10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2020

OR

☐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 001-34278

BROADWIND, 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.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(Registrant’s telephone number, including area code)

Broadwind Energy, Inc.

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	BWEN	The NASDAQ Capital Market

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 twelve 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  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒  No  ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒ Emerging growth company ☐	Smaller reporting company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period to comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of shares of registrant’s common stock, par value $0.001, outstanding as of May 1,  2020:  16,640,043.

BROADWIND, 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 Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
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		27

PART I.       FINANCIAL INFORMATION

Item 1.Financial Statements

BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	March 31,		December 31,
	2020		2019
ASSETS
CURRENT ASSETS:
Cash	$	2,743	$	2,416
Accounts receivable, net		16,244		18,310
Inventories, net		40,754		31,863
Prepaid expenses and other current assets		2,600		2,124
Total current assets		62,341		54,713
LONG-TERM ASSETS:
Property and equipment, net		46,989		46,940
Operating lease right-of-use assets		19,932		15,980
Intangible assets, net		4,736		4,919
Other assets		300		314
TOTAL ASSETS	$	134,298	$	122,866
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	16,350	$	12,917
Current portion of finance lease obligations		462		546
Current portion of operating lease obligations		1,579		1,326
Accounts payable		25,132		21,876
Accrued liabilities		4,392		4,911
Customer deposits		23,022		22,717
Total current liabilities		70,937		64,293
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		355		505
Long-term finance lease obligations, net of current portion		594		673
Long-term operating lease obligations, net of current portion		20,324		16,591
Other		66		44
Total long-term liabilities		21,339		17,813
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; 30,000,000 shares authorized; 16,913,980 and 16,830,930 shares issued as of March 31, 2020, and December 31, 2019, respectively		17		17
Treasury stock, at cost, 273,937 shares as of March 31, 2020 and December 31, 2019		(1,842)		(1,842)
Additional paid-in capital		383,669		383,361
Accumulated deficit		(339,822)		(340,776)
Total stockholders’ equity		42,022		40,760
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	134,298	$	122,866

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

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BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2020		2019
Revenues	$	48,634	$	41,660
Cost of sales		42,462		38,111
Restructuring		—		12
Gross profit		6,172		3,537
OPERATING EXPENSES:
Selling, general and administrative		4,309		3,828
Intangible amortization		183		203
Total operating expenses		4,492		4,031
Operating income (loss)		1,680		(494)
OTHER EXPENSE, net:
Interest expense, net		(673)		(536)
Other, net		(1)		(1)
Total other expense, net		(674)		(537)
Net income (loss) before provision for income taxes		1,006		(1,031)
Provision for income taxes		52		11
NET INCOME (LOSS)	$	954	$	(1,042)
NET INCOME (LOSS) PER COMMON SHARE—BASIC:
Net income (loss)	$	0.06	$	(0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		16,596		15,786
NET INCOME (LOSS) PER COMMON SHARE—DILUTED:
Net income (loss)	$	0.06	$	(0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		16,733		15,786

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

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BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

	Common Stock			Treasury Stock			Additional
	Shares	Issued			Issued		Paid-in		Accumulated
	Issued	Amount		Shares	Amount		Capital		Deficit		Total
BALANCE, December 31, 2018	15,982,622	$	16	(273,937)	$	(1,842)	$	381,441	$	(336,253)	$	43,362
Stock issued for restricted stock	141,384		—	—		—		—		—		—
Stock issued under defined contribution 401(k) retirement savings plan	135,636		—	—		—		187		—		187
Share-based compensation	—		—	—		—		255		—		255
Net loss	—		—	—		—		—		(1,042)		(1,042)
BALANCE, March 31, 2019	16,259,642		16	(273,937)		(1,842)		381,883		(337,295)		42,762
BALANCE, December 31, 2019	16,830,930	$	17	(273,937)	$	(1,842)	$	383,361	$	(340,776)	$	40,760
Stock issued for restricted stock	83,050		—	—		—		—		—		—
Share-based compensation	—		—	—		—		308		—		308
Net income	—		—	—		—		—		954		954
BALANCE, March 31, 2020	16,913,980	$	17	(273,937)	$	(1,842)	$	383,669	$	(339,822)	$	42,022

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

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BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	954	$	(1,042)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense		1,612		1,761
Deferred income taxes		22		(9)
Change in fair value of interest rate swap agreements		138		—
Stock-based compensation		308		255
Allowance for doubtful accounts		29		(14)
Common stock issued under defined contribution 401(k) plan		—		187
Gain on disposal of assets		—		(1)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		2,037		(5,040)
Inventories		(8,891)		(10,274)
Prepaid expenses and other current assets		(476)		70
Accounts payable		3,545		8,132
Accrued liabilities		(657)		321
Customer deposits		305		(5,752)
Other non-current assets and liabilities		49		57
Net cash used in operating activities		(1,025)		(11,349)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(670)		(577)
Proceeds from disposals of property and equipment		—		1
Net cash used in investing activities		(670)		(576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		51,552		42,440
Payments on line of credit		(49,070)		(31,191)
Payments on long-term debt		(242)		(228)
Principal payments on finance leases		(218)		(236)
Net cash provided by financing activities		2,022		10,785
NET INCREASE (DECREASE) IN CASH		327		(1,140)
CASH beginning of the period		2,416		1,177
CASH end of the period	$	2,743	$	37

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

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BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands, except share and per share data)

NOTE 1 — BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”).  All intercompany transactions and balances have been eliminated. The 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, 2020 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2020. The December 31, 2019 condensed 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, 2019. 

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2020 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 

Company Description

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications.  The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 74% of the Company’s revenue during the first three months of 2020. 

Liquidity

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances,  the Credit Facility (as defined below), equipment financing, and access to the public or private debt and equity markets and has the option to raise capital under the Company’s Form S-3 (as discussed below).

See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.

Total debt and finance lease obligations at March 31, 2020 totaled $17,761, which includes current outstanding debt and finance leases totaling $16,812. The current outstanding debt includes $14,000 outstanding under the Company’s revolving line of credit.

On August 11, 2017, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 10, 2017 (the “Form S-3”). This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On July 31, 2018, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agent shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel. As of March 31, 2020, the Company’s common stock having a value of approximately $9,967 remained available for issuance with respect to the ATM Agreement. The Company has not used the ATM Agreement in 2019 or 2020.

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In April 2020, the Company received funds under notes and related documents with CIBC under the new U.S. Paycheck Protection Program. For additional discussion, refer to Note 16, “Subsequent Events” of these condensed consolidated financial statements.

The Company anticipates that current cash resources, amounts available under the Credit Facility, the loans received

by the Company under the U.S. Payroll Protection Program, cash to be generated from operations and any potential proceeds from the sale of further Company securities under the Form S-3 will be adequate to meet the Company’s liquidity needs for at least the next twelve months. However, the Company does not anticipate that it will have the ability to generate a significant amount of capital from equity markets in the near-term as a result of the low trading volume of the Company’s common stock on the NASDAQ exchange and limitations on the aggregate amount of securities the Company may offer under the Form S-3 due to its public float size. The Form S-3 will expire on October 10, 2020.

If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and 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 the Company to meet these financial obligations.

Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts and health insurance reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

NOTE 2 — REVENUES

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2020 and 2019:

		Three Months Ended March 31,
		2020		2019
Heavy Fabrications	$	38,368	$	28,294
Gearing		6,227		10,027
Industrial Solutions		4,039		3,339
Consolidated	$	48,634	$	41,660

Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For many tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under

6

these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019, as follows: 

	Three Months Ended
	March 31,
	2020		2019
Basic earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Basic net income (loss) per share	$	0.06	$	(0.07)
Diluted earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Common stock equivalents:
Non-vested stock awards (1)		137,038		—
Weighted average number of common shares outstanding		16,733,274		15,785,954
Diluted net income (loss) per share	$	0.06	$	(0.07)

(1) Stock options and restricted stock units granted and outstanding of 683,019 as of March 31, 2019 are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for three months ended March 31, 2019.

NOTE 4 — INVENTORIES

The components of inventories as of March 31, 2020 and December 31, 2019 are summarized as follows:

	March 31,		December 31,
	2020		2019
Raw materials	$	24,325	$	22,759
Work-in-process		11,496		8,366
Finished goods		6,926		2,915
		42,747		34,040
Less: Reserve for excess and obsolete inventory		(1,993)		(2,177)
Net inventories	$	40,754	$	31,863

NOTE 5 — 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 Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC. Other intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 3 to 8 years.

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As of March 31, 2020 and December 31, 2019, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	March 31, 2020									December 31, 2019
									Remaining									Remaining
									Weighted									Weighted
					Accumulated		Net		Average					Accumulated		Net		Average
	Cost		Accumulated		Impairment		Book		Amortization			Accumulated		Impairment		Book		Amortization
	Basis		Amortization		Charges		Value		Period	Cost		Amortization		Charges		Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(90)	$	—	$	80	2.8	$	170	$	(83)	$	—	$	87	3.1
Customer relationships		15,979		(6,750)		(7,592)		1,637	5.6		15,979		(6,674)		(7,592)		1,713	5.8
Trade names		9,099		(6,080)		—		3,019	7.5		9,099		(5,980)		—		3,119	7.8
Intangible assets	$	25,248	$	(12,920)	$	(7,592)	$	4,736	6.3	$	25,248	$	(12,737)	$	(7,592)	$	4,919	6.5

As of March 31, 2020, estimated future amortization expense is as follows:

2020	$	550
2021		733
2022		725
2023		664
2024		661
2025 and thereafter		1,403
Total	$	4,736

NOTE 6 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2020 and December 31, 2019 consisted of the following: 

	March 31,		December 31,
	2020		2019
Accrued payroll and benefits	$	3,256	$	3,870
Fair value of interest rate swap		216		78
Accrued property taxes		158		—
Income taxes payable		69		61
Accrued professional fees		91		136
Accrued warranty liability		118		163
Self-insured workers compensation reserve		112		115
Accrued other		372		488
Total accrued liabilities	$	4,392	$	4,911

NOTE 7 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2020 and December 31, 2019 consisted of the following:

	March 31,		December 31,
	2020		2019
Line of credit	$	14,000	$	11,517
Other notes payable		2,363		1,563
Long-term debt		342		342
Less: Current portion		(16,350)		(12,917)
Long-term debt, net of current maturities	$	355	$	505

Credit Facility

On October 26, 2016, the Company established a three-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a $35,000 secured credit facility (the “Credit Facility”). The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

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The Credit Facility is an asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the Amended and Restated Loan Agreement is $35 million with a sublimit for letters of credit of $10 million.  Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three-month LIBOR rate or the base rate, plus a margin.  The applicable margin is 5.50% for LIBOR rate loans and 3.50% for base rates loans. Upon certain pay downs, a pricing grid based on the Company’s trailing twelve month fixed charge coverage ratio may become effective under which applicable margins would range from 2.25% to 2.75% for LIBOR rate loans and 0.00% to 0.75% for base rate loans. The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees.  The initial term of the Amended and Restated Loan Agreement ends on February 25, 2022. With the exception of the balance impacted by the interest rate swap (as defined below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The Amended and Restated Loan Agreement contains customary representations and warranties applicable to the Company and the subsidiaries.  It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all financial covenants as of March 31, 2020.  

In conjunction with the Amended and Restated Loan Agreement, in June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at 2.13%, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s condensed consolidated financial statements as of March 31, 2020 and December 31, 2019.

As of March 31, 2020, there was $14,000 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional $16,283, under the Credit Facility.

Other

In 2016, the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2020 and December 31, 2019. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2019 and 2018,  $114 of the loan was forgiven. As of March 31, 2020, the loan balance was  $342.  In addition, the Company has outstanding notes payable for capital expenditures in the amount of $2,363 and $1,563 as of March 31, 2020 and December 31, 2019, respectively, with $2,350 and $1,400 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2020 and December 31, 2019, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from April 2020 to August 2022.

In April 2020, the Company received loans totaling $9,530 as part of the 2020 Coronavirus Aid, Relief and Economic Stability Act. Please refer to Note 16, “Subsequent Events” of these condensed consolidated financial statements for additional details.

NOTE 8 — LEASES

The Company leases certain facilities and equipment. On January 1, 2019, the Company adopted ASU 2016-02, Leases (“Topic 842”) and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the

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adoption of Topic 842 and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

 The Company has elected to apply the short-term lease exception to all leases of one year or less. During the three months ended March 31, 2020, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of $4,380. 

 Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

Quantitative information regarding the Company’s leases is as follows:

	For the Three Months Ended
	March 31, 2020	March 31, 2019
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$ 129	$ 136
Interest on finance lease liabilities	26	29
Total finance lease costs	155	165
Operating lease cost components:
Operating lease cost	765	786
Short-term lease cost	132	146
Variable lease cost (1)	195	178
Sublease income	(45)	(44)
Total operating lease costs	1,047	1,066
Total lease cost	$ 1,202	$ 1,231
Supplemental cash flow information related to our operating leases is
as follows for the three months ended March 31, 2020 and 2019:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash outflow from operating leases	$ 888	$ 875
Weighted-average remaining lease term-finance leases at end of period (in years)	1.2	1.6
Weighted-average remaining lease term-operating leases at end of period (in years)	10.5	10.9
Weighted-average discount rate-finance leases at end of period	9.2%	8.4%
Weighted-average discount rate-operating leases at end of period	8.8%	9.0%

⁽¹⁾ Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

As of March 31, 2020, future minimum lease payments under finance leases and operating leases were as follows:

	Finance		Operating
	Leases		Leases		Total
2020	$	409	$	2,628	$	3,037
2021		527		3,387		3,914
2022		202		2,902		3,104
2023		34		2,884		2,918
2024		—		2,906		2,906
2025 and thereafter		—		20,119		20,119
Total lease payments		1,172		34,826		35,998
Less—portion representing interest		(116)		(12,923)		(13,039)
Present value of lease obligations		1,056		21,903		22,959
Less—current portion of lease obligations		(462)		(1,579)		(2,041)
Long-term portion of lease obligations	$	594	$	20,324	$	20,918

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NOTE 9 — FAIR VALUE MEASUREMENTS

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. 

The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

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. For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

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.

The following tables represent the fair values of the Company’s financial liabilities as of March 31, 2020 and December 31, 2019:

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	216	$	—	$	216
Total liabilities at fair value	$	—	$	216	$	—	$	216

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	78	$	—	$	78
Total liabilities at fair value	$	—	$	78	$	—	$	78

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, 2020, the Company has a full valuation allowance recorded against deferred tax assets. During the three months ended March 31, 2020, the Company recorded a provision for income taxes of $52, compared to a provision for income taxes of $11 during the three months ended March 31, 2019. 

The Company files income tax returns in U.S. federal and state jurisdictions. As of March 31, 2020, 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, 2019, the Company had federal and unapportioned state net operating loss (“NOL”)

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carryforwards of $258,834 of which $227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire.

Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under IRC Section 382 or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382 in 2010, the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes. 

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended and extended in February 2016 and again in February 2019 (as amended, the “Rights Plan”). The Rights Plan is designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. The amendment to the Rights Plan was most recently approved by our stockholders at our 2019 Annual Meeting of Stockholders and has a term of three years.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non‑taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one‑thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $4.25 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date. 

As of March 31, 2020, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of March 31, 2020.

NOTE 11 — SHARE-BASED COMPENSATION

The following table summarizes stock option activity during the three months ended March 31, 2020: 

		Weighted Average
	Options	Exercise Price
Outstanding as of December 31, 2019	54,362	$	11.16
Forfeited	—	$	—
Outstanding as of March 31, 2020	54,362	$	11.16
Exercisable as of March 31, 2020	54,362	$	11.16

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The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, 2020: 

		Weighted Average
	Number of	Grant-Date Fair Value
	Shares	Per Share
Unvested as of December 31, 2019	1,356,915	$	2.39
Granted	—	$	—
Vested	(121,132)	$	3.41
Forfeited	(89,464)	$	5.43
Unvested as of March 31, 2020	1,146,319	$	2.05

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, 2020 and 2019, as follows: 

	Three Months Ended March 31,
	2020		2019
Share-based compensation expense:
Cost of sales	$	22	$	30
Selling, general and administrative		286		225
Net effect of share-based compensation expense on net income	$	308	$	255
Reduction in earnings per share:
Basic earnings per share	$	0.02	$	0.02
Diluted earnings per share	$	0.02	$	0.02

NOTE 12 — LEGAL PROCEEDINGS

The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. 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 condition or cash flows. It is possible that if one or more of such matters 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 financial condition and 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 the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its condensed consolidated financial statements.

NOTE 14— SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products 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: 

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets.  The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the

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Company provides steel towers and adapters primarily to wind turbine manufacturers.  Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers  (1,650 tower sections), sufficient to support turbines generating more than 1,100 megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets. 

Gearing 

The Company provides gearing and gearboxes to a broad set of customers in diverse markets including; onshore and offshore O&G fracking and drilling, surface and underground mining, defense, wind energy, steel, material handling and other infrastructure markets.  The Company has manufactured loose gearing, gearboxes and systems, and provided heat treatment services for aftermarket and OEM applications for nearly a century.  The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Industrial Solutions 

The Company provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market.   

Corporate

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. 

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the three months ended March 31, 2020 and 2019 is as follows:

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227		4,039		—		—	$	48,634
Operating profit (loss)		3,541		(261)		192		(1,792)		—		1,680
Depreciation and amortization		963		512		104		33		—		1,612
Capital expenditures		381		168		120		1		—		670

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2019
Revenues from external customers	$	28,294		10,027		3,339		—		—	$	41,660
Operating (loss) profit		(222)		1,387		(285)		(1,374)		—		(494)
Depreciation and amortization		1,095		482		122		62		—		1,761
Capital expenditures		201		367		—		9		—		577

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	Total Assets as of
	March 31,		December 31,
Segments:	2020		2019
Heavy Fabrications	$	52,904	$	41,432
Gearing		46,802		47,022
Industrial Solutions		9,107		8,893
Corporate		239,429		239,629
Eliminations		(213,944)		(214,110)
	$	134,298	$	122,866

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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 may 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 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 or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. 

Warranty Liability

The Company warrants its products for terms that range from one to five years. 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, 2020 and 2019, estimated product warranty liability was $118 and $218, 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, 2020 and 2019 were as follows: 

	For the Three Months Ended March 31,
	2020		2019
Balance, beginning of period	$	163	$	226
Reduction of warranty reserve		(25)		(19)
Other adjustments		(20)		11
Balance, end of period	$	118	$	218

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 collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria. 

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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 collectability 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, 2020 and 2019 consisted of the following: 

	For the Three Months Ended March 31,
	2020		2019
Balance at beginning of period	$	127	$	190
Bad debt expense		55		—
Write-offs		(19)		—
Other adjustments		(7)		(14)
Balance at end of period	$	156	$	176

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 and/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of March 31, 2020 or December 31, 2019. 

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NOTE 16 — SUBSEQUENT EVENTS

COVID-19

In March 2020, the World Health Organization characterized the novel coronavirus disease (“COVID-19”) a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy.  The Company’s operations and those of its suppliers and customers, and the supply chains that support the Company’s and its suppliers’ and customers’ operations have been and continue to be affected by COVID-19.  In response to the virus, the Company is following the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees, business partners and their respective communities.  In addition, the Company has taken various precautionary actions including, but not limited to, analyzing its supply chain to determine its exposure and identify alternative sourcing, reducing board of director and executive compensation, delaying applicable merit increases and other discretionary spending, restricting employee travel, encouraging employees that have the ability to work from home to do so, implementing social distancing best practices and preparing various contingency plans in the event the Company faces any material adverse impacts from COVID-19. 

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States in response to COVID-19. The Paycheck Protection Program (“PPP”) was formed as part of the CARES Act and is administered by the U.S. Small Business Administration (the “SBA”). The PPP allows certain companies to apply for aid through forgivable loans (“PPP Loans”). Under the terms of the PPP, certain amounts of the PPP Loans may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company applied for these loans through CIBC Bank and received total proceeds of $9,530. The Company intends to use proceeds from the PPP Loans primarily for payroll costs, in accordance with terms and conditions applicable to loans administered by the SBA. The PPP Loans have a 1.00% interest rate and are scheduled to mature starting on April 5, 2022.

For more information, refer to the Company’s supplemental risk factor included in the Company’s Current Report on Form 8-K filed April 17, 2020.

Name Change

In connection with the Company’s rebranding efforts previously announced, following the approval of the Company’s stockholders at the Company’s 2020 Annual Meeting of Stockholders on May 1, 2020, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware, changing the name of the Company from “Broadwind Energy, Inc.” to “Broadwind, Inc.” effective on May 4, 2020. In connection with the Company’s name change, the board of directors of the Company amended the Company’s Second Amended and Restated Bylaws to reflect the Company’s new corporate name.

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, 2019. 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 including those arising as a result of COVID-19. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries.

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

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KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE

In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.

Key Financial Measures

	Three Months Ended
	March 31,
	2020		2019
Net revenues	$	48,634	$	41,660
Net income (loss)	$	954	$	(1,042)
Adjusted EBITDA (1)	$	3,605	$	1,715
Capital expenditures	$	670	$	577
Free cash flow (2)	$	(329)	$	(11,468)
Operating working capital (3)	$	8,844	$	17,607
Total debt	$	16,705	$	24,384
Total orders	$	33,809	$	24,006
Backlog at end of period	$	127,401	$	81,126
Book-to-bill (4)		0.7		0.6

(1)We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when they internally evaluate the performance of our business, review financial trends and make operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

(2)We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.

(3)We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

(4)We define the book-to-bill as the ratio of new orders we received to units shipped and billed during a period.  

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:

	Three Months Ended
	March 31,
	2020		2019
Net income (loss)	$	954	$	(1,042)
Interest expense		673		536
Income tax provision (benefit)		52		11
Depreciation and amortization		1,612		1,761
Share-based compensation and other stock payments		314		437
Restructuring costs		—		12
Adjusted EBITDA		3,605		1,715
Changes in operating working capital		(3,264)		(12,607)
Capital expenditures		(670)		(577)
Proceeds from disposal of property and equipment		—		1
Free Cash Flow	$	(329)	$	(11,468)

OUR BUSINESS

First  Quarter Overview

We booked $33,809 in new orders in the first quarter of 2020,  up from $24,006 in the first quarter of 2019 driven primarily by a  $5,286 increase in aftermarket wind Gearing and other industrial Gearing orders and a $3,004 rise in Heavy Fabrication orders, predominately driven by an increase in mining and other industrial customers, a result of our ongoing

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diversification efforts.  Our Industrial Solutions segment realized a $1,513 increase in orders for new gas turbine content, partially offset by a decrease in aftermarket demand.  

We recognized revenue of $48,634 in the first quarter of 2020,  up 17%  compared to the first quarter of 2019,  primarily due to sales growth in the Heavy Fabrications segment as tower sections sold surged 66%  compared to the prior year quarter driven primarily by customer demand to support the expected increase of wind turbine tower installations. This growth was partially offset by a lower average sales price on towers sold due to higher levels of customer supplied materials in the current year.  Industrial Solutions revenue was up $700, or 21% primarily due to higher near-term demand for new gas turbine content, partially offset by weaker aftermarket demand.  Gearing revenue was down $3,800 driven primarily by lower order intake in the second half of 2019 and as customers delayed approximately $1,000 of purchases into future periods. 

We reported net income of $954 or $0.06 per share in the first quarter of 2020,  compared to a net loss of $1,042 or $0.07 per share in the first quarter of 2019 primarily due to higher capacity utilization in towers and overall improved operating efficiencies, partially offset by decreased profitability in our gearing segment due to decreased sales,  a lower margin sales mix and manufacturing inefficiencies associated with lower activity levels.

In March 2020, the World Health Organization characterized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. Although our financial results were not materially impacted in the quarter ending March 31, 2020, our operations and those of our suppliers and customers, and the supply chains that support our and their operations have been and continue to be affected by COVID-19.  Order activity levels for Gearing, Industrial Solutions and industrial fabrications have declined since the COVID-19 outbreak.  Additionally, customers have delayed scheduled purchases in our Gearing segment.  For more information, refer to Note 16, “Subsequent Events” in the notes to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and our supplemental risk factor included in our Current Report on Form 8-K filed April 17, 2020.

RESULTS OF OPERATIONS

Three months ended March 31, 2020, Compared to Three months ended March 31, 2019

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2020, compared to the three months ended March 31, 2019. 

	Three Months Ended March 31,								2020 vs. 2019
			% of Total				% of Total
	2020		Revenue		2019		Revenue		$ Change		% Change
Revenues	$	48,634	100.0	%	$	41,660	100.0	%	$	6,974	16.7	%
Cost of sales		42,462	87.3	%		38,111	91.5	%		4,351	11.4	%
Restructuring		—	—	%		12	0.0	%		(12)	(100.0)	%
Gross profit		6,172	12.7	%		3,537	8.5	%		2,635	74.5	%
Operating expenses
Selling, general and administrative expenses		4,309	8.9	%		3,828	9.2	%		481	12.6	%
Intangible amortization		183	0.4	%		203	0.5	%		(20)	(9.9)	%
Total operating expenses		4,492	9.2	%		4,031	9.7	%		461	11.4	%
Operating income (loss)		1,680	3.5	%		(494)	(1.2)	%		2,174	440.1	%
Other expense, net
Interest expense, net		(673)	(1.4)	%		(536)	(1.3)	%		(137)	(25.6)	%
Other, net		(1)	(0.0)	%		(1)	(0.0)	%		—	—	%
Total other expense, net		(674)	(1.4)	%		(537)	(1.3)	%		(137)	(25.5)	%
Net income (loss) before provision for income taxes		1,006	2.1	%		(1,031)	(2.5)	%		2,037	197.6	%
Provision for income taxes		52	0.1	%		11	0.0	%		41	372.7	%
Net income (loss)	$	954	2.0	%	$	(1,042)	(2.5)	%	$	1,996	191.6	%

Consolidated

Revenues increased by $6,974,  primarily due to higher production levels in the Heavy Fabrications segment as towers sections sold increased 66% from the first quarter of 2019, partially offset by a lower average sales price on towers sold primarily due to higher levels of customer supplied materials in the current year. Industrial Solutions revenue was up $700 from the first quarter of 2019, primarily due to increased shipments of new gas turbine content. Partially offsetting these improvements was a decrease in Gearing segment revenue of $3,800 due primarily to weak order intake in the second half of

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2019 primarily within O&G and other industrial markets. In addition, due to declining oil prices and general market uncertainty, customers delayed approximately $1,000 of purchases into future periods.

