SOURCE: ZBB Energy Corporation


May 18, 2010 08:55 ET

ZBB Energy Reports Third Quarter Results

MILWAUKEE, WI--(Marketwire - May 18, 2010) -  ZBB Energy Corporation (NYSE Amex: ZBB), a developer and manufacturer of distributed energy storage solutions, today reported results for its third quarter ending March 31, 2010. The Company filed its 10-Q for the third quarter on May 17, 2010.

Sales during the 2010 third quarter were $188,780, a decrease of 14 percent compared to $219,853 during last year's third quarter. Operating expenses for the third quarter of fiscal year 2010 increased 28 percent to $2.2 million, from $1.7 million in the prior year third quarter. The Company reported a net loss for the third quarter of 2010 of $2.0 million, or $0.16 per share, compared to a net loss of $1.5 million, or $0.16 per share for the third quarter of 2009.

For the first nine months of 2010, sales were $1,556,148, compared to $733,738 for the prior year's first nine months, an increase of 112 percent. Operating expenses for the first nine months of 2010 increased 72 percent to $8.3 million, compared to $4.8 million in the prior year's first nine months. Net loss for the first nine months of 2010 was $6.9 million, or $0.56 per share, compared to a net loss of $4.2 million, or $0.39 per share, for the first nine months of 2009.

Our engineering and development costs for the first nine months of 2010 were $2.5 million, an increase of 20% from last year's first nine months of $2.1 million. The increase during the first nine months of 2010 was primarily due to increased costs related to the further development of our battery and modular power electronics in the newly developed POWR PECC complete energy storage systems, including contracted non-recurring engineering and testing costs, baseline testing and focused efforts to improve the reliability, efficiency, and commercial production of the battery stack.

Highlights for the Quarter:

  • Due to the departure of Rob Parry as the Company's CEO, we completely restructured the Management Team with experienced Managers and technical staff additions with the intention of accelerating product development, improving manufacturing efficiencies and improving our financial controls. Major changes include the hiring of a new permanent CEO, Eric Apfelbach and a new Senior Vice President of Marketing, Dan Nordloh. Certain members of the existing staff were promoted and reassigned additional duties that fit with their areas of expertise. Kevin Dennis was promoted Senior Vice President of Sales and Application and Design Engineering and Scott Scampini, in addition to his CFO duties, was assigned the Manufacturing Operations duties. Due to these changes we are seeing the expected acceleration of product development, increased manufacturing efficiencies and improved financial controls.
  • The Company began the expansion of its mission from just a battery supplier to an enabler of renewable energy systems. This places the correct emphasis on the importance of the Power PECC electronics in bringing together multiple renewable and storage technologies. ZBB is transforming intermittent renewable energy into a reliable power source through intelligent power-management platforms and advanced storage technologies.
  • Board Committees were restructured. Paul Koeppe was named Chairman of the Audit Committee and placed on the Compensation and Governance Committees and Dick Abdoo was named Chairman of the Governance Committee and placed on the Audit and Compensation Committees.
  • We shipped and installed an order for Envinity, a renewable system integrator, for the delivery of two ZESS 50 energy storage devices and ZESS POWR PECC (patent pending) designed to integrate two solar PV arrays, ten wind turbines, a hydro generator, a conventional generator to provide a single output power plant for an off grid application. This first commercial project for the PECC shows the flexibility of the technology and it's enabling of multiple forms of renewable energy sources.
  • We received an order for a ZESS energy system which consists of, three (3) ZESS 50, zinc bromide flow batteries and the ZESS power and energy control center ("PECC") from NIDON Clean Energy (NIDON), a division of NIDON Computer Corporation. The market potential for this particular application is likely very large and we're pleased that Nidon selected ZBB's products for this application. 
  • Manufacturing operations were suspended for most of the quarter ended March 31, 2010 for retooling of the stack manufacturing process related to our Version 2 module (V2). V2 is our next generation module encompassing improvement in efficiencies and stack life and which we expect to begin manufacturing during the quarter ending June 30, 2010. In addition to launching this new product, the short suspension also resulted in cost savings during the quarter.
  • On March 9, 2010, we completed a registered direct sale 2,243,750 units at $.80 per unit consisting of an aggregate of 2,243,750 shares of common stock and warrants to purchase 1,121,875 shares of common stock at an exercise price of $1.04 per share. The proceeds to ZBB after deducting placement agent fees and offering expenses were approximately $1.6 million. In addition, on March 31, 2010, we completed the closing of a private placement of unregistered common stock. The purchasers of the stock were certain of the Company's directors, officers, and key employees. The Company sold 337,346 shares at $.83 per share. The proceeds to ZBB were $280,000
  • In December 2009 we were awarded a $1.3 million Wisconsin Clean Energy Business Loan through the American Recovery and Reinvestment Act. We anticipate closing this loan transaction in May 2010. During the quarter ended March 31, 2010 we received a $1.5 million financing commitment from our bank to supplement the Wisconsin Clean Energy Business Loan
  • During the quarter we restated our financial statements for fiscal year 2009 included in our 2009 Annual Report on Form 10-K and during the nine month period ended March 31, 2010 management and our audit committee determined, based on a impairment evaluation conducted by management and an onsite observation of inventory and property, plant, and equipment conducted by the Company's independent auditors, equipment held by our Australian subsidiary was impaired and would require the Company to recognize an impairment loss of approximately $425,000. Long-term manufacturing assets at the Wisconsin operation were also identified to have reached the end of their useful lives. The net charge to operations, after adjusting the carrying values of these assets, was $828,089 during this period.
  • Internal Revenue Service (IRS) has approved ZBB's application for a $14,685,000 Advanced Energy Manufacturing tax credit under section 48C of the Internal Revenue Code, and as authorized under the American Reinvestment and Recovery Act. The Company signed the acceptance agreement with the IRS on March 15, 2010. Further, the Company is working to find ways of monetizing this tax credit, either directly or through strategic partnerships. The tax credit can be utilized by ZBB or by a successor in interest to ZBB that enters into an agreement with the IRS, including a business that constructs the proposed facility and manufactures the qualifying advanced energy storage systems.

ZBB's CEO Mr. Eric Apfelbach said, "This quarter was a transformative quarter for ZBB where changes were executed across the spectrum within the Company. I'm pleased to say that we have the bulk of the major changes behind us and we are now on a trajectory that we expect to result in ZBB product acceptance in the potentially huge storage market." Mr. Apfelbach went on to say that, "the opportunities in front of ZBB are tremendous and our only impediments to realizing these opportunities are having needed resources available and our ability to execute. I'm convinced we now have the ability to execute our plan and that investors will have the confidence in us to provide the resources we need."

At March 31, 2010, the Company had cash of $2.9 million, a current ratio (current assets divided by current liabilities) of 1.76:1 and long-term debt of $2.2 million. Stockholders' equity stood at $4.0 million.

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
Except for the historical information contained herein, the matters set forth in this press release, including statements relating to ZBB's growth, are forward-looking statements within the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including historical volatility and low trading volume of our stock, the risks and uncertainties inherent in the early stages of growth companies, the company's need to raise substantial additional capital to proceed with its business, risks associated with competitors, and other risks detailed from time to time in the company's most recent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. The company disclaims any intent or obligation to update these forward-looking statements.

Contact Information

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