PINX:JUHL Juhl Energy Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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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:  June 30, 2012

OR

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

Commission file number: 000-54080

JUHL WIND, INC.
(Name of small business issuer in its charter)
 
Delaware
 
20-4947667
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
     
1502 17th Street SE
   
Pipestone, Minnesota 
 
56164
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  o
 
Accelerated filer  o
Non-accelerated filer  o
 
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:  22,915,849  shares outstanding as of August 10, 2012.

 
 

 
 
TABLE OF CONTENTS
 
PART I - FINANCIAL INFORMATION
3
   
 
Item 1. Unaudited Financial Statements
4
     
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
23
     
 
Item 3. Quantitative and Qualitative Analysis About Market Risk
38
     
 
Item 4. Controls and Procedures
38
     
PART II - OTHER INFORMATION
39
   
 
Item 1. Legal Proceedings
39
     
 
Item 1A. Risk Factors
39
     
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
39
     
 
Item 3. Defaults Upon Senior Securities
39
     
 
Item 4. Mine Safety Disclosures
39
     
 
Item 5. Other Information
39
     
 
Item 6. Exhibits
40
     
Signatures
42
   
Exhibits
 
 
 
2

 
 
PART I - FINANCIAL INFORMATION
 
Item 1.            FINANCIAL STATEMENTS (UNAUDITED)
 
The accompanying unaudited condensed consolidated 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” or “SEC”). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary in order to make the consolidated 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 consolidated financial statements. For further information, refer to the consolidated financial statements and footnotes thereto, for the fiscal year ended December 31, 2011, previously filed with the Commission, which are included in the Annual Report on Form 10-K filed on March 30, 2012.

 
3

 
JUHL WIND INC.
 CONSOLIDATED BALANCE SHEETS
JUNE 30, 2012 AND DECEMBER 31, 2011
 
   
JUNE 30,
2012
   
DECEMBER 31,
2011
 
   
(unaudited)
       
ASSETS
           
             
CURRENT ASSETS
           
Cash   $ 3,060,279     $ 5,251,148  
Restricted cash     449,940       335,793  
Short-term investments and accrued interest receivable     566,541       564,927  
Short-term investments - restricted     383,801       382,269  
Accounts receivable     856,909       2,064,939  
Grant receivable- U.S. Treasury 1603 cash grant     -       6,284,476  
Work-in-progress     720,169       -  
Inventory     264,899       270,873  
Other current assets     854,413       664,955  
Current deferred income taxes     12,000       108,000  
Total current assets     7,168,951       15,927,380  
                 
PROPERTY AND EQUIPMENT, Net
    25,380,698       25,846,403  
                 
OTHER ASSETS
               
Investment, at cost     413,000       400,000  
Escrow cash reserves for contractual commitments     948,530       900,870  
Deferred offering and loan costs     256,315       13,607  
Intangible assets     773,456        -  
Goodwill     204,732       -  
Project development costs     330,439       283,141  
Deferred income tax asset     206,000       -  
Total other assets     3,132,472       1,597,618  
                 
TOTAL ASSETS   $ 35,682,121     $ 43,371,401  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
Accounts payable   $ 751,197     $ 3,828,276  
Short-term notes payable     342,518       2,964,703  
Accrued liabilities     1,330,128       1,097,338  
Payable to former owners of acquired company     1,191,722       -  
Income taxes payable     -       90,000  
Deferred revenue - license arrangement and other     220,494       697,281  
Current portion of promissory notes payable     231,804       4,576,063  
Derivative liabilities- interest rate swap     214,311       199,946  
Current portion of nonrecourse debt     760,785       737,167  
Total current liabilities     5,042,959       14,190,774  
                 
LONG-TERM LIABILITIES
               
Nonrecourse debt, net of current portion     10,260,352       10,650,328  
Promissory notes payable, net of current portion     2,604,596       -  
Derivative liabilities- interest rate swap     984,860       812,553  
Deferred revenue - license arrangement and 1603 Grant, net of current portion     2,123,397       2,186,089  
Deferred revenue - power purchase contract     3,959,263       3,720,373  
Deferred income taxes     -       157,000  
Total long-term liabilities     19,932,468       17,526,343  
                 
REDEEMABLE PREFERRED MEMBERSHIP INTERESTS
    2,518,450       2,543,635  
                 
CUMULATIVE PREFERRED STOCK OF SUBSIDIARY
    180,000       180,000  
                 
STOCKHOLDERS' EQUITY
               
Controlling interest in equity:                
Preferred Stock, 20,000,000 shares authorized Series A convertible preferred stock - $.0001 par value, 4,820,000 issued and outstanding as of June 30, 2012 and December 31, 2011
    2,526,660       2,527,731  
Series B convertible preferred stock - $.0001 par value, 5,966,792 issued and outstanding at June 30, 2012 and December 31, 2011
    11,392,403       11,392,403  
Common Stock - $.0001 par value; 100,000,000 shares authorized, 22,754,205 and 22,059,803 issued and 22,564,601 and 21,870,199 outstanding June 30, 2012 and December 31, 2011, respectively
    2,276       2,206  
Additional paid-in capital     9,309,009       8,550,435  
Treasury stock, 189,604 shares held by the Company at June 30, 2012 and December 31, 2011     (218,965 )     (218,965 )
Accumulated deficit     (16,371,506 )     (14,650,814 )
Noncontrolling interest in equity     1,368,367       1,327,653  
Total stockholders' equity     8,008,244       8,930,649  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 35,682,121     $ 43,371,401  
 
The accompanying notes are an integral part of these consolidated statements.
 
