SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K



(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                  to


Commission File Number 0-31313

GRAPHIC



BROADWIND ENERGY, INC.

(Exact name of Registrant as specified in its charter)

Delaware(State of or other jurisdiction of
incorporation or organization)

88-0409160(I.R.S. Employer
Identification No.)47 East Chicago Avenue, Suite 332
Naperville, Illinois

60540(Address of principal executive offices)

(zip code)


Registrant's
telephone number, including area code:(630) 637-0315

Securities
registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value



Indicate
by check mark whether the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of
1933. Yes o    No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes o    No ý

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. 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 ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the Registrant is a shell company, as defined in Rule 12b-2 of the Securities Exchange Act of
1934. Yes o    No ý

The aggregate market value of the Registrant's voting common stock held by non-affiliates of the Registrant, based upon the $2.80 per share closing
sale price of the Registrant's common stock on June 30, 2010 (the last business day of the Registrant's most recently completed second quarter) was approximately $204,543,259. For purposes of
this calculation, the Registrant's directors and executive officers and holders of 10% or more of the Registrant's outstanding shares of voting common stock have been assumed to be affiliates, with
such affiliates holding an aggregate of 33,789,921 shares of the Registrant's voting common stock on June 30, 2010, and shares held by such affiliates are not included in this calculation.

Number
of shares of Registrant's common stock, par value $0.001, outstanding as of March 1, 2011, was 107,113,135.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Registrant's Proxy Statement for the Registrant's 2011 Annual Meeting of Stockholders are incorporated by reference in Part III of this
Form 10-K.



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Table of Contents

BROADWIND ENERGY, INC.
FORM 10-K
TABLE OF CONTENTS



PagePART IITEM 1.

BUSINESS

1ITEM 1A.

RISK FACTORS

9ITEM 1B.

UNRESOLVED STAFF COMMENTS

19ITEM 2.

PROPERTIES

20ITEM 3.

LEGAL PROCEEDINGS

20ITEM 4.

RESERVED

21PART IIITEM 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

22ITEM 6.

SELECTED FINANCIAL DATA

24ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

26ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

44ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

44ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

44ITEM 9A.

CONTROLS AND PROCEDURES

44ITEM 9B.

OTHER INFORMATION

45PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

46ITEM 11.

EXECUTIVE COMPENSATION

46ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

46ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

47ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

47PART IVITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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PART I

Cautionary Note Regarding Forward-Looking Statements

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

ITEM 1.    BUSINESS

As used in this Annual Report on Form 10-K, the terms "we," "us," "our," "Broadwind," "Broadwind Energy," and the
"Company" refer to Broadwind Energy, Inc., a Delaware incorporated company headquartered in Naperville, Illinois, and its wholly-owned subsidiaries.

Business Overview

Broadwind provides technologically advanced high-value products and services to energy, mining and infrastructure sector
customers, primarily in the U.S. Our most significant presence is within the U.S. wind industry, where we believe we are the only independent company that offers our breadth of products and services
to the market. Our product and service portfolio provides our customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of component
and service offerings. Outside of the wind market, we provide precision gearing and specialty weldments to industrial customers, particularly in the energy, mining and infrastructure sectors.

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We
are well positioned to capture market opportunities associated with growth in wind energy and other industrial markets in the U.S. We believe that growth in the U.S. wind energy
market will be driven by: (i) macroeconomic factors, including an economic recovery and increased demand for electricity, rising energy prices and federal and state-level wind development
incentives, (ii) upgrades to existing transmission infrastructure and increasing proliferation of smart grid technology, and (iii) the maturation of technologies and services within the
wind industry, including increased turbine efficiencies, development of a coordinated global supply chain and improved focus on equipment maintenance and reliability. Given our significant installed
capital base, we believe we will be able to substantially grow revenues without making significant investment in additional capital equipment or manufacturing capacity.

In
December 2009, we revised our reporting segment presentation into four reportable operating segments: Towers, Gearing, Technical and Engineering Services, and Logistics. Within our
Logistics segment the Company offered specialized transportation, permitting and logistics management to the wind industry for oversize and overweight machinery and equipment. In December of 2010, our
Board of Directors approved a plan to divest our Logistics business segment, and on March 4, 2011, we completed the disposition of our Logistics business to a third party purchaser.
Consequently, this business unit is now reported as discontinued operations and we have revised our segment presentation to include three reportable operating segments: Towers, Gearing, and Services
(previously Technical and Engineering Services). All current and prior period financial results have been revised to reflect these changes. For additional financial information related to our
segments, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 19 "Segment Reporting" in Item 15 in the notes
to our consolidated financial statements for a discussion of summary financial information by segment.

The
following is a description of products and services offered in each segment:

Towers

We manufacture towers for wind turbines. We specialize in heavier "next generation" wind towers that are larger, more technically
advanced towers, designed for 2 megawatt ("MW") and larger wind turbines. Since starting commercial production in 2005, we have produced approximately 800 towers. Our production facilities in
Manitowoc, Wisconsin and Abilene, Texas are well-placed in close proximity to the primary U.S. wind resource regions. The two facilities have a combined annual tower production capacity of
approximately 500 towers, sufficient to support turbines generating more than 1,200 MW of power.

Our
towers for wind turbines are predominantly sold to wind turbine manufacturers who utilize our products in the assembly of wind turbines. Due to the customized nature of our products,
they are generally sold through our direct sales force following an evaluation, qualification and testing period, which may occur over a number of months. We compete based on product performance,
quality, price, location and available capacity. We have periodically entered into framework agreements under which we provide products to certain key customers over multi-year periods.
Our principal wind tower customers are Gamesa, Nordex and Vestas. Within this segment, we also manufacture specialty fabrications and heavy weldments for wind energy and other industrial customers.

Gearing

We manufacture high precision gearing systems for wind turbines. We also manufacture custom-engineered gearing systems and gearboxes
for energy, mining and other industrial customers. We target niche markets and applications that require the strict tolerances and high quality standards of our processes.

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We
produce to the highest industry quality standards, and we were the first U.S. gear manufacturer to achieve ISO 9001 certification. We use an integrated manufacturing process,
which includes a machining process in Cicero, Illinois, a heat treatment process in Neville Island, Pennsylvania and a finishing process in our Cicero, IL factory. These complex production processes
allow us to manufacture custom products to meet the stringent tolerances and high quality standards of our customers.

Due
to the highly specialized nature of our gearing, it is generally sold through our direct sales force following an evaluation, qualifying prototyping and testing period, which may
occur over a number of months. We compete based on product performance, quality, price and available capacity. We have periodically entered into framework agreements under which we provide products to
certain key customers over multi-year periods. Our most significant Gearing segment customers include Clipper Windpower, Gardner Denver and General Electric.

Services

We offer technical and precision repair and engineering services to manufacturers of wind turbines and developers and operators of wind
farms. Our technical services business provides construction support and operations and maintenance services to the wind industry. Our precision repair and engineering services include repair and
refurbishment of the complex systems and components of wind turbines, including control systems, drivetrains and blades. During 2010, we approved an investment of approximately $7 million to
develop a dedicated drivetrain service center in Abilene, Texas, focused on servicing the growing installed base of MW wind turbines as they come off warranty. The drivetrain service center was
dedicated and put into operation in February 2011.

Sales
contacts are typically initiated through a small direct sales force, or through operating unit managers located in our geographically dispersed service locations. Sales are
generally made under individual purchase orders, although we have blanket purchase orders or multi-year operations and maintenance agreements in place with select key customers. Our
Services business competes with a number of independent service providers in a highly-fragmented but growing industry. Our principal Services segment customers include FPL Energy, NexGen Energy
Partners and Siemens Energy. Our primary service locations are in Illinois, California, South Dakota and Texas. Our vision is to become the most comprehensive independent service provider to the North
American wind industry.

Competitive Strengths

We believe our business model offers a number of competitive strengths that will contribute to our commercial success and will enable
us to capitalize on significant opportunities for growth. These competitive strengths include the following:



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Business and Operating Strategy

We intend to capitalize on the anticipated growth of the wind energy market in North America by providing our technologically advanced,
highly reliable, value-added products and components and customized services across the wind supply chain. While our focus will remain on the wind energy sector, we also plan to take advantage of
growth opportunities by expanding our existing presence in other energy, infrastructure and industrial markets.

Our
strategic objectives include the following:



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COMPANY HISTORY

We were incorporated in Nevada in 1996 as Blackfoot Enterprises Inc. ("Blackfoot"). In February 2006, Blackfoot completed a
reverse shell transaction with Tower Tech Systems Inc. ("Tower Tech"), whereupon Blackfoot became a holding company for Tower Tech, and subsequently changed its name to Tower Tech
Holdings Inc. In 2008, Tower Tech Holdings Inc. reincorporated in Delaware and changed its name to Broadwind Energy, Inc. Through our October 2007 acquisitions of
R.B.A. Inc. ("RBA") and Brad Foote Gear Works, Inc. ("Brad Foote"), and acquisitions of Energy Maintenance Services, LLC ("EMS") and Badger Transport Inc. ("Badger") in
January and June of 2008, respectively, we expanded upon our core platform as a wind tower component manufacturer and established our gearing systems, industrial products, technical services,
precision repair and engineering and logistics businesses. In December 2010, our Board of Directors approved a plan to divest Badger, which was sold to a third party purchaser on March 4, 2011,
and is now treated as a discontinued operation. Effective February 1, 2011, EMS changed its name to Broadwind Services, LLC, and effective March 1, 2011, Tower Tech changed its
name to Broadwind Towers, Inc.

SALES AND MARKETING

Our sales and marketing strategy is to develop and maintain long-term relationships with our customers and to offer a
comprehensive suite of products and services to them. We pursue this strategy by working closely with our customers in developing and designing customized product, manufacturing, and service
solutions. We also intend for our offerings to fulfill needs that our customers may consider non-core and do not desire to provide for within their organizations. We attempt to
base-load our manufacturing facilities by negotiating long-term agreements, under which we supply our customers with gearing, towers or industrial products. Similarly, we seek
to establish long-term relationships to provide services to our customers, which may be subject to
framework agreements or undertaken on a project by project basis. Within the wind industry, our predominant focus, our customer base consists of wind turbine manufacturers who supply
end-users and wind turbine developers with completed wind turbines, as well as wind farm developers and wind farm operators themselves. Within the wind industry, we have
long-standing relationships with customers, engaging them at various levels from key account management, site management, research and development, product design and manufacturing up to
senior management.

COMPETITION

We do not believe that any competitors exist that have developed a similar suite of products and services for the North American wind
industry as those offered by our businesses. However, each of our businesses faces competition from both domestic and international companies, and some of our customers maintain internal capabilities
that compete with our offerings. For our Towers segment, the largest North American based competitors are Trinity Industries and DMI Industries. Additionally, we face competition from a number of
smaller tower producers, including Katana Summit, Ameron International and SIAG, as well as imports from a number of Asian tower manufacturers.

We
are a major North American supplier of wind energy gear sets, but do not manufacture complete gearboxes for this segment. Wind gearbox manufacturers include Winergy (affiliated with
Siemens), Bosch-Rexroth, Moventas and Hansen Transmissions (affiliated with Suzlon Energy). Because wind gearbox manufacturers often source all or a portion of their gear sets from third parties,
these companies are also potential customers for Broadwind. The competitor group participating to provide industrial gearing is more fragmented, comprised of a large number of privately held gearing
manufacturers. These gearing manufacturers compete based upon price, quality, location, available capacity, and several other factors.

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The
market for independent technical and engineering services is highly fragmented, and includes companies such as enXco (affiliated with EDF), Outland Energy Services and UpWind
Solutions.

ENVIRONMENTAL REGULATION AND COMPLIANCE

Our operations are subject to numerous federal, state, and local environmental laws and regulations. While it is our objective to
maintain compliance with these respective laws and regulations, it may not be possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly
remediation and other compliance efforts that we may undertake in the future. Many of our facilities have a history of industrial operations and contaminants have been detected at some of our
facilities. Refer to Item 3 "Legal Proceedings" for further discussion of environmental regulation and compliance.

BACKLOG

We sell our towers and gearing under either long-term supply agreements or individual purchase orders, depending on the
size and the duration of the purchase and sale commitment. Some of these supply agreements are structured as framework agreements, whereby customers commit to purchase a certain fixed quantity or
share of their annual requirements from us, and we reserve a portion of our manufacturing capacity to meet these requirements. Under these framework agreements, we receive purchase orders on a monthly
or other periodic basis based upon our customer's forecast of production volume levels. These long-term agreements have various terms, but generally range from several months to three
years with some contracts carrying automatic renewal provisions. For our Services segment, purchases are based either on individual purchase orders or longer-term operations and
maintenance contracts. As of December 31, 2010, the dollar amount of our backlog believed to be firm under our supply agreements, purchase orders and service contracts was approximately
$226 million, of which $116 million is expected to be delivered during 2011. Deliveries during 2011 may be subject to change as a result of any future modifications to our existing
customer framework agreements or purchase orders.

SEASONALITY

The majority of our business is not affected by seasonality. Within our Services segment there can be some seasonality as project
completions are typically heaviest in the fourth quarter, and the provision of services can be negatively affected by weather related constraints, typically during the first quarter of the year.

EMPLOYEES

We had 850 employees at December 31, 2010, of which 684 were in manufacturing, service and field support related functions and
166 were in administrative functions. Approximately 23% of our employees are covered by two collective bargaining agreements with local unions in Cicero, Illinois and Neville Island, Pennsylvania.
Collective bargaining agreements with our Neville Island and Cicero unions are scheduled to remain in effect through October 2012 and February 2014, respectively. We consider our union and employee
relations to be satisfactory.

RAW MATERIALS

The primary raw material used in the construction of wind towers and gearing products is steel in the form of steel plate, forgings and
castings. Although we are generally responsible for procurement of the raw materials, in some cases our customers source and retain title to steel plate which we convert into finished wind towers.

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We operate a multiple supplier sourcing strategy and source our raw materials through various suppliers located throughout the U.S. and abroad. We do not
generally have long-term supply agreements with any of our raw materials suppliers and closely match terms with those of our customers to limit our exposure to commodity price
fluctuations. We believe that we will be able to obtain an adequate supply of steel and other raw materials to meet our manufacturing requirements, although from time to time we have faced shortages
of specific grades of steel, which may limit our ability to meet customer demand and cause manufacturing inefficiencies.

QUALITY CONTROL

We have a long-standing focus on processes for ensuring the manufacture of high quality products. To achieve high standards
of production and operational quality, we implement strict and extensive quality control and inspection throughout our production processes. We maintain internal quality controls over all core
manufacturing processes and carry out quality assurance inspections at the completion of each major manufacturing step to ensure the quality of our products. The manufacturing process at our Gearing
operation, for example, involves transforming forged steel into highly technical specification gears through rough machining, hobbing, reinforcing thermal treatment, fine machining and fine grinding.
We inspect and test raw materials before they enter the assembly process, re-test the raw materials after rough machining, test the functioning of gear teeth and cores after thermal
treatment and accuracy test final outputs for
product specifications. We believe our investment in industry leading heat treatment, high precision machining, specialized grinding technologies and cutting edge welding has contributed to our high
product reliability and the consistent performance of our products under varying operating conditions. Our Gearing segment is ISO 9001:2000 certified. Our tower manufacturing plant in
Manitowoc, Wisconsin has received ISO 9001:2008 certification, and our Abilene plant is currently in the certification process.

CUSTOMERS

We manufacture products for and provide services to a variety of customers in the wind energy, oil and gas, mining and other
infrastructure industries. The majority of our wind industry customer base consists of wind turbine manufacturers, who supply wind farm operators and wind farm developers with completed wind turbines.
In the other industrial sectors, we sell our products through our trained sales force or through manufacturers' representatives to a wide variety of customers. The wind turbine market is very
concentrated. According to AWEA's 2009 industry data, the top ten wind turbine manufacturers constituted over 99% of the North American market. As a result, our concentration with a limited number of
customers accounted for the majority of our revenues. Sales to each of Gamesa and General Electric represented an amount greater than 10% of our consolidated revenues for the year ended
December 31, 2010 and the loss of one of these customers could have a material adverse effect on our business. This is down from 2009 when sales to each of four customers represented an amount
greater than 10% of our consolidated revenues for the year. We intend to continue to diversify our customer base as we grow our business.

Our
current portfolio of key customers includes: Clipper Windpower, Gamesa, Gardner Denver, General Electric, NexGen Energy Partners, Nordex, Siemens and Vestas.

WORKING CAPITAL

Our primary customers are wind turbine manufacturers, wind farm developers and wind farm operators. The industry has historically
entered into customized contracts with varying terms and conditions between suppliers and customers, depending on the specific objectives of each party. Our practices mirror this historical industry
practice for negotiating agreements on a case-by-case basis. As a result, working capital needs, including levels of accounts receivable and inventory, can vary

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significantly
from quarter to quarter based on the contractual terms associated with that quarter's sales, such as whether we are required to purchase and supply steel pursuant to such contractual
terms.

CORPORATE INFORMATION

Our principal executive office is located at 47 East Chicago Avenue, Suite 332, Naperville, IL 60540. Our phone number is
(630) 637-0315 and our website address iswww.bwen.com.

OTHER INFORMATION

On our website atwww.bwen.com, we make available under the "Investors" menu selection,
free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports or amendments are electronically filed with, or furnished to, the
Securities and Exchange Commission ("SEC"). Materials that we file or furnish to the SEC may also be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC
20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet site at www.sec.govthat contains reports,
proxy and information statements, and other information that we file electronically with the SEC.

ITEM 1A.    RISK FACTORS

Risks Related to Our Business

Our businesses, and therefore our results of operations and financial condition, may continue to be adversely affected by dislocation in the global credit markets and
economic uncertainty.

The disruption in the global credit markets, the re-pricing of credit risk and the deterioration of the financial and real
estate markets generally in recent years, particularly in the U.S. and Europe, have all contributed to a reduction in consumer spending and a contraction in global economic growth including the wind
energy sector. The recession has had negative effects on demand for alternative sources of energy and consequently for our product and service offerings. Although there is a growing confidence that
the global economies have resumed growth, there remains risk that the recovery may not be sustained or that the recovery may not include the industries or markets in which we conduct our business. In
addition, because there is a long lead-time between orders for wind products and delivery, there is generally a lag before the impact of changed economic conditions affects our results,
and an improvement in economic conditions may not be reflected in our financial results of operations in a corresponding manner. Any deterioration in economic conditions could have a material adverse
effect on our business in a number of ways, including lower sales and extended renewal cycles if there is a reduction in demand for wind energy, and such deterioration could have a material adverse
effect on our liquidity, results of operations and financial condition.

In
particular, risks we might face could include potential declines in revenues in our business segments due to reduced orders or other factors caused by economic challenges faced by our
customers and prospective customers, and an inability to finance our operating needs on reasonable terms.

The U.S. wind industry is reliant on tax and other economic incentives and political and governmental policies. A significant change in these incentives and policies could
negatively impact our results of operations and growth.

Our business segments are focused on supplying products and services to wind turbine manufacturers and owners and operators of wind
energy generation facilities. The U.S. wind industry is dependent upon federal tax incentives and state renewable portfolio standards and may not be

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economically
viable absent such incentives. The federal government provides economic incentives to the owners of wind energy facilities, including a federal production tax credit, an investment tax
credit and a cash grant equal in value to the investment tax credit. The production tax credit was extended by the American Recovery and Reinvestment Act ("ARRA") in February 2009 and provides the
owner of a qualifying wind energy facility placed in service before the end of 2012 with a ten-year tax credit against the owner's federal income tax obligations based on the amount of
electricity generated by the qualifying wind energy facility and sold to unrelated third parties. Alternatively, wind project owners may (i) elect to receive an investment tax credit equal to
30% of the qualifying basis of facilities placed in service before the end of 2012 or (ii) for facilities placed in service in 2009 through 2011 (or, if construction begins before the end of
2011, placed in service before the end of 2012), apply to receive a cash grant from the Department of Treasury, equal in value to the investment tax credit.

These
programs provide material incentives to develop wind energy generation facilities and thereby impact the demand for our manufactured products and services. The increased demand for
our products and services resulting from the credits and incentives may continue until such credits or incentives lapse. The failure of Congress to extend or renew these incentives beyond their
current expiration dates could significantly delay the development of wind energy generation facilities and the demand for wind turbines, towers, gearing and related components. In addition, we cannot
assure you that any subsequent extension or renewal of the production tax credit, investment tax credit or cash grant program will be enacted prior to its expiration or, if allowed to expire, that any
extension or renewal enacted thereafter would be enacted with retroactive effect. It is possible that these federal incentives will not be extended beyond their current expiration dates. Any delay or
failure to extend or renew the federal production tax credit, investment tax credit or cash grant program in the future could have a material adverse impact on our business, results of operations,
financial performance and future development efforts.

State
renewable energy portfolio standards generally require or encourage state-regulated electric utilities to supply a certain proportion of electricity from renewable energy sources
or devote a certain portion of their plant capacity to renewable energy generation. Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of
electricity that was produced from renewable sources. Under many state standards, these renewable energy credits can be unbundled from their associated energy and traded in a market system, allowing
generators with insufficient credits to meet their applicable state mandate. These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for
our manufactured
products. Currently, the majority of states and the District of Colombia have renewable energy portfolio standards in place and certain states have voluntary utility commitments to supply a specific
percentage of their electricity from renewable sources. The enactment of renewable energy portfolio standards in additional states or any changes to existing renewable energy portfolio standards, or
the enactment of a federal renewable energy portfolio standard or imposition of other greenhouse gas regulations, may impact the demand for our products. We cannot assure you that government support
for renewable energy will continue. The elimination of, or reduction in, state or federal government policies that support renewable energy could have a material adverse impact on our business,
results of operations, financial performance and future development efforts.

We could incur substantial costs to comply with environmental, health and safety laws and regulations and to address violations of or liabilities under these requirements.

Our operations are subject to a variety of environmental laws and regulations in the jurisdictions in which we operate and sell
products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and
product content, performance and packaging. We cannot guarantee that we will at all times be in compliance with such laws and regulations, and if we fail to comply with

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these
laws and regulations or our permitting and other requirements, we may be required to pay fines, limit production at our facilities or be subject to other sanctions. Also, certain environmental
laws can impose all or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous
owner or operator of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may
also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. Many of
our facilities have a history of industrial operations, and contaminants have been detected at some of our facilities.

We
are aware of an investigation commenced by the United States Attorney's Office, Northern District of Illinois, for potential violation of federal environmental laws. On
February 15, 2011, officials from the United States Environmental Protection Agency ("USEPA") conducted a search of one of our facilities in Cicero, Illinois. Also on February 15, 2011,
we received a subpoena requesting production of certain documents relating to the facility's compliance with certain environmental regulations relating to the generation, discharge and disposal of
wastewater from certain of our processes from 2004 to the present. On February 23, 2011, we also received an additional subpoena requesting production of certain documents relating to certain
of our employees and environmental and manufacturing processes. We do not currently have information as to when the investigation may be concluded, and we are also conducting an internal investigation
of any possible noncompliance. At this time, we have not been formally notified that we are a subject or target of the investigation and no fines or penalties have been suggested. There can be no
assurances that the conclusion of the investigation will not result in a determination that we have violated applicable laws. If we are found to have violated such laws, we
could be subject to fines, civil penalties and criminal penalties. In connection with this investigation, we have recorded a liability of $675 at December 31, 2010, which represents the low end
of our estimate of costs and expenses that have been incurred, or which are expected to be incurred during 2011. Due to the preliminary nature of the investigation, it is reasonably possible that our
estimate of the obligation may change in the near term.

The
assertion of further claims relating to on- or off-site contamination, the discovery of previously unknown environmental liabilities, or the imposition of
unanticipated investigation or cleanup obligations could result in potentially significant expenditures to address contamination or resolve claims or liabilities. Such costs and expenditures could
have a material adverse effect on our business, financial condition or results of operations.

Changes
in existing environmental laws and regulations, or their application, could cause us to incur additional or unexpected costs to achieve or maintain compliance. Our facilities
emit greenhouse gases which may be subject to pending or future environmental laws or regulations, which could cause us to incur additional or unexpected costs to achieve and maintain compliance.

Our financial and operating performance is subject to certain factors which are out of our control, including prevailing economic conditions and the state of the wind energy
market in North America.

As a supplier of products and services to wind turbine manufacturers and owners and operators of wind energy generation facilities, our
results of operations (like those of our customers) are subject to general economic conditions, and specifically, to the state of the wind energy market. In addition to the state and federal
government policies supporting renewable energy described above, the growth and development of the larger wind energy market in North America is subject to a number of factors, including, among other
things:



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In
addition, while some of the factors listed above may only affect individual wind project developments or portions of the market, in the aggregate they may have a significant effect on
the successful development of the wind energy market as a whole, and thus affect our operating and financial results.

