ENEI --- AS: 750M, OS: 622M
The Company currently has 622,225,936 shares of its common stock outstanding. It has issued options, warrants, convertible debentures and other instruments which give the holders the right to acquire an estimated additional 318,836,594 shares of its common stock. The Company’s authorized common stock consists of 750,000,000 shares.
The Company is increasing its authorizing common shares to 950,000,000 to: (1) allow for potential future issuance of common stock, or options, warrants, convertible debentures and other instruments exercisable for or convertible into common; (2) and ensure that the Company has sufficient authorized common stock to satisfy its obligation to issue common stock upon the exercise or conversion of options, warrants, convertible debentures and other instruments that are already outstanding.
Form 424B3 -- Prospectus filed 12/10/07
http://sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000895642
Amount Of Percent
Beneficial Of
Name Ownership Class
Ener1 Group, Inc. 518,385,830 (1) 72.8 %
Bzinfin, S.A. 552,812,488 (2) (3) 76.0 %
Morgan Stanley & Co., Incorporated, 1585 Broadway, 10th Floor, New York, NY 10036 54,150,000 (4) 8.4 %
The Quercus Trust, 230 Santiago Drive, Newport Beach, CA 92660 38,000,000 (5) 5.9 %
(1) Includes 90,062,810 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(2) Includes 105,372,399 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(3) As a result of changes in ownership of Ener1 Group, Inc., Bzinfin, S.A. is considered the beneficial owner of Ener1, Inc. stock owned by Ener1 Group, Inc. Boris Zingarevich is an indirect beneficial owner of Bzinfin, which owns 69% of the common stock of Ener1Group. Dispositive and voting power over the shares of Ener1 common stock that is held by Ener1 Group is exercised by the board of directors of Ener1 Group, which consists of Dr. Peter Novak, Mike Zoi, Boris Zingarevich, Charles Gassenheimer, Alexei Paramonov and Marshall Cogan.
(4) Includes 25,650,000 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(5) David Gelbaum and Monica Chavez Gelbaum are Trustees of The Quercus Trust. Includes 18,000,000 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
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In 2007, Ener1 relied on its controlling shareholder, Ener1 Group, Inc. ("Ener1 Group") for its capital raising efforts and funding to sustain operations on a month-to-month basis. During the first five months of 2007, Ener1 Group, on behalf and for the benefit of Ener1, Inc., raised $6,800,000 in a series of transactions with third parties which was funded to Ener1, Inc. through the exercise of warrants held by Ener1 Group. In June 2007, Ener1 Group agreed to invest up to $15,000,000 in Ener1, which amount will fund up to 95% of Ener1's planned operations through December 31, 2007. This funding is subject to Ener1’s achieving certain operational and financial milestones including monthly limitations on available amounts based on budgeted expenditures. During the three and nine months ended September 30, 2007, Ener1 received $6,000,000 and $9,862,000 respectively. The remaining amount of $5,138,000 is available to Ener1 through December 31, 2007, assuming these milestones are met.
Ener1 intends to continue efforts to raise substantial additional capital during 2007 and 2008 from strategic and financial investors. In addition, Ener1 has received $141,000 and expects to receive additional financial grants from government and industry sources.
In January 2007, Ener1 issued 16,000,000 shares of common stock for $4,000,000 to Ener1 Group upon its exercise of 16,000,000 warrants.
(On January 5, 2007, in conjunction with a Purchase Agreement among Ener1 Group, Ener1 and Credit Suisse, Ener1 amended the terms of certain warrants to purchase up to 16,000,000 common shares previously issued to Ener1 Group to reduce the exercise price of the warrants from $2.00 and $1.50 per share to $0.25 per share. On January 5, 2007, following this amendment, Ener1 Group exercised all of these warrants to purchase 16,000,000 common shares for $4,000,000.)
In February 2007, Ener1 issued 4,823,000 shares of common stock for $1,205,000 to Ener1 Group upon its exercise of 4,823,000 warrants.
In May 2007, Ener1 issued 20,680,000 shares of common stock for $4,700,000 to Ener1 Group upon its exercise of 18,800,000 warrants.
In June 2007, Ener1 issued 12,873,000 shares of common stock for $3,862,000 to Ener1 Group as part of its Capital Commitment Agreement.
In August 2007, Ener1 issued 6,000,000 shares of common stock for $1,800,000 to Ener1 Group as part of its Capital Commitment Agreement.
In September 2007, Ener1 issued 14,000,000 shares of common stock for $4,200,000 to Ener1 Group as part of its Capital Commitment Agreement.
