Certain statements made in this conference call 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 section. 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 believe, expect, may, will, should, could, seek, intend, plan, estimate , anticipate, or other comparable terms.Forward-looking statements in this conference call may address the following subjects among others. Statement 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 the 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 the management's discussion and analysis of financial condition and results of the operation sections of our most recently filed annual report on Form 10-K and as such our quarterly reports on Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution participants in this conference call 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 there to or any change in events, conditions or circumstances on which any such statement is based. Now I will walk through the details of our financial results for the fourth quarter and the year. Revenue for the fourth quarter was $1.1 million which was down 21% from the same period a year ago. It is important to note that with the commercialization of our new ZBB EnerSystems products the company’s model is transitioning and product sales will continue to grow as a percentage of overall revenue.
As such, during the fourth quarter we saw a 29% increase in product sales from the same period a year ago while engineering services declined 68%. Engineering services will continue to be an important part of our business going forward, but the lumpy nature of this business may make comparisons more difficult as was the case during the fourth quarter.Revenue for the year was $4.8 million representing a 167% increase from fiscal 2011. Also for the year, product revenue increased 145% and engineering services increased 189%. Total costs and expenses for the three months ended June 30, 2012 increased approximately $2.1 million which was primarily due to the following factors. Cost of product sales in the fourth quarter increased $704,000. This increase was partially due to our yearend recalculation of the manufacturing overhead rate and inventory costing which was also applied to cost of product sales for the first three quarters. As such the reported cost of product sales in the fourth quarter includes approximately $149,000 of yearend adjustments that do not relate to fourth quarter product shipments. The actual cost of product sales for fourth quarter shipments was approximately $822,000. These costs are higher than the planned ongoing costs due to start up production costs, higher initial material costs for low volume purchases and the initial low production volume. Advanced engineering and development expenses increased $1.5 million due to the company's engineering and development activities for our ZBB EnerStore and ZBB EnerSection systems which included preproduction development and pilot plant operations, prototype production and ETL testing in the June 2012 quarter. SG&A expenses increased $347,000 due to planned increases in sales, marketing and administrative personnel which resulted in an increase in salaries and related expense of $241,000 and the increase in stock-based compensation expense of $386,000. These increases were partially offset by decreases in several other expense category. Total cost and expenses for the twelve months ended June 30 2012 and 2011 were $7.3 million and $10.6 million respectively. This increase of $6.7 million was primarily due to the following. Read the rest of this transcript for free on seekingalpha.com