SOURCE: ZBB Energy Corporation

ZBB Energy Corporation

November 11, 2010 16:05 ET

ZBB Energy Reports Quarterly Financial Results and Strong Backlog for Fiscal Year 2011

MILWAUKEE, WI--(Marketwire - November 11, 2010) - ZBB Energy Corporation (NYSE Amex: ZBB), a leading developer of intelligent, renewable energy power platforms, today reported its results of operations for the quarter year ended September 30, 2010.

"While our restructuring of the Company is going well and on track, this was an unusual quarter for revenue recognition," said Eric Apfelbach, CEO and President. "The decrease in commercial product sales and revenues from last year's first quarter is primarily the result of the need for PECC inverter certification to UL standard 1741 for certain orders, which is expected in early calendar year 2011 and some temporary installation issues with an order shipped during the quarter. Backlog expected to be realized in fiscal year 2011 currently exceeds $1 million."

Net loss on the basis of accounting principles generally accepted in the United States (GAAP) was $2.0 million or $0.13 per diluted share in the quarter ended September 30, 2010, compared with $1.5 million or $0.13 per diluted share in the quarter ended September 30, 2009. Net loss in the latest quarter was increased by advanced engineering and development expenses, selling, general and administrative expenses.

Our revenues for the three months ended September 30, 2010 and 2009 were $0 and $811,913. This was the result of a decrease in revenues of $666,726 from commercial product sales and revenues, and a $145,187 decrease in engineering and development revenues as compared to the three months ended September 30, 2009. The decrease in engineering and development revenues for this quarter is due to the Company completing all final accounting and the final research report completing the entire Advanced Electricity Storage Technologies project ("AEST") with the Commonwealth of Australia. Final submission of the audited project financial statement was approved by the Audit Committee of Board of Directors on November 10, 2010. The final completion of this project will realize additional revenues in fiscal 2011 of approximately $200K.

Total costs and expenses for the three months ended September 30, 2010 and 2009 were $2,004,085 and $2,262,848, respectively. This decrease of $258,763 in the three months ended September 30, 2010 was primarily due to the following:

    -- decreased costs of product sales of $646,102, because products that
       shipped in the quarter ended September 30, 2010 were not fully
       commissioned and accepted by the customer, and a decrease in cost
       of engineering and development revenues of $294,455 due to a
       decrease in activities under the AEST contract; and
    -- increases in advanced engineering and development expenses of
       approximately $514,000 primarily due to an increase in the
       Company's engineering and development activities for its next
       generation battery module and the PECC systems; and
    -- legal and accounting fees increase of approximately $180,000
       related to certain accounting matters.

Other expenses for the three months ended September 30, 2010 and 2009 consisted primarily of interest expenses of $32,007 and $32,032, respectively.

Our net loss for the three months ended September 30, 2010 and 2009 was $2,034,032 and $1,476,231, respectively, resulting in a $558,071 increase in net loss as compared to the three months ended September 30, 2009. This increase in loss was primarily the result of increases in advanced engineering and development expenses and selling, general and administrative expenses, as described above.

Highlights for the quarter include:

    -- ZBB hosted a visit by President Obama at our Menomonee Falls,
       Wisconsin facility
    -- Released our next-generation ZESS POWR™ battery module (V2)
       that will provide greater performance and reliability than our
       already commercially proven product range.
    -- Awarded contract to supply UW Milwaukee's New Energy Lab with
       renewable energy technology
    -- Drew down the first tranche under our $10 million Socius
       Securities Purchase Agreement
    -- Restructured our management team to enhance the company's sales,
       engineering and product development functions
    -- California Public Utilities Commission announced the funding of
       the ZBB Energy and SunPower solar power demonstration project with
       a ZESS 500 on a Target store in California
    -- Delivered four modular ZESS 50 batteries and a ZESS POWR™ PECC
       (Power & Energy Control Center) system to Powertech Labs as part
       of that company's Bella Coola Hydrogen Assisted Renewable Power
       (HARP) project. Revenue will be recognized upon completion of
       installation.
    -- ZBB announced changes in Board of Directors' roles. Paul Koeppe
       named Chairman of the Board

"We made significant progress during the quarter on all of our initiatives and we will continue to build strategic backlog in all of our target market segments," said Eric Apfelbach, President and CEO.

