UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)


x  QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
quarterly period ended:  March 31, 2009





OR





o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE EXCHANGE ACT





Commission
file number: 333-141010





JUHL WIND,
INC.


(Name of
small business issuer in its charter)





Delaware
              
              20-4947667(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)





996
      190th AvenueWoodstock, Minnesota
              
              56186(Address
      of principal executive offices)
              
              (Zip
      code)




Issuer's
telephone number: (507)
777-4310




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.




Yes x   No o




Indicate
by check mark whether the registrant 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                       
      oNon-accelerated
      filer                                             o
              
              Smaller
      reporting company      x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes o No x




Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:




Common
Stock:   20,285,637 shares outstanding as of March 31,
2009.







TABLE OF
CONTENTS





PART
      I - FINANCIAL INFORMATION
                
                
                1Item
      1. Unaudited Financial Statements
                
                
                1Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
                
                
                17Item
      3. Quantitative and Qualitative Analysis About Market Risk
                
                
                33Item
      4. Controls and Procedures
                
                
                33PART
      II - OTHER INFORMATION
                
                
                35Item
      1. Legal Proceedings
                
                
                35Item
      1A. Risk Factors
                
                
                35Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                
                
                35Item
      3. Defaults Upon Senior Securities
                
                
                35Item
      4. Submission of Matters to a Vote of Security Holders
                
                
                35Item
      5. Other Information
                
                
                35Item
      6. Exhibits
                
                
                36Signatures
                
                
                37Exhibits







PART I - FINANCIAL
INFORMATION




Item 1.
              FINANCIAL
      STATEMENTS (UNAUDITED)





The
accompanying unaudited financial statements of Juhl Wind, Inc. (“Juhl Wind” or
the “Company”) have been prepared in accordance with generally accepted
accounting principles in the United States for interim financial reporting and
pursuant to the rules and regulations of the Securities and Exchange Commission
("Commission"). While these statements reflect all normal recurring adjustments
which are, in the opinion of management, necessary in order to make the
financial statements not misleading and for fair presentation of the results of
the interim period, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. For further information, refer to the financial statements and
footnotes thereto, for the fiscal year ended December 31, 2008, previously filed
with the Commission, which are included in the Annual Report on Form 10-K filed
on or about March 31, 2009.


1




JUHL WIND INC.
 CONSOLIDATED
BALANCE SHEETS
 MARCH
31, 2009 AND DECEMBER 31, 2008
 
 MARCH
      31
                            
                            
                            DECEMBER
      312009
                            
                            
                            2008(unaudited)ASSETSCURRENT
      ASSETSCash
                            
                            $
                            1,193,520
                            
                            
                            $
                            1,310,789Restricted
      Cash
                            
                            
                            230,016
                            
                            
                            
                            264,557Accounts
      ReceivableNet
      of an allowance of $10,000 at March 31, 2009 and December 31,
      2008
                            
                            
                            49,548
                            
                            
                            
                            44,007Short
      Term Investments and accrued interest receivable
                            
                            
                            1,325,992
                            
                            
                            
                            1,306,775Short
      Term Investments - Restricted
                            
                            
                            700,000
                            
                            
                            
                            700,000Unbilled
      Receivables at net realizable value
                            
                            
                            216,424
                            
                            
                            
                            250,699Inventory
                            
                            
                            321,578
                            
                            
                            
                            403,118Reimbursable
      Project Costs
                            
                            
                            79,619
                            
                            
                            
                            147,800Other
      Current Assets
                            
                            
                            32,549
                            
                            
                            
                            97,727Current
      Deferred Income Taxes
                            
                            
                            335,000
                            
                            
                            
                            422,000TOTAL
      CURRENT ASSETS
                            
                            
                            4,484,246
                            
                            
                            
                            4,947,472PROPERTY
      AND EQUIPMENT (Net)
                            
                            
                            369,434
                            
                            
                            
                            344,124GOODWILL
                            
                            
                            227,998
                            
                            
                            
                            227,998OTHER
      ASSETSDeferred
      Income Tax Asset
                            
                            
                            101,000
                            
                            
                            
                            14,000Project
      Development Costs
                            
                            
                            302,000
                            
                            
                            
                            302,000Intangible
      Assets
                            
                            
                            15,000
                            
                            
                            
                            72,000TOTAL
      OTHER ASSETS
                            
                            
                            418,000
                            
                            
                            
                            388,000TOTAL
      ASSETS
                            
                            $
                            5,499,678
                            
                            
                            $
                            5,907,594LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      Payable
                            
                            $
                            523,834
                            
                            
                            $
                            250,285Accrued
      Expenses
                            
                            
                            353,805
                            
                            
                            
                            346,019Deferred
      Revenue
                            
                            
                            305,168
                            
                            
                            
                            332,541Notes
      Payable
                            
                            
                            696,791
                            
                            
                            
                            646,791TOTAL
      CURRENT LIABILITIES
                            
                            
                            1,879,598
                            
                            
                            
                            1,575,636WARRANT
      LIABILITY
                            
                            $
                            11,227,111
                            
                            
                            $
                            -SERIES
      A CONVERTIBLE PREFERRED STOCK$.0001
      par value, 20,000,000 authorized, 5,160,000 issued and outstanding as of
      December 31, 2008
                            
                            $
                            -
                            
                            
                            $
                            3,342,954STOCKHOLDERS'
      EQUITYSeries
      A Convertible Preferred Stock - $.0001 par value, 20,000,000 authorized,
      5,160,000 issued and outstanding at March 31, 2009
                            
                            
                            2,703,742
                            
                            
                            
                            -Common
      Stock - $.0001 par value; 100,000,000 shares authorized, 20,285,637 issued
      and outstanding as of March 31, 2009
                            
                            
                            2,028
                            
                            
                            
                            2,018Additional
      Paid-In Capital
                            
                            
                            1,609,394
                            
                            
                            
                            2,740,788Accumulated
      Deficit
                            
                            
                            (11,922,195
                            )
                            
                            
                            (1,753,802
                            )TOTAL
      STOCKHOLDERS' EQUITY
                            
                            
                            (7,607,031
                            )
                            
                            
                            989,004TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                            
                            $
                            5,499,678
                            
                            
                            $
                            5,907,594
 
 The
accompanying notes are an integral part of these statements.
  2
 
 JUHL WIND INC.
 CONSOLIDATED
STATEMENT OF OPERATIONS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 2009
                                      
                                      
                                      2008(unaudited)
                                      
                                      
                                      (unaudited)REVENUEWind
      Farm Development and Management
                                      
                                      $
                                      131,854
                                      
                                      
                                      
                                      37.9
                                      %
                                      
                                      $
                                      139,298
                                      
                                      
                                      
                                      29.1
                                      %Turbine
      Sales & Service
                                      
                                      
                                      193,708
                                      
                                      
                                      
                                      55.6
                                      
                                      
                                      
                                      316,433
                                      
                                      
                                      
                                      66.0Related
      Party Revenue
                                      
                                      
                                      21,985
                                      
                                      
                                      
                                      6.3
                                      
                                      
                                      
                                      21,765
                                      
                                      
                                      
                                      4.5Other
      Operating Income
                                      
                                      
                                      729
                                      
                                      
                                      
                                      0.2
                                      
                                      
                                      
                                      1,834
                                      
                                      
                                      
                                      0.4TOTAL
      REVENUE
                                      
                                      
                                      348,276
                                      
                                      
                                      
                                      100.0
                                      
                                      
                                      
                                      479,330
                                      
                                      
                                      
                                      100.0COST
      OF GOODS SOLD
                                      
                                      
                                      171,152
                                      
                                      
                                      
                                      49.1
                                      
                                      
                                      
                                      157,848
                                      
                                      
                                      
                                      32.9GROSS
      PROFIT
                                      
                                      
                                      177,124
                                      
                                      
                                      
                                      50.9
                                      
                                      
                                      
                                      321,482
                                      
                                      
                                      
                                      67.1OPERATING
      EXPENSESGeneral
      and Administrative Expenses
                                      
                                      
                                      463,603
                                      
                                      
                                      
                                      133.1
                                      
                                      
                                      
                                      48,563
                                      
                                      
                                      
                                      10.1Investor
      Relations Expenses
                                      
                                      
                                      34,826
                                      
                                      
                                      
                                      10.0
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Payroll
      and Employee Benefits
                                      
                                      
                                      397,769
                                      
                                      
                                      
                                      114.2
                                      
                                      
                                      
                                      76,507
                                      
                                      
                                      
                                      16.0Windfarm
      Management Expenses
                                      
                                      
                                      102,177
                                      
                                      
                                      
                                      29.3
                                      
                                      
                                      
                                      51,019
                                      
                                      
                                      
                                      10.6TOTAL
      OPERATING EXPENSES
                                      
                                      
                                      998,375
                                      
                                      
                                      
                                      286.7
                                      
                                      
                                      
                                      176,089
                                      
                                      
                                      
                                      36.7OPERATING
      INCOME (LOSS)
                                      
                                      
                                      (821,251
                                      )
                                      
                                      
                                      (235.8
                                      )
                                      
                                      
                                      145,393
                                      
                                      
                                      
                                      30.4OTHER
      INCOME (EXPENSE)Interest
      Income
                                      
                                      
                                      24,203
                                      
                                      
                                      
                                      7.0
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Interest
      Expense
                                      
                                      
                                      (8,668
                                      )
                                      
                                      
                                      (2.5
                                      )
                                      
                                      
                                      (8,095
                                      )
                                      
                                      
                                      (1.7
                                      )Gain
      in fair value of warrant liability
                                      
                                      
                                      1,349,705
                                      
                                      
                                      
                                      387.5
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Other
      Expense
                                      
                                      
                                      300
                                      
                                      
                                      
                                      0.1
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -TOTAL
      OTHER INCOME (EXPENSE)
                                      
                                      
                                      1,365,540
                                      
                                      
                                      
                                      392.1
                                      
                                      
                                      
                                      (8,095
                                      )
                                      
                                      
                                      (1.7
                                      )INCOME
      BEFORE INCOME TAXES
                                      
                                      
                                      544,289
                                      
                                      
                                      
                                      156.3
                                      
                                      
                                      
                                      137,298
                                      
                                      
                                      
                                      28.7INCOME
      TAX PROVISION (BENEFIT )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -NET
      INCOME
                                      
                                      
                                      544,289
                                      
                                      
                                      
                                      156.3
                                      %
                                      
                                      
                                      137,298
                                      
                                      
                                      
                                      28.7
                                      %PREFERRED
      DIVIDENDS
                                      
                                      
                                      103,200
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -NET
      INCOME AVAILABLE FOR COMMON STOCKHOLDERS
                                      
                                      
                                      441,089
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      137,298WEIGHTED AVERAGE SHARES
      OUTSTANDING -
      BASIC
                                      
                                      
                                      20,285,637
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      15,250,000NET
      LOSS PER SHARE - BASIC
                                      
                                      $
                                      0.02
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      0.01WEIGHTED AVERAGE SHARES
      OUTSTANDING -
      DILUTED
                                      
                                      
                                      28,782,304
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      15,250,000NET
      LOSS PER SHARE - DILUTED
                                      
                                      $
                                      0.02
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      0.01
 
 The
accompanying notes are an integral part of these statements.
  3
 
 JUHL
WIND INC.
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR
THE QUARTER ENDED MARCH 31, 2009
 
 AdditionalCommon Stock
                    
                    
                    Preferred Stock
                    
                    
                    Paid-In
                    
                    
                    Accumulated
                    
                    
                    TotalShares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Deficit
                    
                    
                    EquityBALANCE
      - December 31, 2008
                    
                    
                    20,183,213
                    
                    
                    $
                    2,018
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    2,740,788
                    
                    
                    $
                    (1,753,802
                    )
                    
                    $
                    989,004Cumulative
      effect of accounting change (note 4)
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (529,133
                    )
                    
                    
                    (1,438,201
                    )
                    
                    
                    (10,609,482
                    )
                    
                    
                    (12,576,816
                    )ADJUSTED
      BALANCE- January 1, 2009
                    
                    
                    20,183,213
                    
                    
                    
                    2,018
                    
                    
                    
                    -
                    
                    
                    
                    (529,133
                    )
                    
                    
                    1,302,587
                    
                    
                    
                    (12,363,284
                    )
                    
                    
                    (11,587,812
                    )Removal
      of contingent redemption feature of preferred stock
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    5,160,000
                    
                    
                    
                    3,342,954
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3,342,954Net
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    544,289
                    
                    
                    
                    544,289Stock-based
      compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    93,538
                    
                    
                    
                    -
                    
                    
                    
                    93,538Common
      stock dividends issued to preferred shareholders
                    
                    
                    102,424
                    
                    
                    
                    10
                    
                    
                    
                    -
                    
                    
                    
                    (213,279
                    )
                    
                    
                    213,269
                    
                    
                    
                    -
                    
                    
                    
                    -Preferred
      dividends
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    103,200
                    
                    
                    
                    -
                    
                    
                    
                    (103,200
                    )
                    
                    
                    -BALANCE
      - March 31, 2009 (unaudited)
                    
                    
                    20,285,637
                    
                    
                    $
                    2,028
                    
                    
                    
                    5,160,000
                    
                    
                    $
                    2,703,742
                    
                    
                    $
                    1,609,394
                    
                    
                    $
                    (11,922,195
                    )
                    
                    $
                    (7,607,031
                    )
 
 The
accompanying notes are an integral part of these consolidated
statements
  4
 
 JUHL
WIND INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 2009
                  
                  
                  2008(unaudited)
                  
                  
                  (unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                  
                  $
                  544,289
                  
                  
                  $
                  137,298Adjustments
      to Reconcile Net Income to Net Cash Provided by Operating
      Activities:Depreciation
      and Amortization
                  
                  
                  69,826
                  
                  
                  
                  7,316Stock-Based
      Compensation to Employees
                  
                  
                  93,538
                  
                  
                  
                  -Gain
      on warrant liability fair value
                  
                  
                  (1,349,705
                  )
                  
                  
                  -Change
      in assets and liabilities, net of contributed company:Accounts
      Receivable
                  
                  
                  (5,541
                  )
                  
                  
                  153,777Unbilled
      Receivable
                  
                  
                  34,275
                  
                  
                  
                  (99,925
                  )Inventory
                  
                  
                  81,540
                  
                  
                  
                  44,013Reimbursable
      Project Costs
                  
                  
                  68,181
                  
                  
                  
                  -Other
      Current Assets
                  
                  
                  65,178
                  
                  
                  
                  (24
                  )Interest
      receivable on short term investments
                  
                  
                  (19,217
                  )
                  
                  
                  -Accounts
      Payable
                  
                  
                  273,549
                  
                  
                  
                  (142,520
                  )Accrued
      Expenses
                  
                  
                  7,786
                  
                  
                  
                  (59,092
                  )Deferred
      Revenue
                  
                  
                  (27,373
                  )
                  
                  
                  166,083NET
      CASH FROM (USED IN) OPERATING ACTIVITIES
                  
                  
                  (163,674
                  )
                  
                  
                  206,926CASH
      FLOWS FROM INVESTING ACTIVITIESCash
      Acquired from Community Wind Development Group, LLC
                  
                  
                  -
                  
                  
                  
                  13,108Investment
      in Project Development Costs
                  
                  
                  -
                  
                  
                  
                  (100,000
                  )Payments
      for Property and Equipment
                  
                  
                  (38,136
                  )
                  
                  
                  (2,168
                  )NET
      CASH USED IN INVESTING ACTIVITIES
                  
                  
                  (38,136
                  )
                  
                  
                  (89,060
                  )CASH
      FLOWS FROM FINANCING ACTIVITIESChange
      in restricted cash
                  
                  
                  34,541
                  
                  
                  
                  -Proceeds
      from Notes Payable
                  
                  
                  50,000
                  
                  
                  
                  -Principal
      Payments on Notes Payable
                  
                  
                  -
                  
                  
                  
                  (5,000
                  )Distributions
      to Shareholders
                  
                  
                  -
                  
                  
                  
                  (558
                  )NET
      CASH (USED IN) FROM FINANCING ACTIVITIES
                  
                  
                  84,541
                  
                  
                  
                  (5,558
                  )NET
      INCREASE (DECREASE) IN CASH
                  
                  
                  (117,269
                  )
                  
                  
                  112,308CASH
      BEGINNING OF THE PERIOD
                  
                  
                  1,310,789
                  
                  
                  
                  163,476CASH
      END OF THE PERIOD
                  
                  $
                  1,193,520
                  
                  
                  $
                  275,784NONCASH
      INVESTING ACTIVITYEquity
      Contribution of Net Assets and Liabilities of Common Owned Company by
      Shareholder
                  
                  $
                  -
                  
                  
                  $
                  5,438
 
 The
accompanying notes are an integral part of these statements.
  5




JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 1.
              BACKGROUND,
      CHANGE OF CONTROL AND BASIS OF
PRESENTATION
 
 The
accompanying unaudited condensed consolidated interim financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnotes disclosures
normally included in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been condensed or omitted as permitted by such rules and
regulations.  These financial statements and related notes should be
read in conjunction with the financial statements and notes thereto included in
the Company’s audited financial statements for the year ended December 31, 2008
and 2007 contained in Form 10-K filed with the Securities and Exchange
Commission on March 31, 2009.
 
