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 adjustments, considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2026, 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, 2025.

The December 31, 2025 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, 2025.

In conjunction with the Abilene sale transaction (as described in Note 4, “Discontinued Operations”), the results of operations of the wind and industrial fabrication operations, including operations historically in Manitowoc, Wisconsin, are now reported as a discontinued operation and the Company has revised its segment presentation to include two reportable operating segments: Gearing and Industrial Solutions. The Company’s discontinued operations exclude the results of pressure reducing system (“PRS”) operations. All current and prior period financial results have been revised to reflect these changes. See Note 17, “Segment Reporting” of these condensed consolidated financial statements for further discussion of reportable segments.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2026 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Company Description

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for power generation, critical infrastructure, 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: welding, coatings, gear cutting and shaping, gearbox manufacturing and repair, heat treatment, precision machining, assembly, engineering and packaging solutions.

Liquidity

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the 2022 Credit Facility (as defined below), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital from the sale of the Company’s securities under the Company’s registration statement on Form S-3 (as discussed below), and proceeds from any sales of Advanced Manufacturing Production tax credits (“AMP credits”) (discussed in Note 7 “AMP Credits” of these condensed consolidated financial statements).

See Note 10, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a description of the 2022 Credit Facility and the Company’s other debt.

Debt and finance lease obligations at June 30, 2026 totaled $6,333, which includes current outstanding debt and finance leases totaling $1,874. The Company’s outstanding debt includes $3,194 outstanding from the senior secured term loan under the 2022 Credit Facility. During the six months ended June 30, 2026, the Company borrowed on the revolving line of credit and repaid a portion of such borrowings during the period. The Company had no amounts drawn on the revolving line of credit as of June 30, 2026. The Company’s revolving line of credit balance, if any, is included in the “Line of credit and current maturities of long-term debt” line item in the Company’s condensed consolidated balance sheet.

On September 22, 2023, 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 12, 2023 (the “Form S-3”), replacing a prior shelf registration statement which expired on October 12, 2023. The Form S-3 will expire on October 12, 2026. This shelf registration statement, which includes a base prospectus, allows the Company 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 September 12, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $12,000. The Company will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31, 2025 or during the six months ended June 30, 2026. As of June 30, 2026, shares of the Company’s common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a 424(b) prospectus supplement.

The Company also utilizes supply chain financing arrangements as a component of its funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, the Company has agreed to sell certain of its accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the Company’s consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense by the Company.

During the three and six months ended June 30, 2026, the Company sold account receivables totaling $9,207 and $16,366, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $207 and $363, respectively. During the three and six months ended June 30, 2025, the Company sold account receivables totaling $5,727 and $9,757, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $138 and $238, respectively.

The Company anticipates that current cash resources, amounts available under the 2022 Credit Facility, sales of shares under the Sales Agreement, cash to be generated from operations and equipment financing, access to the public and private debt and/or equity markets, and proceeds from sales of AMP credits 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 receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, the Company may in the future encounter cash flow and liquidity issues, which could have a material adverse impact on the Company.

If the Company’s operational performance deteriorates, the Company may be unable to comply with existing financial covenants, and could lose access to the 2022 Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on the Company’s stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity-linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on the Company and could be on less favorable terms than the 2022 Credit Facility. While management believes that the Company will continue to have sufficient cash available to operate its businesses and to meet the Company’s financial obligations and debt covenants, there can be no assurances that the Company’s operations will generate sufficient cash, or that credit facilities or equity or equity-linked financings 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 inventory reserves, warranty reserves, impairment of long-lived assets, allowance for credit losses, and valuation allowances on deferred taxes. 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.

NOTE 2 — REVENUES

Revenues are recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended June 30, 2026 and 2025:

The Company’s revenue is generally recognized at a point in time, typically when the promised goods or services are physically transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For substantially all wind sales as well as certain sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. During the three and six months ended June 30, 2026, the Company did not recognize any revenue within the Gearing segment under terms included in bill and hold sales arrangements. During the three and six months ended June 30, 2025, the Company recognized $221 and $436, respectively, of revenue within the Gearing segment under terms included in bill and hold sales arrangements.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTE 3 — NET INCOME PER SHARE

The following table presents a reconciliation of basic and diluted income per share for the three and six months ended June 30, 2026 and 2025, as follows:

(1) Restricted stock units granted and outstanding of 627,119 as of June 30, 2026 are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for the three and six months ended June 30, 2026. Restricted stock units granted and outstanding of 897,948 as of June 30, 2025 are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for the three and six months ended June 30, 2025.

