S-1 1 juhl_s1-072712.htm FORM S-1 juhl_s1-072712.htm


As filed with the Securities and Exchange Commission on July 30,2012
Registration No._________________
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
 
 
JUHL WIND, INC.
(Exact Name of Registrant As Specified in Its Charter)
 
Delaware
20-4947667
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
 1502 17th Street SE
Pipestone, Minnesota 56164
(507) 777-4310
(Address, including zip code, and telephone number,
including area code, of Registrant’s principal executive offices)
 
Juhl Wind, Inc.
1502 17th Street SE
Pipestone, Minnesota 56164
(507) 777-4310
(Name, Address, including zip code, and telephone number,
including area code, of agent for service)
 
Copies of all communications and notices to:
 
Bartly J. Loethen, Esq.
Synergy Law Group, LLC
730 West Randolph, 6th Floor
Chicago, IL 60661
Tel: (312) 454-0015
Fax: (312) 454-0261
 
Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
 If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
 
 

 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,'' “accelerated filer'' and “smaller reporting company'' in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
 
Smaller reporting company x
 
   
 CALCULATION OF REGISTRATION FEE
Title of each
class of
securities to be
registered
 
Amount to be
Registered  (1)
   
Proposed
maximum
offering
price per
share(2)
   
Proposed
maximum
aggregate
offering
price
   
Amount of
registration
fee
Common Stock, $.0001 par value
   
2,393,000
     
$.56
     
$1,340,080
     
$153.57
 
 
(1)            
Pursuant to Rule 416 under the Securities Act of 1933, this registration statement also relates to an indeterminate number of additional shares which may be issuable to prevent dilution resulting from stock dividends, stock splits, recapitalization or other similar transactions effected without the receipt of consideration that results in an increase in the number of the outstanding shares of common stock.
   
(2)
Estimated solely for the purpose of computing the amount of registration fee in accordance with Rule 457(c) under the Securities Act based on the average of the high and low sale price for common stock as reported on the OTC Bulletin Board on July 16, 2012.
 
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
 
 
 

 
 
The information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold until the registration statement is effective. This prospectus is not an offer to sell these securities and does not solicit an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.
 
PRELIMINARY PROSPECTUS
 
SUBJECT TO COMPLETION, DATED _____________, 2012
  
Image Logo
 
JUHL WIND, INC.
 
2,393,000 Shares of Common Stock
 
This prospectus relates to the sale of up to 2,393,000 shares of our common stock which may be offered by the selling shareholder, Lincoln Park Capital Fund, LLC, or Lincoln Park, from time to time. The shares of common stock being offered by the selling shareholder are issuable pursuant to the Lincoln Park Purchase Agreement, which we refer to in this prospectus as the Purchase Agreement. Please refer to the section of this prospectus entitled “The Lincoln Park Transaction” for a description of the Purchase Agreement and the section entitled “Selling Shareholder” for additional information. Such registration does not mean that Lincoln Park will actually offer or sell any of these shares. We will not receive any proceeds from the sales of shares of our common stock by the selling shareholder; however, we may receive proceeds of up to $10,000,000 under the Purchase Agreement.

Our common stock is currently quoted on the OTC Bulletin Board under the symbol “JUHL”. On July 16, 2012, the last reported sale price of our common stock was $0.60 per share. 

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 9 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

The selling shareholder is an “underwriter” within the meaning of the Securities Act of 1933, as amended. The selling shareholder is offering these shares of common stock and may sell all or a portion of these shares from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution”.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.
 
 
 
The date of this prospectus is ______, 2012.
 
 
 

 
 
TABLE OF CONTENTS
 
Market and Industry Data
1
Definitions
1
Prospectus Summary
3
Risk Factors
9
Cautionary Note Regarding Forward Looking Statements and Industry Data
22
Use of Proceeds
22
Capitalization
23
Dilution
23
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Industry and Market Overview
37
Business
47
Directors and Executive Officers
63
Executive Compensation
67
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
71
The Lincoln Park Transaction
74
Selling Shareholder
76
Certain relationships, Related Party Transactions
77
Description of Capital Stock
77
Shares Eligible for Future Sale
81
Plan of Distribution
82
Legal Matters
83
Experts
83
Disclosure of Commission Position on Indemnification for Securities Act Liabilities
83
Index to Financial Statements
F-1
 
 
 

 
 
You should rely only on information contained or incorporated by reference to this prospectus in deciding whether to purchase our shares.  We have not, and the selling shareholder has not, authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus. This prospectus is not an offer to sell, nor is the selling shareholder seeking an offer to buy, securities in any state where the offer or solicitation is not permitted. Under no circumstances should the delivery to you of this prospectus or any sale made pursuant to this prospectus create any implication that the information contained in this prospectus is correct as of any time after the date of this prospectus. To the extent any facts or events arising after the date of this prospectus, individually or in the aggregate, represent a fundamental change in the information presented in this prospectus, this prospectus will be updated to the extent required by law.

MARKET AND INDUSTRY DATA
 
We obtained statistical data, market data and other industry data and forecasts used throughout this prospectus from market research, publicly available information and industry publications.  Industry publications generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy and completeness of the information.  
 
 
DEFINITIONS

“We,” “Our,” “us” and similar expressions refer to the Company and its subsidiaries as the context requires as follows:
 
Juhl Wind or
the Company
Juhl Wind, Inc., a Delaware corporation (formerly MH & SC Incorporated)
 
 
Juhl Energy Development
Juhl Energy Development, Inc., a Minnesota corporation
 
Juhl Energy Services
 
Juhl Energy Services, Inc.,
a Minnesota corporation (formerly known as DanMar and Associates, Inc.)
 
Juhl Energy Development and July Energy Services are referred to separately prior to our share exchange transaction on June 24, 2008, in which Juhl Energy Development and Juhl Energy Services became wholly-owned subsidiaries and  Juhl Wind became successor to the business of Juhl Energy Development and Juhl Energy Services, after giving effect to the share exchange transaction (as more fully-described in the Corporate Information and History section herein)
 
NextGen
Next Generation Power Systems, Inc.,
a South Dakota corporation , which we acquired on October 31, 2008 and which is now our wholly-owned subsidiary
 
Juhl Renewable Assets
 
Juhl Renewable Assets, Inc.,
a Delaware corporation (formerly known as Juhl Wind Asset Investment, Inc. and Juhl Wind Project Lending, Inc.), our wholly-owned subsidiary formed on May 19, 2010
 
Juhl Renewable Energy Systems
 
Juhl Renewable Energy Systems, Inc.,
a Delaware corporation, our wholly-owned subsidiary formed on February 2, 2012
 
Valley View
Valley View Transmission, LLC,
a Minnesota limited liability company, of which Juhl Renewable Assets, Inc.  indirectly holds a 32.6% interest (as more fully-described in the Corporate Information and History section herein)
 
Woodstock Hills
Woodstock Hills, LLC,
a Delaware limited liability company, of which we acquired a 99.9% interest on April 28, 2011, and which is now a subsidiary of Juhl Renewable Assets, Inc.
 
Winona Wind
Winona Wind Holdings, LLC,
a Minnesota limited liability company which we acquired on October 13, 2011, and which is now a wholly-owned subsidiary of Juhl Renewable Assets, Inc. and which owns 100%
of Winona County Wind, LLC, the operator of the wind farm
 
PEC
Power Engineers Collaborative, LLC,
an Illinois limited liability company, which we acquired on April 30, 2012 and which is now our wholly-owned subsidiary

 
1

 

ELECTRICAL POWER ABBREVIATIONS

kW
kilowatt or 1,000 watts of electrical power
MW
megawatt or 1,000 kW of electrical power
GW
gigawatt or 1,000 MW of electrical power
TW
terawatt or 1,000 GW of electrical power;
kWh
MWh
GWh
TWh
An hour during which 1kW, MW, GW or TW, as applicable, of electrical power has been continuously produced. 
Capacity
Rated capacity
NCF
Net capacity factor, or the measure of a wind energy project’s actual production expressed as a percentage of the amount of power the wind energy project could have produced running at full capacity for a particular period of time
PTC
Production tax credit under the  American Recovery and Reinvestment Act
REC
renewable energy certificate or other renewable energy attribute, as the context requires
 
 
2

 
 
PROSPECTUS SUMMARY
 
This summary highlights selected information from this prospectus but does not contain all information that you should consider before investing in our common stock.  You should read this entire prospectus carefully, including the information under “Risk Factors” beginning on page 9, and the consolidated financial statements included elsewhere in this prospectus.

BUSINESS OVERVIEW

Juhl Wind is an established leader in community wind power development and management, focused historically on wind farm projects throughout the United States. We handle all aspects of wind project development, through our operating subsidiaries, including full development and ownership of wind farms, general consultation on wind projects, construction management of wind farm projects and system operations and maintenance for completed wind farms, which results in multiple revenue streams. Our primary focus has been to build 5 MW to 80 MW wind farms that are jointly owned by local communities, farm owners, environmentally-concerned investors, and our Company. The wind farms are connected to the general utility electric grid to produce clean, environmentally-sound wind power. Our development of community wind power systems generally results in landowners owning a portion of the long term equity in the wind farm that resides on their land. We pioneered community wind power systems in developing the currently accepted financial, operational and legal structure providing local ownership of medium to large scale wind farms. Since 1999, we have completed 21 wind farm projects, accounting for approximately 195 megawatts of wind power that currently operate in the Midwest region of the United States, and we provide operation management and oversight to wind generation facilities generating approximately 107 megawatts, through our subsidiary, Juhl Energy Services.  We are presently engaged in various aspects of the development of approximately 25 new wind farm projects in the United States totaling approximately 400 megawatts of wind power.  In the second quarter of 2012, we acquired, through Juhl Energy Development, the assets of two early stage development wind farms located in Ohio, representing approximately 7.6 megawatts of wind power.

Historically, our wind power projects are based on the formation of partnerships with the local owners upon whose land the wind turbines are installed.  Over the years, this type of wind power has been labeled “community wind power” because the systems are locally owned by the landowners (often farmers). Community wind power is a specialized sector in the wind energy industry that differs from the large, utility-owned wind power systems that are also being built in the United States.  Community wind power is a form of community-based energy development (C-BED). Various states, including Minnesota and Nebraska (where we have projects in development), have enacted C-BED initiatives, which include mechanisms to support community wind power and are intended to make it easier for community wind power projects to be successful without putting an excessive burden on utilities.  Therefore, community wind power is both environmentally sustainable and provides an economic stimulus for the rural areas that it encompasses.

Our business and operating strategy, among other things, is to continue to leverage our portfolio of existing community wind power projects, develop new wind farm projects located in the United States, and take equity ownership positions in existing community-based wind farms.  We take projects where the following important conditions exist for successful developments: acceptable wind resources, suitable transmission access, and an appropriate regulatory framework providing acceptable power purchase agreements and long-term utility agreements. Based on our pipeline of projects, we believe that we will continue to develop projects and will grow the number of wind farms for which we are providing operational oversight. We expect that the continued growth in our project pipeline will act as a key competitive advantage as the community wind power industry grows throughout the United States.  Further, we believe that there are existing wind farms that are or will become available for sale by equity owners who have fully utilized the tax attributes or no longer have the desire to continue ownership.
 
 
3

 
 
We continue to evolve our strategy and increase our portfolio capacity through acquisitions that complement and support our core business and take advantage of the growth occurring in the wind industry, including wind farm management and turbine maintenance services, as well as related business services, such as engineering and consulting services.  In 2011, as part of our acquisition strategy, we acquired ownership of existing wind farms, through our wind farm ownership and operation subsidiary, Juhl Renewable Assets, that fit our distributed generation model and the size of projects that we typically develop.  We believe that the ownership of community wind farms (in part or in whole) will provide an ability to expand our services to wind farm operations and to create recurring annual revenue streams for our business. 

During the second quarter of 2012, we continued our strategy of acquiring complementary businesses by acquiring an engineering firm, Power Engineers Collaborative, LLC (“PEC”) which is now our wholly-owned subsidiary, and expanded our professional service offerings. Our acquisition of PEC brings experience, significant expansion of our base business and opportunity to offer increased capabilities beyond wind and into the full range of clean energy sectors including natural gas, biomass, waste-to-energy, medium-to-large on-site solar, and support to larger wind farm construction. PEC also provides us with cross-selling opportunities that will lead to additional growth across our subsidiaries.

As part of our strategy, we will use our position in the renewable energy space to advance conservation technologies focused on smaller scale and solar systems, through our subsidiary, Juhl Renewable Energy Systems, to consumers and agricultural-related businesses, directly and through a dealer network.

Our evolving business and operating strategy will rely heavily on the expertise of our management team. Our Chairman and Principal Executive Officer, Daniel J. Juhl, was one of the creators of community wind power in the United States. In addition to Mr. Juhl’s expertise in the wind power field developed during the course of his activity in the industry since 1978, John Mitola, our President, is also considered an expert in the energy field having focused his career on energy efficiency, demand side management and independent power development. Mr. Mitola has significant experience in the energy industry and electric industry regulation, oversight and governmental policy. The visibility of Mr. Juhl and Mr. Mitola in the wind industry will maximize the quantity and quality of projects available for consideration.

Our Subsidiaries

The Company operates through the following subsidiaries (with further description provided below in “Business”):
 
Juhl Renewable Assets - renewable assets ownership
Juhl Energy Development - wind farm development
Juhl Energy Services - wind farm operations and maintenance services
Juhl Renewable Energy Systems - small scale renewables
Next Generation Power Systems - refurbished turbines and maintenance support
Power Engineers Collaborative - engineering services
 
Our Business Development

Our Company was formed as a Delaware corporation in January 2006 as Help-U-Drive Incorporated for the purpose of developing a business to assist impaired drivers.  Upon further investigation, we decided that this was not a business opportunity we wanted to pursue due to potential liability and other reasons. In October 2006, we acquired My Health and Safety Supply Company, LLC, an Indiana limited liability company, pursuant to a plan of exchange with the holders of 100% of the outstanding membership interests of My Health & Safety Supply Company. We changed our name to MH & SC, Incorporated in September 2006. My Health & Safety Supply Company, LLC became our wholly-owned subsidiary and began developing its business to market a variety of health and safety products on the Internet. This business was sold simultaneously with the exchange transaction described below since it was incidental to our new wind energy business. In March 2007, we filed a registration statement with the SEC, which became effective in December 2007, and we became a publicly-reporting and trading company.

On June 24, 2008, we entered into a Securities Exchange Agreement with Juhl Energy Development and Juhl Energy Services and, for certain limited purposes, their respective stockholders. On June 24, 2008, the exchange transaction provided for in the Securities Exchange Agreement was completed and Juhl Energy Development and Juhl Energy Services became our wholly-owned subsidiaries. Juhl Energy Services and Juhl Energy Development were formed as Minnesota corporations in October 2001 and September 2007, respectively, and have been in the wind energy business since formation.
 
 
4

 
 
Pursuant to the Securities Exchange Agreement, at closing, the two former beneficial stockholders of Juhl Energy Development and Juhl Energy Services received a majority of 15,250,000 shares of our common stock, representing approximately 60.6% of our outstanding shares of common stock, inclusive of shares of common stock issuable upon the conversion of our Series A convertible preferred stock sold in our concurrent private placement. In exchange for the shares we issued to the former Juhl Energy Development and Juhl Energy Services stockholders, we acquired 100% of the outstanding common stock of Juhl Energy Development and Juhl Energy Services. The consideration issued in the exchange transaction was determined as a result of arm’s-length negotiations between the parties.  Concurrently with the closing of the exchange transaction, we also completed a private placement to institutional investors and other accredited investors, in which we received aggregate gross proceeds of $5,160,000.

Leading up to the exchange transaction, Juhl Energy Development engaged Greenview Capital, LLC to assist and advise it in an effort to secure financing. Juhl Energy Development agreed to pay Greenview Capital, and its designees, a fee for such advice in the amount of $300,000 in cash and 2,250,000 shares of our common stock. Aside from the Greenview Capital arrangements, no finder’s fees were paid or consulting agreements entered into in connection with the exchange transaction.

Following the exchange transaction, we succeeded to the wind farm development and management business of Juhl Energy Development and Juhl Energy Services.  Prior to the exchange transaction, there were no material relationships between us and Juhl Energy Development or Juhl Energy Services, between Juhl Energy Development or Juhl Energy Services and our affiliates, directors or officers, or between any associates of Juhl Energy Development or Juhl Energy Services and our officers or directors. All of our pre-exchange transaction liabilities were settled on or immediately following the closing.

Through the exchange transaction, the stockholders of our privately-held predecessors, Juhl Energy Development and Juhl Energy Services, received a majority of the outstanding shares of MH & SC and their officers and directors assumed similar positions with MH & SC.  Following the exchange transaction, we changed our corporate name to Juhl Wind, Inc.
 
On October 31, 2008, we acquired all of the outstanding shares of common stock of NextGen in exchange for an aggregate purchase price of $322,500 payable by delivery of an aggregate of 92,143 shares of our common stock allocated among the NextGen non-controlling interests. The purchase transaction included assumption of certain liabilities of NextGen including a note payable to First Farmer’s & Merchant’s National Bank, but excluded the stockholder notes, which the stockholders of NextGen agreed to contribute to equity. Simultaneously with the acquisition of NextGen, the Company also purchased a commercial building and associated land located in Pipestone, Minnesota from the individual owners of NextGen. The Company issued 41,070 unregistered shares of common stock to the minority stockholders of NextGen for the purchase of the land and building. The 41,070 shares issued to the NextGen minority interest were valued at $3.50 per share at the date of acquisition, or $144,000.  The acquisition was accounted for at the fair value of the land and building on the date of purchase which totaled $173,055. NextGen is now our wholly-owned subsidiary.

On April 28, 2011, Juhl Wind paid $400,000 to acquire a 99.9% ownership interest in a 10.2 megawatt wind farm, Woodstock Hills, located in Woodstock, Minnesota. The Woodstock Hills wind farm has been operating as a wind energy generation facility since 1999 and had been originally developed by the Company’s CEO, who remains the .1% minority interest member.  On May 6, 2011, Juhl Wind transferred its entire interest in Woodstock Hills to Juhl Renewable Assets, pursuant to a transfer and assignment agreement. 

On October 13, 2011, the individual project owners of the Winona Wind Holdings, LLC, which owns 100% of Winona County Wind, LLC, the operator of a 1.5 megawatt wind-powered electric generating facility in Winona County, Minnesota, sold their 100% ownership interest to our subsidiary, Juhl Energy Development, for $5,000.  Subsequently on December 31, 2011, Juhl Energy Development transferred its interest in the Winona wind farm to Juhl Renewable Assets and increased its equity investment to approximately $100,000.     

On November 29, 2011, Juhl Renewable Assets purchased interests in Juhl Valley View, LLC (“Juhl Valley View”).  As a result of the investment, Juhl Renewable Assets has a 36.6% voting interest in Juhl Valley View, and has an additional 13.9% voting power through a voting trust arrangement with three other investors.  Pursuant to a subscription agreement, Juhl Valley View agreed to invest all subscription amounts received as part of the offering into Valley View Wind Investors, LLC which owns 99% financial rights and 49% governing rights of Valley View Transmission, LLC, which operates the 10 MW Valley View wind farm.

On April 30, 2012, Juhl Wind became the sole equity owner in Power Engineers Collaborative, L.L.C., an Illinois limited liability company, which provides engineering services to clients in the energy, industry and building systems markets. The Company entered into a unit purchase agreement (the “Purchase Agreement”) for the purchase of one-hundred (100) membership units of PEC (the “Units”), which represents 100% of the membership equity interests, from three individual owners.
 
 
5

 
 
Recent Developments/Achievements

Since becoming a public company in 2008, we have achieved several significant milestones:
 
 
·
we have secured institutional investment in excess of $7 million available for use as working capital and general corporate purposes;
 
 
·
we acquired NextGen which specializes in smaller scale wind turbine and solar systems.  This acquisition brought smaller wind turbine and solar expertise to the Company to enhance and expand our existing community wind power product and service offerings; in turn, we received $1 million during 2009 and 2010 from a licensing and distribution arrangement for the NextGen technology.  We have now formed a wholly-owned subsidiary, Juhl Wind Renewable Systems, to build upon our core business of consumer related energy products, including small wind turbines and solar products;
 
 
·
we completed the development on 7 wind farms totaling 77.25 MW of installed wind power:  
 
 
o
20 MW Grant County wind farm; commissioned in 2010;
 
 
o
1.5 MW wind farm commissioned in 2011 in Winona County, MN;
 
 
o
10 MW wind farm commissioned in 2011 in Chandler, MN (Valley View project);
 
 
o
5 MW wind farm commissioned in 2012 in Winona County, MN for Gundersen Lutheran health systems;
 
 
o
40 MW consisting of two wind farms  commissioned in 2011 in Meeker County; and
 
 
o
.75 MW Woodstock Muni wind farm, commissioned in 2010;
 
 
·
we have worked to align ourselves with environmentally-friendly concerned investors and non-traditional banking institutions to provide financing options for investment in our projects, and have worked with traditional bank financing, as well;
 
 
·
we have entered into strategic relationships with industry partners to continue our ability to develop projects in our pipeline.  These relationships with turbine suppliers, a wind consulting firm and others will benefit our continued growth in the community wind power industry with the development and completion of further community wind power projects;
 
 
·
we have formed an acquisition subsidiary, Juhl Renewable Assets, in order to supplement our core business by acquiring complementary businesses, owning existing wind farms, and joint venturing with other industry partners on specific project; to date, Juhl Renewable Assets made its first initial investment in the Valley View wind farm, and subsequent investments in Woodstock Hills and Winona wind farms.  Juhl Renewable Assets also made an investment in  PVPower, which is focused on the sale of solar power products, including photovoltaic solar panel and modules from multiple solar panel manufacturers, solar inverters, solar charge controllers, and deep cycle solar batteries through non-traditional sales channels, specifically through a distributor network over the Internet;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of $12,564,150 for the 20 megawatt Grant County Wind Project in the fourth quarter of 2010.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant went toward partial payments of construction financing arranged by Juhl for the community wind project;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of approximately $1,413,000 for the 1.5 megawatt Winona County Wind Project in the first quarter of 2012.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant primarily went toward payment of construction costs for the project, now owned by Juhl Renewable Assets;
 
 
·
we assisted in closing of permanent equity financing for the Grant County and Meeker County projects totaling approximately $90 million in March 2011, and the completion of a $13 million construction and financing for the Valley View project in March of 2011;
 
 
·
we completed a 4.95 MW wind farm project for Gundersen Health System in Winona County, Minnesota.  It is the first-of-its kind wind farm in North America to be constructed to specifically address the energy concerns of a large regional health organization.  This is an example of how we are partnering with large and industrial organization projects, such as Gundersen Health System, to help such organizations realize their goals of becoming energy independent;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of approximately $6,284,000 for the 10 megawatt Valley View Project in the first quarter of 2012.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant primarily went toward payment of turbine and construction costs for the project;
 
 
·
we signed a development services agreement with Black Oak Wind Farm located near Ithaca, NY, which is a proposed 15 to 30 MW facility.  This is the first wind farm where we have expanded our development services outside of the Midwest region.  This allows us to diversify our development portfolio by adding projects throughout North America and in regions that generally experience higher electric rates;
 
 
6

 
 
 
·
during the second quarter of 2012, we acquired an engineering firm, Power Engineers Collaborative, which is now our wholly-owned subsidiary, and expanded our professional service offerings.  Our acquisition of PEC brings experience, significant expansion of our base business and opportunity to offer increased capabilities beyond wind and into the full range of clean energy sectors including natural gas, biomass, waste-to-energy, medium-to-large on-site solar, and support to larger wind farm construction. PEC also provides us with cross-selling opportunities that will lead to additional growth across our subsidiaries;
 
 
·
during the second quarter of 2012, Juhl Energy Development acquired substantially all of the early stage development assets relating to the development, construction and/or operation of an approximately 3.6 MW community wind energy project on a site located in Painesville, Ohio; and   
 
 
·
during the second quarter of 2012, Juhl Energy Development, acquired substantially all of the early stage development assets relating to the development, construction and/or operation of an approximately 4 MW community wind energy project on a site located in Russells Point, Ohio.
 
 
Corporate Information

Our principal executive office is located at 1502 17th Street SE, Pipestone, Minnesota 56164, and our telephone number is (507) 777-4310. We maintain a corporate website at www.juhlwind.com. Information contained in, or accessible through, our website does not constitute a part of, and is not incorporated into, this prospectus. Also, this prospectus includes the names of various government agencies and the trade names of other companies. Unless specifically stated otherwise, the use or display by us of such other parties' names and trade names in this prospectus is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, any of these other parties.
 
 
THE OFFERING

Common Stock

Common Stock outstanding prior to the offering:
 
22,915,849 shares, including the 407,332 commitment shares already issued to Lincoln Park under the Purchase Agreement and included in this offering (1)
     
Common Stock offered by the selling shareholder:
 
2,393,000 shares, consisting of the 407,332 commitment shares already issued to Lincoln Park and the remaining shares to be purchased from time to time under the Purchase Agreement
     
Common Stock to be outstanding after giving effect to the issuance of 2,393,000 shares to Lincoln Park under the Purchase Agreement
 
24,901,517
     
Use of Proceeds:
 
We will not receive any proceeds from the sale of the shares of common stock by Lincoln Park. However, we may receive up to $10,000,000 from sales of shares under the Purchase Agreement. Any proceeds that we receive from sales to Lincoln Park under the Purchase Agreement will be used to offer to redeem shares of common stock, and to fund operations and investor relations.  See “Use of Proceeds”.
     
Offering Price
 
The shares of common stock may be sold by Lincoln Park at market prices.  See “Plan of Distribution”.
     
Risk Factors
 
This investment involves a high degree of risk.  See “Risk Factors” for a discussion of factors you should consider carefully before making an investment decision.
     
OTCBB 
 
JUHL

(1)           The number of shares of our common stock set forth above is based on 22,915,849 shares of common stock outstanding as of July 16, 2012, and excludes:
 
 
7

 
 
 
·
options to purchase 1,510,000 shares of our common stock pursuant to our 2008 Incentive Compensation Plan, of which 1,297,500 are exercisable within 60 days following July 16, 2012;
 
 
·
options and warrants outside our 2008 Incentive Compensation Plan to purchase an aggregate of 650,000 shares of our common stock, all of which are exercisable as of July 16, 2012; and
 
 
·
10,786,792 shares of Preferred Stock convertible into Common Stock at a ratio of 1:1.
 
On June 15, 2012, we executed a Purchase Agreement and a Registration Rights Agreement with the selling shareholder, Lincoln Park Capital Fund, LLC, or Lincoln Park. Under the Purchase Agreement, we have the right to sell to Lincoln Park up to $10,000,000 of our common stock at our option as described below.

Pursuant to the Registration Rights Agreement, we are filing this registration statement and prospectus with the SEC covering the shares that may be issued to Lincoln Park under the Purchase Agreement. We do not have the right to commence any sales of our shares to Lincoln Park until the SEC has declared effective the registration statement. Thereafter, over approximately 30 months, and subject to certain terms and conditions, we have the right, in our sole discretion, to direct Lincoln Park to make periodic purchases of up to 100,000 shares of our common stock per sale and depending upon certain conditions as set forth in the Purchase Agreement, increasing to amounts up to 500,000 shares of our common stock as often as every two business days up to the aggregate commitment of $10,000,000. The purchase price of the shares will be based on the market prices of our shares immediately prior to the time of sale as computed under the Purchase Agreement without any fixed discount. In no event, however, will Lincoln Park be obligated or have the right to purchase shares of our common stock under the Purchase Agreement at a price of less than $.65 per share.  The Company may deliver multiple purchase notices to Lincoln Park so long as at least two (2) Business Days have passed since the most recent purchase was completed. We may, at any time, and in our sole discretion, terminate the Purchase Agreement without fee, penalty or cost upon notice to Lincoln Park. Lincoln Park may not assign or transfer its rights and obligations under the Purchase Agreement.
 
Upon signing the Purchase Agreement, we issued 407,332 shares of our common stock to Lincoln Park as a commitment fee for entering into the Purchase Agreement (which shares are included in this offering). The commitment shares remain restricted for trading purposes until such time as this registration may become effective, and then only in conjunction with terms contained in the Purchase Agreement.

Under the Purchase Agreement and the Registration Rights Agreement, we are required to register 2,393,000 shares, which include the 407,332 shares already issued to Lincoln Park under the Purchase Agreement.

Although the Purchase Agreement provides that we may sell up to $10,000,000 of our common stock to Lincoln Park, we are only registering 2,393,000 shares to be purchased thereunder, which may or may not cover all such shares purchased by Lincoln Park under the Purchase Agreement, depending on the purchase price per share.

Of the 2,393,000 shares of common stock offered under this prospectus:

 
·
407,332 shares have already been issued to Lincoln Park as a commitment fee for entering into the Purchase Agreement; and
 
·
The remainder represents shares we may sell to Lincoln Park under the Purchase Agreement.
 
Except as otherwise indicated herein, all information in this prospectus, including the number of shares that will be outstanding after this offering, assumes or gives effect to no exercise of options or warrants outstanding on the date of this prospectus or in the future, except as specifically set forth herein.

As of July 16, 2012, there were 22,915,849 shares of common stock outstanding, of which 7,253,217 shares were held by non-affiliates (which for purposes hereof such non-affiliate number does not include the 407,332 shares already issued to Lincoln Park). If all of the 2,393,000 shares offered by Lincoln Park were issued and outstanding as of the date hereof, such shares would represent 9.61% of the total common stock outstanding, or 24.81% of the non-affiliates’ shares outstanding. The number of shares ultimately offered for sale by Lincoln Park is dependent upon the number of shares that we sell to Lincoln Park under the Purchase Agreement. If we elect to issue more than the 2,393,000 shares offered under this prospectus, which we have the right but not the obligation to do, we must first register under the Securities Act the resale by Lincoln Park of any additional shares we may elect to sell to Lincoln Park before we can sell such additional shares.
 
 
8

 
 
Summary Financial Information
 
The following tables summarize our financial data. We have derived the following summary of our statement of operations data for the years ended December 31, 2011 and 2010 from our audited financial statements appearing later in this prospectus. We have derived the following summary of our statement of operations data for the three months ended March 31, 2012 and 2011 and balance sheet data as of March 31, 2012 from our unaudited financial statements appearing later in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the summary of our financial data set forth below together with our financial statements and the related notes to those statements, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing later in this prospectus.
 
Statement of Operations Data
 
   
Year Ended
December 31,
   
Three Months Ended
March 31,
 
   
2011
   
2010
   
2012
   
2011
 
Net sales
  $ 15,577,657     $ 6,268,143     $ 1,206,359     $ 6,591,411  
Cost of sales
    6,017,327       4,894,481       506,051       791,990  
Gross profit
    9,560,330       1,373,662       700,308       5,799,421  
Total operating expenses
    4,672,447       4,120,271       1,126,971       1,020,733  
Operating income (loss)
    4,887,883       (2,746,609 )     (426,663 )     4,778,688  
Total other income (expense), net
    (69,878 )     (31,556 )     (254,540 )     (24,839 )
Income (loss) before income taxes
    4,818,005       (2,778,165 )     (681,203 )     4,753,849  
Income tax benefit (expense)
    (1,776,000 )     978,000       267,000       (1,952,000 )
Net income (loss)
  $ 3,042,005     $ (1,800,165 )   $ (414,203 )     2,801,849  
 
Balance Sheet Data
 
   
December 31, 2011
   
December 31, 2010
    March 31, 2012  
Current assets
  $ 15,927,380     $ 14,404,552     $ 8,026,092  
Total assets
  $ 43,371,401     $ 18,092,861     $ 35,258,580  
Current liabilities
  $ 14,190,774     $ 12,666,298     $ 4,132,705  
Long-term liabilities/other
  $ 20,249,978     $ 879,000     $ 22,642,621  
Total stockholders’ equity
  $ 8,930,649     $ 4,547,563     $ 8,483,254  
 
 
 
RISK FACTORS

This investment involves a high degree of risk and you should purchase shares only if you can afford a complete loss of your investment. You should carefully consider the following risk factors, other information in this prospectus and all other information contained in our other public filings before making an investment decision about our common stock. While the risks described below are the ones we believe are most important for you to consider, these risks are not the only ones that we face. Our business, financial condition or results of operations could be affected materially and adversely by any or all of these risks.


