acct205ip5 - Running head: ENER1S FINANCIAL WOES Ener1s...

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Running head: ENER1’S FINANCIAL WOES Ener1’s Financial Woes – Unit 5 IP <name removed to preserve anonymity> AIU Online 1
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ENER1’S FINANCIAL WOES Ener1’s Financial Woes Lithium-ion maker Ener1 encountered a severe problem with its cash flow due to earnings statements being re-issued for all of the Dec 31, 2010 fiscal year, and for Q1 ending March 31, 2011 due to a write-off of $73 million in May (Businessweek.com, 2011). Due to the restated estimates, stock prices have plunged to record lows, a lawsuit has been filed by investors feeling they have been cheated, and auditors examining Ener1’s records are unsure at present if the company has enough cash flow to cover continued operations or if bankruptcy will be required for the organization (McLaughlin, 2011). Ultimately, whether the company survives or not will have a huge impact not only on the investors and employees of Ener1, but also on the State of Indiana’s local economy, as Ener1 has several plants within the state and had received State tax incentives to the tune of ~$41 million due to its growth plans that included hiring over 400 local Indiana workers over the next two years (McLaughlin, 2011). The CEO for Ener1, Jeffrey Seidel, has stated “the restatements were a direct result of one or more material weaknesses in internal control over financial reporting” (McLaughlin, 2011). Additionally, Ener1 has delayed filing its current quarter results until the auditors have finished reviewing their financial records. This has further driven down the company’s stock pricing, as it has shaken the trust in Ener1 leadership as being reliable and providing trustworthy reports of company financial standing when coupled with the lack of internal controls and restatement issues.
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acct205ip5 - Running head: ENER1S FINANCIAL WOES Ener1s...

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