4

 
 
The following table presents information on assets and liabilities related to a VIE that is consolidated by the Company at June 30, 2012 and December 31, 2011. The difference between total VIE assets and liabilities represents the Company's interests in those entities, which were eliminated in consolidation.
 
   
JUNE 30,
2012
   
DECEMBER 31,
2011
 
   
(unaudited)
         
Cash   $ 40,090     $ 28,621  
Restricted Cash     367,908       253,761  
Accounts receivable and other current assets     231,484       225,977  
Grant receivable     -       6,284,476  
Property and equipment, net     15,979,451       16,308,909  
All other assets     650,000       718,653  
Total assets   $ 17,268,933     $ 23,820,397  
                 
                 
Accounts payable and accrued expenses   $ 483,573     $ 2,700,984  
Short-term notes payable     -       2,588,200  
Derivative liabilities     1,199,171       1,012,499  
Nonrecourse debt     9,917,483       10,153,208  
Total liabilities   $ 11,600,227     $ 16,454,891  
 
The assets of the consolidated VIEs are used to settle the liabilities of those entities. Liabilities are nonrecourse to the general credit of the Company.

The accompanying notes are an integral part of these consolidated statements.
 
 
5

 
JUHL WIND INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTERS ENDED JUNE 30, 2012 AND JUNE 30, 2011
 
  2012     2011  
 
(unaudited)
   
(unaudited)
 
                         
                         
REVENUE
    1,878,615       100.0 %     1,086,522       100.0 %
                                 
COST OF GOODS SOLD
    1,265,699       67.4       815,834       75.1  
                                 
GROSS PROFIT
    612,916       32.6       270,688       24.9  
                                 
OPERATING EXPENSES
                               
General and administrative expenses
    675,426       36.0       505,236       46.5  
Payroll and employee benefits
    540,328       28.8       685,705       63.1  
Wind farm management expenses
    108,868       5.8       84,810       7.8  
Total operating expenses
    1,324,622       70.6       1,275,751       117.4  
                                 
OPERATING INCOME (LOSS)
    (711,706 )     (38.0 )     (1,005,063 )     (92.5 )
                                 
OTHER INCOME (EXPENSE)
                               
Interest income
    10,850       0.6       101,957       9.4  
Interest expense
    (217,811 )     (11.6 )     (116,915 )     (10.8 )
Loss on fair value of interest rate swap
    (187,001 )     (10.0 )     -       0.0  
Total other income (expense), net
    (393,962 )     (21.0 )     (14,958 )     (1.4 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    (1,105,668 )     (59.0 )     (1,020,021 )     (93.9 )
                                 
INCOME TAX EXPENSE
    -       0.0       378,000       34.8  
                                 
NET INCOME (LOSS)
    (1,105,668 )     (59.0 )     (642,021 )     (59.1 )
                                 
LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
    (17,777 )     -       -       -  
                                 
NET INCOME (LOSS) ATTRIBUTED TO JUHL WIND, INC.
  $ (1,087,891 )     (59.0 ) %   $ (642,021 )     (59.1 ) %
                                 
PREFERRED DIVIDENDS
    97,471               97,471          
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
  $ (1,203,139 )           $ (739,492 )        
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC & DILUTED
    22,398,918               21,729,252          
                                 
NET INCOME (LOSS) PER SHARE BASIC & DILUTED
  $ (0.05 )           $ (0.03 )        
 
The accompanying notes are an integral part of these consolidated statements.
 
 
6

 
 JUHL WIND INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND JUNE 30, 2011
 
   
2012
   
2011
 
   
(unaudited)
   
(unaudited)
 
                         
                         
REVENUE
    3,084,974       100.0 %     7,677,935       100.0 %
                                 
COST OF GOODS SOLD
    1,775,293       57.6       1,607,824       20.9  
                                 
GROSS PROFIT
    1,309,681       42.4       6,070,111       79.1  
                                 
OPERATING EXPENSES
                               
General and administrative expenses
    1,219,778       39.5       971,703       12.7  
Payroll and employee benefits
    999,026       32.4       1,221,655       16.0  
Wind farm administration expenses
    229,245       7.4       103,126       1.3  
Total operating expenses
    2,448,049       79.3       2,296,484       30.0  
                                 
OPERATING INCOME (LOSS)
    (1,138,368 )     (36.9 )     3,773,627       49.1  
                                 
OTHER INCOME (EXPENSE)
                               
Interest and dividend income
    24,907       0.8       240,726       3.1  
Interest expense
    (486,738 )     (15.8 )     (280,523 )     (3.7 )
Loss on fair value of interest rate swap
    (186,672 )     (6.1 )     -       0.0  
Total other expense, net
    (648,503 )     (21.1 )     (39,797 )     (0.6 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    (1,786,871 )     (58.0 )     3,733,830       48.5  
                                 
INCOME TAX BENEFIT (EXPENSE)
    267,000       8.7       (1,574,000 )     (20.5 )
                                 
NET INCOME (LOSS)
    (1,519,871 )     (49.3 )     2,159,830       28.0  
                                 
LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST
    40,714       1.3       (1,714 )     (0.0 )
                                 
NET INCOME (LOSS) ATTRIBUTED TO JUHL WIND, INC.
  $ (1,560,585 )     (50.6 ) %   $ 2,161,544       28.0 %
                                 
PREFERRED DIVIDENDS
    194,942               193,871          
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
  $ (1,755,527 )           $ 1,965,959          
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
    22,294,175               21,499,279          
                                 
NET INCOME (LOSS) PER SHARE - BASIC
  $ (0.08 )           $ 0.09          
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
    22,190,522               21,559,102          
                                 
NET INCOME (LOSS) PER SHARE - DILUTED
  $ (0.08 )           $ 0.09          
 
The accompanying notes are an integral part of these consolidated statements.
 
7

 
 
JUHL WIND INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2012
 
   
Common Stock
   
Convertible
Preferred Stock
Series A
   
Convertible
Preferred Stock
Series B
   
Additional
Paid-In
   
Treasury
   
Accumulated
   
Total
Stockholders'
Equity-
   
Non-
Controlling
   
Total
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Stock
   
Deficit
   
Juhl Wind
   
Interest
   
Equity
 
                                                                         
BALANCE -December 31, 2011
    22,059,803     $ 2,206       4,820,000     $ 2,527,731       5,966,792     $ 11,392,403     $ 8,550,435     $ (218,965 )   $ (14,650,814 )   $ 7,602,996     $ 1,327,653     $ 8,930,649  
                                                                                                 
Net income
    -       -       -       -       -       -       -       -       (1,560,585 )     (1,560,585 )     40,714       (1,519,871 )
                                                                                                 
Stock-based compensation
    -       -       -       -       -       -       128,174       -       -       128,174               128,174  
                                                                                                 
Series A preferred stock dividend paid in common stock
    287,070       29       -       (196,013 )     -       -       195,984       -       -       -               -  
                                                                                                 
Series A Preferred dividends
    -       -       -       194,942       -       -       (194,942 )     -       -       -               -  
                                                                                                 
Dividends on subsidiary preferred stock paid in cash
    -       -       -       -       -       -       -       -       (9,000 )     (9,000 )             (9,000 )
                                                                                                 
Common stock issued as commitment shares on an equity line facility
    407,332       41       -       -       -       -       244,358       -       -       244,399               244,399  
                                                                                                 
Contingent issuance of common stock for PEC acquisition
    -       -                                       385,000               -       385,000               385,000  
                                                                                                 
Dividends paid on preferred membership interests in wind farms
    -       -       -       -       -       -       -       -       (151,107 )     (151,107 )             (151,107 )
                                                                                                 
BALANCE -June 30, 2012 (unaudited)
    22,754,205     $ 2,276       4,820,000     $ 2,526,660       5,966,792     $ 11,392,403     $ 9,309,009     $ (218,965 )   $ (16,371,506 )   $ 6,639,877     $ 1,368,367     $ 8,008,244  
 
The accompanying notes are an integral part of these consolidated statements.

 
8

 
JUHL WIND INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011
 
   
2012
   
2011
 
   
(unaudited)
   
(unaudited)
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income (loss)
  $ (1,519,871 )   $ 2,159,830  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    655,046       135,772  
Increase in investment
    (13,000 )     -  
Stock-based compensation
    128,174       278,752  
Loss on fair value of interest rate swap
    186,672       -  
Change in operating assets and liabilities, net of effects from acquisitions:
 
Accounts receivable
    2,037,774       3,056,818  
Promissory notes receivable
    -       (6,002,806 )
Work-in-progress
    (125,321 )     -  
Inventory
    5,974       (155 )
Reimbursable project costs
    -       274,092  
Costs and estimated earnings in excess of billings
    -       515,962  
Other current assets
    (54,543 )     71,945  
Interest receivable on short term investments
    (3,146 )     (4,015 )
Accounts payable
    (1,310,585 )     (12,736 )
Promissory notes payable
    77,210       1,353,806  
Accrued expenses
    74,624       (131,317 )
Income taxes payable
    (90,000 )     250,000  
Deferred income taxes
    (267,000 )     1,324,000  
Customer deposits
    -       167,869  
Advance on sale of project development rights
    -       1,000,000  
Deferred revenue
    (277,031 )     (230,814 )
Other
    181,068       87,021  
Net cash provided by (used in) operating activities     (313,955 )     4,294,024  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Proceeds from short-term investments
    -       302,685  
Purchases of short-term investments
    -       (237,482 )
Proceeds from cash grant
    6,284,476       -  
Cash paid for business acquisition, net of cash acquired
    (1,000,000 )     (215,922 )
Payments for project development costs
    (39,100 )     (318,800 )
Payments for property and equipment
    (109,075 )     (63,497 )
Net cash provided by (used in) investing activities     5,136,301       (533,016 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Change in restricted cash
    (114,147 )     27,984  
Escrowed cash reserves for contractual commitments
    (47,660 )     (83 )
Cash dividends paid
    (185,292 )     (91,200 )
Principal payments on bank notes payable
    (3,073,343 )     -  
Payments of accounts payable and promissory notes payable related to property and equipment
    (3,592,773 )     -  
Payments for treasury stock
    -       (115,580 )
Net cash used in financing activities     (7,013,215 )     (178,879 )
                 
