3. GOING CONCERN	6 Months Ended
Dec. 31, 2013
Notes to Financial Statements
GOING CONCERN	The accompanying consolidated financial statements have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $4,755,760 attributable to ZBB Energy Corporation for the six months ended December 31, 2013 and as of December 31, 2013 has an accumulated deficit of $85,688,584 and total ZBB Energy Corporation equity of $2,072,181. The ability of the Company to settle its total liabilities of $6,743,748 and to continue as a going concern is dependent upon obtaining additional financing, closing additional sales orders and achieving profitability. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. We believe that cash and cash equivalents on hand at December 31, 2013, expected collections on the Lotte R&D Agreement and Amended License Agreement, and other potential sources of cash, will be sufficient to fund our current operations through the end of fiscal year 2014. However, unexpected delays in payments could cause short-term gaps in cash for funding operations. Accordingly, the Company is actively seeking funding alternatives including conventional lines of credit, sale of property and other short-term funding sources to provide appropriate cash availability in case of unforeseen cash receipt delays. In addition to the short-term cash funding alternatives, we are working on strategic partnership transactions that may be available to the Company. We are currently in active discussions with several parties regarding potential strategic partnership and/or license and development transactions. If the Company is unable to obtain additional required funding, the Company’s financial condition and results of operations may be materially adversely affected and the Company may not be able to continue operations.

3. GOING CONCERN

6 Months Ended

Dec. 31, 2013

The accompanying consolidated financial statements have been prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred a net loss of $4,755,760 attributable to ZBB Energy Corporation for the six months ended December 31, 2013 and as of December 31, 2013 has an accumulated deficit of $85,688,584 and total ZBB Energy Corporation equity of $2,072,181. The ability of the Company to settle its total liabilities of $6,743,748 and to continue as a going concern is dependent upon obtaining additional financing, closing additional sales orders and achieving profitability. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

We believe that cash and cash equivalents on hand at December 31, 2013, expected collections on the Lotte R&D Agreement and Amended License Agreement, and other potential sources of cash, will be sufficient to fund our current operations through the end of fiscal year 2014. However, unexpected delays in payments could cause short-term gaps in cash for funding operations. Accordingly, the Company is actively seeking funding alternatives including conventional lines of credit, sale of property and other short-term funding sources to provide appropriate cash availability in case of unforeseen cash receipt delays.

In addition to the short-term cash funding alternatives, we are working on strategic partnership transactions that may be available to the Company. We are currently in active discussions with several parties regarding potential strategic partnership and/or license and development transactions. If the Company is unable to obtain additional required funding, 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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