We are substantially dependent on a few significant customers.

The wind turbine market in the U.S. is very concentrated, with ten manufacturers controlling in excess of 99% of the market. Like us,
these customers were adversely affected by the recent downturn in the economy and the wind energy market, and we have seen, and may continue to see, a decrease in order volume from such customers.
Historically, the majority of our
revenues are highly concentrated with a limited number of customers. In 2010, two customersGamesa and General Electriceach accounted for more than 10% of our consolidated
revenues and our five largest customers accounted for 78% of our consolidated revenues. Our customers periodically have expressed their intent to scale back, delay or restructure existing customer
agreements, which has led to reduced revenues from these customers and which may occur again in the future. As a result, our operating profits and gross margins have been negatively affected by a
decline in production levels, which has created production volume inefficiencies in our operations and cost structures.

Additionally,
if our relationships with significant customers should change materially, it could be difficult for us to immediately and profitably replace lost sales in a market with
such concentration, which would materially adversely affect our results. We could be adversely impacted by decreased customer demand for our products and services due to (1) the impact of
current or future economic conditions on our customers, (2) our customers' loss of market share to competitors of theirs that do not use our products, and (3) our loss of market share
with our customers. We could lose market share with our customers to competitors or to our customers themselves, should they decide to become more vertically integrated and produce our products or
deliver our services internally. Finally, most of our customers do not purchase all of our products and services, so if some of our customers gain market share, it could impact our mix of products and
services among our segments.

In
addition, even if our customers continue to do business with us, we can be adversely affected by a number of other potential developments with our customers. For
example:



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Our customers may be significantly affected by disruptions and volatility in the economy and in the wind energy market.

Current market disruptions and regular market volatility may have adverse impacts on our customers' ability to pay when due the amounts
payable to us and could cause related increases in our working capital or borrowing needs. In addition, our customers have in the past attempted and may attempt in the future to renegotiate the terms
of contracts or reduce the size of orders with us as a result of disruptions and volatility in the markets. Our backlog is significant, but we cannot predict with any degree of certainty the amount of
our backlog that we will ultimately ship to our customers.

Market
disruptions and regular market volatility may also result in an increased likelihood of our customers asserting warranty or remediation claims in connection with our products or
services that they would not ordinarily assert in a more stable economic environment. In the event of such a claim, we may incur costs if we decide to compensate the affected customer or to engage in
litigation against the affected customer regarding the claim. We maintain product liability insurance, but there can be no guarantee that such insurance will be available or adequate to protect
against such claims. A successful claim against us could result in a material adverse effect on our business.

We may have difficulty raising additional financing when needed or on acceptable terms and there can be no assurances that our operations will generate cash flows in an
amount sufficient to enable us to pay our indebtedness.

We rely on banks and capital markets as a source of liquidity for capital requirements not satisfied by cash flows from operations.
While we anticipate that our current cash resources and cash generated through our operations and credit line will be adequate to meet our liquidity needs for at least the next twelve months, our
committed sources of liquidity may be
inadequate to satisfy our operational needs. If we are not able to access capital at competitive rates, the ability to implement our business plans may be adversely affected. In the absence of access
to capital resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations at times when the prices for such assets are depressed. In such
event, we may not be able to consummate those dispositions. Furthermore, the proceeds of any such dispositions may not be adequate to meet our debt service obligations when due.

Additionally,
our ability to make scheduled payments on our existing or future debt obligations and fund operations will depend on our future financial and operating performance. While
we believe we will continue to have sufficient cash flows to operate our businesses, there can be no assurances that our operations will generate sufficient cash flows to enable us to pay our
remaining indebtedness or to fund our other liquidity needs. If we cannot make scheduled payments on our debt, we will be in default and, as a result, among other things, our debt holders could
declare all outstanding principal and interest to be due and payable which could force us to liquidate certain assets or substantially restructure or alter our business operations or debt obligations.
Moreover, if we are unable to obtain additional capital or if our current sources of financing are reduced or unavailable, we will likely be

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required
to delay, reduce the scope of, or eliminate our plans for expansion and growth and this could affect our overall operations.

Growth and diversification through acquisitions and internal expansion may not be successful, and could result in poor financial performance.

To execute our business strategy, we may seek to acquire new businesses. We may not be able to identify appropriate acquisition
candidates or successfully negotiate, finance or integrate acquisitions. If we are unable to make acquisitions, we may be unable to realize the growth we anticipate. Future acquisitions could involve
numerous risks including difficulties in integrating the operations, services, products and personnel of the acquired business, and the potential loss of key employees, customers and suppliers of the
acquired business. If we are unable to successfully manage these acquisition risks, future earnings may be adversely affected.

We
may also grow our existing business through increased production levels at existing facilities and through expansion to new manufacturing facilities and locations, such as our
recently completed drivetrain service center in Abilene, Texas. Such expansion and any future expansion will require coordinated efforts across the Company and continued enhancements to our current
operating infrastructure, including management and operations personnel, systems and equipment, and property. Difficulties or delays in acquiring and effectively integrating any new facilities may
adversely affect future performance. For example, we recorded higher costs in 2009 in connection with the startup of production at our Abilene, Texas tower manufacturing facility. Moreover, if our
expansion efforts do not adequately predict the demand of our customers and our potential customers, our future earnings may be adversely affected.

We face competition from industry participants who may have greater resources than we do.

Our businesses are subject to risks associated with competition from new or existing industry participants who may have more resources
and better access to capital. Many of our competitors and potential competitors may have substantially greater financial, customer support, technical and marketing resources, larger customer bases,
longer operating histories, greater name recognition and more established relationships in the industry than we do. Among other things, these industry participants compete with us based upon price,
quality, location and available capacity. We cannot be sure that we will have the resources or expertise to compete successfully in the future. Some of our competitors may also be able to provide
customers with additional benefits at lower overall costs to increase market share. We cannot be sure that we will be able to match cost reductions by our competitors or that we will be able to
succeed in the face of current or future competition. In addition, we may face competition from our customers as they seek to be more vertically integrated and offer full service packages. Some of our
customers are also performing more services themselves.

We have generated net losses and negative cash flows since our inception.

We have experienced operating losses for each of the years during which we have operated. In addition, in light of current economic
conditions and the state of the wind energy market in the U.S., we anticipate that losses and periods of negative cash flow may occur in the foreseeable future. We have incurred significant costs in
connection with the development of our businesses, and there is no assurance that we will achieve sufficient revenues to offset anticipated operating costs. Although we anticipate deriving revenues
from the sale of our products and services, no assurance can be given that these products and services can be sold on a profitable basis. If we achieve profitability, we cannot give any assurance that
we would be able to sustain or increase profitability on a quarterly or annual basis in the future.

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We may not be able to identify alternative uses, sell or otherwise dispose of our wind tower manufacturing facility in Brandon, South Dakota.

In the first quarter of 2010, we completed construction of a third wind tower manufacturing facility in Brandon, South Dakota, but as
of the date hereof, we have not commenced production at this facility. Following the Company's strategic planning meetings that took
place in the fourth quarter of 2010, we determined that due to the oversupply of capacity in the U.S. tower market and the significant level of towers imported from Asia, it would be difficult or
impossible to operate this facility in a profitable or cost-effective manner. We are currently exploring alternative uses for the building and equipment comprising this facility. In
connection with this determination, during the fourth quarter of 2010, we recorded an impairment charge of $13.3 million. We may elect to sell or otherwise dispose of the facility and
equipment, or use them for a different business purpose. If we are unable to find an alternative use or are unable to sell or otherwise dispose of the facility and equipment, we would continue to
incur significant fixed costs associated with ownership of the facility. There can be no assurance that we will be able to identify alternate uses, sell or otherwise dispose of the facility and
equipment on terms deemed to be commercially reasonable by us.

Our future operating results and the market price of our common stock could be materially adversely affected if we are required to take additional write downs to the
carrying value of long-lived assets associated with any of our operating segments in the future.

We review our long-lived assets, including intangibles, for impairment whenever events or changes in circumstances indicate
the carrying amounts of these assets may not be recoverable. Recoverability is measured by a comparison of the assets' carrying amount to their expected future undiscounted net cash flows. If such
assets are considered to be impaired, the impairment to be recognized is measured based on the amount by which the carrying amount of the asset exceeds its fair value.

In
addition to the impairment related to our Brandon, South Dakota wind tower manufacturing facility, during the fourth quarter of 2010 we performed a review of other
long-lived assets and concluded that the projected fair value of the Services segment assets was less than the carrying value. As a result, we recorded an impairment charge of
$22.9 million related to intangible and other long-lived assets.

In
the future, if our projected undiscounted cash flows associated with our operating segments do not exceed the carrying value of their net assets, we may be required to record
additional write-downs of the carrying value of intangible assets or other long-lived assets associated with any of our operating segments and our operating results and the market price of
our common stock may be materially adversely affected.

Disruptions in the supply of parts and raw materials, or changes in supplier relations, may negatively impact our operating results.

We are dependent upon the supply of certain raw materials used in our production process, and these raw materials are exposed to price
fluctuations on the open market. Raw
material costs for items such as steel, the primary raw material used by us, have fluctuated significantly and may continue to fluctuate. To reduce price risk caused by market fluctuations, we have
generally incorporated price adjustment clauses in our sales contracts. However, limitations on availability of raw materials or increases in the cost of raw materials (including steel), energy,
transportation and other necessary services may impact our operating results if our manufacturing businesses are not able to fully pass on the costs associated with such increases to their respective
customers. Alternatively, we will not realize material improvements from declines in steel prices as the terms of many of our contracts provide that we pass through these costs to our customers.

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In
addition, we may encounter supplier constraints, be unable to maintain favorable supplier arrangements and relations or be affected by disruptions in the supply chain caused by such
events as natural disasters, power outages and labor strikes. In the event of significant increases or decreases in the price of raw materials, particularly steel, our margins and profitability could
be negatively impacted.

If our projections regarding the future market demand for our products and services are inaccurate, our operating results and our overall business may be adversely affected.

We had previously made significant capital investments in anticipation of rapid growth in the U.S. wind energy market. However, the
growth in the U.S. wind energy market has not kept pace with the expectations we had when some of these capital investments were made, and there can be no assurance that the U.S. wind energy market
will grow and develop in a manner consistent with our past expectations. The expansion of our internal manufacturing and service capabilities has required significant up-front fixed costs.
If market demand for our products and services does not increase at the pace we have anticipated and align with our expanded manufacturing capacity, we may be unable to offset these costs and to
achieve economies of scale, and our operating results may continue to be adversely affected as a result of high fixed costs, reduced margins and underutilization of capacity. In light of these
considerations, we may be forced to temporarily idle existing capacity or sell to third parties manufacturing capacity that we cannot utilize in the near term. Alternatively, if we experience rapid
demand for our products and services in excess of our estimates, or we have reduced our manufacturing capacity, our installed capital equipment and existing workforce may be insufficient to support
higher production volumes, which could harm our customer relationships and overall reputation. In addition, we may not be able to expand our workforce and operations in a timely manner, procure
adequate resources, or locate suitable third-party suppliers, to respond effectively to changes in demand for our existing products and services or to the demand for new products and services
requested by our customers, and our business could be adversely affected. Our ability to meet such excess customer demand could also depend on our ability to raise additional capital and effectively
scale our manufacturing operations.

If our estimates for warranty expenses differ materially from actual claims made, or if we are unable to reasonably estimate future warranty expense for our products and
services, our business and financial results could be negatively affected.

We provide warranty terms generally ranging between one and seven years to our tower, gearing and services customers depending upon the
specific product or service and terms of the customer agreement. We reserve for warranty claims based on industry experience and estimates made by management based upon a percentage of our sales
revenues related to such products or services. From time to time, customers have submitted warranty claims against us. However, we have a limited history on which to base our warranty estimates for
certain products that we manufacture and services that we provide. Our assumptions could be materially different from the actual performance of our products in the future and could exceed the levels
against which we have reserved. In some instances our customers have interpreted the scope and coverage of certain of our warranty provisions differently from our interpretation of such provisions.
The expenses associated with remediation activities in the wind energy industry can be substantial, and if we are required to pay such costs in connection with a customer's warranty claim we could be
subject to additional unplanned cash expenditures. If our estimates prove materially incorrect, or if we are required to cover remediation expenses in addition to our regular warranty coverage, we
could be required to incur additional expenses and could face a material unplanned cash expenditure, which could harm our financial and operating results.

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Material weaknesses or other deficiencies in our internal controls over financial reporting, including potential failure to prevent or detect errors or fraud, could affect
the accuracy of our reported financial results.

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.

As
referenced in Item 9A, "Controls and Procedures" of this Annual Report on Form 10-K, management of the Company has determined that as of December 31,
2010, the Company maintained effective controls over financial reporting. However, in each of 2008 and 2009 management concluded that the Company had material weaknesses over its internal controls
over financial reporting. While we have now remediated these past material weaknesses and believe that we have designed and implemented procedures to maintain effective controls over financial
reporting, we cannot be certain that we will not in the future have material weaknesses or significant deficiencies in our internal controls over financial reporting, or that we will successfully
remediate any weaknesses or
deficiencies that we find. Internal control weaknesses or deficiencies in the future could affect our ability to complete our financial reporting on a timely basis or report accurate numbers. If we
are not able to maintain the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") in a timely manner or with adequate compliance, we may be subject to sanctions or
investigation by regulatory authorities. This type of action could adversely affect our financial results or investors' confidence in our company and our ability to access capital markets, and could
cause our stock price to decline.

Trade restrictions may present barriers to entry in certain international markets.

Restrictions on trade with certain international markets could affect our ability to expand into those markets. In addition, the
existence of government subsidies available to our competitors in certain countries may affect our ability to compete on a price basis.

We may be unable to keep pace with rapidly changing technology in wind turbine component manufacturing.

The global market for wind turbines is rapidly evolving technologically. Our component manufacturing equipment and technology may not
be suited for future generations of products being developed by wind turbine companies. For example, some wind turbine manufacturers are using wind turbine towers made from concrete instead of steel.
Other wind turbine designs have reduced the use of gearing or eliminated the gearbox entirely through the use of direct or compact drive technologies. To maintain a successful business in our field,
we must keep pace with technological developments and changing standards of our customers and potential customers and meet their constantly evolving demands. If we fail to adequately respond to the
technological changes in our industry, or are not suited to provide components for new types of wind turbines, our net worth, financial condition and operating results may be adversely affected.

We rely on unionized labor, the loss of which could adversely affect our future success.

We are dependent on the services of unionized labor and have collective bargaining agreements with certain of our operations workforce
at our Cicero and Neville Island gearing facilities. The loss of the services of these and other personnel, whether through terminations, attrition, labor strike, or otherwise, or a material change in
our collective bargaining agreements, could have a material adverse impact on us and our future profitability. Collective bargaining agreements have been ratified by collective bargaining units in
place at our Cicero, Illinois and Neville Island, Pennsylvania facilities and expire in February 2014 and October 2012, respectively. As of December 31, 2010, our collective bargaining units
represented approximately 23% of our workforce.

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We need to hire additional qualified personnel, including management personnel, and the loss of our key personnel could harm our business.

Our future success will depend largely on the skills, efforts and motivation of our executive officers and other key personnel. Our
success also depends, in large part, upon our ability to attract and retain highly qualified management and key personnel throughout our organization. During 2011, we will likely need to hire
additional personnel, including management, engineering and sales personnel, to fill in our organization. We face competition in the attraction and retention of personnel who possess the skill sets
that we seek. In addition, key personnel may leave our company and subsequently compete against us. The loss of the services of any of our key personnel, or our failure to attract and retain other
qualified and experienced personnel on acceptable terms, could have a material adverse effect on our business, results of operations, or financial condition.

Our ability to comply with regulatory requirements is critical to our future success and our current level of controls cannot guarantee that we are in compliance with all
such requirements.

As a manufacturer and distributor of wind and other energy industry products we may be or become subject to the requirements of
federal, state and local or foreign regulatory authorities. In addition, we are subject to a number of industry standard-setting authorities, such as the American Gear Manufacturers Association and
the American Welding Society. Changes in the standards and requirements imposed by such authorities could have a material adverse effect on us. In the event we are unable to meet any such standards
when adopted, our business could be adversely affected. We may not be able to obtain all regulatory approvals, licenses and permits that may be
required in the future, or any necessary modifications to existing regulatory approvals, licenses and permits, or maintain all required regulatory approvals, licenses and permits.

There
can be no guarantee that our businesses are in full compliance with such standards and requirements. We continue to develop our internal controls with a goal of providing a greater
degree of certainty that our businesses are in compliance with applicable governmental and regulatory requirements, but our current level of internal control may fail to reveal to us material
instances of non-compliance with such requirements, and such non-compliance could have a material adverse effect on our business.

Our principal stockholder has the ability to influence our affairs significantly.

Tontine Capital Management, L.L.C. ("TCM"), Tontine Capital Overseas GP, L.L.C. ("TCO"), Tontine Management, L.L.C. ("TM"), Tontine
Overseas Associates, L.L.C. ("TOA"), Tontine Capital Overseas Master Fund II, L.P. ("TCP II"), Tontine Assets Associates, L.L.C. ("TAA"), Tontine Power Partners, L.P. ("TPP") and Tontine
Associates, L.L.C. ("TA," and collectively with TCM, TCO, TM, TOA, TCP II, TAA and TPP and their affiliates, "Tontine") owns approximately 18.3% of our outstanding common stock. Although
Tontine currently does not have any representatives on our Board of Directors, Tontine has, and for so long as they hold at least 10% of our then issued and outstanding common stock will continue to
have, the right to designate two individuals on our Board of Directors pursuant to a Securities Purchase Agreement entered into with Broadwind in August 2007. As a result, Tontine may have the ability
to significantly influence our policies, business and affairs, and the outcome of any corporate transaction or other matter, including mergers, consolidations and the sale of all, or substantially
all, of our assets. Tontine's significant ownership level may have the effect of delaying, deterring or preventing a change in control that otherwise could result in a premium in the price of our
common stock. In addition, the actions of Tontine may have the effect of influencing changes in control or changes in management, or limiting the ability of our other stockholders to approve
transactions that they may deem to be in their best interest.

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We may not have the technical expertise and we may be unable to secure the necessary patents or other intellectual property rights needed to successfully market new products
that we may develop.

A key element of our business and operating strategy is to exploit our technological ability to design new manufacturing and service
processes and products to take advantage of the anticipated growth in the North American wind market. Historically, we have not developed patented technology or engaged in technical design work on a
significant scale. If we are unable to
develop new manufacturing and service processes and products that are attractive to our customers and potential customers, or if we are unable to secure the necessary patents or other intellectual
property rights needed to prevent our competitors from developing and marketing substantially similar products, we could experience a material adverse effect on our business and results of operations.

We cannot insure against all potential risks and may have difficulty insuring our business activities or become subject to increased insurance premiums.

Our business is subject to a number of risks, including inherent risks associated with manufacturing and service and construction
support for wind turbines. To mitigate the risks associated with our business, we have obtained various insurance policies. However, our insurance policies have high deductibles in certain instances
and do not cover losses as a result of certain events such as terrorist attacks. In addition, our insurance policies are subject to annual review by our insurers and these policies may not be renewed
at all or on similar or favorable terms. If we were to incur a significant uninsured loss or a loss in excess of the limits of our insurance policies, the results could have a material adverse effect
on our business, financial condition and results of operations.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.    PROPERTIES

Our corporate headquarters is located in Naperville, Illinois, which is a suburb located west of Chicago, Illinois. In addition, our
subsidiaries own or lease operating facilities, which are presented by operating segment as follows:

Operating Segment and
Facility Type

Location

Owned /
Leased

Approximate
Square FootageTowersTower Manufacturing

Manitowoc, WI

Leased


200,000Tower Manufacturing

Abilene, TX

Owned


146,000Tower Manufacturing

Brandon, SD(1)

Owned


146,000Specialty Structures

Manitowoc, WI

Leased


45,000Specialty Structures

Clintonville, WI

Owned


63,000GearingGearing System ManufacturingFinishing

Cicero, IL

Owned


198,000Gearing System ManufacturingMachining

Cicero, IL

Leased


301,000Gearing System ManufacturingHeat Treatment

Neville Island, PA

Owned


70,000ServicesService and Maintenance

Gary, SD

Leased


25,000Service and Maintenance

Abilene, TX

Leased


297,000Service and Maintenance

Howard, SD

Owned


25,000Service and Maintenance

Tehachapi, CA

Leased


5,000CorporateAdministrative

Naperville, IL

Leased


6,800


(1)Construction
of the tower manufacturing facility located in Brandon, South Dakota was completed in the first quarter of 2010. We have not begun production
at this facility. Following the Company's strategic planning meetings that took place in the fourth quarter of 2010, we determined that it would be difficult or impossible to operate this facility in
a profitable or cost-effective manner. As such, we are currently exploring alternative uses for the building and equipment comprising this facility, and recorded an impairment charge of
$13.3 million in the fourth quarter 2010 related to this facility.


We
consider that our facilities are in good condition and are adequate for our present and future needs.

ITEM 3.    LEGAL PROCEEDINGS

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of
Illinois, Eastern Division, against Broadwind and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of our common stock between
March 17, 2009 and August 9, 2010. The complaint seeks to allege that the defendants violated Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated
thereunder, and Section 20(a) of the Exchange Act by issuing a series of allegedly false and/or misleading statements concerning our financial results, operations, and prospects, including with
respect to the January 2010 secondary public offering of our common stock. Between February 15, 2011 and March 9, 2011, three putative shareholder derivative lawsuits were filed in the
United States District Court for the Northern District of Illinois, Eastern Division, and one putative shareholder derivative lawsuit was filed in the Circuit Court of Cook County, Illinois, Chancery
Division, against certain of our current and former officers and directors, and certain Tontine entities, seeking to challenge alleged breaches of fiduciary duty,

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waste
of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of our common stock. One of the lawsuits also alleges that certain directors
violated Section 14(a) of the Exchange Act in connection with our Proxy Statement for our 2010 Annual Meeting of Stockholders. Because of the preliminary nature of these lawsuits, we are not
able to estimate a loss or range of loss, but based on currently available information we expect that any liability resulting from these claims would be substantially covered by our insurance
policies.

We
are aware of an investigation commenced by the United States Attorney's Office, Northern District of Illinois, for potential violation of federal environmental laws. On
February 15, 2011, officials from the USEPA conducted a search of one of our facilities in Cicero, Illinois. During the search, officials interviewed a number of our employees and seized
documents relating to the facility's compliance with certain environmental laws and regulations. Also on February 15, 2011, we received a subpoena requesting production of certain documents
relating to the facility's compliance with certain environmental regulations relating to the generation, discharge and disposal of wastewater from certain of our processes from 2004 to the present. We
are in the process of responding to this subpoena, which response is currently due on March 24, 2011. On February 23, 2011, we also received an additional subpoena requesting production
of certain documents relating to certain of our employees and environmental and manufacturing processes. We are in the process of responding to this subpoena, and have requested an extension of the
time allotted to respond. Such extensions are generally granted as a matter of routine, but we have not yet received a new date by which such response will be due. We do not currently have information
as to when the investigation may be concluded, and we are also conducting an internal investigation of any possible noncompliance. At this time, we have not been formally notified that we are a
subject or target of the investigation and no fines or penalties have been suggested. There can be no assurances that the conclusion of the investigation will not result in a determination that we
have violated applicable laws. If we are found to have violated such laws, we could be subject to fines, civil penalties and criminal penalties. We have recorded a liability of $675 at
December 31, 2010, which represents the low end of our estimate of costs and expenses that have been incurred, or which are expected to be incurred during 2011 in connection with this matter.
Due to the preliminary nature of the investigation, it is reasonably possible that our estimate of the obligation may change in the near term.

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

ITEM 4.    RESERVED

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Prior to April 9, 2009, our common stock was quoted on the OTC Bulletin Board ("OTCBB") under the symbol "BWEN.OB." Our common
stock began trading on the NASDAQ Global Select Market ("NASDAQ") on April 9, 2009 under the symbol "BWEN."

The
following table sets forth the range of high and low bid quotations as reported by the OTCBB for the first quarter of 2009 and for the second quarter for the period of April 1
through April 8, 2009. Quotations on the OTCBB reflect inter-dealer prices, which do not include retail
mark-up, mark-down or commissions, and may not represent actual sale prices. For the second quarter of 2009 since April 9, 2009 and for all subsequent quarters, the
table sets forth the high and low bid prices of our common stock traded on the NASDAQ Global Select Market.