 In the
opinion of management, the interim financial statements reflect all adjustments
considered necessary for fair presentation.  The adjustments made to
these statements consist only of normal recurring adjustments.  The
results reported in these condensed consolidated interim financial statements
should not be regarded as necessarily indicative of results that may be expected
for the year ended December 31, 2009.
 
 Juhl
Wind, Inc. (“Juhl Wind”) conducts business under three subsidiaries, DanMar and
Associates, Inc. (“DanMar”), Juhl Energy Development, Inc. (“JEDI”), and Next
Generation Power Systems, Inc. (“NextGen”). The Company provides development,
management, and consulting services to wind farm projects throughout the
Midwestern U.S. and produces consumer-owned renewable energy products. All
intercompany balances and transactions are eliminated in
consolidation.
 
 Reverse
Acquisition
 On June
24, 2008, the owners of DanMar and Associates, Inc. and Juhl Energy Development,
Inc., both privately held companies under common control, exchanged all of their
outstanding shares of common stock in the companies for 15,250,000 shares of
common stock of MH&SC, Inc., a public company.  Upon the exchange
transaction (transaction), MH&SC, Inc. changed its name to Juhl Wind, Inc.
As a result of the transaction, DanMar and Associates, Inc. and Juhl Energy
Development, Inc. (the Companies) are now wholly-owned subsidiaries of Juhl
Wind, Inc. In essence, DanMar and Associates, Inc. and Juhl Energy Development,
Inc. merged into a public shell company with no or nominal remaining operations
and no or nominal assets and liabilities. In accordance with Statement of
Financial Accounting Standards No. 141, Business Combinations,JEDI
is considered the accounting acquirer in the exchange transaction. Consequently,
the assets and liabilities and the historical operations included in the
accompanying consolidated financial statements are those of the Companies and
are recorded at its historical cost basis.
 
 Acquisition
of Next Generation Power Systems
 On
October 31, 2008, the Company acquired all of the issued and outstanding shares
of common stock of Next Generation Power Systems, Inc. (“NextGen”), a company
under common control. The assets and liabilities and the historical operations
of NextGen are included in the accompanying consolidated financial statements
for 2009 and 2008.  In
accordance with Statement of Financial Accounting Standards No. 141R, Business
Combinations, the acquisition was accounted for as a combination of entities
under common control (i.e. “as if pooling”) where the assets and liabilities of
those under common control are at historical cost and at fair value for the
noncontrolling interest.
 
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 
 CASH
 The
Company maintains cash balances at various financial institutions located in
Minnesota.  Accounts are insured by the Federal Deposit Insurance
Corporation (FDIC) up to $250,000.  At times throughout the year cash
balances may exceed the FDIC insurance limits.  In August 2008, the
Company obtained an excess deposit insurance bond to insure deposits up to
$4,500,000. The bond is effective August 2008 through February
2011.
 
 ACCOUNTS
RECEIVABLE
 Credit
terms are extended to customers in the normal course of business.  The
Company performs ongoing credit evaluations of its customers’ financial
condition and, generally, requires no collateral.
 
 Trade
accounts receivable are recorded at their estimated net realizable value, net of
an allowance for doubtful accounts. The Company follows a policy of providing an
allowance for doubtful accounts.  Based on historical experience, and
its evaluation of the current status of receivables, the Company is of the
belief that such accounts will be collectible in all material respects after
consideration of the allowance shown in the financial statements. Accounts are
considered past due if payment is not made on a timely basis in accordance with
the Company’s credit terms.  Accounts considered uncollectible are
written off.
  6
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 UNBILLED
RECEIVABLES
 Unbilled
receivables are generated when the revenue from a project has been earned by the
Company but has not been formally billed by the Company due to project relations
with the owners of the project. The unbilled receivables are recorded at their
estimated realizable value. The Company follows a policy providing an allowance
for doubtful accounts reserving for significant timing risk
and other risks associated with energy project
development.
 
 INVENTORIES
 Inventories,
consisting primarily of parts and materials relating to the production of small
scale wind turbines, are stated at the lower of average cost or market value
(average cost).
 
 REIMBURSABLE
PROJECT COSTS
 Reimbursable
project costs represent advances made on behalf of wind farm entities to assist
them in the legal or other costs incurred in the initial development stages of
their respective wind farm project.
 
 PROJECT
DEVELOPMENT COSTS
 Project
development costs represent amounts paid by the Company for projects that Juhl
Wind is the wind farm developer and project owner. Such costs are carried as a
long-term asset until such time that the Company receives a reimbursement as a
part of the permanent financing of a commissioned wind farm project, or
alternatively, upon reimbursement by new project ownership.
 
 PROPERTY
AND EQUIPMENT
 Property
and equipment are stated at cost. Major renewals and improvements are
capitalized, while replacements, maintenance and repairs which do not improve or
extend the life of the respective assets are expensed currently. Property and
equipment are being depreciated over their estimated useful lives using the
straight-line method.
 
 LONG-LIVED
ASSETS
 Long-lived
assets, such as property, plant, and equipment, and purchased intangible assets
subject to amortization, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. If circumstances require a long-lived asset be tested for possible
impairment, the Company first compares undiscounted cash flows expected to be
generated by an asset to the carrying value of the asset. If the carrying value
of the long-lived asset is not recoverable on an undiscounted cash flow basis,
impairment is recognized to the extent that the carrying value exceeds its fair
value. Fair value is determined through various valuation techniques including,
but not limited to, discounted cash flow models, quoted market values and
third-party independent appraisals.
 
 Goodwill
and other indefinite lived intangible assets are reviewed for impairment at
least annually and if events or changes in circumstances during the year
indicate that the carrying amount of the indefinite lived intangible may not be
recoverable.
 
 GOODWILL
 The
Company’s goodwill resulted from its business acquisition of the minority
interest of NextGen in October 2008. Goodwill and other intangible assets with
indefinite lives are not amortized but instead tested at least annually for
impairment. The Company must make assumptions regarding estimated future cash
flows and other factors to determine the fair value of the respective assets in
assessing the fair value of its goodwill and other intangible assets. We have
assessed the impairment of goodwill as of March 31, 2009 as required
pursuant to SFAS 142. No impairment of goodwill was considered
necessary.
 
 STOCK
OPTION PLANS
 
 Upon
issuance of employee stock options on June 24, 2008 (inception date), the
Company adopted FASB Statement No. 123(R), Share-Based Payment (Statement
123(R)). This statement replaces FASB Statement No. 123, Accounting for
Stock-Based Compensation (Statement 123) and supersedes APB No. 25. Statement
123(R) requires that all stock-based compensation be recognized as an expense in
the financial statements and that such cost be measured at the fair value of the
award. The Company recognizes compensation expense based on the estimated grant
date fair value using the Black-Scholes option-pricing model.
  7
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 The
Company accounts for unit based instruments granted to nonemployees under the
fair value method of EITF 96-18, Accounting for Equity Instruments that are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services and EITF 00-18, Accounting for Recognition for Certain
Transactions Involving Equity Instruments Granted to Other than Employees. 
Under EITF 96-18 and EITF 00-18, unit based instruments usually are recorded at
their underlying fair value.  In certain instances the fair value of the
goods or services is used to determine the value of the equity instrument as it
is a better measure of fair value.
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 The
carrying value of cash and equivalents, restricted cash, short term investments,
receivables, payables, and warrant liability approximates their fair value. The
carrying values of notes payable are based on estimates of current rates at
which the Company could borrow funds with similar remaining
maturities.
 
 USE
OF ESTIMATES
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses. The
Company uses estimates and assumptions in accounting for the following
significant matters, among others: revenue recorded from the development
agreements is a significant estimate based on a percentage of estimated project
costs; reliability of accounts receivable; valuation of deferred tax assets,
inventory, stock based compensation, goodwill, intangible asset, income tax
uncertainties, warrant liability, and other contingencies. Revenue from the
development agreements is adjusted to reflect actual costs incurred by the
project upon the commercial operation date. Accordingly, actual revenue may
differ from previously estimated amounts, and such differences may be material
to the financial statements. The Company periodically reviews estimates and
assumptions, and the effects of any such revisions are reflected in the period
in which the revision is made.
 
 REVENUE
RECOGNITION
 Consumer-owned
energy products:
 Revenue
from the sale of small wind turbines and other renewable energy systems is
recognized upon shipment to the customer and transfer of ownership. Installation
services are recognized as revenue upon completion of the installation
services.  Deposits received from customers are included as Deferred
Revenue until shipment occurs.
 
 Wind
Farm Consulting, Development and Management Services:
 Consulting
Services
 Consulting
services fees are primarily fixed fee arrangements of a short-term duration and
are recognized as revenue on a completed contract basis.
 
 Wind
Farm Development Services
 The
Company normally earns a development service fee from each of the wind farm
projects that it develops in cooperation with wind farm investors. These
development services arrangements are evaluated under EITF 00-21, Revenue Arrangements with Multiple
Deliverables, which addresses certain aspects of accounting by a vendor
for arrangements under which the vendor will perform multiple revenue generating
activities.
 The
development services fee revenue is recognized as follows:
 ·
              Proceeds
      received upon the signing of a Development Services Agreement (generally
      10% of the total expected development fee) are amortized over the expected
      period of the development process, which is generally three years. The
      amortization period is re-assessed by management as new timelines are
      established for the project in-service date, and the amortization period
      is adjusted.
 ·
              The
      remaining proceeds are allocated to the following deliverables based on
      vendor specific objective evidence (VSOE) of each item: 1) achievement of
      a signed Power Purchase Agreement (PPA) with an electrical utility, and 2)
      final commissioning of the wind farm turbines.  Management has
      determined that these deliverables have stand-alone value, and performance
      of the undelivered services are considered probable and in the control of
      the Company.
  8
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 Wind
Farm Management Services
 Revenues
earned from administrative and management services agreements are recognized as
the services are provided. The administrative and management services agreements
call for quarterly payments in advance or arrears of services rendered based on
the terms of the agreement. The administrative and management services payments
in advance are carried as deferred revenue and recognized monthly as services
are performed.
 
 EARNINGS
PER SHARE
 Basic net
income (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares outstanding during the
period.  Diluted net income per share is computed by dividing net
income by the weighted average number of shares and share equivalents
outstanding during the period. As of March 31, 2009, the Company had 8,520,000
unit equivalents outstanding relating to outstanding stock options and warrants.
As of March 31, 2008, the Company had no share equivalents
outstanding.
 
 INCOME
TAXES
 The
Company records income tax in accordance with FAS No. 109, “Accounting for
Income Taxes”.  Under the provisions of FAS 109, deferred income taxes
are provided for timing differences between financial statements and income tax
reporting, primarily from the use of accelerated depreciation methods for income
tax purposes, stock based compensation, accrued liabilities and warranty
costs.  The measurement of deferred tax assets and liabilities is
based on provisions of the enacted tax law; the effects of future changes in tax
laws or rates are not anticipated.
 
 RECLASSIFICATIONS
 Certain
reclassifications were made to the previously issued 2008 financial statements
in the statement of operations and the statement of stockholders’ equity in
order for comparability to the 2009. The 2008 financial statements have been
adjusted to show activity from the pooling of interests transaction with Next
Gen as discussed in Note 1.
 
 3.
              PRIVATE
      PLACEMENT OF SERIES A 8% CONVERTIBLE PREFERRED STOCK AND COMMON STOCK
      WARRANTS
 
 In June 2008, the Company completed a
private placement consisting of shares of newly-created series A 8% convertible
preferred stock (Series A), and detachable, five-year class A, class B and Class
C warrants to purchase shares of common stock at an exercise price of $1.25
(class A), $1.50 (class B) and $1.75 (class C) per share.  In total,
the Company sold 5,160,000 shares of Series A convertible preferred stock
(convertible at any time into a like number of shares of common stock) and class
A, class B and class C warrants to each purchase 2,580,000 shares of common
stock, or an aggregate of 7,740,000 shares of common stock.  We also
issued 2,250,000 shares of our common stock to Greenview Capital, LLC and
unrelated designees at the closing of the transaction in consideration for
merger advisory services.
 
 Conversion
Rights of Series A
 
 At any
time, each share of Series A is convertible into one share of common
stock.However, the number of shares of common stock issuable
upon conversion of Series A is subject to adjustment upon the occurrence of
certain customary events, including, among others, a stock split, reverse stock
split or combination of our common stock; an issuance of our common stock or
other securities as a dividend or distribution on the common stock; a
reclassification, exchange or substitution of the common stock; or a capital
reorganization of our company. Additionally, until June 24, 2010, the holders of
Series A will have “full-ratchet” anti-dilution price protection, with limited
exceptions for issuances under employee benefit plans and pursuant to
transactions involving a strategic partner preapproved by the holders on a
case-by-case basis. After June 24, 2010, the holders of Preferred Stock will
have “weighted average” anti-dilution price protection.
 
 Voting
Rights of Series A
 
 Holders
of Series A are not entitled to vote their shares with the holders of our common
stock, except for certain extraordinary corporate transactions, in which case
they vote as a separate class. Holders of Series A shall also have any voting
rights to which they are entitled by Delaware law.
  9
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 Liquidation
Rights of Series
A
 
 In the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
our company, including a merger or consolidation of our company with or into
another company, or any transfer, sale or lease by us of substantially all of
our assets, the holders of Series A will be entitled to receive out of our
assets available for distribution to stockholders, before any distribution is
made to holders of our common stock or any other series of our preferred stock,
liquidating distributions in an amount equal to $1.20 per share, plus accrued
but unpaid dividends.
 
 Redemption
Rights of Series A
 
 Series A
may not be redeemed by the Company or the shareholders at any
time.
 