In September 2007, Ener1 issued 3,333,333 shares of common stock to Itochu and 400,000 shares of common stock to SBIC as part of its purchase of patents and know-how in connection with the EnerStruct transaction.
In September 2007, Ener1 issued 1,458,057 shares of common stock for conversion of $1,151,865 of the 2005 senior debentures.
------
Overview
We have three business lines which we conduct through our three operating subsidiaries. EnerDel, which is an 80.5% owned subsidiary which is 19.5% owned by Delphi, develops lithium ion ("Li-ion") batteries, battery packs and components such as Li-ion battery electrodes and lithium electronic controllers for lithium battery packs. EnerFuel develops fuel cell products and services. NanoEner develops technologies, materials and equipment for nanomanufacturing.
Currently, we generate minimal revenue from sales of Ener1’s products and product samples. Substantially all of our planned products are still under development. We will require significant capital investment to continue our product development activities to commercialize our technology.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Ener1 has experienced net operating losses since 1997 and negative cash flows from operations since 1999 and had an accumulated deficit of $217,282,000 and a working capital deficit of $8,916,000 as of September 30, 2007. It is likely that Ener1’s operations will continue to incur negative cash flows through December 31, 2007 and additional financing will be required to fund Ener1’s planned operations and meet its current obligations through those periods. Such conditions raise substantial doubt about Ener1’s ability to continue as a going concern.
Results of Operations
While we had no significant sales or gross profit from continuing operations in the nine months ended September 30, 2007, sales increased $349,000 from $27,000 for the nine months ended September 30, 2006 to $376,000 for the nine months ended September 30, 2007. The primary cause for the increase is due to EnerDel’s sales of $182,000 to the Office of Naval Research under a cost plus fixed fee contract for $854,000 through March 2008. In addition to sales, Ener1 reports proceeds from grants such as USABC and FHI as a reduction of research and development expenses. Proceeds from grants were $141,000 and $0 in the nine months ended September 30, 2007 and 2006, respectively.
Nine Months Ended September 30, 2007
Net income (loss). We reported a net loss of $26,794,000 for the nine months ended September 30, 2007, a decrease of $10,759,000 when compared to a net loss of $37,553,000 for the nine months ended September 30, 2006. The decrease in net loss was due to a decrease of $2,393,000 in loss on derivative liabilities, a decrease of $8,617,000 in warrant modification expense, and a decrease in general and administrative expenses of $2,885,000, partially offset by an increase of $4,523,000 in research and development expenses.
Losses from operations. We reported losses from operations of $14,929,000 for the nine months ended September 30, 2007, a decrease of $7,286,000 when compared to losses from operations of $22,215,000 for the nine months ended September 30, 2006. The decrease in operating losses was attributable to a $2,885,000 decrease in general and administrative expenses and an $8,617,000 reduction in warrant modification expense, partially offset by a $4,523,000 increase in research and development expenses.
General and administrative (“G&A”) expenses. G&A decreased $2,885,000, or 33%, to $5,818,000 for the nine months ended September 30, 2007, compared to $8,703,000 for the nine months ended September 30, 2006.
Research and development (“R&D”) expenses. Our R&D expenses were $8,539,000 and $4,016,000 for the nine months ended September 30, 2007 and 2006, respectively, an increase of $4,523,000 or 113%.
-----
At September 30, 2007, we had a working capital deficit of $8,916,000 (a deficit of $2,906,000 excluding derivative liabilities). Our available cash at September 30, 2007 was $1,716,000. We used $18,135,000 of cash for operating activities in the nine months ended September 30, 2007, which was funded through financing activities of $19,876,000. These financing activities consisted primarily of funding from Ener1 Group, our controlling shareholder, through convertible notes and exercise of warrants to purchase Ener1 common stock, which generated proceeds of $10,401,000, and its purchase of common stock pursuant to the Capital Commitment described below which generated proceeds of $9,862,000.
In consideration for the exercise by Ener1 Group of certain warrants, we lowered the exercise prices of certain warrants held by Ener1 Group prior to their expiration. The proceeds of our financing activities during the nine months ended September 30, 2007 were used for working capital purposes, including interest payments of $3,859,000 made to the holders of the 2004 Debentures and 2005 Debentures and payments of $1,542,000 of registration delay expenses to holders of our 2004 Debentures and 2005 Debentures.
We incur monthly cash operating expenses, primarily for salaries, insurance, employee benefits and rent, typically ranging from $1,200,000 to $1,600,000. In addition, interest payments of approximately $1,300,000 related to our 2004 Debentures and 2005 Debentures are due at the end of each quarter.
