenses	(441		)	(75		)	(1,100		)
Non Cash Expense-Other Income (Loss)	(297		)	(294		)	(4,000		)
	$	(874	)	$	(726	)	$	(12,800	)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2011. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2.  Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties.

(Dollars are presented in thousands except per share data or unless otherwise stated)

18

OUR BUSINESS

First Quarter Overview

During the first quarter of 2012, we continued to execute our strategy in an improving, but still challenging, economic climate. We anticipate that economic conditions within the wind industry will stay strong for the second and third quarters, but will weaken significantly in the latter part of 2012 and into 2013 due to the scheduled expiration of the Production Tax Credit that supports the wind industry. As such, we cannot provide assurances that improved market conditions within the wind industry will occur or that we will be able to capitalize on these opportunities. In addition, a continued or prolonged economic slowdown in the wind industry or other unfavorable market factors, including the pressures in the natural gas production markets caused by current oversupply and historically low prices, could result in further revisions to our expectations with respect to future financial results and cash flows. In response to these conditions, we have made a strategic decision to diversify our business into oil, gas, mining, and other industries, particularly within gearing and industrial weldments. These factors have required management to reassess its estimates of the fair value of some of our reportable segments and could result in further review of our intangible assets and fixed assets, although no additional impairment to the carrying value of these assets was indicated by our first quarter 2012 testing.

During the third quarter of 2011 we conducted a review of our business strategies and product plans given the outlook for the economy at large, the forecast for the industries we serve, and our own business environment. As a result, we have begun to execute a restructuring plan to rationalize our facility capacity and our management structure, and to consolidate and increase the efficiencies of our operations.

We have concluded that our wind manufacturing footprint and fixed cost base is too large and expensive for our medium-term needs. We are planning to reduce our facility footprint by at least 30% through the sale and/or closure of facilities comprising a total of 400,000 square feet during the next fifteen months through June, 2013. We believe the remaining locations will be sufficient to support our Towers and Weldments, Gearing, Services and general corporate and administrative activities while allowing for growth for the next several years.

We expect to incur restructuring costs associated with the consolidation totaling an estimated $12,800. Costs are expected to include approximately $4,900 in capital expenditures and $7,900 in expenses, of which approximately $4,000 is anticipated to be non-cash expenses and $3,900 is anticipated to be cash expenses. Net proceeds from associated asset sales, estimated to be approximately $7,500 will be used to fund cash costs. We anticipate annual savings of approximately $5,500 related to the restructuring.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

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	Three Months Ended March 31,										2012 vs. 2011
	2012			% of Total  Revenue		2011			% of Total Revenue		$ Change			% Change
Revenues	$	54,443		100.0	%	$	43,530		100.0	%	$	10,913		25.1	%
Cost of sales	51,822			95.2	%	40,951			94.1	%	10,871			26.5	%
Restructuring	389			0.7	%	—			0.0	%	389			N/A
Gross profit	2,232			4.1	%	2,579			5.9	%	(347		)	-13.5	%
Operating expenses
Selling, general and administrative expenses	5,883			10.8	%	6,337			14.6	%	(454		)	-7.2	%
Intangible amortization	215			0.4	%	215			0.5	%	—			N/A
Restructuring	75			0.1	%	—			0.0	%	75			N/A
Total operating expenses	6,173			11.3	%	6,552			15.1	%	(379		)	-5.8	%
Operating loss	(3,941		)	-7.2	%	(3,973		)	-9.2	%	32			0.8	%
Other income (expense)
Interest expense, net	(262		)	-0.5	%	(273		)	-0.6	%	11			4.0	%
Other, net	363			0.7	%	210			0.5	%	153			72.9	%
Total other income (expense), net	101			0.2	%	(63		)	-0.1	%	164			260.3	%
Net loss from continuing operations before benefit for income taxes	(3,840		)	-7.0	%	(4,036		)	-9.3	%	196			4.9	%
Provision for income taxes	20			0.0	%	17			0.0	%	3			17.6	%
Loss from continuing operations	(3,860		)	-7.0	%	(4,053		)	-9.3	%	193			4.8	%
Loss from discontinued operations, net of tax	—			0.0	%	(1,127		)	-2.6	%	1,127			100.0	%
Net loss	$	(3,860	)	-7.0	%	$	(5,180	)	-11.9	%	$	1,320		25.5	%

Consolidated

Revenues increased by $10,913, from $43,530 during the three months ended March 31, 2011, to $54,443 during the three months ended March 31, 2012. We experienced increased revenue in each of our business segments. In our Gearing segment, we continue to experience sales increases to our industrial customers as our expanded sales force gains traction. Towers and Weldments revenues increased 25%, despite a 19% decrease in the volume of wind tower sections sold in the first quarter of 2012 compared to 2011. In the prior year period, fabrication-only towers sections represented 43% of our volume, compared to zero in the current quarter. Our Services segment revenues increased 88% in the first quarter of 2012 compared to 2011.

Gross profit decreased by $347, from $2,579 during the three months ended March 31, 2011, to $2,232 during the three months ended March 31, 2012. The decrease in gross profit was primarily attributable to a decline in Towers and Weldments gross profit due to the lack of higher margin fabrication-only towers in the current quarter and restructuring costs at Gearing, largely offset by improved volume and margins in Gearing, as compared to the same period in the prior year. As a result, our gross margin decreased from 5.9% during the three months ended March 31, 2011, to 4.1% during the three months ended March 31, 2012.

Selling, general and administrative expenses decreased by $454, from $6,337 during the three months ended March 31, 2011, to $5,883 during the three months ended March 31, 2012. The decrease was primarily attributable to lower employee compensation expense and lower professional fees as part of general cost containment efforts. Operating expenses as a percentage of sales decreased from 15% in the prior year quarter, to 11% in the current year.

Intangible amortization expense of $215 was unchanged compared with the prior year period. Restructuring expense of $75 was incurred in the current quarter, compared to zero in the prior year period.

The provision for income taxes was not significant in either period.

Net loss decreased from $5,180 during the three months ended March 31, 2011, to $3,860 during the three months ended March 31, 2012, primarily as a result of the factors described above.

Towers and Weldments Segment

The following table summarizes the Towers and Weldments segment operating results for the three months ended March 31, 2012 and 2011:

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	Three Months Ended
	March 31,
	2012			2011
Revenues	$	35,169		$	28,170
Operating income	1,005			2,420
Operating margin	2.9		%	8.6		%

Towers and Weldments segment revenues increased by $6,999, from $28,170 during the three months ended March 31, 2011, to $35,169 during the three months ended March 31, 2012. The 25% increase in revenues is due to a heavy mix of fabrication-only tower sections in the prior year quarter and growth in weldment sales. Revenues increased despite a 19% decrease in the volume of wind tower sections sold, and a 28% decrease in the volume of megawatt capacity sold in the first quarter of 2012 compared to 2011.  In the prior year period, fabrication-only towers sections represented 43% of our volume, compared to zero in the current quarter.

Towers and Weldments segment operating income decreased by $1,415, from $2,420 during the three months ended March 31, 2011 to $1,005 during the three months ended March 31, 2012.  The decrease in operating income was primarily attributable to the decrease in wind tower sections manufactured and the absence of higher margin fabrication-only tower sections in the current year quarter.  Operating margin decreased from 8.6% during the three months ended March 31, 2011, to 2.9% during the three months ended March 31, 2012.

Gearing Segment

The following table summarizes the Gearing segment operating results for the three months ended March 31, 2012 and 2011:

	Three Months Ended
	March 31,
	2012			2011
Revenues	$	16,032		$	13,553
Operating loss	(1,121		)	(2,397		)
Operating margin	-7.0		%	-17.7		%

Gearing segment revenues increased by $2,479, from $13,553 during the three months ended March 31, 2011, to $16,032 during the three months ended March 31, 2012. The 18% increase in total revenues was attributable to a 73% increase in industrial sales, partially offset by a 39% decrease in wind gearing sales as compared to the prior year quarter. Sales to industrial customers represent 75% of the current quarter total.

Gearing segment operating loss decreased by $1,276, from $2,397 during the three months ended March 31, 2011, to $1,121 during the three months ended March 31, 2012. The decrease in operating loss was primarily due to the 18% increase in sales volume and associated increases in margins, favorable scrap sales and fixed overhead absorption, partially offset by higher restructuring and selling expenses. As a result of the factors described above, operating margin improved from (17.7%) during the three months ended March 31, 2011, to (7.0%) during the three months ended March 31, 2012.

Services Segment

The following table summarizes the Services segment operating results for the three months ended March 31, 2012 and 2011:

	Three Months Ended
	March 31,
	2012			2011
Revenues	$	3,442		$	1,828
Operating (loss) income	(1,623		)	(1,354		)
Operating margin	-47.2		%	-74.1		%

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Services segment revenues increased by $1,614, from $1,828 during the three months ended March 31, 2011, to $3,442 during the three months ended March 31, 2012.  Each channel of business experienced increased revenue over the prior period, with the largest increase of $898 in field services.

Services segment operating loss increased by $269, from $1,354 during the three months ended March 31, 2011, to $1,623 during the three months ended March 31, 2012. Increased contribution margins were more than offset by higher employee compensation and by higher depreciation expense related to our Abilene, Texas drivetrain facility. Because of the increased revenue base, operating margin improved from (74.1%) during the three months ended March 31, 2011, to (47.2%) during the three months ended March 31, 2012.

Corporate and Other

Corporate and Other operating loss decreased by $440, from $2,642 during the three months ended March 31, 2011, to $2,202 during the three months ended March 31, 2012. The reduction in expense was primarily attributable to lower employee compensation expense and professional fees as well as general cost containment efforts.

SELECTED FINANCIAL DATA

The following non-GAAP financial measure presented below relates to earnings before interest, taxes, depreciation, amortization, restructuring and share-based payments (“Adjusted EBITDA”) and is presented for illustrative purposes as an accompaniment to our unaudited financial results of operations for the three months ended March 31, 2012 and 2011. Adjusted EBITDA should not be considered an alternative to, nor is there any implication that it is more meaningful than, any measure of performance or liquidity promulgated under GAAP. We believe that Adjusted EBITDA is particularly meaningful due principally to the role acquisitions have played in our development. Historically, our growth through acquisitions has resulted in significant non-cash depreciation and amortization expense, which was primarily attributable to a significant portion of the purchase price of our acquired businesses being allocated to depreciable fixed assets and definite-lived intangible assets. The following Adjusted EBITDA calculation is derived from our unaudited condensed consolidated financial results for the three months ended March 31, 2012 and 2011, as follows:

	Three Months Ended
	March 31,
	2012			2011
	(unaudited)
Loss from continuing operations	$	(3,860	)	$	(4,053	)
Provision for income taxes	20			17
Interest expense, net	262			273
Depreciation and amortization	3,656			3,501
Restructuring	464			—
Share-based compensation and other stock payments	850			487
Adjusted EBITDA	$	1,392		$	225

SUMMARY OF CRITICAL ACCOUNTING POLICIES

We have identified significant accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to our financial condition or results of operations under different conditions or using different assumptions.  Our most critical accounting policies (with respect to which there have been no changes) are related to the following areas: revenue recognition, warranty liability, inventories, intangible assets, long-lived assets and income taxes. Details regarding our application of these policies and the related estimates are described fully in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Recent Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us we believe that none of the new standards will have a significant impact on our consolidated financial statements.