Common StockHigh

Low2010First quarter

$
8.47

$
4.05Second quarter


4.57


2.15Third quarter


3.83


1.42Fourth quarter


2.42


1.59




High

Low2009First quarter

$
5.45

$
2.60Second quarter


11.45


4.05Third quarter


12.49


7.18Fourth quarter


9.92


5.01


The
closing price for our common stock as of March 1, 2011 was $1.51. As of March 1, 2011, there were 82 holders of record of our common stock.

We
have never paid cash dividends on our common stock and have no current plan to do so in the foreseeable future. The declaration and payment of dividends on our common stock are
subject to the discretion of our Board of Directors and are further limited by our credit agreements and other contractual agreements we may have in place from time to time. The decision of our Board
of Directors to pay future dividends will depend on general business conditions, the effect of a dividend payment on our financial condition, and other factors the Board of Directors may consider
relevant. The current policy of our Board of Directors is to reinvest cash generated in our operations to promote future growth and to fund potential investments.

Performance Graph

The following Performance Graph and related information shall not be deemed "soliciting material" or "filed"
under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, nor shall such information be incorporated by reference by any general statement incorporating by reference
this Annual Report on Form 10-K into any filing under such Acts, except to the extent that the Company specifically incorporates it by reference into such filing.

The following graph compares cumulative shareholder returns for our common stock as compared with the S&P 500 and the Clean Edge Global Wind Energy Index
for the period from April 9, 2009 (the date our common stock began trading on the NASDAQ Global Select Market) to December 31, 2010. The graph assumes an investment of $100 as of
April 9, 2009 and that dividends were reinvested.

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Table of Contents

At
December 31, 2010, the Company changed the index used in the performance graph to the Clean Edge Global Wind Energy Index from the PowerShares Global Wind Energy Index, which had been used
in the prior year, as we believe it will be a better representation of the overall wind market in future periods. The historical results obtained from using the Clean Edge Global Wind Energy Index are
materially consistent with those obtained from using the PowerShares Global Wind Energy Index.

GRAPHIC

Repurchases

We did not engage in any repurchases of our common stock during the year ended December 31, 2010.

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the fourth quarter or for the year ended December 31, 2010.

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" of
this Annual Report on Form 10-K for information as of December 31, 2010 with respect to shares of our common stock that may be issued under our existing share-based
compensation plans.

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ITEM 6.    SELECTED FINANCIAL DATA

The following selected historical consolidated financial and other data are qualified in their entirety by reference to, and should be
read in conjunction with, our consolidated financial statements and the related notes thereto appearing elsewhere herein and Part II, Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Our selected statement of continuing operations data set forth below for each of the years ended December 31, 2010, 2009, 2008, 2007 and 2006,
and the balance sheet data as of December 31, 2010, 2009, 2008, 2007 and 2006, are derived from our consolidated financial statements. The selected statement of continuing operations data
excludes the results of our Badger subsidiary, which is now reported as discontinued operations.

(In thousands, except per share data)

For the Year Ended December 31,2010

2009

2008

2007

2006Selected Statement of Operations DataRevenues

$
136,896

$
184,798

$
207,349

$
29,804

$
4,023Gross profit (loss)


1,946


11,904


31,696


3,939


(799
)Gross profit (loss) percentage


1.4
%

6.4
%

15.3
%

13.2
%

(19.9
)%Impairment charges(1)

$
40,777

$
82,211

$
2,409

$


$
Intangible amortization


2,992


9,524


10,645


1,750


21Operating loss


(69,227
)

(112,253
)

(21,874
)

(3,535
)

(2,321
)Loss from continuing operations


(69,753
)

(107,026
)

(25,278
)

(3,362
)

(2,735
)Net loss per sharebasic and diluted:Loss from continuing operations


(0.66
)

(1.11
)

(0.28
)

(0.07
)

(0.08
)Cash dividends per common share



















As of December 31,2010

2009

2008

2007

2006Selected Balance Sheet DataAssets:Property and equipment, net

$
106,317

$
129,619

$
136,133

$
58,890

$
2,799Total assets


183,506


231,488


380,609


205,818


3,895Liabilities:Total long-term debt, net of current maturities


9,671


13,396


24,397


17,620


807Total stockholders' equity (deficit)


126,196


155,595


262,156


124,536


(5,314
)




For the Year Ended December 31,2010

2009

2008

2007

2006Selected Other DataNon GAAP Financial MeasuresAdjusted EBITDA(2)

$
(9,833
)
$
1,913

$
2,420

$
103

$
(1,643
)Adjusted EBITDA margin percentage(3)


(7.2
)%

1.0
%

1.2
%

0.3
%

(40.8
)%


(1)See
Note 8 "Goodwill and Intangible Assets" in Part IV, Item 15 in the notes to our consolidated financial statements for further
discussion of the impairment charges for these years.(2)For
any period, earnings from continuing operations before interest, taxes, depreciation, amortization, and share-based compensation ("Adjusted EBITDA") are
calculated as presented below. We believe that Adjusted EBITDA is particularly meaningful due principally to the role


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acquisitions
have played in our development. Historically, our growth through acquisitions has resulted in significant non-cash depreciation and amortization expense because a significant
portion of the purchase price of our acquired businesses is generally allocated to depreciable fixed assets and long-lived assets, which primarily consist of goodwill and amortizable
intangible assets. Please note that Adjusted EBITDA should not be considered an alternative to, nor is there any implication that Adjusted EBITDA is more meaningful than, any measure of performance or
liquidity promulgated under accounting principles generally accepted in the U.S. ("GAAP"). Additionally, the calculation of Adjusted EBITDA excludes the effect of any goodwill, intangible and
long-lived asset impairment charges.


For the Year Ended December 31,2010

2009

2008

2007

2006Loss from continuing operations

$
(69,753
)
$
(107,026
)
$
(25,278
)
$
(3,362
)
$
(2,735
)(Benefit) provision for income taxes


(160
)

(947
)

1,096


(1,039
)

Interest expense, net


1,172


2,174


2,104


839


411Impairment charges


40,777


82,211


2,409





Depreciation and amortization


16,463


22,696


20,090


3,523


328Share-based compensation


1,668


2,805


1,999


142


353Adjusted EBITDA

$
(9,833
)
$
1,913

$
2,420

$
103

$
(1,643
)


(3)Adjusted
EBITDA margin percentage is equal to Adjusted EBITDA divided by total revenue.


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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion below contains "forward-looking statements," as defined in Section 21E of the Exchange
Act, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects and opportunities, as well as assumptions made by, and
information currently available to, our management. We have tried to identify forward-looking statements by using words such as "anticipate," "believe," "plan," "expect," "intend," "will," and similar
expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various
risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A "Risk Factors" in Part I of this Annual Report on Form 10-K,
that could cause our actual growth, results of operations, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these
statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements
contained herein to reflect future events, developments, or changed circumstances, or for any other reason.

As used in this Annual Report on Form 10-K, the terms "we," "us," "our," "Broadwind," "Broadwind Energy" and the
"Company" refer to Broadwind Energy, Inc. and its wholly-owned subsidiaries.

(Dollars are presented in thousands unless otherwise stated)

Business Overview

Broadwind Energy provides technologically advanced high-value products and services to energy, mining and infrastructure
sector customers, primarily in the U.S. Our most significant presence is within the U.S. wind industry, where we believe we are the only independent company that offers our breadth of products and
services to the market. Our product and service portfolio provides our customers, including wind turbine manufacturers, wind farm developers and wind farm operators, with access to a broad array of
component and service offerings. Outside of the wind market, we provide precision gearing and specialty weldments to industrial customers, particularly in the energy, mining and infrastructure
sectors.

The
Company was built primarily through acquisitions made in 2007 and 2008. Beginning in late 2008, the severe impacts of the global economic downturn and banking crisis significantly
impacted the wind energy business in general and Broadwind in particular. The recession and lack of adequate capital to fund new wind farm developments caused new equipment order intake to drop,
contributed to pressure on product margins and reduced service opportunities. Although we had a number of multi-year framework agreements in place with key customers, their purchase
requirements dropped sharply which necessitated renegotiations of volume commitments and prices in certain instances. Accordingly, the decline in production levels across our business units has
created production volume inefficiencies within our operations and cost structures, which has had a negative effect on our operating profits and gross margins.

We
have taken a number of steps to reduce operating costs, repay debt and improve our financial position and product offerings. As such, we believe we are well-positioned to
capture market opportunities associated with growth in wind energy and other industrial demand in the U.S. We believe that growth in the U.S. wind energy market will be driven by:
(i) macroeconomic factors, including economic recovery and increased demand for electricity, rising energy prices and federal and state-level wind development incentives, (ii) upgrades
to existing transmission infrastructure and increasing proliferation of smart grid technology, and (iii) the maturation of technologies and services within the wind industry, including
increased turbine efficiencies, a coordinated global supply chain and

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improved
focus on equipment maintenance and reliability. Given our significant installed manufacturing and service platform, we believe we will be able to substantially grow revenues without making
significant investment in additional capital equipment or manufacturing capacity.

We
review our goodwill balances for impairment on at least an annual basis and review our intangible and other long-lived assets for impairment whenever events or changes in
circumstances indicate that the asset's carrying value amount may not be recoverable. During the second quarter of 2010, the Company identified a triggering event associated with the continued
deterioration in the financial performance within our Services segment. This triggering event required a revision of the Company's projection of future operating results and cash flows for this
segment in light of the continued economic weakness in the wind energy industry. We performed our review of goodwill based on the carrying value of these assets as of June 30, 2010, and the
estimate of fair-value for each of our operating segments was based primarily on projected future results, cash flows and other assumptions. As a result of this review, we recorded a
goodwill impairment charge of $4,561 at June 30, 2010 in our Services segment. During the fourth quarter of 2010, the Company identified triggering events associated with the Company's current
period operating losses, its history of continued operating losses and its revised projections of operating results and cash flows developed as part of the strategic planning process. As a result, our
review of other long-lived assets indicated that the carrying values of customer relationships, trade name and property and equipment at our Services segment were also impaired.
Accordingly, we recorded an impairment charge during the fourth quarter of $22,890. In addition, we determined that our Brandon, South Dakota tower manufacturing facility was impaired and recorded an
impairment charge to fixed assets of $13,326.

In
connection with our December 2010 decision to divest our Badger Transport, Inc. subsidiary ("Badger"), which formerly comprised our Logistics segment, we have classified Badger as a
discontinued operation. The assets and liabilities of Badger have been classified as "Assets held for sale" and "Liabilities held for sale" in our Consolidated Balance Sheet. In connection with the
reclassification to assets held for sale, we recorded an impairment charge of $10,020 to write down the assets to their net realizable value. The impairment charge is included in "Loss from
Discontinued Operations" in our Consolidated Statement of Operations.

In
connection with our annual goodwill impairment analysis as of October 31, 2009, we determined that the goodwill balance attributable to our Gearing segment was impaired due to
a deterioration in financial performance during 2009 and as a result of the subsequent fourth quarter revision in our
projection of future operating results and cash flows in light of the effect of the continued economic downturn on the wind gearing industry. Additionally, we determined that the carrying value of our
RBA trade name was impaired as a result of the merger of the operations of our subsidiary R.B.A. Inc. ("RBA") into our Towers segment in December 2009 and that RBA's customer relationship
intangible was impaired due to a revision in projected revenues and cash flows associated with this customer relationship. We recorded goodwill and intangible impairment charges of $24,269 and
$57,942, respectively, to properly reflect the carrying value of these assets.

In
the future, if our projected discounted cash flows associated with our operating segments do not exceed the carrying value of their net assets, we may be required to record additional
write downs of the carrying value of intangible assets or other long-lived assets associated with any of our operating segments, in which event our operating results, and the market price
of our common stock may be materially adversely affected.

Summary of Recent Events:



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RESULTS OF OPERATIONS

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our
results of operations for the year ended December 31, 2010 compared to the year ended December 31, 2009.

For the Year Ended December 31,

2010 vs. 20092010

% of Total

2009

% of Total

$ Change

% ChangeRevenues

$
136,896


100.0
%
$
184,798


100.0
%
$
(47,902
)

(25.9
)%Cost of sales


134,950


98.6
%

172,894


93.6
%

(37,944
)

(21.9
)%Gross profit


1,946


1.4
%

11,904


6.4
%

(9,958
)

(83.7
)%Operating expensesSelling, general and administrative expenses


27,404


20.0
%

32,422


17.5
%

(5,018
)

(15.5
)%Impairment charges


40,777


29.8
%

82,211


44.5
%

(41,434
)

(50.4
)%Intangible amortization


2,992


2.2
%

9,524


5.2
%

(6,532
)

(68.6
)%Total operating expenses


71,173


52.0
%

124,157


67.2
%

(52,984
)

(42.7
)%Operating loss


(69,227
)

(50.6
)%

(112,253
)

(60.8
)%

43,026


(38.3
)%Other (expense) incomeInterest expense, net


(1,172
)

(0.9
)%

(2,174
)

(1.2
)%

1,002


(46.1
)%Other, net


486


0.4
%

6,454


3.5
%

(5,968
)

(92.5
)%Total other (expense) income, net


(686
)

(0.5
)%

4,280


2.3
%

(4,966
)

(116.0
)%Net loss from continuing operations before benefit for income taxes


(69,913
)

(51.1
)%

(107,973
)

(58.5
)%

38,060


(35.2
)%Benefit for income taxes


(160
)

(0.1
)%

(947
)

(0.6
)%

787


(83.1
)%Loss from continuing operations


(69,753
)

(51.0
)%

(107,026
)

(57.9
)%

37,273


(34.8
)%Loss from discontinued operations, net of tax


(15,422
)

(11.3
)%

(3,093
)

(1.7
)%

(12,329
)

398.6
%Net loss

$
(85,175
)

(62.3
)%
$
(110,119
)

(59.6
)%
$
24,944


(22.7
)%


Consolidated

Total revenues decreased $47,902 or 26%, from $184,798 during the year ended December 31, 2009, to $136,896 during the year
ended December 31, 2010. The decrease in revenues was primarily attributable to an 18% decline in our Towers segment revenue due mainly to a reduction in the price of the steel component
included in the overall tower section price compared to the prior year. Our Gearing segment experienced decreases in wind and industrial gearing revenues of 21% and 29%, respectively, due primarily to
reduced or delayed production orders in 2010 from key customers. Revenues in our Services segment decreased 56% due to the absence of a large blade program completed in 2009, and an overall reduction
in technical services provided in 2010.

Total
cost of sales decreased $37,944 or 22%, from $172,894 during the year ended December 31, 2009, to $134,950 during the year ended December 31, 2010. The decrease in
cost of sales within our Towers segment was primarily attributable to the 18% decline in revenues as compared to the prior year, as well as the absence of start-up and production costs for
our new wind tower manufacturing facility in Abilene, Texas in 2009. The decrease in cost of sales within our Gearing segment was

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primarily
due to the 24% decline in revenues compared to the prior year as well as enhanced production efficiencies during the second half of 2010. The decrease in cost of sales in our Services
segment was due to lower direct labor costs for field technicians as a result of the 56% decline in revenues compared to the prior year.

Selling,
general and administrative expenses decreased from $32,422 during the year ended December 31, 2009, to $27,404 during the year ended December 31, 2010. The
decrease was primarily attributable to cost reduction initiatives, namely the reduction of third party professional fees, implemented during 2010 to mitigate the effects of an overall decline in
production volumes, the absence of charges incurred in 2009 associated with amendments to our credit agreement with Bank of America and reserves established in connection with a customer dispute in
2009.

We
review our goodwill balances for impairment on at least an annual basis and review our intangible and other long-lived assets for impairment whenever events or changes in
circumstances indicate that the asset's carrying value amount may not be recoverable. During the second quarter of 2010 the Company identified a triggering event associated with the continued
deterioration in the financial performance within our Services segment. This triggering event required a revision of the Company's projection of future operating results and cash flows for this
segment in light of the continued economic weakness in the wind energy industry. We performed our review of goodwill based on the carrying value of these assets as of June 30, 2010, and the
estimate of fair value for each of our operating segments was based primarily on projected future results, cash flows and other assumptions. As a result of this review, we recorded a goodwill
impairment charge of $4,561 at June 30, 2010 in our Services segment. During the fourth quarter of 2010, the Company identified triggering events associated with the Company's current period
operating losses, its history of continued operating losses and its revised projections of operating results and cash flows developed as part of the strategic planning process. As a result, our review
of other long-lived assets indicated that the carrying values of customer relationships, trade name and property and equipment within our Services segment were also impaired. Accordingly,
we recorded an impairment charge during the fourth quarter of $22,890. In addition, following the Company's strategic planning meetings that took place in the fourth quarter 2010, we determined that
our Brandon, South Dakota tower manufacturing facility was impaired and recorded an impairment charge to fixed assets of $13,326.

Our
2009 impairment analysis indicated that the fair value of our goodwill and intangible assets related to our Gearing segment was less than the carrying value of these assets. Our
analysis also indicated impairment to our customer relationship and trade name intangible assets in our Towers segment as a
result of the merger of our industrial weldment business into our Towers segment in December 2009, and due to a revision in projected revenues and cash flows associated with these customer
relationships. Accordingly, we recorded goodwill and intangible impairment charges of $24,269 and $57,942, respectively, to properly reflect the carrying value of these assets.

Intangible
amortization expense decreased from $9,524 during the year ended December 31, 2009, to $2,992 during the year ended December 31, 2010. The decrease was primarily
due to a $6,015 reduction in amortization expense in our Gearing segment as a result of the impairment in 2009 to its customer relationship intangibles. In addition, amortization expense in our
Services segment decreased $427 due to the impairment of its intangible assets as of October 31, 2010.

Total
other income, net, was $4,280 during the year ended December 31, 2009, compared to other expense, net, of $686 during the year ended December 31, 2010. The decrease
was primarily attributable to the recognition of $5,082 in income related to an escrow agreement settlement with the former owners of Brad Foote during the second quarter of 2009.

During
the year ended December 31, 2009, we reported a benefit for income taxes of $947, compared to a benefit for income taxes of $160 during the year ended December 31,
2010. The decrease in income tax benefit for 2010 compared to 2009 was primarily attributable to a reduction in

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our
deferred income tax liabilities in connection with the goodwill impairment charge recorded during 2009.

Net
loss from continuing operations decreased from $107,026 during the year ended December 31, 2009, to $69,753 during the year ended December 31, 2010, primarily as a
result of the factors as described above.

Net
loss from discontinued operations, net of tax was $3,093 during the year ended December 31, 2009, compared to $15,422 during the year ended December 31, 2010. The 2010
loss included impairment charges of $10,020.

Net
loss decreased from $110,119 during the year ended December 31, 2009, to $85,175 during the year ended December 31, 2010, primarily as a result of the factors as
described above.

Towers Segment

The following table summarizes the Towers segment operating results for the years ended December 31, 2010 and 2009:

Twelve Months Ended
December 31,2010

2009Revenues

$
76,150

$
93,316Impairment charges


13,326


1,916Operating loss


(11,436
)

(499
)Operating margin


(15.0
)%

(0.5
)%


Towers
segment revenues declined $17,166, from $93,316 during the year ended December 31, 2009, to $76,150 during the year ended December 31, 2010. The reduction in sales
is attributable to a 3% decline in tower section production and lower average tower prices reflecting, in part, 20% lower average steel costs.

Towers
segment operating loss increased by $10,937, from a loss of $499 during the year ended December 31, 2009, to a loss of $11,436 during the year ended December 31,
2010. The increased loss from operations was primarily attributable to a fixed asset impairment charge of $13,326 related to our investment in the Brandon, South Dakota tower facility. Additionally, a
less profitable sales mix resulted in margin degradation of $2,819 as well as $965 in higher labor costs mainly associated with premium costs and inefficiencies that were incurred to support the
increased production volume during the fourth quarter. These items were partially offset by the absence of $3,350 of start-up costs incurred in 2009 associated with our wind tower
manufacturing facility in Abilene, Texas and a non-recurring impairment charge with respect to a customer relationship and trade name intangible in the aggregate amount of $1,916 taken in
2009. Towers operating margins deteriorated from (0.5%) during the year ended December 31, 2009 to (15%) during the year ended December 31, 2010, as a result of these factors.

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Gearing Segment

The following table summarizes the Gearing segment operating results for the years ended December 31, 2010 and 2009:

Twelve Months Ended
December 31,2010

2009Revenues

$
48,996

$
64,518Impairment charges





80,295Operating loss


(13,678
)

(97,058
)Operating margin


(27.9
)%

(150.4
)%


Gearing
segment revenues decreased $15,522, from $64,518 during the year ended December 31, 2009, to $48,996 during the year ended December 31, 2010. The decrease in
revenues was primarily attributable to 21% and 29% declines in wind gearing and industrial revenues, respectively, due mainly to reduced or delayed production orders from key customers. The
manufacture of wind turbine gearing, which typically accounts for the majority of our gearing revenues, continued to be negatively affected by reduced or delayed production orders from our key gearing
customers, predominantly in the first half of the year, as well as ongoing challenges in the wind industry.

Gearing
segment operating loss decreased by $83,380, from $97,058 during the year ended December 31, 2009, to $13,678 during the year ended December 31, 2010. The decrease
in operating loss was largely attributable to the absence of impairment charges of $80,295 recorded during 2009. As a result of the 2009 impairment recorded, the corresponding amortization expense
decreased by approximately $6,000 in 2010 compared to 2009. These two factors were partially offset by the establishment of an environmental reserve of approximately $675 in 2010. Gearing operating
margin was (150.4%) during the year ended December 31, 2009 compared to (27.9%) during the year ended December 31, 2010, due to these factors.

Services Segment

The following table summarizes the Services segment operating results for the years ended December 31, 2010 and 2009:

Twelve Months Ended
December 31,2010

2009Revenues

$
12,090

$
27,575Impairment charges


27,451


Operating loss


(34,747
)
$
(610
)Operating margin


(287.4
)%

(2.2
)%


Services
segment revenues decreased $15,485, from $27,575 during the year ended December 31, 2009, to $12,090 during the year ended December 31, 2010. The decrease in
revenues was primarily the result of the absence of a large blade program completed in 2009, a reduction in services provided in 2010 to two large clients due in part to their divestiture of wind farm
sites and lower outsourced project activity overall.

Services
segment operating loss increased $34,137, from $610 during the year ended December 31, 2009, to $34,747 during the year ended December 31, 2010. The operating
margin declined from (2.2%) in 2009 to (287.4%) in 2010. The deterioration in operating loss and operating margin were primarily attributable to the $5,100 adverse effect of reduced sales, a goodwill
impairment charge of $4,561 recorded in the second quarter of 2010, an impairment charge of $22,890 related to customer relationships, trade name and property and equipment taken in fourth quarter of
2010, less favorable labor utilization during the first half of the year and start-up costs related to the Company's drivetrain service center in Abilene, Texas.

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Corporate and Other

Corporate and Other operating loss decreased $4,720 from $14,086 during the year ended December 31, 2009, to $9,366 during the
year ended December 31, 2010. The decrease in operating loss was primarily attributable to a $2,930 reduction in professional fees associated with tax, accounting and legal services, as well as
the absence of costs associated with an acquisition we did not complete during 2009. In addition, the decrease in operating loss was attributable to the absence of a $1,200 expense related to a
customer dispute incurred in 2009.

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our
results of operations for the year ended December 31, 2009 compared to the year ended December 31, 2008.

