MDB Capital Downgrades Ener1 (HEV) to Sell, Suspends Earnings Model and Valuation on Stock No Longer Justified

January 8, 2009 3:15 PM EST
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MDB Capital downgrades Ener1, Inc. (AMEX: HEV) to Sell.

MDB analyst says, "Think Global, Ener1's most important near-term customer, announced it was temporarily halting production of its Think City electric vehicle due to working capital constraints. The company, which unsuccessfully approached the Norwegian government for direct support, reportedly needs between $15 million to $29 million in short term loan guarantees as a means to finance its current operations and planned expansion. We are now hearing that Think Global has been unable to find other funding sources and that the Norwegian government has again refused to provide the needed capital for continued operations. It now appears that there is a real likelihood of Think Global ceasing operations or at the very least scaling back to a much smaller enterprise. In any event, it now seems that Think Global will not be able to uphold its end of the $70 million contract with Ener1 for the delivery of batteries for the Think City vehicle. Without this contract Ener1 has little in the way of other contracts that might generate near term revenues and the valuation of the stock is no longer justified."

Ener1, Inc. (Ener1) has three business lines that it conducts through its three operating subsidiaries. EnerDel, Inc., an 80.5% owned subsidiary, which is 19.5% owned by Delphi Corporation, develops lithium ion (Li-ion) batteries for automotive, military and other industrial uses.

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