NET INCREASE (DECREASE) IN CASH
    (2,190,869 )     3,582,129  
                 
CASH BEGINNING OF THE PERIOD
    5,251,148       645,596  
                 
CASH END OF THE PERIOD
  $ 3,060,279     $ 4,227,725  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
         
Cash paid during the year for:
               
Interest
  $ 73,656     $ 8,679  
                 
NONCASH INVESTING AND FINANCING ACTIVITIES
               
Series A preferred stock dividend
  $ 194,942     $ 193,871  
Series A dividend payment in common stock
  $ (196,013 )   $ 103,742  
Promissory note receivable received upon issuance of promissory note payable
  $ -     $ 5,264,093  
Reimbursable project costs converted to equity investment in wind farm
  $ -     $ (285,072 )
Conversion of note receivable to equity investment in wind farm
  $ -     $ (185,539 )
Conversion of Series B Preferred stock to common stock
  $ -     $ 1,426,713  
Inventory costs converted to project development costs
  $ -     $ 1,393,333  
Project development costs financed with accounts payable
  $       $ 678,009  
Issuance of common stock for equity line commitment
  $ 244,399     $  -  
Other
  $ -     $ (65,271 )
 
The accompanying notes are an integral part of these consolidated statements.
 
9

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
1.         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 footnote disclosures normally included in annual consolidated 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 unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2011 which was filed with the Securities and Exchange Commission on March 31, 2012.

In the opinion of management, the unaudited condensed consolidated 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, 2012.

Juhl Wind, Inc. (“Juhl Wind” or “the Company”) conducts business under five subsidiaries, Juhl Energy Services, Inc. (“JES”), Juhl Energy Development, Inc. (“JEDI”), Juhl Renewable Assets, Inc. (“JRA”), Next Generation Power Systems, Inc. (“NextGen”), Juhl Renewable Energy Systems, Inc. (“JRES”), Power Engineers Collaborative, LLC (“PEC”), and ownership and operational duties over the following  three operating wind farms--Woodstock Hills LLC (“Woodstock Hills”), Winona County Wind (“Winona”) and Valley View Transmission, LLC (“Valley View”).  All intercompany balances and transactions are eliminated in consolidation.

Juhl Wind, Inc. is an established leader in community wind power development and management, focused on wind farm projects throughout the United States.  The Company handles all aspects of wind project development, through our operating subsidiaries, including full development and ownership of wind farms, general consultation on wind projects, construction management of wind farm projects and system operations and maintenance for completed wind farms.  In April 2012, the Company completed an acquisition of Power Engineers Collaborative, LLC and now provides professional engineering services to the power and building systems industries.

Generally accepted accounting principles require certain variable interest entities (“VIE”s) to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have sufficient powers, obligations, or rights or if the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties.

Juhl Wind initially determined that its Winona County wind farm project was a VIE requiring consolidation through the first three quarters of 2011.  Accordingly, the Company’s consolidated financial statements include the accounts of Winona County for those periods. During the fourth quarter of 2011, Juhl Wind acquired 100% of the ownership interest and accounted for this acquisition under the “common control” rules of ASC 805. 

As a result of a transaction that occurred during the fourth quarter of 2011, Juhl Wind determined that the Valley View wind farm project was a VIE that required consolidation by the Company.  As a result of this transaction, the Company has a 32.6% voting interest in Valley View, and has an additional 13.9% voting power through a voting trust arrangement with three other investors.  The Company currently acts as the managing agent for Valley View, and our CEO is also on the Board of Governors of Valley View.  In addition, the Company agreed to guarantee certain payments to investors in order to secure the required equity capital and to enable the term loan conversion by the lender.  Accordingly, the consolidated financial statements include the accounts of Valley View, including the 32.6% the Company’s ownership interest.  The remaining outside interest of 67.4%, which is not classified outside of permanent equity as redeemable membership units, is presented and classified in the consolidated financial statements as noncontrolling interest.  Prior to this transaction, the Company accounted for its investment in Valley View as an equity method investment.

All significant intercompany investments, balances, and transactions have been eliminated.

 
10

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
2.              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
USE OF ESTIMATES
The preparation of the consolidated 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 and construction contract revenue; realizability of accounts and promissory notes receivable; determination of the primary beneficiary of a variable interest entity; valuation of deferred tax assets, deferred power purchase revenue, stock-based compensation and warrants, asset retirement obligations, derivative instruments and other contingencies. Revenue from the development agreements is adjusted to reflect actual costs incurred by the project upon the commercial operation date.  Accordingly, actual revenue may differ from previously estimated amounts, and such differences may be material to the consolidated 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

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

Turbine services include time-and-material arrangements related to existing installations of wind turbine equipment.  Revenue is recognized upon completion of the maintenance services.

