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    Jumpstart; Ener1 Surges at Opening Bell on Triple-digit Revenue Growth, Narrowed Losses

    Ener1 Inc. (Nasdaq: HEV) shares soared 16% this morning after the company reported record revenue and shrinking losses in Q4 2010. Despite the strong growth, HEV’s shares plunged 29% over the last year, as the market has concerns about the company’s ability of deploying the production of lithium ion batteries to a profitable level before running out of cash. With a 52-week range of $2.75-$5.90, the March 10 trade was at $3.14, on the lower end of that range.

    HEV is an energy technology company that develops compact, lithium-ion-powered battery solutions for the transportation, stationary power markets and small format products market. The company’s primary products for the transportation market consist of battery solutions in each of the three automobile verticals: hybrid electric vehicles (HEVs), plug−in hybrid electric vehicles (PHEVs) and electric vehicles (EVs). In May 2010, HEV commenced commercial production and shipment of lithium−ion battery packs for Think Global, an EV manufacturer in Norway. In the stationary power markets, the company is developing energy storage applications for utility grid and commercial applications. For fiscal year 2010, net sales were $77.4 million, an increase of 122% over net sales of $34.8 million for 2009.

    Net sales were $33.1 million in the year’s final quarter, an increase of 202% over net sales of $11.0 million in the fourth quarter of 2009. The increase in net sales is due to an increase in EV battery pack commercial sales to Think Global, the solid domestic sales of small cell battery packs to commercial customers and the growth in the grid energy storage division. The company has also reported that its net loss narrowed to $10.9 million or $0.08 a share in Q4 2010 compared to $15.0 million in the Q4 2009, or $0.13 a share.

    According to Thompson Reuters, analysts on average were expecting the company to lose $0.10 a share on revenue of $24.5 million in Q4 2010.

    The company’s efforts to promote its technology and impose itself as a leading provider of safe, high-quality lithium-ion solutions within the advanced battery market are generating significant market response. HEV reported a number of new contracts, beyond the electric cars that currently dominate sales, to supply and develop additional applications for its battery solutions, which supported the growth story in 2010 and improved the outlook for the coming years.

    Last October, HEV secured a $40 million supply agreement with Mobile Gas Turbine Electric Powerplants (MGTES) division of Russia’s Federal Grid Company, the third largest in the world. Pursuant to the agreement, the company would supply two separate utility scale energy storage systems in the city of St. Petersburg and Sochi, the host of the 2014 Winter Olympics.  The company has already scheduled the shipment for April 2011.

    HEV has also signed a Memorandum of Understanding with MGTES on a long-term program that would deploy uninterruptible power supply (UPS) systems for transmission substations throughout Russia. In Phase I of this program, HEV could furnish 40 UPS energy storage systems with an aggregate capacity of 25.3 megawatt hours. In addition, HEV is also performing a pay for economic viability analysis study of energy storage applications for the Russia’s Federal Grid transmission system. This study should be delivered to the customer in the second quarter of this year.

    Beside the project with MGTES, the company was selected by Duke Energy to develop and furnish, by the end of 2011, secondary used powered applications or Think EV battery packs including community energy storage, electric vehicle charging, and home energy storage. Even more, the company has launched three separate grid energy storage demonstration projects in Japan and is actively researching the heavy-duty transportation market.

    By extending into areas such as industrial products and grid storage, HEV is extending its market reach and benefiting of a growing and better margins market that could allow it to generate positive operating cash flows by the end of 2011.  Moreover, if oil prices remain high, the demand for the company’s offering could continue growing exponentially.

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