UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A








þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended March 31, 2009





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ____________ to ____________





Commission
File Number 001-34050





Ener1,
Inc.


(Exact
name of registrant as specified in its charter)


FLORIDA
            59-2479377(State
      or other jurisdiction
              of
      incorporation or organization)
            (I.R.S.
      Employer
              Identification
      No.)


1540
Broadway, Suite 25C


New
York, New York 10036


(Address of principal
executive offices) (Zip code)


(212)
920-3500


(Registrant’s
telephone number, including area code)


Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes R Noo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes R Noo





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large accelerated filer  ̈
                
                
                Accelerated filer RNon-accelerated filer    ̈
                (Do
      not check if a smaller reporting company)
                
                Smaller reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).  Yes o No R





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.


Yes o No o





APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Class
                Outstanding
      as of May 4, 2009Common
      Stock, par value $0.01 per share
                113,503,687










Explanatory
Note
  The
consolidated financial statements for the three months ended March 31, 2008 and
2009 and related disclosures in this Amendment No.1 to our Quarterly Report on
Form I0-Q have been restated in accordance with the changes described
below.
  In
January 2010, Ener1 concluded that it was necessary to amend this Quarterly
Report in order to restate its financial statements for the periods ended March
31, 2008 and 2009 to (1) reflect the corrected accounting for unamortized debt
discount upon conversion of our 2004 Debentures and 2005 Debentures as interest
expense, (2) reflect the corrected calculation for amortization of deferred
financing costs and debt discount for our 2004 Debentures, 2005 Debentures and
Series A Preferred Stock, (3) reflect the inclusion of gain on derivative
liability in the calculation of diluted loss per share and 4) to
separately reflect restricted cash pledged to guarantee borrowings from foreign
banks.
  The
financial statements and other financial information included in this Amendment
No. 1 to the Quarterly Report on Form 10-Q have been restated accordingly.
Ener1's shareholders should no longer rely on Ener1's previously filed financial
statements for the three months ended March 31, 2008 and 2009.
  In
order to preserve the nature and character of the disclosures set forth in
this Quarterly Report as originally filed, no attempt has been made in this
Amendment No. 1 to modify or update the disclosures in the original Quarterly
Report except that Ener1 has included the foregoing restatements in Part 1, Item
1 and has made conforming changes to Management's Discussion and Analysis of
Financial Condition and Results of Operations in Part I, Item 2 to reflect these
restatements.









ENER1, INC.




Form
10-Q for the Quarter Ended March 31, 2009




INDEX





PagePart I. FINANCIAL
    INFORMATIONItem
      1.  Financial StatementsUnaudited
      Consolidated Balance Sheets as ofMarch
      31, 2009 and December 31, 2008 (Restated)
                                  3Unaudited
      Consolidated Statements of Operationsfor
      the three months ended March 31, 2009 and 2008
    (Restated)
                                  4Unaudited
      Consolidated Statement of Stockholders’ Equity andComprehensive
      Loss for the three months ended March 31, 2009
    (Restated)
                                  5Unaudited
      Consolidated Statements of Cash Flowsfor
      the three months ended March 31, 2009 and 2008
    (Restated)
                                  6Notes
      to Unaudited Consolidated Financial Statements
                                  7Item
      2.  Management's Discussion and Analysis of FinancialCondition and Results of Operations
                                  28Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
                                  36Item
      4.  Controls and Procedures
                                  36Part II. OTHER INFORMATIONItem
      1.  Legal Proceedings
                                  37Item
      1A. Risk Factors
                                  37Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                                  37Item
      6.  Exhibits
                                  38Signatures
                                  45




- 2
-





ENER1,
INC.


CONSOLIDATED
BALANCE SHEETS


(unaudited,
in thousands, except share data)





March
      31,
                                    
                                    
                                    December
      31,2009
                                    
                                    
                                    2008(Restated)
                                    
                                    
                                    (Restated)ASSETSCurrent
      assetsCash
      and cash equivalents
                                    
                                    $
                                    4,267
                                    
                                    
                                    $
                                    11,229Restricted
      cash
                                    
                                    
                                    2,233
                                    
                                    
                                    
                                    2,976Accounts
      receivable, net of allowance of $982 and $915
                                    
                                    
                                    6,572
                                    
                                    
                                    
                                    7,006Inventory,
      net of allowance for obsolescence of $707 and $483
                                    
                                    
                                    9,199
                                    
                                    
                                    
                                    10,202Prepaid
      expenses and other current assets
                                    
                                    
                                    1,464
                                    
                                    
                                    
                                    1,199Total
      current assets
                                    
                                    
                                    23,735
                                    
                                    
                                    
                                    32,612Property
      and equipment, net of accumulated depreciation of $3,981 and
      $2,728
                                    
                                    
                                    43,767
                                    
                                    
                                    
                                    39,513Deferred
      financing costs, net of amortization of $847 and $0
                                    
                                    
                                    4,241
                                    
                                    
                                    
                                    5,088Intangible
      assets, net of accumulated amortization of $1,053 and
    $568
                                    
                                    
                                    14,587
                                    
                                    
                                    
                                    15,246Goodwill
                                    
                                    
                                    46,032
                                    
                                    
                                    
                                    48,674Other
                                    
                                    
                                    557
                                    
                                    
                                    
                                    598Total
      assets
                                    
                                    $
                                    132,919
                                    
                                    
                                    $
                                    141,731LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable and accrued expenses
                                    
                                    $
                                    12,138
                                    
                                    
                                    $
                                    16,322Accrued
      income taxes payable
                                    
                                    
                                    279
                                    
                                    
                                    
                                    318Short
      term borrowings
                                    
                                    
                                    11,721
                                    
                                    
                                    
                                    9,414Capital
      lease obligations, current portion
                                    
                                    
                                    2,045
                                    
                                    
                                    
                                    2,003Total
      current liabilities
                                    
                                    
                                    26,183
                                    
                                    
                                    
                                    28,057Other
      long-term payables
                                    
                                    
                                    1,159
                                    
                                    
                                    
                                    1,093Derivative
      liabilities
                                    
                                    
                                    6,621
                                    
                                    
                                    
                                    -Long
      term borrowings
                                    
                                    
                                    8,420
                                    
                                    
                                    
                                    795Deferred
      income tax liabilities
                                    
                                    
                                    324
                                    
                                    
                                    
                                    397Convertible
      bonds
                                    
                                    
                                    352
                                    
                                    
                                    
                                    396Capital
      lease obligations, less current portion
                                    
                                    
                                    4,082
                                    
                                    
                                    
                                    4,580Total
      liabilities
                                    
                                    
                                    47,141
                                    
                                    
                                    
                                    35,318Commitments
      and contingenciesStockholders'
      Equity:Common
      stock, $0.01 par value, 175,714,286 shares authorized,113,482,285
      and 113,074,478 issued and outstanding
                                    
                                    
                                    1,136
                                    
                                    
                                    
                                    1,132Paid
      in capital
                                    
                                    
                                    383,302
                                    
                                    
                                    
                                    397,080Accumulated
      other comprehensive income (loss)
                                    
                                    
                                    (2,826
                                    )
                                    
                                    
                                    1,510Accumulated
      deficit
                                    
                                    
                                    (297,809
                                    )
                                    
                                    
                                    (296,826
                                    )Total
      Ener1, Inc. stockholders' equity
                                    
                                    
                                    83,803
                                    
                                    
                                    
                                    102,896Noncontrolling
      interest
                                    
                                    
                                    1,975
                                    
                                    
                                    
                                    3,517Total
      stockholders' equity
                                    
                                    
                                    85,778
                                    
                                    
                                    
                                    106,413Total
      liabilities and stockholders' equity
                                    
                                    $
                                    132,919
                                    
                                    
                                    $
                                    141,731
  See
accompanying notes to these unaudited consolidated financial
statements.




- 3
-




ENER1,
INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(unaudited,
in thousands except per share data)





Three
      Months Ended March 31,2009
                                  
                                  
                                  2008(Restated)
                                  
                                  
                                  (Restated)Net
      sales
                                  
                                  $
                                  8,192
                                  
                                  
                                  $
                                  97Cost
      of sales
                                  
                                  
                                  6,803
                                  
                                  
                                  
                                  -Gross
      profit
                                  
                                  
                                  1,389
                                  
                                  
                                  
                                  97Operating
      expenses:General
      and administrative
                                  
                                  
                                  4,617
                                  
                                  
                                  
                                  2,582Research
      and development, net of proceeds of $1,187 and $1,298
                                  
                                  
                                  6,262
                                  
                                  
                                  
                                  3,065Depreciation
      and amortization
                                  
                                  
                                  1,108
                                  
                                  
                                  
                                  107Total
      operating expenses
                                  
                                  
                                  11,987
                                  
                                  
                                  
                                  5,754Loss
      from operations
                                  
                                  
                                  (10,598
                                  )
                                  
                                  
                                  (5,657
                                  )Other
      income (expense):Interest
      expense
                                  
                                  
                                  (1,317
                                  )
                                  
                                  
                                  (21,377
                                  )Interest
      income
                                  
                                  
                                  37
                                  
                                  
                                  
                                  123Other
                                  
                                  
                                  63
                                  
                                  
                                  
                                  75Gain
      on derivative liabilities
                                  
                                  
                                  3,912
                                  
                                  
                                  
                                  3,936Gain
      on foreign currency transactions
                                  
                                  
                                  671
                                  
                                  
                                  
                                  -Total
      other income (expense)
                                  
                                  
                                  3,366
                                  
                                  
                                  
                                  (17,243
                                  )Loss
      before income taxes
                                  
                                  
                                  (7,232
                                  )
                                  
                                  
                                  (22,900
                                  )Income
      tax expense
                                  
                                  
                                  37
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  
                                  (7,269
                                  )
                                  
                                  
                                  (22,900
                                  )Net
      income (loss) attributable to noncontrolling interest
                                  
                                  
                                  (39
                                  )
                                  
                                  
                                  -Net
      loss attributable to Ener1, Inc.
                                  
                                  $
                                  (7,308
                                  )
                                  
                                  $
                                  (22,900
                                  )Net
      loss per share attributable to Ener1, Inc.:Basic
                                  
                                  $
                                  (0.06
                                  )
                                  
                                  $
                                  (0.25
                                  )Diluted
                                  
                                  $
                                  (0.08
                                  )
                                  
                                  
                                  (0.25
                                  )Weighted
      average shares outstanding for Ener1, Inc.:Basic
                                  
                                  
                                  113,470
                                  
                                  
                                  
                                  93,369Diluted
                                  
                                  
                                  113,484
                                  
                                  
                                  
                                  93,369





See
accompanying notes to these unaudited consolidated financial
statements.




- 4
-




ENER1,
INC.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY


(unaudited,
in thousands, except share data)




AccumulatedOther
                    
                    
                    
                    
                    
                    
                    
                    
                    TotalCommon
      Stock
                    
                    
                    Paid
      in
                    
                    
                    Comprehensive
                    
                    
                    Accumulated
                    
                    
                    Noncontrolling
                    
                    
                    Stockholders'Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Income
      (Loss)
                    
                    
                    Deficit
                    
                    
                    Interest
                    
                    
                    EquityBalance
      December 31, 2008 (Restated)
                    
                    
                    113,074,478
                    
                    
                    $
                    1,132
                    
                    
                    $
                    397,080
                    
                    
                    $
                    1,510
                    
                    
                    $
                    (296,826
                    )
                    
                    $
                    3,517
                    
                    
                    $
                    106,413Comprehensive
      loss:Net
      income (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (7,308
                    )
                    
                    
                    39
                    
                    
                    
                    (7,269
                    )Translation
      adjustment
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,422
                    )
                    
                    
                    -
                    
                    
                    
                    (232
                    )
                    
                    
                    (4,654
                    )Total
      comprehensive loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (11,923
                    )Shares
      issued for exercise of options
                    
                    
                    21,871
                    
                    
                    
                    -
                    
                    
                    
                    40
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    40Shares
      issued for additional noncontrolling interest
                    
                    
                    385,936
                    
                    
                    
                    4
                    
                    
                    
                    1,264
                    
                    
                    
                    86
                    
                    
                    
                    -
                    
                    
                    
                    (1,354
                    )
                    
                    
                    -Cumulative
      effect of change in accounting principle
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (19,521
                    )
                    
                    
                    -
                    
                    
                    
                    6,325
                    
                    
                    
                    5
                    
                    
                    
                    (13,191
                    )Reduction
      in derivative liability
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,679
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,679Warrants
      issued to related party as borrowingfees
      under a line of credit agreement
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    489
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    489Stock-based
      compensation expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,267
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,267Stock-based
      compensation expense of subsidiary
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4Balance
      March 31, 2009 (Restated)
                    
                    
                    113,482,285
                    
                    
                    $
                    1,136
                    
                    
                    $
                    383,302
                    
                    
                    $
                    (2,826
                    )
                    
                    $
                    (297,809
                    )
                    
                    $
                    1,975
                    
                    
                    $
                    85,778





See
accompanying notes to these unaudited consolidated financial
statements.




- 5
-




ENER1,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(unaudited,
in thousands)





Three Months Ended March
      31,2009
                              
                              
                              2008(Restated)
                              
                              
                              (Restated)Operating
      activities:Net
      loss
                              
                              $
                              (7,269
                              )
                              
                              $
                              (22,900
                              )Adjustments
      to reconcile net loss to cash used in operating
      activities:Gain
      on derivative liabilities
                              
                              
                              (3,912
                              )
                              
                              
                              (3,936
                              )Non-cash
      accretion of discounts on debentures and notes
                              
                              
                              -
                              
                              
                              
                              17,728Non-cash
      interest expense related to financing costs
                              
                              
                              933
                              
                              
                              
                              2,279Non-cash
      interest expense on related party debt
                              
                              
                              -
                              
                              
                              
                              279Non-cash
      inducement for debt conversions and equity investments
                              
                              
                              -
                              
                              
                              
                              753Depreciation
      and amortization
                              
                              
                              1,771
                              
                              
                              
                              107Stock-based
      compensation expense
                              
                              
                              1,271
                              
                              
                              
                              831Gain
      on foreign currency transactions, net
                              
                              
                              (671
                              )
                              
                              
                              -Other
      non-cash expenses
                              
                              
                              517
                              
                              
                              
                              -Changes
      in certain operating assets and liabilities:Accounts
      receivable
                              
                              
                              (336
                              )
                              
                              
                              (1,004
                              )Inventory
                              
                              
                              (64
                              )
                              
                              
                              -Accounts
      payable and accrued expenses
                              
                              
                              (3,119
                              )
                              
                              
                              745Changes
      in current assets, liabilities and other, net
                              
                              
                              (870
                              )
                              
                              
                              (37
                              )Net
      cash used in operating activities
                              
                              
                              (11,749
                              )
                              
                              
                              (5,155
                              )Investing
      activities:Capital
      expenditures and equipment deposits
                              
                              
                              (5,842
                              )
                              
                              
                              (5,821
                              )Restricted
      cash
                              
                              
                              743
                              
                              
                              
                              -Other
                              
                              
                              (2
                              )
                              
                              
                              -Net
      cash used in investing activities
                              
                              
                              (5,101
                              )
                              
                              
                              (5,821
                              )Financing
      activities:Proceeds
      from borrowings, net of costs
                              
                              
                              10,462
                              
                              
                              
                              -Proceeds
      from exercise of options and warrants
                              
                              
                              40
                              
                              
                              
                              -Repayment
      of capital leases
                              
                              
                              (494
                              )
                              
                              
                              -Repayment
      of notes payable and bank installment loan
                              
                              
                              -
                              
                              
                              
                              (230
                              )Net
      cash provided by (used in) financing activities
                              
                              
                              10,008
                              
                              
                              
                              (230
                              )Effect
      of exchange rate changes on cash and cash equivalents
                              
                              
                              (120
                              )
                              
                              
                              -Net
      decrease in cash and cash equivalents
                              
                              
                              (6,962
                              )
                              
                              
                              (11,206
                              )Cash
      and cash equivalents - beginning balance
                              
                              
                              11,229
                              
                              
                              
                              24,826Cash
      and cash equivalents - ending balance
                              
                              $
                              4,267
                              
                              
                              $
                              13,620Cash
      paid during the year for:Interest
                              
                              $
                              276
                              
                              
                              $
                              164Income
      taxes
                              
                              
                              56
                              
                              
                              
                              -Supplemental
      Disclosure of Non-cash Investing and Financing
    ActivitiesNon-cash
      investing and financing activities:Cumulative
      effect of change in accounting principle on accumulated
      deficit
                              
                              $
                              6,325
                              
                              
                              $
                              -Cumulative
      effect of change in accounting principle on paid in
      capital
                              
                              
                              19,521
                              
                              
                              
                              -Shares
      issued for conversion of senior debentures
                              
                              
                              -
                              
                              
                              
                              11,715Shares
      issued for conversion of senior debentures interest
                              
                              
                              -
                              
                              
                              
                              174Shares
      issued for inducement to convert senior debentures
                              
                              
                              -
                              
                              
                              
                              203Reduction
      in derivative liability
                              
                              
                              2,679
                              
                              
                              
                              6,208Warrants
      issued in connection with advances of related party
    debt
                              
                              
                              489
                              
                              
                              
                              -Warrants
      issued in connection with the commitment of related party
      debt
                              
                              
                              -
                              
                              
                              
                              680Shares
      issued for conversion of convertible notes
                              
                              
                              -
                              
                              
                              
                              11,960Shares
      issued for conversion of convertible notes interest
                              
                              
                              -
                              
                              
                              
                              1,885Beneficial
      conversion value related to conversion of convertible
      notes
                              
                              
                              -
                              
                              
                              
                              3,608Shares
      issued for the purchase of subsidiary shares from noncontrolling
      interest
                              
                              
                              2,597
                              
                              
                              
                              -Borrowings
      pursuant to capital lease obligations
                              
                              
                              14
                              
                              
                              
                              -Borrowings
      pursuant to short term promissory note
                              
                              
                              1,112





See
accompanying notes to these unaudited consolidated financial
statements.