THE FOLLOWING MATTERS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR PROSPECTS, FINANCIAL OR OTHERWISE. REFERENCE TO THIS CAUTIONARY STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT OR STATEMENTS.

With the exception of historical facts herein, the matters discussed herein are “forward looking” statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. Such “forward looking” statements include, but are not necessarily limited to statements regarding anticipated levels of future revenues and earnings from the operations of Juhl Wind, Inc. and its subsidiaries, projected costs and expenses related to our operations, liquidity, capital resources, and availability of future equity capital on commercially reasonable terms.

We disclaim any intent or obligation to publicly update these “forward looking” statements, whether as a result of new information, future events or otherwise. Unless the context indicates or suggest otherwise reference to “we”, “our”, “us”, and the “Company” in this section refers to the consolidated operations of Juhl Wind, Inc., a Delaware corporation.
 
 
9

 
 
Risks Related to Our Business

We need substantial additional financing, some of which may be provided by amounts raised under the Purchase Agreement.

We need substantial additional capital to fund our operations. To date, we have relied almost exclusively on financing transactions to fund our operations. Our inability to obtain sufficient additional financing would have a material adverse effect on our ability to implement our business plan and, as a result, could require us to diminish or suspend activities. At March 31, 2012, we had total current assets of approximately $8,026,000 and total current liabilities of approximately $4,133,000. Under our current operating plan, and assuming we are able to sell the maximum of $10 million from the Purchase Agreement, we believe we can fund our operations through 2014. However, our projections could be wrong and the funds raised under the Purchase Agreement may be insufficient. We could face unforeseen costs or our revenues could fall short of our projections. In addition, there is no assurance that we will be able to sell a sufficient number of shares under the Purchase Agreement to raise the aforementioned financing. New sources of capital may not be available to us when we need them or may be available only on terms we would not find acceptable. Additional financing will likely cause dilution to our stockholders and could involve the issuance of securities with rights senior to the outstanding shares. There is no assurance that such financing will be sufficient, that the financing will be available on terms acceptable to us and at such times as required, or that we will be able to obtain the additional financing required, if any, for the continued operation and growth of our business. Any inability to raise necessary capital will have a material adverse effect on our ability to implement our business strategy and will have a material adverse effect on our revenues and net income.

We may direct Lincoln Park to purchase up to $10 million of our shares of our common stock under our Purchase Agreement over a 30-month period, generally in amounts of up to 100,000 shares and depending on certain conditions increasing to amounts up to 500,000 shares. However, Lincoln Park does not have the right or the obligation to purchase any shares of our common stock on any business day that the price of our common stock is less than $0.65 per share. We intend to register 2,393,000 shares for sale by Lincoln Park pursuant to this prospectus (including the commitment shares issued to Lincoln Park). In the event we elect to issue more than 2,393,000 shares offered hereby, we will be required to file a new registration statement and have it declared effective by the SEC. The extent to which we rely on Lincoln Park as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding from Lincoln Park were to prove unavailable or prohibitively dilutive, and if other sources of funding are available to us, we may determine not to sell shares to Lincoln Park under the Purchase Agreement.

If we cannot continue to develop our portfolio of wind farm projects and turn such projects into operating projects, our business will not grow and we may have significant write-offs.

We may be unable to meet our targets and goals for wind farm development, because we will need to add new projects to our pipeline on an ongoing basis, including projects we acquire from others. In addition, we may have difficulty in converting our projects under development into operating projects or may be unable to find suitable projects to add to our development portfolio. These circumstances could prevent those projects from commencing operations or from meeting our original expectations about how much energy they will generate or the returns they will achieve. Some of our wind farm projects in our portfolio will not progress to construction or may be substantially delayed. From time to time we have abandoned projects on which we had started development work, or re-categorized projects to a less advanced stage than we had previously assigned them, representing in the aggregate a loss of potential capacity. In addition, those projects that are constructed and begin operations may not meet our return expectations due to schedule delays, cost overruns or revenue shortfalls or they may not generate the capacity that we anticipate or result in receipt of revenue in the originally anticipated time period or at all. An inability to maintain and add to our development portfolio or to convert projects into financially successful operating projects would have a material adverse effect on our business, financial condition and results of operations.

We are dependent on Daniel J. Juhl’s reputation and experience, and his loss would adversely affect our ability to implement our strategy.

Our business depends on the availability to us of Daniel J. Juhl, our Chairman of the Board and Chief Executive Officer. Mr. Juhl founded Juhl Energy and Juhl Energy Services, and has been a pioneer in the community wind power industry. The business contacts and relationships that we maintain in the community wind industry are predominantly those of Mr. Juhl. Our business would be materially and adversely affected if his services would become unavailable to us. We cannot assure you that Mr. Juhl will continue to be available to us, although we have entered into a five-year employment agreement with Mr. Juhl expiring in December 2016 and maintain key-man life insurance for our benefit on Mr. Juhl’s life in the amount of $3 million. Any failure by us to find suitable replacements for Mr. Juhl may be disruptive to our operations. Competition for such personnel in this industry is intense, and we may be unable to attract, integrate and retain such personnel successfully.
 
 
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The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.

We depend on our experienced management team and the loss of one or more key executives could have a negative impact on our business. We also depend on our ability to retain and motivate key employees and attract qualified new employees. Because the wind industry is relatively new, there is a scarcity of top-quality employees with experience in the wind industry. If we lose a member of the management team or a key employee, we may not be able to replace him or her. Integrating new employees into our management team and training new employees with no prior experience in the wind industry could prove disruptive to our operations, require a disproportionate amount of resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient technical and managerial personnel could limit or delay our development efforts, which could have a material adverse effect on our business, financial condition and results of operations.

We depend on outside advisors for some of our primary business operations.

To supplement the business experience of our officers and directors, we employ accountants, technical experts, appraisers and attorneys or engage other consultants or advisors. The selection of any such advisors is made by our officers without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to us. In the event management considers it necessary to hire outside advisors, they may elect to hire persons who are affiliates, if they are able to provide the required services.

We compete with other renewable energy producers for limited tax equity financing, which could raise the cost of tax equity financing for us and adversely impact our development strategy.

Tax equity investors have limited funds, and wind energy producers compete with other renewable energy producers for tax equity financing. In the current rapidly expanding market, the cost of tax equity financing may increase and there may not be sufficient tax equity financing available to meet the total demand in any year. In addition, one or more current tax equity investors may decide to withdraw from this market thereby depleting the pool of funds available for tax equity financing. Alternative financing will be more expensive and there may not be sufficient liquidity in alternate financial markets. As a result, development of additional wind farms by us would be adversely affected.

We may not be able to efficiently integrate the operations of our acquisitions, products or technologies.

From time to time, we may acquire new and complementary technology, assets and companies. We do not know if we will be able to complete any acquisitions or if we will be able to successfully integrate any acquired businesses, operate them profitably or retain key employees. Integrating any other newly acquired business, product or technology could be expensive and time-consuming, disrupt our ongoing business and distract our management. We may face competition for acquisition targets from larger and more established companies with greater financial resources. In addition, in order to finance any acquisitions, we might be forced to obtain equity or debt financing on terms that are not favorable to us and, in the case of equity financing our stockholders interests may be diluted. If we are unable to integrate effectively any newly acquired company, product or technology, our business, financial condition and operating results could suffer.

We face competitive pressures from a variety of competitors in the markets we serve.

We are a small company, and we operate in a competitive market, and this competition may accelerate in the future. In the United States, large utility companies dominate the energy production industry and coal continues to dominate as the primary resource for electricity production followed by other traditional resources such as oil and natural gas. We expect that primary competition for the wind power industry will continue to come from utility company producers of electricity generated from coal and other non-renewable energy sources. Within the U.S. wind power market itself, there is also a high degree of competition, with growth opportunities in all sectors of the industry regularly attracting new entrants.

Our competitors have, or may have, substantially greater financial, marketing or technical resources, and in some cases, greater name recognition and experience than we have. Some competitors, including European producers and large U.S. utilities, may enter markets we serve and sell electricity at low prices in order to obtain market share. There are a limited number of sites desirable for wind farms and a limited supply of wind turbines and other related equipment necessary to operate wind farm facilities. Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. They may also be able to devote greater resources to the development, promotion and sale of electricity than we can. Current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers. It is possible that new competitors or alliances among competitors may emerge and rapidly gain significant market share. This would in turn reduce our market share, reduce our overall sales and require us to invest additional funds in new technology development. If we cannot compete successfully against competitors, this will have a negative impact on our business, financial condition, results of operations and cash flow.

We compete with other renewable energy companies (and energy companies in general) for the financing needed to pursue our development plan. Once we have developed a project and put a project into operation, we may compete on price if we sell electricity into power markets at wholesale market prices. Depending on the regulatory framework and market dynamics of a region, we may also compete with other wind energy companies, as well other renewable energy generators, when we bid on or negotiate for a long-term PPA.
 
 
11

 
 
We need to manage growth in operations to maximize our potential growth and achieve our expected revenues and our failure to manage growth will cause a disruption of our operations resulting in the failure to generate revenue.

In order to maximize potential growth in the wind power markets, we believe that we must expand our development activities to locate sites to generate wind power, as well as explore outlets for the sale of electricity generated. This expansion will place a significant strain on our management team and our operational, accounting and information systems. We expect that we will need to continue to improve our financial controls, operating procedures and management information systems. We will also need to effectively hire, train, motivate and manage our employees. Our failure to properly manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

Our operating results may be adversely affected by the uncertain geopolitical environment and unfavorable factors affecting economic and market conditions.

Adverse factors affecting economic conditions worldwide have contributed to a general inconsistency in the power industry and may continue to adversely impact our business, resulting in:

 
·
reduced demand for electricity as a result of a decrease in spending by customers and potential customers
 
 
·
increased price competition for electricity, and
 
 
·
higher overhead costs as a percentage of revenues.
 
Terrorist and military actions may continue to put pressure on economic conditions. If such an attack should occur or if the economic and market conditions in the United States deteriorate as a result of a terrorist attack, we may experience a material adverse impact on our business, operating results, and financial condition as a consequence of the above factors or otherwise.

We rely on a limited number of key customers.

There are a limited number of possible customers for electricity and RECs produced in a given geographic location. As a result, we do not have many choices about the buyers of our electricity, which limits our ability to negotiate the terms under which we sell electricity. Also, since we depend on sales of electricity and RECs to certain key customers, our operations are highly dependent upon these customers' fulfilling their contractual obligations under our power purchase agreements (PPAs) and other material sales contracts. Our customers may not meet their contractual payment obligation or may become subject to insolvency or liquidation proceedings during the term of the relevant contracts. In addition, the credit support we received from such customers to secure their payments under the PPAs may not be sufficient to cover our losses if they fail to perform. Failure by any key customer to meet its contractual commitments or insolvency or liquidation of our customers could have a material adverse effect on our business, financial condition and results of operations.

Electric power plants using our systems to generate electricity rely on national and regional transmission systems and related facilities that are owned and operated by third parties and have both regulatory and physical constraints impeding access to electric markets.

Electric power plants using our systems to generate electricity in domestic regions depend on electric transmission systems and related facilities owned and operated by third parties to deliver the electricity we generate and have both regulatory and physical constraints impeding access to electric markets. Electric power plants using our systems may have limited or no access to interconnection and transmission capacity at reasonable costs or in a timely fashion, because there may not be transmission capacity available or there are many parties seeking access to the limited capacity that is available. In addition, certain PPAs we have entered into contain provisions that limit, or cap, the maximum allowable transmission costs under such PPAs, which may have the effect of increasing total project costs for electric power plants using our systems. The inability to secure access to capacity at reasonable costs, in a timely fashion or at all, could cause delays and require renegotiation of key PPA terms. Any such increased costs and delays could, in turn, delay the commercial operation dates of, or could result in termination of the PPAs associated with, electric power plants using our systems and negatively impact our revenues and financial condition.

The inherent volatility in the market price of electricity could impact our profitability.

Our revenues, income and cash flow are subject to volatility in the market price for electricity. Our ability to generate revenue has exposure to movements in the market price of electricity, as sales to the power market are likely to be made at prevailing market prices. The market price of electricity is sensitive to cyclical changes in demand and capacity supply, and in the economy, as well as to regulatory trends and developments impacting electricity market rules and pricing, transmission development and investment within the United States and to the power markets in other jurisdictions via interconnects and other external factors outside of our control. Energy from wind generating facilities must be taken “as delivered” which necessitates the use of other system resources to keep the demand and supply of electric energy in balance. Accordingly, the potential revenue, income and cash flow may be volatile and adversely affect our value.
 
 
12

 
 
Risks Relating to the Wind Energy Industry

The performance of wind farms is dependent upon meteorological and atmospheric conditions that fluctuate over time.

The production of electricity generated by wind farms will form the basis for a substantial portion of project revenues. As a result, our results of operations may be highly dependent on meteorological and atmospheric conditions.

Site selection requires the evaluation of the quality of the wind resources based upon a variety of factors. The wind data gathered on site and data collected through other sources form the basis of wind resource projections for a wind farm’s performance, revenue generation, operating profit, project debt capacity, project tax equity capacity and return on investment, which are fundamental elements of our project planning. Wind resource projections at the time of commercial operations can have a significant impact on the level of capital that we can raise. Wind resource projections do not predict the wind at any specific period of time in the future. Therefore, even in the event where prediction of a wind farm’s wind resources becomes validated over time, the wind farm will experience hours, days, months and even years that are below wind resource predictions. Wind resource projections may not predict the actual wind resources observed by the wind farm over a long period of time. Assumptions included in wind resource projections, such as the interference between turbines, effects of vegetation and land use, and terrain effects may not be accurate. Wind resources average monthly and average time of day long-term predictions may not be accurate and, therefore, the energy wind farms produce over time may have a different value than forecast. If as a result of inaccurate wind resource projections, the performance of one or more of our wind farms falls below projected levels, our business, results of operations and financial condition could be materially adversely affected.

Operational factors may reduce energy production below projections, causing a reduction in revenue.

The amount of electricity generated by a wind farm depends upon many factors in addition to the quality of the wind resources, including but not limited to turbine performance, aerodynamic losses resulting from wear on the wind turbine, degradation of other components, icing or soiling of the blades and the number of times an individual turbine or an entire wind farm may need to be shut down for maintenance or to avoid damage due to extreme weather conditions. In addition, conditions on the electrical transmission network can impact the amount of energy a wind farm can deliver to the network. We cannot assure you that any of our wind farms will meet energy production expectations in any given time period, which could impact our ability to obtain future projects.

If wind farm energy projections are not realized, we could face a number of material consequences, including the following:

 
·
sales of energy by the projects may be significantly lower than forecast,
 
 
·
the amount of capacity permitted to be sold from our wind farms may be lower than forecast, and
 
 
·
our wind farms may be unable to meet the obligations of agreements based on projected production and as a result revenue would be lower than forecasted.
 
All of which taken together would negatively impact our business.

The wind energy industry is extensively regulated and changes in or new regulations or delays in regulatory approval could hurt our business development.

Our activities in the maintenance and management of electricity generating stations are subject to extensive energy and environmental regulation by federal, state and local authorities. Delay in obtaining, or failure to obtain and maintain in full force and effect, any of the regulatory approvals we need to develop our wind farms, or delay or failure to satisfy any applicable regulatory requirements, could prevent operation of our electricity generating stations or the sale of their electric energy, could result in potential liability, and could cause us to incur additional costs.

Various state governments may not extend or may decrease incentives for renewable energy, including wind energy, which would have an adverse impact on our development strategy.

Various types of incentives which support the sale of electricity generated from wind energy presently exist in Minnesota and other states where we plan to continue developing wind farms. In response to the push for cleaner power generation and more secure energy supplies, Minnesota, 34 other states and the District of Columbia have enacted renewables portfolio standards, or RPS, programs. These programs either require electric utilities and other retail energy suppliers to produce or acquire a certain percentage of their annual electricity consumption from renewable power generation resources or designate an entity to administer the central procurement of renewable energy certificates, or RECs, for the state. Wind energy producers such as us generate RECs due to the environmentally beneficial attributes associated with their production of electricity, and we benefit from the RPS-mandated purchase of electricity produced by us. A REC is a stand-alone tradable instrument representing the attributes associated with one megawatt hour of energy produced from a renewable energy source. These attributes typically include reduced air and water pollution, reduced greenhouse gas emissions and increased use of domestic energy sources. Many states including Minnesota use RECs to track and verify compliance with their RPS programs. Retail energy suppliers can meet the requirements by purchasing RECs from renewable energy generators, in addition to producing or acquiring the electricity from renewable sources. We cannot assure you that governmental support for alternative energy sources in the form of RPS programs or RECs recognition and trading will continue at the state level or that the wind farms that we develop will qualify for such incentives. Any decrease in such state-level incentives like RPS programs and RECs recognition and trading would have an adverse impact on our development strategy.
 
 
13

 
 
We depend on our ability to locate and develop new sources of wind power in a timely and consistent manner, and failure to do so would adversely affect our operations and financial performance.

Our success in the industry requires additional and continuing development to become and remain competitive. We expect to continue to make substantial investments in development activities. Our future success will depend, in part, on our ability to continue to locate additional wind power sites. Developing a wind farm site is dependent upon, among other things, acquisition of rights to parcels of property, receipt of required local, state and federal permits and the negotiation of satisfactory turbine supply, engineering, construction and agreements with respect to connecting to the existing electricity transmission network. This development activity will require continued investment in order to maintain and grow our market position. We may experience unforeseen problems in our development endeavors. We may not achieve widespread market acceptance of our wind-powered electricity. We may not meet some of these requirements or may not meet them on a timely basis. We may modify plans for the development of a wind farm. We will typically incur substantial expense in the development of wind farms. Many of these expenses, including obtaining permits and legal and other services, are incurred before we can determine whether a site is environmentally or economically feasible. After such a determination is made, significant expenses, such as environmental impact studies, are incurred. A number of factors are critical to a determination of whether a site will ultimately be developed as a wind farm including changes in regulatory environment, changes in energy prices, community opposition, failure to obtain regulatory and transmission approvals and permits. These factors could materially affect our ability to forecast operations and negatively affect our stock price, results of operations, cash flow and financial condition.

Access to, availability and cost of transmission networks are critical to development of wind farms; failure to obtain sufficient network connections for future wind farms would adversely affect our operations and financial performance.

We depend on electric transmission facilities owned and operated by third parties to provide an outlet for electricity for our projects. We typically do not own or control the transmission facilities other than the limited facilities necessary to connect wind farms to the transmission network. The capacity of the local transmission network may be limited or constrained, and the owner of the network may not allow us to interconnect a new wind farm without first constructing the system upgrades that the owner requires. For this reason, we expect to pay some or all of the costs of upgrading the existing transmission facilities to support the additional electricity that a wind farm will be delivering into the network. The location of a wind farm in a particular area therefore depends significantly on whether it is possible to interconnect with the transmission network at a reasonable cost. Many wind farms are located in remote areas with limited transmission networks where intense competition exists for access to, and use of capacity on, the existing transmission facilities. We cannot assure you that we will obtain sufficient network connections for future wind farms within planned timetables and budgetary constraints.

Wind farms are required to meet certain technical specifications in order to be connected to the transmission network. If any wind farm does not meet, or ceases to comply with, these specifications, we will not be able to connect, to or remain connected, to the transmission network. We may also incur liabilities and penalties, including disconnection from the network, if the transmission of electricity by one or more of wind farms does not comply with applicable technical requirements. In the agreements with respect to connecting to the existing electricity transmission network between wind farms and the applicable transmission owner or operator, the transmission owner or operator retains the right to interrupt or curtail our transmission deliveries as required in order to maintain the reliability of the transmission network. We cannot assure you that our wind farms will not be adversely impacted by any such interruption or curtailment.

Most of the revenue for our projects comes from sales of electricity and RECs, which are subject to market price fluctuations, and there is a risk of a significant, sustained decline in their market prices. Such a decline may make it more difficult to develop our wind farm projects.

We may not be able to develop our projects economically if there is a significant, sustained decline in market prices for electricity or RECs without a commensurate decline in the cost of turbines and the other capital costs of constructing wind energy projects. Electricity prices are affected by various factors and may decline for many reasons that are not within our control. Those factors include changes in the cost or availability of fuel, regulatory and governmental actions, changes in the amount of available generating capacity from both traditional and renewable sources, changes in power transmission or fuel transportation capacity, seasonality, weather conditions and changes in demand for electricity. In addition, other power generators may develop new technologies or improvements to traditional technologies to produce power that could increase the supply of electricity and cause a sustained reduction in market prices for electricity and RECs. If governmental action or conditions in the markets for electricity or RECs cause a significant, sustained decline in the market prices of electricity or those attributes, without an offsetting decline in the cost of turbines or other capital costs of wind energy projects, we may not be able to develop and construct our pipeline of development projects or achieve expected revenues, which could have a material adverse effect on our business, financial condition and results of operations.
 
 
14

 
 
We need governmental approvals and permits, including environmental approvals and permits, to construct and operate our projects. Any failure to procure and maintain necessary permits would adversely affect ongoing development, construction and continuing operation of our projects.

The design, construction and operation of wind energy projects are highly regulated, may require various governmental approvals and permits, including environmental approvals and permits. We cannot predict whether all permits required for a given project will be granted or whether the conditions associated with the permits will be achievable. The denial of a permit essential to a project or the imposition of impractical conditions would impair our ability to develop the project. Delay in the review and permitting process for a project can impair or delay our ability to develop that project or increase the cost so substantially that the project is no longer attractive to us.

Our development activities and operations are subject to numerous environmental, health and safety laws and regulations.

We are subject to environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations may require us to obtain and maintain permits and approvals, undergo environmental impact assessments and review processes and implement environmental, health and safety programs and procedures to control risks associated with the siting, construction, operation and decommissioning of wind energy projects. For example, to obtain permits we may be required to undertake expensive programs to protect and maintain local endangered species. If such programs are not successful, we could also be subject to penalties or to revocation of our permits. In addition, permits frequently specify permissible sound levels.

If we do not comply with applicable laws, regulations or permit requirements, we may be required to pay penalties or fines or curtail or cease operations of the affected projects. Violations of environmental and other laws, regulations and permit requirements, including certain violations of laws protecting migratory birds and endangered species, may also result in criminal sanctions or injunctions.

Environmental, health and safety laws, regulations and permit requirements may change or become more stringent. Any such changes could require us to incur materially higher costs than we currently have. Our costs of complying with current and future environmental, health and safety laws, regulations and permit requirements, and any liabilities, fines or other sanctions resulting from violations of them, could adversely affect our business, financial condition and results of operations.

Warranties from suppliers of turbines, which protect us against turbine non-performance, may be limited by the ability of the vendor to satisfy its obligations under the warranty. In addition, the warranties have time limits and if we are not ready for turbine installation at the time we receive a turbine, that warranty protection can be lost.

When turbines are purchased for projects, we also enter into warranty agreements with the manufacturer. However, there can be no assurance that the supplier will be able to fulfill its contractual obligations. In addition, these warranties generally expire within two to five years after the turbine delivery date or the date the turbine is commissioned. We may lose all or a portion of the benefit of a warranty if we take delivery of a turbine before we are able to deploy it, as we have in the past. If we seek warranty protection and the vendor is unable or unwilling to perform its obligations under the warranty, whether as a result of the vendor's financial condition or otherwise, or if the term of the warranty has expired, we may suffer reduced warranty availability for the affected turbines, which could have a material adverse effect on our business, financial condition and results of operations. Also, under such warranties, the warranty payments by the manufacturer are typically subject to an aggregate maximum cap that is a portion of the total purchase price of the turbines. Losses in excess of these caps would be our responsibility.

Acquisition of existing wind energy assets involves numerous risks.

Our growth strategy includes acquiring wind energy assets complementary to Juhl Wind, such as additional wind service businesses, including operations and maintenance providers and wind consulting providers. Such strategy includes acquiring ownership of existing wind farms that meet our distributed generation model and the size range of our typical projects of 100 MW or less.  The acquisition of existing wind energy assets involves numerous risks. They include: difficulty in developing the assets into operating projects; unanticipated costs and exposure to liabilities; difficulty in integrating the acquired assets; and, if the assets are in new markets, the risks of entering markets where we have limited experience. A failure to achieve the financial returns we expect when we acquire wind energy assets could have an adverse effect on our business.
 
 
15

 
 
We are not able to insure against all potential risks and may become subject to higher insurance premiums.

Our business is exposed to the risks inherent in the construction and operation of wind energy projects, such as breakdowns, manufacturing defects, natural disasters, terrorist attacks and sabotage. We are also exposed to environmental risks. We have insurance policies covering certain risks associated with our business. Our insurance policies do not, however, cover losses as a result of force majeure, natural disasters, terrorist attacks or sabotage, among other things. We generally do not maintain insurance for certain environmental risks, such as environmental contamination. In addition, our insurance policies are subject to annual review by our insurers and may not be renewed at all or on similar or favorable terms. A serious uninsured loss or a loss significantly exceeding the limits of our insurance policies could have a material adverse effect on our business, financial condition and results of operations.

Any inability or delay in updating or obtaining required licenses and permits could hinder development and adversely affect profitability.

We may be unable to obtain all necessary licenses and permits to operate our business.  Juhl Wind may not necessarily hold all of the licenses and permits required in connection with the construction and operation of most of our wind projects. The failure to obtain all necessary licenses or permits, including renewals or modifications, could result in construction delays of any of our projects or could otherwise have a material adverse effect on Juhl Wind.

The wind energy industry is highly dependent on tax incentives.

Section 45 of the Internal Revenue Code provides for a production tax credit of 1.5 cents (adjusted annually for inflation) per kilowatt hours of electricity produced by the taxpayer from a qualified facility during the 10-year period beginning on the date it was originally placed in service, and sold to an unrelated person. The production tax credit is reduced under a formula for any year in which the national average price of electricity produced from wind for the immediately succeeding year, or the “reference price,” exceeds 8 cents a kilowatt hour adjusted for inflation and is completely eliminated when the reference price exceeds 11 cents (adjusted for inflation) per kilowatt hour. The 2012 reference price for electricity produced from wind did not exceed 8 cents multiplied by an inflation adjustment factor, thus the phaseout rules of the credit did not apply to electricity sold during calendar year 2011. The production tax credit which was scheduled to expire for qualified facilities placed in service after December 31, 2008, was extended by the Emergency Economic Stabilization Act of 2008 (Public Law 110-343) to qualified facilities placed in service before January 1, 2010. Under the American Recovery and Reinvestment Tax Act of 2009, the placed in service deadline for wind facilities has been extended to December 31, 2012. The elimination or significant reduction in the production tax credit described above could harm our business, financial condition and results of operations.
  
The federal government may not extend or may decrease tax incentives for renewable energy, including wind energy, which we depend and would have an adverse impact on our development strategy.

The growth of wind power developments is likely to be hampered over the next two years due to uncertainty over the direction of U.S. energy policies and low natural gas prices. At the date of this registration statement, Congress has not extended programs such as the production tax credit or cash grant program. These programs, which expire at the end of 2012, provide material incentives to develop wind energy generation facilities. The uncertainty with respect to extension of these credits and incentives has placed the wind industry in a tentative position. The development of wind energy projects requires extensive lead time, and the failure of Congress to extend or renew these incentives beyond the current 2012 expiration dates has already interrupted potential wind energy installations planned for 2013, as developers are shelving plans for wind projects. We expect that further Congressional delay on action to renew or extend these incentives will likely result in additional deferral of wind energy generation facility development and will likewise negatively impact the demand for wind turbines, towers, and related components. As a result, the continued Congressional delay or failure to extend or renew these or similar incentives in the future could have a material adverse impact on our business, results of operation, financial performance and future development efforts of wind energy projects.

Risks Related to the Renewable Energy Industry

Compliance with environmental regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines.

We are required to comply with all national and local regulations regarding protection of the environment. If we fail to comply with present or future environmental regulations, we may be required to pay substantial fines, suspend production or cease operations. In addition, our cost to comply with future regulations may increase, which could adversely impact the price of our products and our profitability.

The abundant competition and rapidly changing technology in the renewable energy industry may impair our success.

The renewable energy marketplace is highly fragmented, competitive and subject to rapid technological change, and we may be unable to successfully compete. Evolving industry standards, rapid price changes and rapid product obsolescence also impact the market. We currently compete in the market for renewable energy products and services and against companies that are better capitalized than us. Our competitors include many domestic and foreign companies, many of which have substantially greater financial, marketing, personnel and other resources than we do. Our current competitors or new market entrants could introduce new or enhanced technologies, products or services with features that could render our technologies, products or services obsolete or less marketable. Our success will be dependent upon our ability to develop superior energy products in a cost effective manner. In addition, we may be required to continually enhance any products that are developed as well as introduce new products that keep pace with technological change and address the increasingly sophisticated needs of the marketplace. There can be no assurance that we will be able to keep pace with the technological demands of the marketplace or successfully develop products that will succeed in the marketplace.
 
 
16

 
 
Changes to the currently favorable regulations and legislation within the renewable energy industry may adversely impact our future revenues.

The favorable legislative and regulatory climate for the renewable energy industry may not continue. The viability of our renewable energy projects will be in large part dependent upon the continuation of a favorable legislative and regulatory climate with respect to the continuing operations and the future growth and development of the renewable energy industry. Government regulations, subsidies, incentives and the market design have a favorable impact on the construction of renewable energy facilities. If the current government regulations, subsidy and incentive programs or the design of the market are significantly modified or delayed, our projects may be adversely affected, which may have a material adverse effect on the Company. The elimination or significant reduction in these tax credits could harm our business, financial condition and results of operations.

The pricing of renewable energy may fluctuate due to the level of production of renewable energy.

We believe that the production of renewable energy fuels is expanding rapidly, especially in the United States. There are a number of new plants under construction and planned for construction. We expect existing renewable energy fuel to expand by increasing production capacity and actual production. Increases in the demand for renewable energy fuels may not be commensurate with increasing supplies of renewable energy fuels or power. Thus, increased production of renewable energy fuels or power may lead to lower renewable energy fuel prices. The increased production of renewable energy fuels and power could also have other adverse effects. For example, increased renewable energy fuels production could lead to increased supplies of co-products from the production of renewable energy fuels. Those increased supplies could lead to lower prices for those co-products. Also, the increased production of renewable energy fuels could result in increased demand for renewable energy fuel supplies. This could result in higher prices for such supplies and cause higher renewable energy fuels production costs, which would result in lower profits. We cannot predict the future price of renewable energy fuels. Any material decline in the price of renewable energy fuels or power will adversely affect our sales and profitability.

Risks Associated with Our Common Stock and Capital Structure

The sale of our common stock to Lincoln Park may cause dilution to our existing stockholders and the sale of the shares of common stock acquired by Lincoln Park could cause the price of our common stock to decline.

This offering relates to up to $10 million of our common stock that we may sell to Lincoln Park. The shares offered to Lincoln Park may be sold over a 30-month period. The number of shares ultimately offered for sale by Lincoln Park is dependent upon the number of shares we elect to sell to Lincoln Park under the Purchase Agreement. Depending upon market liquidity at the time, sales of shares of our common stock by Lincoln Park may cause the trading price of our common stock to decline. After it has acquired shares under the Purchase Agreement, Lincoln Park may sell all, some or none of those shares. Sales to Lincoln Park by us pursuant to the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock by Lincoln Park, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales of our shares to Lincoln Park and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.