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LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of March 31, 2012, total cash assets equaled $11,261. Our management anticipates that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and debt and lease commitments through at least the next 12 months primarily with current cash on hand and cash generated by operations or other financing arrangements. On September 29, 2010, our subsidiaries entered into account purchase agreements (the “AP Agreements”) with Wells Fargo Bank, N.A. The aggregate facility limit of the AP Agreements is $10,000. At March 31, 2012, $2,917 was drawn under the AP Agreements, and we had the ability to draw up to an additional $7,083, subject to maintaining a month-end minimum total cash balance equal to the greater of $2,000 or the outstanding purchased amount, not to exceed $5,000.

Our ability to make scheduled payments on our debt and other financial obligations will depend on our future financial and operating performance. However, if sales and subsequent collections from several of our large customers, as well as revenues generated from new customer orders, are not materially consistent with management’s expectations, we may encounter cash flow and liquidity issues. Additional funding may not be available when needed or on terms acceptable to us. Furthermore, if we are unable to obtain additional capital, we will likely be required to delay, reduce the scope of or eliminate our plans for expansion and growth, and this could affect our overall operations. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, will likely require financial covenants or impose other restrictions on us.

Our ability to meet financial debt covenants and make scheduled payments on our debt and other financial obligations will depend on our future financial and operating performance. If we cannot make scheduled payments on our debt, or comply with applicable covenants, we will be in default and, as a result, among other things, our debt holders could declare all outstanding principal and interest to be due and payable. As of March 31, 2012, we were in compliance with all of our debt covenants.  While we believe that we will continue to have sufficient cash flows to operate our businesses and meet our financial debt covenants, there can be no assurances that our operations will generate sufficient cash or that credit facilities will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

Sources and Uses of Cash

Operating Cash Flows

During the three months ended March 31, 2012, net cash used by operating activities totaled $1,399, compared to net cash provided by operating activities of $9,171 during the three months ended March 31, 2011. The increase in net cash used in operating activities was primarily attributable to an inventory build in our Towers and Weldments business and the absence of a large increase in deposits experienced in the prior year quarter.

Investing Cash Flows

During the three months ended March 31, 2012 and 2011, net cash used in investing activities totaled $112 and $1,611, respectively. The decrease in net cash used in investing activities as compared to the prior year period was primarily attributable to decreased capital expenditures, specifically related to the construction of our drivetrain service center in Abilene, Texas during the prior year.

Financing Cash Flows

During the three months ended March 31, 2012 and 2011, net cash used in financing activities totaled $972 and $700, respectively. The increase in net cash used in financing activities as compared to the prior year period was primarily attributable to a $214 payment on a shareholder note in the current year.

Contractual Obligations

As of March 31, 2012, we had $390 in purchase commitments representing the remaining payments due on equipment purchase contracts related to the construction of our Brandon, South Dakota wind tower manufacturing facility which we have classified as Held for Sale.

Cautionary Note Regarding Forward-Looking Statements

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our

23

Annual Report on Form 10-K for the year ended December 31, 2011. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Item 2, contain “forward-looking statements”— that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. Forward-looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those discussed in Item 1A “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2011, that could cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects, and opportunities to differ materially from those expressed in, or implied by, these statements. Our forward-looking statements may include or relate to the following: (i) our plans to continue to grow our business through organic growth and integration of previous and future acquisitions; (ii) our beliefs with respect to the sufficiency of our liquidity and our plans to evaluate alternate sources of funding if necessary; (iii) our plans and assumptions, including estimated costs and saving opportunities, regarding our ongoing restructuring efforts designed to improve our financial performance; (iv) our expectations relating to state, local and federal regulatory frameworks affecting the wind energy industry, including the extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards; (v) our expectations relating to construction of new facilities, expansion and/or restructuring of existing facilities and sufficiency of our existing capacity to meet the demands of our customers and support expectations regarding our growth; (vi) our plans with respect to the use of proceeds from financing activities and our ability to operate our business efficiently, manage capital expenditures and costs effectively, and generate cash flow; (vii) our beliefs and expectations relating to the economy and the potential impact it may have on our business, including our customers; (viii) our beliefs regarding the state of the wind energy market and other energy and industrial markets generally; and (ix) our expectations relating to the impact of pending litigation as well as environmental compliance matters. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason.

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three months ended March 31, 2012. For a discussion of our exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk,” contained in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4.        Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There was no change in our internal control over financial reporting during the quarter ended March 31, 2012 that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

PART II.   OTHER INFORMATION

Item 1.        Legal Proceedings

The information required by this item is incorporated herein by reference to Note 12, “Legal Proceedings” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

24

Item 1A.     Risk Factors

There are no material changes to our risk factors as previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.        Defaults Upon Senior Securities

None

Item 4.        Mine Safety Disclosures

Not Applicable

Item 5.        Other Information

None

Item 6.        Exhibits

The exhibits listed on the Exhibit Index following the signature page are filed as part of this Quarterly Report.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BROADWIND ENERGY, INC.
May 9, 2012	By:	/s/ Peter C. Duprey
		Peter C. Duprey
		President and Chief Executive Officer
May 9, 2012	By:	/s/ Stephanie K. Kushner
		Stephanie K. Kushner
		Chief Financial Officer
		(Principal Financial Officer)

26

EXHIBIT INDEX

BROADWIND ENERGY, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2012

Exhibit Number	Exhibit
10.1	Form of Non-Employee Director Restricted Stock Unit Award Agreement*
10.2	Form of Restricted Stock Unit Award Agreement*
10.3	Form of Restricted Stock Unit Award Agreement*
10.4	Form of Stock Option Agreement*
31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer*

*Filed herewith.

27

EX-10.1

Exhibit 10.1

BROADWIND ENERGY, INC.

2012 EQUITY INCENTIVE PLAN

NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AWARD AGREEMENT

Broadwind Energy, Inc., a Delaware corporation (the “Company”), hereby grants to [                    ] (the “Holder”) as of            ,                    (the “Grant Date”), pursuant to the terms and conditions of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “Plan”), a restricted stock unit award (the “Award”) with respect to [              ] shares of the Company’s Common Stock, par value $0.001 per share (“Stock”), upon and subject to the restrictions, terms and conditions set forth in the Plan and this agreement (the “Agreement”).

1.Award Subject to Acceptance of Agreement.  The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space below and returning such original execution copy to the Company.

2.Rights as a Stockholder.   The Holder shall not be entitled to any privileges of ownership with respect to the shares of Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares.

3.Restriction Period and Vesting.

3.1.Service-Based Vesting Condition.  The Award shall vest                               , provided the Holder continuously serves as a Non-Employee Director through the applicable vesting date.  The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2.Termination of Service.

3.2.1.Termination as a Result of Holder’s Death or Disability.  If the Holder’s service as a Non-Employee Director terminates prior to the end of the Restriction Period by reason of the Holder’s death or Disability, then the Award shall be 100% vested upon such termination of service.  For purposes of this Agreement, “Disability” shall mean the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

3.2.2.Termination Other than for Death or Disability.  If the Holder’s service as a Non-Employee Director with the Company terminates prior to the end of the Restriction Period for any reason other than death or Disability, the Award shall be immediately forfeited by the Holder and cancelled by the Company.

3.2.3.Change in Control.   Upon a Change in Control (as defined in the Plan), the Restriction Period shall lapse and the Award shall become fully vested and shall be subject to Section 5.8 of the Plan.

4.Delivery of Certificates.  Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Award, the Company shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the

Holder)  the number of shares of Stock underlying the vested Award.  The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance.  Prior to the issuance to the Holder of the shares of Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Stock, and will have the status of a general unsecured creditor of the Company.

5.Transfer Restrictions and Investment Representation.

5.1.Nontransferability of Award.  The Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company.  Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

5.2.Investment Representation.  The Holder hereby represents and covenants that (a) any share of Stock acquired upon the vesting of the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable.  As a further condition precedent to the delivery to the Holder of any shares of Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

6.Additional Terms and Conditions of Award.

6.1.Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities subject to the Award shall be equitably adjusted by the Committee.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants.  If any adjustment would

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result in a fractional security being subject to the Award, the Company shall pay the Holder in connection with the first settlement, in whole or part, occurring after such adjustment, an amount in cash determined by multiplying (i) such fraction (rounded to the nearest hundredth) by (ii) the Fair Market Value of such security on the settlement date as determined by the Committee.  The decision of the Committee regarding any such adjustment and the Fair Market Value of any fractional security shall be final, binding and conclusive.

6.2.Compliance with Applicable Law.  The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

6.3.Award Confers No Rights to Continued Service.  In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement, give or be deemed to give the Holder any right to continued service as a Non-Employee Director.

6.4.Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Board for review.  The resolution of such a dispute by the Board shall be final and binding on all parties.

6.5.Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors and assigns.

6.6.Notices.  All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Broadwind Energy, Inc., Attn. General Counsel, 47 East Chicago Avenue, Suite 332, Naperville, Illinois 60540, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company.  All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service.  The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

6.7.Governing Law.  This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

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6.8.Entire Agreement.  The Plan is incorporated herein by reference.  Capitalized terms not defined herein shall have the meanings specified in the Plan.  The Award Notice, this Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

6.9.Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

6.10.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

	BROADWIND ENERGY, INC.
	By:
Accepted this            day of                               , 20

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EX-10.2

Exhibit 10.2

BROADWIND ENERGY, INC.

2012 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Broadwind Energy, Inc., a Delaware corporation (the “Company”), hereby grants to [                    ] (the “Holder”) as of              ,            (the “Grant Date”), pursuant to the terms and conditions of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “Plan”), a restricted stock unit award (the “Award”) with respect to [        ] shares of the Company’s Common Stock, par value $0.001 per share (“Stock”), upon and subject to the restrictions, terms and conditions set forth in the Plan and this agreement (the “Agreement”).

1.Award Subject to Acceptance of Agreement.  The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company.

2.Rights as a Stockholder.  The Holder shall not be entitled to any privileges of ownership with respect to the shares of Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares.

3.Restriction Period and Vesting.

3.1.Service-Based Vesting Condition.  Except as otherwise provided in this Section 3, the Award shall vest                                                                               , provided the Holder remains continuously employed by the Company through such date. The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2.Termination of Employment.

3.2.1.Termination as a Result of Holder’s Death or Disability.  If the Holder’s employment with the Company terminates prior to the end of the Restriction Period by reason of the Holder’s death or Disability, then the portion of the Award that was not vested immediately prior to such termination of employment shall be 100% vested upon such termination of employment.

3.2.2.Termination for any Reason other than Death or Disability.  Except as provided in Section 3.2.3, if the Holder’s employment with the Company terminates prior to the end for any reason other than the Holder’s death or Disability, then the portion of the Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.

3.2.3.Change in Control.  Notwithstanding anything in the Plan or this Agreement to the contrary, if, upon or within one year of a Change in Control (as defined in the Plan), the Company or a succeeding entity terminates the Holder’s employment for any reason other than for Cause, then the Restriction Period shall lapse and the Award shall become fully vested and shall be subject to Section 5.8 of the Plan.

