Unassociated Document

Milwaukee, WI — September 7, 2010 — ZBB Energy Corporation (NYSE Amex: ZBB), a leading developer of intelligent, renewable energy power platforms, today reported increased annual revenues for the fiscal year ended June 30, 2010. Net loss on the basis of accounting principles generally accepted in the United States (GAAP) was $9.6 million or $0.74 per diluted share in the year ended June 30, 2010, compared with $5.6 million or $0.53 per diluted share in the year ended June 30, 2009. Net loss in the latest fiscal year was increased by advanced engineering and development expenses, selling, general and administrative expenses, and impairment expenses.

Our revenues for the years ended June 30, 2010 and 2009 were $1,545,980 and $1,156,792, respectively, an increase of $389,188 or 33.6%. This was the result of an increase in revenues of $899,460 from commercial product sales and revenues, and a $510,272 decrease in engineering and development revenues as compared to the year ending June 30, 2009. The increase in commercial product sales and revenues was primarily the result of the Company’s sale of a 500 Kwh system shipped to Dundalk Institute of Technology, Ireland in the first quarter of 2010. The decrease in engineering and development revenues is due to the substantial completion of the Advanced Electricity Storage Technologies project (“AEST”) with the Commonwealth of Australia in June 2010. Revenues include estimates of earned revenue based on the Company’s performance on its engineering and development contracts.

Total costs and expenses for the year ended June 30, 2010 and 2009 were $11,057,919 and $6,667,934, respectively. This increase of $4,389,985 in the year ended June 30, 2010 was primarily due to the following:

•

increased costs of $572,891 related to the additional cost of product sales for the shipment to Dundalk

•

increases in advanced engineering and development expenses of $1,368,000 due to an increase in the Company’s engineering and development activities for its next generation battery module and the PECC systems

•

legal and accounting fee increases of $258,249 related to the termination of the Company’s CEO and restatements of the Company’s financial statements

•

severance pay to the Company’s former CEO of $390,000

•

increase in stock option expense of $188,575 for options issued to new employees and for accelerated vesting of directors options

•

increase in non-cash directors fees of $182,500 and cash director’s fees of $38,584 due to an increase in the size of the Board of Directors.

•

fund raising expenses of $177,918 for government grant proposals, section 48c tax credit fees, and loan commitment fees

•

The increase in costs and expenses in the year ended June 30, 2010 also included equipment impairment expenses of $903,305 and an increase in depreciation of $146,401 over the prior year due to new equipment purchases in late fiscal year 2010.

Our net loss for the years ended June 30, 2010 and 2009 was $9,606,826 and $5,561,056, respectively, resulting in a $4,045,770 increase in net loss as compared to the year ended June 30, 2009. In summary, this increase in loss was primarily the result of increases in advanced engineering and development expenses, selling, general and administrative expenses, and impairment expenses, totaling $4,226,423, as described above.

“Management has adopted a plan with multiple financing upsides and is very confident that this plan will provide necessary funding for the next year. Although we have a comprehensive business and financing strategy in place, there is not absolute certainty, however, that the company can continue to finance its growth strategy. Therefore, we plan to include the going concern disclosure that was added in last quarter in our June 30, 2010 Form 10k filing until a greater margin of error can be realized in the balance sheet and burn rate of the company,” said Eric Apfelbach, President and CEO.

“I’m more bullish on ZBB’s future than ever. We’ve experienced a number of changes this past year that have been challenging. I believe, however, that we’ve now created a solid foundation on which to build the Company. We have funding vehicles in place to fund the Company for the next year. We have products under development that position ZBB uniquely in the energy storage and renewables markets. We are executing on a sales and marketing strategy that will allow us to realize the enormous market potential of the energy storage and renewables markets.”

Investor Conference Call — 4:00 p.m. Central time, Tuesday, September 7, 2010

A conference call to discuss the financial and operating results and company’s outlook will be held on Tuesday, September 7, 2010, at 4:00 p.m. US Central (5:00 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 and then reference “ZBB Earnings Call” (no pin number required). For all international callers, dial 201-604-517.

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.