In 2007, Ener1 relied on its controlling shareholder, Ener1 Group, Inc. ("Ener1 Group") for its capital raising efforts and funding to sustain operations on a month-to-month basis. During the first five months of 2007, Ener1 Group, on behalf and for the benefit of Ener1, Inc., raised $6,800,000 in a series of transactions with third parties which was funded to Ener1, Inc. through the exercise of warrants held by Ener1 Group. In June 2007, Ener1 Group agreed to invest up to $15,000,000 in us (the "Capital Commitment"), hopefully to fund up to 95% of our planned operations through December 31, 2007. Funding under the Capital Commitment is subject to our achieving certain operational and financial milestones including monthly limitations on available amounts based on budgeted expenditures. At September 30, 2007, the maximum amount available under the Capital Commitment through December 31, 2007 was $5,700,000. From June 29, 2007 through September 30, 2007, Ener1 Group purchased 32,873,333 shares of common stock from us for $9,862,000 pursuant to the Capital Commitment. On October 1, 2007, we used $1,296,000 of our available cash for the interest payments then due under the 2004 Debentures and 2005 Debentures. We will require additional funding beyond December 31, 2007, or sooner if the milestones on which the Capital Commitment is conditioned are not met and Ener1 Group does not provide funding under the agreement to meet our past due and on-going operating expenses. We do not have any commitments from other sources to provide additional funding.
We estimate that to fully fund our business plan in 2008, we need to raise a minimum of $25,000,000 in additional capital. We intend to continue efforts to raise substantial additional capital during 2007 and 2008 from strategic and financial investors. In addition, we have received and expect to receive additional financial grants from government and industry sources. During the first nine months of 2007, we were awarded $10,000,000 in grants. These grants are typically in the form of cost sharing development contracts which will be implemented over the next six to eighteen months and will offset research and development efforts. If we are unable to obtain funding from any of the above sources, we plan to seek additional funds from Ener1 Group on terms similar to those obtained during 2007. There is no assurance that Ener1 Group will provide such funds. If we do not obtain adequate short-term working capital and permanent financing, we would have to curtail our research and development activities and adopt an alternative operating model to continue as a going concern.
The Company currently has 622,225,936 shares of its common stock outstanding. It has issued options, warrants, convertible debentures and other instruments which give the holders the right to acquire an estimated additional 318,836,594 shares of its common stock. The Company’s authorized common stock consists of 750,000,000 shares.
The Company is increasing its authorizing common shares to 950,000,000 to: (1) allow for potential future issuance of common stock, or options, warrants, convertible debentures and other instruments exercisable for or convertible into common; (2) and ensure that the Company has sufficient authorized common stock to satisfy its obligation to issue common stock upon the exercise or conversion of options, warrants, convertible debentures and other instruments that are already outstanding.
Form 424B3 -- Prospectus filed 12/10/07
http://sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000895642
Amount Of Percent
Beneficial Of
Name Ownership Class
Ener1 Group, Inc. 518,385,830 (1) 72.8 %
Bzinfin, S.A. 552,812,488 (2) (3) 76.0 %
Morgan Stanley & Co., Incorporated, 1585 Broadway, 10th Floor, New York, NY 10036 54,150,000 (4) 8.4 %
The Quercus Trust, 230 Santiago Drive, Newport Beach, CA 92660 38,000,000 (5) 5.9 %
(1) Includes 90,062,810 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(2) Includes 105,372,399 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(3) As a result of changes in ownership of Ener1 Group, Inc., Bzinfin, S.A. is considered the beneficial owner of Ener1, Inc. stock owned by Ener1 Group, Inc. Boris Zingarevich is an indirect beneficial owner of Bzinfin, which owns 69% of the common stock of Ener1Group. Dispositive and voting power over the shares of Ener1 common stock that is held by Ener1 Group is exercised by the board of directors of Ener1 Group, which consists of Dr. Peter Novak, Mike Zoi, Boris Zingarevich, Charles Gassenheimer, Alexei Paramonov and Marshall Cogan.
(4) Includes 25,650,000 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
(5) David Gelbaum and Monica Chavez Gelbaum are Trustees of The Quercus Trust. Includes 18,000,000 shares issuable under outstanding warrants exercisable during the 60 day period following November 28, 2007.