3.2.4.  Disability.  For purposes of this Award, “Disability” shall have the meaning set forth in the employment agreement, if any, between the Holder and the Company, provided that if the Holder is not a party to an employment agreement that contains such definition, then “Disability” shall mean the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

3.3.5.  Cause.  For purposes of this Award, “Cause” shall have the meaning set forth in the employment agreement, if any, between the Holder and the Company, provided that if the Holder is not a party to an employment agreement that contains such definition, then “Cause” shall mean (i) embezzlement, misappropriation, theft or other criminal conduct, of which the Holder is convicted, related to the property and assets of the Company, (ii) the Holder’s conviction of a felony or (iii) the Holder’s willful refusal to perform or substantial disregard of the Holder’s duties as assigned to the Holder by the Company, as determined by the Company in its sole and absolute discretion.

4.Delivery of Certificates.  Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Award, in whole or part, the Company shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the Holder)  the number of shares of Stock underlying the vested Award.  The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance.  Prior to the issuance to the Holder of the shares of Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Stock, and will have the status of a general unsecured creditor of the Company.

5.Transfer Restrictions and Investment Representation.

5.1.Nontransferability of Award.  The Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company.  Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

5.2.Investment Representation.  The Holder hereby represents and covenants that (a) any share of Stock acquired upon the vesting of the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of

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Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable.  As a further condition precedent to the delivery to the Holder of any shares of Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

6.Additional Terms and Conditions of Award.

6.1.Withholding Taxes.  (a)  As a condition precedent to the delivery of the Shares upon the vesting of the Award, the Holder shall, upon request by the Company, pay to the Company such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award.  If the Holder shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Holder.

(b)The Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means:  (1) a cash payment to the Company, (2) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments, (3) authorizing the Company to withhold whole shares of Stock which would otherwise be delivered to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments or (4) any combination of (1), (2) and (3).  Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments.  Any fraction of a share of Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Holder.  No certificate representing a share of Stock shall be delivered until the Required Tax Payments have been satisfied in full.

6.2.Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities subject to the Award shall be equitably adjusted by the Committee.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants.  If any adjustment would result in a fractional security being subject to the Award, the Company shall pay the Holder in connection with the first settlement, in whole or part, occurring after such adjustment, an amount in cash determined by multiplying (i) such fraction (rounded to the nearest hundredth) by (ii) the Fair Market Value of such security on the settlement date as determined by the Committee.  The decision of the Committee regarding any such adjustment and the Fair Market Value of any fractional security shall be final, binding and conclusive.

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6.3.Compliance with Applicable Law.  The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

6.4.Restrictive Covenants.

(a)During the period beginning on the date of this Award and ending on the date which is one year following the termination of the Holder’s employment with, or service to, the Company, the Holder shall not, except with the express prior written consent of the Company:  (i) directly or indirectly, either for the Holder, or on behalf of any of the Company’s competitors (“Competitors”): (1) induce or attempt to induce any employee, independent contractor or consultant of the Company to leave the employ of, or terminate its engagement with, the Company; or (2) in any way interfere with the relationship between the Company and any employee, independent contractor or consultant of the Company; or (ii) directly or indirectly, either for the Holder, or on behalf of any of the Competitors, solicit the business of any person or entity known to the Holder to be a customer of the Company, where the Holder, or any person reporting to the Holder, had an ongoing business relationship or had made substantial efforts with respect to such customer during the Holder’s employment with, or service to, the Company.

(b)The Holder, by accepting this Award, agrees that the foregoing covenants are reasonable with respect to their duration and scope.  The Holder further acknowledges that the restrictions are reasonable and necessary for the protection of the legitimate business interests of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company, and that such restrictions were a material inducement to the Company to grant this Award.  In the event of any violation or threatened violation of these restrictions, the Holder shall forfeit all restricted stock units subject to this Award which have not vested and this Award shall terminate as of the date of the violation or threatened violation of these restrictions.

6.5.Award Confers No Rights to Continued Employment.  In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement, give or be deemed to give the Holder any right to continued employment by the Company or prevent or be deemed to prevent the Company from terminating the Holder’s employment at any time, with or without Cause.

6.6.Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on all parties.

6.7.Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors and assigns.

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6.8.Notices.  All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Broadwind Energy, Inc., Attn. General Counsel, 47 East Chicago Avenue, Naperville, Illinois 60540, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company.  All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service.  The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

6.9.Governing Law.  This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

6.10.Entire Agreement.  The Plan is incorporated herein by reference.  Capitalized terms not defined herein shall have the meanings specified in the Plan.  This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

6.11.Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

6.12.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

6.13.Counterparts.  This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

	BROADWIND ENERGY, INC.
	By:
Accepted this        day of                           , 20

5

EX-10.3

Exhibit 10.3

BROADWIND ENERGY, INC.

2012 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Broadwind Energy, Inc., a Delaware corporation (the “Company”), hereby grants to [                    ] (the “Holder”) as of                      ,              (the “Grant Date”), pursuant to the terms and conditions of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “Plan”), a restricted stock unit award (the “Award”) with respect to [        ] shares of the Company’s Common Stock, par value $0.001 per share (“Stock”), upon and subject to the restrictions, terms and conditions set forth in the Plan and this agreement (the “Agreement”).

1.Award Subject to Acceptance of Agreement.  The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company.

2.Rights as a Stockholder.   The Holder shall not be entitled to any privileges of ownership with respect to the shares of Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares.

3.Restriction Period and Vesting.

3.1.Service-Based Vesting Condition.  Except as otherwise provided in this Section 3, the Award shall vest                                                                                       , provided the Holder remains continuously employed by the Company through such date. The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2.Termination of Employment.  If the Holder’s employment with the Company terminates prior to the end of the Restriction Period for any reason, then the portion of the Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.

4.Delivery of Certificates.  Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Award, in whole or part, the Company shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the Holder)  the number of shares of Stock underlying the vested Award.  The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance.  Prior to the issuance to the Holder of the shares of Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Stock, and will have the status of a general unsecured creditor of the Company.

5.Transfer Restrictions and Investment Representation.

5.1.Nontransferability of Award.  The Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of

one or more beneficiaries on the form prescribed by the Company.  Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

5.2.Investment Representation.  The Holder hereby represents and covenants that (a) any share of Stock acquired upon the vesting of the Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable.  As a further condition precedent to the delivery to the Holder of any shares of Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

6.Additional Terms and Conditions of Award.

6.1.Withholding Taxes.  (a)  As a condition precedent to the delivery of  the Shares upon the vesting of the Award, the Holder shall, upon request by the Company, pay to the Company such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award.  If the Holder shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to the Holder.

(b)The Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means:  (1) a cash payment to the Company, (2) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments, (3) authorizing the Company to withhold whole shares of Stock which would otherwise be delivered to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments or (4) any combination of (1), (2) and (3).  Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments.  Any fraction of a share of Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by the Holder.  No certificate representing a share of Stock shall be delivered until the Required Tax Payments have been satisfied in full.

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6.2.Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities subject to the Award shall be equitably adjusted by the Committee.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants.  If any adjustment would result in a fractional security being subject to the Award, the Company shall pay the Holder in connection with the first settlement, in whole or part, occurring after such adjustment, an amount in cash determined by multiplying (i) such fraction (rounded to the nearest hundredth) by (ii) the Fair Market Value of such security on the settlement date as determined by the Committee.  The decision of the Committee regarding any such adjustment and the Fair Market Value of any fractional security shall be final, binding and conclusive.

6.3.Compliance with Applicable Law.  The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

6.4.Restrictive Covenants.

(a)During the period beginning on the date of this Award and ending on the date which is one year following the termination of the Holder’s employment with, or service to, the Company, the Holder shall not, except with the express prior written consent of the Company:  (i) directly or indirectly, either for the Holder, or on behalf of any of the Company’s competitors (“Competitors”): (1) induce or attempt to induce any employee, independent contractor or consultant of the Company to leave the employ of, or terminate its engagement with, the Company; or (2) in any way interfere with the relationship between the Company and any employee, independent contractor or consultant of the Company; or (ii) directly or indirectly, either for the Holder, or on behalf of any of the Competitors, solicit the business of any person or entity known to the Holder to be a customer of the Company, where the Holder, or any person reporting to the Holder, had an ongoing business relationship or had made substantial efforts with respect to such customer during the Holder’s employment with, or service to, the Company.

(b)The Holder, by accepting this Award, agrees that the foregoing covenants are reasonable with respect to their duration and scope.  The Holder further acknowledges that the restrictions are reasonable and necessary for the protection of the legitimate business interests of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company, and that such restrictions were a material inducement to the Company to grant this Award.  In the event of any violation or threatened violation of these restrictions, the Holder shall forfeit all restricted stock units subject to this

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Award which have not vested and this Award shall terminate as of the date of the violation or threatened violation of these restrictions.

6.5.Award Confers No Rights to Continued Employment.  In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement, give or be deemed to give the Holder any right to continued employment by the Company or prevent or be deemed to prevent the Company from terminating the Holder’s employment at any time, with or without Cause.

6.6.Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review.  The resolution of such a dispute by the Committee shall be final and binding on all parties.

6.7.Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors and assigns.

6.8.Notices.  All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Broadwind Energy, Inc., Attn. General Counsel, 47 East Chicago Avenue, Naperville, Illinois 60540, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company.  All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service.  The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

6.9.Governing Law.  This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

6.10.Entire Agreement.  The Plan is incorporated herein by reference.  Capitalized terms not defined herein shall have the meanings specified in the Plan.  This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

6.11.Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

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6.12.Amendment and Waiver.  The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

6.13.Counterparts.  This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

	BROADWIND ENERGY, INC.
	By:
Accepted this        day of                           , 20

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EX-10.4

Exhibit 10.4

BROADWIND ENERGY, INC.

2012 EQUITY INCENTIVE PLAN

OPTION AWARD NOTICE

[Name of Optionee]

You have been awarded an option to purchase shares of Common Stock of Broadwind Energy, Inc. (the “Company”), pursuant to the terms and conditions of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement (together with this Award Notice, the “Agreement”).  Copies of the Plan and the Stock Option Agreement are attached hereto.  Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.

Option:	You have been awarded an Incentive Stock Option to purchase from the Company [                                  ] shares of its Common Stock, par value $0.001 per share, subject to adjustment as provided in Section 3.4 of the Agreement. Notwithstanding the foregoing, to the extent the option does not qualify as an Incentive Stock Option under the Code or the Treasury regulations promulgated thereunder, such option shall constitute a Nonqualified Stock Option.
Option Date:	,
Exercise Price:	$                             per share, subject to adjustment as provided in Section 3.4 of the Agreement.
Vesting Schedule:	Except as otherwise provided in the Plan, Agreement or any other agreement between the Company and Optionee, the Option shall vest                                                                                                                                                                                                                                                  , provided you remain continuously employed by the Company through such date.
Expiration Date:	Except to the extent earlier terminated pursuant to Section 2.2 of the Agreement or earlier exercised pursuant to Section 2.3 of the Agreement, the Option shall terminate at 5:00 p.m., Central time, on the tenth anniversary of the Option Date.
Restrictive Covenant:	You acknowledge that you will be subject to the restrictive covenants set forth in Section 3.6 of the Agreement and that, by accepting this Option, you agree that such covenants are reasonable with respect to their duration and scope and further acknowledge that the restrictions are reasonable and necessary for the protection of the legitimate business interests of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company, and that such restrictions were a material inducement to the Company to grant this

Option.  In the event of any violation or threatened violation of these restrictions, any and all of your rights under this Option, whether unvested or vested, shall be forfeited and shall immediately terminate and shall thereafter be void.