 Dividends
Rights of Series A
 
 Series A
will be entitled to receive dividends at a rate of 8% per year, payable
quarterly in arrears in cash or shares of our common stock. The Company has
accrued dividends within equity to Series A  totaling
$103,200  as of  March 31, 2009.
 
 Certain
Covenant Rights and Registration Rights of Series A
 
 Series A
contains certain negative covenants, such as a limitation on indebtedness, a
limitation on increases in executive compensation, an incentive compensation
plan not to exceed 10% of our outstanding common equivalent shares, and
restrictions on mergers, acquisitions and other fundamental transactions,
without the prior written consent of a majority of the holders of Series
A, and certain other affirmative covenants.  All covenants expire if
Series A position held by its majority original investor falls below 20% of the
original Series A position held by it immediately following the closing of the
original offering. The Company is also required to issue registered common
shares upon conversion of Series A and exercise of the class A, class B and
class C warrants.  If the underlying shares are not registered as
required in the Series A offering document, the Corporation would be required to
pay liquidated damages of 2% of the original purchase price per each 30 day
period or part thereof for any registration default up to a maximum of
12%.
 
 The
Company recorded a liability and corresponding expense at December 31, 2008 in
the amount of $258,879 to account for estimated liquidated damages and late fees
to the holders of the Series A shares.  The liquidated damages and
late fees were related to the breach of covenants and rights contained in the
Registration Rights Agreement, primarily as a result of the Company’s delay in
successfully completing an effective registration statement, and to a lesser
extent, the timely payment of quarterly dividends.  The Company and
the holders of the Series A shares have agreed in writing in March 2009 to pay
the $258,879 in the form of shares of common stock issuable over the period
April 1 through October 1, 2009. In April 2009, the Company issued approximately
114,000 shares in payment of approximately $222,000 of this liability. The
Company anticipates that approximately 28,000 additional shares of common stock
will be issued in connection with the payment of the remaining
liability.
 
 4.
              WARRANT
      LIABILITY
 
 The
Company adopted Emerging Issues Task Force Issue No. 07-5,Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own
Stock  (“EITF 07-5”) effective January 1, 2009. The adoption of
EITF 07-5’s requirements can affect the accounting for warrants and many
convertibleinstruments with
provisions that protect holders from a decline in the stock price (or
“down-round” provisions). For example, warrants with such provisions willno longer be recorded
in equity. Down-round provisions reduce the exercise price of a warrant or
convertible instrument if a company either issues equity shares for a price that
is lower than the exercise price of those instruments or issues new warrants or
convertible instruments that have a lower exercise price. We evaluated whether
our warrants or convertible preferred stock contain provisions that protect
holders from declines in our stock price or otherwise could result in
modification of the exercise price and/or shares to be issued under the
respective warrant or preferred stock agreements based on a variable that is not
an input to the fair value of a
“fixed-for-fixed” option. The Company determined that the all of the outstanding
warrants contained such provisions thereby concluding they were not indexed to
the Company’s own stock and must now be treated as a derivative
liability.  Prior to the adoption of EITF 07-05, the warrants were
considered equity instruments.  The Company determined that while its
convertible preferred stock contains certain anti-dilution features, the
conversion feature embedded within its convertible preferred stock does not
require bifurcation under the guidance of SFAS 133.
  10
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 In
accordance with EITF 07-5, the Company, beginning on January 1, 2009, recognizes
these warrants as liabilities at their respective fair values on each reporting
date. The cumulative effect of the change in accounting for these instruments of
$12,576,816 was recognized as an adjustment to the opening balance of
stockholders’ equity at January 1, 2009. The amounts recognized in the
consolidated balance sheet as a result of the initial application of EITF 07-5
on January 1, 2009 were determined based on the amounts that would have been
recognized if EITF 07-5 had been applied from the issuance date of the
instruments and the amounts recognized in the consolidated balance sheet upon
the initial application of EITF 07-5.   In addition, the carrying
value of convertible preferred stock was reduced by $529,133 upon the adoption
of EITF 07-5.  This reduction was due to the initial valuation
allocated to preferred stock was determined using the relative fair value of
convertible preferred and the related warrants issued in the original
transaction.  If the initial transaction would have been accounted for
under EITF 07-5, the preferred stock would have been valued using its residual
value as the full fair value of the warrants would have had to been first
allocated from the net proceeds of the transaction and then the remainder to the
value of convertible preferred stock.
 
 The
Company re-measured the fair value of these instruments as of March 31, 2009,
and recorded a $1,349,705 gain to the statement of operations. The Company
determined the fair values of these securities using a Black-Scholes valuation
model and the assumptions used at March 31, 2009 are noted in the following
table:
 
 Three Months EndedMarch 31, 2009Expected
      option term
                      
                      4.25 yearsRisk-free
      interest rate
                      
                      
                      2.90
                      %Expected
      volatility
                      
                      
                      90
                      %Dividend
      yield
                      
                      
                      0
                      %
 
 Expected
volatility is based on historical volatility of peer companies operating in a
similar industry. The warrants have a transferability provision and based on
guidance provided in SAB 107 for options issued with such a provision, we used
the full contractual term as the expected term of the warrants. The risk free
rate is based on the five-year U.S. Treasury security rates.
 
 5.
              CONCENTRATIONS,
      RISKS AND UNCERTANTIES
 The
Company derived approximately 72% and 73% of its revenue from sales to six
customers in 2009 and seven customers in 2008, respectively. Also, approximately
46% and 42% of wind farm development and management revenue related to three
customers as of March 31, 2009 and 2008, respectively. At March 31, 2009 and
2008, 65% and 56% of the Company's accounts receivable were due from five and
four customers, respectively.  One customer comprises approximately
92% and 80% the Company’s unbilled receivables as of March 31, 2009 and 2008,
respectively.
 
 6.
              INVENTORIES
 Inventories
consist of the following:
 
 March 31,
                      2009
                    
                    
                    December 31,
                      2008Materials
      and supplies
                    
                    $
                    321,578
                    
                    
                    $
                    351,213Work
      –in-progress
                    
                    
                    -
                    
                    
                    
                    51,905$
                    321,578
                    
                    
                    $
                    403,118
  11
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 7.
              PROPERTY
      AND EQUIPMENT
 Property
and equipment consists of the following:
 
 March
      31,
                      2009
                    
                    
                    December
      31,
                      2008Land
                    
                    $
                    17,500
                    
                    
                    $
                    17,500Building
      and improvements
                    
                    
                    238,120
                    
                    
                    
                    238,120Equipment,
      including vehicles
                    
                    
                    306,462
                    
                    
                    
                    268,326Subtotal
                    
                    
                    562,082
                    
                    
                    
                    523,946Less
      Accumulated depreciation
                    
                    
                    (192,648
                    )
                    
                    
                    (179,822
                    )Total
                    
                    $
                    369,434
                    
                    
                    $
                    344,124
 
 8.
              INCOME
      TAXES
 The
Company files a consolidated tax return inclusive of each of its wholly-owned
subsidiaries, DanMar, JEDI, and NextGen. The Company’s provision for income
taxes includes only the effects of operating activities subsequent to the dates
of acquisition as disclosed in Note 1 above, since each of the entities had
elected Subchapter S status for all periods prior to acquisition. Upon
acquisition, the Subchapter S elections were automatically terminated. No
provision for income taxes is shown for the three month period ended March 31,
2008 since all the operating entities were taxed as Subchapter S corporations
during that period.
 
 At the time the S corporation
elections were terminated, the Company recorded deferred tax assets and
liabilities arising from the anticipated timing differences recorded in the
financial statements and income tax returns for various accrued expenses and the
methods used in computing depreciation.
 
 The
components of the deferred income tax asset and liability as of March 31, 2009
are as follows:
 
 Current
      Deferred Income Tax Benefit:Accrued
      Vacation and Officer’s Compensation
                      
                      $
                      11,000Liquidated
      Damages Provision
                      
                      
                      104,000Reserves
      for Warranty
                      
                      
                      47,000Net
      Operating Loss Carryforward
                      
                      
                      173,000Total
                      
                      $
                      335,000Non-Current
      Deferred Income Tax Benefit:Net
      Operating Loss Carryforward
                      
                      
                      345,000Stock
      Option Expense
                      
                      
                      76,000Less
      Valuation Allowance
                      
                      
                      (299,000
                      )Total
                      
                      $
                      122,000Non-current
      Deferred Income Tax LiabilityDepreciation
                      
                      $
                      21,000
 
 The
following represents the reconciliation of the statutory federal tax rate and
the effective tax rate for the period ended March 31, 2009:
 
 Statutory
      Tax Rate
                      
                      $
                      185,058
                      
                      
                      
                      34.0
                      %States
      Taxes, Net of Federal Benefit
                      
                      
                      (44.788
                      )
                      
                      
                      (8.2
                      )Nondeductible
      Expenses
                      
                      
                      (438,855
                      )
                      
                      
                      (80.6
                      )Valuation
      Allowance
                      
                      
                      299,000
                      
                      
                      
                      54.9Other,
      Net
                      
                      
                      (415
                      )
                      
                      
                      (.1
                      )$
                      -
                      
                      
                      
                      0.00
                      %
  12
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 In
assessing the realization of deferred tax assets, the Company’s management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized.  The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become
deductible.  The Company’s management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment.  As of March 31, 2009, a
valuation allowance of $299,000 has been recognized for deferred tax
assets.
 
 At March
31, 2009, the Company has a federal net operating loss carryforward of
approximately $1.2 million which will expire in the year
2023.
 
 We
adopted provisions of , Accounting for Uncertainty in Income
Taxes – an interpretation of FASB Statement No. 109 (FIN No. 48) in June
2008, upon becoming a corporation, with no cumulative effect adjustment
required. FIN 48 clarifies the requirements of SFAS 109, Accounting for Income Taxes,
relating to the recognition of income tax benefits. FIN 48 provides a two-step
approach to recognizing and measuring tax benefits when realization of the
benefits is uncertain. The first step is to determine whether the benefit meets
the more-likely-than-not condition for recognition and the second step is to
determine the amount to be recognized based on the cumulative probability that
exceeds 50%. In accordance with FIN No. 48, we have adopted a policy under
which, if required to be recognized in the future, we will classify interest
related to the underpayment of income taxes as a component of interest expense
and we will classify any related penalties in general and administrative
expenses in the consolidated statement of operations.
 
 9.
              STOCK-BASED
      COMPENSATION
 The
Company has a non-qualified incentive compensation plan to provide stock
options, stock issuances and other equity interests in the Company to employees,
directors, consultants, independent contractors, and advisors of the Company and
other person who is determined by the Committee of the Board of Directors of the
Company to have made (or expected to make) contributions to the Company. As of
March 31, 2009, the Company has 2,167,111 shares available for award under the
plan.
 
 The
Company has granted to key employees and directors of the Company, 730,000
options to purchase common shares under the above plan.  These options
carry an exercise price ranging from of $1.00-$2.11 per share and expire ten
years from the date of grant.  The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following assumptions, underlying price $1.25, dividend yield of 0%,
expected volatility of 96%, risk-free interest rate of 4%, and expected life of
6 years. Based on pricing model it was determined that approximately $93,538 of
option related compensation was expense in the period ending March 31,
2009.
 
 A summary
of the Company’s stock option plan as of March 31, 2009 and changes during the
period then ended is listed below:
 
 Outstanding
      at December 31, 2008
                    
                    
                    620,000Granted
                    
                    
                    110,000Exercised
                    
                    
                    -Expired
                    
                    
                    -Forfeited
                    
                    
                    -Outstanding
      at March 31, 2009
                    
                    
                    730,000Options
      exercisable at the end of the period
                    
                    
                    59,996
 
 As of
March 31, 2009, there was approximately $775,000 of total unrecognized
compensation expense cost.  This cost is expected to be recognized
over a weighted-average period of 3 years.
 13
 JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 The Board
of Directors has authorized management to grant further stock options to
employees or consultants from shares reserved under the Plan whereby the Company
expects to grant approximately 240,000 options in the second quarter of 2009 in
addition to grants mentioned above.
 
 10.
              FAIR
      VALUE MEASUREMENTS
 
 The
following warrant liability is recorded at fair value:
 
 March 31, 2009Fair Value Carrying Amount
                        in the Balance Sheet
                      
                      
                      Fair Value Measurement UsingLevel 1
                      
                      
                      Level 2
                      
                      
                      Level 3LiabilitiesWarrant
      liability
                      
                      
                      11,227,111
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      11,227,111
 
 The
reconciliation of beginning and ending balances for assets and liabilities
measured at fair value using significant unobservable inputs (Level 3) are as
follows:
 
 Warrant
      liabilityBeginning
      Balance, January 1, 2009
                      
                      $
                      -Cumulative
      effect of accounting principle
                      
                      
                      12,576,816Gain
      on warrant liability fair value adjustment
                      
                      
                      1,349,705Ending
      Balance, March 31, 2009
                      
                      $
                      11,227,111Total
      unrealized gain included in earnings which are attributable to the change
      in unrealized gains or losses related to assets or liabilities still held
      at the reporting date
                      
                      $
                      1,349,705
 
 The
Company’s Level 3 liability consists of the common stock warrants held by the
preferred shareholders subject to redemption discussed in Note 4.  The
fair value of the warrant liability  is estimated using the
Black-Scholes option pricing model using internal observable and unobservable
market input assumptions.
 
 11.
              BUSINESS
      SEGMENTS
 The
Company groups its operations into two business segments–Wind Farm Development
and Management  and Consumer-owned Renewable Energy products. 
The Company's business segments are separate business units that offer different
products. The accounting policies for each segment are the same as those
described in the summary of significant accounting policies. Corporate assets
include: cash and cash equivalents, short-term investments, deferred income
taxes, and other assets.
  14
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 The
following is information for each segment for the years ended March 31, 2009 and
2008:
 
 Wind Farm
                      Development
                      and
                      Management
                    
                    
                    Consumer-
                      Owned
                      Renewable
                      Energy
                    
                    
                    ConsolidatedFor
      the Quarter Ended March 31, 2009Wind
      farm development/mgmt
                    
                    $
                    131,854
                    
                    
                    
                    
                    
                    $
                    131,854Consumer-owned
      renewable energy
                    
                    
                    
                    
                    
                    $
                    193,708
                    
                    
                    
                    193,708Related
      party revenue
                    
                    
                    21,985
                    
                    
                    
                    
                    
                    
                    
                    21,985Other
                    
                    
                    729
                    
                    
                    
                    -
                    
                    
                    
                    729Total
      revenue
                    
                    $
                    154,568
                    
                    
                    $
                    193,708
                    
                    
                    $
                    348,276Loss
      from operations
                    
                    $
                    (739,781
                    )
                    
                    $
                    (81,470
                    )
                    
                    $
                    (821,251
                    )Other
      income (loss), net
                    
                    
                    1,371,021
                    
                    
                    
                    (5,481
                    )
                    
                    
                    1,365,540Loss
      before income tax benefit
                    
                    $
                    631,240
                    
                    
                    $
                    (86,951
                    )
                    
                    $
                    544,289Identifiable
      assets at March 31, 2009
                    
                    $
                    1,466,351
                    
                    
                    $
                    788,226
                    
                    
                    $
                    2,254,577Corporate
      assets
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3,245,101Total
      assets at March 31, 2009
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    $
                    5,499,678
 
 Wind
      Farm
                      Development
                      and
                      Management
                    
                    
                    Consumer-
                      Owned
                      Renewable
                      Energy
                    
                    
                    ConsolidatedFor
      the Quarter Ended March 31, 2008Wind
      farm development/mgmt Management
                    
                    $
                    139,298
                    
                    
                    
                    
                    
                    $
                    139,298Consumer-owned
      renewable energy
                    
                    
                    -
                    
                    
                    $
                    316,433
                    
                    
                    
                    316,433Related
      party revenue
                    
                    
                    21,765
                    
                    
                    
                    -
                    
                    
                    
                    21,765Other
                    
                    
                    1,834
                    
                    
                    
                    -
                    
                    
                    
                    1,834Total
      revenue
                    
                    $
                    162,897
                    
                    
                    $
                    316,433
                    
                    
                    $
                    479,330Income
      (loss) from operations
                    
                    $
                    54,563
                    
                    
                    $
                    90,830
                    
                    
                    $
                    145,393Other
      income (loss), net
                    
                    
                    -
                    
                    
                    
                    (8,095
                    )
                    
                    
                    (8,095
                    )Income
      (loss) before income taxes
                    
                    $
                    54,563
                    
                    
                    $
                    82,735
                    
                    
                    $
                    137,298Identifiable
      assets at March 31, 2008
                    
                    $
                    978,420
                    
                    
                    $
                    648,801
                    
                    
                    $
                    1,627,221Corporate
      assets
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -Total
      assets at March 31, 2008
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    $
                    1,627,221
 
 12.
              TRANSACTIONS
      WITH RELATED PARTIES
 The
Company provides wind farm management services to entities that are controlled
by theCompany’s Chief Executive Officer and family members. This revenue is
shown on the face of the consolidated statement of operations.  The
fees are billed at rates similar to fee structures charged to unrelated parties.
 