Because we became public through a share exchange transaction (or reverse acquisition), we may not be able to attract the attention of major brokerage firms.

Additional risks are associated with our becoming public through a reverse acquisition. For example, security analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. We cannot assure you that brokerage firms will want to conduct any public offerings on our behalf in the future.

Our management will have broad discretion as to the use of the proceeds from the Purchase Agreement, and we may not use the proceeds effectively.

We have not designated the amount of net proceeds from the Purchase Agreement to be used for any particular purpose. Accordingly, our management will have broad discretion as to the application of the net proceeds from the Purchase Agreement. Our shareholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may not increase our profitability or market value.
 
 
17

 
 
You will experience immediate dilution in the book value per share of the common stock you purchase.

Because the price per share of our common stock being offered is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on the assumed minimum allowed offering price of $.65 per share, if you purchase shares of common stock in this offering, you will suffer dilution of $.25 per share in the net tangible book value of the common stock. See the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.

Dividends on our Series A convertible preferred stock are payable in shares of our common stock which will dilute your ownership in us; common stock issuable upon conversion of our convertible preferred stock will further dilute your ownership interest in us.

Under the terms of our Series A convertible preferred stock, holders of Series A convertible preferred stock are entitled to receive dividends at a rate of 8% per year, payable quarterly in arrears in cash or shares of our common stock. We have issued 1,345,090 shares of our common stock as of the date hereof (of which 113,965 shares constituted late fees and liquidated damages). Accordingly, the number of shares of common stock issued or issuable in connection with this agreement will dilute your ownership in us. In addition, we are obligated to issue up to 4,820,000 shares of common stock upon conversion of our Series A convertible preferred stock and up to 5,966,792 shares of common stock upon conversion of our Series B convertible preferred stock. Accordingly, the issuance of these shares of common stock upon conversion of our convertible preferred stock will further dilute your ownership in us.

If and when additional registration statements relating to the securities we issued in the 2008 private placement and the 2009 warrant exchange become effective, a significant number of shares of common stock will be eligible for public resale, which could depress the market price of our common stock.

We have granted the holders of the Series B convertible preferred stock “piggy-back” registration rights with respect to the remaining 5,966,792 shares of common stock underlying the Series B convertible preferred stock. The $1.00 per share conversion price of the Series B convertible preferred stock issued in the 2009 warrant exchange was at a discount to the market price per share. If the conversion price of the Series B convertible preferred stock is less than the common stock market price per share following the effective date of the registration statement, the selling stockholders would have a built-in profit and may be inclined to sell their shares, which sales may have a depressive effect on the common stock market price. Shares may be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect as well. In general, a person who has held restricted shares for a period of six months may, upon filing a notification with the SEC on Form 144, sell our common stock into the market, subject to certain limitations.

Our current management can exert significant influence over us.

As of July 16, 2012, our executive officers and directors as a group beneficially owned approximately 68.39% of our outstanding shares of common stock on fully-diluted basis. As a result, these stockholders will be able to assert significant influence over all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our outstanding shares of common stock could have the effect of delaying or preventing a change in control, or otherwise discouraging or preventing a potential acquirer from attempting to obtain control. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of the owners of this concentration of ownership may not always coincide with our interests or the interests of other stockholders and, accordingly, could cause us to enter into transactions or agreements that we would not otherwise consider.

Our common stock is considered “penny stock” and may be difficult to sell.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market or exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock may be below $5.00 per share and therefore may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of our stockholders to sell their shares. In addition, since our common stock is quoted on the OTC Bulletin Board, our stockholders may find it difficult to obtain accurate quotations of our common stock and may find few buyers to purchase the stock or a lack of market makers to support the stock price.
 
 
18

 
 
We could issue “blank check” preferred stock without approval of the common stockholders with the effect of diluting then current stockholder interests and impairing their voting rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Our certificate of incorporation authorizes the issuance of up to 20,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors (of which 5,160,000 shares have been classified as Series A convertible preferred stock, and 6,607,006 have been classified as Series B convertible preferred stock). Our board of directors is empowered, without common stockholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company. In addition, advanced notice is required prior to stockholder proposals.

Delaware law could also make it more difficult for a third party to acquire us. Specifically, Section 203 of the Delaware General Corporation Law may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by our stockholders.

Our stock price has been volatile and this volatility is likely to continue.

Historically, the market price of our common stock has been volatile. The high and low prices for the years 2008 through 2011 and 2012 (through July 16, 2012) are set forth in the table below:

Juhl Wind, Inc.
Trading Range – Common Stock
Year
 
Low
 
High
2008
 
$
1.10
 
$
5.40
2009
 
$
1.50
 
$
3.50
2010
 
$
.87
 
$
2.58
2011
 
$
0.41
 
$
1.73
2012 (January 1 – July 16)
 
$
0.30
 
$
1.14

Events that may affect our common stock price include:

 
·
Quarter to quarter variations in our operating results;
 
 
·
Changes in earnings estimates by securities analysts;
 
 
·
Changes in interest rates or other general economic conditions;
 
Discussion of us and our stock price by financial and industry press and in online investor communities;
 
 
·
Fluctuations in stock market prices and trading volumes of similar companies; and
 
 
·
Additions or departures of key personnel.
 
Although all publicly traded securities are subject to price and volume fluctuations, it is likely that our common stock will experience these fluctuations to a greater degree than the securities of more established and better capitalized organizations.

We have not paid, and we are unlikely to pay in the near future, cash dividends on our common stock. As a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

We have never paid any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends by us will depend on our future earnings, financial condition and such other business and economic factors as our management may consider relevant. As a result, your only opportunity to achieve a return on your investment will be if the market price of our common stock appreciates and you sell your shares at a profit.

Our common stock does not have a vigorous trading market and you may not be able to sell your securities when desired.

We have a limited active public market for our common shares. We cannot assure you that a more active public market will develop thereby allowing you to sell large quantities of our shares. Consequently, you may not be able to readily liquidate your investment.

Factors over which we have little or no control may cause our operating results to vary widely from period to period, which may cause our stock price to decline.

Our operating results may fluctuate from period to period depending on several factors, including varying weather conditions; changes in regulated or market electricity prices; electricity demand, which follows broad seasonal demand patterns; changes in market prices for RECs; marking to market of our hedging arrangements; and unanticipated development or construction delays. Thus, a period-to-period comparison of our operating results may not reflect long-term trends in our business and may not prove to be a relevant indicator of future earnings. These factors may harm our business, financial condition and results of operations and may cause our stock price to decline.
 
 
19

 
 
Our operating results may fluctuate significantly from period to period; if we fail to meet the expectations of securities analysts or investors, our stock price may decline significantly.

Several factors can contribute to significant quarterly and other periodic fluctuations in our results of operations. These factors may include but are not limited to the following:

 
·
Pricing and availability of competitive products and services;
 
·
Changes in government regulations, tax-based incentive programs, and changes in global economic conditions;
 
·
Delays in installation of specific projects due to inclement weather;
 
·
Changes in currency translation rates affecting margins and pricing levels;
 
We base our planned operating expenses in part on our expectations of future revenue, and we believe a significant portion of our expenses will be fixed in the short-term. If revenue for a particular quarter is lower than we expect, we likely will be unable to proportionately reduce our operating expenses for that quarter, which would harm our operating results for that quarter. This may cause us to miss analysts’ guidance or any guidance announced by us. If we fail to meet or exceed analyst or investor expectations or our own future guidance, even by a small amount, our stock price could fluctuate, perhaps substantially.

Risks Related to our Financial Activities

We have made certain guarantees of indebtedness or offered indemnification as part of our funding activities in certain wind farm projects. Thus, if a default or breach occurs, it would likely have a current or future adverse effect on our financial condition.

We have made certain guarantees of indebtedness or offered indemnifications of warranties and representations in conjunction with the funding activities of the Valley View and Grant County wind farms.

In conjunction with the credit facility in the Grant County project, the Company has agreed for a limited period of time to indemnify the new equity investor with respect to certain representations and warranties made in conjunction with the equity purchase, including potential liabilities for Section 1603 Treasury Grant recapture or tax liabilities attributable to the period prior to the closing date. 

The Company agreed to guarantee certain payments to investors in the Valley View wind farm project as set forth below:

 
·
The timely payment of any and all guaranteed payments required to be paid to  preferred membership investors (who contributed approximately $2.5 million)  as they may become due under the respective LLC operating agreements, and the timely payment of any and all amounts payable upon exercise of a put right by such preferred members.  The put right is not under the Company’s control and may occur either in two years or in certain cases, ten years.  The Company does  have up to six months from the date that to make such Put Right Payment, and should Juhl Wind fail to make the Put Right Payment within such six month period, the principal amount owed by the Company is subject to a penalty of an additional 10%.
 
 
·
The Company has agreed, with respect to a put right made available to one of the Common Members in the Valley View project (who contributed $500,000) to redeem any of its units then held by the Purchaser for a price in cash equal to the present value of the (i) estimate future distributions to be made to Purchaser net of (ii) estimated future income allocations for which no distributions are projected to be made (“Put Right Purchase Amount”). If the Company fails to pay in full the put right purchase amount in cash on the due date, the Company shall issue a promissory note with a maturity date not exceeding 36 months and pay interest thereon.
 
 
·
The Company has made certain representations and warranties with regard to indemnifications in conjunction with the funding activities of the Valley View and Grant County wind farms, including potential liabilities for Section 1603 Treasury Grant recapture or tax liabilities attributable to the period prior to the closing date.
 
Aside from these arrangements, we believe that there are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
 
 
20

 
 
If our subsidiaries default on their obligations under their debt instruments, we may need to make payments to lenders to prevent foreclosure on the collateral securing the debt, which would cause us to lose certain of our wind energy projects.

Our subsidiaries incur various types of debt. Non-recourse debt is repayable solely from the applicable project's revenues and is secured by the project's physical assets, major contracts, cash accounts, or our ownership interest in the project subsidiary (if any). Limited recourse debt is debt where we have provided a limited guarantee and recourse debt is debt where we have provided a full guarantee, which means if our subsidiaries default on these obligations, we will be liable directly to those creditors, although in the case of limited recourse debt only to the extent of our limited recourse obligations. To satisfy these obligations, we may be required to use amounts distributed by our other subsidiaries as well as other sources of available cash, reducing the cash available to execute our business plan. In addition, if our subsidiaries default on their obligations under non-recourse financing agreements, we may decide to make payments to prevent the creditors of these subsidiaries from foreclosing on the relevant collateral. Such a foreclosure would result in our losing our ownership interest in the subsidiary or in some or all of its assets. The loss of our ownership interest in one or more of our subsidiaries or some or all of their assets could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to finance the growth of our business, including the development and construction of our wind energy projects and the growth of our organization.

We are in a capital intensive business and rely heavily on the debt and equity markets to finance the development and construction costs of our projects and other projected capital expenditures. Completion of our projects requires significant capital expenditures and construction costs. Recovery of the capital investment in a wind energy project generally occurs over a long period of time. As a result, we must obtain funds from equity or debt financings, including tax equity transactions, or from government grants to develop and construct our existing project pipeline, to finance the acquisition of turbines, to identify and develop new projects and to pay the general and administrative costs of operating our business. The cost of turbines has historically represented approximately 70% of the total cost of an average wind energy project. The significant disruption in credit and capital markets generally that began in the fall of 2008 and has persisted has made it difficult to obtain financing on acceptable terms or, in some cases, at all. If we are unable to raise additional funds when needed, we could delay development and construction of projects, reduce the scope of projects or abandon or sell some or all of our development projects, or default on our contractual commitments to buy turbines in the future, any of which would adversely affect our business, financial condition and results of operations.

We have had material weaknesses and significant deficiencies in our internal control over financial reporting. Any material weaknesses or significant deficiencies in our internal controls could result in a material misstatement in our financial statements as well as result in our inability to file periodic reports timely as required by federal securities laws, which could have a material adverse effect on our business and stock price.

We are required to design, implement and maintain effective controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis.

We had material weaknesses in our internal control over financial reporting that related to the adequacy of our financial and accounting organization support for our financial accounting and reporting needs. These weaknesses mainly resulted from a lack of sufficient personnel, and contributed to significant deficiencies related to: (1) effective policies and procedures designed to ensure certain costs are capitalized in accordance with generally accepted accounting principles and captured in the appropriate accounting period; (2) an effective process to ensure the completeness of accounts payable and accrued expenses; and (3) an effective review, approval and communications process for journal entries.

While we implemented procedures to remediate these weaknesses and deficiencies, we cannot be certain that in the future that we will not have material weaknesses or significant deficiencies in our internal control over financial reporting, or that we will successfully remediate any that we find. We may have weaknesses or deficiencies in our internal controls that could result in a material misstatement in our annual or interim consolidated financial statements, or cause us to fail to meet our obligations to file periodic financial reports with the SEC. We also may fail to conclude on an ongoing basis that we have effective internal control over financial reporting as contemplated by Section 404 of the Sarbanes-Oxley Act of 2002.   Any of these failures could result in adverse consequences that could materially and adversely affect our business, including potential action by the SEC against us, possible defaults under our debt agreements, stockholder lawsuits, delisting of our stock and general damage to our reputation.

We are subject to credit and performance risk from third parties under service and supply contracts.

We enter into contracts with vendors to supply equipment, materials and other goods and services for the development, construction and operation of wind projects as well as for other business operations. If vendors do not perform their obligations, we may have to enter into new contracts with other vendors at a higher cost or may have schedule disruptions.
 
 
21

 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
 
This prospectus contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in this prospectus.  Important factors that may cause actual results to differ from projections include, but are not limited to, for example: adverse economic conditions, inability to raise sufficient additional capital to operate our business, delays, cancellations or cost overruns involving the development or construction of our wind farms, the vulnerability of our wind farms to adverse meteorological and atmospheric conditions, unexpected costs, lower than expected sales and revenues, and operating defects, adverse results of any legal proceedings, the volatility of our operating results and financial condition, inability to attract or retain qualified senior management personnel, expiration of certain governmental tax and economic incentives, and other specific risks that may be referred to in this prospectus. It is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement. All statements, other than statements of historical facts, included in this prospectus regarding our expectations, objectives, assumptions, strategy, future operations, financial position, estimated revenue or losses, projected costs, prospects and plans and objectives of management are forward-looking statements.  When used in this prospectus, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “plan” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this prospectus. We undertake no obligation to update any forward-looking statements or other information contained herein. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this prospectus are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Information regarding market and industry statistics contained in this prospectus is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.  

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered and sold from time to time by Lincoln Park. We will not receive any proceeds upon the sale of shares by Lincoln Park. However, we may receive proceeds of up to $10,000,000 under the Purchase Agreement with Lincoln Park, subject to the terms and conditions of the Purchase Agreement.

We will retain broad discretion in determining how we will allocate the proceeds from any sales to Lincoln Park. Any proceeds that we receive from sales to Lincoln Park under the Purchase Agreement will be used for the following purposes: (i) up to 30% of any proceeds of this offering will be used to offer to redeem shares of our Common Stock held by certain investors; and (ii) the remaining proceeds will be allocated, in our discretion, to fund growth in our operations and to fund our investor relations.  We do not expect that the proceeds from this offering are necessary to continue the Company’s current ongoing operations.
 
 
22

 
 
CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2012, and the proforma impact of this offering on those financial statements had this offering been consummated at that date:

   
Actual
   
Pro Forma(2)
   
Pro-Forma
Adjusted (1)
 
                   
Cash
 
$
4,759,341
   
$
845,479
   
$
5,604,820
 
Deferred Offering Costs
   
-0-
     
244,399
     
244,399
 
                         
Total
 
$
4,759,341
   
$
1,089,878
   
$
5,849,219
 
                         
Common stock, $0.0001 par value; 100,000,000 authorized; 22,194,978 issued and outstanding
 
$
2,220
   
$
239
   
$
2,459
 
Convertible Series A preferred stock, $0.0001 par value; 4,820,000 issued and outstanding
   
2,526,660
             
2,526,660
 
Convertible Series B preferred stock, $.00001 par value; 5,966,792 issued and outstanding
   
11,392,403
             
11,392,403
 
                         
Additional paid-in capital (2)
   
8,597,904
     
1,476,844
     
10,074,748
 
Treasury stock (3)
   
(218,965
)
   
(387,205)
     
(606,170)
 
Noncontrolling interest in equity
   
1,386,144
             
1,386,144
 
Accumulated deficit
   
(15,203,112
)
           
(15,203,112)
 
Total stockholders’ equity
 
$
8,483,254
   
$
1,089,878
   
$
9,573,132
 

 
(1)
The number of shares of common stock outstanding in the table above excludes:
 
 
·
1,387,111 shares of our common stock available for future issuance under our 2008 Incentive Compensation Plan;
 
·
650,000 shares of our common stock issuable upon the exercise of outstanding warrants and options granted outside our 2008 Incentive Compensation Plan, with a weighted-average exercise price of $2.39 per share; and
 
·
10,786,792 shares of Preferred Stock convertible into Common Stock at a 1:1 ratio.
 
·
313,539 shares of common stock issued in April and July 2012 with respect to payment of dividends on Series A preferred stock.
 
 
(2)
Pro-forma amounts assume receipt of $845,479  in estimated proceeds from the sale of 1,985,668 shares of common stock issuable under the Purchase Agreement and registered in this offering (assuming a purchase price of $.65 per share, offering expenses of approximately $58,000, and use of 30% of proceeds for redemption of our common stock held by certain investors.  The 407,332 commitment shares were assumed issued at $.60 per share (closing price on June 15, 2012) and are included as deferred offering costs.
 
 
(3)
The Company has as of March 31, 2012, 189,604 shares held in treasury.  Assuming the redemption of 595,700 shares of common stock (which is equal to 30% of proceeds of this offering), the Company will have a total of 785,304 shares held in treasury.
 
DILUTION

Investors who purchase our common stock will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the number of outstanding shares of our common stock. As of March 31, 2012, we had a net tangible book value of approximately $8,483,000, or approximately $.38 per share of common stock.

Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of common stock in this offering, assuming a purchase price of $.65 per share, which is the minimum purchase price at which shares can be sold under the Purchase Agreement, and the pro forma as adjusted net tangible book value per share of common stock immediately after the completion of this offering. For purposes of the proforma calculations, it is assumed that 30% of any proceeds of this offering will be used to redeem Common Stock held by certain investors.

After giving effect to our assumed receipt of $845,479  in estimated proceeds from the sale of 1,985,668 shares of common stock issuable under the Purchase Agreement and registered in this offering (assuming a purchase price of $.65 per share, offering expenses of approximately $58,000, and use of 30% of proceeds for redemption of our common stock held by certain investors), our pro forma net tangible book value as of March 31, 2012 would have been $9,560,370 or $.40 per share (which is net of approximately $13,000 of intangible amounts). This would represent no immediate increase or decrease in the net tangible book value to existing shareholders attributable to this offering. The following table illustrates this per share dilution:
 
Assumed public offering price per share of common stock (minimum allowed price)
 
$
.65
 
         
Net tangible book value per share at March 31, 2012
 
$
.38
 
Increase in net tangible book value per share attributable to this offering
   
.02
 
Pro forma net tangible book value per share after this offering
 
$
.40
 
Dilution per share to new investors
 
$
.25
 
 
 
23

 
 
To the extent that we sell more or less than 1,985,668 of shares under the Purchase Agreement, or to the extent that some or all sales are made at prices in excess of the minimum allowable purchase price of $.65 per share, then the dilution reflected in the table above will differ. The above table is based on 22,194,178 shares of our common stock outstanding as of March 31, 2012, adjusted for the assumed sale of 2,393,000 in shares to Lincoln Park under the Purchase Agreement at the assumed minimum purchase price described above. In addition, the calculations in the foregoing table do not take into account, as of March 31, 2012:
 
 
·
1,387,111 shares of our common stock available for future issuance under our 2008 Incentive Option Plan;
 
·
650,000 shares of our common stock issuable upon the exercise of outstanding warrants and options granted outside our 2008 Incentive Compensation Plan, with a weighted-average exercise price of $2.39 per share; and
 
·
10,786,792 shares of Preferred Stock convertible into Common Stock at a 1:1 ratio.
 
·
313,539 shares of common stock issued in April and July 2012 with respect to payment of dividends on Series A preferred stock.

To the extent that options or warrants are exercised, new options are issued under our equity benefit plans, or we issue additional shares of common stock in the future, there may be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
 
 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and the related notes to those statements included later in this prospectus.  In addition to historical financial information, this discussion contains forward looking statements reflecting our current plans, estimates, beliefs and expectations that involve risk and uncertainties.  As a result of many important factors, particularly those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors”.  Our actual results may differ materially from those anticipated in these forward looking statements.

Overview

Juhl Wind succeeded to the wind farm development and management businesses of Juhl Energy Development and Juhl Energy Services through a securities exchange transaction among those parties in June 2008. The Company had previously become a reporting company as a result of the registration statement filed with the SEC in March 2007 which was declared effective in December 2007.

Juhl Wind is an established leader in community wind power development and management, focused historically on wind farm projects throughout the United States. We handle all aspects of wind project development, through our operating subsidiaries, including full development and ownership of wind farms, general consultation on wind projects, construction management of wind farm projects and system operations and maintenance for completed wind farms, which results in multiple revenue streams. Our primary focus has been to build 5 MW to 80 MW wind farms that are jointly owned by local communities, farm owners, environmentally concerned investors, and our Company. The wind farms are connected to the general utility electric grid to produce clean, environmentally-sound wind power. Our development of community wind power systems results in landowners owning a portion of the long term equity in the wind farm that resides on their land. We pioneered community wind power systems, in developing the currently accepted financial, operational and legal structure providing local ownership of medium to large scale wind farms. Since 1999, we have completed 21 wind farm projects, accounting for approximately 195 megawatts of wind power that currently operate in the Midwest region of the United States, and we provide operation management and oversight to wind generation facilities generating approximately 107 megawatts, through our subsidiary, Juhl Energy Services. We are presently engaged in various aspects of the development of approximately 25 new wind farm projects in the United States totaling approximately 400 megawatts of wind power.


How We Operate

The Company operates through the following subsidiaries (with further description provided below in “Business”)
 
Juhl Renewable Assets - renewable assets ownership
Juhl Energy Development - wind farm development
Juhl Energy Services - wind farm operations and maintenance services
Juhl Renewable Energy Systems - small scale renewables
Next Generation Power Systems - refurbished turbines and maintenance support
Power Engineers Collaborative - engineering services
 
The Company groups its operations into three business segments–Wind Farm Development and Management, Wind Farm Ownership and Operation, and Consumer-Owned Renewable Energy products.  The Company's business segments are separate business units that offer different products. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. Corporate assets include: cash and cash equivalents, short-term investments, deferred income taxes, and other assets.
 
 
24

 
 
Our wind farm development projects most commonly involve a fee contract with entities specially formed by local farmers upon whose land the wind turbines are installed. Revenue is also derived from our work in the development of wind farms throughout the development process including four major components: feasibility studies, development fees, operations and management oversight and construction contract revenue.

We hold contract rights, are involved with projects in development and under negotiation, and provide development activities in the wind power industry. Once wind farms are operational, we seek contract rights to provide administrative services agreements which call for management and administrative services to be provided to the operating wind farm, along with turbine and balance of plant maintenance services.  Our assets include five development services agreements, twelve projects in early development stages, and three agreements to conduct wind power feasibility studies.
 
The Wind Farm Ownership and Operation segment includes the sales of electricity generated from wind energy facilities, who have long-term, take-or-pay power purchase contracts with a utility purchaser. The electricity sales are typically billed on a monthly basis to the utility. The wind farms have operational expenses that generally include turbine and balance of plant maintenance fees, equipment repairs, land lease payments, administrative expenses, and debt service costs.
 
Due to the anticipated increased demand for electricity from alternative energy sources in 2012 and beyond, we believe the demand for wind energy developments and consumer-owned renewable energy products will be stable or will increase in the foreseeable future (even if the production tax credits expire). Our revenues have grown on an annual basis beginning in 2009; however, revenue will continue to be subject to shifts in timing due to project development delays resulting from our ability to obtain financing and the construction season in the Upper Midwest climate.

Factors Affecting Our Operating Results

Demand

Political factors have stressed the importance of renewable energy and U.S. energy independence, causing the demand for wind power in the United States to grow rapidly over the last several years.  We expect that the growth of wind power developments will be hampered over the next two years due to uncertainty over the direction of U.S. energy policies and low natural gas prices.  At the date of this report, Congress has not extended programs such as the production tax credit or cash grant program. These programs, which expire at the end of 2012, provide material incentives to develop wind energy generation facilities.  The uncertainty with respect to extension of these credits and incentives has placed the wind industry in a tentative position.  The development of wind energy projects requires extensive lead time, and the failure of Congress to extend or renew these incentives beyond the current 2012 expiration dates has already interrupted potential wind energy installations planned for 2013, as developers are shelving plans for wind projects We expect that further Congressional delay on action to renew or extend these incentives will likely result in additional deferral of wind energy generation facility development and will likewise negatively impact the demand for wind turbines, towers, and related components.  As a result, the continued Congressional delay or failure to extend or renew these or similar incentives in the future could have a material adverse impact on our business, results of operation, financial performance and future development efforts of wind energy projects.  

Although development of wind farms has been incentivized over the past 20 years by the PTCs and that the PTC’s are now set to expire, we believe there still is impetus in the United States to increase its generation of electrical power through renewable energy means. We believe that the market for community wind power and distributed generation projects will be maintained as a model for ongoing installations of wind power given the constraints of transmission capacity and utility power purchases that are currently affecting the growth of larger scale projects.   

Growth in wind power is being driven by several environmental, socio-economic and energy policy factors that include:

 
·
ongoing increases in electricity demand due to population growth and growth in energy consuming devices such as computers, televisions and air conditioning systems, as coal and oil resources need replacing;
 
 
·
the fluctuating costs of the predominant fuels required to drive the existing fleet of conventional electric generation such as coal, natural gas, nuclear and oil, especially as recent low (subsidized) wind prices are roughly competitive with natural gas;
 
 
·
existing and growing legislative and regulatory mandates for “cleaner” forms of electric generation, including state renewable portfolio standards and the U.S. federal tax incentives for wind and solar generation, including the Recovery and Reinvestment Act enacted in February 2009 (although PTCs are set to expire at December 31, 2012, unless extended by Congress) ;
 
 
·
the expectancy that the Environmental Protection Agency will enact regulations and standards accelerating the retirement of aging coal plants and impacting the life of natural gas plants, thus increasing the need for replacement of resources;
 
 
·
uncertainty surrounding the growth potential of nuclear power plants;
 
 
·
wind projects have shorter development timeframe than natural gas plants and have greater flexibility to adapt to changing conditions;
 
 
·
worldwide concern over greenhouse gas emissions and calls to reduce global warming due to the carbon dioxide produced by conventional electric generation; and
 
 
·
newer wind turbine models are becoming more efficient (such as advances in wind turbine blade aerodynamics, development of variable speed generators, advances in remote operation and monitoring systems, improvements in wind monitoring and forecasting tools and advances in turbine maintenance) and offer improved capacity factors, and together with cost competition among suppliers, wind power systems have become more competitive with coal and gas on a dollar-per-megawatt-hour basis.
 
 
25

 
 
We can provide full-scale development of wind farms across the range of required steps including performing initial feasibility studies, assisting in power purchase agreement negotiations, arranging equity and debt project financing, providing equipment and  construction services, and managing operations.  Further, we will continue to develop our capabilities in the renewable energy space with development of distributed generation projects, such as wind facilities that can be utilized by large corporations interesting in being green, or solar projects. Thus, we believe it is necessary to evolve and diversify in our asset, product and service portfolio to reduce our exposure to uncertainty related to the extension or renewal of tax incentives and other favorable governmental policies currently supporting the U.S. wind industry.
 
Debt and Equity Financing Markets

Although demand for wind power is likely to increase for reasons described above, arranging project financing, particularly construction financing, has become increasingly difficult. The timing of the Company’s construction and turbine supply revenues associated with the development of wind farms is heavily impacted by the ability to complete debt and equity financing arrangements.

Wind farm development projects are dependent on the ability to raise debt and equity financing to fund the turbine and substation components, construction costs and other development expenses. We assist project owners in identifying sources of debt and equity capital as a part of our development efforts. We have expended significant efforts on behalf of our construction-ready wind farm projects to identify sources of debt and equity financing in order to proceed to the actual construction phase. The debt and equity sources include some financiers who are based in foreign countries and have experience in wind energy projects. It is our belief that many community wind farm project owners and developers across the U.S. are facing similar difficulties in arranging project financing as well, particularly construction financing. The difficulties in obtaining project financing is  especially  evident within banking institutions who have liquidity issues resulting from the recent recessionary conditions and a banking crisis that has led to U.S. government bailout programs in 2008. In light of the difficulties in arranging project financing, we are observing that turbine suppliers are also becoming a source of capital in the construction financing of wind farm projects. We expect credit conditions to improve and we will assist project owners in examining federal and loan guarantee programs as an additional means of securing project financing.
 
Our wind farm development projects are financed with a combination of debt, tax equity financing and other equity capital. At the initial stage of a project's development, we use a combination of equity capital and turbine supply loans to cover development expenses and turbine costs. Turbine supply loans are employed to finance a majority of the cost of a project's turbines. Once a project moves to the construction phase, we use a combination of equity capital and construction loans to finance the construction of the project, and also using our balance sheet and the resources of subcontractors for funding balance of plant and start-up costs.  Proceeds from the construction loans are typically used to fund construction and installation costs as well as to retire the turbine supply loans. Finally, once a project is complete and commercial operations begin, we permanently finance the project through a combination of term loans, tax equity financing transactions or other fixed-rate mezzanine capital, the proceeds of which are used to retire the construction loans and pay other service providers.
 
Further, we expect that with the elimination of the PTCs on December 31, 2012 (unless an extension is passed by Congress), financing will shift from unleveraged tax equity to more traditional project financing which has proven difficult.  Thus, alternative financing arrangements, such as vendor financing for construction costs, will become imperative in any wind development project, which is a type of financing we have used for a number of our projects. This has also caused our revenue levels to fluctuate as wind farm development fees is significantly affected by the investment and financing of projects.

We believe that we have the ability to raise additional preferred stock monies through our subsidiary, Juhl Renewable Assets, and deploy this capital into our future project developments, and that there is sufficient interest by individual investors and private equity funds that desire to make renewable energy investments with a fixed rate of return.
 
 
26

 
 
Site Selection

Wind is intermittent and electricity generated from wind power can be highly variable. Good site selection and advantageous positioning of turbines on a selected site are critical to the economic production of electricity by wind energy. In our experience, the primary cost of producing wind-powered electricity is the turbine equipment and construction cost. As an intermittent resource, wind power must be carefully positioned into the electric grid along with other generation resources and we believe Juhl Wind has demonstrated the expertise necessary to work with local electric utilities to affect the proper integration plan.  As such, we intend to continue to identify new sites to produce wind energy through the community wind power model throughout the United States and Canada with a focus on the Midwestern region of the U.S.
 
Site selection also includes identification of sites that we believe may be suitable for development, and basic analysis of site viability for wind development projects. We make initial assessments of potential sites for our community wind farms based on a number of criteria, including topography; wind resource suitability; construction access; access to transmission networks; site size; land ownership; and environmental, zoning and other local and state laws and regulations. We make these assessments taking into account our business and operating strategy. We then proceed with an initial environmental screening, usually conducted on the basis of public available information and sometimes supplemented with a site visit by a qualified professional to identify environmentally sensitive areas. Once a site passes this initial review, we begin more detailed site-specific environmental assessments in connection with our permitting efforts, and establish constraints for turbine siting and civil and site engineering. These typically include detailed mapping and other studies, all aimed at ensuring that we may safely operate a potential project without detrimental impact on the local environment.
 
