All statements contained herein that are not statements of historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the word "believe," "anticipate," "expect," "project," "intend," "will continue," "will likely result," "should" or words or phrases of similar meaning. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results of the Company to differ materially from the forward-looking statements. The risks and uncertainties include those associated with the present economic circumstances in the United States and throughout Europe, general business and economic conditions in the Company's motion markets, introduction of new technologies, products and competitors, the ability to protect the Company's intellectual property, the ability of the Company to sustain, manage or forecast its growth and product acceptance, success of new corporation strategies and implementation of defined critical issues designed for growth and improvement in profits, the continued success of the Company's customers to allow the Company to realize revenues from its order backlog and to support the Company's expected delivery schedules, the continued viability of the Company's customers and their ability to adapt to changing technology and product demand, the loss of significant customers or enforceability of the Company's contracts in connection with a merger, acquisition, disposition, bankruptcy, or otherwise, the ability of the Company to meet the technical specifications of its customers, the continued availability of parts and components, increased competition and changes in competitor responses to the Company's products and services, changes in government regulations, availability of financing, the ability of the Company's lenders and financial institutions to provide additional funds if needed for operations or for making future acquisitions or the ability of the Company to obtain alternate financing if present sources of financing are terminated, the ability to attract and retain qualified personnel who can design new applications and products for the motion industry, the ability of the Company to identify and consummate favorable acquisitions to support external growth and new technology, the ability of the Company to successfully integrate an acquired business into the Company's business model without substantial costs, delays, or problems, the ability of the Company to establish low cost region manufacturing and component sourcing capabilities, and the ability of the Company to control costs, including relocation costs, for the purpose of improving profitability. The Company's ability to compete in this market depends upon its capacity to anticipate the need for new products, and to continue to design and market those products to meet customers' needs in a competitive world. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements as a prediction of actual results. The Company has no obligation or intent to release publicly any revisions to any forward looking statements, whether as a result of new information, future events, or otherwise.

New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, the Company makes no assurance that expectations, beliefs or projections will be achieved.

Overview

Allied Motion has developed a long term corporate strategy with its sole focus in the motion control industry. Allied Motion utilizes its underlying core "electro-magnetic, mechanical and electronic motion technology/know how" to provide compact, high performance products as solutions in a wide range of motion applications. The Company designs, manufactures and sells motors, electronic motion controls, gearing and optical encoders to a broad spectrum of customers throughout the world. The Company sells components individually and also provides integrated motion control solutions to customers. The Company sells its products through its own direct sales force and manufacturer's reps and distributors. The products are manufactured at the Company's own facilities in North America, Europe and China, and at contract

manufacturing facilities in China and Eastern Europe, where the Company owns all the capital equipment and tooling and has designed and set-up the manufacturing processes in each facility.

Examples of the end products using Allied Motion's technology in the medical and health care industries include surgical robots, prosthetics, electric powered surgical hand pieces, programmable pumps to meter and administer infusions associated with chemotherapy, pain control and antibiotics; nuclear imaging systems, automated pharmacy dispensing equipment, kidney dialysis equipment, respiratory ventilators and heart pumps, wheel chairs, scooters, stair lifts, patient lifts, patient handling tables and beds. In electronics, our products are used in the handling, inspection, and testing of components and in the automation and verification of final products such as PC's, game equipment and cell phones. Our motors are used in the HVAC systems of trucks, buses, RV's, boats and off-road construction/farming equipment. These motors operate a variety of actuation systems (e.g., patient and wheelchair lifts, RV slide-outs, truck bed covers etc.), they provide improved fuel efficiency while the vehicles are idling and are used in drive-by-wire applications to electrically replace or power-assist a variety of mechanical linkages. Our products are also utilized in high performance vehicles, vehicles using alternative fuel systems such as LPG, fuel cell and hybrid vehicles. Our geared motor products are utilized in automated material handling vehicles/robots, commercial grade floor cleaners, commercial building equipment such as welders, cable pullers and assembly tool. Several products are used in a variety of military/defense applications including inertial guided missiles, mid-range munitions systems, weapons systems on armed personnel carriers, unmanned vehicles and in security and access control in camera systems, door access control and in airport screening and scanning devices. Other end products utilizing our technology include high definition printers; tunable lasers and spectrum analyzers for the fiber optic industry; processing equipment for the semiconductor industry, as well as ticket and cash dispensing machines (ATMs).