NOTE 4 — DISCONTINUED OPERATIONS

On April 30, 2026, (the “Closing Date”) Broadwind Heavy Fabrications, Inc. (“BHF”), a wholly owned subsidiary of the Company, entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Freeman Enclosure Systems, LLC (the “Buyer”), a wholly-owned subsidiary of IES Holdings, Inc., pursuant to which BHF sold the real property and certain assets contained therein which comprise the Company’s production facility located in Abilene, Texas (the “Facility”), including equipment, machinery, other personal property, specified service contracts, and permits (collectively, the “Purchased Assets”), to the Buyer for an aggregate purchase price of up to $19,500 in cash, subject to certain purchase price adjustments, (the “Transaction”). The Company received net cash proceeds of $17,154 on the sale of the Transaction. On the Closing Date, BHF also entered into a short term lease agreement with the Buyer, pursuant to which (a) BHF leased the Facility and the Purchased Assets back from the Buyer (the “Lease”) for a nominal below-market rent for a term that is expected to end on September 5, 2026 and (b) the Buyer received an option to purchase certain excluded manufacturing equipment located in the Facility at a future date. The Lease was entered into for the limited purpose of completing existing customer contracts, fulfilling remaining wind tower manufacturing obligations, and facilitating an orderly wind-down and transition of the wind fabrication operations. Cash inflows and outflows associated with this continuing involvement consist primarily of operating cash flows generated from completing remaining wind tower contracts, employee-related costs, inventory liquidation activities, and other transition-related expenditures incurred through the termination of the leaseback period. Net cash inflows associated with this continuing involvement total $3,116 for the period from May 1, 2026 through June 30, 2026. The Company recorded a prepaid asset related to the below-market rent as of April 30, 2026. The asset is being amortized over the remaining lease term and is included in the “Current assets-discontinued operations” line item of the Company’s condensed consolidated balance sheets as of June 30, 2026. The sale of the Abilene facility resulted in a loss of $224 for the three and six months ended June 30, 2026 and is included in the “Income from discontinued operations, net of tax” line item in the Company’s condensed consolidated statement of operations. The second quarter results also include a $1,106 charge associated with a contract dispute related to the Company’s former Heavy Fabrications segment. This charge is included in the “Income from discontinued operations, net of tax” line item in the Company’s condensed consolidated statement of operations.

The Abilene sale transaction represented the Company’s exit from the wind and industrial fabrications business and the Company determined this was a strategic shift that will have a major effect on the Company’s operations and as a result, certain impacted operations qualified for discontinued operations treatment in the second quarter of 2026. As a result of this analysis, the results of operations of the wind and industrial fabrication operations, including operations historically in Manitowoc, Wisconsin, have been reclassified to discontinued operations on the condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026. In addition, the discontinued assets and liabilities are presented separately on the Company’s condensed consolidated balance sheets for both current and prior periods beginning in the second quarter of 2026. The Company’s discontinued operations exclude the results of PRS operations.

Results of Discontinued Operations

Results of discontinued operations in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2026 and 2025, were as follows:

Assets and Liabilities Related to Discontinued Operations

Assets and liabilities related to discontinued operations in the Company’s consolidated balance sheets as of June 30, 2026 and December 31, 2025 includes the following:

NOTE 5 — CASH AND CASH EQUIVALENTS

Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded as interest income which is netted against interest expense in the Company’s condensed consolidated statements of operations. The components of cash and cash equivalents as of June 30, 2026 and December 31, 2025 are summarized as follows:

NOTE 6 — INVENTORIES

The components of inventories as of June 30, 2026 and December 31, 2025 are summarized as follows:

NOTE 7 — AMP CREDITS

During the three and six months ended June 30, 2026, the Company recognized gross AMP credits totaling $3,000 and $5,772, respectively, within the “Income from discontinued operations, net of tax” line item in the Company’s condensed consolidated statements of operations. During the three and six months ended June 30, 2025, the Company recognized gross AMP credits totaling $3,132 and $5,904, respectively, within the “Income from discontinued operations, net of tax” line item in the Company’s condensed consolidated statements of operations. These AMP credits were introduced as part of the Inflation Reduction Act (“IRA”), which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind components. Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit originally applied to each component produced and sold in the U.S. beginning in 2023 through 2032. The One Big Beautiful Bill Act (the “OBBBA”), enacted on July 4, 2025, eliminates the credit for components produced and sold after 2027. Wind towers are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, the Company relied on the megawatt rating provided by the customers. Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits, sell the AMP credits to third parties for cash, or apply the AMP credits against taxable income. The Company recognized the AMP credits within income from discontinued operations in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025. The assets related to the AMP credits are recognized as current assets in the “Current assets-discontinued operations” line item in the Company’s condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025.