BROADWIND ENERGY, INC.

By:

Name:

Title:

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Broadwind Energy, Inc. at the address stated herein, I hereby acknowledge receipt of the Agreement and the Plan, accept the Option granted to me and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

Optionee

Date

BROADWIND ENERGY, INC.

ATTENTION:  GENERAL COUNSEL

47 EAST CHICAGO AVENUE, SUITE 332

Naperville, IL  60540

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BROADWIND  ENERGY, INC.
2012 EQUITY INCENTIVE PLAN

Stock Option Agreement

Broadwind Energy, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (“Optionee”) named in the award notice attached hereto (the “Award Notice”) as of the date set forth in the Award Notice (the “Option Date”), pursuant to the provisions of the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “Plan”), an option to purchase from the Company the number and class of shares of stock set forth in the Award Notice at the price per share set forth in the Award Notice (the “Exercise Price”) (the “Option”), upon and subject to the terms and conditions set forth below, in the Award Notice and in the Plan.  Capitalized terms not defined herein shall have the meanings specified in the Plan.

1.Option Subject to Acceptance of Agreement.  The Option shall be null and void unless Optionee shall accept this Agreement by executing the Award Notice in the space provided therefor and returning an original execution copy of the Award Notice to the Company.

2.Time and Manner of Exercise of Option.

2.1.Maximum Term of Option.  In no event may the Option be exercised, in whole or in part, after the expiration date set forth in the Award Notice (the “Expiration Date”).

2.2.Vesting and Exercise of Option.  The Option shall become vested and exercisable in accordance with the vesting schedule set forth in the Award Notice (the “Vesting Schedule”).  The Option shall be vested and exercisable following a termination of Optionee’s employment according to the following terms and conditions:

(a)Termination as a Result of Optionee’s Death or Disability.  If Optionee’s employment with the Company terminates by reason of Optionee’s death or Disability, then the Option, to the extent vested on the effective date of such termination of employment, may thereafter be exercised by Optionee or Optionee’s executor, administrator, legal representative, guardian or similar person until and including the earlier to occur of (i) the date which is one year after the date of such termination of employment and (ii) the Expiration Date.

(b)Termination by the Company Other than for Cause, Death or Disability or by the Optionee.  If Optionee’s employment with the Company terminates by reason of (i) the Company’s termination of Optionee’s employment for any reason other than for Cause, death or Disability or (ii) Optionee’s resignation from employment for any reason, the Option, to the extent vested on the effective date of such termination of employment, may thereafter be exercised by Optionee until and including the earlier to occur of (i) the date which is ninety (90) days after the date of such termination of employment and (ii) the Expiration Date.

(c)Termination by Company for Cause.  If Optionee’s employment with the Company terminates by reason of the Company’s termination of Optionee’s employment for Cause, then the Option, whether or not vested, shall terminate immediately upon such termination of employment.

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(d)Death Following Termination.  If Optionee dies during the period set forth in Section 2.2(b), the Option shall be vested only to the extent it is vested on the date of death and may thereafter be exercised by Optionee’s executor, administrator, legal representative, guardian or similar person until and including the earlier to occur of (i) the date which is one year after the date of death and (ii) the Expiration Date.

(e)Change in Control.   Notwithstanding anything in the Plan or this Agreement to the contrary, if, upon or within one year of a Change in Control (as defined in the Plan), the Company or a succeeding entity terminates Optionee’s employment for any reason other than Cause, this Option shall become immediately and fully exercisable upon such Change in Control and shall remain exercisable until the earlier of (i) the Expiration Date and (ii) the date determined by the Committee in connection with the terms of the Plan (including, without limitation, upon consummation of the Change in Control, if so determined by the Committee).  If the Optionee does not exercise this Option, as the case may be, within the time specified in this Section 2.2(e), all rights of the Optionee under this Option shall be forfeited. If the Optionee exercises this Option on a date that is after the three-month anniversary of the date of his termination of employment, this Option shall be treated as a nonqualified stock option and shall no longer qualify as an Incentive Stock Option under Code Section 422.

(f)Disability.  For purpose of this Option, “Disability” shall mean the Optionee’s permanent and total disability within the meaning of Section 22(e)(3) of the Code.

(g)Cause.  For purposes of this Option, “Cause” shall have the meaning set forth in the employment agreement, if any, between the Optionee and the Company, provided that if Optionee is not a party to an employment agreement that contains such definition, then “Cause” shall mean (i) embezzlement, misappropriation, theft or other criminal conduct, of which the Optionee is convicted, related to the property and assets of the Company, (ii) Optionee’s conviction of a felony or (iii) Optionee’s willful refusal to perform or substantial disregard of Optionee’s duties as assigned to the Optionee by the Company, as determined by the Company in its sole and absolute discretion.

2.3.Method of Exercise.  Subject to the limitations set forth in this Agreement, the Option may be exercised by Optionee (a) by delivering to the Company an exercise notice in the form prescribed by the Company specifying the number of whole shares of Stock to be purchased and by accompanying such notice with payment therefor in full (or by arranging for such payment to the Company’s satisfaction) either (i) in cash, (ii) by delivery to the Company (either actual delivery or by attestation procedures established by the Company) of shares of Stock having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise, (iii) authorizing the Company to withhold whole shares of Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, (iv) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom Optionee has submitted an irrevocable notice of exercise or (v) by a combination of (i), (ii) and (iii), and (b) by executing such documents as the Company may reasonably request.  Any fraction of a share of Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by Optionee.  No certificate representing a share of Stock shall

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be issued or delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 3.3, have been paid.

2.4.Termination of Option.  In no event may the Option be exercised after it terminates as set forth in this Section 2.4.  The Option shall terminate, to the extent not earlier terminated pursuant to Section 2.2 or exercised pursuant to Section 2.3, on the Expiration Date.  Upon the termination of the Option, the Option and all rights hereunder shall immediately become null and void.

3.Additional Terms and Conditions of Option.

3.1.Nontransferability of Option.  The Option may not be transferred by Optionee other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company.  Except to the extent permitted by the foregoing sentence, (i) during Optionee’s lifetime the Option is exercisable only by Optionee or Optionee’s legal representative, guardian or similar person and (ii) the Option may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process.  Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Option, the Option and all rights hereunder shall immediately become null and void.

3.2.Investment Representation.  Optionee hereby represents and covenants that (a) any shares of Stock purchased upon exercise of the Option will be purchased for investment and not with a view to the distribution thereof within the meaning of the Securities Act unless such purchase has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, Optionee shall submit a written statement, in a form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of any purchase of any shares hereunder or (y) is true and correct as of the date of any sale of any such shares, as applicable.  As a further condition precedent to any exercise of the Option, Optionee shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board or the Committee shall in its sole discretion deem necessary or advisable.

3.3.Withholding Taxes.  (a) As a condition precedent to the issuance of Stock upon exercise of the Option, Optionee shall, upon request by the Company, pay to the Company in addition to the purchase price of the shares, such amount as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to such exercise of the Option.  If Optionee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Optionee.

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(b)Optionee may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means:  (1) a cash payment to the Company, (2) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (3) authorizing the Company to withhold whole shares of Stock which would otherwise be delivered to Optionee upon exercise of the Option having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) except as may be prohibited by applicable law, a cash payment by a broker-dealer acceptable to the Company to whom Optionee has submitted an irrevocable notice of exercise or (5) any combination of (1), (2) and (3).  Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments.  Any fraction of a share of Stock which would be required to satisfy any such obligation shall be disregarded and the remaining amount due shall be paid in cash by Optionee.  No certificate representing a share of Stock shall be issued or delivered until the Required Tax Payments have been satisfied in full.

3.4.Adjustment.  In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the number and class of securities subject to the Option and the Exercise Price shall be equitably adjusted by the Committee, such adjustment to be made in accordance with Section 409A of the Code.  In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants.  The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.  If any such adjustment would result in a fractional security being subject to the Option, the Company shall pay Optionee, in connection with the first exercise occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded down to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on such date over (B) the Exercise Price of the Option.

3.5.Compliance with Applicable Law.  The Option is subject to the condition that if the listing, registration or qualification of the shares subject to the Option upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the purchase or issuance of shares hereunder, the Option may not be exercised, in whole or in part, and such shares may not be issued, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

3.6.Restrictive Covenants.  (a)  During the period beginning on the date of this Option and ending one year following the termination of the Optionee’s employment with, or

4

service to, the Company, the Optionee shall not, except with the express prior written consent of the Company:  (i) directly or indirectly, either for the Optionee, or on behalf of any of the Company’s competitors (“Competitors”): (1) induce or attempt to induce any employee, independent contractor or consultant of the Company to leave the employ of, or terminate its engagement with, the Company; or (2) in any way interfere with the relationship between the Company and any employee, independent contractor or consultant of the Company; or (ii) directly or indirectly, either for Participant, or on behalf of any of the Competitors, solicit the business of any person or entity known to the Optionee to be a customer of the Company, where the Optionee, or any person reporting to the Optionee, had an ongoing business relationship or had made substantial efforts with respect to such customer during the Optionee’s employment with, or service to, the Company.

(b)Violation of Restrictive Covenant.  The Optionee, by accepting this Option, agrees that the foregoing covenants are reasonable with respect to their duration and scope.  The Optionee further acknowledges that the restrictions are reasonable and necessary for the protection of the legitimate business interests of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company, and that such restrictions were a material inducement to the Company to grant this Option.  In the event of any violation or threatened violation of these restrictions, any and all rights of the Optionee under this Option, whether unvested or vested, shall be forfeited and shall immediately terminate and shall thereafter be void.

3.7.Issuance or Delivery of Shares.  Upon the exercise of the Option, in whole or in part, the Company shall issue or deliver, subject to the conditions of this Article 3, the number of shares of Stock purchased against full payment therefor.  Such issuance shall be evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company.  The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such issuance, except as otherwise provided in Section 3.3.

3.8.Option Confers No Rights as Stockholder.  Optionee shall not be entitled to any privileges of ownership with respect to shares of Stock subject to the Option unless and until such shares are purchased and issued upon the exercise of the Option, in whole or in part, and Optionee becomes a stockholder of record with respect to such issued shares.  Optionee shall not be considered a stockholder of the Company with respect to any such shares not so purchased and issued.

3.9.Option Confers No Rights to Continued Employment.  In no event shall the granting of the Option or its acceptance by Optionee, or any provision of this Agreement or the Plan, give or be deemed to give Optionee any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time.

3.10.Designation of Option.  If designated in the Award Notice as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.  To the extent the Option is exercised pursuant to its terms after the period set forth in Section 422(a) of the Code or exceeds the limitation set forth in Section

5

422(d) of the Code (currently $100,000) or otherwise does not meet the requirements for an Incentive Stock Option under Section 422 of the Code, the Option shall not be treated as an Incentive Stock Option under Section 422.