- 6
-





ENER1,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





Note
1 – Business Overview





Nature
of the Business


Ener1,
Inc. (“Ener1”), a Florida corporation, was founded in 1985 and is headquartered
in New York.  In January 2002, Ener1 Group, Inc. (“Ener1 Group”)
acquired a majority interest in Ener1 and at March 31, 2009 owns approximately
57% of the outstanding common stock of Ener1.





Ener1
(including our subsidiaries, referred to collectively in these unaudited
consolidated financial statements as “Ener1,” “we,” “our” and “us”) operates
primarily in the business of designing, developing and manufacturing
high-performance, rechargeable lithium-ion batteries and battery systems for
energy storage.  End markets include transportation, stationary power
(energy storage for utilities and renewable energy such as wind and solar power
in addition to battery backup systems for residential use), military
applications and small cell markets.  In the transportation markets,
we are developing systems to power the next generation of hybrid, plug-in hybrid
and electric vehicles (HEVs, PHEVs and EVs).  This technology is also
being developed for other transportation markets including buses and trucks as
well as alternative transportation vehicles.  We also conduct research
on and develop fuel cells and nano coating processes.  In addition,
our Enertech subsidiary specializes in “small cell” technology and manufactures
electrodes for other battery manufacturers, commercial battery packs, prismatic
cells and lithium polymer batteries as well as manufactures large format cells
for automotive applications.





Basis
of Presentation


In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments, consisting of only normal recurring
accruals, necessary for a fair statement of financial position, results of
operations, and cash flows. The information included in this quarterly report on
Form 10-Q should be read in conjunction with the consolidated financial
statements and the accompanying notes included in our Annual Report on Form 10-K
for the year ended December 31, 2008. The accounting policies are described in
the “Notes to the Consolidated Financial Statements” in the 2008 Annual Report
on Form 10-K and updated, as necessary, in this Form 10-Q. The year end
consolidated balance sheet data presented for comparative purposes was derived
from audited financial statements, but does not include all disclosures required
by accounting principles generally accepted in the United States. The results of
operations for the three months ended March 31, 2009 are not necessarily
indicative of the operating results for the full year or for any other
subsequent interim period.





Effective
January 1, 2009, we implemented Statement of Financial Accounting Standards
(“SFAS”) No. 160, Noncontrolling Interests in
Consolidated Financial Statements,an amendment to ARB No. 51, (“SFAS
160”). This standard changed the accounting for and reporting of minority
interest (now called noncontrolling interest) in the consolidated financial
statements. The adoption of SFAS 160 has resulted in the reclassification of
amounts previously attributable to noncontrolling interest to a separate
component of stockholders’ equity on the accompanying unaudited consolidated
balance sheet. Additionally, net loss attributable to noncontrolling interest is
shown separately from net loss in the unaudited consolidated statements of
operations. Certain prior period amounts have been reclassified to conform to
the current period financial statement presentation.  These
reclassifications have no effect on the previously reported financial position
or results of operations.





Principles
of Consolidation


The
accompanying consolidated financial statements include the accounts of
Ener1 and its wholly-owned and majority-owned
subsidiaries.  Amounts pertaining to the noncontrolling interests held
by third parties in the operating results and financial position of our
majority-owned subsidiaries are reported as a component of stockholders’ equity
separate from Ener1’s equity.  All significant intercompany
transactions and balances have been eliminated in consolidation.





Foreign
Currencies


Subsidiaries
located outside the United States use the local currency as the functional
currency. Accordingly, assets and liabilities denominated in foreign currencies
are translated using exchange rates in effect at the balance sheet date and
equity accounts at the historical exchange rates.  Revenues and
expenses are translated using the average exchange rates during the
year.  Any translation adjustments resulting from this process are
shown separately as a component of accumulated other comprehensive income (loss)
within stockholders’ equity in the unaudited consolidated balance
sheets.  Foreign currency transaction gains and losses are reported
net in other income (expense) in the unaudited consolidated statements of
operations.





- 7
-





Use
of Estimates


The
preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States requires management to make
estimates and judgments that may affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate these estimates, including
those related to revenue recognition and related allowances, derivatives,
inventory, impairments of long-lived assets, including intangible assets,
impairments of goodwill, income taxes including the valuation allowance for
deferred tax assets, valuation of long-lived assets, research and development,
contingencies and litigation, as well as share-based payments. These estimates
are based on our historical experience and on various other assumptions that are
believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities. Actual results
may differ from these estimates under different assumptions or
conditions.





Note 2 – Restatement of Previously Issued Financial
Statements





Summary
of Restatement Items





The
consolidated financial statements for the three months ended March 31, 2008 and
2009 and related disclosures in this Amendment No. 1 to the Quarterly Report on
Form 10-Q have been restated in accordance with the changes described
below.





The
balance sheet as of March 31, 2009 included in the Quarterly Report at the time
of the initial filing on May 11, 2009 has been restated to adjust the opening
retained earnings and paid in capital by $13,713,000 as a result of the
restatement of the December 31, 2008 balance sheet. The December 31, 2008
balance sheet and the income statement for the three months ended March 31, 2008
were adjusted to (1) reflect the corrected accounting for unamortized debt
discount upon conversion of our 2004 Debentures and 2005 Debentures as interest
expense, (2) reflect the corrected calculation for amortization of deferred
financing costs and debt discount for our 2004 Debentures, 2005 Debentures and
Series A Preferred Stock and 3)
separately reflect restricted cash pledged to guarantee borrowings from foreign
banks. Likewise,
the income statement for the three months ended March 31, 2009 was restated to
reflect the inclusion of gain on derivative liability in the calculation of
diluted loss per share.





The
Company originally recorded the unamortized discount, upon conversion,
associated with the 2004 Debentures and 2005 Debentures as additional paid in
capital. The 2007 and 2008 financial statements have been restated to reclassify
the unamortized discount to interest expense. In addition, the Company used an
effective interest rate that resulted in an overstatement of amortization of the
deferred financing costs and debt discount for the 2004 Debentures, 2005
Debentures and Series A Preferred Stock. The 2007 and 2008 financial statements
have been restated to reflect the correct interest expense and net income
attributable to noncontrolling interest. Also, the
Company did not separately reflect restricted cash pledged to guarantee
borrowings from foreign banks.


The
impact of the adjustments related to the accounting for the unamortized debt
discount, deferred financing costs and discount accretion as well
as to separately reflect restricted cash are
summarized below (the following tables compare specific line items from the
financial statements for the three months ended March 31, 2008 with the same
line items from the financial statements for the corresponding three months
ended March 31, 2008, as previously reported by the Company on May 11,
2009):





- 8
-





Consolidated
Statement of Operations Impact (in thousands except per share
data)





Three Months
                      Ended
                    
                    
                    Three Months Ended March 31, 2008March 31, 2009
                      (Restated)
                    
                    
                    As previously
                        reported
                    
                    
                    Adjustments
                    
                    
                    As restatedNet
      sales
                    
                    $
                    8,192
                    
                    
                    $
                    97
                    
                    
                    
                    
                    
                    $
                    97Cost
      of sales
                    
                    
                    6,803
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    -Gross
      profit
                    
                    
                    1,389
                    
                    
                    
                    97
                    
                    
                    
                    -
                    
                    
                    
                    97Operating
      expenses:General
      and administrative
                    
                    
                    4,617
                    
                    
                    
                    2,582
                    
                    
                    
                    
                    
                    
                    
                    2,582Research
      and development, net
                    
                    
                    6,262
                    
                    
                    
                    3,065
                    
                    
                    
                    
                    
                    
                    
                    3,065Depreciation
      and amortization
                    
                    
                    1,108
                    
                    
                    
                    107
                    
                    
                    
                    
                    
                    
                    
                    107Total
      operating expenses
                    
                    
                    11,987
                    
                    
                    
                    5,754
                    
                    
                    
                    -
                    
                    
                    
                    5,754Loss
      from operations
                    
                    
                    (10,598
                    )
                    
                    
                    (5,657
                    )
                    
                    
                    -
                    
                    
                    
                    (5,657
                    )Other
      income (expense):Interest
      expense
                    
                    
                    (1,317
                    )
                    
                    
                    (11,625
                    )
                    
                    
                    (9,752
                    ) (a)
                    
                    
                    (21,377
                    )Interest
      income
                    
                    
                    37
                    
                    
                    
                    123
                    
                    
                    
                    
                    
                    
                    
                    123Other
                    
                    
                    63
                    
                    
                    
                    75
                    
                    
                    
                    
                    
                    
                    
                    75Gain
      on derivative liabilities
                    
                    
                    3,912
                    
                    
                    
                    3,936
                    
                    
                    
                    
                    
                    
                    
                    3,936Gain
      on foreign currency transactions
                    
                    
                    671
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    -Total
      other income (expense)
                    
                    
                    3,366
                    
                    
                    
                    (7,491
                    )
                    
                    
                    (9,752
                    )
                    
                    
                    (17,243
                    )Loss
      before income taxes
                    
                    
                    (7,232
                    )
                    
                    
                    (13,148
                    )
                    
                    
                    (9,752
                    )
                    
                    
                    (22,900
                    )Income
      tax expense
                    
                    
                    37
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    -Net
      loss
                    
                    
                    (7,269
                    )
                    
                    
                    (13,148
                    )
                    
                    
                    (9,752
                    )
                    
                    
                    (22,900
                    )Net
      income (loss) attributable to noncontrolling interest
                    
                    
                    39
                    
                    
                    
                    580
                    
                    
                    
                    (580
                    )
      (c)
                    
                    
                    -Net
      loss attributable to Ener1, Inc.
                    
                    $
                    (7,308
                    )
                    
                    $
                    (13,728
                    )
                    
                    $
                    (9,172
                    )
                    
                    $
                    (22,900
                    )Net
      loss per share attributable to Ener1, Inc.:Basic
                    
                    $
                    (0.06
                    )
                    
                    $
                    (0.15
                    )
                    
                    
                    
                    
                    
                    $
                    (0.25
                    )Diluted
                    
                    $
                    (0.08
                    ) (b)
                    
                    $
                    (0.15
                    )
                    
                    
                    
                    
                    
                    $
                    (0.25
                    )Weighted
      average shares outstanding for Ener1, Inc.:Basic
                    
                    
                    113,470
                    
                    
                    
                    93,369
                    
                    
                    
                    
                    
                    
                    
                    93,369Diluted
                    
                    
                    113,484
                    
                    
                    
                    93,369
                    
                    
                    
                    
                    
                    
                    
                    93,369





(a)
            To record interest expense
      of $8,308,000 for the 2004 Debentures and 2005 Debentures unamortized
      discount previously calculated incorrectly and improperly recorded to
      additional paid in
capital.


To record interest expense of
$1,444,000 to correct the amortization of deferred financing
costs.




(b)
            Restated
      to reflect the inclusion of gain on derivative liability in calculation of
      diluted loss per share.




(c)
              Adjustment
      to accretion discount on Series A Preferred Stock previously calculated
      incorrectly.


- 9
-





Balance
Sheet Impact





In
addition to the effects on Ener1's consolidated statement of operations for the
three months ended March 31, 2008 as discussed above, the restatement impacted
Ener1's opening consolidated balance sheet as of January 1, 2009. The following
table sets forth the effects of the restatement adjustments on Ener1’s
consolidated balance sheet as of March 31, 2009 as compared to the consolidated
balance sheet as of March 31, 2009 as previously reported on May 11,
2009:





(dollars
in thousands)


March 31, 2009
                          
                          
                          December 31,As previously
                          
                          
                          
                          
                          
                          
                          
                          
                          2008reported
                          
                          
                          Adjustments
                          
                          
                          As restated
                          
                          
                          RestatedASSETSCurrent
      assetsCash
      and cash equivalents
                          
                          
                          6,500
                          
                          
                          $
                          (2,233
                          )
      (c)
                          
                          $
                          4,267
                          
                          
                          $
                          11,229Restricted
      cash
                          
                          
                          -
                          
                          
                          $
                          2,233
                          (c)
                          
                          
                          2,233
                          
                          
                          
                          2,976Accounts
      receivable, net of allowance of $982 and $915
                          
                          
                          6,572
                          
                          
                          
                          
                          
                          
                          
                          6,572
                          
                          
                          
                          7,006Inventory,
      net of allowance for obsolescence of $707 and $483
                          
                          
                          9,199
                          
                          
                          
                          
                          
                          
                          
                          9,199
                          
                          
                          
                          10,202Prepaid
      expenses and other current assets
                          
                          
                          1,464
                          
                          
                          
                          
                          
                          
                          
                          1,464
                          
                          
                          
                          1,199Total
      current assets
                          
                          
                          23,735
                          
                          
                          
                          -
                          
                          
                          
                          23,735
                          
                          
                          
                          32,612Property
      and equipment, net of accumulated depreciation of $3,981 and
      $2,728
                          
                          
                          43,767
                          
                          
                          
                          
                          
                          
                          
                          43,767
                          
                          
                          
                          39,513Deferred
      financing costs, net of amortization of $847 and $0
                          
                          
                          4,241
                          
                          
                          
                          -
                          
                          
                          
                          4,241
                          
                          
                          
                          5,088Intangible
      assets, net of accumulated amortization of $1,053 and
    $568
                          
                          
                          14,587
                          
                          
                          
                          
                          
                          
                          
                          14,587
                          
                          
                          
                          15,246Goodwill
                          
                          
                          46,032
                          
                          
                          
                          
                          
                          
                          
                          46,032
                          
                          
                          
                          48,674Other
                          
                          
                          557
                          
                          
                          
                          
                          
