Auditors are reviewing whether struggling lithium-ion battery maker Ener1 Inc. has enough cash to continue operations.

New York-based Ener1 employs almost 400 workers in the Indianapolis area at its EnerDel subsidiary.

“In my opinion, we do have liquidity for the rest of the year,” Ener1 Chief Financial Officer Jeffrey Seidel told IBJ Wednesday.

Seidel still has to convince the accountants. Ener1 agreed to restate its earnings for the fiscal year ended Dec. 31, 2010, and for the quarter ended March 31 this year to reflect losses related to electric car maker Think Global, which went bankrupt in June.

The restatement, issued Tuesday, drove Ener1's stock price to a 45-cent per-share closing price. It dropped another 2 cents per share on Wednesday.

As part of the restatement, Ener1 disclosed to investors that the adjustments were “the result of one or more material weaknesses in internal control over financial reporting.”

Ener1 also disclosed that it is “in the process of determining whether the company has sufficient liquidity to fund its operations.”

Such notices are “very concerning” to an investor, said George Farra, an investment adviser at Woodley Farra Manion Portfolio Management Inc. in Indianapolis.

Ener1 wrote off its $73 million investment in Think in May. Ener1 had been the exclusive supplier for Think, a privately held Norwegian company that began assembling its City car in Elkhart last year. Ener1 also became one of Think’s key financial backers.

Seidel said he had planned to place $32 million of Think's unpaid loans and accounts receivable in a joint-venture structure in the second quarter. However, Ener1 delayed filing its second-quarter earnings statement while auditors finished their analysis.

As a result, Ener1 agreed to record its entire loss from Think in the fourth quarter of 2010. That pushed the net loss for the fiscal year up to $165.3 million, instead of $68.8 million.

The net loss for the first quarter dropped to $20.5 million, instead of the previously stated $84.7 million.

Ener1, which was founded in 2002 and went public in 2008, has not turned a profit, and it’s operating on various credit arrangements. Seidel acknowledged that the accounting problems, specifically the late filing of the second-quarter financial statement, could trigger a default.

He said he hoped to have matters resolved soon, but declined to speculate on the exact timing.

Ener1 hasn’t made any recent changes to its operations or personnel, Seidel said. “That’s the irony of it. We believe our current portfolio’s never been stronger. Our prospects are sound.”

Ener1 also assembles batteries for use on the Russian electric grid, buses in China and an all-electric motorcycle.

“Given a chance, this company can turn itself around quite nicely," Seidel said.

Ener1 has attracted millions in federal grants and state and local tax incentives, based on its technology and growth plans. It received a $118.5 million federal matching grant, and it’s eligible for $21.3 million in tax incentives from the state of Indiana, based on plans to hire hundreds of people at its Mount Comfort facility.

Ener1 had about 380 employees in Indianapolis, Noblesville and Mount Comfort in March of this year. At that time the company trimmed its work force because Think slowed production.

Think had just begun assembling cars for North American production in Elkhart this year. Boris Zingarevich, the Russian industrialist who backs Ener1, bought Think out of bankruptcy in July.

EnerDel was formed in Indiana in 2004 when Ener1 began acquiring the lithiom-ion battery operations of Delphi Corp.