4.Miscellaneous Provisions.

4.1.Decisions of Board or Committee.  The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Option or its exercise.  Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

4.2.Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan.

4.3.Notices.  All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Broadwind Energy, Inc., Attn. General Counsel, 47 East Chicago Avenue, Naperville, Illinois 60540, and if to Optionee, to the last known mailing address of Optionee contained in the records of the Company.  All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service.  The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

4.4.Partial Invalidity.  The invalidity or unenforceability of any particular provision of this Agreement shall not effect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

4.5.Governing Law.  This Agreement, the Option and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

4.6.Counterparts.  The Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

4.7.Agreement Subject to the Plan.  This Agreement is subject to the provisions of the Plan, and shall be interpreted in accordance therewith.  Optionee hereby acknowledges receipt of a copy of the Plan, and by signing and returning the Award Notice to the Company, at the address stated herein, he or she agrees to be bound by the terms and conditions of this Agreement, the Award Notice and the Plan.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Peter C. Duprey, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Broadwind Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and we have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2012
	/s/ PETER C. DUPREY
	Peter C. Duprey
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Stephanie K. Kushner, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Broadwind Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and we have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2012
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind Energy, Inc. (the “Company”) for the period ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter C. Duprey, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 9, 2012
	/s/ PETER C. DUPREY
	Peter C. Duprey
	President and Chief Executive Officer
	(Principal Executive Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind Energy, Inc. (the “Company”) for the period ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephanie K. Kushner, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 9, 2012
	/s/ STEPHANIE K. KUSHNER
	Stephanie K. Kushner
	Chief Financial Officer
	(Principal Financial Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

3 Months Ended

Mar. 31, 2012

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

NOTE 4 — CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash and cash equivalents comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. The Company’s treasury policy is to invest excess cash in money market funds or other short-term investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded to interest income in the Company’s condensed consolidated statements of operations. As of March 31, 2012 and December 31, 2011, cash and cash equivalents totaled $10,857 and $13,340, respectively. These amounts consisted of cash balances and investments in municipal bonds with original maturities of three months or less.

Cash and cash equivalents consisted of the following as of March 31, 2012 and December 31, 2011:

	March 31,		December 31,
	2012		2011
Cash and cash equivalents:
Cash	$	10,149	$	11,127
Certificates of deposits	708		707
Municipal bonds	—		1,506
Total cash and cash equivalents	10,857		13,340

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DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2012

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 3 — DISCONTINUED OPERATIONS

In March 2011, the Company completed the divestiture of its logistics business, through the sale of its wholly owned subsidiary Badger Transport, Inc. (“Badger”) to BTI Logistics, LLC (“BTI Logistics”). Proceeds from the sale included approximately $800 in cash, a $1,500 secured promissory note payable in quarterly installments of $125 beginning September 30, 2011, and 100,000 shares of Broadwind common stock held by the buyer. The purchase price is subject to final working capital adjustments and certain contingencies and indemnifications. In addition, BTI Logistics assumed approximately $2,600 of debt and capital leases, plus approximately $1,600 of operating lease obligations.

Results of operations for Badger, which are reflected as discontinued operations in the Company’s consolidated statements of income for the three months ended March 31, 2012 and 2011, were as follows:

	Three Months Ended
	March 31,
	2012		2011
Revenues	$	—	$	435
Loss before benefit for income taxes	—		(1,125		)
Income tax provision	—		2
Loss from discontinued operations	$	—	$	(1,127	)

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 10,857	$ 13,340
Restricted cash	404	876
Accounts receivable, net of allowance for doubtful accounts of $539 and $438 as of March 31, 2012 and December 31, 2011, respectively	23,199	25,311
Inventories, net	32,368	23,355
Prepaid expenses and other current assets	3,350	4,033
Assets held for sale	8,050	8,052
Total current assets	78,228	74,967
Property and equipment, net	84,760	87,766
Intangible assets, net	8,999	9,214
Other assets	819	944
TOTAL ASSETS	172,806	172,891
CURRENT LIABILITIES:
Lines of credit and notes payable	1,586	1,566
Current maturities of long-term debt	604	636
Current portions of capital lease obligations	924	965
Accounts payable	24,945	17,358
Accrued liabilities	4,619	5,749
Customer deposits	14,600	17,328
Liabilities held for sale	4,583	4,833
Total current liabilities	51,861	48,435
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	4,598	4,797
Long-term capital lease obligations, net of current portions	827	975
Other	856	825
Total long-term liabilities	6,281	6,597
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized; 139,854,757 and 139,779,197 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively	140	140
Additional paid-in capital	370,788	370,123
Accumulated deficit	(256,264)	(252,404)
Total stockholders' equity	114,664	117,859
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 172,806	$ 172,891

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2012

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2012. The December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind Energy, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. Additionally, certain reclassifications have been made to prior period financial statements to conform to the current period presentation.

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2012 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Broadwind,” and the “Company” refer to Broadwind Energy, Inc., a Delaware corporation headquartered in Naperville, Illinois, and its wholly owned subsidiaries.

Broadwind provides technologically advanced high-value products and services to energy, mining and infrastructure sector customers, primarily in the U.S. The Company’s most significant presence is within the U.S. wind industry, although it has increasingly diversified into other industrial markets in order to improve its capacity utilization and reduce its exposure to uncertainty related to the extension or renewal of tax incentives and other favorable governmental policies currently supporting the U.S. wind industry. The Company’s product and service portfolio provides its wind energy customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of component and service offerings. Outside of the wind market, the Company provides precision gearing and specialty weldments to a broad range of industrial customers for oil and gas, mining and other industrial applications.

Liquidity

The Company has a limited history of operations and has incurred operating losses since inception. The Company anticipates that current cash resources and cash to be generated from operations over the next twelve months will be adequate to meet the Company’s liquidity needs for at least the next twelve months. As discussed further in Note 8, “Debt and Credit Agreements” of these consolidated financial statements, the Company is obligated to make principal payments on outstanding debt totaling $2,190 during the next twelve months, has $4,583 of indebtedness associated with its Liabilities Held for Sale and is obligated to make purchases totaling $390 during the same period under the purchase commitments described in Note 15, “Commitments and Contingencies” of these consolidated financial statements.

In addition, please refer to Note 17, “Restructuring” of these consolidated financial statements for a discussion of the Company’s restructuring plan through 2013 which the Company initiated in the third quarter of 2011. The Company expects that a total of approximately $12,800 of costs will be incurred to implement this restructuring plan. Of the total projected expenses, the Company anticipates that $4,000 will be non-cash expenditures. The Company anticipates that the remaining cash expenditures will be funded substantially by net proceeds from asset sales of $7,500, as well as anticipated cash flow savings of $5,500 annually from the restructuring efforts.

If assumptions regarding the Company’s restructuring efforts, sales and subsequent collections from several of the Company’s large customers, as well as revenues generated from new customer orders, are not materially consistent with management’s expectations, the Company may encounter cash flow and liquidity issues. Additional funding may not be available when needed or on terms acceptable to the Company, which could affect its overall operations. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, will likely require financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash flows to operate its businesses and meet its financial debt covenants, there can be no assurances that its operations will generate sufficient cash or that credit facilities will be available in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs.

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RESTRUCTURING

3 Months Ended

Mar. 31, 2012

RESTRUCTURING

RESTRUCTURING

NOTE 17 — RESTRUCTURING

During the third quarter of 2011, the Company conducted a review of its business strategies and product plans based on the outlook for the economy at large, the forecast for the industries it serves, and its business environment. The Company concluded that its manufacturing footprint and fixed cost base are too large and expensive for its medium-term needs and has begun restructuring its facility capacity and its management structure to consolidate and increase the efficiencies of its operations.

The Company plans to reduce its facility footprint by at least 30% through the sale and/or closure during the next fifteen months of facilities comprising a total of approximately 400,000 square feet. The Company believes the remaining locations will be sufficient to support its Towers and Weldments, Gearing, Services and general corporate and administrative activities, while allowing for growth for the next several years.

As part of this plan, in the third quarter of 2011, the Company determined that the Brandon Facility should be sold, and as a result the Company has reclassified the land, building and fixtures valued at $8,000 from Property and Equipment to Assets Held for Sale. In addition, the related indebtedness associated with the Brandon Facility of $4,583 has been reclassified from Long-Term Debt Net of Current Maturities and Current Maturities of Long-Term Debt to Liabilities Held for Sale. The Company expects that this sale will be completed in the next twelve months. The Company had previously recorded an impairment charge of $13,326 in the fourth quarter of 2010 to bring these assets to fair value; no further impairment charges were recorded.

Additional restructuring plans were approved in the fourth quarter of 2011. The Company expects to incur a total of $12,800 of expenses to implement its restructuring plan. Of the total projected expenses, the Company anticipates $4,000 will consist of non-cash expenditures. The Company expects the remaining cash expenditures will be funded substantially by net proceeds from asset sales of $7,500. The table below details the Company’s total expected restructuring charges as of March 31, 2012:

	2011			Q1 ‘12			Total
	Actual			Actual			Projected
Capital Expenditures	$	(5	)	$	(262	)	$	(4,900	)
Cash Expense
Cost of Sales	(131		)	(95		)	(2,800		)
Selling, general, and administrative expenses	(441		)	(75		)	(1,100		)
Non Cash Expense-Other Income (Loss)	(297		)	(294		)	(4,000		)
	$	(874	)	$	(726	)	$	(12,800	)

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2012

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 2 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2011, as follows:

	Three Months Ended
	March 31,
	2012			2011
Basic earnings per share calculation:
Net loss to common stockholders	$	(3,860	)	$	(5,180	)
Weighted average number of common shares outstanding	139,795,666			107,108,072
Basic net loss per share	$	(0.03	)	$	(0.05	)
Diluted earnings per share calculation:
Net loss to common stockholders	$	(3,860	)	$	(5,180	)
Weighted average number of common shares outstanding	139,795,666			107,108,072
Common stock equivalents:
Stock options and unvested restricted stock units (1)	—			—
Weighted average number of common shares outstanding	139,795,666			107,108,072
Diluted net loss per share	$	(0.03	)	$	(0.05	)

(1) Stock options and unvested restricted stock units granted and outstanding of 4,651,277 and 2,311,633 as of March 31, 2012 and 2011, respectively, are excluded from the computation of diluted earnings per share due to the anti-dilutive effect as a result of the Company’s net loss for these respective periods.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 539	$ 438
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	139,854,757	139,779,197
Common stock, shares outstanding	139,854,757	139,779,197