Our site selection effort is based on establishing close working relationships with local permitting authorities, communities and other local stakeholders, such as farmers. We believe that by entering into dialogue with these groups early, we are better able to incorporate local concerns into our site assessment, leading to effective permit applications and expedited completion of our projects.  We believe our ability to understand and interpret site information has been and will continue to be a key factor in our success in identifying desirable project sites for our community wind farm developments.  
 
Basis of Presentation
 
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles and the rules and regulations of the SEC.

We acquired the wind farm development and management business of Juhl Energy Development and Juhl Energy Services, and Juhl Energy Development and Juhl Energy Services became our wholly-owned subsidiaries. For accounting purposes, Juhl Energy Development was the acquirer in the share exchange transaction, and consequently the transaction is treated as a recapitalization of the company. Juhl Energy Services was accounted for in a manner similar to pooling of interests due to common control ownership.

In October 2008, we acquired all of the issued and outstanding shares of common stock of NextGen. Our acquisition of NextGen was accounted for in a manner similar to pooling of interests due to common control ownership. The assets and liabilities of NextGen were combined at historical cost for the portion (54%) under common control and at fair value for the non-controlling interest.  The activities of NextGen are included in the accompanying consolidated financial statements.

On May 19, 2010, we formed Juhl Renewable Assets, Inc. ("Juhl Renewable Assets" formerly Juhl Wind Asset Investment, Inc. and Juhl Wind Project Lending, Inc.), in the state of Delaware, as our wholly-owned subsidiary.  Juhl Renewable Assets revenue and expense activities will be reported on our financial statements on a consolidated basis in a similar manner as to Juhl Energy Services, Juhl Energy Development and NextGen.  

On April 29, 2011, we acquired 99.9% of the membership interests of Woodstock Hills LLC (“Woodstock Hills”), a 10.2 MW wind energy facility.  The financial activities of Woodstock Hills have been consolidated into our financial statements subsequent to the purchase date.
 
On October 13, 2011, Juhl Renewable Assets became a 100% equity owner in Winona Wind Holdings, LLC (“WWH”), which in turn owns 100% of the Winona County Wind, LLC (“WCW”), the operator of a 1.5 MW wind energy facility. Prior to this acquisition, we had been consolidating the financial activities of WCW as a variable interest entity.  The financial activities of WWH and WCW were already incorporated into our consolidated financial statements prior to this acquisition.

On April 30, 2012, Juhl Wind became the sole equity owner in Power Engineers Collaborative, L.L.C., an Illinois limited liability company (“PEC”), which provides engineering services to clients in the energy, industry and building systems markets.  Since PEC was acquired subsequent to March 31, 2012, it has not yet been incorporated into our consolidated financial statements, but will be consolidated in the financial statements for the period ended June 30, 2012.
 
 
27

 
 
Generally accepted accounting principles require certain variable interest entities (“VIE”s) to be consolidated if a party with an ownership, contractual, or other financial interest in the VIE (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary.  Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and non-controlling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. Juhl Wind has determined that  Valley View Transmission, LLC (“Valley View”), a 10 MW wind farm that reached commercial operation in November 2011, is a VIE and that Juhl Wind is the primary beneficiary. Our financial statement footnotes describe in more detail the considerations made in determining that Valley View is a VIE, including the equity investment made in the Valley View project at the time of commercial operation.

Woodstock Hills, Valley View and Winona are wind energy generating facilities and in that regard, those activities are considered a new segment in our financial statement disclosures called Wind Farm Ownership and Operation.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this report.
 
Significant Accounting Estimates
 
We review all significant estimates affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustment prior to their publication. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of consolidated financial statements; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company uses estimates and assumptions in accounting for the following significant matters, among others: revenue recorded from the development agreements and construction contract revenue; realizability of accounts and promissory notes receivable; valuation of deferred tax assets, stock based compensation and warrants, asset retirement obligations, determination of the primary beneficiary of a variable interest entity, derivative instruments, and other contingencies. Revenue from the development agreements is adjusted to reflect actual costs incurred by the project upon the commercial operation date.  Accordingly, actual revenue may differ from previously estimated amounts, and such differences may be material to the financial statements. The Company periodically reviews estimates and assumptions, and the effects of any such revisions are reflected in the period in which the revision is made.
 
Our management has discussed the development and selection of these significant accounting estimates with our board of directors and our board of directors has reviewed our disclosures relating to them.

Results of Operations of the Three Months Ended March 31, 2012 Compared to Three Months ended March 31, 2011

Revenue

Total revenue decreased by approximately $5,385,000, or 81.7%, from approximately $6,591,000 for the quarter ended March 31, 2011, to approximately $1,206,000 for the quarter ended March 31, 2012.

A comparison of our revenue for the quarter ended March 31, 2012 and 2011 is as follows:
 
   
March 31,
2012
   
March 31,
2011
   
Change
   
% Change
 
JEDI:
                       
Wind farm development
 
$
27,892
   
$
5,101,071
   
$
(5,073,179
)
   
(99.5
)%
Construction
   
-
     
1,265,504
     
(1,265,504
)
   
(100.0
)
JESI:
                               
Management and maintenance
   
294,477
     
159,801
     
134,676
     
84.3
 
NextGen/JRES:
                               
Small scale solar and wind
   
36,999
     
65,035
     
(28,036
)
   
(43.1
)
JRA:
                               
Electricity Sales
   
846,991
     
-0-
     
846,991
   
inf
 

Total
 
$
1,206,359
   
$
6,591,411
   
$
(5,385,052)
     
(81.7)
%


Juhl Energy Development (JEDI)
The decrease in wind farm development revenue is primarily attributable to approximately $4,988,000 of wind farm development fee revenue from three wind farm construction projects that completed financing arrangements during the first quarter of 2011, whereas we recorded only approximately $28,000 in the first quarter of 2012.
 
 
28

 
 
The decrease in construction revenues of approximately $1,266,000 over the quarter ended March 31, 2011 was related to having one construction project in process for 2011 and none in 2012.  

Our wind farm development and construction revenues for 2012 are dependent on our ability to successfully complete financing, permitting and turbine arrangements with respect to two late-stage development projects comprising approximately 10 MW.  Depending on the financing arrangements, we may ultimately be unable to report revenue from construction and development if we are considered the primary beneficiary due to variable interest entity rules.  We do expect that the Crofton Hills wind farm, which we sold our development rights in 2011, will be completed in 2012 and therefore allow the recognition of $500,000 of deferred revenue in 2012.  
 
Juhl Energy Services (JESI)
Revenue from wind farm administration, management and maintenance service increased by approximately $135,000 over the quarter ended March 31, 2011.  The increase is primarily attributable to administrative services agreements for approximately 107 MW of wind farms, of which 22 MW relate to companies whose revenues are eliminated in consolidation.
 
We expect that our overall 2012 revenues will increase by $150,000 as a result of getting a full year run rate on existing service contracts that commenced in 2011. In addition, we have made bid proposals on existing wind farms for maintenance services and to the extent we are successful in our bids, our revenues will grow accordingly.
 
Juhl Renewable Assets (JRA)
In 2011, we acquired ownership in three wind farms (Woodstock Hills, Winona County and Valley View) and our consolidated financial statements include the operations of these entities.  At March 31, 2011, we had no significant ownership investments in wind farms and therefore we reported no electricity sales revenues.
 
Revenue for electricity sales for the period ended March 31, 2012 was approximately $847,000.  This amount was adjusted downward by $120,000 during the quarter ended March 31, 2012 based on the use of an accounting revenue recognition policy that reduces the current billing amounts to the average rate over the remainder of the power purchase contract and the accounting over an unfavorable PPA contract.

Next Generation Power Systems/Juhl Renewable Energy Systems (NextGen/JRES)
 Revenues from the sales and services of small scale wind and solar products and services decreased by approximately $28,000 for the quarter ended March 31, 2012 from the quarter ended March 31, 2011.  The decrease which was primarily related to the fact that NextGen did not sell any refurbished turbines during the period ended March 31, 2012. NextGen has discontinued selling refurbished small turbine units and revenues will decrease as a result except for periodic maintenance and repair services.  The JRES subsidiary is in the process of completing a new turbine design and testing of a new prototype model, and as such, its revenues will be delayed until design and test activities are completed within the next twelve months. JRES is also seeking to build revenue streams from the Solarbank product line but any significant revenues will probably not occur until 2013 as we seek to enhance our production and distribution capabilities.
 
Cost of Goods Sold

Cost of goods sold decreased by approximately $286,000, or 36.1% from approximately $792,000 for the quarter ended March 31, 2011 to approximately $506,000 for the quarter ended March 31, 2012. The decrease is primarily attributable to approximately $654,000 of construction costs that were incurred in 2011 compared to no such costs in the period ended March 31, 2012, offset by $429,000 of costs of sales relating to wind farm operations whereas we had no wind farm operations costs in 2011.
 
Gross margins decreased by approximately $5,099,000, which is primarily attributable to the decrease in development fee revenue noted above. Expenses related to development fee revenue are primarily payroll costs that are shown in the operating expense section.
 
Operating Expenses

General and Administrative Expenses.   General and administrative expenses increased by approximately $75,000 or 16.1%, from approximately $466,000 for the quarter ended March 31, 2011 to approximately $541,000 for the quarter ended March 31, 2012. For purposes of financial statement reporting at March 31, 2012, we have now combined investor relations expense as part of general and administrative operating expense.  The increase of $75,000 for the quarter ended March 31, 2012 was primarily attributable to an increase in professional fees of approximately $115,000 as a result of increased usage of professional services for due diligence costs associated with business acquisition activity and other business requirements associated with being a public company.  Investor relations expenses, which are now included in general and administrative expenses decreased by approximately $85,000 compared to the prior year as we reduced our level of spending from a year ago associated with communications to increase exposure of Juhl Wind.
 
 
29

 
 
Payroll and Employee Benefits.   Payroll and employee benefits expenses decreased by approximately $77,000, or 14.4%, from approximately $536,000 for the quarter ended March 31, 2011 to approximately $459,000 for the quarter ended March 31, 2012.   The $77,000 decrease over the three months ended March 31, 2012 was primarily attributable to a decrease of $91,000 in non-cash stock based compensation expense, offset by salary increases during the period.  The employee head count did not change materially over the past year.  Payroll related to maintenance services employees are considered as a part of cost of goods sold.
 
Wind Farm Administration Expenses.   Wind farm administration expenses represent costs that we incur to perform administrative services with respect to our management services contracts, as well as the general and administrative expenses incurred directly within the three wind farm entities that we are consolidating. Wind farm administration expenses increased by approximately $109,000, or 592.3%, from approximately $18,000 for the quarter ended March 31, 2011 to approximately $127,000 for the quarter ended March 31, 2012.  The increase in expenses resulted primarily attributable to the full year run rate on the Grant County project.
 
Other Income (expenses).  Other income and expenses during the first quarter of 2012 primarily consists of interest expense of approximately $269,000 relating to the Valley View wind farm nonrecourse bank loan and construction financing.  The interest income and interest expense in the prior year of approximately $139,000 and $164,000 primarily relates to the promissory notes receivable and payable, respectively, held in conjunction with the construction of the Grant County and Valley View wind farms.

Operating Income (Loss)

Our operating loss represents a decrease of approximately $5,206,000, from an operating income of approximately $4,779,000 for the quarter ended March 31, 2011 compared to operating loss of approximately $427,000 for the quarter ended March 31, 2012. The increase in operating income for the quarter ended March 31, 2012 is primarily attributable to the decrease in development activity noted above.

Net Income (Loss)

Net income decreased by approximately $3,216,000, or 114.8%, from a net income of approximately $2,802,000 for the quarter ended March 31, 2011 to net loss of approximately $414,000 for the quarter ended March 31, 2011.  The decrease in net income from the period ended March 31, 2011 is largely attributable to the decreased revenue sources from development fee revenue noted in the revenue section above, net of a year-to-year reduction in our income tax provision of $2,219,000.

The net loss in the quarter ended March 31, 2012 is indicative of the inconsistent revenue patterns of our wind farm development services business as revenue recognition is significantly impacted by the timing of the development fee revenue.

Results of Operations of the Fiscal Year December 31, 2011 Compared to the Fiscal Year Ended December 31, 2010
 
Revenue
 
Total revenue increased by approximately $9,310,000, or 148.5%, from approximately $6,268,000 for the year ended December 31, 2010, to approximately $15,578,000, for the year ended December 31, 2011.

A comparison of our revenue for the years ended December 31, 2011 and 2010 is as follows:
 
   
December 31,
2011
   
December 31,
2010
   
Change
   
% Change
 
JEDI:
                       
Wind farm development
 
$
8,288,191
   
$
255,538
   
$
8,032,653
     
3143.4
%
Construction
   
5,242,048
     
4,648,616
     
593,432
     
12.8
 
JESI:
                               
Management and maintenance
   
1,076,798
     
583,827
     
492,971
     
84.4
 
NextGen/JRES:
                               
Small scale solar and wind
   
364,816
     
780,162
     
(415,346
)
   
(53.2
)
JRA:
                               
Electricity Sales
   
605,804
     
-0-
     
605,804
   
inf
 
Total
 
$
15,577,657
   
$
6,268,143
   
$
9,309,514
     
148.5
%
 
 
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Juhl Energy Development (JEDI)
Wind farm development revenue, increased by approximately $8,033,000 from approximately $256,000 for the year ended December 31, 2010 to approximately $8,288,000 for the year ended December 31, 2011.  The increase in revenue over the year ended December 31, 2010 is primarily attributable to wind farm development fee revenue earned from five wind farm projects that completed construction and financing arrangements during 2011, and one additional project where we recognized approximately $1,679,000 in net proceeds from the sale of our development work-to-date for cash. There was only one completed project in 2010.

Our construction revenues increased by approximately $593,000 over 2010.  This increase in construction contract revenue in 2011 is primarily related to having four construction projects (51.5 MW) during the year ended December 31, 2011 compared to two projects (21 MW) under construction during the year ended December 30, 2010. Two of the four projects in 2011 were limited to construction advisory services arrangements.
 
At December 31, 2011, we had no projects under construction and as such, our wind farm development and construction revenues for 2012 are dependent on our ability to develop and construct two late-stage development projects comprising 7 MW.  We do expect that the Crofton Hills wind farm, which we sold our development rights in 2011, will be completed in 2012 and therefore allow the recognition of $500,000 of deferred revenue.

Juhl Energy Services (JESI)
Revenue from wind farm administration, management and maintenance service increased by approximately $493,000 over 2010.  The increase is primarily attributable to $317,000 of increased turbine maintenance service contract revenues from three new wind farms in 2011, where we provided turbine maintenance revenues to 51 MW of wind farms in 2011 compared to 11 MW of wind farms in 2010. In addition, our management services revenues increased by $189,000 over 2010 as a result of adding one new wind farm administrative services contract. JESI currently has administrative services agreements for approximately 107 MW of wind farms, of which 22 MW relate to companies whose revenues are eliminated in consolidation.
 
We expect that our 2012 revenues will increase by $150,000 as a result of getting a full year run rate on existing service contracts that commenced in 2011. In addition, we have made bid proposals on existing wind farms for maintenance services and to the extent we are successful in our bids, our revenues will grow accordingly.
 
Juhl Renewable Assets (JRA)
 In 2011, we acquired ownership in three wind farms (Woodstock Hills, Winona County and Valley View) and our consolidated financial statements include the operations of these entities. In 2010, we had no significant ownership investments in wind farms.
 
Revenue for electricity sales in 2011 was $605,000.  This amount was adjusted downward by $300,000 during 2011 based on the use of an accounting revenue recognition policy that reduces the current billing amounts to the average rate over the remainder of the power purchase contract and the accounting over an unfavorable PPA contract.

Next Generation Power Systems/Juhl Renewable Energy Systems (NextGen/JRES)
 
Revenues from the sales and services of small scale wind and solar products and services decreased by approximately $415,000 for the year ended December 31, 2011 from December 31, 2010.  The $415,000 decrease which was primarily related to a lower sales volume by NextGen of refurbished wind turbines (8 units in the period ended December 31, 2010 versus 3 units over the same period in 2011). NextGen has discontinued selling refurbished small turbine units and revenues will decrease as a result except for periodic maintenance services.  The JRES subsidiary is in the process of completing a new turbine design and testing of a new prototype model, and as such, its revenues will be delayed until design and test activities are completed within the next twelve months. JRES is also seeking to build revenue streams from the Solarbank product line but any significant revenues will probably not occur until 2013 as we seek to enhance our production and distribution capabilities.
 
Cost of Goods Sold
 
Costs of goods sold increased by approximately $1,123,000, or 22.9% in 2011, from approximately $4,894,000 for the year ended December 31, 2010 to approximately $6,017,000 for the year ended December 31, 2011.  The increase of $1,123,000 in cost of goods sold for the year ended December 31, 2011 is primarily attributable to the inclusion of wind farm operating costs of $502,000 (including depreciation) whereas there were none in 2010;  a $500,000 project payment made to Grant County local owners for their participation and assistance in project matters and completion of the wind farm;  increased construction costs  and maintenance services expenses attributable to a growth in revenue volume; and offset by approximately $530,000 in reduction in cost of sales related to reduction in the amount of NextGen small turbine sales.   Cost of goods sold amounts will fluctuate on a comparative basis since a substantial amount of the project costs are incurred in the first three months of the project construction period.
 
Gross margins increased by approximately $8,187,000, which is primarily attributable to the increase in development fee revenue noted above. Expenses related to development fee revenue are primarily payroll costs that are shown in the operating expense section.
 
 
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Operating Expenses
 
General and Administrative Expenses.  General and administrative expenses increased by approximately $520,000, or 32.3%, from approximately $1,610,000 for the year ended December 31, 2010 to approximately $2,130,000 for the year ended December 31, 2011. For purposes of financial statement reporting at December 31, 2011, we have now combined investor relations expense as part of general and administrative operating expense.  The increase of $520,000 for the year ended December 31, 2011 was primarily attributable to an increase in investor relations expense of approximately $417,000  Such increase was due to our expanded investor relations communications to increase exposure of Juhl Wind as a result of our increased wind farm development and acquisition activities.  We incurred increased expenses in the area of legal and professional fees of approximately $107,000 as a result of our three wind farm acquisitions, registration statement, and involvement with the higher level of wind farm development and construction activity.

In addition, we note that our general and administrative expenses decreased for the year ended December 31, 2011 by approximately $73,000 due to prior year costs associated with the investigation of the small wind turbine manufacturing and distribution considerations, and we experienced expense increases of $83,000 and $40,000 in 2011 for advertising and travel, respectively.

Payroll and Employee Benefits.  Payroll and employee benefits expenses decreased by approximately $152,000, or 6.3%, from approximately $2,427,000 for the year ended December 31, 2010 to approximately $2,275,000 for the year ended December 31, 2011.  The $152,000 decrease over the twelve months ended December 31, 2011 was primarily attributable to a decrease of $214,000 in non-cash stock based compensation expense, offset by payments of approximately $45,000 to two officers who delayed a pay rate increase in 2010 to assist the Company with cash flow.  The overall employee count increased by two employees over 2010, primarily in the maintenance services area, and payroll related to maintenance services employees are considered as a part of cost of goods sold.
 
Wind Farm Administration Expenses.  Wind farm administration expenses represent costs that we incur to perform administrative services with respect to our management services contracts, as well as the general and administrative expenses incurred directly within the three wind farm entities that we are consolidating.  Wind farm administration expenses increased by approximately $184,000, or 220.4%, from approximately $84,000 for the year ended December 31, 2010 to approximately $268,000 for the year ended December 31, 2011.  The increase in expenses resulted primarily attributable to the following:  1) $129,000 in contractual payments made to local owners of the Grant County Wind project for project management purposes, and 2) inclusion of the Woodstock Hills, Valley View and Winona wind farm management and maintenance expenses of $53,000 to operate the wind farm since the April 29, 2011 acquisition date, including depreciation.
    
Other Income (expenses). Other income and expenses for the year ended December 31, 2011 include approximately $361,000 and $362,000 of interest income and interest expense, respectively, with respect to the promissory notes receivable and payable held in conjunction with the construction of the Grant County, Valley View and Winona wind farms. In 2011, we recorded a $320,000 loss for our share of net losses from Valley View between the time of our original equity investment in March 2011 and prior to the time of the acquisition in November 2011.  We also recorded a $320,000 gain related to remeasuring the original book value of our Valley View equity investment to fair value as a result of consolidating Valley View.
 
Operating Income (Loss)
 
Our operating income increased by approximately $7,634,000, or 278.0%, from an operating loss of approximately $2,746,000 for the year ended December 31, 2010 to operating income of approximately $4,888,000 for the year ended December 31, 2011.  The increase in operating income for the year ended December 31, 2011 is primarily attributable to the increase in development fee revenue of $8,033,000 earned from the completion of five wind farm developments and the sale of development work-to-date on one project, and approximately $430,000 revenue earned from two construction advisory services contracts.
 
Net Income (Loss)
 
Net income increased by approximately $4,842,000, or 269.0%, from a net loss of approximately $1,800,000 for the year ended December 31, 2010 to approximately $3,042,000 for the year ended December 31, 2011.  The increase in net income over the period ended December 31, 2011 is largely attributable to the increase in revenue sources noted under revenue and operating income sections above.

The net loss in the year period ended December 31, 2010 is indicative of the inconsistent revenue patterns of our wind farm development services business as revenue recognition is significantly impacted by the timing of the development fee revenue.
 
 
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Changes in the Financial Condition for the Period ended March 31, 2012 and December 31, 2011

Accounts Receivable

Traditional credit terms are extended to customers in the normal course of business. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral.

Accounts receivable of approximately $637,000 at March 31, 2012 included approximately $362,000 from a credit-rated utility.  The December 31, 2011 accounts receivable included approximately $1,635,000 for construction activities of a 4.95 MW wind farm, which was collected in February 2012 along with the receipt of the $6,284,000 U.S. Treasury cash grant receivable for the Valley View wind farm in March 2012.

Property and Equipment

As of March 31, 2012 and December 31, 2011, we held approximately $25,599,000 and $25,846,000 in net book value of property and equipment, respectively. The assets include approximately $25,681,000 (at original cost) in wind turbine assets of the Woodstock Hills, Valley View and Winona wind farms in 2011.

As of December 31, 2011 and December 31, 2010, we held $25,846,000 and $489,000 in net book value of property and equipment, respectively. The significant increase is related to the acquisition of $25,681,000 in wind turbine assets of the Woodstock Hills, Valley View and Winona wind farms in 2011.

The wind farm assets were booked at fair value at the time of the acquisition for the Woodstock Hills and Valley View entities, and at book value for Winona due to common control.  Other assets included in property and equipment includes land, buildings, office equipment, shop equipment and service vehicles.

Liquidity and Capital Resources

Juhl Wind, as a holding company, does not directly operate or have any ownership in any revenue-producing generation facilities. Thus, it has no material assets other than the stock of its subsidiaries and depends upon transfers of funds from its subsidiaries to meet its obligations.

At March 31, 2012, we carried approximately $5,708,000 in cash and short term-investments on the balance sheet (excluding restricted cash).  At December 31, 2011, we carried approximately $6.2 million in cash and short term-investments on the balance sheet (excluding restricted cash).   However, approximately $383,000 of the short-term investments has been designated as security for the bank notes payable of approximately $360,000 and therefore has been reflected in current assets as a restricted short-term investment on the consolidated balance sheets.  In order to provide additional protection to our cash reserves, we have obtained a $1.5 million letter of credit facility that provides security for the deposits that may not otherwise be insured through the Federal Deposit Insurance Corporation.  

Our unrestricted cash position decreased by approximately $108,000 for the quarter ended March 31, 2012 over the quarter ended December 31, 2011. As mentioned above under accounts receivable, we were able to collect certain significant receivables and therefore controlled the total amount of net cash outflow for the quarter.  Based on our anticipated level of revenues and cash position, we believe that funds generated from existing contractual agreements, together with existing cash resources, will be sufficient to finance our operations and planned capital expenditures through the next 24 months.  Our cash position improved by approximately $4.5 million over 2010 as a result of the completion of five wind farm development projects and related financings in 2011, together with the sale of the development rights and work-to-date on one other project. These events significantly enhanced our liquidity and capital resources, but we did provide for certain guarantees and warranties in conjunction with these events as we have mentioned in the financial statement footnotes and under Off-Balance Sheet Arrangements below.

During 2011, we made equity investments in three wind farms totaling 21.7 MW for a combined investment of approximately $2.3 million. Our net outlay of cash for these investments was approximately $600,000, and the remainder was accomplished by converting approximately $1,700,000 of our earned construction or development fees from the underlying projects.  We had not previously owned any wind farms prior to 2011. We expect to continue investigating wind farm acquisition opportunities as the marketplace appears to have owners, such as utilities or large developers, who are interested in selling projects where tax benefits have been depleted or simply that the ownership interests are no longer a fit for the organization.
 
Our investment in three wind farms during 2011 allows us to take advantage of accelerated depreciation deductions, or bonus depreciation, for federal income tax purposes. This provides us with significant benefits to offset our taxable income sources in 2011, and will provide net operating loss deductions in future years.

Development fees have represented a significant component of our revenue streams in the past.  Such fees are premised on contractual agreements and the ultimate realizability of these revenues is dependent on reaching commercial operation and final financing of wind farm projects. This does cause the timing of our revenue streams to be inconsistent as we are dependent on successful construction conditions such as weather as well as assisting in the closing of funding which normally has numerous legal conditions.
 
 
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Our balance sheet at March 31, 2012 includes a promissory note payable of approximately $2,800,000 to a turbine supplier for amounts due for turbines on the Winona project.  The note was initially payable in April 2012 based on additional project financing. The Company continues to seek long-term financing for this project. In lieu of a refinancing, the note is payable through free cash flows available from the Winona project, and as such,  approximately $2,566,000 has been classified as long-term based on our assessment of future cash flows that are expected beyond one year. The Company has a secured interest in the Winona project. In the event that the Company does not make the free cash flow payments from the Winona project available to the turbine supplier, this could put the Company into an event of default.
 
On April 30, 2012, we used $1,000,000 of our cash balances to acquire PEC per the purchase agreement. We expect that PEC operations will not require any further cash requirements over the foreseeable future.

We are currently analyzing existing wind farm portfolios of owners who may be interested in selling their interests. We would expect to utilize some of our cash resources in conjunction with resources that we believe will be available to us from outside debt or equity resources.

We will continue our internal efforts to assist our project owners in arranging financing terms for each project under development.  The ability to assist project owners with obtaining debt and equity financing is a material factor in producing our future development fee revenue streams and cash flow. We expect that we will be required to obtain interim vendor financing from turbine suppliers or a BOP subcontractor, and we are typically required to grant a security interest to those suppliers.  The security agreement allows the supplier to step-into our developer rights that we have to the project entity, after a passage of time typically 180 days from project completion.

Net Cash – Operating Activities
Net cash used in operating activities increased by approximately $3,444,000, from the net cash provided by operating activities of approximately $3,297,000 for the quarter ended March 31, 2011 to net cash used in operating activities of approximately $147,000 for the quarter ended March 31, 2012. The change in net cash used in operating activities of $3,444,000 is primarily due to the collection in 2011 of wind farm development and construction advisory fees from the Meeker County projects of approximately $2,300,000, construction and cost reimbursements from Grant County of approximately $460,000 and receipt of a $1,000,000 cash advance relating to the sale of development rights. We will continue to manage operating expenses for cash flow control as we seek to diversify our revenue base, such as with the acquisition of PEC and three wind farms in 2011.

Net cash provided by operating activities increased by approximately $7,095,000, from the net cash used in operating activities of approximately $1,620,000 for the year ended December 31, 2010 to net cash provided by operating activities of approximately $5,475,000  for the year ended December 31, 2011. The change in net cash provided by operating activities of $7,095,000 is primarily due to the collection of wind farm development and construction advisory fees from the Meeker County wind projects of approximately $4,200,000, collection of the Grant County wind farm development fee of approximately $1,700,000 and receipt of $1,700,000 in net proceeds from the sale of development work-to-date on the Crofton Hills wind project, together with increased gross margins from maintenance and construction activities.   In addition, we have worked with our primary construction subcontractors to either defer payments via a promissory note or payments outside a normal 30 day operation cycle.  We will continue to manage payments of accounts payable related to project-related expenses to coincide with billings on these projects and to obtain temporary financing arrangements, if considered necessary, to provide cash for project construction.

Net Cash – Investing Activities
Net cash provided by investing activities increased by approximately $5,942,000, from the net cash provided by investing activities of approximately $265,000 for the quarter ended March 31, 2011 to net cash provided by investing activities of approximately $6,207,000  for the quarter ended March 31, 2012.  The increase is primarily attributable to the receipt of U.S. Treasury Section 1603 cash grant in the amount of $6,284,476.  

Net cash used in investing activities decreased by approximately $259,000, from the net cash used in investing activities of approximately $550,000 for the year ended December 31, 2010 to net cash used in investing activities of approximately $291,000  for the year ended December 31, 2011.   The decrease is primarily attributable to the receipt in 2011 of a $1,413,000  cash grant received in December 2011 from the U.S. Treasury relating to the Winona wind farm project, and offset by net cash investments made to acquire the Woodstock Hills, Valley View and Winona wind farms of $219,000, a $280,000 purchase of a minority equity interest investment in a unrelated company, and $205,000 in property additions unrelated to wind farms. We made similar amounts of cash payments of approximately $1,100,000 in both 2011 and 2010 for project development costs (primarily the Winona project).

Net Cash – Financing Activities
Net cash flow used in financing activities increased by approximately $6,651,000, from the net cash flow provided by financing activities of approximately $99,000 for the quarter ended March 31, 2011 to approximately to net cash used in  financing activities of approximately $6,551,000 for the quarter ended March 31, 2012.  The increase in cash used in financing activities is primarily attributable making the payments made to a bank and vendors from the cash grant as described about under investing activities.
 
 
34

 

Net cash flow used in financing activities increased by approximately $592,000, from the net cash flow provided from financing activities of approximately $14,000 for the year ended December 31, 2010 to net cash used in financing activities of approximately $578,000 for the year ended December 31, 2011. The increase in cash used for financing activities is primarily attributable to using cash to make approximately $143,000 of stock repurchases relating to our October 2010 stock buyback program,  $183,000 cash dividend payments to a Series A Preferred Stock shareholder for two quarterly dividend payments,  $320,000 of principal payments on nonrecourse debt and bank notes, and offset by $180,000 in cash raised from the sale of a new issue of preferred stock by our subsidiary, Juhl Renewable Assets.   In addition, there were new bank borrowings in 2011 of approximately $704,000 relating to the closing of the Valley View loan, and approximately all of these proceeds together with an additional $102,000 (combined total $806,000) were used in increasing  lender-controlled escrow reserves. We do not anticipate paying future quarterly dividends in cash on the Series A Preferred Stock.  Payments on the nonrecourse debt will increase to approximately $800,000 in 2012 as the current year does not include a full year of payments. 

Impact of Inflation

We expect to be able to pass inflationary increases on to our customers through price increases, as required, and do not expect inflation to be a significant factor in our business.

Seasonality

Although our operating history is limited, we do not believe our services are seasonal except for future wind farm construction revenue which may be impacted by climate in the Upper Midwest.

Off-Balance Sheet Arrangements

As mentioned above in the Liquidity and Capital Resources section, we have made certain guarantees of indebtedness or offered indemnifications of warranties and representations in conjunction with the funding activities of the Valley View and Grant County wind farms.

In conjunction with the credit facility in the Grant County project, the Company has agreed for a limited period of time to indemnify the new equity investor with respect to certain representations and warranties made in conjunction with the equity purchase, including potential liabilities for Section 1603 Treasury Grant recapture or tax liabilities attributable to the period prior to the closing date. 