The OBBBA also introduced new restrictions on foreign supply chains and foreign owners or investors in tax-credit-supported facilities, referred to as “Prohibited Foreign Entity” or “PFE” restrictions. Taxpayers cannot claim AMP credits in taxable years beginning after enactment of the OBBBA if the taxpayers source from Prohibited Foreign Entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities). AMP credits are also disallowed in taxable years beginning after enactment of the OBBBA for eligible components that receive material assistance from a PFE. These restrictions generally took effect on January 1, 2026, and the Treasury Department is required to issue final regulations implementing them by December 31, 2026. On February 12, 2026, the Treasury Department released interim guidance that further clarified methods for calculating material assistance and included a request for comments by March 30, 2026. The Company cannot predict with certainty what the final guidance, or any other future guidance, will provide, or how it will impact the potential impact for the Company's AMP credits claimed in 2026 and future years.

During the six months ended June 30, 2026, the Company recognized gross AMP credits totaling $5,772 and recognized a 6.5% discount on the credits totaling $375, which was recognized within income from discontinued operations. The Company also incurred other miscellaneous administrative costs related to the credits in the amount of $44, which have been recorded within income from discontinued operations. Additionally, costs totaling $3 are included in the “Current assets-discontinued operations” line item of the Company’s condensed consolidated financial statements at June 30, 2026.

During the six months ended June 30, 2025, the Company recognized gross AMP credits totaling $5,904 and recognized a 6.5% discount on the credits totaling $384, which was recognized within income from discontinued operations. The Company also incurred other miscellaneous administrative costs related to the credits in the amount of $52, which have been recorded within income from discontinued operations. Additionally, costs totaling $10 are included in the “Current assets-discontinued operations” line item of the Company’s condensed consolidated financial statements at June 30, 2025.

NOTE 8 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017. Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life of 1 year.

As of June 30, 2026 and December 31, 2025, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

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As of June 30, 2026, estimated future amortization expense was as follows:

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NOTE 9 — ACCRUED LIABILITIES

Accrued liabilities as of June 30, 2026 and December 31, 2025 consisted of the following:

NOTE 10 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of June 30, 2026 and December 31, 2025 consisted of the following:

Credit Facility

On August 4, 2022, the Company entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), which replaced its prior credit facility and provided the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. Net deferred financing costs related to the 2022 Credit Facility which primarily relate to the revolving credit loan, were $118 at June 30, 2026, which is net of accumulated amortization of $428. Net deferred financing costs at December 31, 2025 were $165, which is net of accumulated amortization of $355. The deferred financing costs are straight-lined over the loan term and included in the “Other assets” line item of the Company’s condensed consolidated financial statements at June 30, 2026 and December 31, 2025.

On February 8, 2023, the Company executed Amendment No. 1 to Credit Agreement and Limited Waiver which waived certain covenants under the Credit Agreement, modified the Fixed Charge Coverage Ratio, and has been superseded by subsequent amendments.

On December 19, 2024, the Company executed Amendment No. 2 to Credit Agreement, which (1) increased the outstanding principal amount of the term loan to $7,578 and restarted the 84-month amortization period, and (2) amended the Fixed Charge Coverage Ratio (as defined in the 2022 Credit Agreement) from 1.1:1.0 to 1.0:1.0 for each twelve-month period ending January 31, 2024 through and including December 31, 2025. Proceeds from the increased amount of the term loan were used to repay the Company’s indebtedness under its existing revolving line of credit with Wells Fargo and related fees and expenses, thereby allowing for increased availability under the existing revolving line of credit.

On September 22, 2025, the Company executed Amendment No. 3 to Credit Agreement which reduced the monthly principal repayment amount payable by the Company from $90 for each monthly period from January 1, 2025 through and including September 1, 2025 to $62 for each monthly period after October 1, 2025 with the last installment being in the amount of the entire unpaid balance of the term loan.