 13.
              COMMITMENTS
      AND CONTINGENCIES
 Development
Agreements
  The
Company enters into development agreements with third parties for the
development of wind projects. The development agreements call for development
fees ranging from 1% to 5% of the total project cost. The development fees are
due in three installments. Ten percent is due at the development agreement
signing. Another 40% is due at the signing of the PPA agreement, and the
remaining 50% is due at the commercial operation date of the project. As of
March 31, 2009 and December 31, 2008, the Company was involved with various
development agreements at different stages within the contracts. The Company was
also involved with several new projects for which development agreements have
not been signed.
  15
  JUHL
WIND, INC.
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE QUARTERS ENDED MARCH 31, 2009 AND 2008
 
 Management
Agreements
 The
Company has three agreements in place for operational wind projects to perform
management services for those projects. The agreements provide monthly
management fees equal to 2% of the project’s gross sales. These agreements also
provide payments for general and administrative fees, maintenance fees, and any
other out-of-pocket expenses for the project. The contracts expire at various
dates through 2015. The agreements may be terminated by the wind farm upon the
last day of the month that is at least 30 days after the Company has received
written notice of the intent to terminate the agreement.
 
 Administrative
Services Agreements
 The
Company has four agreements in place for operational wind projects to perform
administrative services for those projects. These agreements provide quarterly
payments in advance or in arrears of services performed. Payments range from
$4,500 to $5,000 per quarter, and will continue through the Change of Percentage
Ownership Date, as defined by the administrative services agreements, and will
be renewed annually without any additional action. The agreements may be
terminated by the wind farm upon at least 90 days written notice to the
Company.
  16




Item
      2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





The
following discussion should be read in conjunction with our financial statements
and the notes thereto which appear elsewhere in this report. The results shown
herein are not necessarily indicative of the results to be expected in any
future periods. This discussion contains forward-looking statements based on
current expectations, which involve uncertainties. Actual results and the timing
of events could differ materially from the forward-looking statements as a
result of a number of factors.





Forward-Looking
Statements





The
following discussion and analysis is provided to increase the understanding of,
and should be read in conjunction with, the Financial Statements of the Company
and Notes thereto included elsewhere in this Report. Historical results and
percentage relationships among any amounts in these financial statements are not
necessarily indicative of trends in operating results for any future period. The
statements, which are not historical facts contained in this Report constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are based on currently available
operating, financial and competitive information, and are subject to various
risks and uncertainties. Future events and the Company's actual results may
differ materially from the results reflected in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, dependence on existing and future key strategic and strategic
end-user customers, limited ability to establish new strategic relationships,
ability to sustain and manage growth, variability of operating results, the
Company's expansion and development of new service lines, marketing and other
business development initiatives, the commencement of new engagements,
competition in the industry, general economic conditions, dependence on key
personnel, the ability to attract, hire and retain personnel who possess the
technical skills and experience necessary to meet the service requirements of
its clients, the potential liability with respect to actions taken by its
existing and past employees, risks associated with international sales, and
other risks described herein and in the Company's other SEC
filings.





Overview
of Our Business





Juhl Wind
provides development, management and consulting services to wind farm projects
throughout the Midwestern U.S. and also sells consumer-owned renewable energy
products such as remanufactured small wind turbines and solar
systems.





We are
engaged in the development of a type of wind power in various small communities
in the Midwestern United States and Canada that has been labeled “community wind
power.” Our ultimate goal is to build medium to large-scale wind farms jointly
owned by local communities, farm owners and our company. The wind farms are
connected to the general utility electric grid to produce clean,
environmentally-sound wind power for use by the electric power
industry.





Since
1999, we have developed 14 wind farms, accounting for more than 117 megawatts of
wind power, that currently operate in the Midwest region of the United States.
We are presently engaged in various aspects of the development of 24 wind farms
totaling an additional 425 megawatts of community wind power
systems.





Our
projects are based on the formation of partnerships with the farmers upon whose
land the wind turbines are installed.  Over the years, this type of
wind power has been labeled “community wind power” because the systems are
locally owned by the farmers themselves and/or other local stakeholders. Our
Chairman and Chief Executive Officer, Dan Juhl, was one of the creators of
Community Wind power in the United States. Community wind is a specialized
sector in the wind energy industry that differs from the large, utility-owned
wind power systems that are also being built in the United
States.  Community wind is a form of community-based energy
development (C-BED). Various states, including Minnesota, have enacted C-BED
initiatives, which include mechanisms to support community wind and are intended
to make it easier for community wind projects to be successful without putting
an excessive burden on utilities.





Historically,
landowners in rural areas could only benefit from the development of wind farms
in their community by leasing their land to large wind developers. These large
developers would then sell the wind energy to the local utility company and
retain a majority of the project’s profits. We provide what we believe is a
better alternative for local communities by specifically concentrating on C-BED
community wind projects that are locally owned by farmers, investors,
businesses, schools, utilities, or other public or private local entities. As a
result, we believe that community wind projects keep more dollars in local
communities, preserve local energy independence, and protect the environment.
Our goal, and Mr. Juhl’s focus over the past years, is to share ownership with
farmers and to build a network of farmer-owned community wind power
systems.





Mr. Juhl
is an acknowledged expert in the wind power field and is considered a pioneer in
the wind industry having been active in the field since 1978.  He was
a leader in the passage of specific legislation supporting wind power
development in the states of Minnesota and Nebraska.  John Mitola, our
President, is also considered an expert in the energy field having focused his
career on energy efficiency, demand side management and independent power
development.   He has significant experience in the energy
industry and electric industry regulation, oversight and governmental policy.
Previously, he served as chief executive officer and a director of Electric City
Corp., a publicly-held company that specialized in energy efficiency systems,
and as the general manager of Exelon Thermal Technologies, a subsidiary of
Exelon Corp. that designed and built alternative energy
systems.


17





Our
management team has been involved in the wind power industry for more than 30
years. We have experience in the design, manufacture, maintenance and sale of
wind turbines, as well as the full-scale development of wind farms. We hold
contract rights, are involved with projects in development and under
negotiation, and provide development activities in the wind power industry. Our
contract rights relate to administrative services agreements which call for
management and administrative services to be provided for seven existing
Minnesota wind farm developments. Our assets include eight development services
agreements, ten projects in early development stages, and six agreements to
conduct wind power feasibility studies.





The
Company’s involvement in the sale of consumer-owned renewable energy products
commenced in November 2008 as a result of the acquisition of Next Generation
Power Systems, Inc. (“NextGen”).  Prior to the acquisition, Dan Juhl
had been a controlling shareholder in NextGen since it was organized in
2004.  The NextGen business restores small wind turbines in the 30 KW
class for sale to consumers for on-site electricity
generation.  NextGen also provides solar-powered systems that allow
small businesses and consumers to generate or store electrical power for on-site
use or emergency backup.





Corporate
Information and History





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





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




Pursuant
to the Securities Exchange Agreement, at closing, the two former beneficial
stockholders of Juhl Energy and DanMar received an aggregate of 15,250,000
shares of our common stock, representing approximately 60.6% of our outstanding
shares of common stock, inclusive of shares of common stock issuable upon the
conversion of our series A convertible preferred stock sold in our concurrent
private placement. In exchange for the shares we issued to the former Juhl
Energy and DanMar stockholders, we acquired 100% of the outstanding common stock
of Juhl Energy and DanMar. Concurrently with the closing of the exchange
transaction, we also completed a private placement to institutional investors
and other accredited investors, in which we received aggregate gross proceeds of
$5,160,000.





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




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





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





On
October 31, 2008, we acquired all of the issued and outstanding shares of common
stock of NextGen in exchange for an aggregate purchase price of $322,500 (the
“Purchase Price”) payable by delivery of an aggregate of 92,143 unregistered
shares of our common stock allocated among certain of the NextGen selling
shareholders (excluding Dan Juhl).  The Purchase Price included
contribution of $100,000 of notes payable to certain NextGen selling
shareholders to equity.  The purchase transaction also included our
purchase of land and a commercial building located at 1502 17th Street
SE, Pipestone, Minnesota 56164 for a purchase price of $144,000 payable by
delivery of an aggregate of 41,070 unregistered shares of our common stock
allocated among certain individuals (who were also the NextGen selling
shareholders, excluding Dan Juhl).  The purchase transaction also
included assumption of certain liabilities of NextGen including a note payable
to First Farmers & Merchants National Bank.


18


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





Industry
and Market Overview





Demand
for electricity has dramatically increased as our society has become more
technologically driven, and this trend is expected to continue. Significant new
capacity for the generation of electricity will be required to meet anticipated
demand. According to the U.S. Department of Energy, Energy Information
Administration’s (”EIA”) Annual Energy Review 2007, nearly half of all
electricity produced in the United States was generated by coal, which is the
largest source of carbon dioxide in the atmosphere. Other major sources of
electricity in 2007 were nuclear (19%), natural gas (21%) and hydropower (6%).
Wind power accounted for nearly 1% of electricity production in the United
States. According to the review, the amount of electricity generated from coal
in the United States increased 72% between 1980 and 2007, and is projected to be
51% higher in 2025 than in 2002, according to the U.S. Department of Energy
EIA’s Annual Energy Outlook 2004 with Projections to 2025.  The EIA’s
2009 Annual Energy Outlook released in March 2009 provides that coal production,
consumption and price projections now vary considerably because of differences
in assumptions about expectations for and implementation of legislation aimed at
reducing greenhouse gas emissions.  These and other independent
government and trade publications cited herein are publicly available on the
Internet without charge.





Most of
the world’s main energy sources are still based on the consumption of
non-renewable resources such as petroleum, coal, natural gas and uranium.
However, while still a small segment of the energy supply, renewable sources
such as wind power are growing rapidly in market share. Wind power delivers
multiple environmental benefits. Wind power operates without emitting any
greenhouse gases and has one of the lowest greenhouse gas lifecycle emissions of
any power technology. Wind power results in no harmful emissions, no extraction
of fuel, no radioactive or hazardous wastes and no use of water to steam or
cool. Wind projects are developed over large areas, but their carbon footprint
is light. Farmers, ranchers and most other land owners can continue their usual
activities after wind turbines are installed on their property.





According
to the U.S. Department of Energy EIA’s publication Renewable Resources in the
U.S. Electricity Supply, wind power generation was projected to increase
eight-fold between 1990 and 2010, a rate of 10.4% per year. Annual growth in the
global wind energy capacity for the past ten years has exceeded an average of
28% per year according to the Global Wind Energy Council’s (“GWEC”) Global Wind
2008 Report, with 2008 experiencing an increase of 28.8%. Although wind power
produces under 1% of electricity worldwide according to the GWEC’s Global Wind
2007 Report, it is a leading renewable energy source and accounts for 20% of
electricity production in Denmark (according to the U.S. Department of Energy’s
Energy Facts web page).  Elsewhere in the European Union, wind power
generation represented more than 11% of electricity consumption in Spain, and
7.5% of electricity consumption in Germany (according to the GWEC’s Global Wind
2008 Report.  The GWEC’s Global Wind 2008 Report predicts that wind
power is positioned to supply 10% to 12% of global electricity demand by 2020,
reducing carbon dioxide omissions by 1.5 billion tons annually.





Wind
power has become a mainstream option for electricity generation, and we believe
that it is a critical element to solving climate change and delivering
cost-effective domestic power in the United States. The U.S. wind power industry
has exceeded all previous records, with a 50% increase in generating capacity in
2008, according to the GWEC Global Wind 2008 Report.  Similarly, the
GWEC Global Wind 2007 Report stated an industry growth of 45% in
2007.   Wind now provides over 21,000 megawatts of electricity
generating capacity in the United States, producing enough electricity to serve
5.5 million U.S. homes, according to the American Wind Energy Association’s
December 22, 2008 “Year End Wrap Up” press release. According to this press
release, that capacity will generate over 60 billion kilowatt hours of clean,
cost-effective electricity in 2009, which eliminates the burning of 30.4 million
short tons of coal, 91 million barrels of oil and 560 billion cubic feet of
natural gas.  Wind power is now one of the largest sources of new
electricity generation of any kind. According to the GWEC Global Wind 2008
Report, wind projects accounted for about 42% of all new power generating
capacity added in the United States in 2008.





The GWEC
Global Wind 2008 Report announced that the United States led the world in wind
power installations in 2008.  Global wind capacity increased by more
than 20,000 megawatts in 2008, with installation of 8,358 megawatt capacity in
the United States alone. China and India were the second and third largest wind
power growth countries last year with 6,300 megawatts and 1,800 megawatts of
wind power capacity added, respectively, according to the report.





Wind
power can deliver zero-emissions electricity in large amounts. According to the
American Solar Energy Society’s report, Tackling Climate Change in the U.S.,
energy efficiency and renewable energies can provide most, if not all, of the
U.S. carbon emission reductions needed to keep atmospheric carbon dioxide levels
at no more than 450 to 500 parts per million, the level targeted in the more
protective climate change bills before the U.S. Congress. According to this
report, wind power would offer a large carbon reduction “wedge” by contributing
a 35% relative share from among the various renewable energy contributors, and
can constitute about 20% of the U.S. electricity supply by 2030.





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


19





Furthermore,
wind power delivers zero-emissions electricity at an affordable cost. No other
power plants being built in the United States today generate zero-emissions
electricity at a cost per kilowatt-hour nearly as affordable as wind power.
Consequently, using wind power lowers the cost of complying with emissions
reduction goals. The affordable cost of wind power is stable over time. Wind
projects do not use any fuel for their operations, so the price of wind power
does not vary when fuel prices increase. When utilities acquire wind power, they
lock in electricity at a stable price for 20 years or more.





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





The
industry reports or studies relied upon in this section are publicly available
and were not prepared for the Company.  Further, the Company did not
compensate any of the parties that provided such reports or studies referenced
herein.