                          
                          
                          557
                          
                          
                          
                          598Total
      assets
                          
                          $
                          132,919
                          
                          
                          $
                          -
                          
                          
                          $
                          132,919
                          
                          
                          $
                          141,731LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable and accrued expenses
                          
                          $
                          12,138
                          
                          
                          
                          
                          
                          
                          $
                          12,138
                          
                          
                          $
                          16,322Accrued
      income taxes payable
                          
                          
                          279
                          
                          
                          
                          
                          
                          
                          
                          279
                          
                          
                          
                          318Short
      term borrowings
                          
                          
                          11,721
                          
                          
                          
                          
                          
                          
                          
                          11,721
                          
                          
                          
                          9,414Capital
      lease obligations, current portion
                          
                          
                          2,045
                          
                          
                          
                          
                          
                          
                          
                          2,045
                          
                          
                          
                          2,003Total
      current liabilities
                          
                          
                          26,183
                          
                          
                          
                          -
                          
                          
                          
                          26,183
                          
                          
                          
                          28,057Other
      long-term payables
                          
                          
                          1,159
                          
                          
                          
                          
                          
                          
                          
                          1,159
                          
                          
                          
                          1,093Derivative
      liabilities
                          
                          
                          6,621
                          
                          
                          
                          
                          
                          
                          
                          6,621
                          
                          
                          
                          -Long
      term borrowings
                          
                          
                          8,420
                          
                          
                          
                          
                          
                          
                          
                          8,420
                          
                          
                          
                          795Deferred
      income tax liabilities
                          
                          
                          324
                          
                          
                          
                          
                          
                          
                          
                          324
                          
                          
                          
                          397Convertible
      bonds
                          
                          
                          352
                          
                          
                          
                          
                          
                          
                          
                          352
                          
                          
                          
                          396Capital
      lease obligations, less current portion
                          
                          
                          4,082
                          
                          
                          
                          
                          
                          
                          
                          4,082
                          
                          
                          
                          4,580Total
      liabilities
                          
                          
                          47,141
                          
                          
                          
                          -
                          
                          
                          
                          47,141
                          
                          
                          
                          35,318Commitments
      and contingenciesStockholders'
      Equity:Common
      stock, $0.01 par value, 175,714,286 shares authorized, 113,482,285 and
      113,074,478 issued and outstanding
                          
                          
                          1,136
                          
                          
                          
                          
                          
                          
                          
                          1,136
                          
                          
                          
                          1,132Paid
      in capital
                          
                          
                          369,589
                          
                          
                          
                          13,713
                          (a)
                          
                          
                          383,302
                          
                          
                          
                          397,080Investment
      from Ener1
                          
                          
                          -
                          
                          
                          
                          
                          
                          
                          
                          -
                          
                          
                          
                          -Accumulated
      other comprehensive income (loss)
                          
                          
                          (2,826
                          )
                          
                          
                          
                          
                          
                          
                          (2,826
                          )
                          
                          
                          1,510Accumulated
      deficit
                          
                          
                          (284,096
                          )
                          
                          
                          (13,713
                          )
      (b)
                          
                          
                          (297,809
                          )
                          
                          
                          (296,826
                          )Total
      Ener1, Inc. stockholders' equity
                          
                          
                          83,803
                          
                          
                          
                          -
                          
                          
                          
                          83,803
                          
                          
                          
                          102,896Noncontrolling
      interest
                          
                          
                          1,975
                          
                          
                          
                          
                          
                          
                          
                          1,975
                          
                          
                          
                          3,517Total
      stockholders' equity
                          
                          
                          85,778
                          
                          
                          
                          -
                          
                          
                          
                          85,778
                          
                          
                          
                          106,413Total
      liabilities and stockholders' equity
                          
                          $
                          132,919
                          
                          
                          $
                          -
                          
                          
                          $
                          132,919
                          
                          
                          $
                          141,731





(a)
            To
      correct the accounting for conversions of 2004 Debentures and 2005
      Debentures.


(b)
            To
      adjust opening retained earnings for $3,961,000 and to reflect aggregate
      effects of income statement adjustments of $9,752,000 for the three
      months ended March 31, 2008.(c)
            To
      reflect restricted cash pledged to guarantee borrowings from foreign
      banks.








- 10
-




Note 3
– New Accounting Pronouncements





Recently
Adopted Accounting Pronouncements


Effective
January 1, 2009, we implemented SFAS No. 141(R), Business Combination,(“SFAS
141(R)”). This standard requires an acquiring company to measure all assets
acquired and liabilities assumed, including contingent considerations and all
contractual contingencies, at fair value as of the acquisition date. In
addition, an acquiring company is required to capitalize in-process research and
development and either amortize it over the life of the product, or write it off
if the project is abandoned or impaired.  Due to the fact that SFAS
141(R) is applicable to future acquisitions completed after January 1, 2009 and
we did not have any business combinations this quarter, the adoption of SFAS
141(R) did not have an impact on the consolidated financial
statements.





On
January 1, 2009, we adopted EITF No. 07-05, Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock ("EITF
07-05").  EITF 07-05 provides that an entity should use a two-step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument's
contingent exercise and settlement provisions.   The adoption of EITF
07-05 has affected the accounting for (i) certain freestanding warrants that
contain exercise price adjustment features (“down round provisions”) and (ii)
convertible bonds issued by our foreign subsidiary with a strike price
denominated in a foreign currency.  Our warrants with such provisions
are no longer deemed to be indexed to the company’s own stock and are no longer
classified in equity.  Instead, these warrants were reclassified as
derivative liability on January 1, 2009 as a result of this EITF.  The
fair value of the derivative liability as of January 1, 2009
was approximately $13,196,000 and was recorded as a cumulative adjustment
to accumulated deficit. The conversion feature of the convertible bonds
denominated in a foreign currency was bifurcated and recorded as a derivative
liability resulting in a cumulative adjustment to accumulated deficit of
approximately $5,000 on January 1, 2009. See Note 6, Derivative Instruments and
Fair Value of Financial Instruments.





On
January 1, 2009, we adopted SFAS No. 157, Fair Value of Financial
Instruments, (“SFAS 157”) as delayed by FSP 157-2-2 for all non-financial
assets and non-financial liabilities.  SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
This statement does not require any new fair value measurements, but provides
guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information.  The adoption of this
standard did not have a material impact on our financial
statements.





FSP APB
14-1, Accounting for
Convertible Debt Instruments that may be Settled in Cash upon Conversion
(Including Partial Cash Settlement)("FSP APB 14-1") applies to
convertible debt securities that, upon conversion, may be settled by the issuer
fully or partially in cash.  We examined our convertible debt
instruments and preferred stock for applicability under this
FSP.  FSP APB 14-1 was adopted on January 1, 2009 and there
was no impact to our financial statements as our convertible debt and preferred
stock were not within the scope of the FSP.




- 11
-





Recently
Issued Accounting Standards


In April
2009, the Financial Accounting Standards Board (“FASB”) issued the following new
accounting standards:





·
            FASB
      Staff Position FAS 157-4, Determining Whether a Market
      Is Not Active and a Transaction Is Not Distressed,(“FSP FAS
      157-4”) provides guidelines for making fair value measurements more
      consistent with the principles presented in SFAS 157.  FSP FAS
      157-4 provides additional authoritative guidance in determining whether a
      market is active or inactive and whether a transaction is distressed. It
      is applicable to all assets and liabilities (i.e., financial and
      non-financial) and will require enhanced
  disclosures.





·
            FASB
      Staff Positions FAS 115-2, FAS 124-2, and EITF 99-20-2, Recognition and Presentation
      of Other-Than-Temporary Impairments, (“FSP FAS 115-2, FAS 124-2,
      and EITF 99-20-2”) provides additional guidance to provide greater clarity
      about the credit and noncredit component of an other-than-temporary
      impairment event and to more effectively communicate when an
      other-than-temporary impairment event has occurred. This FSP applies to
      debt securities.





·
            FASB
      Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about Fair
      Value of Financial Instruments, (“FSP FAS 107-1 and APB 28-1”)
      amends FASB Statement No. 107, Disclosures about Fair Value
      of Financial Instruments, to require disclosures about fair value
      of financial instruments in interim as well as in annual financial
      statements. This FSP also amends APB Opinion No. 28, Interim Financial
      Reporting, to require those disclosures in all interim financial
      statements.





These
standards are effective for periods ending after June 15, 2009. We are
evaluating the impact that these standards will have on our financial
statements.





Note 4
– Supplemental Financial Information





Inventory


The
following table presents the components of inventory (in
thousands):





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Finished
      goods
                  
                  $
                  5,148
                  
                  
                  $
                  5,152Work
      in process
                  
                  
                  377
                  
                  
                  
                  783Raw
      materials and supplies
                  
                  
                  4,381
                  
                  
                  
                  4,7509,906
                  
                  
                  
                  10,685Less
      valuation allowance
                  
                  
                  (707
                  )
                  
                  
                  (483
                  )$
                  9,199
                  
                  
                  $
                  10,202





We
regularly review inventory on hand and, when necessary, record a provision for
excess or obsolete inventories based on an assessment of future
demand.  Inventories are presented net of a reserve for obsolescence
of $707,000 and $483,000 at March 31, 2009 and December 31, 2008,
respectively.





- 12
-





Property
and Equipment


The
following table presents details of property and equipment (in
thousands):





Useful
      life
                    
                    
                    March
      31,
                    
                    
                    December
      31,(in years)
                    
                    
                    2009
                    
                    
                    2008Land
                    
                    
                    
                    
                    $
                    1,829
                    
                    
                    $
                    1,966Building
      and building improvements
                    
                    30
      - 39
                    
                    
                    
                    5,016
                    
                    
                    
                    5,381Machinery
      and equipment
                    
                    5 -
      10
                    
                    
                    
                    23,458
                    
                    
                    
                    19,313Office
      equipment, furniture and other
                    
                    3 -
      7
                    
                    
                    
                    2,325
                    
                    
                    
                    2,137Leasehold
      improvements
                    
                    1 -
      5
                    
                    
                    
                    9,363
                    
                    
                    
                    7,966Construction
      in progress
                    
                    n/a
                    
                    
                    
                    5,757
                    
                    
                    
                    5,47747,748
                    
                    
                    
                    42,241Less
      accumulated depreciation
                    
                    
                    
                    
                    
                    (3,981
                    )
                    
                    
                    (2,728
                    )$
                    43,767
                    
                    
                    $
                    39,513





Construction
in progress includes deposits for equipment of $1,199,000 and $3,402,000 at
March 31, 2009 and December 31, 2008, respectively.  These deposits
are for equipment being constructed by third parties specifically for our
use.  Depreciation on these assets will commence when we place the
assets in service.





Depreciation
expense for the periods ended March 31, 2009 and 2008 was approximately
$1,280,000 and $107,000, respectively.  Assets recorded under capital
leases were approximately $7,223,000 and $7,209,000 at March 31, 2009 and
December 31, 2008, respectively.





Deferred
Financing Costs


Deferred
financing costs represent the $5,088,000 in fair value of the 1,250,000 warrants
issued to Ener1 Group as a commitment fee pursuant to a $30,000,000 Line of
Credit Agreement (the “LOC Agreement”) effective December 29,
2008.  These costs are being amortized to interest expense, over the
18 month term of the Agreement, totaling $847,000 during the three months ended
March 31, 2009.





The
estimated future straight line amortization of existing deferred financing costs
is $2,545,000 in 2009 and $1,696,000 during 2010.  If we issue equity
instruments related to financing transactions in the future, our interest
expense will be increased by the amortization of those costs.





Intangible
Assets


The
following table presents details of intangible assets (in
thousands):





Useful
      life
                    
                    
                    March
      31,
                    
                    
                    December
      31,(in years)
                    
                    
                    2009
                    
                    
                    2008Patents
                    
                    10
                    
                    
                    $
                    78
                    
                    
                    $
                    86Patented
      and unpatented technology
                    
                    10
                    
                    
                    
                    13,814
                    
                    
                    
                    13,814Electric
      vehicle battery technology
                    
                    4.2
                    
                    
                    
                    964
                    
                    
                    
                    1,056Customer
      relationships
                    
                    2.2
                    
                    
                    
                    784
                    
                    
                    
                    85815,640
                    
                    
                    
                    15,814Less
      accumulated amortization
                    
                    
                    
                    
                    
                    (1,053
                    )
                    
                    
                    (568
                    )$
                    14,587
                    
                    
                    $
                    15,246





Amortization
expense for the periods ended March 31, 2009 and 2008 was approximately $491,000
and $0, respectively.





- 13
-





Goodwill


The
following table summarizes the activity related to the carrying value of
goodwill (in thousands):





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Beginning
      balance
                  
                  $
                  48,674
                  
                  
                  $
                  -Purchase
      price allocation
                  
                  
                  -
                  
                  
                  
                  47,192Purchase
      price adjustments
                  
                  
                  2
                  
                  
                  
                  702Translation
      adjustments
                  
                  
                  (2,644
                  )
                  
                  
                  780Ending
      balance
                  
                  $
                  46,032
                  
                  
                  $
                  48,674





During
the three months ended March 31, 2009, goodwill was adjusted as a result of
foreign currency translations totaling approximately $2,644,000 due to
fluctuations in the Korean Won, the local currency of Enertech.





Accounts
Payable and Accrued Expenses


The
following table presents details of accounts payable and accrued expenses (in
thousands):





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Accounts
      payable
                  
                  $
                  9,562
                  
                  
                  $
                  12,825Accrued
      compensation and benefits
                  
                  
                  649
                  
                  
                  
                  1,194Accrued
      professional fees
                  
                  
                  133
                  
                  
                  
                  573Customer
      advances
                  
                  
                  642
                  
                  
                  
                  561Accrued
      other
                  
                  
                  1,152
                  
                  
                  
                  1,169$
                  12,138
                  
                  
                  $
                  16,322





Other
Long-Term Payables


The
following table presents details of other long term payables (in
thousands):





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Refundable
      government grants (Enertech)
                  
                  $
                  187
                  
                  
                  $
                  161Severance
      benefits (Enertech)
                  
                  
                  972
                  
                  
                  
                  932$
                  1,159
                  
                  
                  $
                  1,093





Convertible
Bonds


On
January 25, 2008, our Enertech subsidiary issued a $9,173,000 convertible bond
maturing January 25, 2013 which is convertible into shares of Enertech common
stock at a conversion price of 750 Korean Won per share. The conversion ratio is
fixed to 11,564,092 shares if fully converted.  The bonds have a
conversion period from April 2008 through December 2012. The convertible bonds
accrue interest at 8.5% per annum which is payable at maturity if the bonds are
not converted prior to their maturity.





We own
approximately 96% of the outstanding balance of the convertible bonds at March
31, 2009 and as a result have eliminated the principal and related interest, in
consolidation.  The amount of the remaining outstanding convertible
bonds as of March 31, 2009 is $352,000.





- 14
-





We have
evaluated the application of SFAS 133 Accounting for Derivative
Instruments and Hedging Activities, and EITF Issue 07-05, Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity's Own Stock, to the convertible bonds
with a strike price denominated in a foreign currency.  Based on the
guidance in SFAS 133 and EITF 07-05, we have concluded that the conversion
feature of the convertible bonds is required to be bifurcated and accounted for
separately as a derivative liability effective January 1, 2009.  See
Note 6, Derivative Instruments and Fair Value of Financial
Instruments.