On February 4, 2026, the Company executed Amendment No. 4 to the Credit Agreement which (i) amended the period for measuring the Fixed Charge Coverage Ratio (as defined in the 2022 Credit Agreement) requirement that previously referred to each twelve month period ending January 31, 2025 through December 31, 2025 to apply instead to the each twelve month period ending January 31, 2025 through October 31, 2025, (ii) added a new period for measuring the Fixed Charge Coverage Ratio requirement for the twelve month period ending November 30, 2025, in the range of 0.75 to 1.0 (iii) amended the Fixed Charge Coverage Ratio requirement for the period from January 31, 2026 through December 31, 2026 from the range of 1.1 to 1.0 to 0.75 to 1.0, and (iv) excludes certain designated capital expenditures from the definition of Unfinanced Capital Expenditures (as defined in the 2022 Credit Agreement) which amounts are then subtracted from EBITDA in the calculation of the Fixed Charge Coverage Ratio and (v) the Company agreed to maintain minimum excess availability under the Credit Agreement equal to or greater than 25% of the revolving loan limit under the Credit Agreement.

The 2022 Credit Agreement, as amended, contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. The initial term of the revolving credit facility matures August 4, 2027. The term loan also matures on August 4, 2027, with monthly payments based on an 84-month amortization.

As of June 30, 2026, there was $3,194 of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional $23,014, or $14,264 after considering the requirement to maintain minimum excess availability under the Credit Agreement equal to or greater than 25% of the revolving loan limit thereunder. As of June 30, 2026, the Company was in compliance with all financial covenants under the 2022 Credit Facility. As of June 30, 2026, the effective interest rate of the senior secured revolving credit facility was 5.87% and the senior secured term loan was 6.12%. As of December 31, 2025, the effective interest rate of the senior secured revolving credit facility was 5.77% and the effective rate of the senior secured term loan was 6.27%.

Prior to entering into Amendment No. 3 to Credit Agreement described above, the Company used a portion of the proceeds from the sale of assets used in its industrial fabrication operations in Manitowoc, Wisconsin to make a mandatory repayment of $1,600 on the outstanding senior secured term loan. The repayment was made during September 2025. Additionally, on April 30, 2026, in addition to the normal required progress payments, the Company made a repayment of $1,420 on the outstanding senior secured term loan under the 2022 Credit Agreement in conjunction with the sale of the Abilene production facility as described in Note 4 “Discontinued Operations” of these condensed consolidated financial statements.

Other

In addition, the Company had outstanding notes payable for capital expenditures in the amount of $109 and $130 as of June 30, 2026 and December 31, 2025, respectively, with $43 and $42 included in the “Line of credit and current maturities of long-term debt” line item of the Company’s condensed consolidated financial statements as of June 30, 2026 and December 31, 2025, respectively. The notes payable have monthly payments that range from $1 to $3 and an interest rate of approximately 6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from September 2028 to June 2029.

NOTE 11 — LEASES

The Company leases certain facilities and equipment. The leases are accounted for under Accounting Standard Update 2016-02, Leases (“Topic 842”), and the Company elected to apply each available practical expedient. The discount rates used for the leases are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

The Company has elected to apply the short-term lease exception to all leases of one year or less. During the six months ended June 30, 2026 and 2025, the Company had additional operating leases that resulted in right-of-use assets obtained in exchange for lease obligations in the amount of $3,405 and $0, respectively. During the six months ended June 30, 2026 and 2025, the Company had no additional finance leases associated with property, plant, and equipment.

Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

During 2026, the Company executed a lease amendment that extended the term of the Industrial Solutions facility lease and increased the amount of square footage leased. These lease provisions were effective June 1, 2026. During 2025, the Company executed a lease amendment that extended the term of the Gearing facility lease and reduced the amount of square footage leased. These lease provisions are effective December 1, 2026.

Quantitative information regarding the Company’s leases is as follows:

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As of June 30, 2026, future minimum lease payments under finance leases and operating leases were as follows:

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NOTE 12 — FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

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

The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

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

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

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

NOTE 13 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of June 30, 2026, the Company has a full valuation allowance recorded against deferred tax assets. During the six months ended June 30, 2026, the Company recorded a provision for income taxes of $76, compared to a provision for income taxes of $17 during the six months ended June 30, 2025. On August 16, 2022, Congress enacted the IRA which includes advanced manufacturing tax credits for manufacturers of eligible components, including wind components produced and sold in the U.S. beginning in 2023 through 2032. The OBBBA, enacted on July 4, 2025, eliminates the credit for components produced and sold after 2027. These credits will have no impact on income tax expense.