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LEGAL PROCEEDINGS

3 Months Ended

Mar. 31, 2012

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

NOTE 12 — LEGAL PROCEEDINGS

Shareholder Lawsuits

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of Illinois, Eastern Division, against the Company and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of the Company’s common stock between March 17, 2009 and August 9, 2010. A lead plaintiff has been appointed and an amended complaint was filed on September 13, 2011. The amended complaint names as additional defendants certain of the Company’s current and former directors, certain Tontine entities, and Jeffrey Gendell, a principal of Tontine. The complaint seeks to allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and/or Section 20(a) of the Exchange Act by issuing or causing to be issued a series of allegedly false and/or misleading statements concerning the Company’s financial results, operations, and prospects, including with respect to the January 2010 secondary public offering of the Company’s common stock. The plaintiffs allege that the Company’s statements were false and misleading because, among other things, the Company’s reported financial results during the class period allegedly violated generally accepted accounting principles because they failed to reflect the impairment of goodwill and other intangible assets, and the Company allegedly failed to disclose known trends and other information regarding certain customer relationships at Brad Foote. In support of their claims, the plaintiffs rely in part upon six alleged confidential informants, all of whom are alleged to be former employees of the Company. On November 18, 2011, the Company filed a motion to dismiss.  On April 19, 2012, the Court granted in part and denied in part the Company’s motion. The Court dismissed all claims with prejudice against each of the named current and former officers except for J. Cameron Drecoll and held that the plaintiffs had failed to state a claim for any alleged misstatements made after March 19, 2010. In addition, the Court dismissed all claims with prejudice against the named Tontine entities and Mr. Gendell. The Court denied the motion with respect to certain of the claims asserted against the Company and Mr. Drecoll. The Company will be filing its answer and intends to vigorously defend the remaining claims asserted against it. Between February 15, 2011 and March 30, 2011, three putative shareholder derivative lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division against certain of the Company’s current and former officers and directors, and certain Tontine entities, seeking to challenge alleged breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of the Company’s common stock. One of the lawsuits also alleges that certain directors violated Section 14(a) of the Exchange Act in connection with the Company’s Proxy Statement for its 2010 Annual Meeting of Stockholders. Two of the matters pending in the federal court have been consolidated and the Company filed a motion to dismiss these matters on September 19, 2011, which is now fully briefed and awaiting a ruling. The Company has received a request from the Tontine defendants for indemnification in the derivative suits and the class action lawsuit and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. The Company maintains directors and officers liability insurance, however, the costs of indemnification for Mr. Gendell and/or Tontine would not be covered by any Company insurance policy. Because of the preliminary nature of these lawsuits, the Company is not able to estimate a loss or range of loss, if any, that may be incurred in connection with this matter at this time.

SEC Inquiry

In August 2011, the Company received a subpoena from the United States Securities and Exchange Commission (“SEC”) seeking documents and other records related to certain accounting practices at Brad Foote. The subpoena was issued in connection with an informal inquiry that the Company received from the SEC in November 2010 arising out of a whistleblower complaint received by the SEC related to revenue recognition, cost accounting and intangible and fixed asset valuations at Brad Foote. The Company has been providing information to the SEC in response to the informal inquiry and subpoena. The Company cannot currently predict the outcome of this investigation. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. The Company has received a request from Tontine for indemnification of expenses incurred in connection with an SEC subpoena and may receive additional requests for indemnification from Tontine and/or Mr. Gendell pursuant to various agreements related to shares owned by Tontine. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Environmental

The Company is aware of a grand jury investigation commenced by the United States Attorney’s Office, Northern District of Illinois, for potential violation of federal environmental laws. On February 15, 2011, pursuant to a search warrant, officials from the United States Environmental Protection Agency entered and conducted a search of one of Brad Foote’s facilities in Cicero, Illinois, in connection with the alleged improper disposal of industrial wastewater to the sewer. Also on or about February 15, 2011, in connection with the same matter, the Company received two grand jury subpoenas requesting testimony and the production of certain documents relating to the Brad Foote facility’s past compliance with certain environmental laws and regulations relating to the generation, discharge and disposal of wastewater from certain of its processes between 2004 and the present. On or about February 23, 2011, the Company received another grand jury subpoena relating to the same investigation, requesting testimony and the production of certain other documents relating to certain of the Brad Foote facility’s employees, environmental and manufacturing processes, and disposal practices. The Company has produced e-mails, reports and correspondence as requested, and completed its response to these subpoenas on August 17, 2011.  The Company does not currently have information as to when the investigation may be concluded, and is also conducting an internal investigation of any possible non-compliance. The Company has also voluntarily instituted corrective measures at the Brad Foote facility, including changes to its wastewater disposal practices.  At this time, the Company has been advised that Brad Foote is a target of the investigation, but no fines or penalties have been suggested.  There can be no assurances that the conclusion of the investigation will not result in a determination that applicable environmental, health and safety laws and regulations were violated at the Brad Foote facility. Any violations found, or any criminal or civil fines, penalties and/or other sanctions imposed could be substantial and materially and adversely affect the Company. The Company had recorded a liability of $675 at December 31, 2010, which represented the low end of its estimate of remediation-related costs and expenses; as of March 31, 2012, those initial costs have been incurred, and additional costs have been expensed as incurred. No additional remediation related expenses are anticipated or have been accrued; however, the outcome of the investigation, the liability in connection therewith, and the impact to the Company’s operations cannot be predicted at this time. The Company does not believe that the resolution of this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations. No estimate regarding the loss or range of loss, if any, that may be incurred in connection with this matter is possible at this time.

Other

The Company is also a party to additional claims and legal proceedings arising in the ordinary course of business. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial position or liquidity. It is possible that if one or more of the matters described above were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s cash flows in the periods the Company would be required to pay such liability.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information
Entity Registrant Name	BROADWIND ENERGY, INC.
Entity Central Index Key	0001120370
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		139,854,757
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2012

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, the Company has not identified any standards that it believes merit further discussion. The Company believes that none of the new standards will have a significant impact on its consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues	$ 54,443	$ 43,530
Cost of sales	51,822	40,951
Restructuring	389
Gross profit	2,232	2,579
OPERATING EXPENSES:
Selling, general and administrative	5,883	6,337
Intangible amortization	215	215
Restructuring	75
Total operating expenses	6,173	6,552
Operating loss	(3,941)	(3,973)
OTHER (EXPENSE) INCOME, net:
Interest expense, net	(262)	(273)
Other, net	363	210
Total other (expense) income, net	101	(63)
Net loss from continuing operations before provision for income taxes	(3,840)	(4,036)
Provision for income taxes	20	17
LOSS FROM CONTINUING OPERATIONS	(3,860)	(4,053)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		(1,127)
NET LOSS	$ (3,860)	$ (5,180)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
Loss from continuing operations (in dollars per share)	$ (0.03)	$ (0.04)
Loss from discontinued operations (in dollars per share)		$ (0.01)
Net loss (in dollars per share)	$ (0.03)	$ (0.05)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic (in shares)	139,796	107,108
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Diluted (in shares)	139,796	107,108

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ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2012

ACCRUED LIABILITIES

ACCRUED LIABILITIES

NOTE 7 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2012 and December 31, 2011 consisted of the following:

	March 31,		December 31,
	2012		2011
Accrued payroll and benefits	$	1,920	$	2,762
Accrued property taxes	293		250
Income taxes payable	393		386
Accrued professional fees	485		433
Accrued warranty liability	924		983
Accrued other	604		935
Total accrued liabilities	$	4,619	$	5,749

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2012

INTANGIBLE ASSETS

INTANGIBLE ASSETS

NOTE 6 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of its Gearing subsidiary completed during 2007. Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 8 to 20 years. The Company tests intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. During the first quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of March 31, 2012.

As of March 31, 2012 and December 31, 2011, the cost basis, accumulated amortization, impairment charge and net book value of intangible assets were as follows:

	March 31, 2012									December 31, 2011
								Net									Net
	Cost		Accumulated			Impairment		Book		Cost		Accumulated			Impairment		Book
	Basis		Amortization			Charge		Value		Basis		Amortization			Charge		Value
Intangible assets:
Customer relationships	$	3,979	$	(1,199	)	$	—	$	2,780	$	3,979	$	(1,084	)	$	—	$	2,895
Trade names	7,999		(1,780		)	—		6,219		7,999		(1,680		)	—		6,319
Intangible assets	$	11,978	$	(2,979	)	$	—	$	8,999	$	11,978	$	(2,764	)	$	—	$	9,214

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2012

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 14 — SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products and services offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker. The Company’s segments and their product and service offerings are summarized below:

Towers and Weldments

The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for 2 megawatt (“MW”) and larger wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of approximately 500 towers, sufficient to support turbines generating more than 1,200 MW of power. This product segment also encompasses the manufacture of specialty fabrications and specialty weldments for mining and other industrial customers.

Gearing

The Company engineers, builds and remanufactures precision gears and gearing systems for oil and gas, wind, mining and other industrial applications. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Services

The Company offers a comprehensive range of services, primarily to wind farm developers and operators. The Company specializes in non-routine maintenance services for both kilowatt and megawatt turbines. The Company also offers comprehensive field services to the wind industry. The Company is increasingly focusing its efforts on the identification and/or development of product and service offerings which will improve the reliability and efficiency of wind turbines, and therefore enhance the economic benefits to its customers. The Company provides wind services across the U.S., with primary service locations in South Dakota and Texas. In February 2011, the Company put into operation its dedicated drivetrain service center in Abilene, Texas, which is focused on servicing the growing installed base of MW wind turbines as they come off warranty and, to a limited extent, industrial gearboxes requiring precision repair and testing.

Corporate and Other

“Corporate and Other” is comprised of adjustments to reconcile segment results to consolidated results, which primarily includes corporate administrative expenses and intercompany eliminations.

Summary financial information by reportable segment for the three months ended March 31, 2012 and 2011 was as follows:

	Revenues						Operating (Loss) Profit
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2012			2011			2012			2011
Segments:
Towers and Weldments	$	35,169		$	28,170		$	1,005		$	2,420
Gearing	16,032			13,553			(1,121		)	(2,397		)
Services	3,442			1,828			(1,623		)	(1,354		)
Corporate and Other (1)	(200		)	(21		)	(2,202		)	(2,642		)
	$	54,443		$	43,530		$	(3,941	)	$	(3,973	)

	Depreciation and Amortization				Capital Expenditures
	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2012		2011		2012		2011
Segments:
Towers and Weldments	$	876	$	879	$	31	$	105
Gearing	2,672		2,522		365		262
Services	385		56		242		1,995
Corporate and Other (1)	17		44		77		18
	$	3,950	$	3,501	$	715	$	2,380

	Total Assets as of
	March 31,		December 31,
	2012		2011
Segments:
Towers and Weldments	$	73,832	$	69,235
Gearing	72,825		72,699
Services	15,070		16,743
Assets held for sale	8,050		8,052
Corporate and Other (1)	3,029		6,162
	$	172,806	$	172,891

(1) “Corporate and Other” includes the assets and selling, general and administrative expenses of the Company’s corporate office, in addition to intercompany eliminations.

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INCOME TAXES

3 Months Ended

Mar. 31, 2012

INCOME TAXES

INCOME TAXES

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of March 31, 2012, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended March 31, 2012, the Company recorded a provision for income taxes of $20 from continuing operations compared to a provision for income taxes of $17 from continuing operations during the three months ended March 31, 2011. The increase in the provision for income taxes during the three months ended March 31, 2012, was primarily attributable to a change in state apportionment rates that caused a modest change in the current state taxes computed based upon gross margin.