The Company agreed to guarantee certain payments to investors in the Valley View wind farm project as set forth below:

 
·
the timely payment of any and all guaranteed payments required to be paid to  preferred membership investors (who contributed approximately $2.5 million)  as they may become due under the respective LLC operating agreements, and the timely payment of any and all amounts payable upon exercise of a put right by such preferred members.  The put right is under not under the Company’s control and may occur either in two years or in certain cases, ten years.  The Company does  have up to six months from the date that to make such Put Right Payment, and should Juhl Wind fail to make the Put Right Payment within such six month period, the principal amount owed by the Company is subject to a penalty of an additional 10%.
 
 
·
The Company has agreed, with respect to a put right made available to one of the Common Members in the Valley View project (who contributed $500,000) to redeem any of its units then held by the Purchaser for a price in cash equal to the present value of the (i) estimate future distributions to be made to Purchaser net of (ii) estimated future income allocations for which no distributions are projected to be made (“Put Right Purchase Amount”).  If the Company fails to pay in full the put right purchase amount in cash on the due date, the Company shall issue a promissory note with a maturity date not exceeding 36 months and pay interest thereon.
 
 
·
The Company has made certain representations and warranties with regard to indemnifications in conjunction with the funding activities of the Valley View and Grant County wind farms, including potential liabilities for Section 1603 Treasury Grant recapture or tax liabilities attributable to the period prior to the closing date.  
 
Aside from these arrangements, we believe that there are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
 
 
35

 
 
Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to exercise its judgment. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosures of commitments and contingencies at the date of the financial statements.
 
On an ongoing basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety factors including our historical experience, knowledge of our business and industry, current and expected economic conditions, the composition of our products/services and the regulatory environment. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary.
 
While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates. A description of significant accounting policies that require us to make estimates and assumptions in the preparation of our consolidated financial statements is as follows:

Revenue Recognition.

Turbine Sales and Service

Turbine sales occur from small scale wind turbines that are internally re-manufactured and sold by the Company, or through purchase and resale of larger scale wind turbines to wind farm project owners. Revenue from the sale of small scale wind turbines are recognized upon shipment to the customer as transfer of ownership and risk of loss have been transferred to the customer. Deposits received from customers are included as deferred revenue until shipment occurs. Revenues from the sale of larger scale wind turbines are generally recognized in conjunction with the construction services percentage of completion accounting discussed below. Commencement of revenue recognition is only after turbine erection activities have begun.  Turbine services include time-and-material arrangements related to existing installations of wind turbine equipment.  Revenue is recognized upon completion of the maintenance services.

Licensing Agreements

Revenues earned from licensing agreements are amortized straight line over the term of the agreement.
  
Wind Farm Consulting, Development and Management Services:
 
Consulting Services
 
Consulting services fees are primarily fixed fee arrangements of a short-term duration and are recognized as revenue on a completed contract basis.

Wind Farm Development Services
 
The Company normally earns a development service fee from each of the wind farm projects that it develops in cooperation with wind farm investors. These development services arrangements are evaluated under authoritative guidance relating to “Revenue Arrangements with Multiple Deliverables ,” which addresses certain aspects of accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities.

The development services fee revenue is recognized as follows:
 
Proceeds received upon the signing of a Development Services Agreement (generally 10% of the total expected development fee) are amortized over the expected period of the development process, which is generally three years. The amortization period is re-assessed by management as new timelines are established for the project in-service date, and the amortization period is adjusted. The remaining proceeds are allocated to the following deliverables based on vendor specific objective evidence (“VSOE”) of each item: 1) achievement of a signed Power Purchase Agreement (“PPA”) with an electrical utility, and 2) final commissioning of the wind farm turbines.  Management has determined that these deliverables have stand-alone value, and performance of the undelivered services are considered probable and in the control of the Company.
 
Wind Farm Management Services
 
Revenues earned from administrative, management and maintenance services agreements are recognized as the services are provided. The administrative and management services agreements call for quarterly payments in advance or arrears of services rendered based on the terms of the agreement. The administrative and management services payments in advance are carried as deferred revenue and recognized monthly as services are performed. Maintenance services are generally billed on a time and materials basis.  Revenues from services work are recognized when services are performed.
 
 
36

 
 
Wind Farm Construction Services
 
We recognize revenue on construction contracts on the percentage of completion method with costs and estimated profits included in contract revenue as work is performed. Construction contracts generally provide that customers accept completion of progress to date and compensate us for services rendered measured in terms of units installed, hours expended or some other measure of progress. We recognize revenue on both signed contracts and change orders. A discussion of the treatment of claims and unapproved change orders is described later in this section. Percentage of completion for construction contracts is measured principally by the percentage of costs incurred as part of the balance of plant contract (which excludes the wind turbines) and accrued to date for each contract to the estimated total cost for each contract at completion. We generally consider contracts to be substantially complete upon departure from the work site and acceptance by the customer. Contract costs include all direct material (excluding wind turbines), labor and insurance costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Changes in job performance, job conditions, estimated contract costs and profitability and final contract settlements may result in revisions to costs and income and the effects of these revisions are recognized in the period in which the revisions are determined. Provisions for total estimated losses on uncompleted contracts are made in the period in which such losses are determined. The balances billed but not paid by customers pursuant to retainage provisions in construction contracts will be due upon completion of the contracts and acceptance by the customer. Based on the Company’s experience with similar contracts in recent years, the retention balance at each balance sheet date will be collected within the subsequent fiscal year.

Electrical power sales
 
Electrical power sales to a utility purchaser are recognized as electrical energy is produced.   In accordance with generally accepted accounting principles, revenue levelization is required whenever there is a variable pricing arrangement such as the PPA with Woodstock Hills.  This requires that the revenue be levelized over the term of the agreement.  The revenue recognized is the lesser of the amount billable under the contract, or the amount determined by the megawatt hours made available during the period multiplied by the average revenue per megawatt hour over the life of the PPA.

The Woodstock Hills wind farm credited with producing Renewable Energy Credits (REC’s). These have a market value, and we recognize revenue on the sale of such credits as revenue when sold on the open market.

Variable Interest Entities

The Company has determined that one of its wind farm projects are variable interest entities (“VIE”).  The footnotes to our consolidated financial statements in this prospectus provide our analysis and judgments with respect to whether or not the Company should consider consolidation of these VIE’s into our financial statements. We have consolidated one VIE because we believe that we had implicit power to significantly impact the economic performance of the limited liability company associated with that wind farm project.

INDUSTRY AND MARKET OVERVIEW

This registration statement includes market and industry data that we have developed from publicly available information, various industry publications and other published industry sources and our internal data and estimates.  Although we believe that the publications and reports are reliable, we have not independently verified the data.  Our internal data, estimates and forecasts are based upon information obtained from trade and business organizations and other contacts in the market in which we operate and our management’s understanding of industry conditions.

As of the date of the preparation of this registration statement, these and other independent government and trade publications cited herein are publicly available on the Internet without charge.  Upon request, the Company will also provide copies of such sources cited herein.
 
Energy Demand

According to the reference case (the “EIA Reference Case”) in the U.S. Department of Energy,  Energy Information Administration’s (“EIA”) “Annual Energy Outlook 2012 with Projections to 2035” , electricity demand increases 0.7% per year from 2010 through 2035. New capacity for electricity generation will be required to meet anticipated demand. According to the EIA’s “Annual Energy Review 2010,” nearly half of all electricity produced in the United States in 2010 was generated by coal, which is the largest source of carbon dioxide emissions in the atmosphere. Other major sources of electricity in 2010 were nuclear (20%), natural gas (24%), hydroelectric power (6%), and “other,” which consists of, among other things, wind, petroleum, wood and waste (6%).   According to the EIA Reference Case detailed in the U.S. Department of Energy EIA’s “Annual Energy Outlook 2012 with Projections to 2035,” total coal consumption is projected to increase from 20.76 quadrillion Btu in 2010 to 21.15 quadrillion Btu in 2035, although the increase occurs at a relatively weak average rate of less than 0.1% per year from 2010 to 2035, remaining at below 2010 levels until after 2031. The EIA Reference Case projections in the EIA’s “Annual Energy Outlook 2012 with Projections to 2035” also predict that total electricity consumption will grow from 3,877 billion kilowatt hours in 2010 to 4,716 billion kilowatt hours in 2035, increasing at an average annual rate of 0.8% per year.  According to the EIA’s “Short-Term Energy Outlook” published in June 2012, the EIA expects a 1.0% decline in total electricity consumption during 2012 (with such a decline being attributed to a 14% decline in summer temperatures from the summer of 2011), followed by a 1.9% increase in total electricity consumption during 2013.
 
 
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Most of the world’s primary energy sources are based on the consumption of non-renewable resources such as petroleum, coal, natural gas and uranium. However, while still a small segment of the energy supply, renewable sources such as wind power are growing rapidly in market share. Wind power delivers multiple environmental benefits. Wind power operates without emitting any greenhouse gases and has one of the lowest greenhouse gas lifecycle emissions of any power technology. Wind power results in no harmful emissions, no extraction of fuel, no radioactive or hazardous wastes and no use of water to steam or cool. Wind power projects are developed over large areas, but their carbon footprint is light. Farmers, ranchers and most other land owners can continue the vast majority of their usual activities after wind turbines are installed on their property.

Wind Power Generation

According to the U.S. Department of Energy EIA’s publication “Renewable Resources in the U.S. Electricity Supply,” published in February 1993, wind power generation in the U.S. was projected to increase eight-fold between 1990 and 2010, a rate of 10.4% per year.  The U.S. has greatly exceeded this estimate, with average annual growth in wind power generation capacity increasing by 33% for the past five years, according to the Global Wind Energy Council’s (“GWEC”) “Global Wind 2011 Report.”  Worldwide, annual growth in the global wind energy capacity for the past ten years has averaged about 28% per year according to the GWEC’s “Global Wind 2011 Report.”  This 2011 GWEC report stated an increase of more than 20% in total global wind power capacity in 2011, despite the ongoing global economic and financial crises.  The United States added 6,810 MW of newly installed wind capacity in 2011, according to the GWEC’s “Global Wind Report 2011.”  This represents a 30% increase from the 5,216 MW installed in 2010, showing an overall 17% annual growth in U.S. wind power capacity from 2010 to 2011, according to the GWEC’s “Global Wind 2011 Report.”  In addition, according to the GWEC’s “Global Wind 2011 Report,” the U.S. saw continued diversification in the wind turbine market in 2011, with an increase in both the number of active turbine manufacturers as well as an increase in the number of turbine models offered.  

Wind power has become a mainstream option for electricity generation, and we believe that it is a critical element to solving climate change and delivering cost-effective domestic power in the United States. The demand for renewable energy in the U.S. has been driven by a number of factors, including concerns about energy independence, environmental and climate change concerns, a desire for lower exposure to fuel cost volatility and, more recently, a desire for economic development.  There is strong popular support in the United States for wind energy specifically, according to AWEA’s “Wind Power Outlook 2011” report.  According to this AWEA report, a Harris poll released in October 2010 showed that 87% of Americans want more wind energy. Moreover, the report stated that the use of wind energy will lead to favorable environmental results: wind power is the least harmful form of electricity generation for people and wildlife, and wind power increasingly displaces emissions of carbon, air toxins and other pollutants from fossil fuels.  According to the AWEA’s “Wind Power Outlook 2011,” the electricity generated by the wind turbines installed in the U.S. through 2010 will avoid the emission of over 54 million tons carbon dioxide annually (the equivalent of taking over 9.5 million cars off of the road).   Another environmental benefit of wind power is conservation of water: the AWEA’s “Wind Power Outlook 2011” reported that, each year, the operation of the U.S. wind fleet is estimated to conserve nearly 24 billion gallons of water that would otherwise be used for steam or cooling in conventional power plants.

 In 2011, the United States was second in new wind power installations, coming in only behind China (which had 17,631 MW of newly installed capacity in 2011), as reported by the GWEC in its “Global Wind 2011 Report.”  According to this report, the U.S. also came in second worldwide, again behind China (which had 62,364 MW of total installed wind capacity), for total installed wind capacity with 46,919 MW of total installed wind capacity in the U.S.   India and Germany came in at third and fourth, respectively, in newly installed capacity in 2011, and Germany and Spain came in at third and fourth, respectively, in 2011 in worldwide total installed wind capacity, according to the GWEC’s “Global Wind 2011 Report.”  Previously, in 2010, according to the GWEC “Global Wind 2010 Report,” the United States was second worldwide, behind China, in both new wind power installations and in total installed wind capacity.  In 2010, Germany and Spain were third and fourth in terms of total installed wind capacity, and India and Spain were the third and fourth largest wind power growth countries in 2010 with 2,139 MW and 1,516 MW of wind power capacity added, respectively, according to the GWEC’s “Global Wind 2010 Report.”

According to the “Wind Energy Outlook for North America” article published in late 2011 by the marketing and consulting firm Pike Research, the North American wind energy industry lags in key areas compared to the European and Asian industries, but many key wind industry players are optimistic about the prospects of the North American market.  The “Wind Energy Outlook for North America” article reported that total installed wind capacity in North America will more than double over the next six years, increasing from approximately 53,00 MW in 2011 to almost 126,000 MW by 2017.  On a worldwide scale, the World Wind Energy Association forecasted in its “World Wind Energy Report 2010” publication that a global wind capacity of 600,000 MW is possible by the year 2015, and that a global wind capacity of over 1,500,000 MW is possible by the year 2020.
 
 
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Wind power can deliver zero-emission electricity in large amounts. According to the American Solar Energy Society’s report dated January 2007, “Tackling Climate Change in the U.S.,” energy efficiency and renewable energies can provide most, if not all, of the U.S. carbon emission reductions needed to keep atmospheric carbon dioxide levels at no more than 450 to 500 parts per million, the level targeted in the more protective climate change bills before the U.S. Congress. According to this report, wind power would offer a large carbon reduction “wedge” by contributing a 35% relative share from among the various renewable energy contributors, and can constitute about 20% of the U.S. electricity supply by 2030.  The more recent “Wind Power Outlook 2011” report, published by the AWEA, similarly posited that wind could pay a major role in meeting America’s electricity demand.

According to the Emerging Growth Research, LLP’s Industry Report “U.S. Wind Sector Overview and Predictions for 2009” dated December 29, 2008, which we refer to as the “Emerging Growth Report 2008,” the domestic wind capacity installed as of the end of 2008 is equivalent to the capacity of approximately 35 average sized coal-fired power plants.  Considering that each average size coal-fired power plant in the United States produces about 3,000,000 tons of carbon emission each year, currently-installed wind power capacity is reducing total carbon emissions by just over 105,000,000 tons each year.

Wind power delivers zero-emissions electricity at an affordable cost and the cost of wind power has been decreasing.  Bloomberg New Energy Finance predicted that wind energy is expected to be competitive with natural gas in just four years, by the year 2016.  No other power plants being built in the United States today generate zero-emissions electricity at a cost per kilowatt-hour nearly as affordable as wind power. Consequently, using wind power lowers the cost of complying with emissions reduction goals. The affordable cost of wind power is stable over time. Wind projects do not use any fuel for their operations, so the price of wind power does not vary when fuel prices increase. When utilities acquire wind power, they historically have locked in electricity at a stable price for 20 years or more.  The AWEA’s “Wind Power Outlook 2011” also cited a number of more recent studies concluding that wind power can hold down energy prices and that, although the U.S. does need to reinvest in its electric grid, the consumer savings realized from such an investment would be significantly greater than the costs of the initial infrastructure investment.  An additional benefit of wind power projects is that they typically have a shorter development time frame than other types of power projects and can move more quickly as conditions change (such as natural gas projects).

Wind, however, is intermittent and electricity generated from wind power can be highly variable. Good site selection and advantageous positioning of turbines on a selected site are critical to the economic production of electricity by wind energy. In our experience, the primary cost of producing wind-powered electricity is the turbine equipment and construction cost, which cost has been on the decline in recent years (as discussed more fully below).  Wind energy itself has no fuel costs and relatively low maintenance costs. As an intermittent resource, wind power must be carefully positioned into the electric grid along with other generation resources, and we believe Juhl Wind has demonstrated the expertise necessary to work with local electric utilities to affect the proper integration plan.  As such, we intend to continue to identify new sites to produce wind energy through the community wind model throughout the United States and Canada.

Turbine Costs & Wind Project Costs Decreasing

Over the past few years, the cost of wind turbines has fallen considerably.  The AWEA reported in its “Top 10 for 2011” press release that wind turbine costs have dropped sharply in recent years, by as much as 33% or more between late 2008 and 2010.  Moreover, since 2008, the price declines in the cost of wind turbines were accompanied with improved turbine technology and more favorable terms for turbine purchasers (such as reduced turbine delivery lead times, longer initial operations and management contracts and improved warranty terms), according to the DOE’s “2010 Wind Technologies Market Report.”  The DOE’s “2010 Wind Technologies Market Report” also predicted that all of the foregoing are expected, over time, to exert downward pressure on total wind project costs and wind power prices.  Installed project costs are found to exhibit some economies of scale, at least at the low end of the project size range.

In 2011, the price drop of wind turbines was especially notable.  During the second half of 2011, according to the Bloomberg New Energy Finance (“BNEF”) Wind Turbine Price Index (the “BNEF Price Index”), the average price for utility-scale wind energy equipment hit a new low.  According to the BNEF, purchase contracts for turbines in the second half of 2011 for 2013 delivery fell to $1.21 million/MW, which was down 4% from six months earlier.  The most dramatic price drop was felt by older wind turbines, which prices fell 10% from six months earlier.  However, newer and more efficient wind turbines (which offer improved capacity factors for electricity generation) also saw a price drop, based on the analysis of contracts covered by the BNEF Price Index.  According to the BNEF Price Index, these decreasing prices in the second half of 2011 were worldwide, particularly as the Chinese manufacturers competed for wind turbine orders.  The BNEF Price Index also revealed that most procurement officers and wind turbine manufacturers anticipate further moderate declines in wind turbine prices throughout the rest of 2012 and 2013, and do not expect prices to recover until at least 2014.
 
 
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The declining prices are significant because lower equipment prices make wind energy more competitive with fossil fuels, such as coal and gas on a dollar-per-megawatt-hour basis, which is extremely important as the tax incentives for wind energy are set to expire at the end of 2012.

According to the U.S. Department of Energy’s most recent “2010 Wind Technologies Market Report,” published in mid-2011, the average installed cost of wind power projects remained stagnant in 2010.  Consistent with the recent trends in wind turbine prices described above, however, such cost was expected to decline in the near future.  As reported in the “2010 Wind Technologies Market Report,” among a large sample of wind power projects installed in 2010, the capacity-weighted average installed cost of $2,155/KW was similar to that seen in 2009, but the estimated costs for projects with construction scheduled to begin in 2011 suggested that there would be a decline in these average costs.  For specific regions in the U.S., the “2010 Wind Technologies Market Report” stated that Texas was the lowest-cost region for wind power projects, while California and New England were the highest-cost regions.

As for small wind turbines (ranging from 400 W to 100 kW (or up to 500 kW, depending on various definitions of “small”), systems consist of a vertical or horizontal axis turbine installed either on-or-off grid.  According to AWEA’s “2011 U.S. Small Wind Turbine Market Report,” the cumulative installed small turbine capacity increased to 198 MW in 2011 (deploying over 151,300 small wind turbines). The AWEA reported that approximately 19 MW were installed, representing 7,300 turbines and $115 million in revenues.  With a range of small-scale wind turbines, the installations are geared toward farmers, country estates, golf courses and domestic properties with large gardens or adjoining fields, which are all locations that have a significant amount of space.   We believe that this is our target market for Juhl Renewable Energy Systems, which focuses on small renewables.

Governmental Programs and Incentives

Overview

The growing concern over global warming caused by greenhouse gas emissions has also contributed to the growth in the wind energy industry. The Intergovernmental Panel on Climate Change’s “Climate Change 2007: Synthesis Report” (the “IPCC Report”) reports that 11 of the previous 12 years (1995-2006) at the time of the IPCC Report’s publication ranked among the warmest years since 1850. Additionally, at the time of the IPCC Report’s publication, the global average sea level had risen at an average rate of 1.8 millimeters per year since 1961 and at 3.1 millimeters per year since 1993, due to the melting of glaciers, ice caps and polar ice sheets, coupled with thermal expansion of the oceans.  In 2009, the International Alliance of Research Universities organized an international scientific congress on climate change to bring together new knowledge developed since the publication of the IPCC Report.  The synthesis report from this congress (the “IARU Report”) concluded that, based on updated trends in surface ocean temperature and heat content since the IPCC Report was published, ocean warming has been about 50% greater than had been previously reported in the IPCC Report.  The IARU Report also stated that, at the time of the IARU Report’s publication, the Arctic sea glaciers were diminishing in the summers as rapidly as they had been since the estimation given in IPCC Report in 2007.

The importance of reducing greenhouse gases has been recognized by the international community, as demonstrated by the signing and ratification of the Kyoto Protocol, which requires reductions in greenhouse gases by the 193 (as of July 2012, according to the United Nations Framework Convention on Climate Change “Status of Ratification” webpage) signatory nations. While the United States did not ratify the Kyoto Protocol, state-level initiatives have been undertaken to reduce greenhouse gas emissions. California was the first state to pass global warming legislation, and nine states on the east coast have signed the Regional Greenhouse Gas Initiative (according to the Regional Greenhouse Gas Initiative’s “About the Regional Greenhouse Gas Initiative Fact Sheet” and “Program Contacts by State” web pages) which proposes to require a 10% reduction in power plant carbon dioxide emissions by 2018.

Various state and federal governments have placed restrictions on fossil fuel emissions, and it is anticipated that additional requirements for limitation of such emissions will continue. Substituting wind energy for traditional fossil fuel-fired generation would help reduce carbon dioxide emissions due to the environmentally-friendly attributes of wind energy. According to the U.S. Department of Energy, EIA’s “International Energy Outlook 2011,” released September 19, 2011, of regions belonging to the Organisation for Economic Co-operation and Development (“OECD”), the United States was projected to be the largest source of energy-related carbon dioxide emissions through 2035, with an average growth of 0.3% per year.  According to the U.S. Environmental Protection Agency’s annual report “Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2010,” published in April 2012, the electric power sector (which consists of those companies whose primary business is the generation of electricity) is the largest source of all energy-related greenhouse gas emissions, accounting for 34% of greenhouse gas emissions in 2010.
 
Environmental legislation and regulations provide additional incentives for the development of wind energy by increasing the marginal cost of energy generated through fossil-fuel technologies. For example, regulations such as the Clean Air Interstate Rule and the Regional Haze Rule, which have been designed to reduce ozone concentrations, particulate emissions and haze and to control mercury emissions, can require conventional energy generators to make significant expenditures, implement pollution control measures or purchase emissions credits to meet compliance requirements. These measures have increased fossil fuel-fired generators’ capital and operating costs and put upward pressure on the market price of energy. Because wind energy producers are price takers in energy markets, these legislative measures effectively serve to make the return on wind energy more attractive relative to other sources of generation.
 
 
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We believe there is significant support in the U.S. to enact legislation that will attempt to reduce the amount of carbon dioxide produced by electrical generators. Although the ultimate form of the legislation is still being debated, we believe that, based on studies (such as the Congressional Budget Office’s February 2008 study titled “Policy Options for Reducing CO2 Emissions”) and the reaction to various initiatives introduced in Congress over the past few years, the two most likely alternatives are (i) a direct emissions tax; or (ii) a cap-and-trade regime.  We believe either of these alternatives would likely result in higher overall power prices, as the marginal cost of electricity in the U.S. is generally set by generation assets which burn fossil fuels such as oil, natural gas and coal and produce carbon dioxide. As a non-carbon emitter and a market price taker, we are positioned to benefit from these higher power prices.

Growth in the United States’ wind energy market and other renewable energy markets has also been driven by state and federal legislation designed to encourage the development and deployment of renewable energy technologies. This support includes:

Renewable Portfolio Standards (RPS)

In response to the push for cleaner power generation and more secure energy supplies, many states have enacted RPS programs. A RPS (sometimes called a Renewable Energy Standard, or RES), is a program that either: (i) requires state-regulated electric utilities and other retail energy suppliers to produce or acquire a certain percentage of their annual electricity consumption from renewable power generation resources or, (ii) as in the case of New York, designate an entity to administer the central procurement of Renewable Energy Certificates (“RECs”) for the state. Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of electricity that was produced from renewable sources.  These standards have spurred significant growth in the wind energy industry and a corresponding demand for our services.  The enactment of renewable energy portfolio standards in additional states or any changes to existing renewable energy portfolio standards may impact the demand for our services.  Similar to federal incentives as discussed below the elimination of, or reduction in, state governmental policies that support renewable energy could have a material adverse impact on our business, results of operations, financial performance and future development efforts.

According to the Quantitative RPS Data Project and the RPS Summary Map (which provide information about state RPS programs), each published by the Department of Energy Database of State Incentives for Renewables & Efficiency (DSIRE), as of March 2012, twenty-nine states, plus the District of Columbia and Puerto Rico, have legislated renewable energy portfolio standards, and eight more states have adopted voluntary renewable portfolio goals.

Almost every state that has implemented an RPS program will need considerable additional renewable energy capacity to meet its RPS requirements. We believe that much of the forecasted 50,000 megawatt installed wind capacity by 2015 will be driven by current and proposed RPS targets, along with additional demand from states without renewable standards.
  
According to the “Emerging Growth Report 2008”, these mandatory requirements, which are now in place in many states, are forcing electric utilities to be at the forefront of wind power development.

Renewable Energy Certificates (REC).   A REC is a stand-alone tradable instrument representing the attributes associated with one megawatt hour of energy produced from a renewable energy source. These attributes typically include reduced air and water pollution, reduced greenhouse gas emissions and increased use of domestic energy sources. Many states use RECs to track and verify compliance with their RPS programs. Retail energy suppliers can meet the requirements by purchasing RECs from renewable energy generators, in addition to producing or acquiring the electricity from renewable sources. Under many RPS programs, energy providers that fail to meet RPS requirements are assessed a penalty for the shortfall, usually known as an alternative compliance payment. Because RECs can be purchased to satisfy the RPS requirements and avoid an alternative compliance payment, the amount of the alternative compliance payment effectively sets a cap on REC prices. In situations where REC supply is short, REC prices approach the alternative compliance payment, which in several states may reach  approximately $50 per megawatt hour. As a result, REC prices can rival the price of energy and RECs can represent a significant additional revenue stream for wind energy generators.

Federal Tax and Economic Incentives

American Recovery and Reinvestment Act of 2009.   On February 13, 2009, the U.S. Congress passed a stimulus package known as the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”).  Approximately $40 billion in spending was appropriated for clean energy initiatives and an additional $20 billion estimated for new and modified tax incentives.  According to a discussion at Windindustry.org, the Recovery Act’s goal opens up new sources of funding for renewable energy at a time when the wind energy industry is set for even more growth.  The Recovery Act contains a number of provisions that focus on the growth of the wind industry.  Some of the pertinent provisions of the Recovery Act include the following: (i) three-year extension of the federal wind energy production tax credit (PTC) so that eligible projects placed in service by the end of 2012 will qualify for the credit; (ii) option for a thirty percent (30%) investment tax credit (ITC) instead of the PTC; (iii) option to convert the ITC into a cash grant for wind projects placed in service before 2013 (“1603 Cash Grant”); (iv)  elimination of the dollar cap on residential small wind and solar for ITC purposes; and (v) additional loan guarantees, bonds and tax incentives.   These programs enacted under the Recovery Act allow community wind farms, such as our Company, to take advantage of funding opportunities created as a result of the initiatives introduced under the Recovery Act.  
 
 
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The Recovery Act removes the $4,000 cap on small wind credit so taxpayers can now take the full 30% credit for a qualified small wind system.  It also provides for an additional $1.6 billion for Clean Renewable Energy Bonds (CREBs) that are used to finance renewable energy.  Previously, these bonds had been given at 0% interest rate, and the bondholder received a tax credit in lieu of bond interest.

 
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1603 Cash Grant Program.  This program had the potential to attract more investors who may not have enough passive activity income to realize the PTC.  The 1603 Cash Grant program means the value of the ITC can be realized, even if the taxpayer cannot take advantage of the credit.   Which credit a taxpayer uses will depend upon an analysis of the project revenue and cost projections as well as analysis of the investor tax appetite.

Further, on December 17, 2010, President Obama, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, signed into law a one-year extension of the popular renewable energy cash grant in lieu of tax credit program established by Section 1603 of the Recovery Act. To qualify for a cash grant under the extended program, a taxpayer must place "specified energy property" in service in 2009, 2010, or 2011, or after 2011 if construction begins in 2009, 2010, or 2011 provided such property is placed in service by the end of 2012 (for wind projects), 2013 (for closed- and open-loop biomass, geothermal, landfill gas, municipal solid waste, qualified hydropower, and marine and hydrokinetic facilities), or 2016 (for solar projects).

The cash grant program allowed us to enhance our ability to attract equity investors for our community wind projects; however, as noted below, the 1603 Cash Grant program has not been extended.
 
 
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DOE Loan Guarantee Extension.  The Department of Energy received an extension of its authority to provide loan guarantees for qualified technologies under Title XVII of the federal Energy Policy Act of 2005 and an additional $6 billion for this program.  Eligible technologies include electricity-generating renewable energy projects.  Funding for this program has been substantially reduced to $2.5 billion and continues to face challenges, especially due to guarantees made to organizations such as Solyndra.
 
 
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Production Tax Credits (PTC).   The PTC provides wind energy generators with a credit against federal income taxes, annually adjusted for inflation, for the duration of ten years from the date that the wind turbine is placed into service. In 2011, the PTC was $22 per megawatt hour (or 2.2 cents per kilowatt hour).  Wind energy generators with insufficient taxable income to benefit from the PTC may take advantage of a variety of investment structures to monetize the tax benefits.

The PTC was originally enacted as part of the Energy Policy Act of 1992 for wind parks placed into service after December 31, 1993 and before July 1, 1999. The PTC subsequently has been extended six times, but also has been allowed to lapse three times (for periods of three, six and nine months) prior to retroactive extension. Currently, the PTC is scheduled to expire on December 31, 2012.  This expiration date reflects a three-year extension passed under the American Recovery and Reinvestment Act enacted in February 2009.  According to American Wind Energy Association’s “Wind Power Outlook 2010,” a new incentive was added as part of the 2009 expansion of the PTC under the Recovery Act.  This provision as passed gave wind farm developers the option to receive a direct payment from the government, rather than the previously existing PTC.  This provision provided more than $1.5 billion capital to different wind projects in 2009.  According to the AWEA’s “Top 10 for 2011” press release, the year 2011 ended without another extension of the PTC; however, the movement for an extension has gathered momentum as bipartisan legislation seeking to grant a four-year PTC extension was introduced in Congress at the end of 2011.  At the time of this report, an extension has not been passed by Congress.

If the PTC is not extended, a December 2011 report by Navigant Consulting for the AWEA predicted that wind investment projects would decrease by two-thirds.  While this prediction represents a smaller drop than the 73% to 98% drop in wind investment projects which occurred during previous years when the PTC lapsed, it would no doubt still have a negative effect on the wind industry.  For example, the CEO of the AWEA released a February 2012 statement asserting that failure to extend the PTC would result in the loss of 37,000 American jobs.
 
 
 
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Accelerated Tax Depreciation.   Tax depreciation is a non-cash expense meant to approximate the loss of an asset’s value over time and is generally the portion of an investment in an asset that can be deducted from taxable income in any given tax period. Current federal income tax law requires taxpayers to depreciate most tangible personal property placed in service after 1986 using the modified accelerated cost recovery system, or MACRS, under which taxpayers are entitled to use the 200% or 150% declining balance method depending on the class of property, rather than the straight line method. Under MACRS, a significant portion of wind park assets is deemed to have depreciable life of five years which is substantially shorter than the 15 to 25 year depreciable lives of many non-renewable power supply assets. This shorter depreciable life and the accelerated and bonus depreciation methods result in a significantly accelerated realization of tax depreciation for wind parks compared to other types of power projects. Wind energy generators with insufficient taxable income to benefit from this accelerated depreciation often monetize the accelerated depreciation, along with the PTCs, through forming a limited liability company with third parties.  In addition, the 2010 Tax Relief Act allows 100% bonus depreciation for qualified wind farm assets put in service after September 8, 2010 and before January 1, 2012.  For 2012, bonus depreciation is still available, but the allowable deduction reverts from 100% to 50% of the eligible basis.
 