Investor Conference Call -- 3:30 p.m. Central time, Thursday, November 11, 2010

A conference call to discuss the financial and operating results and company's outlook will be held on Thursday, November 11, 2010, at 3:30 p.m. US Central (4:30 p.m. Eastern). The conference call will be hosted by Eric Apfelbach, President and CEO. A brief presentation by Mr. Apfelbach will be followed by a question and answer period.

To participate in the conference call, callers from within the United States and Canada, dial the toll free number (888) 428-7458. For international callers, dial the toll number (201) 604-5177. The conference call reference is "ZBB."

For support during a call press *0 on your phone and a conferencing coordinator will assist you. The presentation materials will be posted on the Company's web site at www.zbbenergy.com following the conference call.

About ZBB Energy Corporation

ZBB Energy Corporation (NYSE Amex: ZBB) provides distributed intelligent power management platforms that directly integrate multiple renewable and conventional onsite generation sources with rechargeable zinc bromide flow batteries and other storage technology. This platform solves a wide range of electrical system challenges in global markets for various types of sites with utility, governmental, commercial, industrial and residential end customers. A developer and manufacturer of its modular, scalable and environmentally friendly power systems ("ZESS POWR™"), ZBB Energy was founded in 1998 and is headquartered in Wisconsin with offices also located in Perth, Western Australia.

Safe Harbor Statement

Certain statements made in this press contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, that are intended to be covered by the "safe harbor" created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "could," "seek," "intend," "plan," "estimate," "anticipate" or other comparable terms. Forward-looking statements in this press release may address the following subjects among others: statements regarding the sufficiency of our capital resources, expected operating losses, expected revenues, expected expenses and our expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our most recently filed Annual Report on Form 10-K and our subsequently filed Quarterly Reports of Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

                          ZBB ENERGY CORPORATION
                  Condensed Consolidated Balance Sheets

                                                 September 30,
                                                      2010       June 30,
                                                  (Unaudited)      2010
                                                  -----------  -----------
Assets
Current assets:
 Cash and cash equivalents                        $   722,681  $ 1,235,635
 Accounts receivable                                    7,319        7,553
 Inventories                                          724,246      702,536
 Prepaid and other current assets                     117,485      149,098
                                                  -----------  -----------
   Total current assets                             1,571,731    2,094,822
                                                  -----------  -----------
Long-term assets:
 Property, plant and equipment, net                 3,558,495    3,568,823
 Goodwill                                             803,079      803,079
                                                  -----------  -----------
   Total assets                                   $ 5,933,305  $ 6,466,724
                                                  ===========  ===========

Liabilities and Shareholders' Equity
Current liabilities:
 Bank loans and notes payable                         370,039      395,849
 Accounts payable                                   1,082,321      869,179
 Accrued expenses                                     469,350      539,100
 Commitment fee payable                               294,118            -
 Deferred revenues                                    386,305      325,792
 Accrued compensation and benefits                    576,792      765,106
                                                  -----------  ----------- 
   Total current liabilities                        3,178,925    2,895,026
                                                  ===========  ===========
Long-term liabilities:
 Bank loans and notes payable                       3,187,506    2,120,421
 Debenture notes payable                              517,168            -
                                                  -----------  -----------
   Total liabilities                              $ 6,883,599  $ 5,015,447
                                                  -----------  -----------

Shareholders' equity (deficiency in assets)
 Common stock ($0.01 par value); 150,000,000
  authorized 15,767,350 and 14,915,389 shares
  issued                                              165,748      149,155
 Additional paid-in capital                        49,920,819   49,770,987
 Note receivable - common stock                      (514,255)           -
 Treasury stock - 13,833 shares                       (11,136)     (11,136)
 Accumulated other comprehensive (loss)            (1,582,491)  (1,563,052)
 Accumulated (deficit)                            (48,928,979) (46,894,677)
                                                  -----------  -----------
   Total shareholders' equity (deficiency in
    assets)                                       $  (950,294) $ 1,451,277
                                                  -----------  -----------
   Total liabilities and shareholders' equity
    (deficiency in assets)                        $ 5,933,305  $ 6,466,724
                                                  ===========  ===========