For the Year Ended December 31,2009 vs. 2008% of
Total
Revenue



% of
Total
Revenue2009

2008

$ Change

% ChangeRevenues

$
184,798


100.0
%
$
207,349


100.0
%
$
(22,551
)

(10.9
)%Cost of sales


172,894


93.6
%

175,653


84.7
%

(2,759
)

(1.6
)%Gross profit


11,904


6.4
%

31,696


15.3
%

(19,792
)

(62.4
)%Operating expensesSelling, general and administrative expenses


32,422


17.5
%

40,516


19.5
%

(8,094
)

(20.0
)%Impairment charges


82,211


44.5
%

2,409


1.2
%

79,802


3312.7
%Intangible amortization


9,524


5.2
%

10,645


5.1
%

(1,121
)

(10.5
)%Total operating expenses


124,157


67.2
%

53,570


25.8
%

70,587


131.8
%Operating loss


(112,253
)

(60.8
)%

(21,874
)

(10.5
)%

(90,379
)

413.2
%Other income (expense)Interest expense, net


(2,174
)

(1.2
)%

(2,104
)

(1.0
)%

(70
)

3.3
%Other (expense), net


6,454


3.5
%

(204
)

(0.1
)%

6,658


(3263.7
)%Total other income (expense), net


4,280


2.3
%

(2,308
)

(1.1
)%

6,588


(285.4
)%Net loss from continuing operations before (benefit) provision for income taxes


(107,973
)

(58.5
)%

(24,182
)

(11.6
)%

(83,791
)

346.5
%(Benefit) provision for income taxes


(947
)

(0.6
)%

1,096


0.6
%

(2,043
)

(186.4
)%Loss from continuing operations


(107,026
)

(57.9
)%

(25,278
)

(12.2
)%

(81,748
)

323.4
%Loss from discontinued operations, net of tax


(3,093
)

(1.7
)%

(7
)

0.0
%

(3,086
)

44085.7
%Net loss

$
(110,119
)

(59.6
)%
$
(25,285
)

(12.2
)%
$
(84,834
)

335.5
%


Consolidated

Total revenues decreased $22,551 or 11%, from $207,349 during the year ended December 31, 2008, to $184,798 during the year
ended December 31, 2009. The decrease in revenues was primarily attributable to a 38% decline in gearing revenues, which was the result of a reduction in wind turbine gearing production as
compared to the prior year. Revenues in our Services segment decreased 12% due to the completion of a large blade refurbishment project that did not recur during 2009. These declines were partially
offset by a 29% increase in wind turbine tower revenues as a result of new

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customer
orders and increased manufacturing capacity associated with our wind tower manufacturing facility in Abilene, Texas in January 2009.

Total
cost of sales decreased $2,759, from $175,653 during the year ended December 31, 2008, to $172,894 during the year ended December 31, 2009. The change in cost of
sales was primarily the result of 30% and 10% declines in cost of sales within our Gearing and Services segments, respectively. The decrease in cost of sales in our Gearing segment was primarily
attributable to the 38% decline in revenues as compared to the prior year. The decrease in cost of sales in our Services segment was due to lower direct labor costs for field technicians as a result
of a 12% decline in revenues as compared to the prior year. The decrease in cost of sales was partially offset by an increase in cost of sales of 49% in our Towers segment. The increase in cost of
sales within our Towers segment was primarily attributable to a higher percentage of steel included in the selling price of wind turbine towers manufactured, an increase in production costs related to
higher production volumes and the inclusion
of start-up and production costs for our wind tower manufacturing facility in Abilene, Texas.

Selling,
general and administrative expenses decreased from $40,516 during the year ended December 31, 2008, to $32,422 during the year ended December 31, 2009. The
decrease was primarily attributable to cost reduction initiatives implemented during 2009 across all reportable segments to mitigate the effects of an overall decline in production volumes. These cost
reduction initiatives were partially offset by an $806 increase in share-based compensation expense as a result of an increase in restricted stock units granted and professional fees and costs of
$1,201 associated with amendments to our credit agreement with Bank of America.

Our
annual test of goodwill impairment as of October 31, 2009 indicated that the fair value of our goodwill and intangible assets related to our Gearing segment was less than the
carrying value of these assets. Our analysis also indicated impairment to our trade name and customer relationship intangible assets in our Towers segment as a result of the merger of our industrial
weldment business into our Towers segment in December 2009 and due to a revision in projected revenues and cash flows associated with this customer relationship. Accordingly, we recorded goodwill and
intangible impairment charges of $24,269 and $57,942, respectively, to properly reflect the carrying value of these assets.

Intangible
amortization expense decreased from $10,645 during the year ended December 31, 2008, to $9,524 during the year ended December 31, 2009. The decrease was
primarily due to a $1,203 reduction in amortization expense in our Gearing segment as a result of the impairment in 2009 to its customer relationship intangibles.

Total
other expense, net, was $2,308 during the year ended December 31, 2008, compared to other income, net, of $4,280 during the year ended December 31, 2009. The increase
was primarily attributable to the recognition of $5,082 in income related to an escrow agreement settlement with the former owners of Brad Foote during the second quarter of 2009.

During
the year ended December 31, 2009 we reported a benefit for income taxes of $947 compared to a provision for income taxes of $1,096 during the year ended December 31,
2008. The increase in income tax benefit for 2009 compared to 2008 was primarily attributable to a reduction in our deferred income tax liabilities in connection with the goodwill impairment charge
recorded during 2009.

Net
loss from continuing operations increased from $25,278 during the year ended December 31, 2008, to $107,026 during the year ended December 31, 2009, primarily as a
result of the factors as described above.

Net
loss from discontinued operations, net of tax increased from $7 during the year ended December 31, 2008, to $3,093 during the year ended December 31, 2009. The effects
of the economic downturn on the wind industry and competitive pricing pressure negatively affected the 2009 results.

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Net
loss increased from $25,285 during the year ended December 31, 2008, to $110,119 during the year ended December 31, 2009, primarily as a result of the factors as
described above.

Towers Segment

The following table summarizes the Towers segment operating results for the years ended December 31, 2009 and 2008:

Twelve Months Ended
December 31,2009

2008Revenues

$
93,316

$
72,561Impairment charges


1,916


2,409Operating (loss) income


(499
)

5,813Operating margin


(0.5
)%

8.0
%


Towers
segment revenues increased $20,755, from $72,561 during the year ended December 31, 2008, to $93,316 during the year ended December 31, 2009. Approximately 21% of
the increase in revenues was attributable to an increase in materials included in the selling price of wind turbine towers manufactured. Additionally, revenues increased by approximately 28% in
connection with new customer agreements and the corresponding increase in production volumes at our Manitowoc, Wisconsin and Abilene, Texas facilities.

Despite
higher revenues, the segment incurred an operating loss of $499 due in part to the impairment charge with respect to a customer relationship and trade name intangible in the
aggregate amount of $1,916. The trade name intangible impairment charge was attributable to the merger of our specialty weldment operations into our Towers segment in December 2009, and the customer
relationship intangible impairment was due to a revision in projected revenues and cash flows associated with this customer relationship. The decrease in operating income and operating margin was also
due to production inefficiencies and increased travel and administrative expenses of approximately $3,350 associated with the start-up of our wind tower manufacturing facility in Abilene,
Texas, and our operating margins were negatively impacted by approximately $4,200 due to less profitable customer contracts as compared to the prior year.

Gearing Segment

The following table summarizes the Gearing segment operating results for the years ended December 31, 2009 and 2008:

Twelve Months Ended
December 31,2009

2008Revenues

$
64,518

$
104,553Impairment charges


80,295


Operating loss


(97,058
)

(6,614
)Operating margin


(150.4
)%

(6.3
)%


Gearing
segment revenues decreased $40,035, from $104,553 during the year ended December 31, 2008, to $64,518 during the year ended December 31, 2009. The decrease in
revenues was primarily attributable to 46% and 27% declines in wind gearing and industrial revenues, respectively. The manufacture of wind turbine gearing, which typically accounts for the majority of
our gearing revenues, continued to be negatively affected by reduced or delayed production orders from our key gearing customers.

Gearing
operating loss increased $90,444, from $6,614 during the year ended December 31, 2008, to $97,058 during the year ended December 31, 2009. The increase in operating
loss was largely

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attributable
to impairment charges of $80,295 recorded during 2009. The impairment charges were the result of a revision in our estimates of future results of operations and associated cash flows due
to a decline in production volumes. Additionally, the increase in operating loss was also the result of a continued decline in wind gearing production volumes, which resulted in direct labor and
manufacturing overhead inefficiencies and under-absorption of fixed operating costs. Material costs were $3,972 higher due to additional product rework costs and scrap associated with specification
adjustments for new wind gearing production orders. The increase in operating loss was also impacted by higher depreciation expense of $1,792 associated with capital investments made in 2008, and
expenses and fees of $1,201 incurred in connection with the negotiation of amendments to our credit facility with Bank of America, partially offset by lower outside service expenses associated with a
reduced level of activity and lower selling, general and administrative expenses due to cost reduction initiatives. Gearing operating margins deteriorated from (6.3%) during the year ended
December 31, 2008 to (150.4%) during the year ended December 31, 2009, as a result of these factors.

Services Segment

The following table summarizes the Services segment operating results for the years ended December 31, 2009 and 2008:

Twelve Months Ended
December 31,2009

2008Revenues

$
27,575

$
31,249Impairment charges





Operating loss


(610
)

(1,822
)Operating margin


(2.2
)%

(5.8
)%


Services
segment revenues decreased $3,674, from $31,249 during the year ended December 31, 2008, to $27,575 during the year ended December 31, 2009. The decrease in
revenues was primarily the result of 9% and 16% declines in our technical services and precision repair and engineering service revenues, respectively, during the year ended December 31, 2009.
The decline in our technical services revenues was the result of a continued slowdown in operations and maintenance services performed for wind farm owners and operators, particularly in the fourth
quarter of the year. The decline in engineering services revenues primarily relates to a decision by one of our large service customers to in-service work which was previously contracted
to us.

Services
segment operating loss improved $1,212, from $1,822 during the year ended December 31, 2008, to $610 during the year ended December 31, 2009. The operating margin
improved from (5.8%) in 2008 to (2.2%) in 2009. The improvements in operating loss and operating loss margin were primarily attributable to cost reduction initiatives to align our administrative and
field technicians cost structures as a result of the reduction in service contracts during the year ended December 31, 2009.

Corporate and Other

Corporate and Other operating loss improved $5,165, from $19,251 during the year ended December 31, 2008, to $14,086 during the
year ended December 31, 2009. The decrease in operating loss was primarily attributable to a $4,279 reduction in professional fees associated with due diligence and acquisition-related costs
incurred in connection with acquisitions we did not complete during 2008 and also related to Sarbanes-Oxley and other compliance initiatives, in addition to an $882 reduction in bad debt expense.

SUMMARY OF CRITICAL ACCOUNTING POLICIES

The methods, estimates and judgments that we use in applying our critical accounting policies have a significant impact on the results
that we report in our financial statements. Some of our accounting

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policies
require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.

We
have identified the accounting policies listed below to be critical to obtain an understanding of our consolidated financial statements. This section should also be read in
conjunction with Note 1 "Description of Business and Summary of Significant Accounting Policies" in Part IV, Item 15 in the notes to our consolidated financial statements for
further discussion of these and other significant accounting policies.

Revenue Recognition

We recognize revenue when the earnings process is complete and when persuasive evidence of an arrangement exists, transfer of title has
occurred or services have been rendered, the selling price is fixed or determinable, collectability is reasonably assured and delivery has occurred per the terms of the contract. Customer deposits and
other receipts are deferred and recognized when the revenue is realized and earned.

In
some instances, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. We recognize revenue under these
arrangements only when the buyer requests the bill and hold arrangement, a fixed schedule for delivery exists, the ordered goods are segregated from inventory and not available to fill orders and the
goods are complete and ready for shipment. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

Warranty Liability

We provide warranty terms that generally range from one to seven years for various products relating to workmanship and materials
supplied by us. In certain contracts, we have recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions.

Inventories

Inventories are stated at the lower of cost or market. We have recorded a reserve for excess of cost over market value in our inventory
allowance. Market value of inventory, and management's judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period,
contract terms, and usefulness. Inventories are valued based on an average cost method, which approximates the first-in, first-out (FIFO) basis.

Inventories
consist of raw materials, work-in-process, and finished goods. Raw materials consist of components and parts for general production use.
Work-in-process consists of labor and overhead, processing costs, purchased subcomponents, and materials purchased for specific customer orders. Finished goods consist of
components purchased from third parties as well as components manufactured by us that will be used to produce final customer products.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over fair market value of identifiable net assets acquired through business purchases. We
perform our annual goodwill impairment test during the fourth quarter of each year, or more frequently when events or circumstances indicate that the carrying value of our assets may not be recovered.
We test intangible assets for impairment when events or circumstances indicate that the carrying value of our assets may not be recovered. In evaluating the recoverability of the carrying value of
goodwill and other intangible assets, we must make assumptions regarding the fair value of our reporting units. Our method of determining the fair value is based upon our estimate of the projected
future discounted cash flows of our reporting units.

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If
our fair value estimates or related assumptions change in the future, we may be required to record additional impairment charges related to intangible assets.

Long-Lived Assets

We review property and equipment and other long-lived assets for impairment whenever events or circumstances indicate that
carrying amounts may not be recoverable. If such events or changes in circumstances occur, we will recognize an impairment loss if the undiscounted future cash flows expected to be generated by the
asset are less than the carrying value of the related asset. The impairment loss would adjust the asset to its fair value.

In
evaluating the recoverability of long-lived assets, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such
assets. If our fair value estimates or related assumptions change in the future, we may be required to record impairment charges related to property and equipment and other long-lived
assets.

Income Taxes

We account for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax
consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are
recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes
on deferred tax assets and liabilities is recognized in the year that the change is enacted.

In
connection with the preparation of our consolidated financial statements, we are required to estimate our income tax liability for each of the tax jurisdictions in which we operate.
This process involves estimating our actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax
reporting and financial reporting purposes. We also recognize the expected future income tax benefits of net operating loss carryforwards as deferred income tax assets. In evaluating the realizability
of deferred income tax assets associated with net operating loss carryforwards, we consider, among other things, expected future taxable income, the expected timing of the reversals of existing
temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things,
income tax legislation, statutory income tax rates, or future taxable income levels could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision
to vary significantly among financial reporting periods.

We
also account for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. We follow the
applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition related to the uncertainty in these income tax
positions.

Recent Accounting Pronouncements

The following is a listing of recent accounting standards issued by the Financial Accounting Standards Board (the "FASB") and their
effect on the Company.

In
January 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06,Fair Value Measurements and Disclosures(Topic
820). ASU 2010-06 provides additional disclosure requirements related to fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about purchases, sales, issuances and

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settlements
in the roll forward of activity in Level 3 fair value measurements. Disclosure requirements applicable to Level 3 transactions are effective for fiscal years beginning after
December 15, 2010 and for interim periods within those fiscal years, with early adoption permitted. The portion of ASU 2010-06 that was effective beginning after December 15,
2009 did not have a material effect on our financial position, results of operations or cash flows. Additionally, we do not anticipate that the disclosure requirements applicable to Level 3
transactions that are effective for fiscal years beginning after December 15, 2010 will have a material effect on our financial position, results of operations or cash flows.

In
October 2009, the FASB issued ASU 2009-13,Revenue Recognition(Topic 605). ASU 2009-13 provides additional
guidance related to the accounting for multiple-deliverable arrangements to account for products or services (deliverables) separately rather than as a combined unit and eliminates the residual method
of allocation. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after September 15, 2010, with
early adoption permitted. We do not anticipate that the provisions of ASU 2009-13 will have a material effect on our financial position, results of operations or cash flows.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

At December 31, 2010, cash and cash equivalents totaled $15,331, compared to our cash and cash equivalents which totaled $4,701
at December 31, 2009. In January 2010, we sold ten million newly issued shares of our common stock for proceeds of approximately $54,625, net of underwriting discounts. Additionally, the
completion of our equity offering enabled us to use a portion of these proceeds to reduce our outstanding indebtedness. In January 2010, we repaid outstanding indebtedness due to Bank of America and
ICB in the amounts of $16,076 and $3,066, respectively. The repayment of this indebtedness reduced our future debt service requirements, and eliminated subsidiary-specific financial covenant
requirements and asset liens. We used the remainder of these proceeds for general operating purposes and specific capital expenditures, specifically to help us start our drivetrain service center.

In
September 2010, the Company's domestic subsidiaries ("Subsidiaries") entered into account purchase agreements (the "AP Agreements") with Wells Fargo. The aggregate facility limit of
the AP Agreements is $10,000. At December 31, 2010, no amounts were drawn under the AP Agreements, and
we had the ability to borrow up to $10,000, subject to maintaining a month-end minimum total cash balance of $5,000.

Our
ability to make scheduled payments on our debt and other financial obligations will depend on our future financial and operating performance. However, if sales and subsequent
collections from several of our large customers, as well as revenues generated from new customer orders, are not materially consistent with management's expectations, we may encounter cash flow and
liquidity issues. Additional funding may not be available when needed or on terms acceptable to us. Furthermore, if we are unable to obtain additional capital, we will likely be required to delay,
reduce the scope of or eliminate our plans for expansion and growth, and this could affect our overall operations. Any additional equity financing, if available, may be dilutive to stockholders, and
additional debt financing, if available, will likely require financial covenants or other restrictions. While we believe that we will continue to have sufficient cash flows to operate our businesses
and meet our financial debt covenants, there can be no assurances that our operations will generate sufficient cash or that credit facilities will be available to us in an amount sufficient to enable
us to pay our indebtedness or to fund our other liquidity needs.

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Sources and Uses of Cash

Operating Cash Flows

During the year ended December 31, 2010, net cash flows used in operating activities totaled $10,807, compared to net cash
provided by operating activities of $4,611 for the year ended December 31, 2009. The decrease in net cash provided by operating activities as compared to the prior year was primarily
attributable to an increase in our inventory balances. The increase in inventories was the result of replenishing raw material inventories to meet current production needs.

Investing Cash Flows

During the years ended December 31, 2010 and 2009, net cash used in investing activities totaled $5,015 and $11,952,
respectively. The decrease in net cash used in investing activities as compared to the prior year was primarily attributable to a reduction in capital expenditures due to the completion of certain
capital projects initiated in prior years. During the year ended December 31, 2009, we made capital expenditures totaling $11,271, which primarily related to the construction of our wind tower
manufacturing facility in Abilene, Texas. During the year ended December 31, 2010, we made capital expenditures totaling $6,893, primarily related to equipment purchases for our newly
constructed wind tower manufacturing facility in Brandon, South Dakota and purchases related to our drivetrain service center in Abilene, Texas. Cash flows from investing activities also increased
$1,840 during the year ended December 31, 2010, due to the release of a security interest as part of the conversion of the Construction Loan into the Great Western Term Loan (as such terms are
defined below).

Financing Cash Flows

During the year ended December 31, 2010, net cash provided by financing activities totaled $32,637, compared to net cash used by
financing activities of $2,326 for the year ended December 31, 2009. The increase in net cash provided by financing activities as compared to the prior year was attributable to the equity
offering we completed in January 2010, in which we sold 10,000,000 newly issued shares of our common stock for approximately $54,625, net of underwriting discounts. Partially offsetting the increase
in net cash provided by financing activities was higher payments on lines of credit and notes payable. The decrease in lines of credit and notes payable was primarily due to the repayment of
outstanding indebtedness due to Bank of America and ICB in the aggregate amount of $19,142 in January 2010.

Credit Facilities

Bank of America Debt (Repaid)

In connection with our acquisition of Brad Foote in October 2007, we assumed outstanding debt and available lines of credit totaling
approximately $25,500 under various secured debt facilities (the "BOA Debt Facilities") with Bank of America. As of December 31, 2009, the total principal amount outstanding under the BOA Debt
Facilities was approximately $15,964, and the effective per annum interest rate was 7%. On January 22, 2010, (i) Brad Foote repaid all of the outstanding principal and interest under the
BOA Debt Facilities in the aggregate amount of approximately $16,076 from proceeds of the public offering of common stock; and (ii) the BOA Debt Facilities were terminated.

Investors Community Bank Credit Line (Expired March 12, 2010)

In October 2007, Tower Tech obtained a secured line of credit (the "ICB Line") from ICB in the amount of $2,500, which was subsequently
increased to $5,500 on March 21, 2008. On March 13, 2009, ICB agreed to extend the maturity date of the ICB Line to March 13, 2010. Pursuant to a Master Amendment dated as of
December 30, 2009 among ICB, Tower Tech and Broadwind (as guarantor)

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(the
"Master Amendment"), the amount of the ICB Line was increased to $6,500, subject to borrowing base availability. Tower Tech repaid all of the outstanding indebtedness under the ICB Line in the
amount of $3,066 on January 26, 2010, and allowed the ICB Line to expire on March 13, 2010.

Investors Community BankNotes

On April 7, 2008, RBA executed four (4) promissory notes with ICB (the "ICB Notes") in the aggregate principal amount of
approximately $3,781, as follows: (i) a term note in the maximum principal amount of approximately $421, bearing interest at a per annum rate of 6.85%, with a maturity date of October 5,
2012; (ii) a term note in the maximum principal amount of $700, bearing interest at a per annum rate of 5.65%, with a maturity date of April 25, 2013; (iii) a term note in the
maximum principal amount of $928, bearing interest at a per annum rate of 5.65%, with a maturity date of April 25, 2013; and (iv) a line of credit note in the maximum principal amount of
$1,732, bearing interest at a per annum rate of 4.48% until May 1, 2008 and thereafter at the London Interbank Offered Rate ("LIBOR") plus 1.75%, with a maturity date of April 5, 2009
(the "Line of Credit Note").
The Line of Credit Note was subsequently modified on March 13, 2009 to extend the maturity date to March 13, 2010 and to change the interest rate to the greater of (A) 5% or
(B) prime. The ICB Notes provide for multiple advances, and were secured by substantially all of the assets of RBA.

Pursuant
to the merger of RBA into Tower Tech on December 31, 2009, Tower Tech became the successor by merger to RBA's interest in the loans from ICB to RBA evidenced by the ICB
Notes (other than the Line of Credit Note, which was repaid in full in January 2010). Pursuant to the Master Amendment, Tower Tech agreed to maintain a minimum debt service coverage ratio in addition
to certain other requirements. The Master Amendment was amended as of December 30, 2010, (i) to delete the requirements that Tower Tech maintain a collateral account as security for the
obligations under the ICB Notes and that no additional loans or leases would be entered into by Tower Tech without the prior approval of ICB, and (ii) to replace the requirement that Tower Tech
maintain its primary deposit accounts with ICB with the requirement that Tower Tech maintain with ICB a depository relationship of not less than $700, with such funds to be deposited into a money
market account or certificate of deposit by no later than January 7, 2011. As of December 31, 2010, (i) Tower Tech was in compliance with all covenants under its credit facilities
with ICB, (ii) the total amount of outstanding indebtedness under the remaining ICB Notes was $1,371 and (iii) the effective per annum interest rate under the remaining ICB Notes was
5.81%.

Great Western Bank Loan

On April 28, 2009, Tower Tech entered into a Construction Loan Agreement with Great Western Bank ("GWB"), pursuant to which GWB
agreed to provide up to $10,000 in financing (the "Construction Loan") to fund construction of Tower Tech's wind tower manufacturing facility in Brandon, South Dakota (the "Facility"). Pursuant to a
Change in Terms Agreement dated April 5, 2010 between GWB and Tower Tech, the Construction Loan was converted to a term loan (the "Great Western Term Loan") providing for monthly payments of
principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500, and changing the per annum interest rate to 8.5%. Tower Tech was required to
pay a 1.0% origination fee upon the conversion.

The
Great Western Term Loan is secured by a first mortgage on the Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement,
each between Tower Tech and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Tower Tech to the Great Western Term Loan.
The Great Western Term Loan contains representations, warranties and covenants that are customary for a term financing arrangement and contains no financial covenants. As of December 31, 2010,
the total outstanding indebtedness under the Great Western Term Loan was $5,750.

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Wells Fargo Account Purchase Agreements

On September 29, 2010, the Subsidiaries entered into AP Agreements with Wells Fargo. Under the AP Agreements, Wells Fargo will
advance funds against certain receivables arising from sales of the Subsidiaries' products and services. In connection with the entry into the AP Agreements, the Company and each Subsidiary have
executed guaranties (including cross-guaranties) in favor of Wells Fargo. With respect to the Subsidiaries, the AP Agreements contain provisions providing for cross-defaults and
cross-collateralization. In addition, each Subsidiary has granted to Wells Fargo a security interest against all financed receivables and related collateral. Prior to entering into the AP Agreements,
there was no material relationship between the Company, the Subsidiaries and Wells Fargo.

Under
the terms of the AP Agreements, Wells Fargo will advance approximately 80% of the face value of eligible receivables to the Subsidiaries. Wells Fargo will have full recourse to the
Subsidiaries for collection of the financed receivables. The aggregate facility limit of the AP Agreements is $10,000. For Wells Fargo's services under the AP Agreements, the Subsidiaries have agreed
to pay Wells Fargo (i) a floating discount fee of the then-prevailing LIBOR plus 3.75% per annum, (ii) an annual facility fee of 1% of the aggregate facility limit, and
(iii) an annual unused line fee of 0.042% on the portion of the credit facility which is unused. The initial term of the AP Agreements ends on September 29, 2013. If the AP Agreements
are terminated prior to this date, an early termination fee of up to 3% of the aggregate facility limit may apply. At December 31, 2010, no amounts were drawn under the AP Agreements, and the
Subsidiaries had the ability to borrow up to $10,000, subject to maintaining a month-end minimum total cash balance of $5,000.