Capital
Leases


The
following table summarizes the activity on our capital leases (in
thousands):





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Beginning
      balance
                  
                  $
                  6,583
                  
                  
                  $
                  -Borrowings
                  
                  
                  14
                  
                  
                  
                  7,209Repayments
                  
                  
                  (494
                  )
                  
                  
                  (355
                  )Debt
      issuance costs
                  
                  
                  -
                  
                  
                  
                  (281
                  )Amortization
      of debt issuance costs
                  
                  
                  24
                  
                  
                  
                  10Ending
      balance
                  
                  
                  6,127
                  
                  
                  
                  6,583less:
      current portion
                  
                  
                  (2,045
                  )
                  
                  
                  (2,003
                  )Long
      term capital lease obligation
                  
                  $
                  4,082
                  
                  
                  $
                  4,580





The total
monthly payment for capital lease obligations is approximately
$211,000.





Note 5
– Acquisitions





Supplemental
Pro Forma Data (Unaudited)


The
following “unaudited pro forma condensed combined statements of operations”
gives effect to the Enertech acquisition that was completed in 2008 as if it had
occurred at the beginning of 2008.  We acquired Enertech
International, Inc. as of October 24, 2008, as described in our Current Report
on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on October
30, 2008. This pro forma data is presented for informational purposes only and
does not purport to be indicative of the results of future operations or of the
results that would have occurred had the acquisition taken place at the
beginning of 2008.





- 15
-





Ener1,
Inc.
 Unaudited
Pro Forma Condensed Combined Statements of Operations
 For
the Three Months Ended March 31, 2008
 (In
thousands, except share data)
 
 Historical
                          Ener1
                          Three Months
                          Ended
                          March 31,
                          2008
                          (Restated)
                        
                        
                        Historical
                          Enertech
                          Three Months
                          Ended
                          March 31,
                          2008
                        
                        
                        Pro Forma
                          Adjustments
                        
                        
                        Pro Forma
                          Condensed
                          Combined
                          (Restated)Net
      sales
                        
                        $
                        97
                        
                        
                        $
                        9,678
                        
                        
                        $
                        (168
                        )
      (a)
                        
                        $
                        9,607Cost
      of sales
                        
                        
                        -
                        
                        
                        
                        8,359
                        
                        
                        
                        (111
                        )
      (a)
                        
                        
                        8,248Gross
      profit
                        
                        
                        97
                        
                        
                        
                        1,319
                        
                        
                        
                        (57
                        )
                        
                        
                        1,359Operating
      expense
                        
                        
                        5,754
                        
                        
                        
                        1,576
                        
                        
                        
                        (23
                        )
      (a), (b)
                        
                        
                        7,307Total
      other expenses
                        
                        
                        (17,243
                        )
                        
                        
                        (484
                        )
                        
                        
                        411
                        (c
      ), (d)
                        
                        
                        (17,316
                        )Income
      tax expense
                        
                        
                        -
                        
                        
                        
                        69
                        
                        
                        
                        
                        
                        
                        
                        69Net
      loss
                        
                        
                        (22,900
                        )
                        
                        
                        (810
                        )
                        
                        
                        377
                        
                        
                        
                        (23,333
                        )Net
      loss attributable to the noncontrolling interest
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (232
                        )(e)
                        
                        
                        (232
                        )Net
      loss attributable to Ener1
                        
                        $
                        (22,900
                        )
                        
                        $
                        (810
                        )
                        
                        $
                        609
                        
                        
                        $
                        (23,101
                        )Weighted
      average shares outstanding
                        
                        
                        93,369
                        
                        
                        
                        
                        
                        
                        
                        5,000
                        (f)
                        
                        
                        98,369Net
      loss per share-basic and diluted
                        
                        $
                        (0.25
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        $
                        (0.24
                        )




(a)
              Reduce
      net sales and operating expenses for intercompany transactions relating to
      purchases by Ener1 of products from
Enertech.
 (b)
              Increase
      to depreciation and amortization from the fair value of certain tangible
      and identifiable intangible assets.
 (c)
              Reduction
      of interest and discount expense for intercompany transactions relating to
      convertible bonds and bonds with
warrants.
 (d)
              Reduction
      of gain on derivative liability for intercompany transactions relating to
      bonds with warrants.
 (e)
              Noncontrolling
      interest reflects an adjustment to the allocable portion of pro forma
      income before controlling interest in
Enertech.
 (f)
              Adjustment
      to record the weighted impact of 5,000,000 shares of Ener1 common stock
      issued in connection with the acquisition of
  Enertech.




During
the three months ended March 31, 2009, goodwill was decreased as a result of
foreign currency translations totaling approximately $2,644,000 due to
fluctuations in the Korean Won, the local currency of Enertech.





On
January 7, 2009, we filed a registration statement to register the resale of the
shares issued to the Sellers, as well as the shares issuable upon the exercise
of the warrants and the registration statement became effective on February 5,
2009.  In addition, through January 24, 2009, we could have been
obligated to make a cash payment to the Sellers if common shares had been issued
at a price less than $7.20 per share.  Such clause has expired and no
such cash payment was made.





In
January 2009, we purchased an additional ownership interest in Enertech by
issuing 385,936 shares of Ener1 common stock valued at approximately $2,597,000
based on the closing stock price of $6.73 on the effective date of the
closing.   As a result, the ownership interest in Enertech
increased from 83% to 89%, on a fully diluted basis.  The additional
ownership interest has been accounted for as an equity transaction in accordance
with SFAS 160.  See Note 9,
Noncontrolling Interests.





- 16
-





Note 6
- Derivative Instruments and Fair Value of Financial
Instruments





Derivative
Instruments


We have
evaluated the application of SFAS 133 Accounting for Derivative
Instruments and Hedging Activities, and EITF No. 07-05, Determining Whether an Instrument
(oranEmbedded Feature) Is Indexed to an Entity's Own Stock, to (i) certain freestanding
warrants that contain exercise price adjustment features known as down round
provisions and (ii) convertible bonds with a strike price denominated in a
foreign currency.  Based on the guidance in SFAS 133 and EITF 07-05,
we have concluded these instruments are required to be accounted for as
derivatives effective January 1, 2009.





We have
recorded the fair value of the warrants and convertible bonds that are
classified as derivative liabilities in our balance sheet at fair value with
changes in the value of these derivatives reflected in the consolidated
statements of operations as gain or loss on derivative
liabilities.  These derivative instruments are not designated as
hedging instruments under SFAS 133.





Lattice Valuation
Model


We have
valued the freestanding warrants that contain down round provisions using a
lattice model, with the assistance of a valuation consultant, for which
management understands the methodologies. This model incorporates transaction
details such as Ener1’s stock price, contractual terms, maturity, risk free
rates, as well as assumptions about future financings, volatility, and warrant
holder behavior as of January 1, 2009, January 24, 2009 and March 31,
2009.





The
primary assumptions include projected annual volatility of 103% and holder
exercise targets at 150% of the exercise price for the warrants expiring in 2010
and 200% of the exercise price for the warrants expiring in 2014, decreasing as
the warrants approach maturity.  Based on these assumptions, the fair
value of the warrant derivatives as of January 1, 2009 was estimated by
management to be $13,196,000.  Amounts previously recorded to paid in
capital associated with these warrants of approximately $19,521,000 were
reversed and the remaining $6,325,000 was recorded as a cumulative adjustment to
accumulated deficit.





On
January 24, 2009, the down round provision contained in certain warrants expired
and these warrants were no longer treated as derivative
liabilities.  The fair value of the derivative liability associated
with these warrants was marked to market on this date and a gain on derivative
liability of approximately $1,587,000 was recorded.  The balance of
the derivative liability of $2,679,000 was then recorded as a contribution to
paid in capital on the same date.





The fair
value of the remaining warrant derivatives as of March 31, 2009 was estimated by
management to be $6,585,000.





The
foregoing assumptions are reviewed quarterly and are subject to change based
primarily on management’s assessment of the probability of the events described
occurring.  Accordingly, changes to these assessments could materially
affect the valuation.





Black-Scholes Valuation
Model


We used a
Black-Scholes pricing model to determine the fair value of the convertible
bonds.  This model uses market sourced inputs such as interest rates,
stock price and volatility, the selection of which requires management’s
judgment.  The convertible bond is convertible into shares of common
stock of our Enertech subsidiary, not shares of Ener1 common
stock.  As a result, stock prices were estimated using the average
stock price of four comparable Korean companies, which operate in the same
industry and are similar in size to Enertech, with a 30% liquidity discount and
volatility was estimated using the average volatility of the same four
comparable Korean companies.  Interest rates represent the Korean
government bond rate for securities with a maturity that approximates the
estimated expected life of the derivative.





- 17
-


The fair
value of the convertible bonds as of January 25, 2008 (the date of issuance),
January 1, 2009 and March 31, 2009 was estimated using the following assumptions
of management:
 
 Volatility
                    
                    
                    Interest
                      Rate
                    
                    
                    Stock Price
                    
                    
                    Term in
                      YearsJanuary
      25, 2008
                    
                    
                    53.2
                    %
                    
                    
                    5.3
                    %
                    
                    $
                    0.54
                    
                    
                    
                    5.0January
      1, 2009
                    
                    
                    56.6
                    %
                    
                    
                    3.8
                    %
                    
                    $
                    0.30
                    
                    
                    
                    4.1March
      31, 2009
                    
                    
                    58.3
                    %
                    
                    
                    4.7
                    %
                    
                    $
                    0.47
                    
                    
                    
                    3.8
 
 We own
approximately 96% of the outstanding balance of the convertible bonds and as a
result have eliminated 96% of the derivative liability and loss on derivative
liability in consolidation and recorded a $5,000 cumulative effect for the
adoption of EITF 07-05 to noncontrolling interest.  Based on these
assumptions, the remaining derivative liability, as of March 31, 2009 is $36,000
and the loss on derivative liability for the three months ended March 31, 2009
was approximately $20,000.
 
 The
foregoing assumptions are reviewed quarterly and are subject to change based
primarily on management’s assessment of the probability of the events described
occurring.  Accordingly, changes to these assessments could materially
affect the valuation.
 
 Fair
Value of Financial Instruments
 SFAS 157
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. SFAS 157 also establishes a
fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
SFAS 157 describes three levels of inputs that may be used to measure fair
value:
  Level 1 – Quoted prices
in active markets for identical assets or liabilities.
  Level 2 – Observable
inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or
liabilities.
  Level 3 – Unobservable
inputs that are supported by little or no market activity and that are financial
instruments whose values are determined using pricing models, discounted cash
flow methodologies, or similar techniques, as well as instruments for which the
determination of fair value requires significant judgment or estimation. Our
Level 3 liabilities consist of the derivative liabilities associated with
certain freestanding warrants that contain down round provisions and convertible
bonds with a strike price denominated in a foreign currency.
 
 If the
inputs used to measure the financial assets and liabilities fall within more
than one level described above, the categorization is based on the lowest level
input that is significant to the fair value measurement of the
instrument.
  - 18
-
  Financial Assets and
Liabilities Measured at Fair Value on a Recurring Basis
 The
following table summarizes the financial assets and liabilities measured at fair
value, on a recurring basis during the three months ended March 31, 2009 (in
thousands):
 
 Carrying
                                
                                
                                Fair Value Measurements UsingValue
                                
                                
                                Level 1
                                
                                
                                Level 2
                                
                                
                                Level 3
                                
                                
                                TotalDerivative
      liabilities
                                
                                $
                                6,621
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                6,621
                                
                                
                                $
                                6,621Totals
                                
                                
                                
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                6,621
                                
                                
                                $
                                6,621
 
 Level 3
Valuation Techniques
 Financial
assets are considered Level 3 when their fair values are determined using
pricing models, discounted cash flow methodologies or similar techniques and at
least one significant model assumption or input is unobservable.  Our
Level 3 liabilities consist of the derivative liabilities associated with
certain freestanding warrants that contain down round provisions and convertible
bonds with a strike price denominated in a foreign currency.
 
 The
following table provides a summary of the changes in fair value, including net
transfers in and/or out, of all financial assets measured at fair value on a
recurring basis using significant unobservable inputs during the quarter ended
March 31, 2009 (in thousands):
 
 DerivativeLiabilitiesBalance,
      January 1, 2009
                    
                    $
                    13,212Total
      realized/unrealized (gains) or losses:Included
      in other income (expense)
                    
                    
                    (3,912
                    )Included
      in stockholders' equity
                    
                    
                    (2,679
                    )Purchases,
      issuances and settlements
                    
                    
                    -Transfers
      in and/or out of Level 3
                    
                    
                    -Balance,
      March 31, 2009
                    
                    $
                    6,621
 
 Our
foreign subsidiary, Enertech, has derivative instruments for managing exposure
to foreign currency primarily to hedge the foreign exchange risk arising from
accounts receivable from domestic subsidiaries.  These derivative
instruments are measured at fair value as they are not designated as hedges
based on the criteria established by SFAS 133, and gains or losses from changes
in the fair value are recognized in earnings.
 
 Note 7
– Short Term and Long Term Borrowings
 
 Short
term borrowings
 Short
term borrowings as of March 31, 2009 and December 31, 2008 consist of the
following:
 
 March 31,
                        
                        
                        December 31,Interest rate
                        
                        
                        2009
                        
                        
                        2008Equipment
      loan
                        
                        3.50%
                        
                        
                        $
                        1,112
                        
                        
                        $
                        -Letters
      of credit
                        
                        3.35%
      ~ 4.86%
                        
                        
                        
                        1,833
                        
                        
                        
                        1,716Trade
      financing
                        
                        6.24%
      ~ 6.98%
                        
                        
                        
                        8,576
                        
                        
                        
                        7,298General
      term loan
                        
                        7.85%
                        
                        
                        
                        200
                        
                        
                        
                        400$
                        11,721
                        
                        
                        $
                        9,414
  - 19
-




The
equipment loan is for purchased machinery and equipment which has been
customized specifically for Ener1’s use.  The loan is scheduled to
mature in September 2009 and has a monthly payment of approximately
$186,000.





The
letters of credit and trade financing agreements are denominated in Korean Won
and the total amount available at March 31, 2009 was approximately $12,519,000
of which $10,409,000 was outstanding.  The amounts are scheduled for
repayment at various times throughout 2009.





The
general term loan is denominated in United States dollars and the total amount
available at March 31, 2009 was $750,000 of which $200,000 was
outstanding.  The loan is scheduled to mature on April 27,
2010.





Certain
bank deposits, land, buildings and equipment are pledged as collateral for the
above loans.





Long
term borrowings


Long term
borrowings as of March 31, 2009 and December 31, 2008 consist of the
following:





March 31,
                  
                  
                  December 31,Interest rate
                  
                  
                  2009
                  
                  
                  2008Equipment
      loan
                  
                  
                  7.85
                  %
                  
                  $
                  2,542
                  
                  
                  $
                  795Line
      of credit
                  
                  
                  8.00
                  %
                  
                  
                  5,878
                  
                  
                  
                  -$
                  8,420
                  
                  
                  $
                  795





The
equipment loan is denominated in Korean Won and the total amount available at
March 31, 2009 was approximately $3,631,000 of which $2,542,000 was
outstanding.  The loan bears interest at 7.85% and matures in October
2011.  Certain bank deposits, land and buildings are pledged as
collateral to guarantee the payments of this debt.





See
Note 10, Related Party Transactions, for information regarding the line of
credit.





Note 8
– Earnings  per Share





Earnings
per Share


Net
loss per share basic is calculated by dividing net loss by the weighted average
number of common shares outstanding during the period. Net loss per share
diluted is calculated by adjusting outstanding shares, assuming any dilutive
effects of common stock equivalents using the treasury stock method. For the
three months ended March 31, 2009, the gain on derivative liability in the
amount of $2,325,000 was added to the net loss in computing diluted loss per
share and 14,000 shares were added to the diluted weighted average
shares.





Common
stock equivalents consist of shares issuable upon the exercise of warrants,
stock options and the completion of vesting periods for restricted
stock.  These common stock equivalents have been excluded from the
computation of earnings per share due to their antidilutive effect as we have
reflected a net loss for the three months ended March 31, 2009 and 2008,
respectively.