Gross profit increased by $2,635 due primarily to higher capacity utilization in towers and overall improved operating efficiencies.  This benefit was partially offset by lower gearing sales across all core industries, a lower margin sales mix and manufacturing inefficiencies associated with lower activity levels. As a result, gross margin increased to 12.7% during the three months ended March 31, 2020, from 8.5% during the three months ended March 31, 2019.

Due to higher revenue levels, operating expenses as a percentage of sales improved to 9.2% in the current-year quarter from 9.7% in the prior year quarter.

Net income increased to $954 during the three months ended March 31, 2020 from a net loss of $1,042 during the three months ended March 31, 2019 due to the factors described above. 

Heavy Fabrications Segment

	Three Months Ended
	March 31,
	2020			2019
Orders	$	15,514		$	12,510
Tower sections sold		312			188
Revenues		38,368			28,294
Operating income (loss)		3,541			(222)
Operating margin		9.2	%		(0.8)	%

 The increase in Heavy Fabrications segment orders was primarily due to increased demand for other industrial fabrications of $4,935, primarily from mining and other industrial customers resulting from ongoing diversification efforts. Partially offsetting this increase was a reduction in tower orders, primarily due to timing of customer purchases.  Segment revenues increased by $10,074 due to a 66% increase in tower sections sold compared to the prior year quarter and the benefit of improved customer diversification. This was partially offset by a lower average sales price on towers sold primarily due to increased customer supplied materials in the current year.

Heavy Fabrications segment operating results improved by $3,763 compared to the prior year. The quarter-over-quarter improvement reflected the higher capacity utilization associated with tower production and overall improved operating efficiencies. Operating margin was 9.2% during the three months ended March 31, 2020, an increase from (0.8%) during the three months ended March 31, 2019.

Gearing Segment

	Three Months Ended
	March 31,
	2020			2019
Orders	$	12,421		$	7,135
Revenues		6,227			10,027
Operating (loss) income		(261)			1,387
Operating margin		(4.2)	%		13.8	%

 Gearing segment orders increased 74% compared to the prior year period primarily due to an increase in aftermarket wind gearing orders, which can fluctuate based on customer order patterns. Gearing segment orders also benefitted from an increase in other industrial customer demand. Revenue decreased 38% from the prior year quarter due primarily to lower order intake in the second half of 2019 within O&G and other industrial markets. In addition, due to declining oil prices and general market uncertainty, customers delayed approximately $1,000 of purchases into future periods. 

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Gearing segment operating results decreased $1,648 from the prior year period.  The decrease was primarily attributable to a decrease in sales across all core markets,  a lower margin sales mix and manufacturing inefficiencies associated with lower activity levels. Operating margin was (4.2%) during the three months ended March 31, 2020, down from 13.8%  during the three months ended March 31, 2019.

Industrial Solutions Segment

	Three Months Ended
	March 31,
	2020				2019
Orders	$	5,874		$	4,361
Revenues		4,039			3,339
Operating income (loss)		192			(285)
Operating margin		4.8	%		(8.5)	%

Industrial Solutions segment orders and revenues increased from the prior year period primarily due to stronger near-term demand for new gas turbine content, partially offset by lower aftermarket demand.  The revenue increase was a result of recent strong order activity levels associated with an increase in global new gas turbine activity levels. The operating income improvement was a result of the revenue growth and general operating efficiencies. The operating margin improved to 4.8% during the three months ended March 31, 2020 from (8.5%) during the three months ended March 31, 2019.

Corporate and Other

Corporate and Other expenses increased by $418 during the three months ended March 31, 2020 primarily due to increased salary and benefit related expenses in the current year quarter.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of March 31, 2020, cash and cash equivalents totaled $2,743 an increase of $327 from December 31, 2019. Cash balances remain minimal as operating receipts and disbursements flow through our Credit Facility, which is in a drawn position. Debt and finance lease obligations at March 31, 2020 totaled $17,761. As of March 31, 2020, we had the ability to borrow up to an additional $16,283 under the Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements). On July 31, 2018, we entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the ATM Agreement, we may sell from time to time through the Agent shares of the Company's common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next twelve months primarily through cash generated from operations, available cash balances, the Credit Facility, additional equipment financing, and access to the public or private debt equity markets, including the option to raise capital from the sale of our securities under the Form S-3. However, we do not anticipate that we will have the ability to generate a significant amount of capital from equity markets in the near-term as a result of the low trading volume of our common stock on the NASDAQ exchange and limitations on the aggregate amount of securities that we may offer under the Form S-3 due to our public float size. The Form S-3 will expire on October 10, 2020.

We anticipate that current cash resources, amounts available under the Credit Facility, the loans received under the U.S. Payroll Protection Program, cash to be generated from operations, and any potential proceeds from the sale of our securities under the Form S-3 will be adequate to meet our liquidity needs for at least the next twelve months. If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, we may encounter cash flow and liquidity issues. Additionally new or existing customers may request acceleration of production or we may accept new orders or modify existing orders to purchase steel opportunistically or to build products without deposits, which will reduce our liquidity.  Further in advance of anticipated cash needs, we may also issue debt or sell equity or equity linked securities.  

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If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to meet these financial obligations.

Sources and Uses of Cash

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2020 and 2019:

	Three Months Ended
	March 31,
	2020		2019
Total cash provided by (used in):
Operating activities	$	(1,025)	$	(11,349)
Investing activities		(670)		(576)
Financing activities		2,022		10,785
Net increase (decrease) in cash	$	327	$	(1,140)

Operating Cash Flows

During the three months ended March 31, 2020, net cash used in operating activities totaled $1,025, compared to net cash used in operating activities of $11,349 for the three months ended March 31,  2019.  This decrease in net cash used was primarily due to improved operating performance, a lower working capital build in the current year period, largely as a result of the timing of new orders that included deposit provisions.

Investing Cash Flows

During the three months ended March 31, 2020, net cash used in investing activities totaled $670, compared to net cash used in investing activities of $576 during the three months ended March 31,  2019.  The increase in net cash used in investing activities as compared to the prior-year period was due to an increase in net purchases of property and equipment.

Financing Cash Flows

During the three months ended March 31, 2020, net cash provided by financing activities totaled $2,022, compared to net cash provided by financing activities of $10,785 for the three months ended March 31, 2019.  The decrease versus the prior-year period was primarily due to lower usage of our Credit Facility in the current year.

Other

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2020 and December 31, 2019.  The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2020, the loan balance was $342.  In addition, we have outstanding notes payable for capital expenditures in the amount of $2,363 and $1,563 as of March 31, 2020 and December 31, 2019, respectively, with $2,350 and $1,400 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, 2020 and December 31, 2019, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from April 2020 to August 2022.

In April 2020, we received loans totaling $9,530 as part of the 2020 Coronavirus Aid, Relief and Economic Stability Act.  Please refer to Note 16, “Subsequent Events” in the notes to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.

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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 Annual Report on Form 10-K for the year ended December 31, 2019. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the Coronavirus Aid, Relief and Economic Security Act; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by our Current Report on Form 8-K filed April 17, 2020 . We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305(e) of Regulation S-K. 

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We seek to 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 SEC’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the

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supervision and with the participation of our CEO and CFO, 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 CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2020.  

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION

Item 1.Legal Proceedings

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

Item 1A.Risk Factors

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 except as supplemented by the risk factor set forth on our Current Report on Form 8-K filed April 17, 2020.

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

Not Applicable.

Item 6.Exhibits

The exhibits listed on the Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

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EXHIBIT INDEX

BROADWIND, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2020

Exhibit Number	Exhibit
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10‑Q for the quarterly period ended June 30, 2008
3.2	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8‑K filed August 23, 2012)
3.3	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8‑K filed May 6, 2020)
3.4	Third Amended and Restated Bylaws of the Company, adopted as of May 4, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8‑K filed May 6, 2020)
10.1	Note dated April 5, 2020 by and between Brad Foote Gear Works, Inc. and CIBC Bank USA*
10.2	Note dated April 5, 2020 by and between Broadwind Heavy Fabricators, Inc. and CIBC Bank USA*
10.3	Note dated April 5, 2020 by and between Broadwind Industrial Services, Inc. and CIBC Bank USA*
10.4	Note dated April 8, 2020 by and between Broadwind Energy, Inc. n/k/a Broadwind, Inc. and CIBC Bank USA*
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*
101	The following financial information from this Form 10-Q of Broadwind, Inc. for the quarter ended March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

________________________

*Filed herewith.

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SIGNATURES

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

	BROADWIND, INC.
May 8, 2020	By:	/s/ Eric B.  Blashford
		Eric B. Blashford
		President, Chief Executive Officer
		(Principal Executive Officer)
May 8, 2020	By:	/s/ Jason L. Bonfigt
		Jason L. Bonfigt
		Vice President, Chief Financial Officer (Principal Financial Officer)

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EX-10.1

Exhibit 10.1

SBA U.S. Small Business Administration

Note

SBA Loan #	54570770-07
SBA Loan Name	Brad Foote Gear Works, Inc.
Date	April 5, 2020
Loan Amount	$2,599,200.00
Interest Rate	1.00% Fixed
Borrower	Brad Foote Gear Works, Inc.
Operating Company	Brad Foote Gear Works, Inc.
Lender	CIBC Bank USA

1. PROMISE TO PAY:

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Two Million Five Hundred Ninety-Nine Thousand Two Hundred

_____________________________________________________________________________________________

Dollars, interest on the unpaid principal balance, and all other amounts required by this Note.

2. DEFINITIONS:

"Collateral" means any property taken as security for payment of this Note or any guarantee of this Note.

"Guarantor" means each person or entity that signs a guarantee of payment of this Note.

"Loan" means the loan evidenced by this Note.

"Loan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or

anyone who pledges collateral.

"SBA" means the Small Business Administration, an Agency of the United States of America.

3. PAYMENT TERMS:

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

The interest rate is on this Note is fixed at 1.00% per year.

All payments of principal and interest are deferred for the first six (6) months from the date of this

Note ("Deferment Period").

On or about the date that is eight weeks following the date of this Note, Borrower shall submit to

Lender a certified and attested schedule or eligible amounts of forgiveness ("Forgiven Balance"),

together with documentation verifying the number of full-time equivalent employees on

Borrower's payroll as well as the dollar amounts of payroll costs, covered mortgage interest

payments, covered rent payments, and covered utility payments for the eight week period

following the date of the first disbursement under this Note, as required by the Payroll Protection

Program ("PPP"). Subject to the terms of the PPP, the Forgiven Balance will reduce the principal

balance of this Note and the accrued interest on the Forgiven Balance is also forgiven.

Borrower must pay any remaining principal balance and accrued interest on or before the Maturity

Date (defined below) with interest thereon paid monthly after the Deferment Period over the

remaining term of this Note. Payments must be made on the same day as the date of this Note in

1

the months they are due.

Lender will apply each installment payment first to pay interest accrued to the day Lender receives

the payment, then to bring principal current, then to pay any late fees, and will apply any

remaining balance to reduce principal.

The interest rate identified in the Note may not be changed during the life of the Loan unless

changes in accordance with SOP 5010.

Loan Prepayment:

Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal

balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has

been sold on the secondary market, Borrower must:

a. Give Lender written notice;

b. Pay all accrued interest; and

c. If the prepayment is received less than 21 days from the date Lender receives the notice, pay

an amount equal to 21 days' interest from the date lender receives the notice, less any interest

accrued during the 21 days and paid under subparagraph b., above.

If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower

must give Lender a new notice.

All remaining principal and accrued interest is due and payable 2 years from date of Note

("Maturity Date").

Late Charge: If a payment on this Note is more than 10 days late, Lender may charge Borrower a

late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.

4. DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this

Note, or if Borrower or Operating Company:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender's satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to

Lender or SBA;

E. Makes, or anyone acting on their behalf makes, a materially false or misleading

representation to Lender or SBA;

F. Defaults on any loan or agreement with another creditor, if Lender believes the default

may materially affect Borrower's ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

2

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes

may materially affect Borrower's ability to pay this Note;

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure

without Lender's prior written consent; or

M. Becomes the subject of a civil or criminal action that Lender believes may materially

affect Borrower's ability to pay this Note.

5. LENDER'S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower or Guarantor;

C. File suit and obtain judgment;

D. Take possession of any Collateral; or

E. Sell, lease or otherwise dispose of, any Collateral at public or private sale, with or

without advertisement.

6. LENDER'S GENERAL POWERS:

Without notice and without Borrower's consent, Lender may:

A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other

Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may

include payments for property taxes, prior liens, insurance, appraisals, environmental remediation

costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand

immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7. WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA

regulations. Lender or SBA may use state or local procedures for filing papers, recording documents,

giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any

3

federal immunity from state or local control, penalty, tax or liability. As to this Note, Borrower may not

claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or

preempt federal law.