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

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the "Settlement Agreement") with the former owners of Brad
Foote (the "Selling Shareholders"), including J. Cameron Drecoll, who served as our Chief Executive Officer and a member of our Board of Directors until December 1, 2010. The Settlement
Agreement related to the post-closing escrow established in connection with our acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other terms, we issued three
promissory notes to the Selling Shareholders in the aggregate principal amount of $3,000 (the "Selling Shareholder Notes"). The Selling Shareholder Notes mature on May 28, 2012 and bear
interest at a rate of 7% per annum, with interest payments due quarterly. The Selling Shareholder Note issued to Mr. Drecoll in the principal amount of $2,320 and pursuant to the terms of the
Settlement Agreement is deemed by us to be a related party transaction. As of December 31, 2010, principal of $3,000 and accrued interest of $53 were outstanding under the Selling Shareholder
Notes. We have accounted for the Selling Shareholder Notes as long-term debt in our consolidated balance sheets as of December 31, 2010.

42

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Table of Contents

Contractual Obligations

The following table sets forth, as of December 31, 2010, minimum future cash payments due under contractual obligations,
including, among others, our debt and credit agreements, non-cancelable operating and capital lease agreements and purchase commitments as follows:

2011

2012

2013

2014

2015

2016 &
Thereafter

TotalDebt and credit agreements (1)

$
1,577

$
4,550

$
1,330

$
1,176

$
1,178

$
1,437

$
11,248Estimated interest payments (2)


785


553


330


233


149


54


2,104Operating lease obligations


4,270


3,666


2,468


2,142


1,601


3,915


18,062Capital lease obligations (3)


1,172


1,054


908











3,134Purchase commitments


2,610

















2,610Total contractual cash obligations

$
10,414

$
9,823

$
5,036

$
3,551

$
2,928

$
5,406

$
37,158


---

Debt and Credit Agreements.Debt and credit agreements include outstanding borrowings under our lines of credit, term notes related to
vehicle and
equipment purchases, and notes payable related to an escrow agreement settlement and a purchase agreement for manufacturing equipment. See Note 10 "Debt and Credit Agreements" in
Part IV, Item 15 in the notes to our consolidated financial statements for further discussion of our outstanding indebtedness and credit agreements.

Operating Lease Obligations.We lease a number of our facilities and certain equipment under operating leases expiring at various dates
through 2023.
Lease terms generally range from 3 to 15 years with renewal options for extended terms. The amounts in the table above represent future minimum lease payments for non-cancelable
operating leases.

Capital Lease Obligations.We have capital lease obligations related to certain manufacturing equipment and vehicles expiring at
various dates
through 2013. As of December 31, 2010, the balance of our outstanding capital lease obligations was approximately $3,134, which includes accrued interest of approximately $366.

Purchase Commitments.Purchase commitments represent remaining payments due on equipment purchase contracts related to the construction
of our
Brandon, South Dakota wind tower manufacturing facility as well as equipment purchase orders associated with our drivetrain service center located in Abilene, Texas.

Off-Balance Sheet Arrangements

During April 2009, Tower Tech entered into a sale-leaseback agreement with Varilease, Finance, Inc. ("Varilease"),
whereby Tower Tech sold certain equipment to Varilease in exchange for $2,935 in cash and agreed to lease the equipment back from Varilease for a certain period of time. The primary purpose of this
arrangement was to provide additional liquidity for meeting working capital

43

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Table of Contents

requirements.
The lease agreement is for a three-year period with rental payments of $85 due monthly. In addition, the sale of the assets resulted in a gain on disposition of $40, which is
being amortized to other income in our statement of operations over the life of the operating lease.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, which include changes in interest rates on our variable rate obligations (of which we have
none outstanding as of December 31, 2010), credit risks on accounts receivable and raw material price fluctuations.

Interest Rate Exposure

As of December 31, 2010, all of our third party borrowings under our debt and credit agreements bear annual interest at fixed
interest rates; therefore we had no interest rate exposure. The outstanding borrowings under variable rate obligations were $10,601 as of December 31, 2009.

Credit Risk Exposure

We are exposed to credit risk on our accounts receivable balances and cash balances. Historically, our accounts receivable are highly
concentrated with a select number of customers. During the years ended December 31, 2010 and 2009, our five largest customers accounted for approximately 78% and 73%, respectively, of
consolidated revenues. Additionally, as of December 31, 2010 and 2009, our five largest customers comprised approximately 79% and 65%, respectively, of our outstanding accounts receivable
balances. We are also exposed to potentially significant credit risk as our cash deposits often exceed the federally insured amounts. To address this we adhere to a formal investment policy which
requires us to invest excess cash in efforts to diversify our cash away from any single financial institution.

Commodity Risk Exposure

We are dependent upon the supply of certain raw materials used in our production processes, and these raw materials are exposed to
price fluctuations on the open market. The primary raw material we use is steel. To reduce price risk caused by market fluctuations, we have incorporated price adjustment clauses in certain sales
contracts. Management believes a hypothetical 10% change in the price of steel and other raw materials would not have a significant effect on our consolidated results of operations or cash flows
because these costs are generally passed through to our customers.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial information required by Item 8 is contained in Part IV, Item 15 of this Annual Report on
Form 10-K.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. This information is also accumulated and

44

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communicated
to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, under the
supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as
of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
are effective.

Changes in Internal Control over Financial Reporting

As of December 31, 2009, management determined that, we did not maintain effective internal control over financial reporting due
to the previously reported material weakness related to non-routine revenue transactions, and the related accounting treatment of those transactions was not appropriately reviewed to
ensure compliance with accounting principles generally accepted in the U.S. ("GAAP") at our Gearing segment.

We
have made enhancements to our internal control structure to address our previously disclosed material weakness. We hired additional experienced and qualified financial professionals
to strengthen our accounting and financial controls functions, implemented enhancements to our monthly financial reporting, developed enhancements to our overall reporting procedures and continued to
enhance our control environment. Enhancements included improved procedures for the tracking and reconciliation of revenue transactions and enhanced due diligence by corporate personnel over month end
reporting. We have also upgraded our enterprise resource planning software and server databases. These changes were tested during the fourth quarter of 2010 and were found to be effective.

Report of Management on Internal Control Over Financial Reporting

The management of the Company, including the Company's Chief Executive Officer and Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

The
management of the Company, including the Company's Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial
reporting as of December 31, 2010. Management based this assessment on criteria for effective internal control over financial reporting described in "Internal ControlIntegrated
Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based
on this assessment, management determined that, as of December 31, 2010, our internal control over financial reporting is effective.

Grant
Thornton LLP, an independent registered public accounting firm, who audited our consolidated financial statements included in this Annual Report on
Form 10-K, has also audited the effectiveness of our internal control over financial reporting as stated in its report.

ITEM 9B.    OTHER INFORMATION

None.

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Table of Contents

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

With the exception of the description of our Code of Ethics and Business Conduct below, the information required by this item is
incorporated herein by reference from the discussion under the headings "Directors and Director Compensation," "Corporate Governance" and "Other MattersSection 16(a) Beneficial
Ownership Reporting Compliance" in our definitive Proxy Statement to be filed in connection with our 2011 Annual Meeting of Stockholders (the "2011 Proxy Statement").

Code of Ethics

We have adopted a Code of Ethics and Business Conduct that applies to all of our directors, executive officers and senior financial
officers (including our principal executive officer, principal financial officer, principal accounting officer, controller, and any person performing similar functions). The Code of Ethics and
Business Conduct is available on our website atwww.bwen.comunder the caption "Investors" and is available in print, free of charge, to any
stockholder who sends a request for a paper copy to Broadwind Energy, Inc., Attn: Investor Relations, 47 East Chicago Avenue, Suite 332, Naperville, IL 60540. Broadwind intends to
include on our website any amendment to, or waiver from, a provision of our Code of Ethics and Business Conduct that applies to our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions, that relates to any element of the code of ethics definition enumerated in Item 406(b) of
Regulation S-K.

ITEM 11.    EXECUTIVE COMPENSATION

Information regarding director and executive compensation is incorporated by reference from the discussion under the headings
"Directors and Director Compensation" and "Compensation Discussion and Analysis" in the 2011 Proxy Statement.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Certain of the information required by this item is incorporated herein by reference from the discussion under the heading "Security
Ownership of Certain Beneficial Holders and Management" in the 2011 Proxy Statement.

46

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Table of Contents

The
following table provides information as of December 31, 2010, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

EQUITY COMPENSATION PLAN INFORMATION

(a)

(b)

(c)Plan Category

Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights

Weighted-average
exercise price of
outstanding options,
warrants, and rights

Number of securities
remaining available for
future issuances under
equity compensation
plans (excluding
securities reflected in
column (a))Equity compensation plans approved by stockholders


1,630,095
(1)
$
6.71


3,514,040
(2)Total


1,630,095

$
6.71


3,514,040


---

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the discussion under the headings "Certain Transactions
and Business Relationships" and "Corporate Governance" in our 2011 Proxy Statement.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference from the discussion under the heading "Ratification of
Appointment of Independent Registered Public Accounting Firm" in our 2011 Proxy Statement.

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Table of Contents

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.     Financial Statements

The financial statements listed on the Index to Financial Statements (page 49) are filed as part of this Annual Report.

2.     Financial Statement Schedules

These schedules have been omitted because the required information is included in the consolidated financial statements or notes thereto or because they are not
applicable or not required.

3.     Exhibits

The exhibits listed on the Index to Exhibits (pages 93 through 98) are filed as part of this Annual Report.

48

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Table of Contents

INDEX TO FINANCIAL STATEMENTS



PageReports of Independent Registered Public Accounting Firm

50Consolidated Balance Sheets as of December 31, 2010 and 2009

52Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009, and 2008

53Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2010,
2009, and 2008

54Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009, and
2008

55Notes to Consolidated Financial Statements

56


49

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and
Stockholders of Broadwind Energy, Inc.

We
have audited Broadwind Energy, Inc.'s (a Delaware Corporation) internal control over financial reporting as of December 31, 2010, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Broadwind
Energy, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Broadwind Energy, Inc.'s internal
control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, Broadwind Energy, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the
criteria established inInternal ControlIntegrated Frameworkissued by COSO.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Broadwind Energy, Inc.
and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended
December 31, 2010 and our report dated March 16, 2011 expressed an unqualified opinion.

/s/
GRANT THORNTON LLP

GRANT
THORNTON LLP
Chicago, Illinois
March 16, 2011

50

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and
Stockholders of Broadwind Energy, Inc.

We
have audited the accompanying consolidated balance sheets of Broadwind Energy, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2010 and 2009, and the
related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Broadwind Energy, Inc. and subsidiaries
as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting
principles generally accepted in the United States of America.

We
also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Broadwind Energy, Inc.'s internal control over financial
reporting as of December 31, 2010, based on criteria establishedin Internal ControlIntegrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 16, 2011 expressed an unqualified opinion.

/s/
GRANT THORNTON LLP

GRANT
THORNTON LLP
Chicago, Illinois
March 16, 2011

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

As of December 31,2010

2009ASSETSCURRENT ASSETS:Cash and cash equivalents

$
15,331

$
4,701Restricted cash


170


2,010Accounts receivable, net


21,427


21,487Inventories, net


17,739


8,825Prepaid expenses and other current assets


3,476


4,549Assets held for sale


6,847


2,004Total current assets


64,990


43,576Property and equipment, net


106,317


129,619Goodwill





4,561Intangible assets, net


10,073


32,401Long-term assets held for sale





17,993Other assets


2,126


3,338TOTAL ASSETS

$
183,506

$
231,488LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:Lines of credit and notes payable

$
140

$
10,717Current maturities of long-term debt


1,437


7,782Current portions of capital lease obligations


966


882Accounts payable


22,342


14,499Accrued liabilities


6,515


6,679Customer deposits


8,881


10,199Liabilities held for sale


4,221


1,984Total current liabilities


44,502


52,742LONG-TERM LIABILITIES:Long-term debt, net of current maturities


9,671


13,396Long-term capital lease obligations, net of current portions


1,802


2,749Interest rate swap agreements





253Deferred income tax liabilities





403Long-term liabilities held for sale





4,409Other


1,335


1,941Total long-term liabilities


12,808


23,151COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS' EQUITY:Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding





Common stock, $0.001 par value; 150,000,000 shares authorized; 107,112,817 and 96,701,127 shares issued and outstanding as of December 31, 2010 and 2009,
 respectively


107


97Additional paid-in capital


356,545


300,779Accumulated deficit


(230,456
)

(145,281
)Total stockholders' equity


126,196


155,595TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
183,506

$
231,488


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

52

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Table of Contents



BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

For the Years Ended December 31,2010

2009

2008Revenues

$
136,896

$
184,798

$
207,349Cost of sales


134,950


172,894


175,653Gross profit


1,946


11,904


31,696OPERATING EXPENSES:Selling, general and administrative


27,404


32,422


40,516Impairment charges


40,777


82,211


2,409Intangible amortization


2,992


9,524


10,645Total operating expenses


71,173


124,157


53,570Operating loss


(69,227
)

(112,253
)

(21,874
)OTHER (EXPENSE) INCOME, net:Interest expense, net


(1,172
)

(2,174
)

(2,104
)Other income (expense), net


486


6,454


(204
)Total other (expense) income, net


(686
)

4,280


(2,308
)Net loss from continuing operations before (benefit) provision for income taxes


(69,913
)

(107,973
)

(24,182
)(Benefit) provision for income taxes


(160
)

(947
)

1,096LOSS FROM CONTINUING OPERATIONS


(69,753
)

(107,026
)

(25,278
)LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX


(15,422
)

(3,093
)

(7
)NET LOSS

$
(85,175
)
$
(110,119
)
$
(25,285
)NET LOSS PER COMMON SHAREBASIC AND DILUTED:Loss from continuing operations

$
(0.66
)
$
(1.11
)
$
(0.28
)Loss from discontinued operations


(0.14
)

(0.03
)

Net Loss

$
(0.80
)
$
(1.14
)
$
(0.28
)WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic and diluted


106,272


96,574


89,899


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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share data)

Common StockInterest in
Variable
Interest
EntityShares
Issued and
Outstanding

Issued
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

TotalBALANCE, December31, 2007


76,260,912

$
76

$
133,033

$
(9,877
)
$
1,304

$
124,536Stock issued for restricted stock


7,500














Stock issued for the acquisition of Energy Maintenance Service, LLC


1,629,834


2


13,819








13,821Stock issued for the acquisition of Badger Transport, Inc.


581,959


1


5,999








6,000Stock issued for the conversion of related-party notes


3,333,332


3


24,997








25,000Stock issued in private equity placements, net of costs of $336


14,656,878


14


117,375








117,389Share-based compensation








1,999








1,999Reclassification of variable interest entity














(1,304
)

(1,304
)Net loss











(25,285
)




(25,285
)BALANCE, December31, 2008


96,470,415

$
96

$
297,222

$
(35,162
)
$


$
262,156Stock issued under stock option plans


91,940





675








675Stock issued for restricted stock


129,715


1











1Stock issued under defined contribution 401(k) retirement savings plan


9,057





76








76Share-based compensation








2,806








2,806Net loss











(110,119
)




(110,119
)BALANCE, December31, 2009


96,701,127

$
97

$
300,779

$
(145,281
)
$


$
155,595Stock issued under equity offering (net of offering costs of $1,278)


10,000,000


10


53,337








53,347Stock issued for restricted stock


126,710














Stock issued under defined contribution 401(k) retirement savings plan


284,980





684








684Share-based compensation








1,745








1,745Net loss











(85,175
)




(85,175
)BALANCE, December31, 2010


107,112,817

$
107

$
356,545

$
(230,456
)
$


$
126,196


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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Years Ended December 31,2010

2009

2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(85,175
)
$
(110,119
)
$
(25,285
)Loss from discontinued operations


15,422


3,093


7Loss from continuing operations


(69,753
)

(107,026
)

(25,278
)Adjustments to reconcile net cash provided (used in) by operating activities:Depreciation and amortization expense


16,463


22,696


20,090Impairment charges


40,777


82,211


2,409Change in fair value of interest rate swap agreements


(253
)

(330
)

194Deferred income taxes


1,338


(813
)

535Stock-based compensation


1,745


2,805


1,999Allowance for doubtful accounts


(1,142
)

248


(1,675
)Loss on disposal of assets


70


165


113Changes in operating assets and liabilities:Accounts receivable


1,202


13,928


(16,479
)Inventories


(8,914
)

32,896


(28,246
)Prepaid expenses and other current assets


1,072


163


(1,268
)Accounts payable


7,565


(24,556
)

21,649Accrued liabilities


(332
)

(5,311
)

2,442Customer deposits


(1,317
)

(10,627
)

19,674Other non-current assets and liabilities


672


(1,838
)

(61
)Net cash (used in) provided by operating activities of continued operations


(10,807
)

4,611


(3,902
)CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for acquisitions, net of cash received








(23,125
)Purchases of property and equipment


(6,893
)

(11,271
)

(79,092
)Proceeds from disposals of property and equipment


38


829


40Decrease (increase) in restricted cash


1,840


(1,510
)

Net cash used in investing activities of continued operations


(5,015
)

(11,952
)

(102,177
)CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from issuance of stock


53,347


675


117,390Common stock issued under defined contribution 401(k) plan


684


76


Payments on lines of credit and notes payable


(21,231
)

(11,810
)

(5,604
)Payments on related party notes payable








(1,365
)Proceeds from lines of credit and notes payable


700


5,952


9,075Proceeds from sale-leaseback transactions





2,980


Proceeds from deposits on equipment





665


Principal payments on capital leases


(863
)

(864
)

(307
)Net cash provided by (used in) financing activities of continued operations


32,637


(2,326
)

119,189DISCONTINUED OPERATIONS:Operating cash flows


(2,666
)

(1,687
)

1,756Investing cash flows


(113
)

(568
)

(4,519
)Financing cash flows


(3,003
)

1,498


(877
)Net cash provided by (used in) discontinued operations


(5,782
)

(757
)

(3,640
)Add: Cash balance of discontinued operations, beginning of period


127


1,246


Less: Cash balance of discontinued operations, end of period


530


127


1,246NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


10,630


(9,305
)

8,224CASH AND CASH EQUIVALENTS, beginning of the year


4,701


14,006


5,782CASH AND CASH EQUIVALENTS, end of the year

$
15,331

$
4,701

$
14,006Supplemental cash flow information:Interest paid, net of capitalized interest

$
1,171

$
1,913

$
3,255Income taxes paid

$
38

$
505

$
28Non-cash investing and financing activities:Common stock issued for acquisitions

$


$


$
19,821Conversion of related party notes payable to equity

$


$


$
25,000Issuance of restricted stock grants

$
803

$
936

$
214Common stock issued under defined contribution 401(k) plan

$
684

$
76

$



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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        December 31, 2010, 2009, and 2008        (in
thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Broadwind Energy Inc. (the "Company") provides technologically advanced high-value products and services to energy, mining
and infrastructure sector customers, primarily in the U.S. The Company's most significant presence is within the U.S. wind industry, where the Company believes it is the only independent company that
offers its breadth of products and services to the market. The Company's product and service portfolio provides our customers, including wind turbine manufacturers, wind farm developers and wind farm
operators, with access to a broad array of component and service offerings. Outside of the wind market, the Company provides precision gearing and specialty weldments to industrial customers,
particularly in the energy, mining and infrastructure sectors.

In
December 2009, the Company revised its reporting segment presentation into four reportable operating segments: Towers, Gearing, Technical and Engineering Services, and Logistics. In
December of 2010, the Company's Board of Directors approved a plan to divest its Logistics business segment; consequently, this business unit is now reported as a Discontinued Operation and the
Company has revised its segment presentation to include three reportable operating segments: Towers, Gearing, and Services (previously Technical and Engineering Services). All current and prior period
financial results have been revised to reflect these changes. See Note 19 "Segment Reporting" of these consolidated financial statements for further discussion of reportable segments.

Liquidity

The Company has a limited history of operations and has incurred operating losses since inception. The Company anticipates that current
cash resources and cash to be generated from operations in 2011 will be adequate to meet the Company's liquidity needs for at least the next twelve months. As discussed further in Note 10,
"Debt and Credit Agreements" of these consolidated financial statements, the Company is obligated to make principal payments on outstanding debt totaling $1,577 during 2011, and is obligated to make
purchases of $2,610 under purchase commitments described in Note 12, "Commitments and Contingencies" of these consolidated financial statements. If sales and subsequent collections from several
of the Company's large customers, as well as revenues generated from new customer orders, are not materially consistent with management's plans, the Company may encounter cash flow and liquidity
issues. Additional funding may not be available when needed or on terms acceptable to the Company, which could affect its overall operations. Any additional equity financing, if available, may be
dilutive to stockholders, and additional debt financing, if available, will likely require financial covenants or other restrictions on the Company. There can be no assurances the Company's efforts to
obtain sufficient cash flow will be successful.

Towers

The Company manufactures towers for wind turbines, specifically the large and heavier wind towers that are designed for
2 megawatt ("MW") and larger wind turbines. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. wind resource regions.
The two facilities have a combined annual tower production capacity of approximately 500 towers, sufficient to support turbines generating more than 1200 MW of power. This

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

product
segment also encompasses the manufacture of specialty fabrications and heavy weldments for wind energy and other industrial customers.

Gearing

The Company manufactures high precision gearing systems for wind turbines and custom-engineered gearing systems and gearboxes for
energy, mining and other industrial customers. The Company uses an integrated manufacturing process, which includes machining processes in Cicero, Illinois, heat treatment in Neville Island,
Pennsylvania and a finishing process in the Cicero factory.

Services

The Company offers technical and precision repair and engineering services to developers and operators of wind farms and manufacturers
of wind turbines. Technical services offerings include construction support and operations and maintenance services for wind farm developers and operators. Precision repair and engineering services
include repair and refurbishment of complex systems and components of wind turbines, including control systems, drivetrains and blades. The Company's primary service locations are in Illinois,
California, South Dakota and Texas. During 2010, the Company approved an investment of approximately $7 million to develop a dedicated drivetrain service center in Abilene, Texas, focused on
servicing the growing installed base of MW wind turbines as they come off warranty. The drivetrain service center was placed into operation in February 2011.

Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

These consolidated financial statements include the accounts of Broadwind and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation. The results of operations of all acquired businesses have been consolidated for all periods subsequent to the date of
acquisition.

Reclassifications

Where appropriate, certain reclassifications have been made to prior years' financial statements to conform to the current year
presentation.

Management's Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements
and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future tax rates, inventory reserves, warranty reserves,
stock option fair values, allowance for doubtful accounts, and allocation of purchase price to the fair value of net assets and liabilities acquired in connection with business combinations.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Although
these estimates are based upon management's best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of cash balances and money market funds. Cash and cash equivalents were $15,331 and $4,701
as of December 31, 2010 and 2009, respectively. The Company's policy is to invest excess cash in money market account funds, which are generally of a short-term duration based upon
operating requirements. Income earned on these investments is recorded to interest income in the consolidated statements of operations. For the years ended December 31, 2010, 2009 and 2008,
interest income was $43, $123 and $584, respectively.

Restricted Cash

Restricted cash consists of cash down payments pertaining to certain contracts under which the use of such cash is restricted as per
the terms of the agreement as well as for collateral to secure vendor services. As of December 31, 2010 and 2009, the Company had restricted cash in the amounts of $170 and $2,010,
respectively.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete and when persuasive evidence of an arrangement exists, transfer of
title has occurred or services have been rendered, the selling price is fixed or determinable, collectability is reasonably assured and delivery has occurred per the terms of the contract. Customer
deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned.

In
some instances, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue
under these arrangements only when the buyer requests the bill and hold arrangement, a fixed schedule for delivery exists, the ordered goods are segregated from inventory and not available to fill
orders and the goods are complete and ready for shipment. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer
acceptance.

Cost of Sales

Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs
include operation, repair and maintenance of equipment, direct and indirect labor and benefit costs, insurance, equipment rentals, freight in and depreciation.

Accounts Receivable

The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer's financial condition
and credit history. Credit is typically on net 30-day terms and

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

customer
deposits are frequently required at various stages of the production process to minimize credit risk.

Historically,
our accounts receivable are highly concentrated with a select number of customers. During the year ended December 31, 2010, our five largest customers accounted for
78% of our consolidated revenues and 79% of outstanding account receivable balances, compared to the year ended December 31, 2009 when our five largest customers accounted for 73% of our
consolidated revenues and 65% of outstanding account receivable balances.