----------
In 2007, Ener1 relied on its controlling shareholder, Ener1 Group, Inc. ("Ener1 Group") for its capital raising efforts and funding to sustain operations on a month-to-month basis. During the first five months of 2007, Ener1 Group, on behalf and for the benefit of Ener1, Inc., raised $6,800,000 in a series of transactions with third parties which was funded to Ener1, Inc. through the exercise of warrants held by Ener1 Group. In June 2007, Ener1 Group agreed to invest up to $15,000,000 in Ener1, which amount will fund up to 95% of Ener1's planned operations through December 31, 2007. This funding is subject to Ener1’s achieving certain operational and financial milestones including monthly limitations on available amounts based on budgeted expenditures. During the three and nine months ended September 30, 2007, Ener1 received $6,000,000 and $9,862,000 respectively. The remaining amount of $5,138,000 is available to Ener1 through December 31, 2007, assuming these milestones are met.
Ener1 intends to continue efforts to raise substantial additional capital during 2007 and 2008 from strategic and financial investors. In addition, Ener1 has received $141,000 and expects to receive additional financial grants from government and industry sources.
In January 2007, Ener1 issued 16,000,000 shares of common stock for $4,000,000 to Ener1 Group upon its exercise of 16,000,000 warrants.
(On January 5, 2007, in conjunction with a Purchase Agreement among Ener1 Group, Ener1 and Credit Suisse, Ener1 amended the terms of certain warrants to purchase up to 16,000,000 common shares previously issued to Ener1 Group to reduce the exercise price of the warrants from $2.00 and $1.50 per share to $0.25 per share. On January 5, 2007, following this amendment, Ener1 Group exercised all of these warrants to purchase 16,000,000 common shares for $4,000,000.)
In February 2007, Ener1 issued 4,823,000 shares of common stock for $1,205,000 to Ener1 Group upon its exercise of 4,823,000 warrants.
In May 2007, Ener1 issued 20,680,000 shares of common stock for $4,700,000 to Ener1 Group upon its exercise of 18,800,000 warrants.
In June 2007, Ener1 issued 12,873,000 shares of common stock for $3,862,000 to Ener1 Group as part of its Capital Commitment Agreement.
In August 2007, Ener1 issued 6,000,000 shares of common stock for $1,800,000 to Ener1 Group as part of its Capital Commitment Agreement.
In September 2007, Ener1 issued 14,000,000 shares of common stock for $4,200,000 to Ener1 Group as part of its Capital Commitment Agreement.
In September 2007, Ener1 issued 3,333,333 shares of common stock to Itochu and 400,000 shares of common stock to SBIC as part of its purchase of patents and know-how in connection with the EnerStruct transaction.
In September 2007, Ener1 issued 1,458,057 shares of common stock for conversion of $1,151,865 of the 2005 senior debentures.
------
Overview
We have three business lines which we conduct through our three operating subsidiaries. EnerDel, which is an 80.5% owned subsidiary which is 19.5% owned by Delphi, develops lithium ion ("Li-ion") batteries, battery packs and components such as Li-ion battery electrodes and lithium electronic controllers for lithium battery packs. EnerFuel develops fuel cell products and services. NanoEner develops technologies, materials and equipment for nanomanufacturing.
Currently, we generate minimal revenue from sales of Ener1’s products and product samples. Substantially all of our planned products are still under development. We will require significant capital investment to continue our product development activities to commercialize our technology.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Ener1 has experienced net operating losses since 1997 and negative cash flows from operations since 1999 and had an accumulated deficit of $217,282,000 and a working capital deficit of $8,916,000 as of September 30, 2007. It is likely that Ener1’s operations will continue to incur negative cash flows through December 31, 2007 and additional financing will be required to fund Ener1’s planned operations and meet its current obligations through those periods. Such conditions raise substantial doubt about Ener1’s ability to continue as a going concern.
Results of Operations
While we had no significant sales or gross profit from continuing operations in the nine months ended September 30, 2007, sales increased $349,000 from $27,000 for the nine months ended September 30, 2006 to $376,000 for the nine months ended September 30, 2007. The primary cause for the increase is due to EnerDel’s sales of $182,000 to the Office of Naval Research under a cost plus fixed fee contract for $854,000 through March 2008. In addition to sales, Ener1 reports proceeds from grants such as USABC and FHI as a reduction of research and development expenses. Proceeds from grants were $141,000 and $0 in the nine months ended September 30, 2007 and 2006, respectively.