Growth
in Demand for Wind Power and Our Position and Service Offerings





Demand
for wind power in the United States is growing rapidly and we believe the call
for growth in community wind power is increasing as well. We are one of the few
companies that has actually completed and put into operation a portfolio of
community wind projects, and we are experiencing strong growth in demand to
provide turnkey development of community wind systems across the Midwestern
United States. Our strategy is to leverage our portfolio of existing projects
and to take on new developments located in the Midwestern United States and
Canada, where proper conditions exist for successful developments: acceptable
wind resources, suitable transmission access and an appropriate regulatory
framework providing acceptable power purchase agreements and long-term utility
agreements.





In July
2008,  the U.S. Department of Energy issued a report entitled 20% Wind
Energy by 2030, discussing the viability of the potential for wind energy in the
United States to grow to approximately 305 gigawatts from 2007’s level of
approximately 11 gigawatts. This projected level of growth is estimated to cost
billions of dollars per year for the next 22 years of growth. Community wind
systems will make up a segment of this growth, leading to what we estimate will
be significant growth in community wind systems.





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





·
            ongoing
      increases in electricity demand due to population growth and growth in
      energy consuming devices such as computers, televisions and air
      conditioning systems,





·
            the
      increasing cost of the predominant fuels required to drive the existing
      fleet of conventional electric generation such as coal, natural gas,
      nuclear and oil,





·
            the
      increasing cost and difficulty faced in the construction of conventional
      electric generation plants,





·
            existing
      and growing legislative and regulatory mandates for “cleaner” forms of
      electric generation, including state renewable portfolio standards and the
      U.S. federal tax incentives for wind and solar
  generation,





·
            ongoing
      improvements to wind power systems making them more cost effective and
      improving availability to meet demand,
and





·
            worldwide
      concern over greenhouse gas emissions and calls to reduce global warming
      due to the carbon dioxide produced by conventional electric
      generation.





In light
of these factors and the resulting increase in demand for wind power, we believe
that we are uniquely positioned to experience significant year-over-year growth
and development of specific community wind farms throughout the United States.
We can provide full-scale development of wind farms across the range of required
steps including:





·
            initial
      feasibility studies and project
design,





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





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





·
            negotiation
      and execution of power purchase
agreements,


20





·
            arrangement
      of equity and debt project
financing,





·
            construction
      oversight and services,





·
            project
      commissioning, and





·
            multi-year
      wind farm operations and
maintenance.





In
addition, we can provide general consulting services to help farmers and
communities evaluate possible community wind farm projects and initiate their
development. Often, we will take on the entire development process including all
of the services outlined above. As project developer, we arrange every aspect of
the development process and would receive payment for the services as each step
or a combination of steps is accomplished. After establishing that a project has
appropriate wind resource and transmission interconnection, we would move on to
complete land right’s agreements, community limited liability company structures
and the power purchase agreement with the local utility.





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





Company
Structure





As a
result of the exchange transaction, Juhl Energy and DanMar are our wholly-owned
subsidiaries. Juhl Energy and DanMar have primarily been involved in providing
development, management and consulting services to various wind farm projects
throughout the Midwest. DanMar was incorporated in January 2003 and is located
in Woodstock, Minnesota. In September 2007, DanMar assigned certain development
and management business to a newly-formed corporation, Juhl Energy.





Juhl
Energy also has a subsidiary, Community Wind Development Group LLC, which was a
predecessor to Juhl Energy in the nature of the work provided, but which had
more than one owner. The operations of Community Wind Development Group have
been included in Juhl Energy since January 1, 2008 acquisition
date.





Historically,
DanMar and Juhl Energy have both engaged in similar development, management and
consulting projects. It is our intention that prospectively, the companies will
perform separate functions. DanMar will engage in purely consultative projects,
offering solely advice on projects being developed by the owners of the projects
or other third parties. Juhl Energy will engage in development and construction
projects where Juhl Energy will, in many cases, oversee the entire development
of wind farms.





In
October 2008, we acquired NextGen.  NextGen is in the business of
renewable energy design and advanced conservation technologies focused on small
business and consumer-owned wind turbine and solar systems.  NextGen’s
business is being integrated into our wind energy company and is our
wholly-owned subsidiary.





Our
Community Wind Farm Portfolio





We
believe that we have completed and placed into service more community wind power
systems than any other U.S. enterprise. To date, we have developed 14 community
wind farms located primarily in the “Buffalo Ridge” area of southwestern
Minnesota. Buffalo Ridge is a large expanse of rolling hills that is 60 miles
long and a part of Lincoln County in the southwest corner of Minnesota. It is
located near the small towns of Hendricks and Lake Benton. We selected Buffalo
Ridge because of its high altitude (approximately 2,000 feet above sea level)
and high average wind speed, making it, in our opinion, an ideal location for
wind-based energy production. These wind farms have been developed since the
mid-1980s and total approximately 117 megawatts. They are fully operational
today. In addition, we provide operating and maintenance services to five of the
14 wind farms.





In
addition to the first 14 wind farms developed by us, we have another 24
community wind projects in various phases of development totaling approximately
425 megawatts. These projects are primarily located in the states of Minnesota
and Nebraska. A sample of the projects, which are in the phase of development
referenced below, include but are not limited to, the following:





Project
      Name
                          
                          Megawatts
                          
                          PhaseCompleted
      wind farm developments
                          
                          117
                          
                          OperationalGrant
      County, MN
                          
                          20
                          
                          Construction
      2009Valley
      View, MN
                          
                          10
                          
                          Financing/Construction
      2009




21





Project Name
                  
                  Megawatts
                  
                  PhaseCrofton
      Hills, NE
                  
                  42
                  
                  Financing/Construction
      2009/2010Traverse
      County, MN
                  
                  20
                  
                  Interconnection
      StudyMeeker
      County, MN (2 projects)
                  
                  40
                  
                  Interconnection
      StudyKittson/Marshall,
      MN
                  
                  80
                  
                  Interconnection
      StudyKennedy/Kittson,
      MN
                  
                  20
                  
                  Interconnection
      Study16
      Additional Midwest Projects
                  
                  193
                  
                  Initial
      Study/Feasibility


Note: From time to time some of our
projects are not listed publicly due to the preferences of local owner groups or
competitive issues facing our business.  However, we strive to provide
regular updates to our projects listing via press releases and corresponding
updates to our corporate website,www.juhlwind.com.





Based on
our pipeline of projects, we believe that we will experience consistent growth
in the number of projects completed and the number of projects for which we are
providing operational oversight. We expect that the continued growth in our
project pipeline will act as a key competitive advantage as the community wind
power industry grows throughout the United States and Canada.





Growth
Strategy





Wind
Farm Development and Management Services:





We
specialize in the development of community wind power systems, and we believe
that we are among the leaders in the field. Our growth strategy is anchored by
the competitive advantage of our portfolio of completed projects coupled with
the projects we currently have under development. Our plan is to continue to
provide the full range of development services across each phase of development,
which we expect will grow our revenue and profitability from each project under
development.





In
addition to growing our revenue per project, we will continue to grow our
projects under development by utilizing competitive strengths and taking
advantage of market conditions to build long-term growth, as
follows:





·
            We
      expect to increase our capacity by entering regional markets through
      organic development. Upon entering a market we work to become a leading
      wind energy operator and an influential voice within the region. We strive
      to develop projects in-house from the initial site selection through
      construction and operation.





·
            We
      will expand business relationships within the investment community both in
      the U.S. and abroad in order to assist project owners in obtaining the
      equity and debt financing for wind farm developments. This will include
      considerations with regard to raising additional capital in private or
      public equity funds that would invest in our wind project
      developments.





·
            We
      expect to create relationships as a community stakeholder. We prioritize
      the creation of strong community relationships that we believe are
      essential to generating support and securing land and permits necessary
      for our wind farms. Our team works closely with the landowners who will
      host the wind farms to ensure that they fully understand the impact of
      having turbines on their property. Throughout the development process, we
      assess and monitor the landowners’ and broader community’s receptiveness
      and willingness to host a wind farm in their area. This proactive
      involvement in the community also enables us to submit permit applications
      that comply with local regulations while addressing local
      concerns.





·
            We
      expect to work with governmental agencies to help us incentivize the
      creation of community wind farms and offer favorable tax breaks. Further,
      we intend to use tax equity financing arrangements in order to monetize
      the value generated by production tax credits and accelerated tax
      depreciation that are available to us as a wind energy
      generator.





·
            We
      will continue to strive to attract, train and retain the most talented
      people in the industry. As we continue to grow our business, we will need
      to attract, train and retain additional employees. We believe that our
      management team will be instrumental in attracting new and experienced
      talent, such as engineers, developers and meteorology experts. We plan to
      provide extensive training and we believe that we offer an attractive
      employment opportunity in the markets in which we
  operate.





As a
result of the relationships we have established and niche markets we have
identified, we have been able to lay the groundwork for 2009 and
beyond.  Some of the areas of focus moving forward include the
following:





·
            moving
      into an even larger market of smaller
projects;





·
            targeting
      5 to 40 megawatt wind farm projects.  In the State of Minnesota
      alone, industry experts have suggested there exist over 6,000 megawatts of
      achievable electricity utilizing our wind power
  model;


22





·
            expanding
      our market of 1 to 10 megawatt on-site wind projects including
      universities and colleges, hospital campuses and other institutional
      sites; and





·
            additional
      growth through targeted
acquisitions.





Consumer-based
renewable energy products – smaller on-site wind power and solar
systems:





NextGen
provides renewable energy systems and specializes in advanced conservation
technologies focused on smaller scale wind turbine and solar
systems.  Production, management and conservation of energy are
NextGen's main focus.




NextGen
has extensive experience with a wide variety of energy saving and
environmentally sound production systems such as small wind, solar, back-up
power, and stand alone power systems.  Its diverse experience enables
it to assist the energy consumer with methods of controlling and in some cases
eliminating their ever burdensome energy costs.  NextGen supports a
transition to a sustainable energy economy which relies on clean, renewable
resources to satisfy societal needs.  NextGen can present the energy
consumer with modern options in terms of cost effectiveness, performance, and
reliability.




NextGen
focuses on energy consumers throughout the Great Plains region. Through thorough
analysis NextGen can examine the energy requirements and implement the
appropriate technology to meet the needs of the energy consumer.  In
addition to site analysis, NextGen markets and installs energy-saving products,
performs system repairs and scheduled maintenance.




NextGen
has developed a SolarBankTM System which is designed to give businesses and
homeowners the ability to store up to 72 hours of emergency power in the event
of a power failure. This back-up power system works automatically and
instantaneously.   When a power outage occurs, the control relay
station automatically taps into the energy reserve stored by the SolarBankTM
System and can run several loads for 24-72 hours. Solar modules are designed to
convert sunlight into electricity at the highest possible efficiency and are
used to charge storage batteries to provide power for remote homes, recreational
vehicles, boats, telecommunications systems and other consumer and commercial
applications.




To
protect the cells from the most severe environmental conditions, the solar
modules are encapsulated between a tempered glass cover and polymer film with a
weather resistant back sheet. The entire laminate is installed in an anodized
aluminum frame for structural strength and ease of installation.





As a
result of the acquisition of NextGen in October 2008, we expect to expand
efforts in this line of business to take advantage of the stimulus recently
provided by the federal government for tax credits and grants applicable to
renewable energy manufacturing facilities and consumers. Some of the areas of
focus include the following:





·
            Reduce
      the reliance on subcontract services within our manufacturing process by
      bringing the production and assembly in-house where considered
      appropriate, and improve quality control and testing
      procedures.


·
            Engage
      an experienced sales and marketing professional to establish and maintain
      a qualified dealer network, and to oversee direct selling efforts underway
      with the consumer marketplace.


·
            Attract,
      train and retain talented individuals in the areas of production,
      engineering and selling functions.


·
            Assess
      the product line for expansion opportunities and turbine sourcing
      arrangements.





Sales
and Marketing





Historically,
DanMar and Juhl Energy have not relied on any direct sales or marketing efforts,
but have gained exposure through trade publications, word of mouth and industry
conferences. We currently have a pipeline of projects we believe will last at
least two years and it is being supplemented on an on-going basis without direct
selling efforts. We anticipate being able to add a significant number of
projects to this pipeline driven primarily by Daniel Juhl, John Mitola and an
expanding development team, trade publications, industry events and word of
mouth. Our web site, www.juhlwind.com, will also serve as a marketing tool. If,
at some point, management determines the pipeline of potential customers is less
than anticipated or desired, or if we are unable to sustain our desired rate of
growth and expansion with these sales and marketing methods, we will reevaluate
the sales and marketing efforts and address the issue at that time.





The
Company is currently utilizing internal direct selling efforts for the sale of
consumer-based renewable energy products. During 2009, we will increase our
efforts to establish sales channels through qualified dealers who demonstrate
technical knowledge in the renewable energy marketplace, and have sales
expertise and financial stability to deliver small scale wind turbine and
solar-related systems.





Wind
Energy Technology, Resources and Suppliers





Wind
power is a form of renewable energy; that is, energy that is replenished daily
by the sun. As portions of the earth are heated by the sun, air rushes to fill
the low pressure areas, creating wind power. The wind is slowed dramatically by
friction as it brushes the ground and vegetation. It may not feel very windy at
ground level, yet the power in the wind may be five times greater at the height
of a 40 story building (the height of the blade tip on a large, modern wind
turbine) than the breeze an individual encounters at ground
level.


23


Wind
power is converted to electricity by a wind turbine. In a typical, modern
large-scale wind turbine, the kinetic energy in the wind (the energy of moving
air molecules) is converted to rotational motion by the rotor (a three-bladed
assembly at the front of the wind turbine). The rotor turns a shaft which
transfers the motion into the nacelle (the large housing at the top of a wind
turbine tower). Inside the nacelle, the slowly rotating shaft enters a gearbox
that greatly increases the rotational shaft speed. The output (high-speed) shaft
is connected to a generator that converts the rotational movement into
electricity at medium voltage (a few hundred volts). The electricity flows down
heavy electric cables inside the tower to a transformer, which increases the
voltage of the electric power to the distribution voltage (a few thousand
volts). Higher voltage electricity flows more easily through electric lines,
generating less heat and fewer point losses. The distribution-voltage power
flows through the underground lines to a collection point where the power may be
combined with other turbines. In many cases, the electricity is sent to nearby
farms, residences and towns where it is used. Otherwise, the
distribution-voltage power is sent to a substation where the voltage is
increased dramatically to transmission-voltage power (a few hundred thousand
volts) and sent through very tall transmission lines many miles to distant
cities and factories.





Wind
turbines come in a variety of sizes, depending upon the use of the electricity.
A large, utility-scale turbine described above may have blades over 40 meters
long, meaning the diameter of the rotor is over 80 meters (nearly the length of
a football field). The turbines might be mounted on towers 80 meters tall (one
blade would extend half way down the tower), produce 1.8 megawatts of power
(1800 kilowatts), supply enough electricity for 600 homes and cost over $1.5
million. Wind turbines designed to supply part of the electricity used by a home
or business is much smaller and less costly. A residential - or farm-sized
turbine - may have a rotor up to 15 meters (50 feet) in diameter mounted on a
metal lattice tower up to 35 meters (120 feet) tall. These turbines may cost
from as little as a few thousand dollars for very small units up to
approximately $40,000 to $80,000.





Per the
Emerging Growth Report 2008, due to the persistent credit crisis, some
wind-based projects are being delayed or cancelled, and the reduction in
commodity prices will likely result in wind power producers experiencing lower
turbine pricing over the coming years.  It is also expected that
delivery lead times will be shortened.  While turbine prices have
risen significantly over the past few years on a per megawatt capacity basis,
the total number of megawatts produced per turbine has increased dramatically
over the same period.  For example, in the year 2000 the average
turbine size was less than 800kW.  By 2003, this had increased to just
over 1.2 megawatts.  As of the end of 2007, approximately half of the
all installations were for turbines rated at between 1.5 megawatts and 2.5
megawatts, an increase of more than 30% from the previous year.