The Company files income tax returns in U.S. federal and state jurisdictions. As of June 30, 2026, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2025, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of $298,182 of which $227,519 will generally begin to expire in 2027. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire.

Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under Section 382 of the IRC or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of Section 382 of the IRC in 2010, the Company determined that aggregate changes in stock ownership triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

In February 2013, the Company adopted a Stockholder Rights Plan, which was approved by the Company’s stockholders and extended in 2016, 2019, 2022, and 2025 for additional three-year periods (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section 382 of the IRC.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $7.70 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

As of June 30, 2026, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of June 30, 2026.

NOTE 14 — SHARE-BASED COMPENSATION

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The following table summarizes the Company’s restricted stock unit and performance award activity during the six months ended June 30, 2026:

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the six months ended June 30, 2026 and 2025, 52,534 and 169,390 shares, respectively, were withheld to cover tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations, including amounts attributable to discontinued operations, for the six months ended June 30, 2026 and 2025. Share-based compensation included in discontinued operations total $150 and $308 for the six months ended June 30, 2026 and 2025, respectively.

NOTE 15 — LEGAL PROCEEDINGS AND OTHER MATTERS

Legal Proceedings

The Company is party to a variety of legal proceedings that arise in the normal course of its business. On an ongoing basis, the Company is often the subject of, or party to, various legal claims by other parties against the Company, by the Company against other parties, or involving the Company, which arise in the normal course of its business. While the results of these legal proceedings or claims cannot be predicted with certainty, management believes that the final outcome of these proceedings or claims will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that if one or more of such matters were decided against the Company, the effects could be materially adverse to the Company, including to its results of operations in the period in which the Company would be required to record or adjust the related liability and to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

NOTE 16 — RECENT ACCOUNTING PRONOUNCEMENTS

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its condensed consolidated financial statements.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update No. 2024-03,“Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Incomes Statement Expenses,” which serves to improve the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses in commonly presented expense captions. This guidance will be effective for annual periods beginning after December 15, 2026. The Company is currently evaluating the impact that the updated guidance will have on its consolidated financial statements.

In September 2025, the Financial Accounting Standards Board issued Accounting Standards Update No. 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modifies guidance on internal-use software costs to reflect current development practices and improve operability. The standard eliminates the project stages model and replaces with a principles based recognition threshold. This guidance is effective for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact that the updated guidance will have on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board issued Accounting Standards Update No. 2025-10, “Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities,” which provides guidance on the recognition, measurement and presentation of government grants. This guidance will be effective for annual periods beginning after December 15, 2028. The Company is currently evaluating the impact that the updated guidance will have on its consolidated financial statements.

NOTE 17— SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker (“CODM”). The Company’s CODM has been identified as the Chief Executive Officer and President, who reviews operating income by segment in relation to total operating income to make decisions about allocating resources and assessing performance. In conjunction with the Abilene sale, the results of operations of the wind and industrial fabrication operations, including operations historically in Manitowoc, Wisconsin, have been reclassified to discontinued operations on the condensed consolidated statements of operations and retrospectively for all periods presented beginning in the second quarter of 2026. The Company’s discontinued operations exclude the results of PRS operations. Accordingly, we have revised our segment presentation to include two reportable operating segments: Gearing and Industrial Solutions.

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

Gearing

The Company provides gearing, gearboxes and precision machined components to a broad set of customers in diverse markets including: power generation, onshore and offshore oil and gas fracking and drilling, material handling, wind energy, surface and underground mining, steel, infrastructure, marine, defense, and other industrial markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and Original Equipment Manufacturers (“OEM”) applications for a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

Industrial Solutions

The Company provides supply chain solutions, light fabrication, inventory management and kitting and assembly services, primarily serving the combined cycle natural gas turbine market. The Company also supports the U.S. wind repowering and solar power generation market via their manufacturing and kitting capabilities as OEMs domesticate their supply chain due to lead time and reliability issues. The Company leverages a global supply chain to provide instrumentation and controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes and wiring, and electromechanical devices. The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs and improve manufacturing velocity and reliability.

Corporate and Other and Eliminations

“Corporate and Other” includes the assets and selling, general and administrative expenses of the Company’s corporate office as well as results for our PRS product line operations. Due to the PRS balances being less significant than our other operations, they do not meet the quantitative threshold for determining reportable segments. “Corporate and Other” and “Eliminations” comprise adjustments to reconcile segment results to consolidated results.

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment and reconciliations to consolidated amounts for the three and six months ended June 30, 2026 and 2025 is as follows: