XML 18 R7.htm IDEA: XBRL DOCUMENT v3.21.1
Note 1 - Basis of Presentation
 3 Months Ended
Mar. 31, 2021
Notes to Financial Statements  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]
NOTE
1
— BASIS OF PRESENTATION
 
 
The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”). All intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form
10
-Q and Article
10
of Regulation S-
X.
Accordingly, the financial statements do
not
include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.
 
Operating results for the 
three
months ended
March 31, 2021
are
not
necessarily indicative of the results that
may
be expected for the
twelve
months ending
December 31, 2021,
or any other interim period, which
may
differ materially due to, among other things, the risk factors set forth in our Annual Report on Form
10
-K for the year ended
December 31, 2020
.
 
The
December 31, 2020
condensed consolidated balance sheet was derived from audited financial statements, but does
not
include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form
10
-K for the year ended
December 31, 2020
. 
 
There have been
no
material changes in the Company's significant accounting policies during the 
three
months ended
March 31, 2021
as compared to the significant accounting policies described in the Company's Annual Report on Form
10
-K for the year ended
December 31, 2020
.
 
Company Description
  
 
Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company's capabilities include, but are
not
limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company's most significant presence is within the U.S. wind energy industry, which accounted for
63%
and
74%
of the Company's revenue during the
first
 
three
months of
2021
 and
2020,
respectively. 
 
Liquidity
 
The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, the Credit Facility (as defined below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S-
3
 (as discussed below).
 
See Note
7,
“Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company's other debt.
 
Total debt and finance lease obligations at 
March 31, 2021
totaled
$17,803,
which includes current outstanding debt and finance leases totaling
$6,532.
 The current outstanding debt includes
$4,468
 
outstanding under the Company's revolving line of credit. Long-term debt includes
$9,151
of Payroll Protection Program loans (“PPP Loans”), which
may
be forgiven if the Company meets certain requirements. See Note
7,
 “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the PPP Loans. 
 
On
August 18, 2020,
the Company filed a “shelf” registration statement on Form S-
3,
which was declared effective by the Securities and Exchange Commission (the “SEC”) on
October 13, 2020 (
the “Form S-
3”
) and expires on
October 12, 2023.
This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in
one
or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes. 
 
On
March 9, 2021,
the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). Pursuant to the terms of the Equity Distribution Agreement, the Company
may
sell from time to time through the Manager shares of the Company's common stock, par value
$0.001
per share with an aggregate sales price of up to
$10,000.
The Company will pay a commission to the Manager of
2.75%
of the gross proceeds of the sale of the shares sold under the Equity Distribution Agreement and reimburse the Manager for all expenses incident to the performance of its obligations under the Equity Distribution Agreement. During the quarter ended
March 
31,
 
2021,
the Company issued
1,100,000
 shares of the Company's common stock thereunder. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately
$6,436
 after deducting commissions paid of approximately
$182
and before deducting other expenses of
$335.
 
 
On
March 27, 2020,
the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of
2020
and the American Rescue Plan Act of
2021
extended and expanded the availability of the ERC. The ERC is available through
December 31, 2021
and is equal to
70%
of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in
2021,
a maximum of
$10,000
in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in
2021
is
$7,000
per employee per calendar quarter. The Company qualified for the ERC in the
first
quarter of
2021
because it had a gross receipts decrease of more than
20%
from the
first
quarter of
2019,
the relevant criteria for the ERC. As a result of the Company averaging 
500
or fewer full-time employees in
2019,
all wages paid to employees were eligible for the ERC (rather than just wages paid to employees
not
providing services). During the
three
months ended
March 31, 2021,
the Company recorded a benefit of
$3,372
 in Other income (expense), net in the Company's condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in the Company's condensed consolidated balance sheet at
March 31, 2021. 
 
The Company anticipates that current cash resources (which includes proceeds from the PPP Loans), expected receipts under the ERC, amounts available under the Credit Facility, cash to be generated from operations and any potential proceeds from the sale of further Company securities under the Form S-
3
will be adequate to meet the Company's liquidity needs for at least the next
twelve
months.
​
If assumptions regarding the Company's production, sales and subsequent collections from certain of the Company's large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management's expectations, particularly in light of the COVID-
19
pandemic and its effects on domestic and global economies, the Company
may
in the future encounter cash flow and liquidity issues. If the Company's operational performance deteriorates significantly, it
may
be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company's operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available,
may
be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be
no
assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations.
​
Management's Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts and health insurance reserves. Although these estimates are based upon management's best knowledge of current events and actions that the Company
may
undertake in the future, actual results could differ from these estimates, particularly in light of the COVID-
19
pandemic.