Licensing Revenue
Revenues earned from licensing agreements are amortized using the straight-line method over the term of the agreement.

Engineering and consulting services
Revenues are primarily generated from professional services provided to clients and are based on either hours of service performed or on a fixed-fee basis. Revenues are accrued through the reporting date for services performed but not yet billed to clients. These unbilled revenues are included in work in process in the accompanying financial statements.

Provisions for estimated losses on work in process are made in the period in which such losses are determined. Changes in project performance, project conditions, and estimated profitability may result in revisions to costs and revenues and are recognized in the period in which the revisions are determined.

Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability on that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause.

 
Wind Farm Development Services
The Company normally earns a development service fee from each of the wind farm projects that it develops in cooperation with wind farm investors. These development services arrangements are evaluated under authoritative guidance relating to “Revenue Arrangements with Multiple Deliverables,” which addresses certain aspects of accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities.
 
 
11

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
The development services fee revenue is recognized as follows:

 
·
Proceeds received upon the signing of a Development Services Agreement (generally 10% of the total expected development fee) are amortized over the expected period of the development process, which is generally three years. The amortization period is re-assessed by management as new timelines are established for the project in-service date, and the amortization period is adjusted.

 
·
The remaining proceeds are allocated to the following deliverables based on vendor specific objective evidence (“VSOE”) of each item: 1) achievement of a signed Power Purchase Agreement (“PPA”) with an electrical utility, and 2) final commissioning of the wind farm turbines.  Management has determined that these deliverables have stand-alone value, and performance of the undelivered services are considered probable and in the control of the Company.

Wind Farm Management Services
Revenues earned from administrative, management and maintenance services agreements are recognized as the services are provided. The administrative and management services agreements call for quarterly payments in advance or arrears of services rendered based on the terms of the agreement. The administrative and management services payments in advance are carried as deferred revenue and recognized monthly as services are performed. Maintenance services are generally billed on a time and materials basis. Revenues from services work are recognized when services are performed.

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

The asset “Costs and estimated earnings in excess of billings on uncompleted contracts” represents revenues recognized in excess of amounts billed which management estimates will be billed and collected within the next twelve months.  The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized. Costs and estimated earnings in excess of billings on uncompleted contracts are amounts considered recoverable from customers based on different measures of performance, including achievement of specific milestones, or at the completion of the contract.

Electricity sales
Electricity sales by wind energy facilities to its utility purchaser are recognized as electrical energy is produced.   In accordance with generally accepted accounting principles, revenue levelization is required whenever there is a variable, de-escalating pricing arrangement such as the power purchase agreement (PPA) with Woodstock Hills.  This requires that the revenue be levelized over the term of the agreement.  The revenue recognized is the lesser of the amount billable under the contract, or the amount determined by the megawatt hours made available during the period multiplied by the average revenue per megawatt hour over the life of the PPA.
 
 
12

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
The Woodstock Hills wind farm is credited with producing Renewable Energy Credits (REC’s). These have a market value, and as REC’s are sold on the open market, the Company will recognize the proceeds as a reduction in the carrying amount of the deferred power purchase contract revenue.

GOODWILL AND OTHER INTANGIBLE ASSETS
The Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.
 
Goodwill includes the excess of the purchase price over the fair value of net assets acquired in a business combination. The Codification requires that goodwill be tested for impairment at the reporting unit level. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.
 
The Company reviews reporting units for possible goodwill impairment by comparing the fair values of each of the reporting units to the carrying value of their respective net assets. If the fair values exceed the carrying values of the net assets, no goodwill impairment is deemed to exist. If the fair values of the reporting units do not exceed the carrying values of the net assets, goodwill is tested for impairment and written down to its implied value if it is determined to be impaired. No impairment was taken for the six months ended June 30, 2012.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, and accounts payable, and other working capital items approximate fair value at June 30, 2012 due to the short maturity nature of these instruments. The carrying value of restricted cash and short-term investments approximate their fair value based on quoted market prices. The Company believes the carrying value of the derivative instruments approximates fair value based on widely accepted valuation techniques including discounted cash flow analysis which includes observable market-based inputs. The Company believes the carrying amount of the long-term debt approximates the fair value due to a significant portion of total indebtedness contains variable interest rates and this rate is a market interest rate for these borrowings.

COMPARATIVE DATA
Certain 2011 balance sheet line and statement of operations items have been reclassified to conform to the current period’s presentation, including the reclassification of wind farm management expenses to cost of goods sold and the combination of investor relations expenses with general and administrative expenses.

3.            CONCENTRATIONS
 
The Company derived approximately 54% of its revenue for the six-months ended June 30, 2012 from one customer primarily as a result of the electricity sales, and 87% of its revenue for the six months ended June 30, 2011 was from sales to 4 customers primarily as a result of development and construction services fees. At June 30, 2012 and December 31, 2011, 39% and 94% of the Company's accounts receivable were due from two customers, respectively.  