Allied Motion has established Solution Centers in North America and Europe to provide applications support and first point of contact for customers requiring motion control solutions. The application engineers draw upon the Technology/Know-How from all Allied Motion companies to provide the best solution for the customer and may be a single component or a solution that utilizes several components to create an integrated solution from our various Technology Units ("TUs"). Allied Motion is currently in the process of renaming it's TU's to incorporate the Allied Motion name first, followed by the city the Units are managed from, to replace the previous company names in parenthesis below. The list is as follows:

†          Allied Motion Tulsa - Tulsa, Oklahoma (Emoteq Corporation)

†          Allied Motion Owosso - Owosso, Michigan (Motor Products Corporation)

†          Allied Motion Watertown - Watertown, New York (Stature Electric,
Inc.)

†          Allied Motion Amherst -  Amherst, New York and Waterloo, Ontario,

Canada (Allied Motion Amherst and Allied Motion Canada)

†          Allied Motion Dordrecht - Dordrecht, The Netherlands (Precision Motor
Technology B.V.)

†          Allied Motion Stockholm - Stockholm, Sweden and Ferndown, UK
(Östergrens Elmotor AB)

†          Allied Motion Changzhou - Changzhou, China (Östergrens Changzhou)



         Allied Motion also has contract production capabilities in Slovakia and
China. The Company is currently in the process of setting up a Solution Center
in Asia.

1st Quarter Overview

After a record year in revenues and profitability in 2011, the first quarter of 2012 had a slight growth in revenues over the first quarter of last year and maintained a diluted earnings per share of $0.14. Sales to our medical, vehicle, and electronics markets were up, while the industrial and aerospace and defense markets were down over the first quarter of 2011.

Orders for the quarter ended March 31, 2012 were $23.0 million compared to $26.4 million in the same quarter of last year. Backlog at March 31, 2012 was $40.9 million, reflecting a 6% increase over the

backlog at the same time last year. The increased backlog over March 31, 2011 reflect the strong orders that were received in 2011 in the Company's served markets. We believe that the markets we serve are recognizing the value of the Company's motion solutions, and we continue to pursue opportunities that will increase the company's revenues and profitability.

We continued our quarterly dividend program, and we increased our dividends per share to $.025 per share. We believe that our cash flows can support our growth initiatives and reward our shareholders at the same time.

Strategy

Allied Motion Business Concept: Allied Motion leverages its superior expertise in electro-magnetic, mechanical and electronic motion technology/know-how to provide solutions with the most compact, differentiated products or systems that "change the game" and add value to our customers' products. Utilizing Allied's "One Team" Organization, our intent is to be the motion solutions leader in our selected target market segments and to focus on geographic markets where our local support provides an additional competitive advantage. We will enhance our competitive position through the creation of an Operational Excellence Team to lead the implementation of Allied Systematic Tools (AST) and drive continuous improvement in quality, cost, delivery and growth throughout the company.

Further development and promotion of our parent brand, Allied Motion, will continue in the future and a Global structure has been defined and is currently being implemented. An example of the Global structure is the One Team Sales Force which has developed nicely in North America and Europe, and we are currently establishing the same capability in Asia. Our Solution Centers differentiate us from our competition and will become functional in North America and Europe in 2012 and the foundation will be also established in Asia in 2012. Together with our One Team Sales Force, the Solution Center is the glue that allows Allied Motion to function and act as One Company, a common request from our customers.

Our platform based Product Line approach, which is where we preplan what products are required by our served market segments, provides us the capability to quickly deliver prototypes, be first in with application solutions and secure new design-in wins. While it is relatively simple to achieve this on an independent component level basis, a coordinated effort to tie all of our technologies together as systems is where the real opportunity lies and that will be our emphasis.

An emphasis is placed on Gross Margin improvement which requires cost reduction, new products emphasizing more complete Motion Control solutions and a support structure trained to sell, apply and service our products and customers. In order to provide additional solution capabilities, additional Electronic Motion Control product offerings are required and the company continues to add new capabilities and make investments in this area.

We also plan to take our commitment to "Allied Systematic Tools", or AST, to a new level this year as we invest in additional resources as part of our Operational Excellence Team to continuously build and utilize AST to improve efficiencies and eliminate waste throughout our Company.

We believe the strategy we have developed for the Company will accomplish our long term goals of increasing shareholder value through the continued strengthening of the foundation necessary to achieve growth in sales and profitability.

Operating Results

Quarter Ended March 31, 2012 compared to Quarter Ended March 31, 2011

NET INCOME The Company reported net income of $1,158,000, or $0.14 per diluted share for the first quarter of 2012, compared to $1,213,000, or $0.14 per diluted share for the same quarter last year.

EBITDA AND ADJUSTED EBITDA EBITDA was $2,104,000 for the first quarter of 2012 compared to a $2,350,000 for the same quarter last year. Adjusted EBITDA was $2,482,000 and $2,492,000 for the first

quarters of 2012 and 2011, respectively. EBITDA and Adjusted EBITDA are non-GAAP measurements. EBITDA consists of income before interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA also excludes stock compensation expense and certain non-recurring items. See information included in "Non - GAAP Measures" below for a reconciliation of net income to EBITDA and Adjusted EBITDA.