Allowance for Doubtful Accounts

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

The
Company monitors our collections and write-off experience to assess whether or not adjustments to our allowance estimates are necessary. Changes in trends in any of the
factors that the Company believes may impact the realizability of our accounts receivable, as noted above, or modifications to our credit standards, collection practices and other related policies may
impact our allowance for doubtful accounts and our financial results. Bad debt expense for the years ended December 31, 2010, 2009 and 2008 was $1,011, $1,438 and $1,196, respectively.

Inventories

Inventories are stated at the lower of cost or market. Any excess of cost over market value is included in the Company's inventory
allowance. Market value of inventory, and management's judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period,
contract terms and usefulness. Inventories are valued based on a weighted average cost method that approximates the first-in, first-out (FIFO) basis.

Inventories
consist of raw materials, work-in-process and finished goods. Raw materials consist of components and parts for general production use.
Work-in-process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of
components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recognized using the straight-line
method over the estimated useful lives of the related assets for financial reporting purposes and an accelerated method for income tax reporting purposes. Expenditures for additions and improvements
are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The
Company capitalizes interest costs incurred on indebtedness used to construct property and equipment. Capitalized interest is recorded as part of the asset to which it relates and is amortized
over the asset's estimated useful life. Interest cost capitalized was $74, $465 and $230 for the years ended December 31, 2010, 2009 and 2008, respectively. Property or equipment sold or
disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded to other income or expense in our consolidated statement of operations.

Goodwill

Goodwill is reviewed for impairment on at least an annual basis by applying a fair value based test. In evaluating the recoverability
of the carrying value of goodwill, the Company must make assumptions regarding the fair values of our reporting units. Our estimate of the fair value of each of our reporting units is based primarily
on projected future operating results and cash flows and other assumptions. The failure of a reporting unit to achieve projected future operating results and cash flows, or adjustments to other
valuation assumptions, could change our estimate of reporting unit fair value, in which case the Company may be required to record an impairment charge. The Company's remaining goodwill was fully
impaired at June 30, 2010, at which time the carrying value was reduced to zero.

Intangible and Other Long-lived Intangible Assets

The Company reviews intangible and other long-lived assets for impairment whenever events or changes in circumstances
indicate that the asset's carrying amount may not be recoverable. Recoverability is measured comparing the assets' carrying amounts to
their expected future undiscounted net cash flows. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets
exceeds the fair value.

Warranty Liability

The Company provides warranty terms that generally range from one to seven years for various products relating to workmanship and
materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty
provisions. The changes in the carrying amount of the Company's total product warranty liability for the years ended December 31, 2010, 2009 and 2008 were as follows:

As of December 31,2010

2009

2008Balance, beginning of year

$
918

$
890

$
242Warranty expense


1,110


591


648Warranty claims


(957
)

(563
)

Balance, end of year

$
1,071

$
918

$
890


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the
future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax
assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax
rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted.

In
connection with the preparation of our consolidated financial statements, the Company is required to estimate our income tax liability for each of the tax jurisdictions in which the
Company operates. This process involves estimating our actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for
income tax reporting and financial reporting purposes. The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss carryforwards. In
evaluating the realizability of deferred income tax assets associated with net operating loss carryforwards, the
Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning
strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable
income levels could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.

The
Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The
Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in
these income tax positions.

Interest Rate Swap Agreements

The Company has periodically used derivative financial instruments in the form of interest rate swaps to minimize the effect of
interest rate fluctuations on certain of our outstanding debt agreements. Our derivative financial instruments are recognized on our consolidated balance sheet at fair value. These derivatives do not
qualify for hedge accounting treatment, and accordingly, all gains or losses on the change in the fair value of these derivative financial instruments are reported in our consolidated statements of
operations.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share-Based Compensation

The Company grants incentive stock options and restricted stock units to certain officers, directors, employees and consultants. The
Company accounts for share-based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the vesting term of the award. See
Note 18 "Share-Based Compensation" of these consolidated financial statements for further discussion of our share-based compensation plans, the nature of share-based awards issued and our
accounting for share-based compensation.

Net Income (Loss) Per Share

The Company presents both basic and diluted net income (loss) per share. Basic net income (loss) per share is based solely upon the
weighted average number of common shares outstanding and excludes any dilutive effects of options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted
average number of common shares and common-share equivalents outstanding during the year excluding those common-share equivalents where the impact to basic net income (loss) per share would be
anti-dilutive.

2. EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the years ended December 31, 2010, 2009 and 2008 as follows:

For the Years Ended December 31,2010

2009

2008Basic earnings per share calculation:Net loss to common stockholders

$
(85,175
)
$
(110,119
)
$
(25,285
)Weighted average common shares outstanding


106,272


96,574


89,899Basic net loss per share

$
(0.80
)
$
(1.14
)
$
(0.28
)Diluted earnings per share calculation:Net loss to common stockholders

$
(85,175
)
$
(110,119
)
$
(25,285
)Weighted average common shares outstanding


106,272


96,574


89,899Common stock equivalents:Stock options and non-vested stock awards(1)








Weighted average common shares outstanding


106,272


96,574


89,899Diluted net loss per share

$
(0.80
)
$
(1.14
)
$
(0.28
)


(1)Stock
options and restricted stock units granted and outstanding of 1,630,095; 1,681,314; and 2,157,500 as of December 31, 2010, 2009 and 2008,
respectively, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company's net loss for these respective years.


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

3. DISCONTINUED OPERATIONS

In December 2010, the Company's Board of Directors approved a plan to divest Badger Transport, Inc. ("Badger"), which formerly comprised our Logistics segment. The adverse effects of
rail providers entering the heavy haul market for wind energy components as well as the effects of the global economic downturn have resulted in continued operating losses at Badger. Badger's
intercompany revenues and expenses were not significant in the years ended December 31, 2010, 2009 or 2008. On March 4, 2011, the Company completed the sale of Badger. Refer to
Note 22 "Subsequent Events" for further discussion of the Badger sale.

During
the fourth quarter of 2010, the Company recorded an asset impairment charge of approximately $10,020 (pre-tax) to reduce the carrying value of the net assets held for
sale to estimated fair value. The impairment charge is included in "Loss before benefit for income taxes" in "Results of Discontinued Operations" below.

Results of Discontinued Operations

Results of operations for Badger, which are reflected as discontinued operations in the Company's consolidated statements of income for
the twelve months ended December 31, 2010, 2009 and 2008, were as follows:

For the Years Ended December 31,2010

2009

2008Revenues

$
9,925

$
13,033

$
9,972Loss before benefit for income taxes


(15,730
)

(3,734
)

(41
)Income tax benefit


(308
)

(641
)

(34
)Loss from discontinued operations

$
(15,422
)
$
(3,093
)
$
(7
)


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

3. DISCONTINUED OPERATIONS (Continued)

Assets and Liabilities Held for Sale

Assets and liabilities classified as held for sale in the Company's consolidated balance sheets as of December 31, 2010 and 2009
includes the following:

As of December 31,2010

2009Assets:Cash

$
530

$
127Accounts receivable


673


433Inventories


292


214Prepaid expenses and other current assets


352


1,230Total current assets

$
1,847

$
2,004Property plant and equipment, net


4,248


6,630Goodwill and other intangible assets





10,000Other noncurrent assets


752


1,363Total Assets

$
6,847

$
19,997Liabilities:Current debt obligations

$
1,370

$
1,487Account payable and accrued liabilities


405


497Total current liabilities

$
1,775

$
1,984Long-term debt


1,550


2,920Other long-term liabilities


896


1,489Total Liabilities

$
4,221

$
6,393


4. RECENT ACCOUNTING PRONOUNCEMENTS

The following is a listing of recent accounting standards issued by the Financial Accounting Standards Board (the "FASB") and their effect on the Company.

In
January 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06,Fair Value Measurements and Disclosures(Topic 820). ASU 2010-06 provides additional disclosure requirements related to fair value measurements. ASU 2010-06 is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value
measurements. Disclosure requirements applicable to Level 3 transactions are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal
years, with early adoption permitted. The portion of ASU 2010-06 that was effective beginning after December 15, 2009 did not have a material effect on our financial
position, results of operations or cash flows. Additionally, the Company does not anticipate that the disclosure requirements applicable to Level 3 transactions that are effective for fiscal

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

4. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

years
beginning after December 15, 2010 will have a material effect on our financial position, results of operations or cash flows.

In
October 2009, the FASB issued ASU 2009-13,Revenue Recognition(Topic 605). ASU 2009-13
provides additional guidance related to the accounting for multiple-deliverable arrangements to account for products or services (deliverables) separately rather than as a combined unit and eliminates
the residual method of allocation. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after
September 15, 2010, with early adoption permitted. We do not anticipate that the provisions of ASU 2009-13 will have a material effect on the Company's financial position,
results of operations or cash flows.

5. ALLOWANCE FOR DOUBTFUL ACCOUNTS

The activity in the accounts receivable allowance from continuing operations for the years ended December 31, 2010, 2009 and 2008 consists of the following:

For the Years Ended December 31,2010

2009

2008Balance at beginning of year

$
1,631

$
1,383

$
2,983Bad debt expense


1,011


1,438


1,196Write-offs(1)


(2,125
)

(395
)

(2,899
)Other adjustments


(28
)

(795
)

103Balance at end of year

$
489

$
1,631

$
1,383


6. INVENTORIES

Inventories are stated at the lower of cost or market value and primarily consist of raw material, work-in-process, and finished goods.
Work-in-process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of
components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

6. INVENTORIES (Continued)

The
components of inventories from continuing operations as of December 31, 2010 and 2009 are summarized as follows:

As of December 31,2010

2009Raw materials

$
9,359

$
4,743Work-in-process


5,869


2,921Finished goods


3,481


3,33818,709


11,002Less: Reserve for excess and obsolete inventory


(970
)

(2,177
)Net inventories

$
17,739

$
8,825


7. PROPERTY AND EQUIPMENT

The cost basis and estimated lives of property and equipment from continuing operations as of December 31, 2010 and 2009 are as follows:

As of December 31,2010

2009

LifeLand

$
4,191

$
4,018Buildings


23,574


23,501

39 yearsMachinery and equipment


100,153


95,227

2-10 yearsOffice furniture and equipment


2,319


2,468

3-7 yearsLeasehold improvements


2,457


2,611

Asset life or life of leaseConstruction in progress


11,650


26,511144,344


154,336Less-accumulated depreciation


(38,027
)

(24,717
)$
106,317

$
129,619


In
the first quarter of 2010, the Company completed construction of a third wind tower manufacturing facility in Brandon, South Dakota, but has not commenced production at this facility.
Following the Company's strategic planning meetings that took place in fourth quarter of 2010, the Company concluded it would be difficult or impossible to operate this facility in a profitable or
cost-effective manner at the Company's current expected production levels. The Company is currently exploring alternative uses for the building and equipment comprising this facility. In
connection with this determination, during the fourth quarter of 2010, the Company recorded an impairment charge of $13,326 to reduce the carrying value of the assets to fair value. The impairment
charge is included in impairment charges in the consolidated statements of operations. The Company estimated the fair value of these assets primarily based on independent appraisals.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

7. PROPERTY AND EQUIPMENT (Continued)

The
Company conducted an impairment analysis of its Services segment during the fourth quarter of 2010. The analysis indicated an impairment of long-lived assets, $3,554 of
which was allocated to property and equipment. The impairment charge is included in impairment charges in the consolidated statements of operations. See Note 8 "Goodwill and Intangible Assets"
of these consolidated financial statements for further discussion of impairment charges.

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying value of goodwill during the years ended December 31, 2010 and 2009 are as follows:

Gearing

Technical and Engineering Services

TotalGoodwill balance as of December 31, 2008

$
21,239

$
4,561

$
25,800Purchase accounting adjustments


3,030





3,030Impairment charge


(24,269
)




(24,269
)Goodwill balance as of December 31, 2009





4,561


4,561Impairment charge





(4,561
)

(4,561
)Goodwill balance as of December 31, 2010

$


$


$



Goodwill
represents the excess of cost over fair market value of identifiable net assets acquired through business purchases. The Company performs an annual impairment test through the
application of a fair-value based test as of October 31 of each year, or more frequently when events or circumstances indicate that the carrying value of its assets may not be
recoverable. The Company's estimate of fair value for each of the Company's operating segments is based primarily on projected future results, cash flows and other assumptions. The first step involves
a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. In performing the first step, the Company determines the fair value of our reporting units
using a combination of an income approach by preparing a discounted cash flow analysis and a market-based approach based on our market capitalization. If the estimated fair value of the reporting unit
exceeds its carrying amount, goodwill of the reporting unit is not impaired, and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its
estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's
goodwill with its carrying amount to measure the amount of impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a
business combination. As a result, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if
the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid. If the carrying amount of the

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

8. GOODWILL AND INTANGIBLE ASSETS (Continued)

reporting
unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The
increase in goodwill in 2009 in the Gearing segment relates to purchase accounting adjustments of $3,030 recorded in connection with an escrow settlement agreement with the former
owners of our wholly owned subsidiary Brad Foote Gear Works, Inc. ("Brad Foote") in May 2009. The Company did not identify a triggering event during 2009 which would indicate an early assessment of
goodwill impairment, however, upon the completion of our annual impairment analysis as of October 31, 2009, the Company determined that the goodwill balance attributable to our Gearing segment
was impaired due to a deterioration in financial performance during 2009 and as a result of the subsequent revision in our projection of future operating results and cash flows in light of the effect
of the continued economic downturn on the wind gearing industry. Accordingly, the Company's analysis indicated that projected fair value of the Gearing segment assets did not exceed the carrying value
of these net assets. As a result, the Company recorded a goodwill impairment charge of $24,269 during the fourth quarter, and the impairment charge was recorded to operating expenses in the Company's
consolidated statements of operations for the year ended December 31, 2009.

During
the second quarter of 2010, the Company identified a triggering event associated with a continued deterioration in financial performance within its Services segment. This
triggering event required a subsequent revision in the Company's projection of future operating results and cash flows for this segment in light of the continued economic weakness in the wind energy
industry. The Company's analysis indicated that the projected fair value of the Services segment assets did not exceed the carrying value of these assets. The method used in determining the fair value
was based upon the Company's estimate of the projected future discounted cash flows of its reporting unit. As a result, the Company recorded a goodwill impairment charge of $4,561 during the second
quarter and the impairment charge was recorded to operating expenses in its consolidated statement of operations.

Intangible and Other Long-lived Assets

As of December 31, 2010 and 2009, the cost basis, accumulated amortization and net book value of intangible assets were as
follows:

December 31, 2010

December 31, 2009Cost

Accumulated
Amortization

Impairment
Charge

Net
Book
Value

Weighted
Average
Amortization
Period

Cost

Accumulated
Amortization

Impairment
Charge

Net
Book
Value

Weighted
Average
Amortization
PeriodIntangible assets:Customer relationships

$
28,679

$
(7,529
)
$
(17,796
)
$
3,354


10.8

$
102,258

$
(20,755
)
$
(57,835
)
$
23,668


10.1Trade names


9,789


(1,530
)

(1,540
)

6,719


20.0


9,909


(1,069
)

(107
)

8,733


20.0Intangible assets

$
38,468

$
(9,059
)
$
(19,336
)
$
10,073


17.0

$
112,167

$
(21,824
)
$
(57,942
)
$
32,401


12.6


The Company reviews intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that
the asset's carrying amount may not be recoverable. Due to the revision in our projections of operating results and cash flows within our Gearing segment during the fourth quarter of 2009, the Company
deemed this a triggering event, and subsequently tested our

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

8. GOODWILL AND INTANGIBLE ASSETS (Continued)

intangible
assets for impairment. The completion of our impairment analysis indicated that the customer relationship intangibles associated with our Gearing segment were impaired. The decline in our
estimates of future operating results and corresponding discounted cash flows indicated that the fair value of these customer relationships was less than the carrying value of these assets.
Additionally, the Company determined that our RBA trade name was impaired as a result of the merger of RBA's operations into our Towers segment in December 2009 and that RBA's customer relationship
intangible was impaired due to a revision in projected revenues and cash flows associated with this customer relationship. Accordingly, the Company recorded an intangible impairment charge of $57,942
to properly reflect the carrying value of these assets.

During
the fourth quarter of 2010, the Company identified triggering events associated with the Company's current period operating loss, its history of continued operating losses and its
revised projections of operating results and cash flows developed as part of the strategic planning process. As a
result, we tested our intangible and other long-lived assets for impairment. The decline in our estimates of future operating results and corresponding cash flows indicated that the fair
value of these assets was less than the carrying value. Accordingly, the Company recorded an impairment charge of $22,890 related to the Services segment. The impairment was allocated as follows:
customer relationships $17,796: trade name $1,540; and property and equipment $3,554. In the future, if our projected discounted cash flows associated with our operating segments do not exceed the
carrying value of their net assets, the Company may be required to record additional write downs of the carrying value of our intangible and other long-lived assets.

Intangible
assets are amortized on a straight-line basis over their estimated useful lives, which range from 10 to 20 years. Amortization expense was $2,992, $9,524
and $10,645 for the years ended December 31, 2010, 2009 and 2008, respectively. As of December 31, 2010, estimated future amortization expense is as follows:

2011

$
8592012


8592013


8592014


8592015


8592016 and thereafter


5,778Total

$
10,073


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

9. ACCRUED LIABILITIES

Accrued liabilities as of December 31, 2010 and 2009 consisted of the following:

December 31,2010

2009Accrued payroll and benefits

$
2,845

$
2,228Accrued property taxes


387


269Income taxes payable


401


225Accrued professional fees


211


1,067Accrued warranty liability


1,071


918Accrued environmental reserve


675


Accrued other


925


1,972Total accrued liabilities

$
6,515

$
6,679


10. DEBT AND CREDIT AGREEMENTS

The Company's outstanding debt balances as of December 31, 2010 and 2009 consisted of the following:

December 31,2010

2009Lines of credit

$


$
10,601Term loans and notes payable


8,928


18,974Related party note


2,320


2,32011,248


31,895LessCurrent portion


(1,577
)

(18,499
)Long-term debt, net of current maturities

$
9,671

$
13,396


As
of December 31, 2010, future annual principal payments on our outstanding debt obligations were as follows:

2011

$
1,5772012


4,5502013


1,3302014


1,1762015


1,1782016 and thereafter


1,437Total

$
11,248


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

10. DEBT AND CREDIT AGREEMENTS (Continued)

Credit Facilities

Bank of America Debt (Repaid)

In connection with the Company's acquisition of Brad Foote in October 2007, the Company assumed outstanding debt and available lines of
credit totaling approximately $25,500 under various secured debt facilities (the "BOA Debt Facilities") with Bank of America. As of December 31, 2009, the total principal amount outstanding
under the BOA Debt Facilities was approximately $15,964, and the effective per annum interest rate was 7%. On January 22, 2010, Brad Foote repaid all of the outstanding principal and interest
under the BOA Debt Facilities in the aggregate amount of $16,076, and the BOA Debt Facilities were terminated.

Investors Community Bank Credit Line (Expired March 12, 2010)

In October 2007, Tower Tech obtained a secured line of credit (the "ICB Line") from Investors Community Bank ("ICB") in the amount of
$2,500, which was subsequently increased to $5,500 on March 21, 2008. On March 13, 2009, ICB agreed to extend the maturity date of the ICB Line to March 13, 2010. Pursuant to a
Master Amendment dated as of December 30, 2009 among ICB, Tower Tech and Broadwind (as guarantor) (the "Master Amendment"), the amount of the ICB Line was increased to $6,500, subject to
borrowing base availability. Tower Tech repaid all of the outstanding indebtedness under the ICB Line in the amount of $3,066 on January 26, 2010, and allowed the ICB Line to expire on
March 13, 2010. The effective interest rate related to the ICB Line was 6% at December 31, 2009.

Investors Community Bank Notes

On April 7, 2008, the Company's wholly owned subsidiary R.B.A. Inc. ("RBA") executed four (4) promissory notes
with ICB (the "ICB Notes") in the aggregate principal amount of approximately $3,781, as follows: (i) a term note in the maximum principal amount of approximately $421, bearing interest at a
per annum rate of 6.85%, with a maturity date of October 5, 2012; (ii) a term note in the maximum principal amount of $700, bearing interest at a per annum rate of 5.65%, with a maturity
date of April 25, 2013; (iii) a term note in the maximum principal amount of $928, bearing interest at a per annum rate of 5.65%, with a maturity date of April 25, 2013; and
(iv) a line of credit note in the maximum principal amount of $1,732, bearing interest at a per annum rate of 4.48% until May 1, 2008 and thereafter at the London Interbank Offered Rate
("LIBOR") plus 1.75%, with a maturity date of April 5, 2009 (the "Line of Credit Note"). The Line of Credit Note was subsequently modified on March 13, 2009 to extend the maturity date
to March 13, 2010 and to change the interest rate to the greater of (A) 5% or (B) prime. The ICB Notes provide for multiple advances, and were secured by substantially all of the
assets of RBA.

Pursuant
to the merger of RBA into Tower Tech on December 31, 2009, Tower Tech became the successor by merger to RBA's interest in the loans from ICB to RBA evidenced by the ICB
Notes (other than the Line of Credit Note, which was repaid in full in January 2010). Pursuant to the Master Amendment, Tower Tech agreed to maintain a minimum debt service coverage ratio in addition
to certain other requirements. The Master Amendment was amended as of December 30, 2010, (i) to

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

10. DEBT AND CREDIT AGREEMENTS (Continued)

delete
the requirements that Tower Tech maintain a collateral account as security for the obligations under the ICB Notes and that no additional loans or leases would be entered into by Tower Tech
without the prior approval of ICB, and (ii) to replace the requirement that Tower Tech maintain its primary deposit accounts with ICB with the requirement that Tower Tech maintain with ICB a
depository relationship of not less than $700, with such funds to be deposited into a money market account or certificate of deposit by no later than January 7, 2011. As of December 31,
2010, (i) Tower Tech was in compliance with all covenants under its credit facilities with ICB, (ii) the total amount of outstanding indebtedness under the remaining ICB Notes was $1,371
and (iii) the effective per annum interest rate under the remaining ICB Notes was 5.81%.

Great Western Bank Loan

On April 28, 2009, Tower Tech entered into a Construction Loan Agreement with Great Western Bank ("GWB"), pursuant to which GWB
agreed to provide up to $10,000 in financing (the "Construction Loan") to fund construction of Tower Tech's wind tower
manufacturing facility in Brandon, South Dakota (the "Facility"). Pursuant to a Change in Terms Agreement dated April 5, 2010 between GWB and Tower Tech, the Construction Loan was converted to
a term loan (the "Great Western Term Loan") providing for monthly payments of principal plus interest, extending the maturity date to November 5, 2016, reducing the principal amount to $6,500,
and changing the per annum interest rate to 8.5%. Tower Tech was required to pay a 1.0% origination fee upon the conversion.

The
Great Western Term Loan is secured by a first mortgage on the Facility and all fixtures and proceeds relating thereto, pursuant to a Mortgage and a Commercial Security Agreement,
each between Tower Tech and GWB, and by a Commercial Guaranty from the Company. In addition, the Company has agreed to subordinate all intercompany debt with Tower Tech to the Great Western Term Loan.
The Great Western Term Loan contains representations, warranties and covenants that are customary for a term financing arrangement and contains no financial covenants. As of December 31, 2010,
the total outstanding indebtedness under the Great Western Term Loan was $5,750.

Wells Fargo Account Purchase Agreements

On September 29, 2010, the Company's domestic subsidiaries ("Subsidiaries") entered into account purchase agreements (the "AP
Agreements") with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. ("Wells Fargo"). Under the AP Agreements, Wells Fargo will advance funds against certain receivables arising from
sales of the Subsidiaries' products and services. In connection with the entry into the AP Agreements, the Company and each Subsidiary have executed guaranties (including cross-guaranties) in favor of
Wells Fargo. With respect to the Subsidiaries, the AP Agreements contain provisions providing for cross-defaults and cross-collateralization. In addition, each Subsidiary has granted to Wells Fargo a
security interest against all financed receivables and related collateral. Prior to entering into the AP Agreements, there was no material relationship between the Company, the Subsidiaries and Wells
Fargo.

Under
the terms of the AP Agreements, Wells Fargo will advance approximately 80% of the face value of eligible receivables to the Subsidiaries. Wells Fargo will have full recourse to the
Subsidiaries for collection of the financed receivables. The aggregate facility limit of the AP Agreements is $10,000.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

10. DEBT AND CREDIT AGREEMENTS (Continued)

For
Wells Fargo's services under the AP Agreements, the Subsidiaries have agreed to pay Wells Fargo (i) a floating discount fee of the then-prevailing LIBOR plus 3.75% per annum,
(ii) an annual facility fee of 1% of the aggregate facility limit, and (iii) an annual unused line fee of 0.042% on the portion of the credit facility which is unused. The initial term
of the AP Agreements ends on September 29, 2013. If the AP Agreements are terminated prior to this date, an early termination fee of up to 3% of the aggregate facility limit may apply. At
December 31, 2010, no amounts were drawn under the AP Agreements, and the Subsidiaries had the ability to borrow up to $10,000, subject to maintaining a month-end minimum total cash
balance of $5,000.