 
13

 

JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
4.            ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:
   
June 30,
2012
   
December 31,
2011*
 
Wind farm management/maintenance
 
$
116,109
   
$
253,928
 
Electricity sales
   
235,997
     
321,619
 
Consulting
   
497,076
     
-
 
Construction contracts
   
-
     
1,440,303
 
Turbine sales and other
   
7,727
     
49,089
 
Total
 
$
856,909
   
$
2,064,939
 

*Derived from December 31, 2011 audited financial statements

 
5.            INVENTORY
 
Inventory consists of the following:
   
June 30,
2012
   
December 31,
2011*
 
Materials and supplies
 
$
264,899
   
$
270,873
 
Total
 
$
264,899
   
$
270,873
 

*Derived from December 31, 2011 audited financial statements

 
6.            PROPERTY AND EQUIPMENT
 
Property and equipment consists of the following:
   
June 30,
2012
   
December 31,
2011*
 
Land and improvements
  $ 60,158     $ 60,158  
Building and improvements
    292,690       294,590  
Equipment, including vehicles
    461,680       413,358  
Turbines and improvements
    25,667,243       25,633,493  
Construction in process
    103,547       65,284  
Subtotal
    26,585,318       26,466,883  
Less accumulated depreciation
    (1,204,620 )     (620,480 )
Total
  $ 25,380,698     $ 25,846,403  
 
*Derived from December 31, 2011 audited financial statements

 
14

 

JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012

7.            INTANGIBLE ASSETS
A summary of intangible assets as of June 30, 2012 is as follows:
 
   
June 30, 2012
   
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Net
 
Weighted Average Amortization
Period
(in years)
Customer relationships
 
$
110,000
   
$
(2,000)
   
$
108,000
 
5
Noncompete agreements
   
278,000
     
(8,000)
     
270,000
 
5
Contract backlog
   
409,189
     
(13,733)
     
395,456
 
1.5 years
Total
 
$
797,189
   
$
(23,733)
   
$
773,456
  3.2 years
  
Amortization expense for the period ended June 30, 2012 was $23,733.

 
8.             INCOME TAXES
 
The Company files a consolidated tax return inclusive of each of its wholly-owned subsidiaries, JES, JEDI, JRA, JRES, PEC and NextGen.  

The Company has recorded deferred tax assets and liabilities arising from the anticipated timing differences recorded in the consolidated financial statements and income tax returns for various accrued expenses, accounting methods used in computing depreciation and revenue recognition, and benefits from net operating loss carryforwards.

The income tax expense (benefit) for the six month periods ended June 30, 2012 and 2011 consists of the following components:

   
2012
   
2011
 
Current
  $ -     $ 250,000  
Deferred
    (267,000 )     1,324,000  
Total income tax expense (benefit)
  $ (267,000 )   $ 1,574,000  

The components of the deferred income tax asset and liability as of June 30, 2012 and 2011 are as follows:
 
   
2012
   
2011
 
Current deferred income tax asset:
           
Accrued vacation and compensation
  $ 45,000     $ 112,000  
Reserves for warranty and doubtful accounts
    20,000       17,000  
Other
    34,000          
Total
  $ 99,000     $ 129,000  
                 
Non-current deferred income tax asset:
               
Stock-based compensation expense
  $ 869,000     $ 779,000  
Deferred revenue/other
    1,133,000       420,000  
Net operating loss carryforward
    2,705,000       -  
Less valuation allowance
    (1,276,000 )     (779,000 )
Total
  $ 3,431,000     $ 420,000  
                 
Current deferred income tax liability:
               
Completed contract accounting
  $ -     $ 180,000  
Prepaid expenses
    87,000       28,000  
Total
  $ 87,000     $ 208,000  
                 
Non-current deferred income tax liability
               
Depreciation
  $ 3,225,000     $ 28,000  
 
 
15

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
Deferred income taxes are presented on the consolidated balance sheet under the following captions at June 30, 2012 and 2011:

   
2012
   
2011
 
Total current assets
 
$
12,000
   
$
(79,000)
 
Total other assets
   
206,000
     
392,000
 
Total
 
$
218,000
   
$
313,000
 
  
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 June 30, 2012, a valuation allowance of $1,276,000 has been recognized for deferred tax assets, primarily for stock-based compensation.
 