Contact Information:

Helen Brown

Investor Relations

ZBB Energy Corporation

T: 262.253.9800

Email: hbrown@zbbenergy.com

ZBB ENERGY CORPORATION

Consolidated Balance Sheets (Unaudited)

	June 30, 2010			June 30, 2009
Assets
Current assets:
Cash and cash equivalents	$	1,235,635		$	2,970,009
Bank certificate of deposit		-			1,000,000
Accounts receivable		7,553			614,154
Interest receivable		-			19,746
Inventories-net of $304,200 and $145,301 allowance		702,536			1,587,113
Prepaids and other current assets		149,098			143,173
Total current assets		2,094,822			6,334,195
Long-term assets:
Property, plant and equipment, net		3,568,823			4,578,180
Goodwill		803,079			803,079
Total assets	$	6,466,724		$	11,715,454

Liabilities and Shareholders' Equity
Current liabilities:
Bank loans		395,849			416,558
Accounts payable		869,179			827,001
Accrued expenses		539,100			25,765
Deferred revenues		325,792			1,128,539
Accrued compensation and benefits		765,106			151,841
Total current liabilities		2,895,026			2,549,704
Long-term liabilities:
Bank loans		2,120,421			2,399,915
Total liabilities	$	5,015,447		$	4,949,619

Shareholders' equity
Common stock ($0.01 par value); 150,000,000 authorized
14,915,389 and 10,618,297 shares issued and outstanding		149,155			106,183
Additional paid-in capital		49,770,988			45,549,079
Treasury stock - 13,833 shares		(11,136	)		-
Accumulated other comprehensive (loss)		(1,563,052	)		(1,601,576	)
Accumulated (deficit)		(46,894,678	)		(37,287,851	)
Total shareholders' equity	$	1,451,277		$	6,765,835
Total liabilities and shareholders' equity	$	6,466,724		$	11,715,454

	Year ended June 30,
	2010			2009
Revenues
Product sales and revenues	$	967,455		$	67,995
Engineering and development revenues		578,525			1,088,797
Total Revenues		1,545,980			1,156,792

Costs and Expenses
Cost of product sales		899,287			56,468
Cost of engineering and development revenues		1,836,299			2,051,803
Advanced engineering and development		2,239,139			807,291
Selling, general, and administrative		4,755,592			3,474,476
Depreciation		424,297			277,896
Impairment and other equipment charges		903,305			-
Total Costs and Expenses		11,057,919			6,667,934

Loss from Operations		(9,511,939	)		(5,511,142	)

Other Income (Expense)
Interest income		60,193			145,088
Interest (expense)		(149,521	)		(182,074	)
Other income (expense)		(5,559	)		(12,928	)
Total Other Income (Expense)		(94,887	)		(49,914	)

Loss before provision for Income Taxes		(9,606,826	)		(5,561,056	)

Provision for Income Taxes		-			-
Net Loss	$	(9,606,826	)	$	(5,561,056	)

Net Loss per share-
Basic and diluted	$	(0.74	)	$	(0.53	)

Weighted average shares-basic and diluted:
Basic		12,924,362			10,547,621
Diluted		12,924,362			10,547,621

ZBB Energy Corporation	Year ended June 30,
Consolidated Statements of Cash Flows (Unaudited)	2010			2009
Cash flows from operating activities
Net loss	$	(9,606,826	)	$	(5,561,056	)
Adjustments to reconcile net loss to net cash (used) in operating activities:
Depreciation		424,297			277,896
Change in inventory allowance		158,899			(88,699	)
Equipment costs reclassified to expenses		-			372,855
Impairment and other equipment charges		903,305			-
Payments applied to note receivable for consulting fees		-			200,000
Stock based compensation		527,439			338,864
(Increase) decrease in operating assets:
Accounts receivable		606,601			(609,987	)
Inventories		725,678			(185,530	)
Prepaids and other current assets		(5,925	)		(41,799	)
Other receivables-interest		19,746			61,083
Increase (decrease) in operating liabilities:
Accounts payable		42,178			247,500
Accrued compensation and benefits		613,265			22,092
Accrued expenses		544,551			25,765
Deferred revenues		(802,747	)		717,539
Net cash (used) in operating activities		(5,849,539	)		(4,223,477	)
Cash flows from investing activities
Capital expenditures		(318,245	)		(889,658	)
Bank certificate of deposit		1,000,000			(1,000,000	)
Net cash provided (used) in investing activities		681,755			(1,889,658	)
Cash flows from financing activities
Proceeds from bank loan		156,000			1,070,000
Repayments of bank loans		(456,203	)		(306,984	)
Proceeds from stock issuance - net of fees and costs		3,737,442			-
Purchase of treasury stock		(11,136	)		-
Net cash provided by financing activities		3,426,103			763,016
Effect of exchange rate changes on cash and cash equivalents		7,307			(131,192	)
Net (decrease) in cash and cash equivalents		(1,734,374	)		(5,481,311	)
Cash and cash equivalents - beginning of year		2,970,009			8,451,320

Cash and cash equivalents - end of year	$	1,235,635		$	2,970,009