8. SUCCESSORS AND ASSIGNS:

Under this Note, Borrower and Operating Company include the successors of each, and Lender

includes its successors and assigns.

9. GENERAL PROVISIONS:

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents

and to enable Lender to acquire, perfect, or maintain Lender's liens on Collateral.

D. Lender may exercise any of its rights separately or together, as many times and in any order it

chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written

terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this

Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any

defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or

maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of

Collateral at a sale.

10. STATE-SPECIFIC PROVISIONS:

This Note is made pursuant to the terms and conditions of the Paycheck Protection Program

(“PPP”), which is part of the CARES Act 2020. Notwithstanding any provision to the contrary, this

Note shall be interpreted in accordance with the PPP and guidance issued by the Small Business

Administration implementing the PPP.

Borrower agrees to execute and deliver to Lender any additional documents consistent with the

Loan Documents as may be recommended or required in connection with the PPP. Borrower

acknowledges the speed of the implementation of the PPP and recognizes that additional

documents may be required to document the Loan.

This Note may be executed by electronic signature, which shall be considered as an original

4

signature for all purposes and shall have the same force and effect as an original signature.Without limitation, “electronic signature” shall include faxed versions of an original signature or electronically scanned and transmitted versions (e.g., via pdf) of an original signature. 

THE HOLDER OF THIS NOTE SHALL NOT BE REQUIRED TO RENEW, EXTEND OR REFINANCE THIS NOTE OR ANY AMOUNTS DUE UNDER THIS NOTE.

JURY WAIVER AND CONSENT TO JURISDICTION. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. TO INDUCE LENDER TO ACCEPT THIS NOTE BORROWER IRREVOCABLY AGREE THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE

ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

11. BORROWER'S NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated under this Note as Borrower.

Broadwind Energy, Inc.

By:	/s/ Jason Bonfigt
Name:	Jason Bonfigt
Title:	Authorized Signatory

5

EX-10.2

Exhibit 10.2

SBA U.S. Small Business Administration

Note

SBA Loan #	54710870-06
SBA Loan Name	Broadwind Heavy Fabrications, Inc.
Date	April 5, 2020
Loan Amount	$6,064,600.00
Interest Rate	1.00% Fixed
Borrower	Broadwind Heavy Fabrications, Inc.
Operating Company
Lender	CIBC Bank USA

1. PROMISE TO PAY:

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Six Million Sixty Four Thousand Six Hundred and 00/100 Dollars ($6,064,600.00)

_____________________________________________________________________________________________

Dollars, interest on the unpaid principal balance, and all other amounts required by this Note.

2. DEFINITIONS:

"Collateral" means any property taken as security for payment of this Note or any guarantee of this Note.

"Guarantor" means each person or entity that signs a guarantee of payment of this Note.

"Loan" means the loan evidenced by this Note.

"Loan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or

anyone who pledges collateral.

"SBA" means the Small Business Administration, an Agency of the United States of America.

3. PAYMENT TERMS:

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

The interest rate is on this Note is fixed at 1.00% per year.

All payments of principal and interest are deferred for the first six (6) months from the date of this

Note ("Deferment Period").

On or about the date that is eight weeks following the date of this Note, Borrower shall submit to

Lender a certified and attested schedule or eligible amounts of forgiveness ("Forgiven Balance"),

together with documentation verifying the number of full-time equivalent employees on

Borrower's payroll as well as the dollar amounts of payroll costs, covered mortgage interest

payments, covered rent payments, and covered utility payments for the eight week period

following the date of the first disbursement under this Note, as required by the Payroll Protection

Program ("PPP"). Subject to the terms of the PPP, the Forgiven Balance will reduce the principal

balance of this Note and the accrued interest on the Forgiven Balance is also forgiven.

Borrower must pay any remaining principal balance and accrued interest on or before the Maturity

Date (defined below) with interest thereon paid monthly after the Deferment Period over the

remaining term of this Note. Payments must be made on the same day as the date of this Note in

1

the months they are due.

Lender will apply each installment payment first to pay interest accrued to the day Lender receives

the payment, then to bring principal current, then to pay any late fees, and will apply any

remaining balance to reduce principal.

The interest rate identified in the Note may not be changed during the life of the Loan unless

changes in accordance with SOP 5010.

Loan Prepayment:

Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal

balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has

been sold on the secondary market, Borrower must:

a. Give Lender written notice;

b. Pay all accrued interest; and

c. If the prepayment is received less than 21 days from the date Lender receives the notice, pay

an amount equal to 21 days' interest from the date lender receives the notice, less any interest

accrued during the 21 days and paid under subparagraph b., above.

If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower

must give Lender a new notice.

All remaining principal and accrued interest is due and payable 2 years from date of Note

("Maturity Date").

Late Charge: If a payment on this Note is more than 10 days late, Lender may charge Borrower a

late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.

4. DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this

Note, or if Borrower or Operating Company:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender's satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to

Lender or SBA;

E. Makes, or anyone acting on their behalf makes, a materially false or misleading

representation to Lender or SBA;

F. Defaults on any loan or agreement with another creditor, if Lender believes the default

may materially affect Borrower's ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

2

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes

may materially affect Borrower's ability to pay this Note;

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure

without Lender's prior written consent; or

M. Becomes the subject of a civil or criminal action that Lender believes may materially

affect Borrower's ability to pay this Note.

5. LENDER'S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower or Guarantor;

C. File suit and obtain judgment;

D. Take possession of any Collateral; or

E. Sell, lease or otherwise dispose of, any Collateral at public or private sale, with or

without advertisement.

6. LENDER'S GENERAL POWERS:

Without notice and without Borrower's consent, Lender may:

A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other

Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may

include payments for property taxes, prior liens, insurance, appraisals, environmental remediation

costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand

immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7. WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA

regulations. Lender or SBA may use state or local procedures for filing papers, recording documents,

giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any

3

federal immunity from state or local control, penalty, tax or liability. As to this Note, Borrower may not

claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or

preempt federal law.

8. SUCCESSORS AND ASSIGNS:

Under this Note, Borrower and Operating Company include the successors of each, and Lender

includes its successors and assigns.

9. GENERAL PROVISIONS:

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents

and to enable Lender to acquire, perfect, or maintain Lender's liens on Collateral.

D. Lender may exercise any of its rights separately or together, as many times and in any order it

chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written

terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this

Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any

defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or

maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of

Collateral at a sale.

10. STATE-SPECIFIC PROVISIONS:

This Note is made pursuant to the terms and conditions of the Paycheck Protection Program

(“PPP”), which is part of the CARES Act 2020. Notwithstanding any provision to the contrary, this

Note shall be interpreted in accordance with the PPP and guidance issued by the Small Business

Administration implementing the PPP.

Borrower agrees to execute and deliver to Lender any additional documents consistent with the

Loan Documents as may be recommended or required in connection with the PPP. Borrower

acknowledges the speed of the implementation of the PPP and recognizes that additional

documents may be required to document the Loan.

This Note may be executed by electronic signature, which shall be considered as an original

4

signature for all purposes and shall have the same force and effect as an original signature.Without limitation, “electronic signature” shall include faxed versions of an original signature or electronically scanned and transmitted versions (e.g., via pdf) of an original signature. 

THE HOLDER OF THIS NOTE SHALL NOT BE REQUIRED TO RENEW, EXTEND OR REFINANCE THIS NOTE OR ANY AMOUNTS DUE UNDER THIS NOTE.

JURY WAIVER AND CONSENT TO JURISDICTION. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. TO INDUCE LENDER TO ACCEPT THIS NOTE BORROWER IRREVOCABLY AGREE THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE

ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

11. BORROWER'S NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated under this Note as Borrower.

Broadwind Energy, Inc.

By:	/s/ Jason Bonfigt
Name:	Jason Bonfigt
Title:	Authorized Signatory

5

EX-10.3

Exhibit 10.3

SBA U.S. Small Business Administration

Note

SBA Loan #	54805570-07
SBA Loan Name	Broadwind Industrial Solutions, LLC
Date	April 5, 2020
Loan Amount	$534,700.00
Interest Rate	1.00% Fixed
Borrower	Broadwind Industrial Solutions, LLC
Operating Company
Lender	CIBC Bank USA

1. PROMISE TO PAY:

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Five Hundred Thirty Four Thousand Seven Hundred and 00/100 Dollars ($534,700.00)

_____________________________________________________________________________________________

Dollars, interest on the unpaid principal balance, and all other amounts required by this Note.

2. DEFINITIONS:

"Collateral" means any property taken as security for payment of this Note or any guarantee of this Note.

"Guarantor" means each person or entity that signs a guarantee of payment of this Note.

"Loan" means the loan evidenced by this Note.

"Loan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or

anyone who pledges collateral.

"SBA" means the Small Business Administration, an Agency of the United States of America.

3. PAYMENT TERMS:

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

The interest rate is on this Note is fixed at 1.00% per year.

All payments of principal and interest are deferred for the first six (6) months from the date of this

Note ("Deferment Period").

On or about the date that is eight weeks following the date of this Note, Borrower shall submit to

Lender a certified and attested schedule or eligible amounts of forgiveness ("Forgiven Balance"),

together with documentation verifying the number of full-time equivalent employees on

Borrower's payroll as well as the dollar amounts of payroll costs, covered mortgage interest

payments, covered rent payments, and covered utility payments for the eight week period

following the date of the first disbursement under this Note, as required by the Payroll Protection

Program ("PPP"). Subject to the terms of the PPP, the Forgiven Balance will reduce the principal

balance of this Note and the accrued interest on the Forgiven Balance is also forgiven.

Borrower must pay any remaining principal balance and accrued interest on or before the Maturity

Date (defined below) with interest thereon paid monthly after the Deferment Period over the

remaining term of this Note. Payments must be made on the same day as the date of this Note in

1

the months they are due.

Lender will apply each installment payment first to pay interest accrued to the day Lender receives

the payment, then to bring principal current, then to pay any late fees, and will apply any

remaining balance to reduce principal.

The interest rate identified in the Note may not be changed during the life of the Loan unless

changes in accordance with SOP 5010.

Loan Prepayment:

Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal

balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has

been sold on the secondary market, Borrower must:

a. Give Lender written notice;

b. Pay all accrued interest; and

c. If the prepayment is received less than 21 days from the date Lender receives the notice, pay

an amount equal to 21 days' interest from the date lender receives the notice, less any interest

accrued during the 21 days and paid under subparagraph b., above.

If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower

must give Lender a new notice.

All remaining principal and accrued interest is due and payable 2 years from date of Note

("Maturity Date").

Late Charge: If a payment on this Note is more than 10 days late, Lender may charge Borrower a

late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.

4. DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this

Note, or if Borrower or Operating Company:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender's satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to

Lender or SBA;

E. Makes, or anyone acting on their behalf makes, a materially false or misleading

representation to Lender or SBA;

F. Defaults on any loan or agreement with another creditor, if Lender believes the default

may materially affect Borrower's ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

2

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes

may materially affect Borrower's ability to pay this Note;

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure

without Lender's prior written consent; or

M. Becomes the subject of a civil or criminal action that Lender believes may materially

affect Borrower's ability to pay this Note.

5. LENDER'S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower or Guarantor;

C. File suit and obtain judgment;

D. Take possession of any Collateral; or

E. Sell, lease or otherwise dispose of, any Collateral at public or private sale, with or

without advertisement.

6. LENDER'S GENERAL POWERS:

Without notice and without Borrower's consent, Lender may:

A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other

Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may

include payments for property taxes, prior liens, insurance, appraisals, environmental remediation

costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand

immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7. WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA

regulations. Lender or SBA may use state or local procedures for filing papers, recording documents,

giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any

3

federal immunity from state or local control, penalty, tax or liability. As to this Note, Borrower may not

claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or

preempt federal law.

8. SUCCESSORS AND ASSIGNS:

Under this Note, Borrower and Operating Company include the successors of each, and Lender

includes its successors and assigns.

9. GENERAL PROVISIONS:

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents

and to enable Lender to acquire, perfect, or maintain Lender's liens on Collateral.

D. Lender may exercise any of its rights separately or together, as many times and in any order it

chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written

terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this

Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any

defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or

maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of

Collateral at a sale.

10. STATE-SPECIFIC PROVISIONS:

This Note is made pursuant to the terms and conditions of the Paycheck Protection Program

(“PPP”), which is part of the CARES Act 2020. Notwithstanding any provision to the contrary, this

Note shall be interpreted in accordance with the PPP and guidance issued by the Small Business

Administration implementing the PPP.

Borrower agrees to execute and deliver to Lender any additional documents consistent with the

Loan Documents as may be recommended or required in connection with the PPP. Borrower

acknowledges the speed of the implementation of the PPP and recognizes that additional

documents may be required to document the Loan.

This Note may be executed by electronic signature, which shall be considered as an original

4

signature for all purposes and shall have the same force and effect as an original signature.Without limitation, “electronic signature” shall include faxed versions of an original signature or electronically scanned and transmitted versions (e.g., via pdf) of an original signature. 