The following represents the reconciliation of the statutory federal tax rate and the effective tax rate for the six months ended June 30, 2012:

Statutory tax rate
 
$
(610,000)
     
34.0
%
States taxes, net of federal benefit
   
(107,000)
     
6.0
 
Nondeductible income/expenses
   
6,000
     
(.4)
 
Other, net
   
(14,000)
     
.8
 
Increase in valuation allowance
   
458,000
     
(25.5)
 
   
$
267,000
     
14.9
%
 
9.             PROMISSORY NOTES PAYABLE
 
Promissory notes payable consists of the following:
 
   
June 30, 2012
   
December 31, 2011*
 
             
             
Note payable to a turbine supplier, including interest at 6%, payable solely through 95% of net cash flows from a wind project; secured by Company’s first secured rights arising out of its Development and Construction Services Agreement with the underlying project **
  $ 2,836,400     $ 2,759,190  
                 
Note payable to a construction subcontractor, including interest at 8%; paid in full March 2012
    -       1,732,073  
                 
Note payable to a governmental entity, bearing no interest, paid in full in February 2012
    -       84,800  
Totals
  $ 2,836,400     $ 4,576,063  
Less current portion
    (231,804 )     (4,576,063 )
Long-term portion
  $ 2,604,596     $ -  
 
*   Derived from December 31, 2011 audited financial statements
** The note payable has been classified as long-term based on estimated payments from project cash flows. Increases in amounts represent accrued interest.

 
16

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
10.          SHORT-TERM NOTES PAYABLE

Short-term notes payable consists of the following:

   
June 30,
2012
   
December 31,
2011*
 
Cash grant bridge note payable to a bank, with interest at 3-month LIBOR plus 2.75 basis points (3.28% at December 31, 2011); loan was paid in full March 2012 upon receipt of the cash grant
  $ -     $ 2,588,200  
                 
Note payable to bank, interest payable monthly at 5%, collateralized by certificates of deposit, due November 2012
    342,518       376,503  
    $ 342,518     $ 2,964,703  
 
*Derived from December 31, 2011 audited financial statements


11.          NONRECOURSE DEBT

Nonrecourse debt obligations consist of the following:

   
June 30,
2012
   
December 31,
2011*
 
Note payable to bank, due January 2016, with interest at 5.5%; payable in quarterly installments of $82,031, collateralized by Woodstock Hills assets including turbines and improvements, rights to payment under leases and the power purchase contract
  $ 1,103,654     $ 1,234,287  
                 
Note payable to a bank, bearing interest at 6-month LIBOR plus 2.75 basis points (3.5% at December 31, 2011); due April 2026; principal and interest payments due semi-annually; collateralized by all Valley View wind farm project assets; see Note 12 for interest rate swap disclosure
    9,917,483       10,153,208  
Total nonrecourse debt
    11,021,137       11,387,495  
Less current portion
    (760,785 )     (737,167 )
Total Long-term portion
  $ 10,260,352     $ 10,650,328  

*Derived from December 31, 2011 audited financial statements


12.          DERIVATIVE FINANCIAL INSTRUMENT AND FAIR VALUE - INTEREST RATE SWAP
 
As a part of the Company’s consolidation of the Valley View wind farm in the fourth quarter of 2011, the Company has an interest rate swap agreement with a notional amount of $7,700,000 to effectively convert those borrowings under its long-term debt arrangement from a variable interest rate to a fixed interest rate of approximately 3.71% during its 15-year term. The fair value of the interest rate swap agreement obligation (Level 2 in the fair value hierarchy) approximated $1,199,171 and $1,012,499 at June 30, 2012 and December 31, 2011, respectively, and is recorded as a current and long-term liability in the consolidated balance sheet. The Company determines the fair value of the interest rate swap by using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the instrument. The analysis reflects the contractual terms of the swap agreement, including the period to maturity and uses observable market-based inputs and uses the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments.
 
 
17

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
Noncash other expense recorded in connection with the change in the fair value of the interest rate swap agreement approximated $187,000 during the six months ended June 30, 2012.

The following table provides details regarding the Company's derivative instruments at June 30, 2012:
 
Instruments
Balance Sheet location   Assets     Liabilities  
Interest rate swap
Current liabilities   $ -     $ 214,311  
Interest rate swap
Long-term liabilities     -       984,860  
 
The following table provides details regarding the approximate gains and losses from the Company's derivative instruments in the statement of operations, none of which are designated as effective hedging instruments:

Instrument
Statement of operations location  
Six months ended
June 30, 2012
 
Interest rate swap
Other income (expense)   $ 186,672  
 
 
13.         DEFERRED POWER PURCHASE CONTRACT REVENUE

Woodstock Hills wind farm

The Woodstock Hills wind farm entered into a power purchase agreement (PPA) with Northern States Power (NSP) in 1997.  The agreement, among other things, requires NSP to purchase all of the electricity output from the Woodstock Hills wind energy generation facility over a 30-year period following its commercial operation date at rates provided in the agreement.  The commercial operation date has been deemed to be May 1, 2004.  The power purchase rates were set at a higher level in the early years of the agreement in order to assist Woodstock Hills in obtaining financing.  The PPA power purchase rates will range from $16 to $45 per megawatt hour over the remaining 23 years of the PPA term, with an average of approximately $29 per megawatt hour over the remaining duration of the agreement.

In accordance with our revenue recognition policy in Note 2, revenue levelization is used to recognize revenue from the electricity sales of Woodstock Hills.  Revenue deferred under this levelization calculation at June 30, 2012 was approximately $440,000.