The
following potential common shares have been excluded from the computation of
diluted net loss per share for the periods presented because the effect of
including them would have been anti-dilutive:





Three Months EndedMarch 31,2009
                          
                          
                          2008Stock
      options that were not in the money
                          
                          
                          1,333,916
                          
                          
                          
                          504,999Stock
      options excluded because effect was anti-dilutive
                          
                          
                          470,120
                          
                          
                          
                          -Warrants
      that were not in the money
                          
                          
                          9,189,926
                          
                          
                          
                          3,651,101Warrants
      excluded because effect was anti-dilutive
                          
                          
                          9,088,682
                          
                          
                          
                          -Restricted
      stock excluded because effect was anti-dilutive
                          
                          
                          10,000
                          
                          
                          
                          -Total
      potential common shares excluded from weighted average
      shares
                          
                          
                          20,092,644
                          
                          
                          
                          4,156,100









- 20
-





Note 9
– Noncontrolling Interests





The
following table reconciles equity attributable to noncontrolling interest (in
thousands):





NoncontrollingInterestBalance,
      January 1, 2009
                  
                  $
                  3,517Net
      income attributable to noncontrolling interest
                  
                  
                  39Cumulative
      effect of change in accounting principle
                  
                  
                  5Translation
      adjustments
                  
                  
                  (232
                  )Reduction
      in noncontrolling interest
                  
                  
                  (1,354
                  )Balance,
      March 31, 2009
                  
                  $
                  1,975





The
reduction in noncontrolling interest of approximately $1,354,000 represents the
decrease in Ener1’s paid in capital for the purchase of 1,625,000 shares of
Enertech common stock on January 6, 2009.  Enertech has a share-based
compensation plan in which stock options are granted to Enertech’s directors and
employees who have contributed to Enertech’s operations.  These stock
options are exercisable into shares of common stock of
Enertech.  During the three months ended March 31, 2009, approximately
$4,000 was expensed under this plan.  As of March 31, 2009, there are
914,500 stock options outstanding which represent approximately 3%, on a fully
diluted basis, of the outstanding ownership of Enertech.





Note 10
– Related Party Transactions





Financing
Transactions


Effective
December 29, 2008, we entered into the LOC Agreement with Ener1 Group to
establish a line of credit in the aggregate principal amount of $30,000,000 for
a period of 18 months or until we complete a public equity offering, whichever
occurs earlier. All amounts borrowed under the LOC Agreement bear interest at 8%
per annum. We issued warrants to Ener1 Group for the purchase of up to 1,250,000
shares of Ener1 common stock as a commitment fee and recorded the fair value of
the warrants as deferred financing costs.  We are further obligated to
issue to Ener1 Group warrants to purchase shares of Ener1 common stock each time
an advance is made under the LOC Agreement equal to the amount of the advance
divided by $20, with an exercise price equal to $8.25 per share.  All
warrants are immediately exercisable and expire two years after
issuance.





The
components of the line of credit balance as of March 31, 2009 are as follows (in
thousands, except share data):





Line of CreditProceeds
      from advances
                  
                  $
                  6,250Unamortized
      discount related to fair value of warrants
                  
                  
                  (438
                  )Accrued
      interest payable at maturity
                  
                  
                  66Balance,
      March 31, 2009
                  
                  $
                  5,878Warrants
      issued
                  
                  
                  312,500Fair
      value of warrants
                  
                  $
                  489





Using a
Black-Scholes pricing model to value the warrants, the fair value of $489,000
has been recorded as a reduction in proceeds and is amortized to interest
expense over the remaining term of the LOC Agreement and totaled $51,000 during
the three months ended March 31, 2009.  The estimated future straight
line amortization of unamortized discount is $263,000 in 2009 and $175,000
during 2010.





- 21
-





In April
and May 2009, we borrowed an additional $4,000,000 pursuant to the LOC Agreement
for a total outstanding principal balance of $10,250,000 and issued warrants to
purchase up to 200,000 shares of Ener1 common stock.  Using a
Black-Scholes pricing model to value the warrants, the fair value of $543,000
has been recorded as a reduction in proceeds and $316,000 will be amortized to
interest expense during 2009 and $227,000 during 2010.




In
May 2009, we agreed,
subject to negotiation
andexecution of documentation, to enter into an Amended and
Restated Line of Credit Agreement (the “Amended LOC Agreement”) with Ener1
Group which provides for the election, by Ener1
Group, to convert up to $8
million of theoutstanding principal into shares of Ener1 common stock,
at a conversion price of $5.00 per share, provided that Ener1 raises capital
through a capital markets equity financing or a strategic equity
financing.  We are currently evaluating the proposed Amended LOC
Agreement in accordance with EITF 98-14, Debtors’ Accounting for Changes in Lines of Credit or
Revolving Debt Arrangements.  We are also considering EITF No.
98-5, Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios and EITF No. 00-27, Application
of Issue No. 98-5 to Certain Convertible Instruments. The impact of
$2,368,000 from the beneficial conversion feature as measured on May 8, 2009,
may change and have a material effect on the financial statements if and when
this transaction is recorded due to the conversion taking place.





Bridge
Financing


On
January 12, 2009, Ener1 Group became one of a number of lenders who have
provided interim financing to Think Global AS (“Think”) of Oslo, Norway, a
customer for our electric vehicle lithium-ion battery, to allow them to focus
their efforts towards the next stages of the restructuring process, which
include raising permanent equity capital and returning to volume
production.  As of March 31, 2009, Ener1 Group has provided
approximately $2,041,000 in bridge financing to Think.





Note
11 – Stock-Based Compensation





At March
31, 2009, we had seven active stock-based employee, executive, director,
advisory board and consultant compensation plans which provide for the granting
of incentive and non-incentive stock options to officers, directors, employees
and consultants.  The Compensation Committee of the Board of Directors
administers the plans and has the authority to determine the optionees to whom
awards will be made, the terms of the vesting and forfeiture, the amounts of the
awards and other terms.  Under the terms of the plans, the option
price approved by the Compensation Committee shall not be less than the fair
market value of Ener1 common stock at the date of grant.





Restricted
Stock


On
February 17, 2009, we granted 10,000 shares of restricted common stock to
certain employees pursuant to the terms of our plans.  The shares were
valued at a price of $4.05 per share based on the closing price of our common
stock on that date. The shares vest on the first anniversary of the grant date,
and we are amortizing the related stock-based compensation of approximately
$41,000 over the one year period.





- 22
-





Stock
Options


During
the three months ended March 31, 2009, we granted performance based options to
employees to purchase up to 702,500 shares of common stock with an exercise
price of $4.05 per share.  These options are subject to specifically
identified performance criteria and are subject to forfeiture if such
performance criteria are not met.  Upon achievement of the performance
criteria, the options will become earned and will vest one-third per year over a
three year period.  The fair value of these options on the date of
grant was computed as $2,150,000 and in accordance with SFAS 123R will be
expensed over the vesting period.





We
granted incentive based options to employees to purchase up to 55,000 shares of
common stock with an exercise price of $4.05 per share.  These options
are scheduled to vest one-third per year over a three year
period.  The fair value of these options on the date of grant was
computed as $119,000 and in accordance with SFAS 123R, will be expensed over the
vesting period.





We also
issued fully vested options to purchase up to 200,000 shares of common stock to
our Chief Executive Officer at an exercise price of $4.05 per
share.  We estimated the fair value of such options totaled
approximately $652,000 based on the Black-Scholes option pricing model with the
following assumptions: expected term of five years, a 1.65% risk free interest
rate, expected volatility of 114.03% and zero dividends.





Current
and former employees have exercised 21,871 options with exercise prices ranging
from $1.61 to $2.17 per share.  The total intrinsic value of these
options on the dates of exercise was $105,000.  Options to purchase up
to 13,552 shares of common stock that were issued to various employees and
former employees were forfeited because vesting requirements were not met or the
options expired in accordance with their terms.





Valuation and Expense Information
under SFAS 123R


We
recorded share-based compensation costs related to stock-based employee plans of
$1,267,000 and $831,000 for the three months period ended March 31, 2009 and
2008, respectively.  As required by SFAS 123R, we estimate expected
future forfeitures of employee stock options and recognize compensation cost
only for the portion of those awards expected to vest. Forfeiture rate estimates
for each plan are based on historical experience through December 31, 2008 and
are adjusted annually to reflect actual forfeiture experience as
needed.  Included in the stock-based compensation cost of $1,267,000
is $285,000 in adjustments to reflect our actual forfeiture rate for vested
awards.





The fair
value of the stock option grants awarded during the three months ended March 31,
2009 were estimated as of the date of grant using a Black-Scholes option
valuation model with the following key assumptions:





Expected
      term
                    
                    4 -
      5 yrsRisk
      free interest rate
                    
                    1.22%
      - 1.65%Expected
      volatility
                    
                    114%Expected
      dividend yield
                    
                    0%





- 23
-





Summary
of Stock Options


A summary
of the changes in the stock options outstanding under all of our stock option
plans described above as of March 31, 2009 is as follows:





Options
                  
                  Number of
                    Options
                  
                  
                  Weighted
                    Average
                    Exercise Price
                  
                  
                  Average
                    Remaining
                    Contractual
                    Term in
                    Years
                  
                  
                  Intrinsic ValueOutstanding
      at December 31, 2008
                  
                  
                  3,957,621
                  
                  
                  $
                  3.34
                  
                  
                  
                  4.5
                  
                  
                  $
                  14,713,862Granted
                  
                  
                  957,500
                  
                  
                  $
                  4.05Exercised
                  
                  
                  (21,871
                  )
                  
                  $
                  1.86Forfeited
      or expired
                  
                  
                  (13,552
                  )
                  
                  $
                  4.89Cancelled
                  
                  
                  (30,000
                  )
                  
                  $
                  5.76Outstanding
      at March 31, 2009
                  
                  
                  4,849,698
                  
                  
                  $
                  3.53
                  
                  
                  
                  4.4
                  
                  
                  $
                  9,163,724Exercisable
      at March 31, 2009
                  
                  
                  2,978,415
                  
                  
                  $
                  3.22
                  
                  
                  
                  4.2
                  
                  
                  $
                  6,606,775





The
following summarizes the outstanding and exercisable options and the respective
exercise prices at March 31, 2009:





Range of
                    exercise price
                  
                  No. of options
                    outstanding
                  
                  
                  Weighted
                    average
                    exercise price
                  
                  
                  No. of options
                    exercisable
                  
                  
                  Weighted
                    average
                    exercise price$0.49
      - $1.61
                  
                  
                  920,307
                  
                  
                  $
                  1.60
                  
                  
                  
                  651,740
                  
                  
                  $
                  1.59$2.10
      - $4.20
                  
                  
                  2,595,475
                  
                  
                  $
                  2.96
                  
                  
                  
                  1,546,066
                  
                  
                  $
                  2.45$4.83
      - $4.90
                  
                  
                  558,199
                  
                  
                  $
                  4.90
                  
                  
                  
                  272,279
                  
                  
                  $
                  4.90$5.18
      - $6.79
                  
                  
                  560,715
                  
                  
                  $
                  6.47
                  
                  
                  
                  446,186
                  
                  
                  $
                  6.65$7.15
      - $7.63
                  
                  
                  215,002
                  
                  
                  $
                  7.34
                  
                  
                  
                  62,144
                  
                  
                  $
                  7.56Totals
                  
                  
                  4,849,698
                  
                  
                  $
                  3.53
                  
                  
                  
                  2,978,415
                  
                  
                  $
                  3.22





The
following table summarizes the changes in our non-vested stock options since
January 1, 2009:





WeightedAverageNo. of options
                      
                      
                      Fair ValueNon-vested
      at January 1, 2009
                      
                      
                      1,192,324
                      
                      
                      $
                      3.31Granted
                      
                      
                      957,500
                      
                      
                      $
                      3.10Vested
                      
                      
                      (234,989
                      )
                      
                      $
                      3.22Forfeited
                      
                      
                      (13,552
                      )
                      
                      $
                      3.92Cancelled
                      
                      
                      (30,000
                      )
                      
                      $
                      4.43Non-vested
      at March 31, 2009
                      
                      
                      1,871,283
                      
                      
                      $
                      3.18





- 24
-





Unearned
Stock-Based Compensation


The
following table presents details of unearned stock-based compensation currently
estimated to be expensed in the remainder of 2009 through 2012 related to the
unvested share based payment awards (in thousands):





2009
                
                
                2010
                
                
                2011
                
                
                2012
                
                
                TotalUnearned
      stock-based compensation
                
                $
                1,699
                
                
                $
                1,709
                
                
                $
                820
                
                
                $
                71
                
                
                $
                4,299





If there
are any modifications or cancellations of the underlying unvested awards, we may
be required to accelerate, increase or cancel any remaining unearned stock-based
compensation expense. Future stock-based compensation expense and unearned
stock-based compensation will increase to the extent that additional equity
awards are granted.





Note
12 - Warrants





During
the period ended March 31, 2009, we issued to Ener1 Group warrants to purchase
up to 312,500 shares of Ener1 common stock at an exercise price of $8.25 per
share in connection with the LOC Agreement.  The warrants are
immediately exercisable and expire two years after the date of
grant.  We used a Black-Scholes pricing model to value the warrants
and the fair value of $489,000 has been recorded as debt discount and will be
amortized to expense over the remaining term of the LOC Agreement.





The fair
value of the warrant grants awarded during the three months ended March 31, 2009
were estimated as of the date of grant using a Black-Scholes option valuation
model with the following key assumptions:





Expected
      term
                  
                  2
      yearsRisk
      free interest rate
                  
                  0.81%
      - 0.96%Expected
      volatility
                  
                  94%
      - 100%Expected
      dividend yield
                  
                  0%





A summary
of the changes in warrants outstanding as of March 31, 2009 is as
follows:





Warrants
                  
                  Number of
                    Warrants
                  
                  
                  Weighted
                    Average
                    Exercise Price
                  
                  
                  Average
                    Remaining
                    Term in Years
                  
                  
                  Intrinsic ValueOutstanding
      and Exercisable at December 31, 2008
                  
                  
                  27,758,424
                  
                  
                  $
                  4.10
                  
                  
                  
                  3.2
                  
                  
                  $
                  95,607,859Granted
                  
                  
                  312,500
                  
                  
                  $
                  8.25Outstanding
      and Exercisable at March 31, 2009
                  
                  
                  28,070,924
                  
                  
                  $
                  4.14
                  
                  
                  
                  2.2
                  
                  
                  $
                  54,317,348





The
following summarizes the outstanding and exercisable warrants and the respective
exercise prices at March 31, 2009:





WeightedRange of
                  
                  No. of warrants
                  
                  
                  Averageexercise price
                  
                  outstanding
                  
                  
                  Exercise Price$2.10
      - $2.80
                  
                  
                  18,880,998
                  
                  
                  $
                  2.30$4.83
      - $5.95
                  
                  
                  2,166,321
                  
                  
                  $
                  5.31$7.50
      - $8.88
                  
                  
                  6,408,217
                  
                  
                  $
                  8.18$10.50
      - $17.57
                  
                  
                  615,388
                  
                  
                  $
                  14.6228,070,924
                  
                  
                  $
                  4.14





- 25
-





Note
13 - Segments





We have
identified three business and reporting segments: battery, fuel cell and
nanotechnology.  The battery business develops and markets advanced
lithium-ion batteries. The fuel cell business develops and markets fuel cells
and fuel cell systems. The nanotechnology business is developing nanotechnology
related manufacturing processes and materials.  Transactions between
segments, consisting principally of product sales and purchases, are recorded at
the consummated sales price





The
following table provides segment financial information (in
thousands):





Three Months EndedMarch 31,2009
                      
                      
                      2008
                        (Restated)Net
      sales:Corporate
                      
                      $
                      55
                      
                      
                      $
                      -Battery
                      
                      
                      8,147
                      
                      
                      
                      83Fuel
      Cell
                      
                      
                      (10
                      )
                      
                      
                      14Total
      Net Sales
                      
                      $
                      8,192
                      
                      
                      $
                      97Corporate
      allocations:Corporate
                      
                      $
                      (3,044
                      )
                      
                      $
                      (4,701
                      )Battery
                      
                      
                      2,653
                      
                      
                      
                      2,965Fuel
      Cell
                      
                      
                      282
                      
                      
                      
                      1,467Nanotechnology
                      
                      
                      109
                      
                      
                      
                      269$
                      -
                      
                      
                      $
                      -Net
      income (loss) attributable to Ener1, Inc.Corporate
                      
                      $
                      3,057
                      
                      
                      $
                      (15,051
                      )Battery
                      
                      
                      (9,042
                      )
                      
                      
                      (4,865
                      )Fuel
      Cell
                      
                      
                      (932
                      )
                      
                      
                      (2,520
                      )Nanotechnology
                      
                      
                      (391
                      )
                      
                      
                      (464
                      )Net
      loss attributable to Ener1, Inc.
                      