THE HOLDER OF THIS NOTE SHALL NOT BE REQUIRED TO RENEW, EXTEND OR REFINANCE THIS NOTE OR ANY AMOUNTS DUE UNDER THIS NOTE.

JURY WAIVER AND CONSENT TO JURISDICTION. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. TO INDUCE LENDER TO ACCEPT THIS NOTE BORROWER IRREVOCABLY AGREE THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE

ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

11. BORROWER'S NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated under this Note as Borrower.

Broadwind Energy, Inc.

By:	/s/ Jason Bonfigt
Name:	Jason Bonfigt
Title:	Authorized Signatory

5

EX-10.4

Exhibit 10.4

SBA U.S. Small Business Administration

Note

SBA Loan #	84173170-06
SBA Loan Name	Broadwind Energy, Inc.
Date	April 8, 2020
Loan Amount	$331,400.00
Interest Rate	1.00% Fixed
Borrower	Broadwind Energy, Inc.
Operating Company	Broadwind Energy, Inc.
Lender	CIBC Bank USA

1. PROMISE TO PAY:

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Three Hundred

Thirty-One Thousand Four Hundred 00/100.

_____________________________________________________________________________________________

Dollars, interest on the unpaid principal balance, and all other amounts required by this Note.

2. DEFINITIONS:

"Collateral" means any property taken as security for payment of this Note or any guarantee of this Note.

"Guarantor" means each person or entity that signs a guarantee of payment of this Note.

"Loan" means the loan evidenced by this Note.

"Loan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or

anyone who pledges collateral.

"SBA" means the Small Business Administration, an Agency of the United States of America.

3. PAYMENT TERMS:

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

The interest rate is on this Note is fixed at 1.00% per year.

All payments of principal and interest are deferred for the first six (6) months from the date of this

Note ("Deferment Period").

On or about the date that is eight weeks following the date of this Note, Borrower shall submit to

Lender a certified and attested schedule or eligible amounts of forgiveness ("Forgiven Balance"),

together with documentation verifying the number of full-time equivalent employees on

Borrower's payroll as well as the dollar amounts of payroll costs, covered mortgage interest

payments, covered rent payments, and covered utility payments for the eight week period

following the date of the first disbursement under this Note, as required by the Payroll Protection

Program ("PPP"). Subject to the terms of the PPP, the Forgiven Balance will reduce the principal

balance of this Note and the accrued interest on the Forgiven Balance is also forgiven.

Borrower must pay any remaining principal balance and accrued interest on or before the Maturity

Date (defined below) with interest thereon paid monthly after the Deferment Period over the

remaining term of this Note. Payments must be made on the same day as the date of this Note in

1

the months they are due.

Lender will apply each installment payment first to pay interest accrued to the day Lender receives

the payment, then to bring principal current, then to pay any late fees, and will apply any

remaining balance to reduce principal.

The interest rate identified in the Note may not be changed during the life of the Loan unless

changes in accordance with SOP 5010.

Loan Prepayment:

Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note. Borrower may prepay 20 percent or less of the unpaid principal

balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has

been sold on the secondary market, Borrower must:

a. Give Lender written notice;

b. Pay all accrued interest; and

c. If the prepayment is received less than 21 days from the date Lender receives the notice, pay

an amount equal to 21 days' interest from the date lender receives the notice, less any interest

accrued during the 21 days and paid under subparagraph b., above.

If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower

must give Lender a new notice.

All remaining principal and accrued interest is due and payable 2 years from date of Note

("Maturity Date").

Late Charge: If a payment on this Note is more than 10 days late, Lender may charge Borrower a

late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment.

4. DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this

Note, or if Borrower or Operating Company:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender's satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to

Lender or SBA;

E. Makes, or anyone acting on their behalf makes, a materially false or misleading

representation to Lender or SBA;

F. Defaults on any loan or agreement with another creditor, if Lender believes the default

may materially affect Borrower's ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

2

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes

may materially affect Borrower's ability to pay this Note;

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure

without Lender's prior written consent; or

M. Becomes the subject of a civil or criminal action that Lender believes may materially

affect Borrower's ability to pay this Note.

5. LENDER'S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower or Guarantor;

C. File suit and obtain judgment;

D. Take possession of any Collateral; or

E. Sell, lease or otherwise dispose of, any Collateral at public or private sale, with or

without advertisement.

6. LENDER'S GENERAL POWERS:

Without notice and without Borrower's consent, Lender may:

A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other

Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may

include payments for property taxes, prior liens, insurance, appraisals, environmental remediation

costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand

immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral or collect amounts owing on this Note.

7. WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA

regulations. Lender or SBA may use state or local procedures for filing papers, recording documents,

giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any

3

federal immunity from state or local control, penalty, tax or liability. As to this Note, Borrower may not

claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or

preempt federal law.

8. SUCCESSORS AND ASSIGNS:

Under this Note, Borrower and Operating Company include the successors of each, and Lender

includes its successors and assigns.

9. GENERAL PROVISIONS:

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents

and to enable Lender to acquire, perfect, or maintain Lender's liens on Collateral.

D. Lender may exercise any of its rights separately or together, as many times and in any order it

chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written

terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this

Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any

defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or

maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of

Collateral at a sale.

10. STATE-SPECIFIC PROVISIONS:

This Note is made pursuant to the terms and conditions of the Paycheck Protection Program

(“PPP”), which is part of the CARES Act 2020. Notwithstanding any provision to the contrary, this

Note shall be interpreted in accordance with the PPP and guidance issued by the Small Business

Administration implementing the PPP.

Borrower agrees to execute and deliver to Lender any additional documents consistent with the

Loan Documents as may be recommended or required in connection with the PPP. Borrower

acknowledges the speed of the implementation of the PPP and recognizes that additional

documents may be required to document the Loan.

This Note may be executed by electronic signature, which shall be considered as an original

4

signature for all purposes and shall have the same force and effect as an original signature.Without limitation, “electronic signature” shall include faxed versions of an original signature or electronically scanned and transmitted versions (e.g., via pdf) of an original signature. 

THE HOLDER OF THIS NOTE SHALL NOT BE REQUIRED TO RENEW, EXTEND OR REFINANCE THIS NOTE OR ANY AMOUNTS DUE UNDER THIS NOTE.

JURY WAIVER AND CONSENT TO JURISDICTION. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. TO INDUCE LENDER TO ACCEPT THIS NOTE BORROWER IRREVOCABLY AGREE THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED WITHIN COOK COUNTY, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE

ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

11. BORROWER'S NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated under this Note as Borrower.

Broadwind Energy, Inc.

By:	/s/ Jason Bonfigt
Name:	Jason Bonfigt
Title:	CFO

5

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Eric B. Blashford, 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 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.

May 8, 2020
	/s/ Eric B. Blashford
	Eric B. Blashford
	President, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jason L. Bonfigt, 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 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.

May 8, 2020
	/s/ Jason L. Bonfigt
	Jason L. Bonfigt
	Vice President, 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, 2020, as filed with the Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”), I, Eric B. Blashford,  President, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), 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 (the “Exchange Act”); 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 8, 2020
	/s/ Eric B. Blashford
	Eric B. Blashford
	President, Chief Executive Officer
	(Principal Executive Officer)

This certification accompanies the Report pursuant to Section 906 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act.

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 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, 2020, as filed with the Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”), I, Jason L. Bonfigt, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), 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; (the “Exchange Act”); 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 8, 2020
	/s/ Jason L. Bonfigt
	Jason L. Bonfigt
	Vice President, Chief Financial Officer
	(Principal Financial Officer)

This certification accompanies the Report pursuant to Section 906 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act.

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 Commission or its staff upon request.

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2020

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its condensed consolidated financial statements.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 9 — FAIR VALUE MEASUREMENTS

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. 

The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

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. For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

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.

The following tables represent the fair values of the Company’s financial liabilities as of March 31, 2020 and December 31, 2019:

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	216	$	—	$	216
Total liabilities at fair value	$	—	$	216	$	—	$	216

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	78	$	—	$	78
Total liabilities at fair value	$	—	$	78	$	—	$	78

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2020

INTANGIBLE ASSETS.

INTANGIBLE ASSETS

NOTE 5 — 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 Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC. Other intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 3 to 8 years.

As of March 31, 2020 and December 31, 2019, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	March 31, 2020									December 31, 2019
									Remaining									Remaining
									Weighted									Weighted
					Accumulated		Net		Average					Accumulated		Net		Average
	Cost		Accumulated		Impairment		Book		Amortization			Accumulated		Impairment		Book		Amortization
	Basis		Amortization		Charges		Value		Period	Cost		Amortization		Charges		Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(90)	$	—	$	80	2.8	$	170	$	(83)	$	—	$	87	3.1
Customer relationships		15,979		(6,750)		(7,592)		1,637	5.6		15,979		(6,674)		(7,592)		1,713	5.8
Trade names		9,099		(6,080)		—		3,019	7.5		9,099		(5,980)		—		3,119	7.8
Intangible assets	$	25,248	$	(12,920)	$	(7,592)	$	4,736	6.3	$	25,248	$	(12,737)	$	(7,592)	$	4,919	6.5

As of March 31, 2020, estimated future amortization expense is as follows:

2020	$	550
2021		733
2022		725
2023		664
2024		661
2025 and thereafter		1,403
Total	$	4,736

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2020

SEGMENT REPORTING

Schedule of financial information by reportable segment

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227		4,039		—		—	$	48,634
Operating profit (loss)		3,541		(261)		192		(1,792)		—		1,680
Depreciation and amortization		963		512		104		33		—		1,612
Capital expenditures		381		168		120		1		—		670

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2019
Revenues from external customers	$	28,294		10,027		3,339		—		—	$	41,660
Operating (loss) profit		(222)		1,387		(285)		(1,374)		—		(494)
Depreciation and amortization		1,095		482		122		62		—		1,761
Capital expenditures		201		367		—		9		—		577

	Total Assets as of
	March 31,		December 31,
Segments:	2020		2019
Heavy Fabrications	$	52,904	$	41,432
Gearing		46,802		47,022
Industrial Solutions		9,107		8,893
Corporate		239,429		239,629
Eliminations		(213,944)		(214,110)
	$	134,298	$	122,866

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
NET INCOME (LOSS) PER COMMON SHARE—BASIC:
Net income (loss)	$ 954	$ (1,042)
Weighted average number of common shares outstanding	16,596,236	15,785,954
Basic net income (loss) per share	$ 0.06	$ (0.07)
NET INCOME ( LOSS) PER COMMON SHARE—DILUTED:
Net income (loss)	$ 954	$ (1,042)
Weighted average number of common shares outstanding	16,596,236	15,785,954
Common stock equivalents:
Non-vested stock awards (in shares)	137,038
Weighted average number of common shares outstanding	16,733,274	15,785,954
Diluted net income (loss) per share	$ 0.06	$ (0.07)
Stock options and restricted stock units granted and outstanding excluded from the computation of diluted earnings per share, due to the anti-dilutive effect (in shares)		683,019

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REVENUES

3 Months Ended

Mar. 31, 2020

REVENUES

REVENUES

NOTE 2 — REVENUES

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2020 and 2019:

		Three Months Ended March 31,
		2020		2019
Heavy Fabrications	$	38,368	$	28,294
Gearing		6,227		10,027
Industrial Solutions		4,039		3,339
Consolidated	$	48,634	$	41,660

Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For many tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 48,634	$ 41,660
Cost of sales	42,462	38,111
Restructuring		12
Gross profit	6,172	3,537
OPERATING EXPENSES:
Selling, general and administrative	4,309	3,828
Intangible amortization	183	203
Total operating expenses	4,492	4,031
Operating income (loss)	1,680	(494)
OTHER EXPENSE, net:
Interest expense, net	(673)	(536)
Other, net	(1)	(1)
Total other expense, net	(674)	(537)
Net income (loss) before provision for income taxes	1,006	(1,031)
Provision for income taxes	52	11
NET INCOME (LOSS)	$ 954	$ (1,042)
NET INCOME (LOSS) PER COMMON SHARE—BASIC:
Net income (loss) (in dollars per share)	$ 0.06	$ (0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC (in shares)	16,596,236	15,785,954
NET INCOME ( LOSS) PER COMMON SHARE—DILUTED:
Net income (loss) (in dollars per share)	$ 0.06	$ (0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED (in shares)	16,733,274	15,785,954

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LEASES - Quantitative information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Finance lease cost components:
Amortization of finance lease assets	$ 129	$ 136
Interest on finance lease liabilities	26	29
Total finance lease costs	155	165
Operating lease cost components:
Operating lease cost	765	786
Short-term lease cost	132	146
Variable lease cost	195	178
Sublease income	(45)	(44)
Total operating lease costs	1,047	1,066
Total lease cost	1,202	1,231
Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2020 and 2019:
Operating cash outflow from operating leases	$ 888	$ 875
Weighted-average remaining lease term-finance leases at end of period (in years)	1 year 2 months 12 days	1 year 7 months 6 days
Weighted-average remaining lease term-operating leases at end of period (in years)	10 years 6 months	10 years 10 months 24 days
Weighted-average discount rate-finance leases at end of period	9.20%	8.40%
Weighted-average discount rate-operating leases at end of period	8.80%	9.00%