 
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Expiration of Certain Federal Tax and Economic Incentives
 
At the date of this prospectus, Congress has not extended programs such as the production tax credit or cash grant program. These programs, which expire at the end of 2012, provide material incentives to develop wind energy generation facilities.  The uncertainty with respect to extension of these credits and incentives has placed the wind industry in a tentative position.  The development of wind energy projects requires extensive lead time, and the failure of Congress to extend or renew these incentives beyond the current 2012 expiration dates has already interrupted  potential wind energy installations planned for 2013, as developers are shelving plans for wind projects (as discussed above under Production Tax Credits). We expect that further Congressional delay on action to renew or extend these incentives will likely result in additional deferral of wind energy generation facility development and will likewise negatively impact the demand for wind turbines, towers, and related components.  As a result, the continued Congressional delay or failure to extend or renew these or similar incentives in the future could have a material adverse impact on our business, results of operation, financial performance and future development efforts of wind energy projects.  Thus, we believe it is necessary to evolve and diversify in our asset, product and service portfolio to reduce our exposure to uncertainty related to the extension or renewal of tax incentives and other favorable governmental policies currently supporting the U.S. wind industry.
 
Federal Legislative/Regulatory Developments
 
Clean Energy Standard Act of 2012 (proposed legislation).    With the expiration of certain federal tax and economic incentives, it is key to the growth of the renewable energy industry that federal legislation to establish a national clean and/or renewable energy standard remains in consideration. On March 1, 2012, the Clean Energy Standard Act of 2012 (the “CES”) was introduced by Senator Jeff Bingaman (D-NM) that would create a federal clean energy standard.  The CES proposal would increase the amount of low-carbon power produced in the United States to 80% by 2035.  The CES proposal includes all low-carbon sources of power and relies on utilities holding “clean energy credits” for a certain percentage of their sales, maxing out at 80% in 2035. According to the Energy Information Administration, a well-designed CES proposal would reduce carbon dioxide emissions in the power sector by 43 percent. The CES proposal has the support of the energy industry, including the American Wind Energy Association.  We believe as the U.S. energy policy is in a constant state of change, this proposed new legislation would provide long term security and clean energy, benefitting all forms of electric generation, including wind and solar. There are no assurances that this legislation or any similar legislation will be enacted.
 
Solar Power Generation
 
Increased global demand for electricity in connection with modern technology and emerging market industrialization has placed a significant burden on the world’s available electricity supply in a vulnerable state, focusing international attention on seeking solutions to maintain access to energy supplies. Solar photovoltaic is a technology by which light is converted into electricity using photovoltaic modules. Solar photovoltaic modules have no moving parts, operate quietly without carbon or other emissions and are capable of short and long-term use with minimal maintenance. Solar energy is renewable and creates no short-term waste and uses almost no water, according to “Solar Generation: Solar Photovoltaic Electricity Empowering the World,” report jointly published by the European Photovoltaic Industry Association (“EPIA”) and Greenpeace International (the “Solar Generation Report”).  The Solar Generation Report states that the “environmental footprint” of solar energy is negligible, as the energy it takes to make a solar power system is typically recouped by the energy costs saved over one to three years. We believe that solar energy, like wind energy, has the potential to achieve the same goals of reducing the world’s dependence on conventional fuels, satisfying the growing demand for energy, enhancing national security by reducing dependence on imported fossil fuels, and reducing greenhouse gas emissions.  Solar energy also has the potential to greatly boost job creation.  In October 2011, according to the “National Solar Jobs Census 2011,” published by the nonprofit, non-lobbying organization The Solar Foundation, the workers in America’s solar energy are quickly increasing – as of August 2011, the U.S. solar industry employed an estimated 100,237 solar workers (up 6.8% since August 2010).

 Solar energy, like wind energy, provides several advantages over fossil-fuel, nuclear and other forms of renewable power generation. One fundamental benefit is that sunlight, the source of the electricity, is available without any mining or transportation. If sufficient sunlight is available, a facility to generate solar power can be located where the power is needed, thus avoiding the need for, and cost of, lengthy distribution and transmissions lines along with other upgrades to the grid. It is a scalable technology, able to produce power according to load demand and available land or space. It is also delivered on-peak, generating the most power during the time of the day when load typically demands it.
 
 
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As with wind power generation, the primary potential disadvantage to solar power is that it relies upon an intermittent resource. Unlike some generators, it cannot increase or decrease its productivity at the request of grid operators. It also does not generate power when the modules are not receiving light at certain levels such as night time. Further, solar power requires space for the arrays of solar photovoltaic modules, which can limit its use in urban areas. We believe innovations in energy storage solutions could resolve some of these issues, which is the type of offered by Juhl Renewable Energy Systems. However, unlike wind, the intermittent production of solar power naturally coincides with peak demand for residential power usage, thereby creating value in increasing available power during such peak periods.

At present, many of the leading manufacturers of photovoltaic products are based in China, due, in part, to their ability to manufacture solar photovoltaic modules at a lower cost than their European or United States counterparts (according to the Solar Generation Report). In addition to decreases in photovoltaic module prices, the industry has seen an overall decline in photovoltaic solar costs. The price decline in photovoltaic equipment reflects a more competitive environment, an increase in efficiency of the solar cells, improvements in technology and the economies of scale. We view the shifts in the solar industry as an opportunity for us to develop solar power projects that can generate power at prices which are lower than the retail prices charged by the utilities and provide solutions using solar energy as a back-up power source in the case of a power outage.

According to the U.S. Department of Energy’s “SunShot Initiative,” a program aimed at increasing solar power use and innovation in the U.S., the U.S. is the world’s second largest consumer of electricity, but also has the largest solar resource of any industrialized country.  The SunShot Initiative aims to reduce the total installed cost of solar energy systems by 75% by 2020 through reduction of solar technology costs, reduction of grid integration costs and acceleration of solar deployment.

The SunShot Initiative’s SunShot Vision Study (published in February 2012) stated that, in 2010, solar energy provided less than only 0.1% of the U.S. electricity demand.  Technical potential, however, for solar energy’s contribution to the U.S. energy demand is enormous.  For example, one estimate suggested that the area required to supply an amount of electricity equivalent to all end-use electricity in the United States using solar power is only about 0.6% of the country’s total land area.

In 2011, the United States was fourth in newly connected solar capacity, according to the EPIA’s Market Report 2011.  The United States was also ranked fourth in the list of the world’s top ten markets for solar power.  In terms of growth, the Solar Energy Industries Association in the Executive Summary for its “U.S. Solar Market Insight: 3rd Quarter 2011” reported that, through the third quarter of 2011, the U.S. solar market had installed more than 1,000 MW of solar capacity (which already surpassed 2010’s installation total of 887 new MW for the year).  According to the Executive Summary for the “U.S. Solar Market Insight:1st Quarter 2012” report, the U.S. began 2012 with the second highest quarter for solar installations ever, with over 18,000 photovoltaic systems totaling 506 MW coming online during the first three months of 2012.

Solar power is also gaining in popularity in the individual U.S. states and cities, as rooftop solar power systems are becoming more prevalent as an energy choice for residences and businesses.  According to “Solar and the City,” an article posted on the Department of Energy’s website, in 2007 San Francisco and Boston each developed online “solar maps,” and New York developed one in 2011.  The “solar maps” are tools that allow people to determine the solar potential of their homes and businesses, and have played a big part in supporting those interested in solar power.  When San Francisco first developed its solar map in 2007, for example, there were only 554 solar installations marked on the map.  Today, that number is 2,073, with a total capacity of 11MW, according to the “Solar and the City” article.  We believe our solar products, based on storage solutions and solar installations, will take advantage of the prevalent climate for solar energy in urban areas where wind projects are not practical.

Growth in Demand for Wind Power and Our Position and Service Offerings
 
Demand for wind power in the United States has grown rapidly (as discussed under Wind Power Generation). We believe that the market for community wind power will be maintained as a model for ongoing installations of wind power given the constraints of transmission capacity and utility power purchases that are currently affecting the growth of larger scale projects.  In addition, we believe that there is impetus in the United States to increase its generation of electrical power through renewable energy means.

Previously, the AWEA’s “U.S. Wind Industry Fourth Quarter 2011 Market Report” estimated indicate that growth in the wind industry in 2012 should be strong.  The wind industry appears to be living up to these predictions, as the AWEA’s “U.S. Wind Industry First Quarter 2012 Market Report” reported that the new wind projects installed in the first quarter of 2012 added 1,695 megawatts (MW) of generating capacity across 17 states.  According to the “U.S. Wind Industry First Quarter 2012 Market Report,” as of the end of the First Quarter of 2012, there were at least 8,916 MW under construction across 31 states and Puerto Rico.  The AWEA, in its “Five trends to watch in 2012” press release, predicts that the wind industry will enter the “boom” phase of the “boom-bust” cycle that the wind industry has been caught in for the past 10 years, based on the amount of wind installation projects under construction at the end of 2011.  Despite this prediction, and despite the increase in new installations in 2011 as compared to 2010, the AWEA cautioned that this continued growth is conditional on U.S. Congressional policies.  A strong long-term federal policy for wind power is needed, according to the “Five trends to watch in 2012” press release and the “Wind Power Outlook 2011” report, both of which were published by the AWEA.
 
 
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Industry Related Information – Community Wind Projects

Based on our research of data available for U.S. wind farms under 50 MW in size, we believe that there are approximately 260 entities or wind farms that  are part of the community wind approach. This totals about 2,238 MW of community style wind out of the 530 projects in the under 50 MW project category, which totals approximately 6,895 MW.  Although the community wind model is only about 5% of the 46 GW total install base in the U.S. for wind farms, the market has seen a large number of developments, both community owned and corporate.

According to the windustry.org January 2010 newsletter, community wind projects added 544 MW of new energy capacity in 2009. As of January 2010, Windustry.org’s Community Wind Map reported that Community Wind accounted for more than four percent of the overall U.S. wind energy capacity with 1,521 MW out of 35,170 MW total for the country. Overall, new wind energy capacity in the U.S. for 2009 was estimated at nearly 10,000 MW compared to 8,500 MW added in 2008, a record high.

The term “Community Wind” for the statistics cited above refers to locally-owned, commercial-scale wind projects that optimize local benefits. Locally-owned means that one or more members of the local community has a significant direct financial stake in the project other than through land lease payments, tax revenue, or other payments in lieu of taxes.  According to an article titled “Community Wind: Affordable, Abundant, Ready To Deliver” published by Windustry.org, Community Wind projects are an affordable energy source and, despite the necessity for the U.S. to reinvest in and modernize its electricity grid in order to deliver wind power to heavily populated areas, Community Wind projects can be deployed in the states now, without new transmission lines.

States with community wind farm developments, such as California and Minnesota, have continued to increase their wind capacity.  In 2011, California, according to the AWEA’s “U.S. Wind Industry Fourth Quarter 2011 Market Report,” there were 921.3 new megawatts installed.  In Minnesota, there were 541.9 new megawatts installed.  Ohio was the fastest growing state for wind power in 2011, with 101.50 new megawatts installed (representing a 929% growth rate for 2011).  Overall, according to the AWEA’s “U.S. Wind Industry Fourth Quarter 2011 Market Report” and the “Fact Sheets” published for each state by the AWEA, the top ten states for wind power capacity were as follows in 2011:

State
Wind Capacity (MW)
Texas
10,337
Iowa
4,375
California
3,927
Illinois
2,743
Minnesota
2,733
Washington
2,573
Oregon
2,513
Oklahoma
2,007
Colorado
1,800
North Dakota
1,445

Increased Demand in WindPower

Growth in wind power is being driven by several environmental, socio-economic and energy policy factors that include:

 
ongoing increases in electricity demand due to population growth and growth in energy-consuming devices such as computers, televisions and air conditioning systems, as coal and oil resources need replacing;
     
 
the fluctuating costs of the predominant fuels required to drive the existing fleet of conventional electric generation such as coal, natural gas, nuclear and oil, especially as recent low (subsidized) wind prices are roughly competitive with natural gas;
     
 
existing and growing legislative and regulatory mandates for “cleaner” forms of electric generation, including state renewable portfolio standards and the U.S. federal tax incentives for wind and solar generation, including the Recovery and Reinvestment Act enacted in February 2009 (although PTCs are set to expire at December 31, 2012, unless extended by Congress) ;
     
 
the expectancy that the Environmental Protection Agency will enact regulations and standards accelerating the retirement of aging coal plants and impacting the life of natural gas plants, thus increasing the need for replacement of resources;
     
 
uncertainty surrounding the growth potential of nuclear power plants;
 
 
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Wind projects have shorter development timeframe than natural gas plants and have greater flexibility to adapt to changing conditions; worldwide concern over greenhouse gas emissions and calls to reduce global warming due to the carbon dioxide produced by conventional electric generation; and n ewer wind turbine models are becoming more efficient (such as advances in wind turbine blade aerodynamics, development of variable speed generators, advances in remote operation and monitoring systems, improvements in wind monitoring and forecasting tools and advances in turbine maintenance) and offer improved capacity factors, and together with cost competition among suppliers.  Wind power systems have become more competitive with coal and gas on a dollar-per-megawatt-hour basis.
 
Although the wind industry continues to experience growth, it is facing factors and obstacles that have the potential to impede its growth.  Here are factors that impose the greatest challenge:
 
New Transmission Infrastructure. As briefly stated previously, the U.S. needs to reinvest in its energy infrastructure.  The U.S. Department of Energy has identified transmission limitations as the largest obstacle to realizing the economic, environmental and energy benefits. The entire transmission system or grid of the U.S needs to be extensively redesigned and redeveloped. At present, this system consists mostly of small and antiquated distribution lines. To rectify this, a series of new high-voltage transmission lines is needed to transmit electricity from wind facilities to major population centers. Such redevelopment faces several obstacles including significant cost and investment by third parties, federal and state governmental approval, changes in government policy, cooperation from landowners, and time.  According to a Bloomberg.com article, “Electricity Declines 50% as Shale Spurs Natural Gas Glut: Energy,” this lack of transmission infrastructure affects investment in wind power.
 
Access to Transmission Lines. Transmission line operators typically charge generators penalty fees if they fail to deliver electricity when it is scheduled to be transmitted. The purpose of these penalty fees is to punish generators and deter them from using transmission scheduling as a way to gain advantage against competitors. But because wind is variable, a wind farm cannot guarantee delivery of electricity for transmission at a scheduled time. Wind energy needs a new penalty system that recognizes the different nature of wind facilities and allows them to compete more effectively.
 
Government Policy. The growth of renewable energy in the U.S., in particular wind energy, is largely the result of government support and incentives. The loss of these supports and incentives would likely slow or stall further growth and possibly make the construction and operation of wind facilities economically unfeasible.  With the expiration of the Production Tax Credit (the “PTC”) approaching on December 31, 2012, and with no further extension set to be passed by Congress, many wind industry participants, including large-scale developers and operators have either shelved plans for constructing new wind projects or have announced significant employee layoffs due to the uncertainty surrounding the PTC.  The U.S. needs a strong, long-term policy for wind energy.
 
Economic Downturn. Economic downturns generally make it more difficult to explore and use traditional financing options to pay for the cost of a wind farm.
 
Reduced Energy Demand. When demand for electricity decreases, particularly during an economic downturn, wind farms must scale back power or shut down, or be forced to do the same by transmission providers.
 
Excess in Other Sources of Power Generation.   Investment in wind power is affected by other sources of power generation.  For example, according to a Bloomberg.com article, “Electricity Declines 50% as Shale Spurs Natural Gas Glut: Energy,” a recent glut of natural gas has cut electricity prices for the U.S. power industry and, in turn, reduced investment in other types of power, including wind power.  Exelon, for instance, has cancelled plans to expand two nuclear power plants due to the low price of natural gas, and CMS Energy has cancelled plans to build a clean coal plant, with the explanation that the clean coal plant’s $2 million price tag was not financially viable due to low natural gas prices.  Low natural gas prices may only be short-term, however: according to the EIA’s Annual Energy Outlook 2012 publication, natural gas prices are predicted to rise between 33% and 54% due to an increase in exports.
 
 
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Juhl Wind – Full Service Development, Construction, Operations, Ownership and Management of Community Wind Farms

Despite the challenges to the overall wind industry, we believe that we are positioned to experience long-term growth and development of specific community wind farms throughout the United States. We can provide full-scale development of community wind farms across the range of required steps including advice and/or services such as:

 
·
initial feasibility studies and project design;

 
·
formation of required land rights agreements to accommodate turbine placement on each project’s specific farm land;

 
·
assisting in applying for applicable environmental, zoning and building permits for the project;

 
·
studies, design and agreements with utilities (as well as with independent system operators (ISOs), which are organizations formed at the direction or recommendation of the Federal Energy Regulatory Commission (“FERC”) that coordinate, control and monitor the operation of the U.S. electrical power grid) with respect to connection to existing electric power transmission networks;

 
·
turbine selection and delivery coordination;

 
·
negotiation and execution of power purchase agreements;

 
·
access and consultation regarding construction financing;

 
·
coordination of vendor terms, including vendor financing;

 
·
introduction to equity and debt project financing services;

 
·
construction oversight and complete balance of plant construction services;

 
·
project commissioning;

 
·
long-term operations and turbine maintenance services;

 
·
management of wind farm operations; and

 
·
equity ownership.

In addition, we can provide general consulting services to help local stake holders evaluate possible projects and initiate their development. We will often take on the entire development process including virtually all of the services outlined above. As project developer, we arrange every aspect of the development process and receive payment for the services as certain steps are accomplished. After establishing that a project has appropriate wind resource and transmission interconnection, we move on to complete land rights agreements, community limited liability company structures and the power purchase agreement with the local utility.

In 2011, our full service development of a community wind farm was exemplified by our work on the Adams and Danielson wind farms located in Meeker County in West Central Minnesota.  We completed the development and construction oversight of the wind farms, representing nearly 40 MW of wind power generation, in March 2011.  Each project cost approximately $42 million and both were completed and put into commercial operation in mid-March 2011.  We served as the developer and owner’s representative for the construction and commissioning phase of the projects.  Shortly after completing the startup of each wind farm, we received a sub- contract to supply full-scale turbine maintenance services to each system, for an initial two-year term, estimated at approximately $900,000.   The wind farms incorporate one of Juhl Wind’s community-based structures in which ownership is shared with the farmers whose land on which the system is located.  The Adams and Danielson wind farms represent our approach to providing the full range of wind farm services to our customers.

BUSINESS
 
BUSINESS OVERVIEW

Juhl Wind is an established leader in community wind power development and management, focused historically on wind farm projects throughout the United States.  We handle all aspects of wind project development, through our operating subsidiaries, including full development and ownership of wind farms, general consultation on wind projects, construction management of wind farm projects and system operations and maintenance for completed wind farms, which results in multiple revenue streams.  Our primary focus has been to build 5 MW to 80 MW wind farms that are jointly owned by local communities, farm owners, environmentally-concerned investors, and our Company.  The wind farms are connected to the general utility electric grid to produce clean, environmentally-sound wind power. Our development of community wind power systems generally results in landowners owning a portion of the long term equity in the wind farm that resides on their land.  We pioneered community wind power systems in developing the currently accepted financial, operational and legal structure providing local ownership of medium to large scale wind farms.  Since 1999, we have completed 21 wind farm projects, accounting for approximately 195 megawatts of wind power that currently operate in the Midwest region of the United States, and we provide operation management and oversight to wind generation facilities generating approximately 107 megawatts, through our subsidiary, Juhl Energy Services.  We are presently engaged in various aspects of the development of approximately 25 new wind farm projects in the United States totaling approximately 400 megawatts of wind power.  In the second quarter of 2012, we acquired, through Juhl Energy Development, the assets of two early stage development wind farms  located in Ohio, representing approximately 7.6 megawatts of wind power.
 
 
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Historically, our wind power projects are based on the formation of partnerships with the local owners upon whose land the wind turbines are installed.  Over the years, this type of wind power has been labeled “community wind power” because the systems are locally owned by the landowners (often farmers).   Community wind power is a specialized sector in the wind energy industry that differs from the large, utility-owned wind power systems that are also being built in the United States.  Community wind power is a form of community-based energy development (C-BED). Various states, including Minnesota and Nebraska (where we have projects in development), have enacted C-BED initiatives, which include mechanisms to support community wind power and are intended to make it easier for community wind power projects to be successful without putting an excessive burden on utilities.  Therefore, community wind power is both environmentally sustainable and provides an economic stimulus for the rural areas that it encompasses.

Our business and operating strategy, among other things, is to continue to leverage our portfolio of existing community wind power projects, develop new wind farm projects located in the United States, and take equity ownership positions in existing community-based wind farms.  We take projects where the following important conditions exist for successful developments: acceptable wind resources, suitable transmission access, and an appropriate regulatory framework providing acceptable power purchase agreements and long-term utility agreements. Based on our pipeline of projects, we believe that we will continue to develop projects and will grow the number of wind farms for which we are providing operational oversight. We expect that the continued growth in our project pipeline will act as a key competitive advantage as the community wind power industry grows throughout the United States.  Further, we believe that there are existing wind farms that are or will become available for sale by equity owners who have fully utilized the tax attributes or no longer have the desire to continue ownership.

We continue to evolve our strategy and increase our portfolio capacity through acquisitions that complement and support our core business and take advantage of the growth occurring in the wind industry, including wind farm management and turbine maintenance services, as well as related business services, such as engineering and consulting services.  In 2011, as part of our acquisition strategy, we acquired ownership of existing wind farms, through our wind farm ownership and operation subsidiary, Juhl Renewable Assets, that fit our distributed generation model and the size of projects that we typically develop.  We believe that the ownership of community wind farms (in part or in whole) will provide an ability to expand our services to wind farm operations and to create recurring annual revenue streams for our business.  During the second quarter of 2012, we continued our strategy of acquiring complementary businesses by acquiring an engineering firm, Power Engineers Collaborative, LLC (“PEC”) which is now our wholly-owned subsidiary, and expanded our professional service offerings. Our acquisition of PEC brings experience, significant expansion of our base business and opportunity to offer increased capabilities beyond wind and into the full range of clean energy sectors including natural gas, biomass, waste-to-energy, medium-to-large on-site solar, and support to larger wind farm construction. PEC also provides us with cross-selling opportunities that will lead to additional growth across our subsidiaries.

As part of our strategy, we will use our position in the renewable energy space to advance conservation technologies focused on smaller scale and solar systems, through our subsidiary, Juhl Renewable Energy Systems, to consumers and agricultural-related businesses, directly and through a dealer network.

Our evolving business and operating strategy will rely heavily on the expertise of our management team. Our Chairman and Principal Executive Officer, Daniel J. Juhl, was one of the creators of community wind power in the United States.  In addition to Mr. Juhl’s expertise in the wind power field developed during the course of his activity in the industry since 1978, John Mitola, our President, is also considered an expert in the energy field having focused his career on energy efficiency, demand side management and independent power development.   Mr. Mitola has significant experience in the energy industry and electric industry regulation, oversight and governmental policy. The visibility of Mr. Juhl and Mr. Mitola in the wind industry will maximize the quantity and quality of projects available for consideration.
 
 
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OVERVIEW OF OPERATING SUBSIDIARIES
As discussed in detail throughout this prospectus, we provide the following portfolio of services and products, as part of the following operating subsidiaries, which allows us to diversify our offerings and benefit from tiered revenue streams:

Juhl Renewable AssetsRenewable Assets Ownership

Through Juhl Renewable Assets, we acquire ownership positions in wind farms, and invest in other related industries that meet our renewable energy criteria.  We utilize our unique knowledge base to acquire new and existing wind farms, thus building an asset base with a predictable revenue stream.  As discussed herein, Juhl Renewable Assets has taken an ownership position in the following wind farms: the 10 MW Valley View wind farm (February 2011), the 10.2 MW Woodstock Hills wind farm (April 2011), and the 1.5 MW Winona wind farm (October 2011).

In this subsidiary, we also look to revenue contribution through acquisition of related business services that provide strong operating margins, such as engineering, consulting and related facilities.

We expect to raise funds to purchase such wind and related assets through the selling of preferred stock in Juhl Renewable Assets.

Juhl Energy Development - Wind Farm Development

Through Juhl Energy Development, we provide full development services for community wind farms, including the following: initial feasibility studies and project design; formation of required land rights agreements to accommodate turbine placement on each project’s specific farm land, assisting in applying for applicable environmental, zoning and building permits for the project; studies, design and agreements with utilities; turbine selection and delivery coordination; negotiation and execution of power purchase agreements; access and consultation regarding construction financing; coordination of vendor terms, including vendor financing; introduction to equity and debt project financing services; construction oversight and balance of plant construction services; and project commissioning.  Revenue is recognized on a completed contract basis.

Since 1999, we have completed 21 wind farm projects, accounting for approximately 195 megawatts of wind power currently operating in the Midwest region of the United States.  We are presently engaged in various aspects of the development of approximately 25 new wind farm projects in the United States totaling approximately 400 megawatts of wind power.  In the second quarter of 2012, we acquired, through Juhl Energy Development, the assets of two early stage development wind farms located in Ohio, representing approximately 7.6 megawatts of wind power.

 Juhl Energy Services - Wind Farm Operations and Maintenance Services

Through Juhl Energy Services, we earn revenue through administrative, management and maintenance services agreements with wind generation facilities, and such revenues are recognized as the in-field services are provided.   We can either provide services to wind farms that we have developed, or contract with existing wind farms that we have not developed.  Currently, Juhl Energy Services provides operation management and oversight to wind generation facilities generating approximately 107 megawatts.

Juhl Renewable Energy Systems - Small Scale Renewables

Through Juhl Renewable Energy Systems, we specialize in advanced conservation technologies focused on smaller scale wind and solar energy systems. Juhl Renewable Energy Systems is focused on the sales and installation of our on-site renewable energy systems, including Solarbank™, a proven on-site solar system; Powerbank™, a simple onsite backup power system, and a newly designed wind turbine in prototype stage, which we consider one of the industry’s most advanced medium scale wind turbines at approximately 35 kW. Juhl Renewable Energy Systems handles projects from start to finish, including design, sales, assembly and service. Juhl Renewable Energy Systems plans to provide several financing structures including its ongoing system ownership at customer sites while delivering guaranteed operations and savings to end-user customers.

Next Generation Power Systems – Refurbished Turbines and Maintenance Support

Next Generation Power Systems is in the business of refurbishing turbines and maintaining this fleet.  We do not expect to sell additional refurbished turbines and this business unit is being phased out.

Power Engineers CollaborativeEngineering Services
Through our most recently acquired wholly-owned subsidiary, Power Engineers Collaborative, we provide engineering services to clients, which include electric utilities, independent power producers, and industry and building systems.   PEC's core business includes aiding clients in site selection, environmental permitting, equipment studies, preparation of contract documents, bid evaluation, contract awards, preparation of detailed construction documents, design of auxiliary facilities, engineering services during construction, and training of operating and maintenance personnel.  The Building Systems Engineering Division (BSE) extends these capabilities and focuses them toward the Mechanical, Electrical, Plumbing ("MEP"), Fire Protection, and energy-related needs of the commercial, residential and institutional sectors.  PEC's MEP work experience ranges from interior developments to high-rise new construction. Business sectors include commercial, retail, data and communication, K-12 and higher educational, food service, high-rise development, hotel, multi-family residential, industrial, geothermal heat pump systems, power, municipal, public works, and parking facilities. 

PEC offers clients services in all phases of an MEP project including permitting, conceptual design, project management and detailed design and construction commissioning start-up.
 
 
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Our Community Wind Farm Portfolio

We believe that we have completed and placed into service more community wind power systems than any other U.S. enterprise. To date, we have developed 21 community wind farms, totaling approximately 195 megawatts of installed power, located primarily in the Buffalo Ridge area of southwestern Minnesota. We selected Buffalo Ridge because of its high altitude (approximately 2,000 feet above sea level) and high average wind speed and access to interconnection facilities, making it, in our opinion, a good location for wind-based energy production.

In addition to the first 21 wind farms developed by us, totaling approximately 195 MW of operating capacity,  we have approximately 25 community wind projects in various phases of development totaling approximately 400 megawatts of operating capacity.  These projects are primarily located in the states of New York, Illinois, Minnesota and Montana.

A sample of our completed the projects, include but are not limited to the following:
 
       
Project Name
County/Location
MW
Completed
15 completed wind farm developments
Upper Midwest U.S.
118.05
1999 to date
GL Wind
Winona County, MN
5.00
2011
Valley View
Chandler, MN
10.00
2011
Winona County Wind
Winona County, MN
1.50
2011
Danielson Wind
Meeker County, MN
20.00
2011
Adams Wind
Meeker County, MN
20.00
2011
Grant County Wind
Hoffman, MN
20.00
2010
 
TOTAL
194.55
 

A sample of our projects that are in various phases of development as referenced below, include but are not limited to the following:

       
Project Name
County/Location
MW
Phase
Black Oak
Ithaca, NY
15 to 20
Initial Study/Feasibility
Crofton Hills
NE
40.00
Construction 2012
Kittson/Marshall
MN
80.00
Early stage development
Kennedy
MN
20.00
Early stage development
Ohio projects
OH
7.6
Early stage development
 20 additional wind farm projects
Upper Midwest U.S.
235 (approx)
Various Development Stages
 
Note: From time to time some of our projects are not listed publicly due to the preferences of local owner groups or competitive issues facing our business.  However, we strive to provide regular updates to our projects listing via press releases and corresponding updates to our corporate website, www.juhlwind.com .

With respect to the projects that are yet to commence construction, it is difficult to predict the timing of construction as it subject to numerous risks and uncertainties.  Thus, some of the projects listed above may not commence construction until after 2012 or at all.  Even once a project commences operations, it may not meet our original expectations about how much energy it will generate or the returns it will achieve.

Overall, based on our pipeline of projects, we believe that we will develop additional projects and we will add to the number of projects for which we are providing operational oversight. We expect that the continued growth in our project pipeline will act as a key competitive advantage as the community wind power industry grows throughout the United States and Canada.
 
 
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COMPETITIVE ADVANTAGES/STRENGTHS

We believe that we have a number of competitive advantages in the community wind energy production sector:

Tiered Service Offering Results in Multiple Revenue Streams.  One of our key advantages is that we do not depend solely on one operating subsidiary to produce revenue.  We generate revenue from these operating subsidiaries:

 
·
Juhl Renewable Assets is our renewable asset ownership subsidiary, including wind farms, where we utilize our unique knowledge base to acquire new and existing wind farms to build our asset base and provide predictable revenue.
 
 
·
Juhl Energy Development is our wind farm development subsidiary, where revenue is generated from development, service and construction fees earned from each of the wind farms that we develop, and is recognized as revenue on a completed basis.
 
 
·
Juhl Energy Services is our wind farm operations and maintenance subsidiary, where revenue is earned from administrative, management and maintenance services agreements and is recognized as the in-field services that are provided.
 
 
·
Juhl Renewable Energy Systems is our small scale renewable subsidiary, where revenue will be contributed through the sale and installation of renewable energy systems.
 
Proven Record in Developing Wind Farm Projects.  One of our key advantages is that we have completed 21 community wind farm projects to date, representing approximately 195 megawatts of generating capacity of electricity, and currently have approximately 25 wind farm projects in various developmental stages, representing approximately 400 megawatts of generating capacity of electricity. We expect that when owners of new projects consider retaining a development enterprise, the ability to point to actual projects completed, along with the extensive knowledge base developed and relationships necessary to get the job done, will provide us an edge in winning projects in the future. These relationships include those with utility power purchasers, equity and debt project finance sources, turbine suppliers and contractors.