                      $
                      (7,308
                      )
                      
                      $
                      (22,900
                      )March
      31,
                      
                      
                      December
      31,Assets:
                      
                      2009
                      
                      
                      2008Corporate
                      
                      $
                      5,468
                      
                      
                      $
                      10,910Battery
                      
                      
                      126,835
                      
                      
                      
                      130,169Fuel
      Cell
                      
                      
                      464
                      
                      
                      
                      488Nanotechnology
                      
                      
                      152
                      
                      
                      
                      164Total
      assets
                      
                      $
                      132,919
                      
                      
                      $
                      141,731





We record
proceeds from cost-sharing grants as a reduction of research and development
expenses.  Proceeds from grants were $1,187,000 and $1,298,000 for the
periods ended March 31, 2009 and 2008, respectively.





- 26
-





Based on
Enertech’s foreign and domestic operations during the three months ended March
31, 2009 additional reportable segments have been created based on geographic
location.  We did not have foreign operations during the three months
ended March 31, 2008.





The
following table provides geographic segment financial information (in
thousands):





Three MonthsEndedMarch 31, 2009Net
      sales:U.S.
                  
                  $
                  5,228South
      Korea
                  
                  
                  7,624Intersegment
      transfers
                  
                  
                  (4,660
                  )Total
      net sales
                  
                  $
                  8,192Net
      income (loss) attributable to Ener1, Inc.U.S.
                  
                  $
                  (7,416
                  )South
      Korea
                  
                  
                  286Intersegment
      transfers
                  
                  
                  (178
                  )Net
      loss attributable to Ener1, Inc.
                  
                  $
                  (7,308
                  )Assets:U.S.
                  
                  $
                  75,203South
      Korea
                  
                  
                  57,716Total
      assets
                  
                  $
                  132,919





We have
been dependent on several large clients for a significant portion of net sales
and as such believe we have a concentration of risk.  Sales and
accounts receivable from customers accounting for 10% or more of net sales and
accounts receivable are as follows (in thousands):





Sales for the period
                    ended March 31,2009
                  
                  
                  
                  
                  
                  2008Li-Tec
      Battery
                  
                  $
                  1,426
                  
                  
                  
                  17
                  %
                  
                  
                  N/A
                  
                  
                  
                  N/ASymbol
      Technologies, Inc. (Motorola)
                  
                  
                  1,106
                  
                  
                  
                  14
                  %
                  
                  
                  N/A
                  
                  
                  
                  N/ABren-Tronics
                  
                  
                  975
                  
                  
                  
                  12
                  %
                  
                  
                  N/A
                  
                  
                  
                  N/AThink
      Global AS
                  
                  
                  -
                  
                  
                  
                  0
                  %
                  
                  
                  97
                  
                  
                  
                  100
                  %$
                  3,507
                  
                  
                  
                  
                  
                  
                  $
                  97





Note
14 – Commitments and Contingencies





Litigation


Ener1
receives communications from time to time alleging various claims. These claims
may include, but are not limited to, employment matters, collections of accounts
payable, and allegations that certain of our products infringe the patent rights
of other third parties.  Ener1 cannot predict the outcome of any such
claims or the effect of any such claims on our operating results, financial
condition, or cash flows.  As of March 31, 2009, there were no
material pending legal proceedings.





Purchase
Commitments


We have
purchase orders and commitments with various suppliers to purchase machinery and
equipment.  These commitments are not recorded in the accompanying
consolidated balance sheets and totaled approximately $5,178,000 as of
March 31, 2009.





- 27
-





Item
2.   Management’s Discussion and Analysis of Financial Condition
and Results of Operations.





The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations contains ”forward-looking statements” within the meaning
of Section 27A of the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements about our beliefs and
expectations. There are many risks and uncertainties that could cause actual
results to differ materially from those discussed in forward-looking statements.
Potential factors that could cause actual results to differ materially from
those discussed in any forward-looking statements include, but are not limited
to, those stated below under the headings “Cautionary Statement Concerning
Forward-Looking Statements” and “Risk Factors” as well as those described from
time to time in our filings with the Securities and Exchange
Commission.





All forward-looking statements are
based on information available to us on the date of this filing, and we assume
no obligation to update such statements. The following discussion should be read
in conjunction with our filings with the Securities and Exchange Commission and
the consolidated financial statements and the related notes included in thisForm
10-Q.





Cautionary
Statement Concerning Forward Looking Statements





We have
made forward-looking statements in this Form 10-Q including, without limitation,
statements concerning our financial outlook for 2009 and beyond, estimates and
projections, statements relating to our business plans, objectives and expected
operating results, and the assumptions upon which those statements are based,
all of which are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934.





Any
statements contained in this report that are not statements of historical fact
may be deemed forward-looking statements. Our forward-looking statements may be
identified by words such as “believes,” “expects,” “thinks,” “anticipates,”
“intends,” “estimates” or similar expressions. You should understand that these
forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties, which may cause actual results to
differ materially from those expressed or implied in the forward-looking
statements.





We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events, or
otherwise.





The
factors discussed in “Risk Factors” and in our filings with the Securities and
Exchange Commission from time to time, and other unforeseen events or
circumstances, could affect our future results and could cause those results or
other outcomes to differ materially from those expressed or implied in our
forward-looking statements. Accordingly, you should not place undue reliance on
forward-looking statements, which speak only as of the date of this Quarterly
Report.





- 28
-





Business
Overview and 2009 Developments


We are
primarily in the business of designing, developing and manufacturing
high-performance, rechargeable lithium-ion batteries and battery systems for
energy storage.  End markets include transportation, stationary power
(energy storage for utilities and renewable energy such as wind and solar power
in addition to battery backup systems for residential use), military
applications and small cell markets.  In the transportation markets,
we are developing systems to power the next generation of hybrid, plug-in hybrid
and electric vehicles (HEVs, PHEVs and EVs).  This technology is also
being developed for other transportation markets including buses and trucks as
well as alternative transportation vehicles.  We also conduct research
and development of fuel cells and nano coating processes. In addition, our
Enertech subsidiary specializes in “small cell” technology and manufactures
electrodes for other battery manufacturers, commercial battery packs, prismatic
cells and lithium polymer batteries as well as manufactures large format cells
for automotive applications.





Our goal
is to become the leading United States-based developer and manufacturer of
advanced, safe, high-performance lithium-ion battery systems for EVs, HEVs, and
PHEVs, and for related non-automotive, stationary power and military
markets.  Our intention is to supply our products to the
transportation and stationary power market segments in North America, Europe and
Asia and the military markets in the United States.  We initially plan
to manufacture and assemble our batteries in our United States-based
Indianapolis and Korea-based plants, and to increase EnerDel’s global production
capacity of cells as required.  Ultimately, we envision a
hub-and-spoke model for manufacturing and distribution, basing cell
manufacturing in our Indianapolis and Korean facilities and locating pack
assembly closer to our customers to reduce transportation expense.





On
January 1, 2009, we adopted EITF No. 07-05, Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock ("EITF
07-05").   The adoption of EITF 07-05 has affected the accounting for
(i) certain freestanding warrants that contain exercise price adjustment
features (“down round provisions”) and (ii) convertible bonds issued by our
foreign subsidiary with a strike price denominated in a foreign
currency.  Our warrants with such provisions are no longer deemed to
be indexed to the company’s own stock and are no longer classified in
equity.  Instead, these warrants were reclassified as derivative
liability on January 1, 2009 as a result of this EITF.  The fair value
of the derivative liability as of January 1, 2009 was approximately
$13,196,000 and was recorded as a cumulative adjustment to accumulated
deficit. The conversion feature of the convertible bonds denominated in a
foreign currency was bifurcated and recorded as a derivative liability resulting
in a cumulative adjustment to accumulated deficit of approximately $5,000 on
January 1, 2009.





In
January 2009, we purchased an additional ownership interest in Enertech by
issuing 385,936 shares of our common stock valued at approximately $2,597,000
based on the closing stock price of $6.73 on the effective date of the
closing.   As a result, our interest in Enertech increased from
83% to 89%, on a fully diluted basis.  The additional ownership
interest has been accounted for as an equity transaction in accordance with
Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in
Consolidated Financial Statements.





On
January 7, 2009, we filed a registration statement on Form S-3 to register the
resale of the shares issued in connection with the Enertech acquisition, as well
as the shares issuable upon the exercise of the warrants and to register
securities up to $100 million for future issuance in our capital raising
activities.  The registration statement became effective on February
5, 2009.





Through
May 7, 2009, we had borrowed $10,250,000 from Ener1 Group, our majority
shareholder pursuant to the LOC Agreement.  In connection with these
borrowings we have issued to Ener1 Group warrants to purchase up to 512,500
shares of Ener1 common stock at an exercise price of $8.25 per
share.  The warrants are immediately exercisable and expire two years
after the date of issuance.  We used a Black-Scholes pricing model to
value the warrants and the fair value of $1,031,000 has been recorded as a
reduction in proceeds and will be amortized to expense over the remaining term
of the LOC Agreement.




- 29
-





In May
2009, we agreed, subject to negotiation and execution of documentation, to
enter into an Amended LOC Agreement with Ener1
Group which provides for the election, by Ener1
Group, to convert up to $8
million of theprincipal into shares of Ener1 common stock, at a
conversion price of $5.00 per share, provided that Ener1 raises capital through
a capital markets equity financing or a strategic equity financing.





Results
of Operations for the Period ended March 31, 2009





The
following information has been derived from the accompanying unaudited
consolidated financial statements for the three months in the periods ended
March 31, 2009 and 2008 and is presented in thousands in all tables in this
discussion.  The three months ended March 31, 2009 includes the
operations of Enertech.  The three months ended March 31, 2008 do not
include the operations of Enertech as the acquisition was not effective, for
accounting purposes, until November 1, 2008.  Therefore, management
has presented the results of operations separately for Ener1 and Enertech for
the three months ended March 31, 2009 for proper comparison to Ener1’s results
of operations for the three months ended March 31, 2008.





Net
Sales, Cost of Sales and Gross Profit





2009
                  
                  
                  2008
                  
                  
                  Ener1Ener1
                  
                  
                  Enertech
                  
                  
                  Totals
                  
                  
                  Ener1
                  
                  
                  $ Change
                  
                  
                  % ChangeNet
      sales
                  
                  $
                  285
                  
                  
                  $
                  7,907
                  
                  
                  $
                  8,192
                  
                  
                  $
                  97
                  
                  
                  $
                  188
                  
                  
                  
                  194
                  %Cost
      of sales
                  
                  
                  -
                  
                  
                  
                  6,803
                  
                  
                  
                  6,803
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Gross
      profit
                  
                  $
                  285
                  
                  
                  $
                  1,104
                  
                  
                  $
                  1,389
                  
                  
                  $
                  97
                  
                  
                  $
                  188
                  
                  
                  
                  194
                  %





Ener1
revenue has increased primarily from the sale of prototype EV battery packs to
European customers, which has been partially offset by a decrease in revenue
from the supply agreement with Think.





Enertech’s
sales of $7,907,000 and cost of sales of $6,803,000 resulted in a gross profit
of $1,104,000 or 14%.  Included in cost of sales is depreciation
expense of $565,000.





Enertech
sales have decreased approximately 17% on a pro forma basis, from $9,510,000 for
the three months ended March 31, 2008 to $7,907,000 for the three months ended
March 31, 2009 resulting in a gross profit decline of approximately $158,000 or
13%.  This revenue decline is due to an overall decline in demand for
batteries due to poor worldwide economic conditions as well as the impact of
foreign currency fluctuations.  The average foreign currency exchange
rate for the three months ended March 31, 2009 declined approximately 33% when
compared to the same period in 2008.





Operating
Expenses





2009
                  
                  
                  2008
                  
                  
                  Ener1Ener1
                  
                  
                  Enertech
                  
                  
                  Totals
                  
                  
                  Ener1
                  
                  
                  $ Change
                  
                  
                  % ChangeGeneral
      and administrative
                  
                  $
                  3,219
                  
                  
                  $
                  1,398
                  
                  
                  $
                  4,617
                  
                  
                  $
                  2,582
                  
                  
                  $
                  637
                  
                  
                  
                  25
                  %Research
      and development, net
                  
                  
                  6,216
                  
                  
                  
                  46
                  
                  
                  
                  6,262
                  
                  
                  
                  3,065
                  
                  
                  
                  3,151
                  
                  
                  
                  103
                  %Depreciation
      and amortization
                  
                  
                  892
                  
                  
                  
                  216
                  
                  
                  
                  1,108
                  
                  
                  
                  107
                  
                  
                  
                  785
                  
                  
                  
                  734
                  %Total
      operating expenses
                  
                  $
                  10,327
                  
                  
                  $
                  1,660
                  
                  
                  $
                  11,987
                  
                  
                  $
                  5,754
                  
                  
                  $
                  4,573
                  
                  
                  
                  79
                  %





General and
administrative:  Ener1 general and administrative expenses
increased due to an increase in legal and professional fees of $410,000, of
which $212,000 is for investor, government, media and public relations, and an
increase in stock-based compensation of $403,000.





- 30
-





These
increases have been partially offset by a decrease in salary related expenses of
$241,000 due to decreases in executive benefits, executive and employee bonuses
and salaries, and the classification of certain employees’ salaries from general
and administrative to research and development programs.





Of
Enertech’s total general and administrative expenses of $1,398,000, which
represents approximately 30% of the consolidated expense, $679,000 or 49% is for
salary and related expenses, $276,000 or 20% is for legal and professional fees,
$106,000 or 8% is for facilities related expenses and $95,000 or 7% is for
travel related costs.





Research and
development:  Ener1 research and development expenses increased
primarily due to an increase in salaries and benefits of $1,813,000 related to
new hires and the classification of certain employees’ salaries from general and
administrative and an increase in materials used in research of
$1,233,000.





We
present proceeds from our cost sharing arrangements with federal government
agencies as a reduction of research and development
expenses.  Billings under these contracts were $1,187,000 and
$1,298,000 for the periods ended March 31, 2009 and 2008, respectively, a
decrease of $111,000 or 9%.





Research
and development expenses for the period ended March 31, 2009 included $5,340,000
of expenses incurred in connection with our battery business, net of $1,155,000
in proceeds, $621,000 of expenses incurred in connection with our fuel cell
business, net of $32,000 in proceeds, and $255,000 of expenses incurred in
connection with our nano-technology business.





Depreciation and
amortization:  Our amortization increased $345,000 related to
intangible assets capitalized after the first quarter of 2008 and depreciation
increased $440,000 as a result of the increases in property and equipment since
March 31, 2008.