REVENUES Revenues were $26,847,000 for the quarter ended March 31, 2012 compared to $26,724,000 for the quarter ended March 31, 2011. Overall, the Company experienced increases in the medical, vehicle, and electronics markets, partially offset by declines in the industrial and aerospace and defense markets.

Sales to U.S. customers accounted for 54% and 50% of our sales in the first quarter of 2012 and 2011, respectively, with the balance to customers primarily in Europe, Canada, and Asia. Sales volumes for the quarter ended March 31, 2012 increased by about 1%, but were offset by the strengthening of the dollar against the euro over the same period of last year. Declining sales to foreign customers indicate some softening in some of the Company's European markets.

ORDER BACKLOG At March 31, 2012, order backlog was approximately $40.9 million, which is up 6% from the same time last year and down 7% from the backlog at December 31, 2011.

GROSS MARGINS Gross margin as a percentage of revenues was 28% and 30% for the quarters ended March 31, 2012 and 2011, respectively. The decrease in gross margins is partially due to the sales mix (decrease in sales of our higher margin business partially offset by increased sales of lower margin business) and partially due to a one-time charge to cover the estimated cost of replacing products in the field due to an incorrect component used by one of the Company's suppliers.

SELLING EXPENSES Selling expenses in the first quarter were $1,365,000 compared to $1,462,000 for the first quarter last year. The 7% decrease is primarily related to lower expected sales incentives in 2012 when compared to 2011.

GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses were $2,947,000 in the quarter ended March 31, 2012 compared to $2,966,000 in the quarter ended March 31, 2011. The slight decrease in general and administrative expenses is primarily due to increased headcount and salary increases, offset by lower incentive bonuses.

ENGINEERING AND DEVELOPMENT EXPENSES Engineering and development expenses were $1,553,000 in the first quarter of 2012 and $1,534,000 in the same quarter last year.

AMORTIZATION OF INTANGIBLE ASSETS Amortization of intangible assets expense was $174,000 in the quarter ended March 31, 2012 and $180,000 in the same quarter last year.

INCOME TAXES Provision for income taxes was $450,000 and $571,000 for the first quarters of 2012 and 2011, respectively. The Company uses an estimate of the annual effective rate to calculate and record income taxes based on the projected results for the fiscal year and the facts and circumstances known at each interim period. The Company is subject to tax in the U.S. and multiple other tax jurisdictions. Judgment is required in determining the worldwide provision for income taxes and in recording the related tax assets and liabilities. The effective income tax rate as a percentage of income before income taxes was 28% and 32% for the quarters ended March 31, 2012 and 2011, respectively. The effective tax rate is lower than the statutory rate primarily due to differences in state and foreign tax rates.

Non-GAAP Measures

EBITDA and Adjusted EBITDA are provided for information purposes only and are not measures of financial performance under generally accepted accounting principles.

The Company believes EBITDA is often a useful measure of a Company's operating performance and is a significant basis used by the Company's management to measure the operating performance of the Company's business because EBITDA excludes charges for depreciation, amortization and interest expense

that have resulted from our debt financings, as well as our provision for income tax expense. EBITDA is frequently used as one of the bases for comparing businesses in the Company's industry.

The Company also believes that Adjusted EBITDA provides helpful information about the operating performance of its business. Adjusted EBITDA excludes stock compensation expense, as well as certain non-recurring items. Nonrecurring items are either income or expenses which do not occur regularly as part of the normal activities of the Company. For the quarter ended March 31, 2012, the charge to replace the incorrect electronic component of $238,000 is excluded from Adjusted EBITDA. There are no non-recurring items that have been excluded from Adjusted EBITDA for the quarter ended March 31, 2011.

EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles.

The Company's calculation of EBITDA and Adjusted EBITDA for the three months ended March 31, 2012 and 2011 is as follows (in thousands):

                                    For the three months
                                           ended
                                         March 31,
                                    2012           2011
Net income                       $     1,158    $     1,213
Interest expense                           7             24
Provision for income tax                 450            571
Depreciation and amortization            489            542
EBITDA                                 2,104          2,350
Stock compensation expense               140            142
Non-recurring expense (income)           238              -
Adjusted EBITDA                  $     2,482    $     2,492

Liquidity and Capital Resources

The Company's liquidity position as measured by cash and cash equivalents decreased $4,574,000 to a balance of $4,581,000 at March 31, 2012. This decrease compares to a smaller decrease of $1,236,000 for the same period last year. During the first quarter of 2012, operations used $2,974,000 in cash compared to $653,000 for the quarter ended March 31, 2011. The increase in cash used in operations this year is due to higher incentive bonus payments, higher tax payments, and increased payments to vendors.