For community wind projects to be completed successfully, projects must be constructed in a cost-effective manner. In the course of completing 21 projects to date, we have been able to demonstrate to project owners, equity investors and lenders, that we can build wind farms on a cost-effective basis.

As more players get into the renewable energy space, with the transforming industry (especially upon the elimination of PTCs), developers, who have a history in the field, are more likely to prosper in the long-term.

Experienced Management Team.   Led by an industry leader, Dan Juhl, our development team is unmatched in its experience, credibility and track record. Mr. Juhl is an expert in the wind power field and is considered a pioneer in the wind industry having been active in this field since 1978.  He was a leader in the passage of specific legislation supporting wind power development in the states of Minnesota and Nebraska, as well as contributing to the development of the currently accepted, financial, operational and legal structure providing local ownership of medium-to-large scale wind farms. John Mitola, our President, is also considered an expert in the energy field having focused his career on energy efficiency, demand side management and independent power development. He has significant experience in the energy industry and electric industry regulation, oversight and government policy. The rest of our management team has been involved in the wind power industry for more than 30 years. We have experience in the design, manufacture, maintenance and sale of wind turbines, as well as the full-scale development of wind farms.

We believe that our experience in developing community wind farms in new market areas and in operating energy companies will enable us to continue to successfully expand our development portfolio. Further, we believe our management’s understanding of deregulated energy markets enables us to maximize the value of our development portfolio. Our team has experience in site selection, market analysis, land acquisition, community relations, permitting, financing, regulation and construction.

Further as we build on our core business through strategic acquisitions or joint ventures with other industry partners on specific projects, our experienced management team’s connections in the industry will be expanded, which will enhance our ability, to review projects that meet our criteria and move forward on those projects.

Established Local Presence.   In the Midwest U.S. markets where we are active, our management team maintains local presence and promotes community stakeholder involvement. By maintaining our principal office in Pipestone, Minnesota and satellite offices in Minneapolis, Minnesota and Chicago, Illinois, and becoming involved in local community affairs, we develop a meaningful local presence, which we believe provides us with a significant advantage when working through the local permitting processes and helps to enlist the support of our local communities for wind farms. We believe that our local approach has enabled us to secure approvals and support for our projects in regions that have historically voiced opposition and has given us a significant advantage over competitors, who are not as active in the local communities in which we are developing wind farms. Our management’s active participation in the state and local regulatory and legislative processes has led to the growth of community wind across the Midwest.
 
 
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We plan to use that credibility that has been built in the local communities to expand our presence outside of the Midwest U.S. market, where we can take advantage of higher electricity rates.

Turbine Access.   We maintain good working relationships with turbine suppliers who are actively marketing turbine equipment in our market area, with extensive experience to determine suitability of turbine technologies for our projects.   In order to continue to survive long term in this industry, we need to continue to control costs.  Thus, the ability to purchase turbines in bulk, possibly through a frame agreement, provides access to the lowest price.  Further, in many of our wind farm projects, we have been willing to use technology of new turbine manufacturing entrants, which proves reliability and favorable access to the supply chain to provide lenders with comfort in terms of financing a project.  Further, newer wind turbine models are more efficient and offer improved capacity factors with prices continuing to fall to record levels.

Ownership-Sharing Structure with Land Owners.   Through our community wind approach, we involve local stakeholders (such as farmers) by working with them to establish a limited liability company that extends ownership to the participants along with the initial equity investor. Landowners are critical to any wind farm because wind turbines must be placed in open areas requiring a large amount of land necessary to “harvest the wind.” Turbines are typically placed on a small plot of land, and less than one acre is removed from normal use (such as farming or grazing) for each 50 acres of wind resource captured. Turbines must be spaced a certain minimum distance apart to avoid “shadowing” each other and reducing power output. By integrating the land owners into the land rights and ownership structures, we can allow a wind-enabled farm to more than double the annual net income from cultivation or grazing.  As a project developer, we assist in finding financing, securing the contract with a utility to buy the electricity produced, negotiating a turbine supply agreement, constructing the system, and operating the wind farm.

As an established leader of community wind power, we have been able to offer what we believe is a unique ownership-sharing formula with landowners and local communities that provide us with an ongoing competitive advantage in this large and open sector of the wind energy arena.  Some of the key advantages of our approach are driven by the fact that our projects are medium-sized which provide the following key benefits:

 
·
the 1 to 50 megawatt size of our wind farm projects benefit from a lower cost per megawatt of installed power and are quicker to build, which provides for a higher return on investment;
 
 
·
the development of these projects secures economic benefits to the local community bringing construction, legal and regulatory work to rural areas by engaging local land owners, engineers, bankers and contractors to assist in the building and maintenance of the projects;
 
 
·
the development of these community wind farm projects lend itself to easier land aggregation for the building of the wind farms;
 
 
·
easier and less expensive transmission and, in general, projects which are much easier to build.  End users generally receive electricity through an already established local utility grid;
 
 
·
the landowner and local community retain more by sharing ownership with the developer and excluding external interests, which creates a more sustainable energy future; and
 
 
·
easier to obtain regulatory permits and to secure project financing through established and/or local resources due to the size of each project.
 
In addition, while mega-wind projects have gained wide attention, we believe we are uniquely positioned as the only publicly-traded community wind power company in the U.S. committed to and building projects in the 1 – 50 megawatt sector, which has received considerable attention in the industry.  This market is largely overlooked by larger developers.  This oversight provides an opportunity to rapidly increase our market share and expansion plans.  We believe such advantages outweigh the higher transactional costs as a small community project must cover comparable costs over a smaller number of turbines with less electrical production and sales.

Strategic Acquisition Subsidiary – Juhl Renewable Assets.    We formed an acquisition subsidiary, Juhl Renewable Assets, which is our vehicle for strategic acquisitions that supplement our core business, to take advantage of the growth occurring in the community wind industry.  Our strategic acquisition plan actively focuses on the following: (i) acquisition of additional wind service businesses, including other operation and maintenance providers and wind consulting providers; (ii) acquisition of ownership of existing wind farms that fit our distributed generation model and the size range of projects we typically develop; and (iii) acquire or joint venture with other industry partners on specific projects, where we can share the various elements of fees and profits, including development fees, general construction, management, and operations and maintenance.  To date, we have acquired significant interests, through Juhl Renewable Assets, in Woodstock Hills, Winona, and Valley View wind farm projects.
 
 
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·
Woodstock Hills Wind Farm.  On April 28, 2011, Juhl Wind paid $400,000 to acquire a 99.9% ownership interest in a 10.2 megawatt wind farm, Woodstock Hills, located in Woodstock, Minnesota. The Woodstock Hills wind farm has been operating as a wind energy generation facility since 1999 and had been originally developed by the Company’s CEO, who remains the .1% minority interest member.  On May 6, 2011, we transferred our entire interest in Woodstock Hills to Juhl Renewable Assets, pursuant to a transfer and assignment agreement.  The Woodstock Hills wind farm entered into a power purchase agreement (PPA) with Northern States Power (NSP) in 1997.  The agreement, among other things, requires NSP to purchase all of the electricity output from the Woodstock Hills wind energy generation facility over a 30-year period following its commercial operation date at rates provided in the agreement.  The commercial operation date has been deemed to be May 1, 2004.  
 
 
·
Winona Wind Farm.  On October 13, 2011, the individual project owners of the Winona Wind Holdings, LLC, which owns 100% of Winona County Wind, LLC, the operator of a 1.5 megawatt wind-powered electric generating facility in Winona County, Minnesota, sold their 100% ownership interest to our subsidiary, Juhl Energy Development, for $5,000.  Subsequently on December 31, 2011, Juhl Energy Development transferred its interest in the Winona wind farm to Juhl Renewable Assets and has increased its investment to approximately $100,000.  The Winona wind farm entered into a PPA with NSP in 2010.  The agreement, among other things, requires NSP to purchase all of the electricity output from the Winona wind energy generation facility over a twenty year period following its commercial operation date at rates provided in the agreement.  The commercial operation date has been deemed to be October 27, 2011.
 
 
·
Valley View Wind Farm.   On November 30, 2011, Juhl Renewable Assets purchased interests in Juhl Valley View, LLC, which equates to a 36.6% voting interest in Juhl Valley View, LLC and has an additional 13.9% voting power through a voting trust arrangement with three other investors.    Pursuant to a subscription agreement, Juhl Valley View, LLC agreed to invest all subscription amounts received as part of the offering into Valley View Wind Investors, LLC, which owns 99% financial rights and 49% governing rights of Valley View Transmission, LLC, which operates the 10 MW Valley View wind farm.  The Valley View farm entered into a PPA with NSP in 2009.  The agreement, among other things, requires NSP to purchase all of the electricity output from the Valley View wind energy generation facility over a twenty year period following its commercial operation date at rates provided in the agreement.  The commercial operation date has been deemed to be November 30, 2011.  The Valley View entity will be included in the financial statements as a consolidated variable interest entity.
 
Juhl Renewable Assets also made a $400,000 investment in PVPower, Inc. (“PVPower”).  PVPower is complementary to Juhl Renewable Energy Systems and is focused on the sale of solar power products, including photovoltaic solar panel and modules from multiple solar panel manufacturers, solar inverters, solar charge controllers, and deep cycle solar batteries through non-traditional sales channels, specifically through a distributor network over the Internet.

On April 30, 2012, Juhl Wind became the sole equity owner in Power Engineers Collaborative, L.L.C., an Illinois limited liability company, which provides engineering services to clients in the energy, industry and building systems markets. 

Further, we intend to issue shares of preferred stock in Juhl Renewable Assets to investors, in order to fund our strategic acquisition operations.  This will avoid delays and difficulties of obtaining financing from traditional lending sources and continue to provide access to financing especially with the lack of PTC driven financing going forward.

Significant Milestones for Juhl Wind

Since becoming a public company in 2008, we have achieved several significant milestones:
 
 
·
we have secured institutional investment in excess of $7 million available for use as working capital;
 
 
·
we acquired NextGen which specializes in smaller scale wind turbine and solar systems.  This acquisition brought smaller wind turbine and solar expertise to the Company to enhance and expand our existing community wind power product and service offerings; in turn, we received $1 million during 2009 and 2010 from a licensing and distribution arrangement for the NextGen technology.  We have now formed a wholly-owned subsidiary, Juhl Wind Renewable Systems, to build upon our core business of consumer related energy products, including small wind turbines and solar products;
 
 
·
we completed the development on 7 wind farms totaling 77.25 MW of installed wind power:  
 
 
o
20 MW Grant County wind farm; commissioned in 2010;
 
 
o
1.5 MW wind farm commissioned in 2011 in Winona County, MN;
 
 
o
10 MW wind farm commissioned in 2011 in Chandler, MN (Valley View project);
 
 
o
5 MW wind farm commissioned in 2012 in Winona County, MN for Gundersen Lutheran health systems;
 
 
o
40 MW consisting of two wind farms  commissioned in 2011 in Meeker County; and
 
 
o
.75 MW Woodstock Muni wind farm, commissioned in 2010;
 
 
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·
we have worked to align ourselves with environmentally-friendly concerned investors and non-traditional banking institutions to provide financing options for investment in our projects, and have worked with traditional bank financing, as well;
 
 
·
we have entered into strategic relationships with industry partners to continue our ability to develop projects in our pipeline.  These relationships with turbine suppliers, a wind consulting firm and others will benefit our continued growth in the community wind power industry with the development and completion of further community wind power projects;
 
 
·
we have formed an acquisition subsidiary, Juhl Renewable Assets, in order to supplement our core business by acquiring complementary businesses, owning existing wind farms, and joint venturing with other industry partners on specific project; to date, Juhl Renewable Assets made its first initial investment in the Valley View wind farm, and subsequent investments in Woodstock Hills and Winona wind farms.  Juhl Renewable Assets also made an investment in  PVPower, which is focused on the sale of solar power products, including photovoltaic solar panel and modules from multiple solar panel manufacturers, solar inverters, solar charge controllers, and deep cycle solar batteries through non-traditional sales channels, specifically through a distributor network over the Internet;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of $12,564,150 for the 20 megawatt Grant County Wind Project in the fourth quarter of 2010.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant went toward partial payments of construction financing arranged by Juhl for the community wind project;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of approximately $1,413,000 for the 1.5 megawatt Winona County Wind Project in the first quarter of 2012.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant primarily went toward payment of construction costs for the project, now owned by Juhl Renewable Assets;
 
 
·
we assisted in closing of permanent equity financing for the Grant County and Meeker County projects totaling approximately $90 million in March 2011, and the completion of a $13 million construction and financing for the Valley View project in March of 2011;
 
 
·
we completed a 4.95 MW wind farm project for Gundersen Health System in Winona County, Minnesota.  It is the first-of-its kind wind farm in North America to be constructed to specifically address the energy concerns of a large regional health organization.  This is an example of how we are partnering with large and industrial organization projects, such as Gundersen Health System, to help such organizations realize their goals of becoming energy independent;
 
 
·
we assisted in the application and receipt of a U.S. Stimulus Grant of approximately $6,284,000 for the 10 megawatt Valley View Project in the first quarter of 2012.  The grant was issued by the U.S. Treasury Department in accordance with the American Recovery and Reinvestment Act of 2009.  The proceeds of the grant primarily went toward payment of turbine and construction costs for the project;
 
 
·
we signed a development services agreement with Black Oak Wind Farm located near Ithaca, NY, which is a proposed 15 to 30 MW facility.  This is the first wind farm where we have expanded our development services outside of the Midwest region.  This allows us to diversify our development portfolio by adding projects throughout North America and in regions that generally experience higher electric rates;
 
 
·
during the second quarter of 2012, we acquired an engineering firm, Power Engineers Collaborative, which is now our wholly-owned subsidiary, and expanded our professional service offerings.  Our acquisition of PEC brings experience, significant expansion of our base business and opportunity to offer increased capabilities beyond wind and into the full range of clean energy sectors including natural gas, biomass, waste-to-energy, medium-to-large on-site solar, and support to larger wind farm construction.   PEC also provides us with cross-selling opportunities that will lead to additional growth across our subsidiaries;
 
 
·
during the second quarter of 2012, Juhl Energy Development acquired substantially all of the early stage development assets relating to the development, construction and/or operation of an approximately 3.6 MW community wind energy project on a site located in Painesville, Ohio; and   
 
 
·
during the second quarter of 2012, Juhl Energy Development, acquired substantially all of the early stage development assets relating to the development, construction and/or operation of an approximately 4 MW community wind energy project on a site located in Russels Point, Ohio.
 

GROWTH STRATEGIES

Our growth strategy continues to evolve as we continue to provide the full range of services across each phase of development of a wind farm project, but also focus on providing broader services to a wind farm project which include construction and development of wind farms, providing maintenance services for existing wind farms, and achieving additional growth through targeted acquisitions.
 
 
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Wind Farm Development, Construction and Management Services:

Our growth strategy is anchored by the competitive advantage of our portfolio of completed projects coupled with the projects we currently have under development. One component of our plan is to continue to provide the full range of services across each phase of development, including construction and management, which enhances our ability to add value to a project, which we expect will grow our revenue and profitability.

In addition to growing our revenue per project, we will continue to grow our projects under development by utilizing competitive strengths and taking advantage of market conditions to build long-term growth, as follows:
 
 
·
We are targeting 5 to 50 megawatt wind farm projects.  In the State of Minnesota alone, industry experts have suggested there exist over 6,000 megawatts of achievable electricity utilizing our community wind power model.  Thus, we expect to increase our capacity by entering regional markets through organic development and strategic acquisitions of existing wind farms that meet our criteria (as discussed below).   For our organic development, upon entering a market we work to become a leading wind energy operator and an influential voice within the region. In these cases, we strive to develop projects in-house from the initial site selection through construction and operation.
 
 
·
In addition to development, we are focusing on providing an overall service component that includes construction and development management by developing relationships with contractors, turbine suppliers, and financing partners in the wind farm industry.  In addition to such service component, we are also expanding our services to include turbine maintenance services for wind farms in the Upper Midwest.  We are growing our service business, through our operations and maintenance subsidiary, Juhl Energy Services.  By way of example, Juhl Energy Services is currently providing wind farm maintenance on the Adams and Danielson wind farms located in Meeker County in West Central Minnesota (as discussed herein).
 
 
·
We plan to expand business relationships within the investment community both in the U.S. and abroad in order to assist project owners in obtaining construction financing and end project equity and debt financing for project developments. This will include introductions to local owners to raise capital in private or public equity funds that might invest in the wind project developments.
 
 
·
We expect to create relationships as a community stakeholder. We prioritize the creation of strong community relationships that we believe are essential to generating support and securing land and permits necessary for our wind farms. Our team works closely with the landowners who will host the wind farms to ensure that they fully understand the impact of the turbines. Throughout the development process, we assess and monitor the community’s receptiveness and willingness to host a wind farm in the project area. This proactive involvement in the community also enables us to submit permit applications that comply with local regulations while addressing local concerns.
 
 
·
Although we see opportunity to expand our pipeline of projects in the Upper Midwest, we are also actively looking to diversify our development portfolio by adding projects throughout North America and in regions that experience higher electric rates.  In 2012, we entered into a development agreement in the State of New York on a 15 to 30 megawatt wind generation facility.
 
 
·
We expect to work with governmental agencies to help us incentivize the creation of community wind farms and their ability to obtain power purchase agreements, and offer favorable tax treatment for owners and investors.  Further, we intend to use tax equity financing arrangements in order to monetize the value generated by production tax credits (or alternatively, investment tax credits or treasury cash grants) and accelerated tax depreciation that are available to wind generation projects.
 
 
·
We will continue to strive to attract, train and retain the most talented people in the industry. As we continue to grow our business, we will need to attract, train and retain additional employees. We believe that our management team will be instrumental in attracting new and experienced talent, such as engineers, developers and meteorology experts. We plan to provide extensive training and we believe that we offer an attractive employment opportunity in the markets in which we operate.
 
 
·
We believe that the formation of Juhl Renewable Assets will provide us the ability in the future to provide supplemental funding to our wind farm development projects.  This will allow us to more quickly bring projects through the early development and construction stages.
 
Growth through Targeted Acquisitions:

 
·
We will focus on growth through targeted acquisitions, to increase our capacity of wind farm projects in our pipeline, and grow our revenue and profitability.  We now actively seek acquisitions to strengthen our business in the following areas:
 
Ø
targeting other segments of our industry, such as additional wind service businesses, including operation and maintenance providers and wind consulting providers;
 
 
Ø
developing a strategy where we may acquire ownership of existing wind farms that fit our distributed generation model and the size range of projects we typically develop (under 100 MW); and
 
 
Ø
acquiring or participating in joint ventures with other industry partners on specific projects (given that so many other independent developers have been unable to move projects in their own pipeline); preferred model is to contract for a joint venture on projects that can share with us the various elements of fee and profit, including development fee, general construction, construction management and operations and maintenance.
 
 
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Consumer-focused renewable energy products – smaller on-site wind power and solar systems:

Juhl Renewable Energy Systems provides renewable energy systems and specializes in advanced conservation technologies focused on smaller scale wind and solar systems.  Juhl Renewable Energy Systems is focused on the sales and installation of Juhl Wind’s on-site renewable energy systems - including Solarbank™, a proven on-site solar system; Powerbank™, a simple on-site backup power system; and a newly designed wind turbine in prototype stage, which we consider one of the industry’s most advanced medium scale wind turbines at approximately 35 kW.  Juhl Renewable Energy Systems handles projects from start to finish, including design, sales, assembly and service.  Juhl Wind plans to provide several financing structures including its ongoing system ownership at customer sites while delivering guaranteed operations and savings to end-user customers.

Juhl Renewable Energy Systems will capitalize on Juhl’s extensive experience with a wide variety of energy saving and environmentally-sound production systems such as small wind, solar, back-up power, and stand alone power systems.  Juhl Renewable Energy Systems will operate as our consumer-focused renewable energy products subsidiary.  Juhl Renewable Energy Systems will build upon our diverse experience to enable it to assist the energy consumer to control, and in some cases eliminate, their ever burdensome energy costs.  Juhl Renewable Energy Systems supports a transition to a sustainable energy economy which relies on clean, renewable resources to satisfy societal needs.  Juhl Renewable Energy Systems can present the energy consumer with modern options in terms of cost effectiveness, performance, and reliability.

Juhl Renewable Energy Systems current product line includes the following:

 
·
Solarbank™ .  Juhl Wind has developed a “SolarBank™ System” which offers one of the most advanced controlled solar system in the market.  Solarbank™ allows the customer the assurance and confidence that power will be available when needed most.  It is designed to give businesses and homeowners the ability to store up to 72 hours of emergency power in the event of a power failure.  This back-up power system works automatically and instantaneously.  When a power outage occurs, the control relay station automatically taps into the energy reserve stored by the SolarBank™ System and can run several loads for 24-72 hours.  Solar modules are designed to convert sunlight into electricity at the highest possible efficiency and are used to charge storage batteries to provide power for remote homes, recreational vehicles, electric cars, boats, telecommunications systems and other consumer and commercial applications.  Additional benefits are the ease of installation, operation, and maintenance; results of several years of improvements to the core design of the system, which has been installed and operating for 6 years.
 
 
·
Powerbank™.   Powerbank™ is Juhl Wind's proven on-site backup power system, offering energy insurance and confidence to customers.  Powerbank™ ensures that power will be available to customers when grid power is at increased rates, or unavailable.
 
Historically, our wholly-owned subsidiary, NextGen, has sold refurbished turbines as part of our smaller on-site wind power products.   Currently, NextGen is only maintaining its current inventory of refurbished turbines and does not expect to sell any refurbished turbines going forward.

Long-Term Survival in Industry – Ability to Add Value and be Cost Effective

For long term survival in the renewable energy space, especially wind, we continue to be adaptable to the changing conditions of the U.S. wind industry and market, increasingly diversifying our offerings, in order to reduce our exposure to the extension or renewal of tax incentives and other favorable governmental policies currently supporting the U.S. wind industry.  Other areas where we believe we can add value to a wind farm project (in addition to our core development, maintenance and management services) is the continued research and development in the following areas:

 
·
Distributed generation facilities that allow power users to operate ‘behind the meter’ ;
 
 
·
dedicated storage facilities to help address intermittency on the transmission systems; and
 
 
·
design of project to meet very specific needs of output purchasers.
 
Sales and Marketing

We derived approximately 83% of our  revenue in 2011 from six customers mostly as a result of the wind farm construction activities, and 79% of our revenue in 2010 was from five customers as a result of wind farm construction activities.
 
 
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Historically, Juhl Energy Services and Juhl Energy Development have not relied on any direct sales or marketing efforts for wind farm development and management, but have gained exposure through trade publications, word of mouth, and industry conferences. We currently have a pipeline of projects we believe will last at least two years and it is being supplemented on an on-going basis without direct selling efforts. We anticipate being able to add a significant number of projects to this pipeline driven primarily by Dan Juhl, John Mitola and an expanding development team, trade publications, industry events and word of mouth. Our web site, www.juhlwind.com, also serves as a marketing tool. If, at some point, management determines the pipeline of potential customers is less than anticipated or desired, or if we are unable to sustain our desired rate of growth and expansion with these sales and marketing methods, we will reevaluate the sales and marketing efforts and address the issue at that time.

We are currently utilizing a combination of internal direct selling efforts as well as third party distributors for the sale of consumer-owned renewable energy products.  We plan to increase our efforts to establish sales channels through qualified dealers who demonstrate technical knowledge in the renewable energy marketplace, and have sales expertise and financial stability to deliver small scale wind turbine and solar-related systems.

Intellectual Property

We depend on our ability to develop and maintain the proprietary aspects of our technology to distinguish our products from our competitors’ products. To protect our proprietary technology, we rely primarily on a combination of confidentiality procedures. It is our policy to require certain employees and consultants to execute confidentiality agreements and invention assignment agreements upon the commencement of their relationship with us. These agreements provide that confidential information developed or made known during the course of a relationship with us must be kept confidential and not disclosed to third parties except in specific circumstances and for the assignment to us of intellectual property rights developed within the scope of the employment relationship.

We have no patents, licenses, franchises, concessions or royalty agreements, other than a July 2009 manufacturing license arrangement with an Ohio company that includes the use of NextGen’s proprietary software controlling the power electronics of the NextGen wind turbine unit and other related documentation. The term of the manufacturing license arrangement is twenty years and does not allow the licensee to access the software or provide such software to any other party.

Currently, we have two pending trademark applications with the United States Patent and Trademark Office for Solarbank and Powerbank.
 
Competition

Within the U.S. wind power market itself, there is a high degree of competition, with growth opportunities in all sectors of the industry regularly attracting new entrants. Juhl Wind is subject to competition from energy marketers, public utilities, and other independent power producers, in particular providers of renewable energy.  These companies may have competitive advantages as a result of scale, the location of their generation facilities, greater access to credit and other financial resources, lower cost structure, greater ability to withstand losses and larger staffs.

The enactment of the American Recovery and Reinvestment Act in February 2009 had provided a greater tax incentive for companies in the renewable energy industry, which provided an incentive for developers to enter in the wind power development market, who will have an overall increased need for wind turbines.  However, as noted, the production tax credits and other tax grants under the American Recovery and Reinvestment Act, have, to date, not been extended.  We believe this is likely to impede new development from new entrants.

With the termination of the PTCs and other cash grant programs under the American Recovery and Reinvestment Act, the opportunity to develop wind farm projects is likely to diminish from levels in the past.  Without the tax incentives, developers with cash flow from existing projects and are well capitalized will be able to continue to develop projects.  Further, the developers with projects that generate a higher capacity of energy will be able to spread capital costs over a larger production base, which is an advantage over our community wind farm target of 5 to 50 MWs.  Finally, developers who are able to access project financing as the elimination of the PTCs would shift from unleveraged tax equity to more traditional financing, where companies with large balance sheets would have an advantage with traditional project lenders.  Developers, such as Juhl Wind, would also need to continue to pursue alternative financing arrangements, such as vendor financing for construction, as we have successfully done in the past.

With the expiration of the PTCs, the cost of wind turbines becomes a key component to control costs in this transition time of the industry.  Typically, the capital cost of purchasing turbines has been high.  However, the average price for wind energy equipment, including turbines, continues to fall based on the production of newer wind turbine models and increased competition of manufacturers in China and reached its lowest price in the second half of 2011.  Thus, each wind farm developer will need to have the funding now to take advantage of the low turbine prices.  As stated above, the more capitalized developers will be able to fund the purchases of the turbines and control costs of the wind development projects.
 
 
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In addition to the cost of turbines, new entrants in the wind power development market face certain barriers to entry.  There is increased difficulty and uncertainty in obtaining long-term power purchase contracts from utilities, even in the face renewable energy portfolio standards in over 30 states.  Other significant factors include the cost of land acquisition, the availability of transmission lines, land use considerations and the environmental impact of construction and operations. Finally, another critical barrier to entry into the wind power development business is the necessary experience required to bring projects to the point where they are able to secure agreements with respect to connecting to the existing electricity transmission network, power purchase agreements and project financing for construction.

We are aware of a few companies that are working in the community wind power area and which management views as being competitive with certain aspects of our company.  Given Juhl’s industry standing and the number of existing projects, we do not view this as a threat or potential disruption to our business.

With respect to the production and sale of consumer-owned renewable energy products, there are numerous businesses operating in the U.S. that are associated with the manufacturing, sales, distribution and installation of products and services. The competition in this field is not dominated by any one particular company or group of companies.
 
Suppliers
 
As the primary operating equipment for our wind farm development projects, wind turbines are integral to our wind project development.  As compared with demand for wind turbines, there are a limited number of turbine suppliers, which limits the current production capacity.   Thus, the cost of wind turbines represents the majority of our wind energy project investment costs.  
 
Wind turbines come in a variety of sizes, depending upon the use of the electricity. A large, utility-scale turbine described above may have blades over 40 meters long, meaning the diameter of the rotor is over 80 meters (nearly the length of a football field). The wind turbines might be mounted on towers 80 meters tall (one blade would extend half way down the tower), produce 1.8 megawatts of power (1800 kilowatts), supply enough electricity for 600 homes and cost over $1.5 million. Wind turbines designed to supply part of the electricity used by a home or business is much smaller and less costly. A residential or farm-sized turbine may have a rotor up to 15 meters (50 feet) in diameter mounted on a metal lattice tower up to 35 meters (120 feet) tall. These turbines may cost from as little as a few thousand dollars for very small units and up to $80,000 excluding installation costs.
 
The principal suppliers to our wind farm projects primarily consist of suppliers of wind turbines, wind turbine parts and various electrical supplies and services relating to wind turbine operation. We also source, as needed, wind studies and electrical engineering expertise from outside suppliers. With respect to wind turbines and related items, to date, our principal suppliers have been Suzlon Energy Limited, Alstom Power and Vestas Wind Support Systems A/S for turbines; Fagen, Inc. for subcontracted construction services, and Abaris EC, LLC, Echo Group, Inc., Muth Electric Inc. and Motion Industries, Inc. for electric services and supplies. We have used WindLogics, Inc. and AWS Truewind for wind studies and Consulting Engineer Group, Inc. and Hoerauf Consultants, Inc. for specialized electrical engineering. Our business is not dependent on any one supplier and our list of suppliers is changing and expanding on an ongoing basis as the market for wind power continues to expand and new suppliers enter with advanced products, technologies and services.

Customers

Our wind farm projects sell electricity and associated RECs primarily to local utilities under multi-year power purchase agreements (“PPA”). A PPA is a contract that provides for the purchase of power at an agreed-upon price for a period of time, which is typically 20 years for wind projects.  For the year ended December 31, 2011, the electrical production we sold to Northern States Power Company d/b/a Xcel Energy represented 100% of our sales.  This PPA typically provides for a 20 year-term in the agreement from the electric utility. The utility normally maintains ownership of any Renewable Energy Certificates (“green tags”) that are associated with the power generated by the projects.  Since the primary cost of wind power is the initial capital cost of the system, each wind farm benefits from a steady stream of reliable revenue and cash flow for decades.
 
Government Regulation

Overview – Utility Regulation

Traditionally, utility markets in the United States have been highly regulated. The U.S. power industry is currently in transition as it moves toward a more competitive environment in wholesale and retail markets. The commercial viability of wind power will increasingly depend upon pricing as the trend toward deregulation continues.
 
 
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Our operations are subject to extensive regulation. To the extent of our involvement in project development, construction, ownership, operation and maintenance of wind farms, including the sale of electricity to utilities, we are subject to energy, environmental and other governmental laws and regulations by various federal, state and local government agencies. The federal government regulates the use of electric energy, capacity and the wholesale sale and transmission of electricity in interstate commerce and regulates certain environmental matters. States and local governments regulate the construction of electricity generating and transmission facilities, the intrastate sale of electricity, and environmental matters.   Below is a brief summary of some of the pertinent laws that are applicable to our business, but such disclosure is not exhaustive of all such laws that we come into contact with operating our business.  

Federal Energy Regulatory Commission
 
 As a company that generates electricity through our wind farm projects, our projects may be subject to government regulation as “public utilities” by the Federal Energy Regulatory Commission (the “FERC”) under the Federal Power Act of 1935 (the “FPA”).    The FERC regulates as "public utilities" those entities that own or operate facilities used for the wholesale sale of electric energy in interstate commerce.
 
Certain small power production facilities may qualify as "qualifying facilities" ("QFs") if the wind powered generating facility has a generating capacity of 80 MW or less.   QFs whose primary source is renewable energy such as wind have the right to sell energy or capacity to a utility through an interconnection agreement and is exempt from certain laws  including, but not limited to,  rate regulation and reporting and accounting requirements of the FPA, for facilities with a generating capacity of 30 MW or less.  However, the FERC must first find that a QF has non-discriminatory access to wholesale energy markets having certain characteristics, including non-discriminatory transmission and interconnection services provided by a regional transmission entity in certain circumstances with respect to its exemption from rate regulation.  For any of our projects that may be non-exempt from the jurisdiction of the FERC, such projects would be subject to rate regulation and the obligation to obtain FERC rate schedules for wholesale sales of energy and capacity.   
 