According
to the Emerging Growth Report 2008, this has abated overall costs because as the
price per megawatt has increased strongly, the price per megawatt hour of
production has risen only modestly.  While the efficiency of turbines
continues to increase, it will continue to provide further justification for
capital expenditures for upcoming projects, as well as likely decreases in
turbine pricing and better availability throughout 2009 and into
2010.





Based on
our management’s experience and observations of the industry, wind industry
manufacturing facilities surged in the United States from 2005 to 2007, and many
existing facilities are expanding. In 2007, new tower, blade, turbine and
assembly plants opened in the states of Illinois, Iowa, South Dakota, Texas and
Wisconsin. Also in 2007, seven other facilities were announced in the states of
Arkansas, Colorado, Iowa, North Carolina, New York and Oklahoma.





Our
principal suppliers primarily consist of suppliers of wind turbines, wind
turbine parts and various electrical supplies and services relating to wind
turbine operation. We also source, as needed, wind studies and electrical
engineering expertise from outside suppliers. With respect to wind turbines and
related items, our principal suppliers have been Suzlon Energy Limited, Ventera
Energy Corporation and Vestas Wind Support Systems A/S for turbines; Hub City
Inc. for various wind turbine parts; and Abaris EC, LLC, Echo Group, Inc., Muth
Electric Inc. and T&R Electric Supply Company Incorporated for electric
services and supplies. We also use WindLogics, Inc. for wind studies and
Hoerhauf Consultants, Inc. for specialized electrical engineering. Our business
is not dependent on any one supplier and our list of suppliers is changing and
expanding on an ongoing basis as the market for wind power continues to expand
and new suppliers enter with advanced products, technologies and
services.





Competition





In the
United States, large utility companies dominate the energy production industry,
and coal continues to dominate as the primary resource for electricity
production. Electricity generated from wind energy faces competition from other
traditional resources such as nuclear, oil and natural gas. The advantages of
conventional production of electricity are that:





·
            the
      technology and infrastructure already exist for the use of fossil fuels
      such as coal, oil and natural gas,





·
            commonly-used
      fossil fuels in liquid form such as light crude oil, gasoline and
      liquefied petroleum gas are easy to distribute,
  and





·
            petroleum
      energy density (an important element in land and air transportation fuel
      tanks) in terms of volume (cubic space) and mass (weight) is superior to
      some alternative energy
sources.


24


However,
energy produced by conventional resources also faces a number of challenges
including:





·
            the
      inefficient atmospheric combustion (burning) of fossil fuels leads to the
      release of pollution into the atmosphere including carbon dioxide which is
      largely considered the primary cause of global
  warming,





·
            dependence
      on fossil fuels from volatile regions or countries of the world creates
      energy security risks for dependent
countries,





·
            fossil
      fuels are non-renewable unsustainable resources which will eventually
      decline in production and become exhausted with potentially dire
      consequences to societies that remain highly dependent on them,
      and





·
            extraction
      of fossil fuels is becoming more expensive and more dangerous as
      readily-available resources are exhausted and mines get deeper and oil
      rigs must drill deeper and further out in
  oceans.





In
contrast, electricity generated from wind energy:





·
            produces
      no water or air pollution that can contaminate the environment because
      there are no chemical processes involved in wind power generation;
      therefore, there are no waste by-products such as carbon
      dioxide,





·
            does
      not contribute to global warming because it does not generate greenhouse
      gases,





·
            is
      a renewable source of energy, and





·
            in
      the case of community wind power, farming and grazing can still take place
      on land occupied by wind turbines.





However,
wind energy producers also face certain obstacles including:





·
            the
      reality that wind is unpredictable and, therefore, wind power is not
      predictably available, and when the wind speed decreases, less electricity
      is generated,





·
            residents
      in communities where wind farms exist may consider them an “eyesore,”
      and





·
            wind
      farms, depending on the location and type of turbine, may negatively
      affect bird migration patterns and may pose a danger to the birds
      themselves; however, newer, larger wind turbines have slower moving blades
      which seem to be visible to most
birds.





We expect
that primary competition for the wind power industry will continue to come from
utility company producers of electricity generated from coal and other
non-renewable energy sources.





Within
the U.S. wind power market itself, there is also a high degree of competition,
with growth opportunities in all sectors of the industry regularly attracting
new entrants. For example, in 2008, our management believes, based on our
industry observations that over 15 utility-scale wind turbine manufacturers are
selling turbines in the United States market, up from only six in 2005 of which
we were aware.





New
entrants in the wind power development market, however, face certain barriers to
entry. The capital costs of buying and maintaining turbines are high. Other
significant factors include the cost of land acquisition, the availability of
transmission lines, land use considerations and the environmental impact of
construction and operations. Finally, another critical barrier to entry into the
wind power development business is the necessary experience required to bring
projects to the point where they are able to secure agreements with respect to
connecting to the existing electricity transmission network, power purchase
agreements and project financing for construction.





We are
aware of two companies that are working in the community wind power area and
which management views as being competitive with certain aspects of our
company.  The first, Nacel Energy, is a community wind development
company founded in 2006 and focused on developing community wind projects in
Texas and Kansas. To our knowledge, Nacel Energy has yet to fully complete the
development of a project.  The second, Wind Energy America, is located
in and focused on community wind power in Minnesota and is currently employing a
strategy where it purchases rights to current or developing wind
projects.





With
respect to the production and sale of consumer-based renewable energy products,
there are numerous businesses operating in the U.S. that are associated with the
manufacturing, sales distribution and installation of products and services. The
competition in this field is not dominated by any one particular company or
group of companies. The industry competition is expected to emerge given the
focus on renewable energy facilities by the federal government.


25


Our
Competitive Advantages





We
believe that we have a number of competitive advantages in the community wind
energy production sector; one of our key advantages being that we have completed
14 community wind farm projects to date and currently have over 20 wind farm
projects in various developmental stages, representing 425 megawatts of
electricity and almost $1 billion in project development. We expect that when
owners of new projects consider retaining a development enterprise, the ability
to point to actual projects completed, along with the extensive knowledge base
developed and relationships necessary to get the job done, will provide us an
edge in winning projects in the future. These relationships include those with
utility power purchasers, equity and debt project finance sources, turbine
suppliers and constructors. Led by an industry leader, Dan Juhl, our development
team is unmatched in its general experience, credibility and proven track
record.





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





For
community wind projects to be completed successfully, projects must be
constructed in a cost-effective manner. In the course of completing 14 projects
to date, we have been able to demonstrate to project owners, equity investors
and lenders, that we can build wind farms on a cost-effective
basis.





In the
Midwest U.S. markets where we are active, our management team maintains local
presence and promotes community stakeholder involvement. By maintaining offices
in Woodstock, Minnesota and Chicago, Illinois, and becoming involved in local
community affairs, we develop a meaningful local presence, which we believe
provides us with a significant advantage when working through the local
permitting processes and helps to enlist the support of our local communities
for wind farms. We believe that our local approach has enabled us to secure
approvals and support for our projects in regions that have historically voiced
meaningful opposition and has given us a significant advantage over competitors,
who are not as active in the local communities in which we are developing wind
farms. Our management’s active participation in the state and local regulatory
and legislative processes has led to the growth of community wind across the
Midwest.





As a
result of our project portfolio and industry-respected management team, we enjoy
strong relationships with key trading partners that are required for successful
wind farm development. These relationships include regulators, turbine
suppliers, electric component suppliers, equity investors, project lenders,
engineering firms, constructors, electric transmission operators and electric
utilities.





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





·
            the
      development of these projects secures economic benefits to the local
      community bringing construction, legal and regulatory work to rural areas
      by engaging local farmers, engineers, bankers and contractors to assist in
      the building and maintenance of the
projects;





·
            easier
      and less expensive transmission and, in general, projects which are much
      easier to build.  End users generally receive electricity
      through an already established local utility
  grid;





·
            the
      landowner and local community retain more by sharing ownership with the
      developer and excluding external interests;
and





·
            easier
      to obtain regulatory permits and to secure project financing through
      established and/or local resources due to the size of each
      project.





In
addition, while mega-wind projects have gained wide attention, the Company is
uniquely positioned as the only public community wind power company in the U. S.
committed to and actually building projects in the 1 – 50 megawatt sector, which
has received considerable attention by the industry.  This market is
largely overlooked by most developers.  This oversight provides an
opportunity to rapidly increase the Company’s market share and expansion
plans.





Since
becoming a public company in 2008, Juhl Wind has achieved several significant
milestones:





·
            we
      have secured institutional investments of over $5 million available for
      use as working capital;





·
            we
      acquired NextGen which specializes in small business and consumer-owned
      wind turbine and solar systems.  This acquisition brings smaller
      wind turbine and solar expertise to the Company to enhance and expand our
      existing community wind power product and service
    offerings;





·
            establishing
      equity financing terms





·
            in
      the last half of 2008, we have entered into seven new feasibility
      consulting studies for community based wind farm projects, including
      completing a feasibility study with Abilene Christian University to study
      the development of a wind project with capacity of  three
      megawatts initially with potential growth to a larger wind
      farm;


26





·
            we
      entered into a development agreement with Winona County, Minnesota for a
      $3.6 million, two megawatt wind system to be completed in
      2009.





Intellectual
Property





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





The
Company has no patents, trademarks, licenses, franchises, concessions or royalty
agreements.





Government
Regulation





Traditionally,
utility markets in the United States have been highly regulated. The U.S. power
industry is currently in transition as it moves toward a more competitive
environment in wholesale and retail markets. The commercial viability of wind
power will increasingly depend upon pricing as the trend toward deregulation
continues.





Our
management anticipates that additional favorable government legislation will
have a positive impact on our business.





The
growing concern over global warming caused by greenhouse gas emissions has also
contributed to the growth in the wind energy industry. According to the
Intergovernmental Panel on Climate Change’s Climate Change 2007: Synthesis
Report, 11 of the last 12 years (1995-2006) rank among the warmest years since
1850. Additionally, the global average sea level has risen at an average rate of
1.8 millimeters per year since 1961 and at 3.1 millimeters per year since 1993,
due to the melting of glaciers, ice caps and polar ice sheets, coupled with
thermal expansion of the oceans. The importance of reducing greenhouse gases has
been recognized by the international community, as demonstrated by the signing
and ratification of the Kyoto Protocol, which requires reductions in greenhouse
gases by the 177 (as of March 2008) signatory nations. While the United States
did not ratify the Kyoto Protocol, state-level initiatives have been undertaken
to reduce greenhouse gas emissions. California was the first state to pass
global warming legislation, and ten states on the east coast have signed the
Regional Greenhouse Gas Initiative, which proposes to require a 10% reduction in
power plant carbon dioxide emissions by 2019.





Various
state and federal governments have placed restrictions on fossil fuel emissions,
and it is anticipated that additional requirements for limitation of such
emissions will continue. Substituting wind energy for traditional fossil
fuel-fired generation would help reduce carbon dioxide emissions due to the
environmentally-friendly attributes of wind energy. According to the U.S.
Department of Energy, EIA’s International Energy Annual 2006, updated December
8, 2008, the United States had the second highest carbon dioxide emissions of
all the countries in the world in 2006, with 5,902.75 billion metric
tons.  This number was second only to China which had 6,017.69 billion
metric tons. According to the U.S. Department of Energy, EIA’s Annual Energy
Review 2007, from 1990 to 2006, carbon dioxide emissions from the United States’
electric power industry have increased by a cumulative amount of 28.7%, from 1.8
billion metric tons to 2.3 billion metric tons.





Environmental
legislation and regulations provide additional incentives for the development of
wind energy by increasing the marginal cost of energy generated through
fossil-fuel technologies. For example, regulations such as the Clean Air
Interstate Rule and the Regional Haze Rule have been designed to reduce ozone
concentrations, particulate emissions and haze and other requirements to control
mercury emissions can require conventional energy generators to make significant
expenditures, implement pollution control measures or purchase emissions credits
to meet compliance requirements. These measures have increased fossil fuel-fired
generators’ capital and operating costs and put upward pressure on the market
price of energy. Because wind energy producers are price takers in energy
markets, these legislative measures effectively serve to make the return on wind
energy more attractive relative to other sources of generation.





We
believe there is significant support in the U.S. to enact legislation that will
attempt to reduce the amount of carbon dioxide produced by electrical
generators. Although the ultimate form of legislation is still being debated,
the two most likely alternatives are (i) a direct emissions tax or (ii) a
cap-and-trade regime. We believe either of these alternatives would likely
result in higher overall power prices, as the marginal cost of electricity in
the U.S. is generally set by generation assets which burn fossil fuels such as
oil, natural gas and coal and produce carbon dioxide. As a non-carbon emitter
and a market price taker, we are positioned to benefit from these higher power
prices.





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




Renewables Portfolio Standards
(RPS).  In response to the push for cleaner power generation
and more secure energy supplies, many states have enacted renewable portfolio
standards (“RPS”) programs. These programs either require electric utilities and
other retail energy suppliers to produce or acquire a certain percentage of
their annual electricity consumption from renewable power generation resources
or, as in the case of New York, designate an entity to administer the central
procurement of Renewable Energy Certificates (“RECs”) for the state. Wind energy
producers generate RECs due to the environmentally beneficial attributes
associated with their production of electricity.


27
  According
to the Lawrence Berkeley National Laboratory’s Renewables Portfolio Standards in
the United States April 2008 report,  RPS programs at the state level
have proliferated since the late 1990s and, as of the end of 2007, 29 states and
the District of Columbia had adopted some form of RPS program. The report also
indicates the District of Columbia and 25 of the 29 states have mandatory RPS
requirements and combined, they represent 46% of total U.S. electrical load. A
number of states including Arizona, California, Colorado, Minnesota, Nevada, New
Jersey, New Mexico, Pennsylvania and Texas, have revised their programs to
include higher targets since original adoption. The report adds that other
states such as Missouri, North Dakota, Vermont and Virginia have adopted state
goals, which set targets, not requirements, for certain percentages of total
energy to be generated from renewable resources. In 2008, South Dakota and Utah
also adopted RPS programs.





Almost
every state that has implemented an RPS program will need considerable
additional renewable energy capacity to meet its RPS requirements. We believe
that much of the forecasted 50,000 megawatt installed wind capacity by 2015 will
be driven by current and proposed RPS targets, along with additional demand from
states without renewable standards.





According
to the Emerging Growth Report 2008, these mandatory requirements, which are now
in place in many states, are forcing electric utilities to be at the forefront
of wind power development.





Renewable Energy Certificates
(REC).  A REC is a stand-alone tradable instrument representing
the attributes associated with one megawatt hour of energy produced from a
renewable energy source. These attributes typically include reduced air and
water pollution, reduced greenhouse gas emissions and increased use of domestic
energy sources. Many states use RECs to track and verify compliance with their
RPS programs. Retail energy suppliers can meet the requirements by purchasing
RECs from renewable energy generators, in addition to producing or acquiring the
electricity from renewable sources. Under many RPS programs, energy providers
that fail to meet RPS requirements are assessed a penalty for the shortfall,
usually known as an alternative compliance payment. Because RECs can be
purchased to satisfy the RPS requirements and avoid an alternative compliance
payment, the amount of the alternative compliance payment effectively sets a cap
on REC prices. In situations where REC supply is short, REC prices approach the
alternative compliance payment, which in several states is approximately $50 to
$59 per megawatt hour. As a result, REC prices can rival the price of energy and
RECs can represent a significant additional revenue stream for wind energy
generators.





Production Tax Credits
(PTC).  The PTC provides wind energy generators with a credit
against federal income taxes, annually adjusted for inflation, for a duration of
ten years from the date that the wind turbine is placed into service. Currently,
the PTC is $21 per megawatt hour. Wind energy generators with insufficient
taxable income to benefit from the PTC may take advantage of a variety of
investment structures to monetize the tax benefits.





The PTC
was originally enacted as part of the Energy Policy Act of 1992 for wind farms
placed into service after December 31, 1993 and before July 1, 1999. The PTC
subsequently has been extended six times, but has been allowed to lapse three
times (for periods of three, six and nine months) prior to retroactive
extension. Currently, the PTC is scheduled to expire on December 31,
2012.  This expiration date reflects a three-year extension passed
under the American Recovery and Reinvestment Act enacted in February
2009.





Accelerated Tax
Depreciation.  Tax depreciation is a non-cash expense meant to
approximate the loss of an asset’s value over time and is generally the portion
of an investment in an asset that can be deducted from taxable income in any
given tax period. Current federal income tax law requires taxpayers to
depreciate most tangible personal property placed in service after 1986 using
the modified accelerated cost recovery system, or MACRS, under which taxpayers
are entitled to use the 200% or 150% declining balance method depending on the
class of property, rather than the straight line method. Under MACRS, a
significant portion of wind farm assets is deemed to have depreciable life of
five years which is substantially shorter than the 15 to 25 year depreciable
lives of many non-renewable power supply assets. In addition, the federal
government has extended the rule regarding 50% additional first year bonus
depreciation for assets placed in service by the end of 2009. This shorter
depreciable life and the accelerated and bonus depreciation methods result in a
significantly accelerated realization of tax depreciation for wind farms
compared to other types of power projects. Wind energy generators with
insufficient taxable income to benefit from this accelerated depreciation often
monetize the accelerated depreciation, along with the PTCs, through forming a
limited liability company with third parties.





American Recovery and Reinvestment
Act of 2009 (the “Recovery Act”). On February 13, 2009 the
11th
Congress passed a stimulus package known as The American Recovery and
Reinvestment Actof 2009 (the
“Recovery Act”).  The Recovery Act has the potential to substantially
impact the market for renewable energy initiatives. Approximately $40 billion in
spending was appropriated for clean energy initiatives and an additional $20
billion is estimated for new and modified tax incentives. According to a
discussion at Windustry.org, the Recovery Act’s goal opens up new sources of
funding for renewable energy at a time when the wind energy industry is set for
even more growth.  The Recovery Act contains a number of provisions
that focus on the growth of the wind industry.  Some of the pertinent
provisions of the Recovery Act include the following: (i) three-year extension
of the federal wind energy production tax credit (PTC) so that eligible projects
placed in service by the end of 2012 will qualify for the credit; (ii) option
for a thirty percent (30%) investment tax credit (ITC) instead of the PTC; (iii)
option to convert the ITC into a grant for wind projects placed in service
before 2013; (iv)  eliminates the dollar cap on residential small wind
and solar for ITC purposes, and (v) additional loan guarantees, bonds and tax
incentives.   These programs enacted under the Recovery Act allow
community wind farms, such as our Company, to take advantage of these funding
opportunities.





Per
Windindustry.org, wind facilities that qualify for the PTC can now make an
irrevocable decision to take 30% ITC in lieu of the PTC.  In order to
do so, the project must be placed into service by December 31, 2012, and the PTC
will no longer be available for the project.  This has the potential
to attract more investors who may not have enough passive activity income to
realize the PTC.  Which credit a taxpayer uses will depend upon an
analysis of the project revenue and cost projections as well as analysis of the
investor tax appetite.


28





Further,
if the project qualifies for the PTC or the ITC and is placed into service
between 2009-2010 (or it begins construction at the time and is place into
service before 2013), the project can choose to apply to the Treasury Department
for a cash grant that is equal to 30% of the qualified costs of the
project.  This cash grant is in lieu of both the PTC and
ITC.  This means the value of the ITC can be realized, even if the
taxpayer cannot take advantage of the credit.  The rules and
application guidelines for this program are currently being established by the
Department of Energy.  We believe that the cash grant program will
allow us to enhance our ability to attract equity investors for our community
wind projects.





The
Recovery Act removes the $4,000 cap on small wind credit so taxpayers can now
take the full 30% credit for a qualified small wind system.  It also
provides for an additional $1.6 billion for Clean Renewable Energy Bonds (CREBs)
that are used to finance renewable energy.  Previously, these bonds
have been given at 0% interest rate, and the bondholder receives a tax credit in
lieu of bond interest.





The
Department of Energy received an extension of its authority to provide loan
guarantees for qualified technologies under Title XVII of the federal Energy
Policy Act of 2005 and an additional $6 billion for this
program.  Eligible technologies include electricity-generating
renewable energy projects.





Employees





As of May
10, 2009, we employed 14 full-time employees and no part-time employees,
excluding employees and consultants of any affiliated companies that are not at
least 50%-owned subsidiaries of ours. None of our employees is subject to a
collective bargaining agreement and we believe that relations with our employees
are very good. We also frequently use third-party consultants to assist in the
completion of various projects. Third parties are instrumental to us in keeping
the construction and development of projects on time and on budget.





Basis
of Presentation





Our
financial statements are prepared in accordance with the rules and regulations
of the SEC.





For
accounting purposes, Juhl Energy was the acquirer in the share exchange
transaction, and consequently the transaction is treated as a recapitalization
of the company.  DanMar was accounted for in a manner similar to
pooling of interests due to common control ownership. Juhl Energy and DanMar’s
financial statements are our historical financial statements.





Our
acquisition of NextGen in October 2008 was accounted for in a manner similar to
pooling of interests due to common control ownership. The assets and liabilities
of NextGen were combined at historical cost for the portion (54%) under common
control and at fair value for the non-controlling interest.  The
revenue and expense activities of NextGen are included in the accompanying
statement of operations for the three months ended March 31, 2009 and
2008.





The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and related notes included
in this report.





Significant
Accounting Estimates





We review
all significant estimates affecting our consolidated financial statements on a
recurring basis and record the effect of any necessary adjustment prior to their
publication. Uncertainties with respect to such estimates and assumptions are
inherent in the preparation of financial statements; accordingly, it is possible
that actual results could differ from those estimates and changes to estimates
could occur in the near term. The preparation of our consolidated financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of the contingent
assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenue and expenses during the reporting period.
Estimates and judgments are used when accounting for revenue, stock-based
compensation, valuation of warrants, accounts receivable and allowance for
doubtful accounts, impairment of goodwill and intangible assets, deferred income
taxes, and contingencies among others.





Our
management has discussed the development and selection of these significant
accounting estimates with our board of directors and our board of directors has
reviewed our disclosures relating to them.


29


Results
of Operations




Comparison
of Three-Month Periods Ended March 31, 2009 and March 31, 2008





Overview




As a
result of the NextGen acquisition, we group our operations into two business
segments: (i) wind farm development and management and (ii) consumer-owned
renewable energy products and services.  Our business segments are
separate business units that offer different products and
services.  The wind farm development and management segment represents
revenue derived from the development of “community wind power.”  The
consumer-owned renewable energy segment represents revenue derived from the sale
of consumer-owned renewable energy products and related installation
services.





Our
general activity for the three months ended March 31, 2009 was primarily focused
on the ongoing development of 24 wind farms we have under development with
various parties and in various stages of development. Our management believes
that we are poised for growth as we now have improved our balance sheet
liquidity necessary to work through our current projects under development and
ability to develop future projects.  We acquired NextGen in the fourth
quarter of 2008 to expand our focus to the consumer sector for renewable energy
products and services.  Our management attention in the first quarter
of 2009 to the consumer segment has primarily been related to the review of
NextGen’s production and distribution capabilities and the integration of these
capabilities into our existing technical and administrative
platforms.





Our
community wind projects are based on the formation of partnerships with the
farmers upon whose land the wind turbines are installed. Revenue is also derived
from our work in the development of wind farms throughout the development
process including four major components: feasibility studies, development fees,
operations and management oversight, and construction management
fees.





We hold
contract rights, are involved with projects in development and under
negotiation, and provide development activities in the wind power industry. Once
wind farms are operational, we seek contract rights to provide administrative
services agreements which call for management and administrative services to be
provided to the operating wind farm. Our assets include eight development
services agreements, ten projects in early development stages, and six
agreements to conduct wind power feasibility studies.





Due to
the anticipated increased demand for electricity from alternative energy sources
in 2009 and beyond, together with the stimulus from new federal government
regulations, we believe the demand for wind energy developments and
consumer-owned renewable energy products will be stable or will increase in the
foreseeable future. We anticipate growing revenues on an annual basis beginning
in 2009; however, revenue will be subject to shifts in timing due to project
development delays resulting from our ability to obtain financing and the
construction season in the Upper Midwest climate.





During
the last fiscal year, we added new projects under development, underscoring the
demand in the market and specifically for our form of community
wind.  We encountered difficult economic conditions with respect to
the financing of wind development projects, and as such, we commissioned no new
wind farm projects during 2008 or the first quarter of 2009.  We did
obtain an equity financing commitment in September 2008 for one of our wind farm
developments, and we expect that construction on this project will occur in
2009. We continue to identify additional debt and equity financing sources in
order to begin construction on two to three backlogged projects in
2009.





Revenue





Total
revenue decreased by approximately $131,000, or 27%, from approximately $479,000
for the quarter ended March 31, 2008, to approximately $348,000 for the quarter
ended March 31, 2009.





In the
wind farm development and management segment, which includes all related party
revenue, revenue was generally flat as revenue from that segment decreased by
$7,000, or 4.3%, from approximately $161,000 for the quarter ended March 31,
2008 to $154,000 for the quarter ended March 31, 2009.  The Company
maintained the same management contracts between 2008 and 2009.  We
did not have any of our development projects become operational in the quarters
ended March 31, 2008 and 2009, respectively, due to the difficulty in obtaining
financing amidst the turmoil in the investment banking and financial
institutions during 2008. We expect project financing conditions to improve in
2009 due to the federal government intervention within the banking sector and
the focus of the recent federal stimulus package as it relates to the energy
industry.





In the
consumer-owned renewable energy segment, revenue decreased by approximately
$122,000, or 38%, from approximately $316,000 for the quarter ended March 31,
2008 to approximately $194,000 for the quarter ended March 31,
2009.  This decrease was primarily attributable to a decline in small
wind turbine sales resulting from the transition of the NextGen business to Juhl
Wind and delays in shipping turbines that were in backlog as management
reformulated NextGen’s business plan for the future.





Cost
of Goods Sold





All of
the costs classified in cost of goods sold relate to the NextGen segment and
includes the purchase of previously used turbines, replacement parts,
subcontract refurbishment services and installation project
costs.  Costs of goods sold increased by approximately $13,000, or 8%,
from approximately $158,000 for the quarter ended March 31, 2008 to
approximately $171,000 for the quarter ended March 31, 2009.  The cost
of goods sold is higher, despite the lower amount of sales revenue, due to
$57,000 of expense assigned to the 2009 turbine sales for amortization of the
intangible backlog asset recognized in the NextGen acquisition. Excluding the
expense assigned to cost of sales for the backlog amortization, as a percentage
of total revenue, cost of goods sold increased from 49% for the quarter ended
March 31, 2008 to 59% for the quarter ended March 31, 2009.  This
increase was primarily attributable to the better turbine pricing achieved in
the sales that occurred in 2008.


30





Operating
Expenses





General and Administrative
Expenses.  General and administrative expenses increased by
approximately $415,000, or 860%, from approximately $48,000 for the quarter
ended March 31, 2008 to approximately $463,000 for the quarter ended March 31,
2009.  The large increase was primarily attributable to approximately
$355,000 of legal, audit and advisory expenses incurred in connection with the
increased costs of being a public reporting company, subsequent audit costs over
the NextGen acquisition, securities registration filings, legal services for
legislative support, and accounting services support. Of this amount, we believe
that approximately $200,000 represent one-time costs associated with these
professional services.  The increase in general and administrative
expenses in 2008 also included increased expenses for travel and supplies in
relation to the increased number of employees and activity surrounding project
management and administration.





Payroll and Employee
Benefits.Payroll and employee benefits expenses increased by
approximately $321,000, or 419%, from approximately $76,000 for the quarter
ended March 31, 2008 to approximately $397,000 for the quarter ended March 31,
2009.  Of this increase, approximately $110, 000 was attributable to
the addition of a new company president and chief financial officer and the
increased rate of pay for the current chief executive officer, approximately
$94,000 was attributable to stock-based compensation expenses and the remaining
increase was attributable to the addition of nine employees versus the quarter
ended March 31, 2008.





Wind Farm Management
Expenses.Wind farm management expenses increased by
approximately $51,000 or 100%, from approximately $51,000 for the quarter ended
March 31, 2008 to approximately $102,000 for the quarter ended March 31,
2009.  This increase was primarily due to the incurrence of one-time
costs incurred to upgrade wind farm facilities as requested by the major equity
investor in the projects.





Other income and
expense.Effective January 1, 2009, the Company adopted the
provisions of Emerging Issues Task Force 07-5 whereby the the detachable
warrants issued in conjunction with the 2008 private placement must be accounted
for as a derivative instrument. During the quarter ended March 31, 2009, we
recorded a gain of approximately $1,350,000 from the change in the fair value of
the underlying warrants using the Black Scholes method. In the future, we will
be making additional adjustments to the fair value of these warrants on a
quarterly basis as long as the warrants are currently outstanding with the
down-round protection provisions that are included in the agreements with the
warrant holders.





We
recorded approximately $35,000 of investor relations expenses in the quarter
ended March 31, 2009. These expenses were paid from a $500,000 restricted cash
fund that had been set up in June 2008 stemming from the 2008 private
placement.  There were no investor relations expenses in quarter ended
March 31, 2008.





Net
Income


For the
reasons described above, net income increased by approximately $407,000 from
approximately $137,000 for the quarter ended March 31, 2008 to $544,000 for the
quarter ended March 31, 2009. Excluding the gain recognized from the recording
of the warrant derivatives, the net loss for March 31, 2009 would have been
$805,000.





Accounts
Receivable





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





Property,
Plant and Equipment





As of
March 31, 2009 and 2008, we held approximately $369,000 and $344,000 in net book
value of property, plant and equipment, respectively. These assets included
land, buildings, office equipment, shop equipment and service
vehicles.





Liquidity
and Capital Resources





At March
31, 2009, we carried $3,194,000 in cash and short term-investments on the
balance sheet primarily due to the 2008 private placement. However, $700,000 of
the short-term investments has been designated as security for the bank notes
payable of approximately $697,000 and therefore have been reflected in current
assets as a restricted asset. In order to provide additional protection to our
cash, we obtained an excess deposit insurance bond (at a cost of $7,089) for our
wholly-owned subsidiary, Juhl Energy, with respect to cash and certificates of
deposit carried in Juhl Energy’s name at First Farmers & Merchants National
Bank. The insurance bond increased our deposit insurance protection to
$4,500,000 and is effective through February 25, 2011.