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INCOME TAXES (Details) $ / shares in Units, $ in Thousands				3 Months Ended
	Feb. 13, 2013 $ / shares shares	Feb. 13, 2013 item $ / shares shares	Feb. 12, 2013	Mar. 31, 2020 USD ($)
Rights Plan
Extended term of Rights plan				3 years
Unrecognized tax benefits				$ 0
Accrued interest or penalties related to uncertain tax positions recognized				$ 0
Series A Junior Participating Preferred Stock
Rights Plan
Number of rights for each outstanding share of common stock | item		1
Number of preferred share purchase rights for each outstanding share of the company's common stock | shares	0.001	0.001
Exercise price (in dollars per right) | $ / shares	$ 4.25	$ 4.25
Series A Junior Participating Preferred Stock | Minimum
Rights Plan
Beneficial ownership percentage of any person or group, together with its affiliates and associates		4.90%
Threshold percentage of beneficial ownership for significant dilution of ownership interest	4.90%
Current beneficial ownership percentage that will not trigger the preferred share purchase rights unless they acquire additional shares			4.90%

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ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2020

ACCRUED LIABILITIES

Schedule of accrued liabilities

	March 31,		December 31,
	2020		2019
Accrued payroll and benefits	$	3,256	$	3,870
Fair value of interest rate swap		216		78
Accrued property taxes		158		—
Income taxes payable		69		61
Accrued professional fees		91		136
Accrued warranty liability		118		163
Self-insured workers compensation reserve		112		115
Accrued other		372		488
Total accrued liabilities	$	4,392	$	4,911

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REVENUES (Tables)

3 Months Ended

Mar. 31, 2020

REVENUES

Schedule of disaggregation of revenue

		Three Months Ended March 31,
		2020		2019
Heavy Fabrications	$	38,368	$	28,294
Gearing		6,227		10,027
Industrial Solutions		4,039		3,339
Consolidated	$	48,634	$	41,660

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2018	$ 16	$ (1,842)	$ 381,441	$ (336,253)	$ 43,362
Balance (in shares) at Dec. 31, 2018	15,982,622	(273,937)
Increase (Decrease) in Stockholders' Equity
Stock issued for restricted stock (in shares)	141,384
Stock issued under defined contribution 401(k) retirement savings plan			187		187
Stock issued under defined contribution 401(k) retirement savings plan (in shares)	135,636
Share-based compensation			255		255
Net income (loss)				(1,042)	(1,042)
Balance at Mar. 31, 2019	$ 16	$ (1,842)	381,883	(337,295)	42,762
Balance (in shares) at Mar. 31, 2019	16,259,642	(273,937)
Balance at Dec. 31, 2019	$ 17	$ (1,842)	383,361	(340,776)	$ 40,760
Balance (in shares) at Dec. 31, 2019	16,830,930	(273,937)			16,830,930
Increase (Decrease) in Stockholders' Equity
Stock issued for restricted stock (in shares)	83,050
Share-based compensation			308		$ 308
Net income (loss)				954	954
Balance at Mar. 31, 2020	$ 17	$ (1,842)	$ 383,669	$ (339,822)	$ 42,022
Balance (in shares) at Mar. 31, 2020	16,913,980	(273,937)			16,913,980

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LEASES - Future minimum lease payments under finance leases and operating leases - (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Jan. 01, 2019
Finance leases
2020	$ 409
2021	527
2022	202
2023	34
Total lease payments	1,172
Less - portion representing interest	(116)
Present value of lease obligations	1,056
Less - Current portion of lease obligations	(462)	$ (546)
Long-term portion of lease obligations	594	673
Operating Leases
2020	2,628
2021	3,387
2022	2,902
2023	2,884
2024	2,906
2025 and thereafter	20,119
Total lease payments	34,826
Less - portion representing interest	(12,923)
Present value of lease obligations	21,903		$ 19,508
Less - current portion of lease obligations	(1,579)	(1,326)
Non-current operating lease liabilities	20,324	$ 16,591
Total
2020	3,037
2021	3,914
2022	3,104
2023	2,918
2024	2,906
2025 and thereafter	20,119
Total lease payments	35,998
Less - portion representing interest	(13,039)
Present value of lease obligations	22,959
Less - current portion of lease obligations	(2,041)
Long-term portion of lease obligations	$ 20,918

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SHARE-BASED COMPENSATION (Details) - Stock Options	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Summary of the stock option activity
Outstanding at the beginning of the period (in shares) | shares	54,362
Forfeited (in shares) | shares	0
Outstanding at the end of the period (in shares) | shares	0
Exercisable (in shares) | shares	54,362
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 11.16
Forfeited (in dollars per share) | $ / shares	0.00
Outstanding at the end of the period (in dollars per share) | $ / shares	0.00
Exercisable (in dollars per share) | $ / shares	$ 11.16

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 01, 2020
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Registrant Name	BROADWIND, INC.
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,640,043
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001120370
Amendment Flag	false

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019, as follows: 

	Three Months Ended
	March 31,
	2020		2019
Basic earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Basic net income (loss) per share	$	0.06	$	(0.07)
Diluted earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Common stock equivalents:
Non-vested stock awards (1)		137,038		—
Weighted average number of common shares outstanding		16,733,274		15,785,954
Diluted net income (loss) per share	$	0.06	$	(0.07)

(1) Stock options and restricted stock units granted and outstanding of 683,019 as of March 31, 2019 are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for three months ended March 31, 2019.

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INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2020

INTANGIBLE ASSETS.

Schedule of the cost basis, accumulated amortization and net book value of intangible assets

	March 31, 2020									December 31, 2019
									Remaining									Remaining
									Weighted									Weighted
					Accumulated		Net		Average					Accumulated		Net		Average
	Cost		Accumulated		Impairment		Book		Amortization			Accumulated		Impairment		Book		Amortization
	Basis		Amortization		Charges		Value		Period	Cost		Amortization		Charges		Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(90)	$	—	$	80	2.8	$	170	$	(83)	$	—	$	87	3.1
Customer relationships		15,979		(6,750)		(7,592)		1,637	5.6		15,979		(6,674)		(7,592)		1,713	5.8
Trade names		9,099		(6,080)		—		3,019	7.5		9,099		(5,980)		—		3,119	7.8
Intangible assets	$	25,248	$	(12,920)	$	(7,592)	$	4,736	6.3	$	25,248	$	(12,737)	$	(7,592)	$	4,919	6.5

Schedule of estimated future amortization expense

As of March 31, 2020, estimated future amortization expense is as follows:

2020	$	550
2021		733
2022		725
2023		664
2024		661
2025 and thereafter		1,403
Total	$	4,736

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

SUBSEQUENT EVENTS.

SUBSEQUENT EVENTS

NOTE 16 — SUBSEQUENT EVENTS

COVID-19

In March 2020, the World Health Organization characterized the novel coronavirus disease (“COVID-19”) a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy.  The Company’s operations and those of its suppliers and customers, and the supply chains that support the Company’s and its suppliers’ and customers’ operations have been and continue to be affected by COVID-19.  In response to the virus, the Company is following the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees, business partners and their respective communities.  In addition, the Company has taken various precautionary actions including, but not limited to, analyzing its supply chain to determine its exposure and identify alternative sourcing, reducing board of director and executive compensation, delaying applicable merit increases and other discretionary spending, restricting employee travel, encouraging employees that have the ability to work from home to do so, implementing social distancing best practices and preparing various contingency plans in the event the Company faces any material adverse impacts from COVID-19. 

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States in response to COVID-19. The Paycheck Protection Program (“PPP”) was formed as part of the CARES Act and is administered by the U.S. Small Business Administration (the “SBA”). The PPP allows certain companies to apply for aid through forgivable loans (“PPP Loans”). Under the terms of the PPP, certain amounts of the PPP Loans may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company applied for these loans through CIBC Bank and received total proceeds of $9,530. The Company intends to use proceeds from the PPP Loans primarily for payroll costs, in accordance with terms and conditions applicable to loans administered by the SBA. The PPP Loans have a 1.00% interest rate and are scheduled to mature starting on April 5, 2022.

For more information, refer to the Company’s supplemental risk factor included in the Company’s Current Report on Form 8-K filed April 17, 2020.

Name Change

In connection with the Company’s rebranding efforts previously announced, following the approval of the Company’s stockholders at the Company’s 2020 Annual Meeting of Stockholders on May 1, 2020, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware, changing the name of the Company from “Broadwind Energy, Inc.” to “Broadwind, Inc.” effective on May 4, 2020. In connection with the Company’s name change, the board of directors of the Company amended the Company’s Second Amended and Restated Bylaws to reflect the Company’s new corporate name.

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LEASES

3 Months Ended

Mar. 31, 2020

LEASES

LEASES

NOTE 8 — LEASES

The Company leases certain facilities and equipment. On January 1, 2019, the Company adopted ASU 2016-02, Leases (“Topic 842”) and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic 842 and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

 The Company has elected to apply the short-term lease exception to all leases of one year or less. During the three months ended March 31, 2020, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of $4,380. 

 Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

Quantitative information regarding the Company’s leases is as follows:

	For the Three Months Ended
	March 31, 2020	March 31, 2019
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$ 129	$ 136
Interest on finance lease liabilities	26	29
Total finance lease costs	155	165
Operating lease cost components:
Operating lease cost	765	786
Short-term lease cost	132	146
Variable lease cost (1)	195	178
Sublease income	(45)	(44)
Total operating lease costs	1,047	1,066
Total lease cost	$ 1,202	$ 1,231
Supplemental cash flow information related to our operating leases is
as follows for the three months ended March 31, 2020 and 2019:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash outflow from operating leases	$ 888	$ 875
Weighted-average remaining lease term-finance leases at end of period (in years)	1.2	1.6
Weighted-average remaining lease term-operating leases at end of period (in years)	10.5	10.9
Weighted-average discount rate-finance leases at end of period	9.2%	8.4%
Weighted-average discount rate-operating leases at end of period	8.8%	9.0%

⁽¹⁾ Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

As of March 31, 2020, future minimum lease payments under finance leases and operating leases were as follows:

	Finance		Operating
	Leases		Leases		Total
2020	$	409	$	2,628	$	3,037
2021		527		3,387		3,914
2022		202		2,902		3,104
2023		34		2,884		2,918
2024		—		2,906		2,906
2025 and thereafter		—		20,119		20,119
Total lease payments		1,172		34,826		35,998
Less—portion representing interest		(116)		(12,923)		(13,039)
Present value of lease obligations		1,056		21,903		22,959
Less—current portion of lease obligations		(462)		(1,579)		(2,041)
Long-term portion of lease obligations	$	594	$	20,324	$	20,918

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INVENTORIES

3 Months Ended

Mar. 31, 2020

INVENTORIES

INVENTORIES

NOTE 4 — INVENTORIES

The components of inventories as of March 31, 2020 and December 31, 2019 are summarized as follows:

	March 31,		December 31,
	2020		2019
Raw materials	$	24,325	$	22,759
Work-in-process		11,496		8,366
Finished goods		6,926		2,915
		42,747		34,040
Less: Reserve for excess and obsolete inventory		(1,993)		(2,177)
Net inventories	$	40,754	$	31,863

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LEGAL PROCEEDINGS

3 Months Ended

Mar. 31, 2020

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

NOTE 12 — LEGAL PROCEEDINGS

The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. 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 condition or cash flows. It is possible that if one or more of such matters 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 financial condition and cash flows in the periods the Company would be required to pay such liability.

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES

Schedule of changes in the carrying amount of the total product warranty liability

	For the Three Months Ended March 31,
	2020		2019
Balance, beginning of period	$	163	$	226
Reduction of warranty reserve		(25)		(19)
Other adjustments		(20)		11
Balance, end of period	$	118	$	218

Schedule of the activity in the accounts receivable allowance liability

	For the Three Months Ended March 31,
	2020		2019
Balance at beginning of period	$	127	$	190
Bad debt expense		55		—
Write-offs		(19)		—
Other adjustments		(7)		(14)
Balance at end of period	$	156	$	176

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INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
INVENTORIES
Raw materials	$ 24,325	$ 22,759
Work-in-process	11,496	8,366
Finished goods	6,926	2,915
Gross inventories	42,747	34,040
Less: Reserve for excess and obsolete inventory	(1,993)	(2,177)
Net inventories	$ 40,754	$ 31,863

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SUBSEQUENT EVENTS (Details) - Paycheck Protection Program loan $ in Thousands	Apr. 30, 2020 USD ($)
Long-term debt	$ 9,530
Subsequent event
Long-term debt	$ 9,530
Debt Instrument, Interest Rate, Stated Percentage	1.00%

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”).  All intercompany transactions and balances have been eliminated. The 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, 2020 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2020. The December 31, 2019 condensed 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, 2019. 

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2020 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Company Description

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications.  The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 74% of the Company’s revenue during the first three months of 2020. 

Liquidity

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances,  the Credit Facility (as defined below), equipment financing, and access to the public or private debt and equity markets and has the option to raise capital under the Company’s Form S-3 (as discussed below).