At the time of acquisition of Woodstock Hills in April 2011, the power purchase rates in the PPA between Woodstock Hills and NSP were considered unfavorable when compared with market conditions at the time of the acquisition. As a result, an unfavorable contract liability of approximately $3,705,000 was recognized on the acquisition date.  The amount of this liability was determined based on what we estimated is the current market rate that power purchasers were paying for electrical power compared to the average PPA rate over the life of the contract, net of the fair value of the renewable energy credits that Woodstock Hills could be expected to realize during the term of the PPA. The net decrease to the unfavorable contract liability from the date of acquisition to June 30, 2012 was approximately $186,000.

The Company has recorded the following long term liability in its financial statements in relation to the PPA:

   
June 30,
2012
   
December 31,
2011*
 
Rate levelization adjustment
  $ 439,850     $ 231,086  
Unfavorable contract liabilities
    3,519,413       3,489,287  
Total
  $ 3,959,263     $ 3,720,373  

*Derived from December 31, 2011 audited financial statements

 
18

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
14.          STOCK-BASED COMPENSATION

The Company has a 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 any 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 June 30, 2012, the Company has 1,387,111 shares available for award under the plan.
 
The Company has granted to key employees and directors of the Company 1,510,000 options to purchase common shares under the above plan.  In addition, the Company issued an additional 500,000 stock options to a director in June 2009 outside of the plan. The outstanding stock options carry an exercise price ranging from of $.77-$2.11 per share and expire ten years from the date of grant. Grants under the plan are discretionary and typically vest over four years. 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 ranging from $.77 to $3.05, dividend yield of 0%, expected volatility ranging from 95% to 104%, risk-free interest rate of 4%, and average expected life of 6 years. Based on the pricing model, the Company expensed approximately $128,000 and $279,000 of stock compensation in the six month periods ended June 30, 2012 and 2011, respectively.
 
A summary of the Company’s stock option plan as of June 30, 2012 and changes during the six-month period then ended is listed below:
 
    Number of option grants     Weighted Average Exercise Price  
Outstanding at January 1, 2012
    1,760,000     $ 1.69  
Granted
    250,000       .77  
Exercised
    -       -  
Expired
    -       -  
Forfeited
    -       -  
Outstanding at June 30, 2012
    2,010,000     $ 1.57  
                 
Options exercisable at the end of the period
    1,668,750          

As of June 30, 2012, there was approximately $114,000 total unrecognized compensation expense cost.  This cost is expected to be recognized over a weighted-average period of 3.5 years.
 
The weighted average fair value of options granted during 2012 is $.53 per share. The Company had 1,606,250 options exercisable at a weighted average price of $1.66 per share at December 31, 2011. At June 30, 2012, the Company had 1,668,750 options exercisable at a weighted average price of $1.63 per share.

 15.         BUSINESS SEGMENTS
 
The Company groups its operations into four business segments–Engineering Consulting, Wind Farm Development and Management, Wind Farm Ownership and Operation, and Consumer-owned Renewable Energy products.  The Company's business segments are separate business units that offer different products. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. Corporate assets include: cash and cash equivalents, short-term investments, deferred income taxes, and other assets.
 
 
19

 
 
JUHL WIND, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012
 
The following is information for each segment for the six months ended June 30, 2012:
 
   
Engineering
Consulting
    Wind Farm Development and Management     Wind Farm Ownership and Operation    
Consumer-
Owned
Renewable
Energy
   
Consolidated
 
For the six months ended June 30, 2012:
                             
Wind farm development/management
  $     $ 597,702     $       $ -     $ 597,702  
Turbine sales and service
                          63,478       63,478  
Consulting
    770,030                               770,030  
Electricity Sales
                    1,653,764       -       1,653,764  
Total revenue
  $ 770,030     $ 597,702     $ 1,653,764     $ 63,478     $ 3,084,974  
                                         
Income (loss) from operations
  $ (51,902 )   $ (1,431,849 )   $ 464,911     $ (119,528 )   $ (1,138,368 )
Other expense, net
            (82,311 )     (558,174 )     (8,018       (648,503 )
Income (loss) before income tax benefit
  $ (51,902 )   $ (1,514,160 )     (93,263 )   $ (127,546 )   $ (1,786,871 )
                                         
Identifiable assets at June 30, 2012
  $ 1,860,689     $ 1,944,350     $ 27,653,250     $ 430,180     $ 31,888,469  
Corporate assets
                                    3,793,652  
Total assets at June 30, 2012
                                  $ 35,682,121  

The following is information for each segment for the six months ended June 30, 2011:
 
   
Wind Farm
Development
and
Management
    Wind Farm Ownership and Operation    
Consumer-
Owned
Renewable
Energy
   
Consolidated
 
For the six months ended June 30, 2011:
                       
Wind farm development/management
  $ 5,294,149     $ -     $ 2,464,     $ 5,296,613  
Turbine Sales and Service
    207,285       -       156,726       364,011  
Related party revenue
    116,249       -       -       116,249  
Electricity Sales
            97,975               97,975  
Construction contract revenue
    1,802,102       -       9859       1,803,087  
Total revenue
  $ 7,419,785     $ 97,975     $ 160,175     $ 7,677,935  
                                 
Loss from operations
  $ 3,948,154     $ (127,059   $ (47,468 )