The Company files income tax returns in U.S. federal and state jurisdictions. As of March 2012, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2011, the Company had federal net operating loss carryforwards of $136,189 expiring in various years through 2031. The majority of the federal net operating loss carryforwards will expire in 2028, 2029, 2030 and 2031. As of December 31, 2011, the Company also had unapportioned state net operating losses in the aggregate of approximately $136,189 expiring in various years through 2031.

The Company does not anticipate that there will be a material change in the total amount of its unrecognized tax benefits within the next twelve months. However, the Company has also considered the effect of U.S. Internal Revenue Code (“IRC”) Section 382 on its ability to utilize existing net operating losses. Under IRC Section 382, the use of net operating loss carryforwards and other tax credit carryforwards may be limited if a change in ownership of a company occurs. If it is determined that due to transactions involving the Company’s shares owned by its five percent shareholders a change of ownership has occurred under the provisions of IRC Section 382, the Company’s net operating loss carryforwards could be subject to significant limitations. Application of IRC Section 382 is complex and requires continuous evaluation and the Company’s current net operating loss carryforwards may be subject to significant future limitation.

As of March 31, 2012, the Company has $426 of unrecognized tax benefits, all of which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company has accrued interest and penalties of $140 as of March 31, 2012. As of December 31, 2011, the Company had unrecognized tax benefits of $417, of which, $131 represented accrued interest and penalties.  The change in unrecognized tax benefits is due to the additional accrual of interest for the period ended March 31, 2012 of $9, compared to $9 for the period ended March 31, 2011.

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DEBT AND CREDIT AGREEMENTS

3 Months Ended

Mar. 31, 2012

DEBT AND CREDIT AGREEMENTS

DEBT AND CREDIT AGREEMENTS

NOTE 8 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2012 and December 31, 2011 consisted of the following:

	March 31,			December 31,
	2012			2011
Term loans and notes payable	$	6,788		$	6,999
Less: Current portion	(2,190		)	(2,202		)
Long-term debt, net of current maturities	$	4,598		$	4,797

Credit Facilities

Investors Community Bank Loans

On April 7, 2008, the Company’s wholly-owned subsidiary R.B.A. Inc. (“RBA”) executed four promissory notes with Investors Community Bank (“ICB”) in the aggregate principal amount of approximately $3,781. Three of these notes were term notes, with initial principal balances totaling $2,049, bearing interest at fixed rates ranging from 5.65% to 6.85% per annum, with maturities ranging from October 2012 to April 2013 (collectively, the “ICB Notes”). The fourth note was a line of credit note, which has been repaid in full.

Pursuant to the merger of RBA into the Company’s wholly-owned subsidiary Broadwind Towers, Inc. (f/k/a Tower Tech Systems Inc.) (“Broadwind Towers”) on December 31, 2009, the loans evidenced by the ICB Notes (collectively, the “ICB Loans”) were modified pursuant to a Master Amendment among ICB, Broadwind Towers and the Company (as guarantor) (the “Master Amendment”). Under the terms of the Master Amendment, Broadwind Towers agreed to a number of security and financial covenants. As the outstanding balances under the ICB Loans have declined, certain of these requirements have been removed through subsequent amendments to the Master Amendment. The remaining security requirements are that Broadwind Towers maintain a depository relationship of not less than $700 with ICB and maintain a debt service ratio of not less than 1.25 to 1.0 at all times. The ICB Loans are also secured by a mortgage on a facility owned by Broadwind Towers in Clintonville, Wisconsin, and by a guarantee from the Company. As of March 31, 2012, (i) the total amount of outstanding indebtedness under the ICB Notes was $1,031, (ii) the effective per annum interest rate under the ICB Notes was 5.72%, and (iii) Broadwind Towers was in compliance with all covenants under the documents evidencing and securing the ICB Loans.

Great Western Bank Loan

On April 28, 2009, Broadwind Towers entered into a Construction Loan Agreement with Great Western Bank (“GWB”), pursuant to which GWB agreed to provide up to $10,000 in financing (the “Construction Loan”) to fund construction of Broadwind Towers’ wind tower manufacturing facility in Brandon, South Dakota (the “Brandon Facility”). Pursuant to a Change in Terms Agreement dated April 5, 2010 between GWB and Broadwind Towers, the Construction Loan was converted to a term loan (the “GWB Term Loan”) providing for monthly payments of principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500, and changing the per annum interest rate to 8.5%.

The GWB Term Loan is secured by a first mortgage on the Brandon Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement, each between Broadwind Towers and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Broadwind Towers to the GWB Term Loan. The GWB Term Loan contains representations, warranties and covenants that are customary for a term financing arrangement and contains no financial covenants. As of March 31, 2012, the total outstanding indebtedness under the GWB Term Loan was $4,583, which is recorded as Liabilities Held for Sale within the consolidated balance sheet in light of the Company having initiated a process to sell the Brandon Facility.

Wells Fargo Account Purchase Agreements

On September 29, 2010, the Company’s wholly-owned subsidiaries Broadwind Towers, Brad Foote Gear Works, Inc. (“Brad Foote”), Broadwind Services, LLC f/k/a Energy Maintenance Service, LLC (“Broadwind Services”) (collectively, the “Subsidiaries”), and Badger entered into account purchase agreements (the “AP Agreements”) with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. (“Wells Fargo”). Under the AP Agreements, when requested by the Company, Wells Fargo will advance funds against certain receivables arising from sales of the Subsidiaries’ products and services. In connection with the entry into the AP Agreements, the Company and each Subsidiary executed guaranties (including cross-guaranties) in favor of Wells Fargo. With respect to the Subsidiaries, the AP Agreements contain provisions providing for cross-defaults and cross-collateralization. In addition, each Subsidiary has granted to Wells Fargo a security interest against all financed receivables and related collateral. Prior to entering into the AP Agreements, there was no material relationship between the Company, the Subsidiaries and Wells Fargo.

Under the terms of the AP Agreements, when requested by the Company, Wells Fargo will advance approximately 80% of the face value of eligible receivables to the Subsidiaries. Wells Fargo will have full recourse to the Subsidiaries for collection of the financed receivables. The aggregate facility limit of the AP Agreements is $10,000. For Wells Fargo’s services under the AP Agreements, the Subsidiaries have agreed to pay Wells Fargo (i) a floating discount fee of the then-prevailing LIBOR plus 3.75% per annum on the sum of the outstanding financed accounts, (ii) an annual facility fee of 1% of the aggregate facility limit, and (iii) an annual unused line fee of 0.042% on the portion of the credit facility which is unused. The initial term of the AP Agreements ends on September 29, 2013. If the AP Agreements are terminated prior to this date, an early termination fee of up to 2% of the aggregate facility limit may apply. On October 19, 2011 the AP Agreements were amended to modify the month-end minimum total cash balance requirement from $5,000 to the greater of $2,000 or the outstanding purchased amount, not to exceed $5,000.

In connection with the sale of Badger to a third party purchaser in March 2011, the AP Agreement between Badger and Wells Fargo and the guaranty provided by Badger to Wells Fargo with respect to the other AP Agreements were each terminated, pursuant to an Omnibus Amendment to Account Purchase Agreements and Guaranties dated as of March 4, 2011, by and among the Company, the Subsidiaries and Wells Fargo.

During the first quarter of 2012 the Company financed approximately $4,238 of accounts receivable with Wells Fargo. At March 31, 2012, $2,917 of financed receivables remained outstanding, and the Subsidiaries had the ability to draw up to an additional $7,083.

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the “Settlement Agreement”) with the former owners of Brad Foote, including J. Cameron Drecoll, who served as the Company’s Chief Executive Officer and a member of its Board of Directors until December 1, 2010. The Settlement Agreement related to the post-closing escrow established in connection with the Company’s acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other terms, the Company issued three promissory notes to the former owners in the aggregate principal amount of $3,000 (the “Selling Shareholder Notes”). The Selling Shareholder Notes issued to the former owners other than Mr. Drecoll mature on May 28, 2012 and bear interest at a rate of 7% per annum, with interest payments due quarterly. The Selling Shareholder Note issued to Mr. Drecoll in the principal amount of $2,320 pursuant to the terms of the Settlement Agreement (the “Drecoll Note”) also was originally scheduled to mature on May 28, 2012 and bore interest at a rate of 7% per annum, with interest payments due quarterly; however, effective as of July 1, 2011, the Drecoll Note was amended and restated to effect the following modifications: (i) the maturity date was changed to January 10, 2014; (ii) the interest rate was changed to 9% per annum; and (iii) the payment schedule was changed to quarterly payments of principal and interest, such that the Drecoll Note is now self-amortizing with payments that commenced in the fourth quarter of 2011. The Company agreed to pay Mr. Drecoll a restructuring fee in the amount of $10 in connection with the restructuring of the Drecoll Note. As of March 31, 2012, principal of $2,576 and accrued interest of $55 were outstanding under the Selling Shareholder Notes.

Other

Included in Long Term Debt, Net of Current Maturities is $2,280 associated with the New Markets Tax Credit Agreement described further in Note 16, “New Markets Tax Credit” of these consolidated financial statements.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2012

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 9 — FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and customer deposits approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

Assets measured at fair value on a nonrecurring basis

The fair value measurement approach for long-lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of the Company’s future operating results, the implied fair value of these assets using an income approach by preparing a discounted cash flow analysis and a market-based approach based on the Company’s market capitalization, and other subjective assumptions. During the first quarter of 2012, the Company identified triggering events associated with the Company’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its identifiable intangible assets and certain property and equipment assets. Based upon the Company’s assessment, no additional impairment to these assets was identified as of March 31, 2012.

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SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 11 — SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

2007 Equity Incentive Plan

The Company grants incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which was approved by the Company’s Board of Directors in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval. Specifically, (i) the 2007 EIP was amended by the Company’s stockholders in June 2009 to increase the number of shares of common stock authorized for issuance under the 2007 EIP, (ii) the 2007 EIP was further amended and restated in March 2011 by the Company’s Board of Directors to limit share recycling under the 2007 EIP, to include a minimum vesting period for time-vesting restricted stock awards and restricted stock units and to add a clawback provision, and (iii) the 2007 EIP was further amended at the Company’s Annual Meeting of Stockholders on May 4, 2012 to increase the number of shares of common stock authorized for issuance under the 2007 EIP to provide sufficient authorized shares to settle certain awards granted in December 2011. As amended, the 2007 EIP reserves 6,910,510 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of March 31, 2012, the Company had reserved 1,250,636 shares for the exercise of stock options outstanding, 3,400,641 shares for restricted stock unit awards outstanding and 256,513 additional shares for future stock awards under the 2007 EIP. As of March 31, 2012, 592,210 shares of common stock reserved for stock options and restricted stock unit awards under the 2007 EIP have been issued in the form of common stock.

2012 Equity Incentive Plan

On March 8, 2012, the Company’s Board of Directors approved the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP” and together with the 2007 EIP, the “Equity Incentive Plans”), and at the Company’s Annual Meeting of Stockholders on May 4, 2012, the Company’s stockholders approved the adoption of the 2012 EIP. The purposes of the 2012 EIP are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2012 EIP by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, and independent contractors; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2012 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and restricted stock units; and (v) performance awards. As of March 31, 2012, the Company had not reserved any shares for awards under the 2012 EIP and no shares had been issued in the form of common stock.