We have
incurred additional operating costs, especially in the area of professional
fees, since becoming a public reporting company. At the same time, we will
continue our internal efforts to arrange financing terms for each project under
development. The ability to obtain debt and equity financing is a material
factor in producing our future revenue streams and cash flow. We expect to
generate positive cash flow when we close on equity financings and begin
construction of two projects, Grant County and Valley View, in 2009.
Construction is expected to begin in the third quarter of 2009.


31


Due to
the anticipated increased demand for power from alternative energy sources in
2009, we believe the demand for our services, and therefore our revenues, will
be stable or will increase in the foreseeable future. Based on our anticipated
level of revenues, we believe that funds generated from operations, together
with existing cash and cash available from construction and consulting
activities, will be sufficient to finance our operations and planned capital
expenditures through the next twelve months.





We will
continue to pursue new community wind farm developments to maintain an active
backlog of projects. However, we cannot assure you that these actions will be
successful. Should volumes and revenues decline to a level significantly below
our current expectations, we would reduce capital expenditures and implement
cost-reduction initiatives which we believe would be sufficient to ensure that
funds generated from operations, together with existing cash and available
borrowings under our credit agreement, would be sufficient to finance our
current operations through the first quarter of 2010.





Net cash
generated from operating activities was approximately $207,000 for the quarter
ended March 31, 2008, and net cash used in operating activities was
approximately $164,000 for the quarter ended March 31, 2009. The change in net
cash from operating activities of  $369,000 is primarily due to the
increased operating expenses such as payroll and professional services fees.
These increased expenses were highlighted above in the discussion and analysis
of Operating Expenses.





Net cash
used in investing activities was approximately $89,000 for the quarter ended
March 31, 2008 and approximately $38,000 for the quarter ended March 31,
2009.   The change in net cash used in investing activities in
2008 primarily relates to reimbursable project costs incurred on wind farm
projects where Juhl Wind is currently the project developer. The net cash used
in investing activities in 2009 relates to the purchase of equipment and a
vehicle.





Our net
cash flow used in financing activities was approximately $6,000 for the quarter
ended March 31, 2008, and net cash generated from financing activities was
approximately $85,000 for the quarter ended March 31,
2009.  Additional financing activities in 2009 included $50,000 in new
borrowings to support NextGen working capital needs, along with approximately
$35,000 from a restricted cash fund to pay investor relations
expenses.





We
maintain an escrow cash account funded by the proceeds received from the Series
A convertible preferred stock we issued in the 2008 private placement, which
occurred during the second quarter of 2008. The funds are to be used only for
investor relations initiatives.  As of March 31, 2009, we had a
balance of approximately $230,000 in the account. Also, 15% of the gross
proceeds generated from the exercise of the warrants attached to this Series A
convertible preferred stock be placed in the account.





Impact
of Inflation





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





Seasonality





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





Off-Balance
Sheet Arrangements





There are
no off-balance sheet arrangements between us and any other entity that have, or
are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.





Critical
Accounting Policies





The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires our management to exercise its judgment. We exercise considerable
judgment with respect to establishing sound accounting policies and in making
estimates and assumptions that affect the reported amounts of our assets and
liabilities, our recognition of revenues and expenses, and disclosures of
commitments and contingencies at the date of the financial
statements.





On an
ongoing basis, we evaluate our estimates and judgments. We base our estimates
and judgments on a variety factors including our historical experience,
knowledge of our business and industry, current and expected economic
conditions, the composition of our products/services and the regulatory
environment. We periodically re-evaluate our estimates and assumptions with
respect to these judgments and modify our approach when circumstances indicate
that modifications are necessary.


While we
believe that the factors we evaluate provide us with a meaningful basis for
establishing and applying sound accounting policies, we cannot guarantee that
the results will always be accurate. Since the determination of these estimates
requires the exercise of judgment, actual results could differ from such
estimates. A description of significant accounting policies that require us to
make estimates and assumptions in the preparation of our consolidated financial
statements is as follows:


32


Revenue
Recognition.We receive a down payment upon the acceptance of
a development contract by the wind farm owner. With no work performed on the
contract, the down payment is considered deferred revenue and is recognized over
the estimated life of the contract. We recognize additional revenue from
development contracts upon completion of each of the two deliverables in the
development contract.  The first deliverable is the acceptance of the
power purchase agreement by the wind farm owner and power company. The
compensation relating to the acceptance of the power purchase agreement is
recognized on the date the agreement is executed. The second deliverable is the
commercial operation date of the project. Revenue is recognized for this
deliverable when the project becomes commercially operational according to the
power company.





We have
signed administrative services agreements with several wind turbine projects to
provide management and bookkeeping services. The administrative services
agreements call for quarterly payments in advance or arrears of services
rendered based on the terms of the agreement. The administrative service
payments are carried as deferred revenue and recognized monthly as services are
performed.





Capitalization and Investment in
Wind Farm Project Assets.Our wind farms have four basic phases: (i)
development (which includes pre-development consulting), (ii) financing and
applications, (iii) engineering and construction, and (iv) operation and
maintenance. During the pre-development phase, milestones are created to ensure
that a project is financially viable. Project viability is obtained when it
becomes probable that costs incurred will generate future economic benefits
sufficient to recover these costs.





Examples
of milestones required for a viable wind project include the
following:





·
            the
      identification, selection and acquisition of sufficient land for control
      of the land area required for a wind
farm,


·
            the
      confirmation of a regional electricity market and the availability of
      RECs,


·
            the
      confirmation of acceptable wind resources (feasibility
    study),


·
            the
      confirmation of the potential to interconnect to the electric transmission
      grid, and


·
            the
      determination of limited environmental
  sensitivity.





Wind farm
project costs are generally funded through 50% equity and 50% debt from outside
investors and local banks. We do not invest our capital in the projects we
develop, with the exception of reimbursable project advances from time to time.
We have established relationships with equity investment partners, as well as
with local banks, and these relationships have culminated in the successful
funding of several projects. The investment community and marketplace have
demonstrated a strong appetite for investments in wind energy in the recent
past. These investors recognize a determined rate of return and return of
capital typically over a ten year period.  Development fees are
generated by us throughout all phases of project development and represent our
revenue. Expenses incurred relating to operations are applied under generally
accepted accounting principles.





Item 3.
            QUANTITATIVE
      AND QUALITATIVE ANALYSIS ABOUT MARKET
RISK





Not
applicable.





Item 4.
            CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures





Based on
management’s evaluation (with participation of our President and Chief Financial
Officer (CFO), as of the end of the period covered by this report, our President
and CFO have concluded that our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the Exchange Act), are ineffective to provide reasonable assurance that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in SEC rules and forms, and is accumulated and
communicated to management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.





Changes
in Internal Control over Financial Reporting





There
were changes to our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting. For
a discussion of the changes made, refer to the Remediation of Material
Weaknesses in Internal Control over Financial Reporting.




Management’s
Report on Internal Control over Financial Reporting as Previously Reported on
Form 10-K





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act.  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 in accordance with U.S. generally
accepted accounting principles. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also,
projection of any evaluation of effectiveness to future periods is 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.


33


Management
has conducted, with the participation of our Chief Executive Officer and Chief
Financial Officer, an assessment, including testing of the effectiveness, of our
internal control over financial reporting as of December 31, 2008. Management’s
assessment of internal control over financial reporting was conducted using the
criteria in Internal Control over Financial Reporting – Guidance for Smaller
Public Companies issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”).





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 the Company’s annual or interim financial
statements will not be prevented or detected on a timely
basis.   In connection with management’s assessment of our
internal control over financial reporting as required under Section 404 of the
Sarbanes-Oxley Act of 2002, we identified the following material weaknesses in
our internal control over financial reporting as of December 31,
2008:





1.           The
Company has not established adequate financial reporting monitoring activities
to mitigate the risk of management override, specifically:





a.           Delegation
of authority has not been formally documented;





b.           Insufficient
oversight of accounting principle implementation; and





c.           Insufficient
oversight of external audit functions;





2.           There
is a strong reliance on the external auditors to review and adjust the annual
and quarterly financial statements, to monitor new accounting principles, and to
ensure compliance with GAAP and SEC disclosure requirements;





3.           There
is a strong reliance on the external attorneys to review and edit the annual and
quarterly filings and to ensure compliance with SEC disclosure requirements;
and





4.           We
have not adequately divided, or compensated for, incompatible functions among
personnel to reduce the risk that a potential material misstatement of the
financial statements would occur without being prevented or
detected.





Because
of the material weaknesses noted above, management has concluded that we did not
maintain effective internal control over financial reporting as of March 31,
2009, based on Internal Control over Financial Reporting – Guidance for Smaller
Public Companies issued by COSO.





Remediation
of Material Weaknesses in Internal Control Over Financial Reporting





Management
is in the process of addressing its material weaknesses in an effort to improve
its system of internal control over financial reporting through the following
actions:





1.
            The
      Company hired a Chief Financial Officer in January 2009 to provide
      oversight of the internal control systems, compliance with the GAAP and
      SEC disclosure requirements, and supervision of the accounting
      functions.





2.
            In
      March 2009, the Board of Directors approved the adoption of a Disclosure
      Control policy, which includes, among other things, a Disclosure Committee
      consisting of the CEO, President and CFO. This Committee will be
      responsible for managing the identification and disclosure of information
      in our SEC filings and public
statements.





3.
            The
      Company has assessed control risks with the assistance of an outside
      consultant who has experience with Sarbanes Oxley compliance and has
      documented key accounting control areas. We expect to continue this effort
      in 2009 to meet attestation
standards.





4.
            We
      have established a formal delegation policy within the Company which
      provides business rules in conjunction with signing and approval authority
      by Company employees.





5.
            As
      a small business, the Company does not have the resources to fund
      sufficient staff to ensure a complete segregation of responsibilities
      within the accounting function.  However, Company management
      does review, and will increase the review of, financial statements and
      bank reconciliations on a monthly basis, together with the adoption of a
      monthly financial closing process. These actions, in addition to the
      improvements identified above, will minimize any risk of a potential
      material misstatement
occurring.


34





The
foregoing initiatives will enable us to improve our internal controls over
financial reporting. Management is committed to continuing efforts aimed at
improving the design adequacy and operational effectiveness of its system of
internal controls.  The remediation efforts noted above will be
subject to the Company’s internal control assessment, testing and evaluation
process.





PART II - OTHER
INFORMATION





Item
1. LEGAL PROCEEDINGS





None





Item
1A. RISK FACTORS





Not
applicable.





Item
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





None.





Item
3. DEFAULTS UPON SENIOR SECURITIES.





None





Item
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.





None.





Item
5. OTHER INFORMATION.





a)
none


b)
none





Appointment
of Chief Financial Officer





On
January 26, 2009, John J. Brand became our Chief Financial
Officer.  Immediately prior to joining Juhl Wind, and since 2002, Mr.
Brand served as the Chief Financial Officer of CMS Direct, Inc.  Mr.
Brand is a former certified public accountant. He has also held Chief Financial
Officer and division controllership positions in both public and private
companies in technology, business services and energy-related businesses. In
addition, Mr. Brand has 14 years of audit and tax experience in public
accounting firms, including Grant Thornton. Mr. Brand earned a B.S. in
Accounting from St. Cloud State University.  In connection with his
appointment, Mr. Brand entered into an employment agreement with us (to be
formalized in writing following Mr. Brand’s first six months of employment with
the Company), pursuant to which he was granted an option with immediate vesting
to purchase 25,000 shares of our common stock.  Options to purchase an
additional 75,000 shares of our common stock will be granted following the first
six months of Mr. Brand’s employment.





Appointment
of New Director





On
January 14, 2009, General Wesley Clark (ret.) became a director of our
Company.  General Clark has enjoyed a distinguished career that began
with his graduation from West Point as first in his class. In 1966, he was
awarded a Rhodes scholarship to Oxford University, where he earned a Masters in
Politics, Philosophy and Economics. During thirty-four years of service in the
United States Army, Wesley Clark rose to the rank of four-star general as NATO’s
Supreme Allied Commander, Europe. After his retirement in July 2000, he became
an investment banker, author, commentator and businessman. In August 2000,
General Clark was awarded the Presidential Medal of Freedom, the nation’s
highest civilian honor. In 2003, he was also a candidate for the Democratic
nomination for the U.S. Presidency. From July 2000 to February 2003, he was a
consultant to and then the Managing Director of the Stephens Group Inc., a
private investment bank. Since March 2003, he has been the Chairman and Chief
Executive Officer of Wesley K. Clark & Associates, a business services and
development firm based in Little Rock, Arkansas. In February 2006, General Clark
joined Rodman & Renshaw Holdings, LLC, which controls Rodman & Renshaw,
LLC, as Chairman of the Board and as a member of their Advisory Board. General
Clark also serves on the boards of directors of AMG Advanced Metallurgical Group
N.V., Argyyle Security, Inc., CVR Energy Inc., NutraCea Inc. and Prysmian
S.P.A.  General Clark serves as a director under the terms of a letter
agreement between the Company and General Clark dated January 13, 2009, a copy
of which was filed as an exhibit to the Company’s annual report on Form 10-K
filed with the Securities and Exchange Commission on March 31,
2009.  The letter agreement provides for, among other things, annual
cash compensation of $10,000, a grant of options to purchase 10,000 shares of
the Company’s common stock, $1,500 per day compensation while conducting Company
business and expense reimbursement during his term of office.


35





Waiver of
Filing Deadline for amended S-1 Registration Statement





On May
13, 2009, we entered into an agreement with our holders of Series A Preferred
Stock to waive the requirement that the Company respond to SEC comments. in
connection with Amendment No. 2 of its Form S-1 registration statement filed on
April 15, 2009, within 10 calendar days from receipt of such comments, as set
forth in the Amendment Agreement dated March 27, 2009 between the
parties.  Pursuant to the Waiver Agreement, the Company has until May
20, 2009 to respond to the SEC comments received on April 30, 2009 and to file
its amended registration statement.  The Waiver Agreement is attached
to this report as Exhibit 10.2.





Item
6. EXHIBITS





Exhibits
required by Item 601 of Regulation S-K





No.
                                                                                
                                                                                Description3.1
                                                                                
                                                                                Articles
      of Incorporation of the Company 13.2
                                                                                
                                                                                Certificate of
      Amendment to Certificate of Incorporation amending, among other things,
      the name of MH & SC, Incorporated to Juhl Wind, Inc. filed June 20,
      2008, and effective June 24, 2008, with the Delaware Secretary of State
      23.3
                                                                                
                                                                                Certificate of
      Designation of Preferences, Rights and Limitations of Series A 8%
      Convertible Preferred Stock of Juhl Wind, Inc. filed June 24, 2008, with
      the Delaware Secretary of State23.4
                                                                                
                                                                                Bylaws of the
      Company110.1
                                                                                
                                                                                Letter Agreement
      dated January 13, 2009 between the Company and General Wesley K.
      Clark310.2
                                                                                
                                                                                Waiver
      Agreement dated May 13, 2009 between Juhl Wind, Inc. and the holders of
      Series A Preferred Stock31.1
                                                                                
                                                                                Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                                                                                
                                                                                Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                                                                                
                                                                                Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  200232.2
                                                                                
                                                                                Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002




1
Incorporated herein by reference from the Company’s Registration Statement on
Form S-B filed with the Securities and Exchange Commission on March, 31,
2007.




2
Incorporated herein by reference from the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 24, 2008.





3Incorporated
herein by reference from the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 2009.


36





SIGNATURES





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





JUHL WIND, INC.(Registrant)Date:  May15,
      2009
                      /s/
      John MitolaJohn
      MitolaPresident




37