Net cash used in investing activities was $1,936,000 and $760,000 for the first quarter of 2012 and 2011, respectively. The increase includes a payment of $1,350,000, which is the final portion of consideration for the Ostergrens acquisition, and an increase of $158,000 over the same period of last year, for purchases of property and equipment.

Net cash provided by financing activities was $223,000 for the quarter ended March 31, 2012 compared to $95,000 for the same period last year. The increase in 2012 is due to more Company stock purchased by the Allied Motion Employee Stock Ownership Plan (ESOP), based on higher company contributions to the plan for 2011, offset by the dividends paid, as well as fewer share repurchases by the

Company in 2012 than 2011 for tax withholding purposes. The Company began to pay quarterly dividends in August 2011, and thus, had not paid dividends in the first quarter of 2011.

The average outstanding borrowings for the quarter ended March 31, 2012 was $158,000. As of March 31, 2012, the amount available to borrow under the Company's various lines-of-credit was approximately $8,600,000.

The Company's Credit Agreement is used for borrowing needs that may occur in the United States and Europe. The Credit Agreement provides revolving credit up to $4 million and €3 million. The Credit Agreement contains certain financial covenants related to maximum leverage, minimum fixed charge coverage and minimum tangible net worth of the Company. The Credit Agreement expires on October 26, 2013.

The Company also has a Credit Line Facility in China providing credit of approximately $700,000 (RMB 4,500,000) to provide financing availability for working capital needs for the Company's subsidiaries in China. There is approximately $550,000 (RMB 3,500,000) available under the facility at March 31, 2012.

The Company has bank overdraft facilities with foreign banks in Europe. The facilities had no outstanding balance as of March 31, 2012. The amount available under the overdraft facilities was approximately $700,000 (€ 300,000 and 2,100,000 SEK).

As part of the Company's quarterly cash dividend program, the Board of Directors declared a dividend, increasing the amount from $0.02 to $0.025 per share in the first quarter of 2012.

The Company's working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Company's credit facilities.

Critical Accounting Policies

The Company has prepared its financial statements in conformity with accounting principles generally accepted in the United States, and these statements necessarily include some amounts that are based on informed judgments and estimates of management. The Company's significant accounting policies are discussed in Note 1 in the Annual Report on Form 10-K for the year ended December 31, 2011. The policies are reviewed on a regular basis. The Company's critical accounting policies are subject to judgments and uncertainties which affect the application of such policies. The Company uses historical experience and all available information to make these judgments and estimates. As discussed below the Company's financial position or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. The Company's critical accounting policies include:

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance is based on historical experience and judgments based on current economic and customer specific factors. Significant judgments are made by management in connection with establishing the Company's customers' ability to pay at the time of shipment. Despite this assessment, from time to time, the Company's customers are unable to meet their payment obligations. The Company continues to monitor customers' credit worthiness, and use judgment in establishing the estimated amounts of customer receivables which may not be collected. A significant change in the liquidity or financial position of the Company's customers could have a material adverse impact on the collectibility of accounts receivable and future operating results.

Inventory is valued at the lower of cost or market. The Company monitors and forecasts expected inventory needs based on sales forecasts. Inventory is written down or written off when it becomes

obsolete or when it is deemed excess. These determinations involve the exercise of significant judgment by management. If actual market conditions are significantly different from those projected by management, the recorded reserve may be adjusted, and such adjustments may have a significant impact on the Company's results of operations. Demand for the Company's products can fluctuate significantly, and in the past the Company has recorded substantial charges for inventory obsolescence.

The Company records deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts recorded in the consolidated financial statements, and for operating loss and tax credit carryforwards. Realization of the recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdiction in future years to obtain benefit from the reversal of net deductible temporary differences and from tax credit and operating loss carryforwards. A valuation allowance is provided to the extent that management deems it more likely than not that the net deferred tax assets will not be realized. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed.

The Company provides pension and postretirement benefits for certain domestic retirees and records the cost of the obligations based on estimates. The net periodic costs are recognized as employees render the services necessary to earn the benefits. Several assumptions are used to calculate the expense and liability related to the plans including the discount rate, the expected rate of return on plan assets, the future rate of compensation increases and health care cost increases. The discount rate is selected based on a bond pricing model that relates to the projected future cash flows of benefit obligations. Actuarial assumptions used are based on demographic factors such as retirement and mortality. Actual results could vary materially from the Company's actuarial assumptions, which may have an impact on the amount of reported expense or liability for pension or postretirement benefits.