GOING CONCERN	9 Months Ended
Mar. 31, 2012
Notes to Financial Statements
GOING CONCERN	NOTE 4 - GOING CONCERN The condensed consolidated financial statements as of March 31, 2012 and for the nine months then ended have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $7,878,643 attributable to ZBB Energy Corporation for the nine months ended March 31, 2012 and as of March 31, 2012 has an accumulated deficit of $63,222,326 and total ZBB Energy Corporation equity of $3,946,430. The ability of the Company to meet its total liabilities of $8,234,644 and to continue as a going concern is dependent upon the availability of future funding and achieving profitability. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. As described in Note 12, in the nine months ended March 31, 2012 the Company raised approximately $7.2 million through the issuance of shares of Company preferred and common stock to certain investors. In addition as described in Note 17 on May 1, 2012, the Company entered into Securities Purchase Agreements with certain investors providing for the sale of a total of $2,465,000 of Zero Coupon Convertible Subordinated Notes (the “Notes”). The Notes, which will mature on August 31, 2012, were issued to investors with a principal amount equal to the investor’s subscription amount times 110% and will not bear interest except following default. The Notes are convertible into shares of common stock of the Company at an exercise price equal to $0.53, which was the closing price of the common stock on May 1, 2012 (the “Conversion Price”). In connection with the Notes, the Company entered into a security agreement with the lenders providing for a security interest in all of the assets of the Company and certain subsidiaries of the Company. In connection with the purchase of Notes, each investor received a five-year warrant to purchase a number of shares of Common Stock equal to 55% times such investor’s investment in the Notes divided by the Conversion Price at an exercise price equal to the Conversion Price. Certain directors and officers of the Company invested $330,000 in the Notes. The proceeds to the Company were approximately $2,210,000. The Company expects to incur financing costs of approximately $250,000 in connection with the issuance of the Notes. The Company believes it has sufficient working capital to fund operations through June 30, 2012. The Company is currently exploring various possible financing options that may be available to fund its operations thereafter. In particular, as described in the registration statement on Form S-1 filed with the SEC on February 26, 2012, the Company is currently contemplating an underwritten public offering of $10 million of shares of common stock. However, the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.

GOING CONCERN

9 Months Ended

Mar. 31, 2012

NOTE 4 - GOING CONCERN

The condensed consolidated financial statements as of March 31, 2012 and for the nine months then ended have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $7,878,643 attributable to ZBB Energy Corporation for the nine months ended March 31, 2012 and as of March 31, 2012 has an accumulated deficit of $63,222,326 and total ZBB Energy Corporation equity of $3,946,430. The ability of the Company to meet its total liabilities of $8,234,644 and to continue as a going concern is dependent upon the availability of future funding and achieving profitability. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

As described in Note 12, in the nine months ended March 31, 2012 the Company raised approximately $7.2 million through the issuance of shares of Company preferred and common stock to certain investors.

In addition as described in Note 17 on May 1, 2012, the Company entered into Securities Purchase Agreements with certain investors providing for the sale of a total of $2,465,000 of Zero Coupon Convertible Subordinated Notes (the “Notes”). The Notes, which will mature on August 31, 2012, were issued to investors with a principal amount equal to the investor’s subscription amount times 110% and will not bear interest except following default. The Notes are convertible into shares of common stock of the Company at an exercise price equal to $0.53, which was the closing price of the common stock on May 1, 2012 (the “Conversion Price”). In connection with the Notes, the Company entered into a security agreement with the lenders providing for a security interest in all of the assets of the Company and certain subsidiaries of the Company. In connection with the purchase of Notes, each investor received a five-year warrant to purchase a number of shares of Common Stock equal to 55% times such investor’s investment in the Notes divided by the Conversion Price at an exercise price equal to the Conversion Price. Certain directors and officers of the Company invested $330,000 in the Notes. The proceeds to the Company were approximately $2,210,000. The Company expects to incur financing costs of approximately $250,000 in connection with the issuance of the Notes.

The Company believes it has sufficient working capital to fund operations through June 30, 2012. The Company is currently exploring various possible financing options that may be available to fund its operations thereafter. In particular, as described in the registration statement on Form S-1 filed with the SEC on February 26, 2012, the Company is currently contemplating an underwritten public offering of $10 million of shares of common stock. However, the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all. If the Company is unable to obtain additional funding and improve its operations, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.

- Definition

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

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