Selling Shareholder Notes

On May 26, 2009, the Company entered into a settlement agreement (the "Settlement Agreement") with the former owners of Brad
Foote (the "Selling Shareholders"), including J. Cameron Drecoll, who served as the Company's Chief Executive Officer and a member of its Board of Directors until December 1, 2010. The
Settlement Agreement related to the post-closing escrow established in connection with the Company's acquisition of Brad Foote. Under the terms of the Settlement Agreement, among other
terms, the Company issued three promissory notes to the Selling Shareholders in the aggregate principal amount of $3,000 (the "Selling Shareholder Notes"). The Selling Shareholder Notes mature on
May 28, 2012 and bear interest at a rate of 7% per annum, with interest payments due quarterly. The Selling Shareholder Note issued to Mr. Drecoll in the principal amount of $2,320 and
pursuant to the terms of the Settlement Agreement is deemed by the Company to be a related party transaction. As of December 31, 2010, principal of $3,000 and accrued interest of $53 were
outstanding under the Selling Shareholder Notes. The Company has accounted for the Selling Shareholder Notes as long-term debt in its consolidated balance sheets.

11. LEASES

The Company leases various property and equipment under operating lease arrangements. Lease terms generally range from 3 to 15 years with renewal options for extended terms. The
Company is required to make additional payments under certain property leases for taxes, insurance and other operating expenses incurred during the operating lease period. Rental expense for the years
ended December 31, 2010, 2009 and 2008 was $4,289, $4,510 and $2,911, respectively.

In
addition, the Company has entered into capital lease arrangements to finance property and equipment and assumed capital lease obligations in connection with certain acquisitions. The
cost basis
and accumulated depreciation of assets recorded under capital leases, which are included in property and equipment, are as follows as of December 31, 2010 and 2009:

December 31,2010

2009Cost

$
6,154

$
6,134Accumulated depreciation


(1,317
)

(680
)Net book value

$
4,837

$
5,454


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

11. LEASES (Continued)

Depreciation
expense recorded in connection with assets recorded under capital leases was $624, $626 and $138 for the years ended December 31, 2010, 2009 and 2008, respectively.

As
of December 31, 2010, future minimum lease payments under capital leases and operating leases are as follows:

Capital
Leases

Operating
Leases

Total2011

$
1,172

$
4,270

$
5,4422012


1,054


3,666


4,7202013


908


2,468


3,3762014





2,142


2,1422015





1,601


1,6012016 and thereafter





3,915


3,915Total


3,134

$
18,062

$
21,196Lessportion representing interest at a weighted average annual rate of 8.8%


(366
)Principal


2,768Lesscurrent portion


(966
)Capital lease obligations, noncurrent portion

$
1,802


12. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company issued purchase commitments in connection with equipment purchases for its wind tower manufacturing facility located in
Brandon, South Dakota, and its drivetrain service center located in Abilene, Texas. As of December 31, 2010, outstanding purchase commitments totaled approximately $1,021 and $1,589,
respectively. The Company expects that these commitments will be fully satisfied in 2011.

During
2008, the Company issued purchase commitments to two equipment manufacturers in connection with equipment purchases totaling $4,888. Under the terms of the purchase orders, the
Company was required to make deposits totaling approximately $1,324. In the second quarter of 2010, the Company informed one of the manufacturers of the Company's election to cancel the equipment
purchase commitment with such manufacturer, which resulted in the forfeiture of a non-refundable deposit in the amount of approximately $650. In the fourth quarter of 2010, the Company
reached an agreement with the second manufacturer pursuant to which the Company agreed to purchase a different piece of equipment in exchange for a credit of the deposit under the original purchase
order with such manufacturer and the trade-in of two pieces of used equipment. As of December 31, 2010, there were no outstanding purchase commitments associated with these
equipment purchases.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

12. COMMITMENTS AND CONTINGENCIES (Continued)

Legal Proceedings

From time to time, the Company is subject to legal proceedings or claims arising from its normal course of operations. The Company
accrues for costs related to loss contingencies when such costs are probable and reasonably estimable. As of December 31, 2010, the Company is not aware of any material pending legal
proceedings or threatened litigation that would have a material adverse effect on the Company's financial condition or results of operations, although no assurance can be given with respect to the
ultimate outcome of pending actions. Refer to Note 22 "Subsequent Events" for further discussion of legal proceedings.

Environmental Compliance and Remediation Liabilities

The Company's operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the
Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination,
employee health and safety, and product content, performance and packaging. Also, certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a
contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability
on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal
sites for personal injuries and property damage associated with releases of hazardous substances from those sites. Refer to Note 22 "Subsequent Events" for further discussion of environmental
compliance and remediation liabilities.

Warranty Liability

The Company provides warranty terms that generally range from one to seven years for various products relating to workmanship and
materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty
provisions.

Sale-Leaseback Transactions

During 2009, the Company entered into sale-leaseback agreements whereby certain owned equipment was sold to a third party
financing company in exchange for cash and the Company subsequently entered into an equipment lease agreement with the purchaser. The primary purpose of these arrangements was to provide additional
liquidity to meet working capital requirements. Depending on the terms of the lease agreement, the lease may be classified as an operating or capital lease. In addition, the sale of the assets may
result in a gain or loss, which must be amortized to other income or loss in the Company's statement of operations over the life of the operating lease. As of December 31, 2010, the minimum
monthly payments due under these lease agreements totaled $85.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

12. COMMITMENTS AND CONTINGENCIES (Continued)

Other

Collective bargaining agreements have been ratified by collective bargaining units in place at our Cicero and Neville Island facilities
and expire in February 2014 and October 2012, respectively. As of December 31, 2010, our collective bargaining units represented approximately 23% of our workforce.

13. INTEREST RATE SWAP AGREEMENTS

As part of our acquisition of Brad Foote in October 2007, the Company assumed two interest rate swap agreements. These swap agreements were intended to minimize the impact of interest
rate fluctuations on certain debt instruments. Interest rate swap agreements involve exchanges of fixed or floating rate interest payments periodically over the life of the agreement without the
exchange of the underlying principal amounts. Derivatives are measured at fair value and recognized as either assets or liabilities on the Company's balance sheet. The accounting for changes in the
fair value of a derivative is dependent upon the use of the derivative and its resulting designation. Unless specific hedge accounting criteria are met, changes in the fair value of the derivative
must be recognized currently in earnings. The Company's interest rate swaps did not qualify for hedge accounting, and therefore, the Company is required to recognize the swap agreements at their fair
market value and record the fluctuations in the fair value of the swap agreements in current earnings.

In
February 2010, the Company settled both interest rate swap agreements for $270 in connection with the repayment of all outstanding indebtedness to Bank of America in January 2010.
During the year ended December 31, 2009, the Company reported a gain related to the change in the fair value of these instruments of $330 compared to a loss of $194 for the year ended
December 31, 2008. The fair market value of the interest rate swaps of $253 was recorded as a long-term liability in our consolidated balance sheets as of December 31, 2009.
The fair values of our interest rate swap agreements were calculated using Level 2 assumptions, and the corresponding gain or loss was recognized as other income (expense) in our consolidated
statements of operations.

14. FAIR VALUE MEASUREMENTS

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

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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

14. FAIR VALUE MEASUREMENTS (Continued)

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

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

Fair value of financial instruments

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

As
of December 31, 2009, the Company had two interest rate swap agreements totaling $253, which were required to be measured at fair value on a recurring basis. In February 2010,
the Company settled both interest rate swap agreements in connection with the repayment of all outstanding indebtedness to Bank of America. See Note 13 "Interest Rate Swap Agreements" of these
consolidated financial statements for a discussion of these interest rate swap agreements.

Assets measured at fair value on a nonrecurring basis

The Company reviews its goodwill balances for impairment on at least an annual basis based on the carrying value of these assets as of
October 31 and tests its intangible and
long-lived assets whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Due to the continuing effects of the economic downturn on the wind
energy industry, the Company tested goodwill and intangible assets for impairment using a fair value measurement approach. The fair value measurement approach utilizes a number of significant
unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of our future operating results, the implied fair value of these assets using an income approach
by preparing a discounted cash flow analysis and a market based approach based on our market capitalization, and other subjective assumptions. Upon completion of our impairment analysis, the Company
determined that the carrying value of its goodwill and intangible assets exceeded the fair value of these assets. Accordingly, the Company recorded goodwill and intangible impairment charges of $4,561
and $19,336, respectively, to properly reflect the carrying value of these assets. In addition, the Company recorded an impairment charge to fixed assets of $13,326 related to its Brandon, South
Dakota tower manufacturing facility, and $3,554 related to property and equipment at its Services segment. See Note 7 "Property and Equipment" of these consolidated financial statements for
further discussion of this impairment charge.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

14. FAIR VALUE MEASUREMENTS (Continued)

The
following table presents the fair value measurements of our nonrecurring assets for continuing operations as of December 31, 2010 and 2009:

Fair Value Measurements UsingDescription

Year Ended
12/31/10

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

Total Gains
(Losses)Goodwill

$


$


$


$


$
(4,561
)Intangible assets, net


10,073








10,073


(19,336
)Property and equipment, net


106,317








106,317


(16,880
)$
(40,777
)Description

Year Ended
12/31/09

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

Total Gains
(Losses)Goodwill

$
4,561

$


$


$
4,561

$
(24,269
)Intangible assets, net


32,401








32,401


(57,942
)Property and equipment, net


129,619








129,619


$
(82,211
)


15. INCOME TAXES

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the
financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary
differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities
is recognized in the year that the change is enacted.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

15. INCOME TAXES (Continued)

The
provision for income taxes for the years ended December 31, 2010, 2009 and 2008 consists of the following:

For the Years Ended December 31,2010

2009

2008Current provisionFederal

$


$


$
Foreign


4





State


62


(37
)

554Total current provision


66


(37
)

554Deferred creditFederal


(23,871
)

(38,143
)

(7,666
)State


(6,076
)

(5,612
)

(410
)Total deferred credit


(29,947
)

(43,755
)

(8,076
)Increase in deferred tax valuation allowance


29,721


42,845


8,618Total (benefit) provision for income taxes

$
(160
)
$
(947
)
$
1,096


The
increase in the deferred tax valuation allowance was $29,721, $42,845, and $8,618 for the years ended December 31, 2010, 2009 and 2008, respectively. The change in the
deferred tax valuation allowance in 2010 was the result of an increase to the deferred tax assets in connection with the impairment of goodwill and intangible assets, and additional federal and state
net operating losses. The change in the deferred tax valuation allowance in 2009 was the result of a significant increase to deferred tax assets in connection with the impairment of goodwill and
intangible assets, and additional federal and state net operating losses.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

15. INCOME TAXES (Continued)

The
tax effects of the temporary differences and net operating losses that give rise to significant portions of deferred tax assets and liabilities are as follows:

As of December 31,2010

2009Current deferred income tax assets:Accrual and reserves

$
2,598

$
2,573Total current deferred tax assets


2,598


2,573Valuation allowance


(2,598
)

(2,573
)Current deferred tax assets, net of valuation allowance





Noncurrent deferred income tax assets:Net operating loss carryforwards

$
45,387

$
30,900Intangible assets


40,248


29,296Other


100


735Total noncurrent deferred tax assets


85,735


60,931Valuation allowance


(80,619
)

(47,704
)Noncurrent deferred tax assets, net of valuation allowance


5,116


13,227Noncurrent deferred income tax liabilities:Fixed assets

$
(5,116
)
$
(13,630
)Intangible assets





Total noncurrent deferred tax liabilities


(5,116
)

(13,630
)Net deferred income tax liability

$


$
(403
)


The
Company has indefinite long-lived intangible assets consisting of goodwill, which are not amortized for financial reporting purposes. However, the expense related to the
amortization of these assets is tax deductible, and therefore the assets are amortized for income tax purposes. As a result, deferred income tax expense and deferred income tax liabilities arise as a
result of the tax-deductibility of these indefinite long-lived intangible assets. The resulting deferred tax liability, which is anticipated to continue to increase over time,
has an indefinite life, resulting in what is referred to as a "naked tax credit." This deferred tax liability would remain on our consolidated balance sheets indefinitely unless there is an impairment
of the related assets for financial reporting purposes, or the businesses to which the assets relate are to be disposed of. As of December 31, 2010, the Company has fully impaired all
indefinite long-lived intangible assets. Therefore, the Company no longer recognizes any deferred tax liabilities arising from the amortization of these items.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

15. INCOME TAXES (Continued)

Valuation
allowances of $83,217 and $50,277 have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2010 and 2009, respectively. A
reconciliation of the beginning and ending amounts of the valuation was as follows:

Valuation allowance as of December 31, 2009

$
(50,277
)Gross increase for current year activity


(32,940
)Valuation allowance as of December 31, 2010

$
(83,217
)


As
of December 31, 2010, the Company had federal net operating loss carryforwards of approximately $112,292 expiring in various years through 2030. The majority of the net
operating loss carry forwards will expire in 2028, 2029, and 2030.

As
of December 31, 2010, the Company had unapportioned state net operating losses in the aggregate of approximately $112,292 expiring in various years from 2021 through 2030 based
upon various net operating loss periods as designated by the different taxing jurisdictions.

The
reconciliation of the tax (benefit) provision computed at the statutory rate to the effective tax rate is as follows:

For the Year Ended December 31,2010

2009

2008Statutory U.S. federal income tax rate


35.0
%

35.0
%

35.0
%State and local income taxes, net of federal income tax benefit


3.2


3.4


(0.4
)Permanent differences


(0.5
)

(0.3
)

(5.0
)Change in valuation allowance


(37.5
)

(37.4
)

(34.7
)FIN48 changes





(0.1
)

Other


0.1


0.3


0.5Effective income tax rate


0.3
%

0.9
%

(4.6
)%


The
Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is
required to be met

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

15. INCOME TAXES (Continued)

before
being recognized in the financial statements. The changes in the Company's uncertain income tax positions for the years ended December 31, 2010 and 2009 consisted of the following:

For the Year Ended December 31,2010

2009Beginning balance

$
349

$
193Tax positions related to current year:Additions





Reductions








Tax positions related to prior years:Additions


33


196Reductions





Settlements





(40
)Lapses in statutes of limitations





Additions from current year acquisitions





33


156Ending balance

$
382

$
349


It
is the Company's policy to include interest and penalties in tax expense. During the years ended December 31, 2010 and 2009, the Company recognized and accrued approximately
$32 and $10, respectively, of interest and penalties.

The
Company files income tax returns in the U.S. federal and state jurisdictions. As of December 31, 2010, open tax years in the federal and some state jurisdictions date back to
1996 due to the taxing authorities' ability to adjust operating loss carryforwards. No changes in settled tax years have occurred through December 31, 2010.

The
Company does not anticipate there will be a material change in the total amount of unrecognized tax benefits within the next 12 months. However, the Company is currently under
audit for its federal income tax returns for periods ended December 31, 2008 and 2009. The Company believes that it has appropriate support for the positions taken on its tax returns and its
annual tax provision includes amounts sufficient to pay any assessments. Nonetheless, the amounts ultimately paid, if any, may differ significantly from the amounts currently accrued.

16. STOCKHOLDERS' EQUITY

On January 21, 2010, the Company completed a public offering of its common stock, par value $0.001 per share, at an offering price of $5.75 per share. In the offering, the Company
sold 10,000,000 newly issued shares of its common stock for approximately $54,625 in proceeds after deducting underwriting discounts, but before deducting other offering related costs. In connection
with the

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

16. STOCKHOLDERS' EQUITY (Continued)

offering,
the Company incurred $1,278 in costs associated with professional and other offering related expenses, which have been netted against the proceeds received in additional paid-in
capital in the Company's consolidated balance sheet as of December 31, 2010.

17. RELATED PARTY TRANSACTIONS

On May 26, 2009, the Company entered into the Settlement Agreement with the Selling Shareholders, including J. Cameron Drecoll, who served as the Company's Chief Executive
Officer and a member of the Company's Board of Directors until December 1, 2010. The Settlement Agreement related to the
post-closing escrow established in connection with the Company's acquisition of Brad Foote. The post-closing escrow fund was created to provide a source of funds for claims for
indemnification made by the Company and certain other indemnified persons against the Selling Shareholders under the Stock Purchase Agreement executed in connection with the Company's acquisition of
Brad Foote. On October 19, 2007, the date the Company consummated its acquisition of Brad Foote, the Company deposited a portion of its total purchase price for Brad Foote (in the amount of
$5,000 in cash and 2,500,000 shares of its common stock) into the escrow fund. The consideration deposited into the escrow fund was to be held by an escrow agent until five business days after
the eighteen month anniversary of the Brad Foote acquisition. Under the terms of the Settlement Agreement, the Company received the entire cash escrow balance of $5,000 plus accrued interest income of
$82, which was recorded as other income. In exchange, the Company agreed to cause the release to the Selling Shareholders of 2,500,000 shares of the Company's common stock held under the escrow
agreement in proportion to their ownership interest in Brad Foote prior to its acquisition by the Company. In addition, the Company agreed to make a cash payment of $30 to one Selling Shareholder and
issued the Selling Shareholder Notes to the three Selling Shareholders in the aggregate principal amount of $3,000. The cash payment and Selling Shareholder Notes were recorded as an increase to the
purchase price through goodwill as these amounts were calculated in accordance with the purchase agreement. The Company also paid to Mr. Drecoll certain tax refunds in the aggregate amount of
approximately $2,212 related to our acquisition of Brad Foote and tax payments in respect of the period prior to the acquisition to which the Company believes the Selling Shareholders are entitled (or
to which the Company is entitled on their behalf). The Selling Shareholder Notes mature on May 28, 2012 and bear interest at a rate of 7% per annum, with interest payments due quarterly. The
Selling Shareholder Note issued to Mr. Drecoll in the principal amount of $2,320 and pursuant to the terms of the Settlement Agreement is deemed by the Company to be a related party
transaction. As of December 31, 2010, principal of $3,000 and accrued interest of $53 was outstanding under the Selling Shareholder Notes. The Company has accounted for the Selling Shareholder
Notes as long-term debt in our consolidated balance sheets as of December 31, 2010.

During
the years ended December 31, 2010, 2009 and 2008, interest expense of $210, $128 and $1,226, respectively, was incurred on shareholder and related party notes.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

18. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plan

The Company grants incentive stock options and other equity awards pursuant to the Broadwind Energy, Inc. 2007 Equity Incentive Plan
(the "EIP"), which was approved by the Company's Board of Directors in October 2007 and by the Company's stockholders in June 2008. The EIP was subsequently amended in August 2008 by the Company's
Board of Directors to include certain non-material amendments to clarify the terms and conditions of restricted stock awards and to provide that the administrator of the EIP has the
authority to authorize future amendments to the EIP. The EIP was further amended by the Company's stockholders in June 2009 to increase the number of shares of common stock authorized for issuance
under the EIP. As amended, the EIP reserves 5,500,000 shares of our common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the
Company and its affiliates will depend to a large degree. As of December 31, 2010, the Company had reserved 917,193 shares for the exercise of stock options outstanding,
712,902 shares for restricted stock unit awards outstanding and 3,514,040 additional shares for future stock awards under the EIP. As of December 31, 2010, 355,865 shares of
common stock reserved for stock options and restricted stock unit awards under the EIP have been issued in the form of common stock.

Stock Options.The exercise price of stock options granted under the EIP is equal to the closing price of our common stock on the date
of grant.
Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten
years after the date of grant. If a plan participant's employment is terminated during the vesting period, he or she forfeits the right to unvested stock option awards.

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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

18. SHARE-BASED COMPENSATION (Continued)

Stock
option activity during the years ended December 31, 2010, 2009 and 2008 under the EIP was as follows:

Options

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual Term

Aggregate Intrinsic
Value
(in thousands)Outstanding as of December 31, 2007


950,000

$
7.92Granted


1,165,000

$
14.59Exercised





Forfeited


(85,000
)
$
11.38Cancelled





Outstanding as of December 31, 2008


2,030,000

$
11.60Granted


209,193

$
7.66Exercised


(91,940
)
$
7.34Forfeited


(723,257
)
$
12.05Expired


(21,833
)
$
10.23Outstanding as of December 31, 2009


1,402,163

$
11.08Granted


464,828

$
3.65Exercised




$
0.00Forfeited


(647,766
)
$
9.37Expired


(302,032
)
$
10.37Outstanding as of December 31, 2010


917,193

$
8.75

8.4 years

$
119Exercisable as of December 31, 2010


223,798

$
12.51

7.5 years

$
0


The
following table summarizes information with respect to all outstanding and exercisable stock options under the EIP as of December 31, 2010:

Options Outstanding

Options ExercisableExercise Price Ranges

Number of options
outstanding

Weighted Average
Exercise Price

Weighted Average
Remaining Contractual Term

Number
Exercisable

Weighted Average
Exercise Price$1.77 - $7.78


437,693

$
3.85

9.4 years


14,414

$
7.78$8.00 - $12.85


294,500


10.21

7.5 years


135,384


9.99$17.80 - $18.20


185,000


18.03

7.6 years


74,000


18.03917,193

$
8.75

8.4 years


223,798

$
12.51


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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

18. SHARE-BASED COMPENSATION (Continued)

The following table summarizes information with respect to outstanding restricted stock units as of December 31, 2010, 2009 and 2008:

Number of Shares

Weighted Average
Grant-Date Fair Value
Per ShareOutstanding as of December 31, 2007


15,000

$
10.90Granted


120,000

$
10.70Vested


(7,500
)
$
10.90Forfeited





Outstanding as of December 31, 2008


127,500

$
10.71Granted


367,215

$
6.86Vested


(176,663
)
$
5.79Forfeited


(38,901
)
$
9.63Outstanding as of December 31, 2009


279,151

$
8.76Granted


709,373

$
3.12Vested


(143,485
)
$
5.71Forfeited


(132,137
)
$
6.95Outstanding as of December 31, 2010


712,902

$
4.09


The
fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Our determination of the fair value of each stock option is
affected by our stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected
stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the
years ended December 31, 2010, 2009 and 2008, and assumptions used to value stock options, are as follows:

For the Years Ended December 31,2010

2009

2008Dividend yield








Risk-free interest rate


2.5
%

2.6
%

3.1
%Weighted average volatility


91.5
%

85.0
%

65.5
%Expected life (in years)


6.3


6.5


6.5Weighted average grant date fair value per share of options granted

$
2.75

$
5.64

$
7.18


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

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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

18. SHARE-BASED COMPENSATION (Continued)

During
the years ended December 31, 2010 and 2009, the Company utilized a standard volatility assumption of 91.5% and 85.0%, respectively, for estimating the fair value of stock
options awarded based on comparable volatility averages for the energy related sector.

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

During
the years ended December 31, 2010 and 2009, the Company utilized a forfeiture rate of 25% and 10%, respectively, for estimating the forfeitures of stock options granted.
During the second quarter of 2010, the Company revised its forfeiture rate to 25% based upon the Company's historical forfeiture rates. The revision to the Company's forfeiture was applied to stock
options and restricted stock units outstanding as of June 30, 2010 and on a prospective basis.

The
following table summarizes share-based compensation expense included in our consolidated statements of operations for the years ended December 31, 2010, 2009 and 2008 as
follows:

For the Years Ended
December 31,2010

2009

2008Share-based compensation expense:Selling, general and administrative

$
1,668

$
2,805

$
1,999Income tax benefit(1)








Net effect of share-based compensation expense on net loss

$
1,668

$
2,805

$
1,999Reduction in earnings per share:Basic and diluted earnings per share(2)

$
0.02

$
0.03

$
0.02


(1)Income
tax benefit is not illustrated because the Company is currently operating at a loss and an actual income tax benefit was not realized for the years
ended December 31, 2010, 2009 and 2008. The result of the loss situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the valuation allowance.(2)Diluted
earnings per share for the years ended December 31, 2010, 2009 and 2008 does not include common stock equivalents due to their
anti-dilutive nature as a result of the Company's net losses for these respective periods. Accordingly, basic earnings per share and diluted earnings per share are identical for all
periods presented.