Most of our wind development projects have a generating capacity of 80 MW or less and qualify as QFs and are exempt from most aspects of FERC regulation.  

Minnesota Public Utility Commission
 
A majority of our wind farm projects are subject to the rules and regulations under the jurisdiction of the Minnesota Public Utility Commission’s Energy Facilities Unit (the “Minnesota Utility Commission”), which manages state oversight of proposals to construct energy facilities in Minnesota, which include wind power generation plants and facilities. The Minnesota Utility Commission’s jurisdiction may include a state Certificate of Need and/or a state Site or Route Permit. Applications for projects subject to the Minnesota Utility Commission’s jurisdiction, such as wind power generation power facilities, are filed with the Minnesota Utility Commission in compliance with Minnesota state statues and administrative rules.  The Minnesota Utility Commission's procedures for review of proposed energy facilities incorporate compliance with the Minnesota Environmental Policy Act and provide for broad spectrum public participation, including timely public notice and multiple opportunities for public comment.  The Minnesota Utility Commission's decisions preempt local jurisdictional authority.
 
Environmental Regulation
 
As part of our wind farm development, including construction management and system operations, we oversee the installation of wind turbines and construction of transmission lines and related facilities, including access roads and substations.   As such, we are subject to numerous restrictions and requirements under federal and state environmental laws and regulations with respect to our operations which affect the timing, cost, location, design, construction and operation of new facilities.  In certain circumstances, such laws and regulations require us to obtain and maintain permits and approvals and incur an environmental review process, which may include performing environmental impact studies on the location of the project.  Compliance with these regulations requires a significant investment of time by our employees and imposes substantial costs on our company.   

In any event, our failure to comply with these laws and regulations, including the failure to obtain the necessary permits, may result the denial or revocation of permits or authorizations to proceed with a project.  Further in some instances failure to comply with such laws and regulations may result in the assessment of administrative, civil and criminal penalties.   
 
In order to comply with these laws and regulations and to obtain the necessary permits, we incur costs in the ordinary course of business.  At the time of this report, we do not consider such compliance costs to be material capital expenditures.  However, future changes to federal and state environmental laws may require us to expend more of our capital to comply with such laws.  
 
Some of the regulations, to which we are or may be subject to include the following:
 
Federal Clean Water Act
 
The Federal Clean Water Act protects the waters of the United States, including wetlands and streams.  Regulations under the Clean Water Act govern critical operating parameters at generating facilities. In connection with our projects, we may be required to obtain permits for the discharge of dredged or fill material into U.S. waters, or for water discharges, such as storm water runoff associated with construction activities.  
 
 
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Federal Bureau of Land Management Permits
 
To date, none of our wind farm projects have been developed on BLM lands.  However, as we expand, some of our projects may be sited on BLM lands.  In that case, as developer of the project, we would be required to obtain rights-of-way from the BLM.  In order to obtain such a permit, we would need to demonstrate that our wind farm project would protect environmental and archeological resources.  
 
Endangered Species Act and Migratory Bird Treaty Act
 
In the event that our wind farm projects require a permit from a federal agency, such agency would also consider the impact on endangered species and their habitat under the Endangered Species Act, which prohibits and imposes stringent penalties for harming endangered species and their habitats. Due to the size and operation of our wind turbines, and the potential harmful impact on birds, our projects also need to comply with the Migratory Bird Treaty Act and the Bald and Golden Eagle Protection Act, which protect migratory birds and bald and golden eagles and are administered by the U.S. Fish and Wildlife Service. State and federal agencies may also require ongoing monitoring or mitigation activities as a condition to approving a project, and may even refuse to issue a permit if the mitigation options are insufficient to address the risks to birds.
 
National Historic Preservation Act
 
In addition, federal agencies may consider a wind farm project's impact on historic or archeological resources under the National Historic Preservation Act and may require us to conduct archeological surveys or take other measures to protect these resources.
 
Other State and Local Programs
 
In addition to federal requirements, we are subject to a variety of state environmental review and permitting requirements. Minnesota, where many of our wind farm projects are located or are being developed, have laws that require state agencies to evaluate our wind farm projects for impacts on environmental, wildlife, historic sites, water resources and agricultural, before granting permits.  Such requirements typically consist of obtaining a special use or conditional use permit under the provisions of the applicable land use ordinance.  
 
Employees

As of July 16, 2012, we employed 52 full-time employees and no part-time employees, excluding employees and consultants of any affiliated companies that are not at least 50%-owned subsidiaries of ours. None of our employees are subject to a collective bargaining agreement and we believe that relations with our employees are very good. We also frequently use third-party consultants to assist in the completion of various projects. Third parties are instrumental to us in keeping the construction and development of projects on time and on budget.

Corporate Information and History

Company Background 

Our Company was formed as a Delaware corporation in January 2006 as Help-U-Drive Incorporated for the purpose of developing a business to assist impaired drivers. Upon further investigation, the prior owners of the company decided that this was not a business opportunity to pursue due to potential liability and other reasons. In October 2006, we acquired My Health and Safety Supply Company, LLC, an Indiana limited liability company, pursuant to a plan of exchange with the holders of 100% of the outstanding membership interests of My Health & Safety Supply Company. We changed our name to MH & SC, Incorporated in September 2006. My Health & Safety Supply Company, LLC became our wholly-owned subsidiary and began developing its business to market a variety of health and safety products on the Internet. This business was sold simultaneously with the exchange transaction described below since it was incidental to our new wind energy business. In March 2007, we filed a registration statement with the SEC, which became effective in December 2007, and we became a publicly-reporting and trading company.

We have not been a party to any bankruptcy, receivership or similar proceeding at any time since inception of the Company.
 
Securities Exchange Agreement

On June 24, 2008, we entered into a Securities Exchange Agreement with Juhl Energy and Juhl Energy Services and, for certain limited purposes, their respective stockholders. On June 24, 2008, the exchange transaction provided for in the Securities Exchange Agreement was completed and Juhl Energy and Juhl Energy Services became our wholly-owned subsidiaries. Juhl Energy Services and Juhl Energy were formed as Minnesota corporations in October 2001 and September 2007, respectively, and have been in the wind energy business since formation.
 
 
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Pursuant to the Securities Exchange Agreement, at closing, the two former beneficial stockholders of Juhl Energy and Juhl Energy Services received an aggregate of 15,250,000 shares of our common stock, representing approximately 60.6% of our outstanding shares of common stock, inclusive of shares of common stock issuable upon the conversion of our Series A convertible preferred stock sold in our concurrent private placement. In exchange for the shares we issued to the former Juhl Energy and Juhl Energy Services stockholders, we acquired 100% of the outstanding common stock of Juhl Energy and Juhl Energy Services. The consideration issued in the exchange transaction was determined as a result of arm’s-length negotiations between the parties.  Concurrently with the closing of the exchange transaction, we also completed a private placement to institutional investors and other accredited investors, in which we received aggregate gross proceeds of $5,160,000.

The consideration issued in the exchange transaction was determined as a result of arm’s-length negotiations between the parties. In leading up to the exchange transaction, Juhl Energy engaged Greenview Capital, LLC to assist and advise it in an effort to secure financing. Juhl Energy agreed to pay Greenview Capital, and its designees, a fee for such advice in the amount of $300,000 in cash and 2,250,000 shares of our common stock. Aside from the Greenview Capital arrangements, no finder’s fees were paid or consulting agreements entered into in connection with the exchange transaction.

Following the exchange transaction, we succeeded to the wind farm development and management business of Juhl Energy and Juhl Energy Services.  Prior to the exchange transaction, there were no material relationships between us and Juhl Energy or Juhl Energy Services, between Juhl Energy or Juhl Energy Services and our affiliates, directors or officers, or between any associates of Juhl Energy or Juhl Energy Services and our officers or directors. All of our pre-exchange transaction liabilities were settled on or immediately following the closing.

Through the share exchange transaction, the stockholders of our privately-held predecessors, Juhl Energy and Juhl Energy Services, received a majority of the outstanding shares of MH & SC and their officers and directors assumed similar positions with MH & SC.  Following the share exchange transaction, we changed our corporate name to Juhl Wind, Inc.

June 2008 Private Placement

In June 2008 and in connection with the Share Exchange Agreement, the Company completed a private placement consisting of shares of newly-created Series A 8% Convertible Preferred Stock (Series A), and detachable, five-year Class A, Class B and Class C warrants to purchase shares of common stock at an exercise price of $1.25 (Class A), $1.50 (Class B) and $1.75 (Class C) per share.  In total, the Company sold 5,160,000 shares of Series A (convertible at any time into a like number of shares of common stock) and Class A, Class B and Class C Warrants to each purchase 2,580,000 shares of common stock, or an aggregate of 7,740,000 shares of common stock.  Such warrants were subsequently exercised or exchanged in June 2009 (see Note 4).  We also issued 2,250,000 shares of our common stock to Greenview Capital, LLC and unrelated designees at the closing of the transaction in consideration for merger advisory services.

Acquisition of Next Generation Power Systems, Inc.

On October 31, 2008, we acquired all of the outstanding shares of common stock of NextGen in exchange for an aggregate purchase price of $322,500 payable by delivery of an aggregate of 92,143 shares of our common stock allocated among the NextGen non-controlling interests. The purchase transaction included assumption of certain liabilities of NextGen including a note payable to First Farmer’s & Merchant’s National Bank, but excluded the stockholder notes, which the stockholders of NextGen agreed to contribute to equity.  Simultaneously with the acquisition of all of NextGen, the Company also purchased a commercial building and associated land located in Pipestone, Minnesota from the individual owners of NextGen. The Company issued 41,070 unregistered shares of common stock to the minority stockholders of NextGen for the purchase of the land and building. The 41,070 shares issued to the NextGen minority interest were valued at $3.50 per share at the date of acquisition, or $144,000.  The acquisition was accounted for at the fair value of the land and building on the date of purchase which totaled $173,055. NextGen is now our wholly-owned subsidiary and focuses on consumer-owned renewable energy design and advanced conservation technologies related to community-scaled renewable energy systems such as small scale wind turbines and solar arrays.

Warrant Amendment and Exchange.

On June 29, 2009, we entered into a warrant amendment agreement with the holders of our Series A Warrants.  Pursuant to the terms of the warrant amendment agreement, all of our then outstanding Series A Warrants to purchase 2,580,000 shares of our common stock at $1.25 per share were amended such that the Series A Warrants would be exercisable solely for shares of our Series B convertible preferred stock.  Pursuant to the warrant amendment agreement, the holders of our Series A Warrants agreed to exercise an aggregate of 2,036,840 Series A Warrants at a price of $1.25 per share.  On June 30, 2009, we entered into a securities exchange agreement with the holders of our Series A, Series B and Series C Warrants pursuant to which the holders agreed to exchange all of their outstanding (i) remaining Series A Warrants to purchase 543,159 shares of our Series B convertible preferred stock (after giving effect to the foregoing amendment and exercise), (ii) Series B warrants to purchase 2,580,000 shares of our common stock at $1.50 per share and (iii) Series C Warrants to purchase 2,580,000 shares of our common stock at $1.75 per share for an aggregate of 4,570,166 shares of our Series B convertible preferred stock.  The exchange value was based on the cashless exercise value of the exchanged warrants.  Following the consummation of the 2009 warrant exchange, we had no further Series A, Series B or Series C warrants outstanding.
 
 
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Strategic Acquisition Subsidiary – Juhl Renewable Assets

We formed a wholly-owned subsidiary, Juhl Renewable Assets,  which is our vehicle for strategic acquisitions that supplement our core business, to take advantage of the growth occurring in the community wind industry.  Our strategic acquisition plan actively focuses on the following: (i) acquisition of additional wind service businesses, including other operation and maintenance providers and wind consulting providers; (ii) acquisition of ownership of existing wind farms that fit our distributed generation model and the size range of projects we typically develop; and (iii) acquire or joint venture with other industry partners on specific projects, where we can share the various elements of fees and profits, including development fees, general construction, management, and operations and maintenance.  To date, we have acquired significant interests, through Juhl Renewable Assets, in Woodstock Hills, Winona, and Valley View wind farm projects.

On April 28, 2011, Juhl Wind paid $400,000 to acquire a 99.9% ownership interest in a 10.2 megawatt wind farm, Woodstock Hills, located in Woodstock, Minnesota. The Woodstock Hills wind farm has been operating as a wind energy generation facility since 1999 and had been originally developed by the Company’s CEO, who remains the .1% minority interest member. On May 6, 2011, Juhl Wind transferred its entire interest in Woodstock Hills to Juhl Renewable Assets, pursuant to a transfer and assignment agreement.

On October 13, 2011, the individual project owners of the Winona Wind Holdings, LLC, which owns 100% of Winona County Wind, LLC, the operator of a 1.5 megawatt wind-powered electric generating facility in Winona County, Minnesota, sold their 100% ownership interest to our subsidiary, Juhl Energy Development, for $5,000. Subsequently on December 31, 2011, Juhl Energy Development transferred its interest in the Winona wind farm to Juhl Renewable Assets and increased its equity investment to approximately $100,000.

On November 29, 2011, Juhl Renewable Assets purchased interests in Juhl Valley View, LLC (“Juhl Valley View”). As a result of the investment, Juhl Renewable Assets has a 36.6% voting interest in Juhl Valley View, and has an additional 13.9% voting power through a voting trust arrangement with three other investors. Pursuant to a subscription agreement, Juhl Valley View agreed to invest all subscription amounts received as part of the offering into Valley View Wind Investors, LLC which owns 99% financial rights and 49% governing rights of Valley View Transmission, LLC, which operates the 10 MW Valley View wind farm.

Acquisition of Power Engineers Collaborative

On April 30, 2012, we became the sole equity owner in Power Engineers Collaborative, LLC, an Illinois limited liability company, which provides engineering services to client in the energy, industry and building systems markets.


DIRECTORS AND EXECUTIVE OFFICERS

The following table shows the positions held by our board of directors and executive officers, and their ages as of July 16, 2012:

Name
 
Age
 
Position
Daniel J. Juhl
 
61
 
Chairman of the Board of Directors and Principal Executive Officer
John P. Mitola
 
46
 
President and Director
John J. Brand
 
55
 
Principal Financial Officer
Edward C. Hurley
 
58
 
Director
General Wesley K. Clark (ret.)
 
67
 
Director
James W. Beck
 
68
 
Director

The principal occupations for the past five years (and, in some instances, for prior years) of each of our directors and executive officers are as follows:

Daniel J. Juhl became our Chairman of the Board and Principal Executive Officer on June 24, 2008, and had served as President of Juhl Energy Development since September 2007 and Juhl Energy Services, since January 1989. Mr. Juhl has been involved in the wind power industry for more than 30 years. He has experience in the design, manufacture, maintenance and sale of wind turbines. He also provides consulting services in the wind power industry helping farmers develop wind projects that qualify for Minnesota’s renewable energy production incentives. Mr. Juhl has been involved in the development of about 1,500 megawatts of wind generation in his 30+ years of experience in the field. He has served as the principal technology officer of Next Generation Power Systems, Inc. from October 2005 until the present. He has been the principal consultant for wind energy projects to Edison Capital, John Deere Capital, Vestas, EWT, Suzlon Turbine Manufacturing, and various public and private utilities throughout the United States and Canada. He has appeared before numerous state and federal governmental bodies advocating wind power and community-based energy development on behalf of landowners, farmers and ranchers. Mr. Juhl wrote the popular wind energy reference guidebook, “Harvesting Wind Energy as a Cash Crop.”
 
 
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Mr. Juhl’s extensive experience in the wind power industry and his specific experience as founder of Juhl Energy Development and Juhl Energy Services, the related companies which are now our wholly-owned subsidiaries, provide the Company with a solid foundation of knowledge about the industry, lends stability to the Company’s position in the industry and makes Mr. Juhl uniquely qualified to serve as CEO and a director of the Company.

John P. Mitola became our President and a member of our board of directors on June 24, 2008, and had served in similar positions with Juhl Energy Development since April 2008. Mr. Mitola has more than 20 years of experience in the energy and environmental industries, real estate development, venture capital, engineering and construction. He was a managing partner with Kingsdale Capital International, a private equity and capital advisory firm that specialized in merchant banking, leveraged buyouts and corporate finance, since August 2006. From 2003 to 2009 Mr. Mitola served as Chairman of the Illinois Toll Highway Authority, one of the largest agencies in Illinois and one of the largest transportation agencies in North America with a $600 million annual operating budget and a $6.3 billion capital program, operating over 274 miles of roadway serving the Chicago metro region.

Most recently, Mr. Mitola was Chief Executive Officer and a director of Electric City Corp., a publicly-held company that specialized in energy efficiency systems, where he served from January 2000 to February 2006. Prior to his role at Electric City, Mr. Mitola was vice president and general manager of Exelon Thermal Technologies, a subsidiary of Exelon Corp. that designed and built alternative energy systems, from March 1997 to December 1999. Prior to serving as its general manager, Mr. Mitola served in various leadership roles at Exelon Thermal Technologies from January 1990 until his move to Electric City Corp. in January 2000. Mr. Mitola is also a member of the board of directors of another publicly-traded company, IDO Security Inc. He is a member of the American Society of Heating, Refrigerating and Air-Conditioning Engineers, and the Association of Energy Engineers. His community affiliations include membership in the Economic Club of Chicago, City Club of Chicago, Union League Club and the governing board of the Christopher House Board of Directors. He is also a member of the board of the Illinois Council Against Handgun Violence. Mr. Mitola received his B.S. degree in engineering from the University of Illinois at Urbana-Champaign and J.D. degree from DePaul University College of Law.

Mr. Mitola’s varied experience in energy-related businesses, his public company experience and the administrative skills he has acquired over his career make him particularly capable to lead the Company’s management team and serve as one of its directors.

John J. Brand became our Chief Financial Officer on January 26, 2009. Mr. Brand is a former certified public accountant with 14 years of audit, tax and consulting experience in public accounting firms, including Grant Thornton. He has significant experience in the financial management of both public and early stage high growth technology companies, as well as a record of achievement in assisting the growth of emerging companies. Immediately prior to joining Juhl Wind, and since 2002, Mr. Brand served as the Chief Financial Officer of CMS Direct, Inc. (now CognitiveDATA, Inc., a subsidiary of Merkle, Inc. subsequent to acquisition), a marketing services and database technology firm serving predominantly the retail industry. From 1993-1999, he served as Chief Financial Officer of MTI Group, a start-up computer network technology services firm that grew to $60 million revenue until its acquisition by Comdisco (a $2B leasing and services firm on NYSE), where he acted as Division Controller in the Network Services Division. From 1999- 2002, Mr. Brand held Chief Financial Officer positions in two start-up business enterprises, a search engine software development endeavor for Subjex Corporation and a energy storage device manufacturer, Powerbanc Corporation. Mr. Brand received his B.S. degree in Accounting from St. Cloud State University.

Edward C. Hurley became a director of our Company in July 2008 following our reverse public offering transaction and is a member of our audit committee as of November 2009. Mr. Hurley also serves on the nominations and governance committee and chairs our compensation committee. Mr. Hurley is a partner with Foley & Lardner LLP where he is a member of the Energy Industry Team, focusing his practice on public utility regulation, a position he has held since May 2010.

Mr. Hurley dedicated over 16 years of his career at the Illinois Commerce Commission ("ICC") where he served as the agency's chairman, as well as a commissioner and an administrative law judge. During his tenure at the ICC, Mr. Hurley was involved in resolving complex issues impacting Illinois businesses governed by the ICC, including the deregulation of the electric energy markets, the process for procurement of electricity by electric utilities, and mergers and acquisitions of telecommunications, electric, and natural gas utilities. He also served as the Special Director of the Office of Emergency Energy Assistance for the State of Illinois, being responsible for the successful implementation of the "Keep Warm Illinois" and "Keep Cool Illinois" Campaigns that were driven by anticipated increases in the costs of natural gas and electricity.

Mr. Hurley also has been involved in regulatory issues at a national level. While at the ICC, Mr. Hurley was active in the National Association of Regulatory Utility Commissioners, where he served on the board of directors as well as the Water Committee. In these roles, Mr. Hurley gained a national perspective regarding the regulatory requirements imposed upon utilities operating in newly competitive markets. He continues to be an active participant, as well as a guest speaker, at numerous conferences relating to issues impacting businesses that operate in regulated industries, including energy, telecommunications and investor-owned water systems. Also, Mr. Hurley has been a member of the National Coal Council since 2004. Prior to joining Foley, Mr. Hurley was of counsel with Chico & Nunes, P.C. He began his career representing clients in litigation in private practice and as an Illinois Assistant Attorney General. Mr. Hurley received his J.D. from John Marshall Law School in 1980 and his B.S.B.A. from Marquette University in 1976.
 
 
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The Company believes that Mr. Hurley’s significant experience in his leadership role at a large public agency in the energy arena adds valuable depth to the Company’s board of directors.
 
 
General Wesley K. Clark (ret.) became a director of our Company in January 2009, and is a member of our audit committee as of November 2009.   He is also a member of our compensation committee and our nominations and corporate governance committee.   Wesley K. Clark is a businessman, educator, writer and commentator.
 
General Clark serves as Chairman and CEO of Wesley K. Clark & Associates, a strategic consulting firm; Co-Chairman of Growth Energy; senior fellow at UCLA's Burkle Center for International Relations; Chairman of Clean Terra, Inc.; Director of International Crisis Group; Chairman of City Year Little Rock; as well as numerous corporate boards. General Clark has authored three books and serves as a member of the Clinton Global Initiative's Energy & Climate Change Advisory Board and ACORE's Advisory Board.
 
Clark retired a four star general after 38 years in the United States Army. He graduated first in his class at West Point and completed degrees in Philosophy, Politics and Economics at Oxford University (B.A. and M.A.) as a Rhodes Scholar. While serving in Vietnam, he commanded an infantry company in combat, where he was severely wounded and evacuated home on a stretcher. He later commanded at the battalion, brigade and division level, and served in a number of significant staff positions, including service as the Director Strategic Plans and Policy (J-5). In his last assignment as Supreme Allied Commander Europe, he led NATO forces to victory in Operation Allied Force, saving 1.5 million Albanians from ethnic cleansing. 
 
His awards include the Presidential Medal of Freedom, Defense Distinguished Service Medal (five awards), Silver star, Bronze star, Purple Heart, honorary knighthoods from the British and Dutch governments, and numerous other awards from other governments, including award of Commander of the Legion of Honor (France). 

The Company believes that the exceptional leadership skills developed by General Clark during his illustrious career and his prominence as a spokesman for energy-related issues lend perspective to the Board and provide opportunities for growth of the Company.

James W. Beck became a director of our Company in November 2009, and is a member of our audit committee as of November 2009 of which he currently serves as chair. He is also a member of our compensation committee and our nominations and corporate governance committee. Mr. Beck is a major shareholder of Intepro, a company engaged in the development of software for vertical markets having to meet requirements for regulatory compliance, and is a co-owner of EMCllc, a firm engaged in the engineering, design and implementation of energy efficient lighting systems in industrial and commercial applications throughout North America for new construction and retrofit markets. Mr. Beck has previously been involved with companies engaged in the evaluation and implementation of energy usage, alternative energy sources, electrical continuation, and energy conservation. Mr. Beck earned a B.S. degree in business from the University of Minnesota. Mr. Beck serves as a member of the Board of Directors of AIA Insurance Services in Lewiston, Idaho, serves as a member of the Advisory Committee of Summit Academy in Minneapolis, Minnesota and is involved in various other community and civic activities.

The Company’s addition of Mr. Beck as a director was founded upon his expertise in the areas of energy usage and conventional and alternative energy and his practical experience in the application of that knowledge to commercial markets which the Company believes will be a valuable asset to its Board.

All directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Officers are elected annually by the board of directors and serve at the discretion of the board.

Independent Directors

Mr. Ed Hurley, Mr. James Beck and General Wesley Clark serve on our board of directors as an “independent director” defined under NASDAQ rules and by the regulations of the Securities Exchange Act of 1934.

In June 2008, we agreed with Vision Opportunity Master Fund, the lead investor in the private placement, to nominate to our board of directors an independent and industry-qualified director selected by it, and reasonably acceptable to us, to serve as a director for at least three years after the closing of the exchange transaction and private placement. We also agreed to cause such director to be appointed to the audit or compensation committee of our board, when established. In fulfillment of that agreement, Mr. Hurley was appointed as such director, and is also a member of both our audit and compensation committee.
 
 
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Board Composition and Meetings of Board of Directors

The Board of Directors is currently composed of five members. All actions of the Board of Directors require the approval of a majority of the directors in attendance at a meeting at which a quorum is present. In 2011, our Board of Directors met in person two times and acted by written consent four times.

Board Committees

The Company has established an audit committee and has created a compensation committee and a nominations and governance committee, in compliance with established corporate governance requirements. Currently, Mr. Hurley, General Clark and Mr. Beck are our only “independent” directors, as that term is defined under NASDAQ rules and by the regulations of the Securities Exchange Act of 1934.

Audit Committee. The Board of Directors of the Company established an Audit Committee at its meeting on November 24, 2009. At this meeting, Mr. Beck was appointed Audit Committee Chairman, and Mr. Hurley and General Clark were appointed as members of the Audit Committee. As a result, the Audit Committee is comprised of our "independent" directors as defined in NASDAQ Marketplace Rule 5605(a)(2). Further, the Board of Directors of the Company adopted an Audit Committee Charter at its meeting on April 8, 2010. The Audit Committee reviews the results and scope of the audit and the financial recommendations provided by our independent registered public accounting firm. Further, the Audit Committee reviews the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls.

The Company does not have a member of its audit committee who qualifies as a “financial expert” at this time. The Company believes that the relevant business experience of its current board of directors and audit committee members provides adequate oversight of accounting and financial reporting and internal controls. The Company expects, however, to consider the addition of an audit committee financial expert in the future as may be required by a national stock exchange.

Compensation Committee. The Board of Directors of the Company established a Compensation Committee at its April 8, 2010 meeting. The Compensation Committee is comprised of our “independent” directors as defined in NASDAQ Marketplace Rule 5605(a)(2). The Compensation Committee reviews and approves our salary and benefit policies, including compensation of executive officers. Further, the Compensation Committee administers our Incentive Compensation Plan, and recommends and approves grants of stock options, restricted stock and other awards under that plan.

Nominations and Governance Committee. The Board of Directors of the Company established a Nominations and Governance Committee at its April 8, 2010 meeting. The Nominations and Governance Committee is comprised of our “independent” directors as defined in NASDAQ Marketplace Rule 5605(a)(2). The Nominations and Governance Committee reviews the qualifications of prospective directors for consideration by the board of directors as management’s nominees for directors. The purpose of the Nominations and Governance Committee is to select, or recommend for our entire board’s selection, the individuals to stand for election as directors at the annual meeting of stockholders and to oversee the selection and composition of committees of our board. The Nominations and Governance Committee’s duties also include considering the adequacy of our corporate governance and overseeing and approving management continuity planning processes.

We will consider nominations for directors submitted by stockholders. Stockholder nominations for election to the board of directors must be made by written notification received by us not later than sixty days prior to the next annual meeting of stockholders. Such notification shall contain, at a minimum, the following information:

 
1.
The name and residential address of the proposed nominee and of each notifying stockholder;
 
 
2.
The principal occupation of the proposed nominee;
 
 
3.
A representation that the notifying stockholder intends to appear in person or by proxy at the meeting to nominate the person specified in the notice;
 
 
4.
The total number of our shares owned by the notifying stockholder;
 
 
5.
A description of all arrangements or understandings between the notifying stockholder and the proposed nominee and any other person or persons pursuant to which the nomination is to be made by the notifying stockholder;
 
 
6.
Any other information regarding the nominee that would be required to be included in a proxy statement filed with the SEC; and
 
 
7.
The consent of the nominee to serve as one of our directors, if elected.
 
The Nominations and Governance Committee will return, without consideration, any notice of proposed nomination which does not contain the foregoing information.
 
 
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The Nominations and Governance Committee has not established specific criteria or minimum qualifications that must be met by committee-nominated or shareholder-nominated nominees for director. Regardless of the source of a given nominee’s nomination, the Nominations and Governance Committee evaluates each nominee based solely upon his/her educational attainments, relevant experience and professional stature. The Nominations and Governance Committee primarily seeks nominations for director from institutional security holders, members of the investment banking community and current directors.

Code of Ethics

Our board of directors has adopted a code of ethics, which applies to all our directors, officers and employees. Our code of ethics is intended to comply with the requirements of Item 406 of Regulation S-K.

Our code of ethics is posted on our Internet website at www.juhlwind.com. We will provide our code of ethics in print without charge to any stockholder who makes a written request to us at Juhl Wind, Inc., 1502 17th St SE, Pipestone, Minnesota 56164. Any waivers of the application, of and any amendments to, our code of ethics must be made by our board of directors. Any waivers of, and any amendments to, our code of ethics will be disclosed promptly on our Internet website, www.juhlwind.com.
 
Indebtedness of Directors and Executive Officers

None of our directors or executive officers or their respective associates or affiliates is indebted to us.

Family Relationships

There are no family relationships among our directors and executive officers.

Legal Proceedings

As of the date of this report, there is no material proceeding to which any of our directors, executive officers, affiliates or stockholders is a party adverse to us.

 
EXECUTIVE COMPENSATION

The following table sets forth, for the most recent two fiscal years, all cash compensation paid, distributed or accrued, including salary and bonus amounts, for services rendered to us by our Principal Executive Officer and four other executive officers in such year who received or are entitled to receive remuneration in excess of $100,000 during the stated period and any individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer as at December 31, 2011:
 
 
Summary Compensation Table
 
 
Name and Principal Position
 
 
Fiscal
Year
 
 
Salary
$
 
 
Bonus1
$
 
Stock Awards
$
 
Option Awards2
$
Non-Equity Incentive Plan Compen-
sation
$
 
Nonqualified Deferred Compensation Earnings
$
 
All Other Compensation
$
 
 
Totals
$
 
Daniel J. Juhl
Chairman and Principal
Executive Officer
 
 
2011
2010
 
 
 
214,585
200,004
 
 
 
60,000
100,000
 
 
 
-
-
 
 
-
-
 
 
-
-
 
 
-
-
 
 
82,2273
9,7004
 
 
356,812
309,704
 
 
John P. Mitola
President
 
 
2011
2010
 
 
 
214,585
200,004
 
 
 
50,000
100,000
 
 
-
-
 
 
-
170,000
 
 
 
-
-
 
 
-
-
 
 
 
82,2273
9,7004
 
 
346,812
479,704
 
 
 
John Brand
Principal Financial Officer
 
 
2011
2010
 
 
150,000
134,940
 
 
45,000
90,000
 
 
-
-
 
 
 79,333
 
 
-
-
 
 
-
-
 
 
41,9455
9,7004
 
 
236,945
313,973
 

 
67

 
   
1 2010 bonus payments were actually paid to Company executives in 2011 based upon accruals made by management as of December 31, 2010 and included in compensation figures reported for 2010.

2The determination of value of option awards is based upon the Black-Scholes Option pricing model, details and assumptions of which are set out in our financial statements included in this annual report. The amounts represent annual amortization of fair value of stock options granted to the named executive officer.

3Represents Car Allowance, Health Savings Account contribution PTO and salary catch-up

4Represents Car Allowance and Health Savings Account contribution

5Represents Car Allowance, Health Savings Account contribution and PTO

The aggregate amount of benefits in each of the years indicated did not exceed the lesser of $50,000 or 10% of the compensation of any named officer.

 
Outstanding Equity Awards at Fiscal Year-End

Option Awards
Stock Awards