                          ZBB ENERGY CORPORATION
        Condensed Consolidated Statements of Operations (Unaudited)

                                                    Three months ended
                                                       September 30,
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------
Revenues
  Product sales and revenues                    $          -  $    666,726
  Engineering and development revenues                     -       145,187
                                                ------------  ------------
   Total Revenues                                          -       811,913
                                                ------------  ------------

Costs and Expenses
  Cost of product sales                                    -       646,102
  Cost of engineering and development revenues             -       294,455
  Advanced engineering and development               839,273       324,707
  Selling, general, and administrative             1,078,729       873,367
  Depreciation                                        86,083       124,217
  Impairment and other equipment charges                   -             -
                                                ------------  ------------
   Total Costs and Expenses                        2,004,085     2,262,848

                                                ------------  ------------
Loss from Operations                              (2,004,085)   (1,450,935)
                                                ------------  ------------

Other (Expense) Income
  Interest income                                      1,790        26,496
  Interest expense                                   (32,007)      (32,032)
  Other expense                                            -       (19,760)
                                                ------------  ------------
   Total Other (Expense) Income                      (30,217)      (25,296)

                                                ------------  ------------
Loss before provision for Income Taxes            (2,034,302)   (1,476,231)

Provision for Income Taxes                                 -             -
                                                ------------  ------------
Net Loss                                        $ (2,034,302) $ (1,476,231)
                                                ============  ============

Net Loss per share-
                                                ------------  ------------
  Basic and diluted                             $      (0.13) $      (0.13)
                                                ============  ============

Weighted average shares-basic and diluted:
  Basic                                           15,410,384    11,514,131
  Diluted                                         15,410,384    11,514,131




                          ZBB ENERGY CORPORATION
        Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                    Three months ended
                                                       September 30,
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------
Cash flows from operating activities
Net loss                                        $ (2,034,302) $ (1,476,231)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation                                        86,083       124,217
  Stock based compensation                           103,598        54,894
(Increase) decrease in operating assets:
  Accounts receivable                                    234       561,066
  Inventories                                       (562,710)      376,983
  Prepaids and other current assets                  116,688        57,211
  Other receivables-interest                               -        19,746
Increase (decrease) in operating liabilities:
  Accounts payable                                   579,067      (108,365)
  Accrued compensation and benefits                 (188,314)       68,588
  Accrued expenses                                   288,726        45,145
  Deferred revenues                                   60,513      (686,795)
                                                ------------  ------------
  Net cash used in operating activities           (1,550,417)     (963,541)
                                                ------------  ------------
Cash flows from investing activities
  Capital expenditures                               (75,755)            -
  Bank certificate of deposit                              -     1,000,000
                                                ------------  ------------
  Net cash (used in) provided by investing
   activities                                        (75,755)    1,000,000
                                                ------------  ------------
Cash flows from financing activities
  Proceeds from bank loans and notes payable       1,156,128       156,000
  Repayments of bank loans and notes payable        (114,853)     (114,168)
  Proceeds from issuance of debenture notes
   payable                                           517,168             -
  Issuance of common stock net of costs and
  underwriting fees                                       -     1,875,276
  Equity issuance costs and fees                    (451,427)            0
                                                ------------  ------------
  Net cash provided by financing activities        1,107,016     1,917,108
                                                ------------  ------------
Effect of exchange rate changes on cash and
 cash equivalents                                      6,202         9,511
                                                ------------  ------------
Net (decrease) increase in cash and cash
 equivalents                                        (512,954)    1,963,078
Cash and cash equivalents - beginning of period    1,235,635     2,970,009
                                                ------------  ------------

Cash and cash equivalents - end of period       $    722,681  $  4,933,087
                                                ============  ============

Contact Information

  • Contact Information:
    Helen Brown
    Investor Relations
    ZBB Energy Corporation
    T: 262.253.9800
    Email: Email Contact