As
of December 31, 2010, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and restricted stock
units, in the amount of approximately $4,093 will be recognized through the year 2015. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted
stock by issuing new shares of common stock.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

19. SEGMENT REPORTING

In December 2009, the Company revised its reporting segment presentation into four reportable operating segments: Towers, Gearing, Technical and Engineering Services, and Logistics. In
December
of 2010, the Company's Board of Directors approved a plan to divest its Logistics business segment; consequently, this business unit is now reported as a Discontinued Operation and the Company has
revised its segment presentation to include three reportable operating segments: Towers, Gearing, and Services (previously Technical and Engineering Services). All current and prior period financial
results have been revised to reflect these changes.

The
Company's segments and their product and service offerings are summarized below:

Towers

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

Gearing

The Company manufactures high precision gearing systems for wind turbines and custom-engineered gearing systems and gearboxes for
energy, mining and other industrial customers. The Company uses an integrated manufacturing process, which includes machining processes in Cicero, Illinois, heat treatment in Neville Island,
Pennsylvania and a finishing process in the Cicero factory.

Services

The Company offers technical and precision repair and engineering services to developers and operators of wind farms and manufacturers
of wind turbines. Technical services offerings include construction support, and operations and maintenance services for wind farm developers and operators. Precision repair and engineering services
include repair and refurbishment of complex systems and components of wind turbines, including control systems, drivetrains and blades. The Company's primary service locations are in Illinois,
California, South Dakota and Texas. During
2010, the Company approved an investment of approximately $7 million to develop a dedicated drivetrain service center in Abilene, Texas, focused on servicing the growing installed base of MW
wind turbines as they come off warranty. The drivetrain service center was dedicated and put into operation in February 2011.

Corporate and Other

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

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

19. SEGMENT REPORTING (Continued)

Summary
financial information by reportable segment is as follows:

Revenues For the Years Ended

Operating (Loss) Profit
For the Years EndedSegments:

2010

2009

2008

2010

2009

2008Towers

$
76,150

$
93,316

$
72,561

$
(11,436
)
$
(499
)
$
5,813Gearing


48,996


64,518


104,553


(13,678
)

(97,058
)

(6,614
)Services


12,090


27,575


31,249


(34,747
)

(610
)

(1,822
)Corporate and Other(1)


(340
)

(611
)

(1,014
)

(9,366
)

(14,086
)

(19,251
)$
136,896

$
184,798

$
207,349

$
(69,227
)
$
(112,253
)
$
(21,874
)




Depreciation and Amortization
For the Years Ended

Capital Expenditures
For the Years Ended2010

2009

2008

2010

2009

2008Segments:Towers

$
3,416

$
3,393

$
1,625

$
2,113

$
10,295

$
47,524Gearing


9,970


15,929


15,340


1,398


262


26,566Services


2,909


3,250


3,024


3,283


485


3,267Corporate and Other(1)


168


124


101


99


229


1,735$
16,463

$
22,696

$
20,090

$
6,893

$
11,271

$
79,092




Total Assets as of
December 31,2010

2009Segments:Towers

$
76,931

$
80,146Gearing


81,336


92,665Services


10,480


36,417Assets held for sale


6,847


19,997Corporate and Other(2)


7,912


2,263$
183,506

$
231,488


(1)"Corporate
and Other" includes corporate administrative expenses and intercompany eliminations. Corporate selling, general and administrative expenses
includes corporate salaries and benefits, share-based compensation, and professional fees.(2)"Corporate
and Other" includes assets of the corporate headquarters and intercompany eliminations.


The
Company generates revenues entirely from transactions completed in the U.S. and its long-lived assets are predominantly located in the U.S. During 2010, two customers
each accounted for more than 10% of total net revenues. During the years ended December 31, 2010, 2009, and 2008, five customers accounted for 78%, 73% and 79%, respectively, of total net
revenues.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

20. EMPLOYEE BENEFIT PLANS

Retirement Savings and Profit Sharing Plans

Prior to January 1, 2009, the Company and each of its business units had defined contribution or profit sharing 401(k)
retirement savings plans with varying levels of contributions.

Effective
January 1, 2009, the Company replaced all of its 401(k) retirement savings plans with one defined contribution 401(k) safe harbor plan covering substantially all of the
Company's non-union employees. Under this plan, an eligible employee may elect to contribute a portion of salary on a pre-tax basis, subject to federal statutory limitations.
The plan requires the Company to make basic matching contributions equal to 100% of the first 3% of the eligible participant's plan compensation contributed as elective deferral contributions and 50%
of the next 2% of the eligible participant's plan compensation contributed as an elective deferral contribution. Under the plan, elective deferrals and basic company matching will be 100% vested at
all times. Effective in the fourth quarter of 2009 and for all subsequent Company matching contributions, the Company began funding these contributions in shares of the Company's common stock in lieu
of a cash contribution. For the Company's union employees, the Company continued its discretionary match in an amount up to 50% of each participant's first 4% of compensation contributed, per the
collective bargaining agreement.

Effective
January 1, 2010, based on the collective bargaining agreement with the Brad Foote union employees in Pennsylvania, the discretionary match changed to 100% of the first
3% of the eligible participant's plan compensation contributed as elective deferral contributions and 50% of the next 2% of the eligible participant's plan compensation contributed as an elective
deferral contribution.

For
the years ended December 31, 2010, 2009 and 2008, the Company recorded expense under these plans of approximately $636, $721 and $368, respectively.

Deferred Compensation Plan

The Company maintains a deferred compensation plan for certain key employees and nonemployee directors, whereby certain wages earned,
compensation for services rendered, and discretionary company-matching contributions may be deferred and deemed to be invested in the Company's common stock. Changes in the fair value of the plan
liability are recorded as charges or credits to compensation expense. Compensation expense associated with the deferred compensation plan recorded during the years ended December 31, 2010,
2009, and 2008, was ($154), $64 and ($90), respectively. The fair value of the plan liability to the Company is included in accrued liabilities in our consolidated balance sheets. As of
December 31, 2010 and 2009, the fair value of plan liability to the Company was $61 and $215, respectively.

In
addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance
benefits to employees.

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

21. QUARTERLY FINANCIAL SUMMARY (UNAUDITED)

The following table provides a summary of selected financial results of operations by quarter for the years ended December 31, 2010 and 2009 as follows:

2010

First

Second

Third

FourthRevenues

$
21,743

$
33,580

$
34,022

$
47,551Gross (loss) profit


(3,496
)

214


(221
)

5,449Operating loss


(12,066
)

(12,198
)

(7,798
)

(37,165
)Loss from continuing operations, net of tax


(11,991
)

(13,200
)

(7,260
)

(37,302
)Net loss


(14,124
)

(14,181
)

(8,299
)

(48,571
)Loss from continuing operations per share:Basic and Diluted


(0.11
)

(0.12
)

(0.07
)

(0.36
)Net loss per share:Basic and Diluted

$
(0.14
)
$
(0.13
)
$
(0.08
)
$
(0.45
)




2009

First

Second

Third

FourthRevenues

$
50,370

$
47,728

$
54,549

$
32,151Gross profit (loss)


4,680


2,684


5,869


(1,329
)Operating loss


(6,185
)

(9,849
)

(4,591
)

(91,628
)Loss from continuing operations, net of tax


(6,246
)

(4,546
)

(5,005
)

(91,229
)Net loss


(7,150
)

(5,426
)

(4,944
)

(92,599
)Loss from continuing operations per share:Basic and Diluted


(0.06
)

(0.05
)

(0.05
)

(0.95
)Net loss per share:Basic and Diluted

$
(0.07
)
$
(0.06
)
$
(0.05
)
$
(0.96
)


22. SUBSEQUENT EVENTS

Legal Proceedings

On February 11, 2011, a putative class action was filed in the United States District Court for the Northern District of
Illinois, Eastern Division, against Broadwind and certain of its current or former officers and directors. The lawsuit is purportedly brought on behalf of purchasers of the Company's common stock
between March 17, 2009 and August 9, 2010. The complaint seeks to allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act by issuing a series of allegedly false and/or misleading statements concerning
the Company's financial results, operations, and prospects, including with respect to the January 2010 secondary public offering of the Company's common stock. Between February 15, 2011 and
March 9, 2011, three putative shareholder derivative lawsuits were filed in the United States District Court for the Northern District of Illinois, Eastern Division, and one putative
shareholder derivative lawsuit was filed in the Circuit Court of Cook County, Illinois, Chancery Division, against certain of the Company's current and former officers and directors, and certain
Tontine entities, seeking to challenge alleged breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, including in connection with the January 2010 secondary public offering of
the Company's common stock. One of the lawsuits also alleges that certain directors violated Section 14(a) of the Exchange Act in connection with our Proxy Statement for our 2010

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BROADWIND ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2010, 2009, and 2008

(in thousands, except share and per share data)

22. SUBSEQUENT EVENTS (Continued)

Annual
Meeting of Stockholders. Because of the preliminary nature of these lawsuits, the Company is not able to estimate a loss or range of loss, but it expects, based on currently available
information, that any liability resulting from these claims would be substantially covered by its insurance policies.

Environmental Compliance and Remediation Liabilities

The Company is aware of an investigation commenced by the United States Attorney's Office, Northern District of Illinois, for potential
violation of federal environmental laws. On February 15, 2011, officials from the United States Environmental Protection Agency conducted a search of one of the Company's facilities in Cicero,
Illinois. During the search, officials interviewed a number of the Company's employees and seized documents relating to the facility's compliance with certain environmental laws and regulations. Also
on February 15, 2011, the Company received a subpoena requesting production of certain documents relating to the facility's compliance with certain environmental regulations relating to the
generation, discharge and disposal of wastewater from certain of the Company's processes from 2004 to the present. The Company is in the process of responding to this subpoena, which response is
currently due on March 24, 2011. On February 23, 2011, the Company also received an additional subpoena requesting production of certain documents relating to certain of the Company's
employees and environmental and manufacturing processes. The Company is in the process of responding to this subpoena, and has requested an extension of the time allotted to respond. Such extensions
are generally granted as a matter of routine, but the Company has not yet
received a new date by which such response will be due. The Company does not currently have information as to when the investigation may be concluded, and it is also conducting an internal
investigation of any possible noncompliance. At this time, the Company has not been formally notified that it is a subject or target of the investigation and no fines or penalties have been suggested.
There can be no assurances that the conclusion of the investigation will not result in a determination that the Company has violated applicable laws. If the Company is found to have violated such
laws, it could be subject to fines, civil penalties and criminal penalties. The Company has recorded a liability of $675 at December 31, 2010, which represents the low end of its estimate of
costs and expenses which have been incurred, or which are expected to be incurred during 2011 in connection with this matter. Due to the preliminary nature of the Company's investigation, it is
reasonably possible that the estimate of the obligation may change in the near term.

Sale of Logistics Business

On March 4, 2011, the Company completed the sale of its logistics business, through the sale of its Badger subsidiary, to BTI
Logistics, LLC ("BTI Logistics"). Proceeds from the sale included $1.0 million in cash, a $1.5 million secured promissory note and 100,000 shares of Broadwind common stock held by
the buyer. In addition, BTI Logistics assumed approximately $2.9 million of debt and capital leases, plus approximately $1.6 million of operating lease obligations. The purchase price is
subject to final working capital adjustments. In connection with the sale, the AP Agreement between Badger and Wells Fargo, and the guaranty provided by Badger to Wells Fargo with respect to the other
AP Agreements were each terminated, pursuant to an Omnibus Amendment to Account Purchase Agreements and Guaranties dated as of March 4, 2011, by and among the Company, the Subsidiaries and
Wells Fargo.

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INDEX TO EXHIBITS

Exhibit
Number

Description2.1

Share Exchange Agreement by and among Blackfoot Enterprises, Inc. and the shareholders of Tower Tech Systems Inc. and Tower Tech Systems Inc. dated as of November 7, 2005 (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K filed November 21, 2005)2.2

Stock Purchase Agreement dated September 13, 2007 among the Company, R.B.A. Inc. and the stockholders of R.B.A. Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K filed September 17, 2007)2.3

Stock Purchase Agreement dated August 22, 2007 among the Company, Brad Foote Gear Works, Inc. and the shareholders of Brad Foote Gear Works, Inc. (incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed August 24, 2007)2.4

Stock Purchase Agreement dated April 24, 2008 among Broadwind Energy, Inc., Badger Transport, Inc. and the shareholders of Badger Transport, Inc. (incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K filed April 30, 2008)2.5

Membership Interest Purchase Agreement dated December 9, 2007 among the Company, Energy Maintenance Service, LLC, Joseph A. Kolbach and the members of Energy Maintenance Service, LLC (incorporated by
reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed December 13, 2007)2.6

Amendment No. 1 to the Membership Interest Purchase Agreement dated December 9, 2007 among the Company, Energy Maintenance Service, LLC, Joseph A. Kolbach and the members of Energy Maintenance Service,
 LLC (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed January 14, 2008)2.7

Stock Purchase Agreement dated March 4, 2011 among Broadwind Energy, Inc., Badger Transport, Inc. and BTI Logistics, LLC (incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed March 10, 2011)3.1

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008)3.2

Amended and Restated Bylaws, as amended and restated through November 3, 2010 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed November 5, 2010)10.1

Form of Irrevocable Proxy of each of Christopher Allie, Raymond L. Brickner, III, Terence P. Fox and Daniel P. Wergin, each dated March 1, 2007, pursuant to the Securities Purchase Agreement by and among Tontine
Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P. and Tower Tech Holdings Inc. dated March 1, 2007 (incorporated by reference to Exhibit 5 to Schedule 13D filed by Tontine Capital Partners, L.P.,
Tontine Capital Management, L.L.C., Tontine Capital Overseas Master Fund, L.P., Tontine Capital Overseas GP, L.L.C. and Jeffrey L. Gendell on March 5, 2007)10.2

Proxy Agreement between Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., J. Cameron Drecoll, Patrick Rosmonowski, Dennis Palmer and Noel Davis dated August 22, 2007
(incorporated by reference to Exhibit 4 to Schedule 13D filed by J. Cameron Drecoll on October 26, 2007)


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Exhibit
Number

Description10.3

Lease Agreement dated December 26, 2007 between Tower Tech Systems Inc. and City Centre, LLC (incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2007)10.4

Purchase Agreement Addendum effective February 11, 2008 between Brad Foote Gear Works, Inc. and BFG Cicero LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed February 21, 2008)10.5

Assignment and Assumption of Purchase Agreement effective February 11, 2008 between Brad Foote Gear Works, Inc. and 1309 South Cicero Avenue, LLC (incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K filed February 21, 2008)10.6

Purchase Agreement effective February 11, 2008 between Brad Foote Gear Works, Inc. and BFG Pittsburgh LLC (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K
filed February 21, 2008)10.7

Assignment and Assumption of Purchase Agreement effective February 11, 2008 between Brad Foote Gear Works, Inc. and 5100 Neville Road, LLC (incorporated by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K filed February 21, 2008)10.8

Securities Purchase Agreement dated March 1, 2007 among the Company, Tontine Capital Partners, L.P. and Tontine Capital Overseas Master Fund, L.P. (incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K filed March 5, 2007)10.9

Securities Purchase Agreement dated August 22, 2007 among the Company, Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine Overseas Fund,
 Ltd. and Tontine 25 Overseas Master Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 24, 2007)10.10

Amended and Restated Securities Purchase Agreement dated January 3, 2008 by and among the Company, Tontine Capital Partners, L.P., Tontine Partners, L.P., and Tontine 25 Overseas Master Fund, L.P.
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 4, 2008)10.11

Securities Purchase Agreement dated April 22, 2008 between Broadwind Energy, Inc., Tontine Capital Partners, L.P., Tontine Partners, L.P., Tontine Overseas Fund, Ltd., and Tontine 25 Overseas
Master Fund, L.P. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed April 28, 2008)10.12

Securities Purchase Agreement dated April 22, 2008 between Broadwind Energy, Inc. and Charles H. Beynon (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed
April 28, 2008)10.13

Registration Rights Agreement dated March 1, 2007 among the Company, Tontine Capital Partners, L.P., and Tontine Capital Overseas Master Fund, L.P. (incorporated by reference to Exhibit 10.3 to the
Company's Current Report on Form 8-K filed March 5, 200710.14

Amendment to Registration Rights Agreement dated October 19, 2007 among the Company, Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine
Overseas Fund, Ltd. and Tontine 25 Overseas Master Fund, L.P. (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed October 24, 2007)


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Exhibit
Number

Description10.15

Amendment No. 2 to Registration Rights Agreement among the Company, Tontine Capital Partners L.P., Tontine Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine 25 Overseas Master Fund,
 L.P., and Tontine Overseas Fund, Ltd. dated July 18, 2008 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed July 23, 2008)10.16

Amendment No. 3 to Registration Rights Agreement among the Company, Tontine Capital Partners L.P., Tontine Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine 25 Overseas Master
Fund, L.P., and Tontine Overseas Fund, Ltd. dated September 12, 2008 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed September 12, 2008)10.17

Amendment No. 4, dated October 31, 2008, to Registration Rights Agreement dated March 1, 2007 and amended October 19, 2007, July 18, 2008 and September 12, 2008, among Broadwind Energy,
 Inc., Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine Overseas Fund, Ltd. and Tontine 25 Overseas Master Fund, L.P. (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K filed November 4, 2008)10.18

Waiver relating to Registration Rights Agreement, dated January 9, 2009, by Tontine Capital Partners, L.P., Tontine Capital Overseas Master Fund, L.P., Tontine Partners, L.P., Tontine Overseas Fund,
 Ltd. and Tontine 25 Overseas Master Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed January 15, 2009)10.19

Registration Rights Agreement dated October 19, 2007 among the Company, J. Cameron Drecoll, Pat Rosmonowski, Dennis Palmer and Noel Davis (incorporated by reference to Exhibit 10.2 to the Company's Current
Report on Form 8-K filed October 24, 2007)10.20

Registration Rights Agreement dated January 16, 2008 among the Company, EMS, Inc., Fagen, Inc., Joseph A. Kolbach and Daniel A. Yarano (incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K filed January 23, 2008)10.21

Registration Rights Agreement dated April 24, 2008 between Broadwind Energy, Inc. and Charles H. Beynon (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed
April 28, 2008)10.22

Registration Rights Agreement dated June 4, 2008 between Broadwind Energy, Inc. and the shareholders of Badger Transport, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K filed June 10, 2008)10.23

Employment Agreement dated as of August 1, 2008 between the Company and Jesse E. Collins, Jr. (incorporated by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K filed January 14,
 2010)10.24

Employment Agreement dated as of June 30, 2008 between the Company and J.D. Rubin (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed March 16,
2009)10.25

Employment Agreement dated as of July 29, 2009 between the Company and Stephanie K. Kushner (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 3,
2009)10.26

Employment Agreement dated as of November 15, 2010 between Broadwind Energy, Inc. and Peter C. Duprey (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed
November 15, 2010)


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Exhibit
Number

Description10.27

Consulting Agreement dated as of November 15, 2010 between Broadwind Energy, Inc. and J. Cameron Drecoll (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed
November 15, 2010)10.28

Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed October 26, 2007)10.29

2007 Equity Incentive Plan, as amended through June 9, 2009 (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 filed June 17, 2009)10.30

Form of Executive Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.31

Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.32

Form of Nonqualified Option Agreement (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.33

Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.34

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.35

Form of Performance Award Agreement (incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.36

Form of Stock Appreciation Rights Agreement (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)10.37

Broadwind Energy, Inc. Executive Short-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 16, 2009)10.38

Commercial Security Agreement dated October 4, 2007 between Tower Tech Systems Inc. and Investors Community Bank (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007)10.39

Guaranty dated October 22, 2008 by the Company to Investors Community Bank for Tower Tech Systems Inc. (incorporated by reference to Exhibit 10.57 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2008)10.40

Agreement Governing Extensions of Credit dated April 22, 2009 between Investors Community Bank and R.B.A. Inc. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2009)10.41

Master Amendment dated as of December 30, 2009 among Investors Community Bank, Tower Tech Systems Inc., and Broadwind Energy, Inc. (incorporated by reference to Exhibit 10.63 to the Company's
Registration Statement on S-1 filed on January 5, 2010)10.42

Construction Loan Agreement, dated April 28, 2009, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed May 1, 2009)


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Exhibit
Number

Description10.43

Promissory Note, dated April 28, 2009, from Tower Tech Systems Inc. to Great Western Bank (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed May 1,
2009)10.44

Letter Agreement, dated April 28, 2009, by and among Broadwind Energy, Inc., Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.96 to Amendment No. 1 to
the Company's Registration Statement on Form S-1)10.45

Commercial Security Agreement, dated April 28, 2009, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.4 to the Company's Current Report on
Form 8-K filed May 1, 2009)10.46

Mortgage, dated April 28, 2009, from Tower Tech Systems Inc. to Great Western Bank (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed May 1,
2009)10.47

Assignment of Deposit Account, dated April 28, 2009, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.6 to the Company's Current Report on
Form 8-K filed May 1, 2009)10.48

Subordination Agreement, dated April 27, 2009, by and between Broadwind Energy, Inc. and Great Western Bank (incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K
filed May 1, 2009)10.49

Commercial Guaranty, dated April 27, 2009, from Broadwind Energy, Inc. to Great Western Bank (incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K filed May 1,
2009)10.50

Change in Terms Agreement, dated December 22, 2009, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.69 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2009)10.51

Letter Agreement, dated December 22, 2009, by and among Broadwind Energy, Inc., Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.70 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2009)10.52

Change in Terms Agreement, dated February 16, 2010, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.71 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2009)10.53

Letter Agreement, dated February 16, 2010, by and among Broadwind Energy, Inc., Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.72 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2009)10.54

Letter Agreement, dated April 5, 2010, by and among Broadwind Energy, Inc., Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2010)10.55

Amendment to Mortgage, dated April 5, 2010, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 201010.56

Business Loan Agreement, dated April 5, 2010, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2010


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Exhibit
Number

Description10.57

Change in Terms Agreement, dated April 5, 2010, by and between Tower Tech Systems Inc. and Great Western Bank (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2010)10.58

Amended and Restated Lease for Industrial/Manufacturing Space, dated as of May 1, 2010, by and between Tower Tech Systems Inc. and City Centre, L.L.C. (incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 201010.59

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)10.60

Form of Account Purchase Agreement, dated as of September 28, 2010, between Wells Fargo Bank, National Association and each of Badger Transport, Inc.; Brad Foote Gear Works, Inc.; Energy Maintenance
Service, LLC; and Tower Tech Systems Inc. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 201010.61

Form of Continuing Guaranty, dated as of September 28, 2010, executed by each of Badger Transport, Inc.; Brad Foote Gear Works, Inc.; Energy Maintenance Service, LLC; and Tower Tech
Systems Inc. in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010)10.62

Continuing Guaranty, dated as of September 28, 2010, executed by Broadwind Energy, Inc. in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010)10.63

First Amendment to Master Amendment, dated as of December 30, 2010, by and among Investors Community Bank, Tower Tech Systems Inc., and Broadwind Energy, Inc. (filed herewith)10.64

Omnibus Amendment to Account Purchase Agreements and Guaranties dated as of March 4, 2011 by and among Badger Transport, Inc., Brad Foote Gear Works, Inc., Broadwind Services, LLC (f/k/a Energy
Maintenance Service, LLC), Broadwind Towers, Inc. (f/k/a Tower Tech Systems Inc.), Broadwind Energy, Inc., and Wells Fargo Bank, National Association (filed herewith)21.1

Subsidiaries of Broadwind Energy, Inc. (filed herewith)23.1

Consent of Grant Thornton LLP (filed herewith)31.1

Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)31.2

Rule 13a-14(a) Certification of Chief Financial Officer (filed herewith)32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer (filed herewith)32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer (filed herewith)


Indicates
management contract or compensation plan or arrangement.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 16th day of March, 2011.

BROADWIND ENERGY, INC.By:

/s/ PETER C. DUPREY PETER C. DUPREY President and Chief Executive Officer
(Principal Executive Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

SIGNATURE

TITLE

DATE/s/ PETER C. DUPREY Peter C. Duprey

President and Chief Executive Officer and Director
(Principal Executive Officer)

March 16, 2011/s/ STEPHANIE K. KUSHNER Stephanie K. Kushner

Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

March 16, 2011/s/ DAVID P. REILAND David P. Reiland

Director and Chairman of the Board

March 16, 2011/s/ TERENCE P. FOX Terence P. Fox

Director

March 16, 2011/s/ CHARLES H. BEYNON Charles H. Beynon

Director

March 16, 2011/s/ WILLIAM T. FEJES, JR. William T. Fejes, Jr.

Director

March 16, 2011


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