See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.

Total debt and finance lease obligations at March 31, 2020 totaled $17,761, which includes current outstanding debt and finance leases totaling $16,812. The current outstanding debt includes $14,000 outstanding under the Company’s revolving line of credit.

On August 11, 2017, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 10, 2017 (the “Form S-3”). This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On July 31, 2018, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with Roth Capital Partners, LLC (the “Agent”). Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agent shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel. As of March 31, 2020, the Company’s common stock having a value of approximately $9,967 remained available for issuance with respect to the ATM Agreement. The Company has not used the ATM Agreement in 2019 or 2020.

In April 2020, the Company received funds under notes and related documents with CIBC under the new U.S. Paycheck Protection Program. For additional discussion, refer to Note 16, “Subsequent Events” of these condensed consolidated financial statements.

The Company anticipates that current cash resources, amounts available under the Credit Facility, the loans received

by the Company under the U.S. Payroll Protection Program, cash to be generated from operations and any potential proceeds from the sale of further Company securities under the Form S-3 will be adequate to meet the Company’s liquidity needs for at least the next twelve months. However, the Company does not anticipate that it will have the ability to generate a significant amount of capital from equity markets in the near-term as a result of the low trading volume of the Company’s common stock on the NASDAQ exchange and limitations on the aggregate amount of securities the Company may offer under the Form S-3 due to its public float size. The Form S-3 will expire on October 10, 2020.

If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and 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 the Company to meet these financial obligations.

Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts and health insurance reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

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LEASES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Jan. 01, 2019
Operating lease liabilities	$ 21,903		$ 19,508
Right-of-use (“ROU”) asset	$ 19,932	$ 15,980	$ 17,613
Short-term lease exception term	1 year
City Centre Main Lease
Operating lease liabilities	$ 4,380
Right-of-use (“ROU”) asset	$ 4,380

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
INCOME TAXES
Provision for income taxes	$ 52	$ 11
Operating Loss Carryforwards			$ 258,834
Annual NOL usage limit	14,284
Tax year 2026
INCOME TAXES
Operating Loss Carryforwards	$ 227,781

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
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	30,000,000	30,000,000
Common stock, shares issued	16,913,980	16,830,930
Treasury stock, common shares	273,937	273,937

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SHARE-BASED COMPENSATION - Shares-based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Summary of share-based compensation expense
Net effect of share-based compensation expense on net income	$ 308	$ 255
Reduction in earnings per share:
Basic earnings per share	$ 0.02	$ 0.02
Diluted earnings per share	$ 0.02	$ 0.02
Cost of sales
Summary of share-based compensation expense
Share-based compensation expense	$ 22	$ 30
Selling, general and administrative
Summary of share-based compensation expense
Share-based compensation expense	$ 286	$ 225

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DEBT AND CREDIT AGREEMENTS (Tables)

3 Months Ended

Mar. 31, 2020

DEBT AND CREDIT AGREEMENTS

Schedule of outstanding debt balances

	March 31,		December 31,
	2020		2019
Line of credit	$	14,000	$	11,517
Other notes payable		2,363		1,563
Long-term debt		342		342
Less: Current portion		(16,350)		(12,917)
Long-term debt, net of current maturities	$	355	$	505

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

Reconciliation of basic and diluted earnings per share

	Three Months Ended
	March 31,
	2020		2019
Basic earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Basic net income (loss) per share	$	0.06	$	(0.07)
Diluted earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Weighted average number of common shares outstanding		16,596,236		15,785,954
Common stock equivalents:
Non-vested stock awards (1)		137,038		—
Weighted average number of common shares outstanding		16,733,274		15,785,954
Diluted net income (loss) per share	$	0.06	$	(0.07)

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2020

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 14— SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products 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: 

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets.  The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers.  Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1,650 tower sections), sufficient to support turbines generating more than 1,100 megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets. 

Gearing 

The Company provides gearing and gearboxes to a broad set of customers in diverse markets including; onshore and offshore O&G fracking and drilling, surface and underground mining, defense, wind energy, steel, material handling and other infrastructure markets.  The Company has manufactured loose gearing, gearboxes and systems, and provided heat treatment  services for aftermarket and OEM applications for nearly a century.  The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Industrial Solutions 

The Company provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market.  

Corporate

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. 

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the three months ended March 31, 2020 and 2019 is as follows:

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227		4,039		—		—	$	48,634
Operating profit (loss)		3,541		(261)		192		(1,792)		—		1,680
Depreciation and amortization		963		512		104		33		—		1,612
Capital expenditures		381		168		120		1		—		670

	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2019
Revenues from external customers	$	28,294		10,027		3,339		—		—	$	41,660
Operating (loss) profit		(222)		1,387		(285)		(1,374)		—		(494)
Depreciation and amortization		1,095		482		122		62		—		1,761
Capital expenditures		201		367		—		9		—		577

	Total Assets as of
	March 31,		December 31,
Segments:	2020		2019
Heavy Fabrications	$	52,904	$	41,432
Gearing		46,802		47,022
Industrial Solutions		9,107		8,893
Corporate		239,429		239,629
Eliminations		(213,944)		(214,110)
	$	134,298	$	122,866

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SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2020

SHARE-BASED COMPENSATION

Schedule of stock option activity

		Weighted Average
	Options	Exercise Price
Outstanding as of December 31, 2019	54,362	$	11.16
Forfeited	—	$	—
Outstanding as of March 31, 2020	54,362	$	11.16
Exercisable as of March 31, 2020	54,362	$	11.16

Schedule of RSU activity

		Weighted Average
	Number of	Grant-Date Fair Value
	Shares	Per Share
Unvested as of December 31, 2019	1,356,915	$	2.39
Granted	—	$	—
Vested	(121,132)	$	3.41
Forfeited	(89,464)	$	5.43
Unvested as of March 31, 2020	1,146,319	$	2.05

Schedule of share-based compensation expense, net of taxes withheld

	Three Months Ended March 31,
	2020		2019
Share-based compensation expense:
Cost of sales	$	22	$	30
Selling, general and administrative		286		225
Net effect of share-based compensation expense on net income	$	308	$	255
Reduction in earnings per share:
Basic earnings per share	$	0.02	$	0.02
Diluted earnings per share	$	0.02	$	0.02

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REVENUES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenues	$ 48,634	$ 41,660
Heavy Fabrications
Disaggregation of Revenue [Line Items]
Revenues	38,368	28,294
Gearing
Disaggregation of Revenue [Line Items]
Revenues	6,227	10,027
Industrial Solutions
Disaggregation of Revenue [Line Items]
Revenues	$ 4,039	$ 3,339

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ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
ACCRUED LIABILITIES
Accrued payroll and benefits	$ 3,256	$ 3,870
Fair value of interest rate swap	216	78
Accrued property taxes	158
Income taxes payable	69	61
Accrued professional fees	91	136
Accrued warranty liability	118	163	$ 218	$ 226
Self-insured workers compensation reserve	112	115
Accrued other	372	488
Total accrued liabilities	$ 4,392	$ 4,911

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INCOME TAXES

3 Months Ended

Mar. 31, 2020

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, 2020, the Company has a full valuation allowance recorded against deferred tax assets. During the three months ended March 31, 2020, the Company recorded a provision for income taxes of $52, compared to a provision for income taxes of $11 during the three months ended March 31, 2019. 

The Company files income tax returns in U.S. federal and state jurisdictions. As of March 31, 2020, 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, 2019, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of $258,834 of which $227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire. 

Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under IRC Section 382 or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382 in 2010, the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes. 

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended and extended in February 2016 and again in February 2019 (as amended, the “Rights Plan”). The Rights Plan is designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. The amendment to the Rights Plan was most recently approved by our stockholders at our 2019 Annual Meeting of Stockholders and has a term of three years.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non‑taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one‑thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $4.25 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date. 

As of March 31, 2020, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of March 31, 2020.

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ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2020

ACCRUED LIABILITIES

ACCRUED LIABILITIES

NOTE 6 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2020 and December 31, 2019 consisted of the following: 

	March 31,		December 31,
	2020		2019
Accrued payroll and benefits	$	3,256	$	3,870
Fair value of interest rate swap		216		78
Accrued property taxes		158		—
Income taxes payable		69		61
Accrued professional fees		91		136
Accrued warranty liability		118		163
Self-insured workers compensation reserve		112		115
Accrued other		372		488
Total accrued liabilities	$	4,392	$	4,911

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SEGMENT REPORTING (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) facility item MW	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
SEGMENT REPORTING
Revenues from external customers		$ 41,660
Revenues	$ 48,634	41,660
Operating profit (loss)	1,680	(494)
Depreciation and amortization	1,612	1,761
Capital expenditures	670	577
Total Assets	$ 134,298		$ 122,866
Towers and Heavy Fabrications
SEGMENT REPORTING
Number of facilities | facility	2
Number of tower sections | item	1,650
Revenues from external customers		28,294
Revenues	$ 38,368
Operating profit (loss)	3,541	(222)
Depreciation and amortization	963	1,095
Capital expenditures	381	201
Total Assets	$ 52,904		41,432
Towers and Heavy Fabrications | Maximum
SEGMENT REPORTING
Annual tower production capacity (in towers) | item	550
Towers and Heavy Fabrications | Minimum
SEGMENT REPORTING
Power generating capacity of turbines that towers produced annually can support (in megawatts) | MW	1,100
Gearing
SEGMENT REPORTING
Revenues from external customers		10,027
Revenues	$ 6,227	10,027
Operating profit (loss)	(261)	1,387
Depreciation and amortization	512	482
Capital expenditures	168	367
Total Assets	46,802		47,022
Industrial Solutions
SEGMENT REPORTING
Revenues from external customers		3,339
Revenues	4,039	3,339
Operating profit (loss)	192	(285)
Depreciation and amortization	104	122
Capital expenditures	120
Total Assets	9,107		8,893
Corporate
SEGMENT REPORTING
Operating profit (loss)	(1,792)	(1,374)
Depreciation and amortization	33	62
Capital expenditures	1	$ 9
Total Assets	239,429		239,629
Eliminations
SEGMENT REPORTING
Total Assets	$ (213,944)		$ (214,110)

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INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
INTANGIBLE ASSETS
Cost Basis	$ 25,248	$ 25,248
Accumulated Amortization	(12,920)	(12,737)
Accumulated Impairment Charges	(7,592)	(7,592)
Net Book Value	$ 4,736	$ 4,919
Remaining Weighted Average Amortization Period	6 years 3 months 18 days	6 years 6 months
Estimated future amortization expense
2020	$ 550
2021	733
2022	725
2023	664
2024	661
2025 and thereafter	1,403
Net Book Value	$ 4,736	$ 4,919
Minimum
INTANGIBLE ASSETS
Remaining Weighted Average Amortization Period	3 years
Maximum
INTANGIBLE ASSETS
Remaining Weighted Average Amortization Period	8 years
Noncompete agreements
INTANGIBLE ASSETS
Cost Basis	$ 170	170
Accumulated Amortization	(90)	(83)
Net Book Value	$ 80	$ 87
Remaining Weighted Average Amortization Period	2 years 9 months 18 days	3 years 1 month 6 days
Estimated future amortization expense
Net Book Value	$ 80	$ 87
Customer relationships
INTANGIBLE ASSETS
Cost Basis	15,979	15,979
Accumulated Amortization	(6,750)	(6,674)
Accumulated Impairment Charges	(7,592)	(7,592)
Net Book Value	$ 1,637	$ 1,713
Remaining Weighted Average Amortization Period	5 years 7 months 6 days	5 years 9 months 18 days
Estimated future amortization expense
Net Book Value	$ 1,637	$ 1,713
Trade names
INTANGIBLE ASSETS
Cost Basis	9,099	9,099
Accumulated Amortization	(6,080)	(5,980)
Net Book Value	$ 3,019	$ 3,119
Remaining Weighted Average Amortization Period	7 years 6 months	7 years 9 months 18 days
Estimated future amortization expense
Net Book Value	$ 3,019	$ 3,119

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

Schedule of the fair values of the Company's financial liabilities

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	216	$	—	$	216
Total liabilities at fair value	$	—	$	216	$	—	$	216

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	78	$	—	$	78
Total liabilities at fair value	$	—	$	78	$	—	$	78

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BASIS OF PRESENTATION (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Jul. 31, 2018	Mar. 31, 2020	Dec. 31, 2019
Description of Business
Revenue as a percentage of sales associated with new wind turbine installations		74.00%
Liquidity
Total debt and capital lease obligations		$ 17,761
Obligation to make principal payments on outstanding debt during the next twelve months		16,812
Outstanding indebtedness under the Credit Facility		$ 14,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001	$ 0.001
Sales agent commission percentage		3.00%
ATM common stock available for issuance		$ 9,967
Minimum
Liquidity
Number of months cash resources adequate to meet Company's liquidity needs		12 months
Maximum
Liquidity
Proceeds from issuance of stock	$ 10,000

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SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2020

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 11 — SHARE-BASED COMPENSATION

The following table summarizes stock option activity during the three months ended March 31, 2020: 