Other
income and expenses





2009
                  
                  
                  2008
                  
                  
                  Ener1Ener1
                  
                  
                  Enertech
                  
                  
                  Totals
                  
                  
                  Ener1
                  
                  
                  $ Change
                  
                  
                  % ChangeInterest
      expense
                  
                  $
                  (1,123
                  )
                  
                  $
                  (194
                  )
                  
                  $
                  (1,317
                  )
                  
                  $
                  (21,377
                  )
                  
                  $
                  20,254
                  
                  
                  
                  -95
                  %Interest
      income
                  
                  
                  3
                  
                  
                  
                  34
                  
                  
                  
                  37
                  
                  
                  
                  123
                  
                  
                  
                  (120
                  )
                  
                  
                  -98
                  %Other
                  
                  
                  1
                  
                  
                  
                  62
                  
                  
                  
                  63
                  
                  
                  
                  -
                  
                  
                  
                  1
                  
                  
                  
                  100
                  %Gain
      (loss) on derivative liabilities
                  
                  
                  3,932
                  
                  
                  
                  (20
                  )
                  
                  
                  3,912
                  
                  
                  
                  3,936
                  
                  
                  
                  (4
                  )
                  
                  
                  0
                  %Gain
      on foreign currency transactions
                  
                  
                  -
                  
                  
                  
                  671
                  
                  
                  
                  671
                  
                  
                  
                  75
                  
                  
                  
                  (75
                  )
                  
                  
                  100
                  %Total
      other income (expenses)
                  
                  $
                  2,813
                  
                  
                  $
                  553
                  
                  
                  $
                  3,366
                  
                  
                  $
                  (17,243
                  )
                  
                  $
                  20,056
                  
                  
                  
                  -116
                  %





Interest
expense:  Interest expense represents a combination of both
cash and non-cash interest related to Enertech’s bank borrowings and convertible
bonds and our capital lease obligations, deferred financing costs and debt
issuance costs.  Cash paid for interest expense was $276,000 and
$164,000 for the periods ended March 31, 2009 and 2008,
respectively.  Non-cash interest expense was $1,041,000 and
$21,213,000 for the periods ended March 31, 2009 and 2008,
respectively.  Cash interest expense for the period ended March 31,
2009 included $141,000 for Enertech





Of the
$1,041,000 of non-cash interest expense, $899,000 represents the amortization of
deferred financing and debt issuance costs associated with the fair value of the
warrants issued to Ener1 Group as commitment fee and borrowing fees pursuant to
the LOC Agreement.  The estimated future straight line amortization of
these deferred financing and debt issuances costs is estimated to be $2,807,000
for the remainder of 2009 and $1,848,000 during 2010.





The
overall decrease in interest expense of $20,254,000 is primarily due to reduced
principal and interest of convertible note and debenture instruments which were
converted into shares of Ener1common stock during the three months ended March
31, 2008.





- 31
-





Gain on derivative
liabilities:  Following the provisions of EITF 07-05 and SFAS
133, we concluded that our warrants containing down round provisions and the
convertible bonds issued by our Enertech subsidiary should be treated as
derivative liabilities effective January 1, 2009, which resulted in a gain on
derivative liabilities for the three months ended March 31, 2009 of $3,932,000
for Ener1 and a loss on derivative liabilities of $20,000 for Enertech for the
same period.





Gain on foreign currency
transactions:  Foreign currency transactions are transactions
denominated in a currency other than the entity’s functional
currency.  Foreign currency transactions may produce receivables or
payables that are fixed in terms of the amount of foreign currency that will be
received or paid.  A change in exchange rates of the functional
currency in which a transaction is denominated increases or decreases the
expected cash flow creating a foreign currency transaction gain or
loss.





Financial
Condition and Liquidity





Cash
Flow Summary


At March
31, 2009, we had unrestricted cash of $4,267,000 and restricted cash of
$2,233,000.  During the three months ended March 31, 2009, we
experienced a decrease in cash and cash equivalents of $7,705,000 which was
funded primarily through our financing activities which includes $10,462,000 in
proceeds from borrowings.





The
following information is a summary of consolidated cash flows for Ener1 for the
three months March 31, 2009 and 2008 (in thousands):





2009
                    
                    
                    2008
                    
                    
                    $ Change
                    
                    
                    % ChangeNet
      loss
                    
                    $
                    (7,269
                    )
                    
                    $
                    (22,900
                    )
                    
                    
                    15,631
                    
                    
                    
                    -68
                    %Non-cash
      items
                    
                    
                    (91
                    )
                    
                    
                    18,041
                    
                    
                    
                    (18,132
                    )
                    
                    
                    -101
                    %Decrease
      in working capital items
                    
                    
                    (4,389
                    )
                    
                    
                    (296
                    )
                    
                    
                    (4,093
                    )
                    
                    
                    1383
                    %Operating
      activities
                    
                    
                    (11,749
                    )
                    
                    
                    (5,155
                    )
                    
                    
                    (6,594
                    )
                    
                    
                    128
                    %Investing
      activities
                    
                    
                    (5,101
                    )
                    
                    
                    (5,821
                    )
                    
                    
                    (720
                    )
                    
                    
                    12
                    %Financing
      activities
                    
                    
                    10,008
                    
                    
                    
                    (230
                    )
                    
                    
                    10,238
                    
                    
                    
                    -4451
                    %Effects
      of exchange rates on cash and cash equivalents
                    
                    
                    (120
                    )
                    
                    
                    -
                    
                    
                    
                    (120
                    )
                    
                    
                    100
                    %Net
      decrease in cash and cash equivalents
                    
                    $
                    (6,962
                    )
                    
                    $
                    (11,206
                    )
                    
                    $
                    4,244
                    
                    
                    
                    -38
                    %Cash
      and cash equivalents - beginning balance
                    
                    
                    11,229
                    
                    
                    
                    24,826
                    
                    
                    
                    (13,597
                    )
                    
                    
                    -55
                    %Cash
      and cash equivalents - ending balance
                    
                    $
                    4,267
                    
                    
                    $
                    13,620
                    
                    
                    $
                    (9,353
                    )





Operating
activities


Cash used
in operating activities is primarily driven by our net loss, adjusted for
non-cash items and changes in working capital.  Cash used in
operations was $11,749,000, comprised of a net loss of $7,269,000, offset by
non-cash items of $91,000 and a net decrease in certain operating assets and
liabilities of $4,389,000.  Non-cash items consist primarily of
depreciation and amortization, stock-based compensation and interest expense,
which are partially offset by the gain on derivative liabilities.  The
decrease in certain operating assets and liabilities is primarily due to the
decrease in accounts payable and accrued expenses.





Investing
activities


Cash
used in investing activities for the three months ended March 31, 2009 was
$5,101,000, compared to $5,821,000 for the three months ended March 31,
2008.  This decrease is primarily due to a decrease in restricted
cash during the first quarter of 2009 as compared to the same period in
2008.  Purchases of property, plant and equipment are increasing as we
continue to upgrade and build out our manufacturing facilities in Indiana and
Korea.





Financing
activities


Cash
provided by financing activities for the three months ended March 31, 2009 was
$10,008,000 compared to cash used in financing activities of $230,000 for the
three months ended March 31, 2008.  The increase was due primarily to
the $10,462,000 in net proceeds from short term borrowings during the three
months ended March 31, 2009.





- 32
-


Borrowings
 Short
term borrowings consist of the following:
 
 March
      31,
                            
                            
                            December
      31,Interest
      rate
                            
                            
                            2009
                            
                            
                            2008Equipment
      loan
                            
                            3.50%
                            
                            
                            $
                            1,112
                            
                            
                            $
                            -Letters
      of credit
                            
                            3.35%
      ~ 4.86%
                            
                            
                            
                            1,833
                            
                            
                            
                            1,716Trade
      financing
                            
                            6.24%
      ~ 6.98%
                            
                            
                            
                            8,576
                            
                            
                            
                            7,298General
      term loan
                            
                            7.85%
                            
                            
                            
                            200
                            
                            
                            
                            400$
                            11,721
                            
                            
                            $
                            9,414
  The
equipment loan is for purchased machinery and equipment which has been
customized specifically for Ener1’s use.  The loan is scheduled to
mature in September 2009 and the monthly payment totals approximately
$186,000.
 
 The
letters of credit and trade financing agreements are denominated in Korean Won
and the total amount available at March 31, 2009 was approximately $12,519,000
of which $10,409,000 was outstanding.  The amounts are scheduled for
repayment at various times throughout 2009.
 
 The
general term loan is denominated in United States dollars and the total amount
available at March 31, 2009 was $750,000 of which $200,000 was
outstanding.  The loan is scheduled to mature on April 27,
2010.
 
 Certain
bank deposits, land, buildings and equipment are pledged as collateral for the
above loans.
 
 Long term
borrowings consist of the following:
 
 March
      31,
                        
                        
                        December
      31,Interest
      rate
                        
                        
                        2009
                        
                        
                        2008Equipment
      loan
                        
                        
                        7.85
                        %
                        
                        $
                        2,542
                        
                        
                        $
                        795Line
      of credit
                        
                        
                        8.00
                        %
                        
                        
                        5,878
                        
                        
                        
                        -$
                        8,420
                        
                        
                        $
                        795
  The
equipment loan is denominated in Korean Won and the total amount available at
March 31, 2009 was approximately $3,631,000 of which $2,542,000 was
outstanding.  The loan bears interest at 7.85% and matures in October
2011.  Certain bank deposits, land and buildings are pledged as
collateral to guarantee the payments of this debt.
 
 During
the three months ended March 31, 2009 we borrowed $6,250,000 under our LOC
Agreement with Ener1 Group and issued warrants to purchase up 312,500 shares of
Ener1 common stock at an exercise price of $8.25 per share.  The
warrants are immediately exercisable and expire two years after
issuance.  Using a Black-Scholes pricing model to value the warrants,
the fair value was recorded as a reduction in proceeds and is amortized to
interest expense over the remaining term of the LOC Agreement.
 
 Amounts
borrowed under the LOC Agreement bear interest at 8.0% per annum and the balance
at March 31, 2009 is comprised of the following (in thousands, except share
data):
  - 33
-
  Line
      of CreditProceeds
      from advances
                      
                      $
                      6,250Unamortized
      discount related to fair value of warrants
                      
                      
                      (438
                      )Accrued
      interest payable at maturity
                      
                      
                      66Balance,
      March 31, 2009
                      
                      $
                      5,878Warrants
      issued
                      
                      
                      312,500Fair
      value of warrants
                      
                      $
                      489
  In April
and May 2009, we borrowed an additional $4,000,000 pursuant to the LOC Agreement
for a total outstanding principal balance of $10,250,000 and issued warrants to
purchase up to 200,000 shares of Ener1 common stock.  Using a
Black-Scholes pricing model to value the warrants, the fair value of $543,000
has been recorded as a reduction in proceeds and $316,000 will be amortized to
interest expense during 2009 and $227,000 during 2010.
  In
May 2009, we agreed,
subject to negotiation
andexecution of documentation, to enter into an Amended and
Restated Line of Credit Agreement (the “Amended LOC Agreement”) with Ener1
Group which provides for the election, by Ener1
Group, to convert up to $8
million of theoutstanding principal into shares of Ener1 common stock,
at a conversion price of $5.00 per share, provided that Ener1 raises capital
through a capital markets equity financing or a strategic equity
financing.  We are currently evaluating the proposed Amended LOC
Agreement in accordance with EITF 98-14, Debtors’ Accounting for Changes in Lines of Credit or
Revolving Debt Arrangements.  We are also considering EITF No.
98-5, Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios and EITF No. 00-27, Application
of Issue No. 98-5 to Certain Convertible Instruments. The impact of
$2,368,000 from the beneficial conversion feature as measured on May 8, 2009,
may change and have a material effect on the financial statements if and when
this transaction is recorded due to the conversion taking
place.
 Liquidity
 
 We
continue to manage our business to develop our products and establish our
manufacturing capacity at a level to attract customers while reserving the
expansion of our capacity and workforce until such time as we receive firm
customer orders.  In addition to our available cash on hand,
additional sources of liquidity include committed credit lines for equipment
purchases and operating expenses as well as access to the public debt and equity
markets.  We continue to balance our cash and financing uses through
investment in our planned operations, equipment purchases, acquisition activity
and redemption of certain securities.
 
 We
anticipate that United States government programs will fund a significant
increase in investment in the domestic battery business and related supplier
markets, and we may benefit from these programs due to our presence as a United
States-based manufacturer.  If we receive funds pursuant to these
government programs, these funds will be designated to increase our battery
manufacturing capacity.
 
 In
December 2008 we applied for a $480 million loan under the Advanced Technology
Vehicle Manufacturing Incentive Program (“ATVM”) to increase our battery
manufacturing capacity in Indiana.  We are currently providing
additional information to the Department of Energy (“DOE”) pursuant to the
application process.  The ATVM was created under Section 136 of the
Energy Independence and Security Act of 2007
  - 34
-
  In
February 2009, the United States government approved a stimulus plan which
included $2 billion of grants for development of battery manufacturing
capability.  In March 2009, the DOE’s National Energy Technology Laboratory
announced on behalf of the DOE’s Office of Energy Efficiency and Renewable
Energy’s Vehicle Technologies (VT) Program, a Funding Opportunity Announcement
entitled "Recovery Act – Electric Drive Vehicle and Component Manufacturing
Initiative under Federal Opportunity Number: DE-FOA-0000026.” The program
will provide grants that support the construction of United States-based
manufacturing plants to produce batteries and electric drive components. 
The battery manufacturing area is focused on battery manufacturing plants,
material and component supplier manufacturing plants, and recycling plants,
including facilities and manufacturing equipment, for lithium-ion and other
advanced batteries for advanced vehicles such as electric drive vehicles
(“EDVs”) and micro-hybrids.  A key objective of the VT program is to
accelerate the development and production of various EDV systems to
substantially reduce petroleum consumption.  A supporting goal is the
development of production-ready batteries, power electronics and electric
machines that can be cost effectively produced in volume to support the
introduction of EDVs.  We currently anticipate applying for a grant
before the May 19, 2009 due date.
 
 We expect
to receive $7,599,000 from our active cost-sharing arrangements with the
Department of Defense (“DOD”), DOE and the United States Advanced Battery
Consortium (“USABC”) through March 2010, which will reduce our future research
and development expense.
 
 Our
ability to access the public debt and equity markets and the related cost of
these activities may be affected by market conditions and our credit rating. In
recent months, the market has experienced significant price and volume
fluctuations.  To date, we have not experienced any limitations in our
ability to access these sources of liquidity, although we expect that the recent
upheaval experienced by the debt and equity markets are likely to adversely
affect our ability to procure such financing.
 
 We
continually monitor the financial institutions that hold our cash and cash
equivalents.   The emphasis is primarily on safety of principal
and secondarily on maximizing yield on those funds.  Diversifying our
cash and cash equivalents among counterparties minimizes exposure to any one of
these entities.
 
 We
believe we have sufficient capital to continue our planned operations for the
remainder of 2009.  We plan to utilize our line of credit with Ener1
Group to fund operations and the purchase of certain production equipment and
manufacturing plant assets.  We continue to integrate Enertech’s
operations into our existing business and it may take time before we realize the
synergies and potential cost savings from this acquisition.  Enertech has
adequate operational funding and also has access to facilities with several
banks for short term working capital and equipment purchases.
 
 Contractual
Obligations and Off-Balance Sheet Arrangements
 
 We have
purchase orders and commitments with various suppliers to purchase machinery and
equipment.  These commitments are not recorded in the accompanying
consolidated balance sheets and totaled approximately $5,178,000 as of
March 31, 2009.
 
 We do not
have any significant relationships with entities often referred to as structured
finance or special purpose entities, which would have been established for the
purpose of facilitating off-balance sheet arrangements. As such, we are not
exposed to any financing, liquidity, market or credit risk that could arise if
we had engaged in such relationships.
 
 Legal
Matters
 Refer
to Note 14, Commitments and
Contingencies, in “Notes to Consolidated Financial Statements,” for a
discussion of legal matters as of March 31, 2009.
 