Nine Months Ended September 30, 2007
Net income (loss). We reported a net loss of $26,794,000 for the nine months ended September 30, 2007, a decrease of $10,759,000 when compared to a net loss of $37,553,000 for the nine months ended September 30, 2006. The decrease in net loss was due to a decrease of $2,393,000 in loss on derivative liabilities, a decrease of $8,617,000 in warrant modification expense, and a decrease in general and administrative expenses of $2,885,000, partially offset by an increase of $4,523,000 in research and development expenses.
Losses from operations. We reported losses from operations of $14,929,000 for the nine months ended September 30, 2007, a decrease of $7,286,000 when compared to losses from operations of $22,215,000 for the nine months ended September 30, 2006. The decrease in operating losses was attributable to a $2,885,000 decrease in general and administrative expenses and an $8,617,000 reduction in warrant modification expense, partially offset by a $4,523,000 increase in research and development expenses.
General and administrative (“G&A”) expenses. G&A decreased $2,885,000, or 33%, to $5,818,000 for the nine months ended September 30, 2007, compared to $8,703,000 for the nine months ended September 30, 2006.
Research and development (“R&D”) expenses. Our R&D expenses were $8,539,000 and $4,016,000 for the nine months ended September 30, 2007 and 2006, respectively, an increase of $4,523,000 or 113%.
-----
At September 30, 2007, we had a working capital deficit of $8,916,000 (a deficit of $2,906,000 excluding derivative liabilities). Our available cash at September 30, 2007 was $1,716,000. We used $18,135,000 of cash for operating activities in the nine months ended September 30, 2007, which was funded through financing activities of $19,876,000. These financing activities consisted primarily of funding from Ener1 Group, our controlling shareholder, through convertible notes and exercise of warrants to purchase Ener1 common stock, which generated proceeds of $10,401,000, and its purchase of common stock pursuant to the Capital Commitment described below which generated proceeds of $9,862,000.
In consideration for the exercise by Ener1 Group of certain warrants, we lowered the exercise prices of certain warrants held by Ener1 Group prior to their expiration. The proceeds of our financing activities during the nine months ended September 30, 2007 were used for working capital purposes, including interest payments of $3,859,000 made to the holders of the 2004 Debentures and 2005 Debentures and payments of $1,542,000 of registration delay expenses to holders of our 2004 Debentures and 2005 Debentures.
We incur monthly cash operating expenses, primarily for salaries, insurance, employee benefits and rent, typically ranging from $1,200,000 to $1,600,000. In addition, interest payments of approximately $1,300,000 related to our 2004 Debentures and 2005 Debentures are due at the end of each quarter.
In 2007, Ener1 relied on its controlling shareholder, Ener1 Group, Inc. ("Ener1 Group") for its capital raising efforts and funding to sustain operations on a month-to-month basis. During the first five months of 2007, Ener1 Group, on behalf and for the benefit of Ener1, Inc., raised $6,800,000 in a series of transactions with third parties which was funded to Ener1, Inc. through the exercise of warrants held by Ener1 Group. In June 2007, Ener1 Group agreed to invest up to $15,000,000 in us (the "Capital Commitment"), hopefully to fund up to 95% of our planned operations through December 31, 2007. Funding under the Capital Commitment is subject to our achieving certain operational and financial milestones including monthly limitations on available amounts based on budgeted expenditures. At September 30, 2007, the maximum amount available under the Capital Commitment through December 31, 2007 was $5,700,000. From June 29, 2007 through September 30, 2007, Ener1 Group purchased 32,873,333 shares of common stock from us for $9,862,000 pursuant to the Capital Commitment. On October 1, 2007, we used $1,296,000 of our available cash for the interest payments then due under the 2004 Debentures and 2005 Debentures. We will require additional funding beyond December 31, 2007, or sooner if the milestones on which the Capital Commitment is conditioned are not met and Ener1 Group does not provide funding under the agreement to meet our past due and on-going operating expenses. We do not have any commitments from other sources to provide additional funding.
We estimate that to fully fund our business plan in 2008, we need to raise a minimum of $25,000,000 in additional capital. We intend to continue efforts to raise substantial additional capital during 2007 and 2008 from strategic and financial investors. In addition, we have received and expect to receive additional financial grants from government and industry sources. During the first nine months of 2007, we were awarded $10,000,000 in grants. These grants are typically in the form of cost sharing development contracts which will be implemented over the next six to eighteen months and will offset research and development efforts. If we are unable to obtain funding from any of the above sources, we plan to seek additional funds from Ener1 Group on terms similar to those obtained during 2007. There is no assurance that Ener1 Group will provide such funds. If we do not obtain adequate short-term working capital and permanent financing, we would have to curtail our research and development activities and adopt an alternative operating model to continue as a going concern.
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