		Weighted Average
	Options	Exercise Price
Outstanding as of December 31, 2019	54,362	$	11.16
Forfeited	—	$	—
Outstanding as of March 31, 2020	54,362	$	11.16
Exercisable as of March 31, 2020	54,362	$	11.16

The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, 2020: 

		Weighted Average
	Number of	Grant-Date Fair Value
	Shares	Per Share
Unvested as of December 31, 2019	1,356,915	$	2.39
Granted	—	$	—
Vested	(121,132)	$	3.41
Forfeited	(89,464)	$	5.43
Unvested as of March 31, 2020	1,146,319	$	2.05

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, 2020 and 2019, as follows: 

	Three Months Ended March 31,
	2020		2019
Share-based compensation expense:
Cost of sales	$	22	$	30
Selling, general and administrative		286		225
Net effect of share-based compensation expense on net income	$	308	$	255
Reduction in earnings per share:
Basic earnings per share	$	0.02	$	0.02
Diluted earnings per share	$	0.02	$	0.02

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DEBT AND CREDIT AGREEMENTS

3 Months Ended

Mar. 31, 2020

DEBT AND CREDIT AGREEMENTS

DEBT AND CREDIT AGREEMENTS

NOTE 7 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2020 and December 31, 2019 consisted of the following:

	March 31,		December 31,
	2020		2019
Line of credit	$	14,000	$	11,517
Other notes payable		2,363		1,563
Long-term debt		342		342
Less: Current portion		(16,350)		(12,917)
Long-term debt, net of current maturities	$	355	$	505

Credit Facility

On October 26, 2016, the Company established a three-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a $35,000 secured credit facility (the “Credit Facility”). The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the Amended and Restated Loan Agreement is $35 million with a sublimit for letters of credit of $10 million.  Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three-month LIBOR rate or the base rate, plus a margin.  The applicable margin is 5.50% for LIBOR rate loans and 3.50% for base rates loans. Upon certain pay downs, a pricing grid based on the Company’s trailing twelve month fixed charge coverage ratio may become effective under which applicable margins would range from 2.25% to 2.75% for LIBOR rate loans and 0.00% to 0.75% for base rate loans. The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees.  The initial term of the Amended and Restated Loan Agreement ends on February 25, 2022. With the exception of the balance impacted by the interest rate swap (as defined below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The Amended and Restated Loan Agreement contains customary representations and warranties applicable to the Company and the subsidiaries.  It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all financial covenants as of March 31, 2020.

In conjunction with the Amended and Restated Loan Agreement, in June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at 2.13%, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s condensed consolidated financial statements as of March 31, 2020 and December 31, 2019.

As of March 31, 2020, there was $14,000 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional $16,283, under the Credit Facility.

Other

In 2016, the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2020 and December 31, 2019. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2020, the loan balance was $342. In addition, the Company has outstanding notes payable for capital expenditures in the amount of $2,363 and $1,563 as of March 31, 2020 and December 31, 2019, respectively, with $2,350 and $1,400 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2020 and December 31, 2019, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from April 2020 to August 2022.

In April 2020, the Company received loans totaling $9,530 as part of the 2020 Coronavirus Aid, Relief and Economic Stability Act. Please refer to Note 16, “Subsequent Events” of these condensed consolidated financial statements for additional details.

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Changes in the carrying amount of the total product warranty liability
Balance, beginning of period	$ 163	$ 226
Reduction of warranty reserve	(25)	(19)
Other adjustments	(20)	11
Balance, end of period	118	218
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	127	190
Bad debt expense	55
Write-offs	(19)
Other adjustments	(7)	(14)
Balance at end of period	156	$ 176
Liquidated Damages
Reserve for liquidated damages	$ 0		$ 0
Minimum
Warranty Liability
Term of warranty	1 year
Maximum
Warranty Liability
Term of warranty	5 years

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SHARE-BASED COMPENSATION - Stock Option Activity (Details) - RSU	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Summary of the restricted stock unit activity
Unvested at the beginning of the period (in shares) | shares	1,356,915
Vested (in shares) | shares	(121,132)
Forfeited (in shares) | shares	(89,464)
Unvested at the end of the period (in shares) | shares	1,146,319
Weighted Average Grant-Date Fair Value Per RSU
Unvested at the beginning of the period (in dollars per share) | $ / shares	$ 2.39
Vested (in dollars per share) | $ / shares	3.41
Forfeited (in dollars per share) | $ / shares	5.43
Unvested at the end of the period (in dollars per share) | $ / shares	$ 2.05

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 954	$ (1,042)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	1,612	1,761
Deferred income taxes	22	(9)
Change in fair value of interest rate swap agreements	138
Stock-based compensation	308	255
Allowance for doubtful accounts	29	(14)
Common stock issued under defined contribution 401(k) plan		187
Gain on disposal of assets		(1)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	2,037	(5,040)
Inventories	(8,891)	(10,274)
Prepaid expenses and other current assets	(476)	70
Accounts payable	3,545	8,132
Accrued liabilities	(657)	321
Customer deposits	305	(5,752)
Other non-current assets and liabilities	49	57
Net cash used in operating activities	(1,025)	(11,349)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(670)	(577)
Proceeds from disposals of property and equipment		1
Net cash used in investing activities of continuing operations	(670)	(576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit	51,552	42,440
Payments on line of credit	(49,070)	(31,191)
Payments on long-term debt	(242)	(228)
Principal payments on finance leases	(218)	(236)
Net cash provided by financing activities	2,022	10,785
NET INCREASE (DECREASE) IN CASH	327	(1,140)
CASH beginning of the period	2,416	1,177
CASH end of the period	$ 2,743	$ 37

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DEBT AND CREDIT AGREEMENTS (Details) - USD ($) $ in Thousands			3 Months Ended	12 Months Ended
	Feb. 25, 2019	Oct. 26, 2016	Mar. 31, 2020	Dec. 31, 2019	Apr. 30, 2020	Jun. 30, 2019	Dec. 31, 2016
Credit Facilities
Line of credit			$ 14,000
Less: Current portion			(16,350)	$ (12,917)
Long-term debt, net of current maturities			355	505
Future annual principal payments
2020			16,812
Swap agreement notional amount						$ 6,000
Interest rate on notional amount of debt						2.13%
Capital Expenditure loan
Credit Facilities
Long-term debt			$ 2,363	1,563
Future annual principal payments
Interest rate (as a percent)			5.00%
Current maturities of long-term debt			$ 2,350	1,400
Capital Expenditure loan | Minimum
Future annual principal payments
Monthly payments on notes payable			1
Capital Expenditure loan | Maximum
Future annual principal payments
Monthly payments on notes payable			36
Development Corporation of Abilene loan
Credit Facilities
Long-term debt			342	342			$ 570
Future annual principal payments
Loan forgiven				114
Paycheck Protection Program loan
Credit Facilities
Long-term debt					$ 9,530
Credit facility
Future annual principal payments
Maximum borrowing capacity	$ 35,000
Line of credit facilities, term of credit agreements		3 years
Line of credit, term extended	3 years
Maximum borrowing capacity of the face value of eligible receivable (as a percent)	85.00%
Maximum percentage of lower of cost or market value of eligible inventories	50.00%
Maximum percentage of orderly liquidation value of eligible inventories	85.00%
Additional maximum borrowing capacity	$ 12,500
Percentage of net orderly liquidation value		75.00%
Percentage of fair market value of mortgaged property	50.00%
Maximum borrowing restricted value	$ 12,000
Interest rate base (as a percent)		3.50%
Unused facility fee (as a percent)	0.50%
Current borrowing capacity			16,283
Credit facility | LIBOR
Future annual principal payments
Interest rate margin (as a percent)	5.50%
Credit facility | Minimum | LIBOR
Future annual principal payments
Interest rate margin (as a percent)	2.25%
Interest rate (as a percent)	0.00%
Credit facility | Maximum | LIBOR
Future annual principal payments
Interest rate margin (as a percent)	2.75%
Interest rate (as a percent)	0.75%
Credit facility | Amended and Restated Loan Agreement
Future annual principal payments
Maximum borrowing capacity	$ 35,000
Credit facility | Letter of Credit
Future annual principal payments
Maximum borrowing capacity	$ 10,000
Line of credit
Credit Facilities
Line of credit			$ 14,000	$ 11,517

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
FAIR VALUE MEASUREMENTS
Interest rate swap	$ 216	$ 78
Recurring
FAIR VALUE MEASUREMENTS
Total liabilities at fair value	216	78
Recurring | Interest rate swap
FAIR VALUE MEASUREMENTS
Interest rate swap	216	78
Recurring | Level 2
FAIR VALUE MEASUREMENTS
Total liabilities at fair value	216	78
Recurring | Level 2 | Interest rate swap
FAIR VALUE MEASUREMENTS
Interest rate swap	$ 216	$ 78

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CURRENT ASSETS:
Cash	$ 2,743	$ 2,416
Accounts receivable, net	16,244	18,310
Inventories, net	40,754	31,863
Prepaid expenses and other current assets	2,600	2,124
Total current assets	62,341	54,713
LONG-TERM ASSETS:
Property and equipment, net	46,989	46,940
Operating lease right-of-use assets	19,932	15,980
Intangible assets, net	4,736	4,919
Other assets	300	314
TOTAL ASSETS	134,298	122,866
CURRENT LIABILITIES:
Line of credit and other notes payable	16,350	12,917
Current portion of finance lease obligations	462	546
Current portion of operating lease obligations	1,579	1,326
Accounts payable	25,132	21,876
Accrued liabilities	4,392	4,911
Customer deposits	23,022	22,717
Total current liabilities	70,937	64,293
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	355	505
Long-term finance lease obligations, net of current portion	594	673
Long-term operating lease obligations, net of current portion	20,324	16,591
Other	66	44
Total long-term liabilities	21,339	17,813
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; 30,000,000 shares authorized; 16,913,980 and 16,830,930 shares issued as of March 31, 2020, and December 31, 2019, respectively	17	17
Treasury stock, at cost, 273,937 shares as of March 31, 2020 and December 31, 2019	(1,842)	(1,842)
Additional paid-in capital	383,669	383,361
Accumulated deficit	(339,822)	(340,776)
Total stockholders’ equity	42,022	40,760
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 134,298	$ 122,866

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2020

INVENTORIES

Schedule of the components of inventories from operations

	March 31,		December 31,
	2020		2019
Raw materials	$	24,325	$	22,759
Work-in-process		11,496		8,366
Finished goods		6,926		2,915
		42,747		34,040
Less: Reserve for excess and obsolete inventory		(1,993)		(2,177)
Net inventories	$	40,754	$	31,863

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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 may 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 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 or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. 

Warranty Liability

The Company warrants its products for terms that range from one to five years. 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, 2020 and 2019, estimated product warranty liability was $118 and $218, 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, 2020 and 2019 were as follows: 

	For the Three Months Ended March 31,
	2020		2019
Balance, beginning of period	$	163	$	226
Reduction of warranty reserve		(25)		(19)
Other adjustments		(20)		11
Balance, end of period	$	118	$	218

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 collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due 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 collectability 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, 2020 and 2019 consisted of the following: 

	For the Three Months Ended March 31,
	2020		2019
Balance at beginning of period	$	127	$	190
Bad debt expense		55		—
Write-offs		(19)		—
Other adjustments		(7)		(14)
Balance at end of period	$	156	$	176

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 and/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of March 31, 2020 or December 31, 2019. 

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LEASES (Tables)

3 Months Ended

Mar. 31, 2020

LEASES

Schedule of Quantitative information regarding leases

	For the Three Months Ended
	March 31, 2020	March 31, 2019
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$ 129	$ 136
Interest on finance lease liabilities	26	29
Total finance lease costs	155	165
Operating lease cost components:
Operating lease cost	765	786
Short-term lease cost	132	146
Variable lease cost (1)	195	178
Sublease income	(45)	(44)
Total operating lease costs	1,047	1,066
Total lease cost	$ 1,202	$ 1,231
Supplemental cash flow information related to our operating leases is
as follows for the three months ended March 31, 2020 and 2019:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash outflow from operating leases	$ 888	$ 875
Weighted-average remaining lease term-finance leases at end of period (in years)	1.2	1.6
Weighted-average remaining lease term-operating leases at end of period (in years)	10.5	10.9
Weighted-average discount rate-finance leases at end of period	9.2%	8.4%
Weighted-average discount rate-operating leases at end of period	8.8%	9.0%

⁽¹⁾ Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

Schedule of future minimum lease payments under finance leases and operating leases

As of March 31, 2020, future minimum lease payments under finance leases and operating leases were as follows:

	Finance		Operating
	Leases		Leases		Total
2020	$	409	$	2,628	$	3,037
2021		527		3,387		3,914
2022		202		2,902		3,104
2023		34		2,884		2,918
2024		—		2,906		2,906
2025 and thereafter		—		20,119		20,119
Total lease payments		1,172		34,826		35,998
Less—portion representing interest		(116)		(12,923)		(13,039)
Present value of lease obligations		1,056		21,903		22,959
Less—current portion of lease obligations		(462)		(1,579)		(2,041)
Long-term portion of lease obligations	$	594	$	20,324	$	20,918