Stock Options.  The exercise price of stock options granted under the Equity Incentive Plans is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. If a plan participant’s employment is terminated during the vesting period, he or she forfeits the right to unvested stock option awards. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units.  The granting of restricted stock units is provided for under the Equity Incentive Plans. Restricted stock units generally vest on the anniversary of the grant date, with vesting terms that range from immediate vesting to five years from the date of grant. The fair value of each unit granted is equal to the closing price of the Company’s common stock on the date of grant and is expensed ratably over the vesting term of the restricted stock unit award. If a plan participant’s employment is terminated during the vesting period, he or she forfeits the right to any unvested portion of the restricted stock units.

The following table summarizes stock option activity during the three months ended March 31, 2012 under the Equity Incentive Plans, as follows:

	Options		Weighted Average Exercise Price
Outstanding as of December 31, 2011	1,275,115		$	6.01
Granted	—		$	—
Exercised	—		$	—
Forfeited	(24,479	)	$	5.98
Expired	—		$	—
Outstanding as of March 31, 2012	1,250,636		$	6.01
Exercisable as of March 31, 2012	1,072,237		$	6.30

The following table summarizes restricted stock unit activity during the three months ended March 31, 2012 under the Equity Incentive Plans, as follows:

	Number of Units		Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2011	3,646,299		$	1.32
Granted	—		$	—
Vested	(111,149	)	$	2.15
Forfeited	(134,509	)	$	1.42
Outstanding as of March 31, 2012	3,400,641		$	1.28

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. There were no stock options issued in the first quarter of 2012. The weighted average fair value per share of stock option awards granted during the three months ended March 31, 2011 and the assumptions used to value these stock options, are as follows:

	Three Months Ended March 31,
	2012	2011
Dividend yield	—	—
Risk-free interest rate	—	2.6		%
Weighted average volatility	—	96.1		%
Expected life (in years)	—	6.3
Weighted average grant date fair value per share of options granted	—	$	1.05

Dividend yield is zero as the Company currently does not pay a dividend.

Risk-free rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the award.

During the three months ended March 31, 2011, the Company utilized a standard volatility assumption of 96.1% for estimating the fair value of stock options awarded based on comparable volatility averages for the energy related sector.

The expected life of each stock option award granted is derived using the “simplified method” for estimating the expected term of a “vanilla-option” in accordance with Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment,” as amended by SAB No. 110, “Share-Based Payment.” The fair value of each unit of restricted stock is equal to the fair market value of the Company’s common stock as of the date of grant.

The Company utilized a forfeiture rate of 25% during the three months ended March 31, 2011 for estimating the forfeitures of stock options granted.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2012 and 2011, as follows:

	Three Months Ended March 31,
	2012		2011
Share-based compensation expense:
Selling, general and administrative	$	665	$	369
Income tax benefit (1)	—		—
Net effect of share-based compensation expense on net loss	$	665	$	369
Reduction in earnings per share:
Basic and diluted earnings per share (2)	$	0.00	$	0.00

(1) Income tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the three months ended March 31, 2012 and 2011. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

(2) Diluted earnings per share for the three months ended March 31, 2012 and 2011 does not include common stock equivalents due to their anti-dilutive nature as a result of the Company’s net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all periods presented.

As of March 31, 2012, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and restricted stock units, in the amount of approximately $3,484 will be recognized through the year 2016. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

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NEW MARKETS TAX CREDIT TRANSACTION

3 Months Ended

Mar. 31, 2012

NEW MARKETS TAX CREDIT TRANSACTION

NEW MARKETS TAX CREDIT TRANSACTION

NOTE 16 — NEW MARKETS TAX CREDIT TRANSACTION

On July 20, 2011, the Company received $2,280 in proceeds via a transaction involving tax credits linked to the Company’s capital investment in the Gearbox Facility. The transaction qualifies under the NMTC program and included a gross loan from AMCREF to Broadwind Services in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF Investor VIII, LLC, with a term of fifteen years and interest payable at the rate of 2.5% per annum.

The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The program could generate $3,900 in tax credits which the Company has made available under the structure by passing them through to Capital One. Most of the proceeds have been applied to the Company’s recent investment in the Gearbox Facility assets and operating costs, as permitted under this program; the March 31, 2012 consolidated balance sheet has $174 in cash classified as restricted cash related to this arrangement which has yet to be used under this program.

The Gearbox Facility must operate and be in compliance with various regulations and restrictions for seven years to comply with terms of the agreement, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. The NMTC program tax credits are subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate any tax credit recapture events or that it will be required to make a payment to Capital One under the indemnification agreement.

The Capital One contribution has been included in the Company’s consolidated balance sheet at March 31, 2012. This transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest. Capital One may exercise an option to put its investment and receive $130 from the Company. If Capital One does not exercise its put option, the Company can exercise a call option at the then fair market value of the call. The Company believes that Capital One will exercise the put option in 2018 at the end of the recapture period. The Capital One contribution other than the amount allocated to the put obligation will be recognized as income only after the put/call is exercised and when Capital One has no ongoing interest. However, there is no legal obligation for Capital One to exercise the put, and the Company has attributed only an insignificant value to the put option included in this structure.

The Company has determined that two pass-through financing entities created under this structure are variable interest entities (“VIE’s”). The ongoing activities of the VIE’s—collecting and remitting interest and fees and complying with NMTC requirements—were considered in the initial design of the transaction and are not expected to significantly affect economic performance throughout the life of the VIE’s. Management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIE’s. The Company has concluded that it is required to consolidate the VIE’s because the Company has both (i) the power to direct those matters that most significantly impact the activities of the VIE and (ii) the obligation to absorb losses or the right to receive benefits of the VIE.

The $262 of issue costs paid to third parties are recorded as prepaid expenses, and are being amortized over the expected seven year term of the NMTC arrangement. Capital One’s net contribution of $2,280 is included in Long Term Debt, Net of Current Maturities in the consolidated balance sheet. Incremental costs to maintain the structure during the compliance period will be recognized as they are incurred.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,860)	$ (5,180)
Loss from discontinued operations		1,127
Loss from continuing operations	(3,860)	(4,053)
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization expense	3,950	3,501
Stock-based compensation	665	369
Allowance for doubtful accounts	134	163
Common stock issued under defined contribution 401(k) plan		149
Loss on disposal of assets	23	82
Changes in operating assets and liabilities:
Accounts receivable	1,988	(1,213)
Inventories	(9,007)	984
Prepaid expenses and other current assets	932	(70)
Accounts payable	7,588	(2,811)
Accrued liabilities	(1,118)	(41)
Customer deposits	(2,729)	12,247
Other non-current assets and liabilities	35	(136)
Net cash (used in) provided by operating activities of continued operations	(1,399)	9,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of logistics business	125	761
Purchases of available for sale securities		(102)
Purchases of property and equipment	(715)	(2,380)
Proceeds from disposals of property and equipment	6	110
Decrease in restricted cash	472
Net cash used in investing activities of continued operations	(112)	(1,611)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lines of credit and notes payable	(708)	(467)
Principal payments on capital leases	(264)	(233)
Net cash used in financing activities of continued operations	(972)	(700)
DISCONTINUED OPERATIONS:
Operating cash flows		(777)
Investing cash flows	0
Financing cash flows		(83)
Net cash used in discontinued operations		(860)
Add: Cash balance of discontinued operations, beginning of period		530
Less: Cash balance of discontinued operations, end of period	0
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(2,483)	6,530
CASH AND CASH EQUIVALENTS, beginning of the period	13,340	15,331
CASH AND CASH EQUIVALENTS, end of the period	10,857	21,861
Supplemental cash flow information:
Interest paid, net of capitalized interest	268	254
Income taxes paid	6	48
Non-cash investing and financing activities:
Issuance of restricted stock grants	409	146
Common stock issued under defined contribution 401(k) plan		$ 149

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INVENTORIES

3 Months Ended

Mar. 31, 2012

INVENTORIES

INVENTORIES

NOTE 5 — INVENTORIES

The components of inventories as of March 31, 2012 and December 31, 2011 are summarized as follows:

	March 31,			December 31,
	2012			2011
Raw materials	$	18,241		$	11,943
Work-in-process	10,479			7,437
Finished goods	4,468			4,921
	33,188			24,301
Less: Reserve for excess and obsolete inventory	(820		)	(946		)
Net inventories	$	32,368		$	23,355

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2012

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 15 — COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company completed construction of a wind tower manufacturing facility in Brandon, South Dakota, in the first quarter of 2010, but has not commenced production at this facility. During 2010 the Company concluded that it would be difficult or impossible to operate this facility in a profitable or cost-effective manner in light of the expected mid-term demand for wind towers. In connection with this determination, during the fourth quarter of 2010, the Company recorded an impairment charge of $13,326 to reduce the carrying value of the assets to fair value. The Company currently has purchase commitments totaling approximately $390 outstanding related to this facility.  In the third quarter of 2011, the Company initiated a process to sell the facility and reclassified the facility, and the related indebtedness, to Assets Held for Sale and Liabilities Held for Sale, respectively (see Note 17, “Restructuring” of these financial statements).

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws can also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners, operators and/or users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

Warranty Liability

The Company provides warranty terms that range from one to seven years for various products and services supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of March 31, 2012 and 2011, estimated product warranty liability was $924 and $919 respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets.

The changes in the carrying amount of the Company’s total product warranty liability for the three months ended March 31, 2012 and 2011 were as follows:

	March 31,			March 31,
	2012			2011
Balance, beginning of period	$	983		$	1,071
Warranty expense	(9		)	47
Warranty claims	(50		)	(199		)
Balance, end of period	$	924		$	919

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its accounts receivable. These factors include individual customer circumstances, history with the Company and other relevant criteria.

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the realizability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the three months ended March 31, 2012 and 2011 consists of the following:

	For the three months ended March 31,
	2012			2011
Balance at beginning of year	$	438		$	489
Bad debt expense	132			154
Write-offs	(31		)	—
Balance at end of period	$	539		$	643

Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question.

Other

As of March 31, 2012, approximately 22% of the Company’s employees were covered by two collective bargaining agreements with local unions in Cicero, Illinois and Neville Island, Pennsylvania. The collective bargaining agreements with the Company’s Cicero and Neville Island unions are scheduled to remain in effect through February 2014 and October 2012, respectively. The Company considers its union and employee relations to be satisfactory.

The sale price of the Company’s Badger subsidiary to BTI Logistics is subject to final working capital adjustments, certain contingencies and indemnifications.

On July 20, 2011, the Company entered into a strategic financing agreement including the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity and Capital One, National Association (“Capital One”). This agreement allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program, see Note 16, “New Markets Tax Credit Transaction” of these consolidated financial statements. Under the New Markets Tax Credit program, the gross loan and investment in the Company’s Abilene, Texas gearbox refurbishment facility (the “Gearbox Facility”) of $10,000 generates $3,900 in tax credits over a period of seven years, which the financing agreement makes available to Capital One. The Gearbox Facility must operate and be in compliance with the terms and conditions of the agreement during the seven year compliance period, or the Company may be liable for the recapture of $3,900 in tax credits to which Capital One is otherwise entitled. The Company does not anticipate any credit recaptures will be required in connection with this arrangement.