 New
Accounting Standards
 Refer
to Note 3, New Accounting
Pronouncements, in “Notes to Consolidated Financial Statements,” for a
discussion regarding new accounting standards.
  - 35
-
  Critical
Accounting Estimates
 The
discussion and analysis of our financial condition and results of operations is
based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements in accordance with generally
accepted accounting principles requires us to make estimates and judgments that
may affect assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to revenue recognition and related
allowances, derivatives, inventory, impairments of long-lived assets including
intangible assets, impairments of goodwill, income taxes including the valuation
allowance for deferred tax assets, valuation of long-lived assets, research and
development, contingencies and litigation, and share-based
payments.  We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities. Actual results may differ from these estimates under different
assumptions or conditions.
 
 Refer to
Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the year ended
December 31, 2008 for a discussion of our critical accounting
estimates.
 
 Item
3.  Quantitative and Qualitative Disclosures About Market
Risk.
 
 This item
3 is not applicable to us as, pursuant to Item 305(c) of Regulation S-K, the
information is not required until after the first fiscal year end in which Item
305 is applicable.
 
 Item
4.  Controls and Procedures.
 
 Disclosure
Controls and Procedures
 
 We have
carried out an evaluation, under the supervision and the participation of our
management, including our principal executive officer and principal financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, amended, the Securities Exchange Act) as of
March 31, 2009.  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures are
not  effective in providing reasonable assurance that (a) the
information required to be disclosed by us in the reports that we file or submit
under the Securities Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and (b) such information is accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure. In designing and evaluating our disclosure controls and
procedures, our management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and our management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Our disclosure controls were not effective
due to the identification of incorrect accounting treatment in 2007 and 2008 of
the unamortized discount on the 2004 and 2005 Debentures when these Debentures
were converted to common stock. Also, the Company did not correctly calculate
the amortization expense on its deferred financing costs and the debt discounts
on its 2004 and 2005 Debentures and Series A Redeemable Preferred
Stock.
 
 Changes
in Internal Control over Financial Reporting
 There
were no changes in our internal control over financial reporting during the
quarter ended March 31, 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
  - 36
-
  PART
II - OTHER INFORMATION
 
 Item 1.
Legal Proceedings.
 
 We
receive communications from time to time alleging various claims. These claims
may include, but are not limited to, employment matters, collection of accounts
payable, and allegations that certain of our products infringe the patent rights
of other third parties. We cannot predict the outcome of any such claims or the
effect of any such claims on our operating results, financial condition, or cash
flows. As of March 31, 2009, there are no material pending legal
proceedings.
 
 Item
1A.  Risk Factors.
 
 Refer to
Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year
ended December 31, 2008 for a discussion of our risk factors.  In
addition, see the following risk factors which have substantially changed since
December 31, 2008.
 
 We
face several risks relating to internal control over financial
reporting.
 As
permitted by SEC rules, we and our independent registered public accountants
excluded Enertech, which represented 36% of our combined assets prior to the
acquisition, from our management’s report on internal control over financial
reporting and their audit of our internal control over financial reporting. As a
result, it is possible that, as we continue to integrate Enertech into our
business, we will identify internal control issues relating to Enertech’s
financial reporting.
 
 In
addition, we have experienced rapid growth in our head count and
operations, which has placed, and will continue to place, significant demands on
our management, operational and financial infrastructure.  In
connection with the preparation of our consolidated financial statements for the
year ended December 31, 2008, our independent registered public accountants
identified four “significant deficiencies” in our internal control over
financial reporting, none of which was considered to constitute a “material
weakness.”  We have taken, and will continue to take, steps which we
believe will remediate these deficiencies; however, we cannot be certain
that such steps will be entirely successful.
 
 If
management is not successful in maintaining a strong internal control
environment, including with respect to Enertech, and material weaknesses occur,
investors could lose confidence in our reported financial
information.  This loss of confidence could lead to a decline in our
stock price, limit our ability to access the capital markets in the future, and
require us to incur additional costs to improve our internal control systems and
procedures.
 
 We may not be able to obtain
government financing.
 We
anticipate that there will be new opportunities for loans and other investments
from the United States government for companies involved in emerging battery
technologies.  We cannot assure you that we will be successful in
obtaining these loans and other investments. Even if we do obtain such
financing, we may be unable to successfully execute on our business plan,
especially with respect to revenue and profitability and the effect these
metrics would have on our stock price, or otherwise meet our current operating
plans and assumptions, in which case our actual results could differ materially
from current expectations.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
 All of
the following issuances were private placements of our securities in accordance
with Section 4(2) of the Securities Act of 1933, as amended and/or Regulation D
under the Securities Act.
 
 Shares issued in connection
with acquisitions
 In
January 2009, we issued 385,936 shares of common stock, valued at approximately
$2,597,000, to Enertech shareholders in connection with the acquisition of
additional ownership in Enertech bringing our current ownership percentage, on a
fully diluted basis, to 89%.
  - 37
-
  Item
6.  Exhibits.
 
 2.1
                
                Purchase
      Agreement, entered into on October 16, 2008, by and between Ener1, Inc.
      and TVG Asian Communications Fund, L.P. and Rosebud Securities Limited to
      acquire 83% ownership interest in Enertech International, Inc.,
      incorporated herein by reference to Exhibit 10.1 to Registrant’s Current
      Report on Form 8-K dated October 30, 2008.3.1
                
                Amended
      and Restated Articles of Incorporation of the Registrant, dated February
      12, 1993, incorporated by reference to Exhibit 3(i) to the Registrant's
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2000,
      SEC File No. 000-21138.3.2
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation, dated
      March 11, 2002, incorporated by reference to Exhibit 3.2 of the
      Registrant's Annual Report on Form 10-K for the year ended December 31,
      2001, SEC File No. 000-21138.3.3
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation, dated
      October 21, 2002, incorporated by reference to Exhibit 3.1 of the
      Registrant's Current Report on Form 8-K dated October 28, 2002, SEC File
      No. 000-21138.3.4
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation,
      incorporated by reference to Exhibit A of the Registrant's Schedule 14C
      filed on December 6, 2004.3.5
                
                By-laws
      of the Registrant, incorporated by reference to Exhibit 3.4 of the
      Registrant's Registration Statement on Form SB-2 (Registration No.
      333-112837), filed February 13, 2004.3.6
                
                Certificate
      of Designations of Series B Convertible Preferred Stock, dated October 15,
      2004, incorporated by reference to Exhibit 3.6 of the Registrant’s Annual
      Report on Form 10-KSB for the year ended December 31,
  2004.3.7
                
                Amendment
      to By-laws of the Registrant, dated January 5, 2005, incorporated by
      reference to Exhibit
      3.2         of the
      Registrant’s Current Report on Form 8-K dated January 12,
      2005.3.8
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation,
      incorporated by reference to Exhibit B of the Registrant's Schedule 14C
      filed December 10, 2007.3.9
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation,
      incorporated by reference to Exhibit 3.8 of the Registrant’s Current
      Report on Form 8-K filed April 24, 2008.3.10
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation,
      incorporated by reference to Exhibit B of the Registrant’s Schedule 14C
      filed July 22, 2008.3.11
                
                Articles
      of Amendment to Amended and Restated Articles of Incorporation,
      incorporated by reference to Exhibit B of the Registrant’s Schedule 14C
      filed December 11, 2008.4.1
                
                Form
      of 5% Senior Secured Convertible Debenture incorporated by reference to
      Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated January
      21, 2004, SEC File No. 000-21138.4.2
                
                Form
      of Warrant to Purchase Common Stock issued pursuant to Securities Purchase
      Agreement, dated January 16, 2004, incorporated by reference to Exhibit
      4.2 to the Registrant's Current Report on Form 8-K dated January 21, 2004,
      SEC File No. 000-21138.4.3
                
                Registration
      Rights Agreement dated as of January 16, 2004, by and among the Registrant
      the entities whose names appear on the signature pages thereof
      incorporated by reference to Exhibit 4.3 to the Registrant's Current
      Report on Form 8-K dated January 21, 2004, SEC File No.
      000-21138.
  - 38
-
 
 4.4
                
                Warrant
      issued to Cofis Compagnie Fiduciaire S.A. dated October 15, 2004 to
      purchase from Ener1, Inc., 4,166,666 shares of Common Stock of the Company
      at a price per share of $1.25, incorporated by reference to Exhibit 4.4 of
      the Registrant’s Annual Report on Form 10-KSB for the year ended December
      31, 2004.4.5
                
                Warrant
      issued to Cofis Compagnie Fiduciaire S.A. dated October 15, 2004 to
      purchase from Ener1, Inc., 4,166,666 shares of Common Stock of the Company
      at a price per share of $1.50, incorporated by reference to Exhibit 4.5 of
      the Registrant’s Annual Report on Form 10-KSB for the year ended December
      31, 2004.4.6
                
                Warrant
      to Purchase Common Stock issued October 20, 2004 to Delphi Automotive
      Systems, LLC, to purchase up to 7,000,000 shares of Common Stock,
      incorporated by reference to Exhibit 4.6 of the Registrant’s Annual Report
      on Form 10-KSB for the year ended December 31, 2004.4.7
                
                Registration
      Rights Agreement dated as of October 20, 2004, by and between Ener1, Inc.
      and Delphi Automotive Systems LLC, incorporated by reference to Exhibit
      4.7 of the Registrant’s Annual Report on Form 10-KSB for the year ended
      December 31, 2004.4.8
                
                Registration
      Rights Agreement dated as of October 20, 2004, by and between EnerDel,
      Inc., Delphi Automotive Systems, LLC and Ener1, Inc., incorporated by
      reference to Exhibit 4.8 of the Registrant’s Annual Report on Form 10-KSB
      for the year ended December 31, 2004.4.9
                
                Form
      of 7.5% Senior Secured Convertible Debenture issued pursuant to Securities
      Purchase Agreement dated March 5, 2005, incorporated by reference to
      Exhibit 4.1 of the Registrant’s Current Report on Form 8-K dated March 15,
      2005.4.10
                
                Form
      of Warrant to Purchase Common Stock of the Registrant issued pursuant to
      Securities Purchase Agreement, dated March 11, 2005 incorporated by
      reference to Exhibit 4.2 of the Registrant’s Current Report on Form
      8-K dated March 15, 2005.4.11
                
                Registration
      Rights Agreement, dated as of March 14, 2005, by and among Ener1, Inc. and
      the purchasers of Ener1's 7.5% Senior Secured Convertible Debentures,
      incorporated by reference to Exhibit 4.3 of the Registrant’s Current
      Report on Form 8-K dated March 15, 2005.4.12
                
                Form
      of Warrant to Purchase Common Stock of Ener1, dated December 9, 2004
      issued to Merriman Curhan Ford & Co., incorporated by reference to
      Exhibit 4.10 to the Registrant’s Registration Statement on Form SB-2
      (Registration No. 333-124745), filed May 9, 2005.4.13
                
                Certificate
      of Designation of Non-Voting, Cumulative and Redeemable Series A Preferred
      Stock of EnerDel, Inc., dated October 20, 2004, incorporated by reference
      to Exhibit 4.6 to Amendment No. 1 to Ener1’s Quarterly Report on Form
      10-QSB/A for the period ending September 30, 2004.4.14
                
                Form
      of Convertible Note issued to Ener1 Group, Inc. on June 30, 2006 and
      August 30, 2006, for $3,250,000 incorporated by reference to Exhibit 4.16
      of Registrant's Quarterly Report on Form 10-QSB, filed August 21,
      2006.4.15
                
                Warrant
      issued to Ener1 Group, Inc. dated June 30, 2006 to purchase 9,000,000
      shares of Common Stock of the Registrant incorporated by reference to
      Exhibit 4.17 of Registrant's Quarterly Report on Form 10-QSB, filed August
      21, 2006.4.16
                
                Warrant
      issued to Ener1 Group, Inc. dated June 30, 2006 to purchase 20,000,000
      shares of Common Stock of the Registrant incorporated by reference to
      Exhibit 4.18 of Registrant's Quarterly Report on Form 10-QSB, filed August
      21, 2006.4.17
                
                Form
      of Warrant to Purchase Common Stock of Ener1, Inc. issued to Ener1 Group
      on August 29, 2006, incorporated by reference to Exhibit 4.17 of
      Registrant's Form SB-2/A filed September 3,
  2006.
  - 39
-
 
 4.18
                
                $3,100,000
      Convertible Promissory Note issued to Ener1 Group, Inc. dated
      September 30, 2006, incorporated by reference to Exhibit 4.19 of
      Registrant's Quarterly Report on Form 10-QSB for the period ending
      September 30, 2006.4.19
                
                Warrant
      issued to Ener1 Group, Inc. dated September 30, 2006 to purchase 9,000,000
      shares of Common Stock of the Registrant, incorporated by reference to
      Exhibit 4.20 of Registrant's Quarterly Report on Form 10-QSB for the
      period ending September 30, 2006.4.20
                
                Warrant
      issued to Ener1 Group, Inc. dated September 30, 2006 to purchase 9,000,000
      shares of Common Stock of the Registrant, incorporated by reference to
      Exhibit 4.21 of Registrant's Quarterly Report on Form 10-QSB for the
      period ending September 30, 2006.4.21
                
                Agreement
      dated October 3, 2006 between Ener1 Group, Inc. and Ener1, Inc. regarding
      payment of salary and other costs of Ener1, Inc. for Ajit Habbu,
      incorporated by reference to Exhibit 4.23 of Registrant's Quarterly
      Report on Form 10-QSB for the period ending September 30,
      2006.4.22
                
                Employment
      Agreement between Ener1, Inc. and Ajit Habbu, incorporated by reference to
      Exhibit 4.24 of Registrant's Quarterly Report on Form 10-QSB for the
      period ending September 30, 2006.4.23
                
                Registration
      Rights Agreement, dated January 5, 2007, by and between Ener1, Inc and
      Credit Suisse Securities (USA), LLC, incorporated by reference to Exhibit
      10.02 to the Registrant’s Current Report on Form 8-K dated January 8,
      2007.4.24
                
                Warrant
      issued to Credit Suisse Securities (USA), LLC, dated January 5, 2007, to
      purchase 5,000,000 shares of Common Stock of the Registrant at a
      price per share of $0.30, incorporated by reference to Exhibit 10.03 to
      the Registrant’s Current Report on Form 8-K dated January 8,
      2007.4.25
                
                $4,500,000
      Convertible Promissory Note issued to Ener1 Group, Inc. dated February 13,
      2007, incorporated by reference to Exhibit 4.26 to the Registrant’s
      Registration Statement on Form SB-2 filed on February 13,
      2007.4.26
                
                Form
      of Warrant to purchase 9,000,000 and 18,000,000 shares of Common Stock of
      the Registrant, issued to Ener1 Group, Inc. dated February 13, 2007,
      incorporated by reference to Exhibit 4.27 to the Registrant’s Registration
      Statement on Form SB-2 filed on February 13, 2007.4.27
                
                Warrant
      issued to Charles Gassenheimer dated January 5, 2007 to purchase 500,000
      shares of common stock of the Registrant, incorporated by reference to
      Exhibit 4.28 to the Registrant’s Registration Statement on Form SB-2 filed
      on February 13, 2007.4.28
                
                Convertible
      Promissory Note for $455,000 issued to Ener1 Group, Inc., dated November
      9, 2006 incorporated by reference to Exhibit 4.29 of Registrant’s
      Quarterly Report on Form 10-QSB for the period ending March 31,
      2007.4.29
                
                Convertible
      Promissory  Note for $655,000 issued to Ener1 Group, Inc., dated
      November 9, 2006 incorporated by reference to Exhibit 4.30 of Registrant’s
      Quarterly Report on Form 10-QSB for the period ending March 31,
      2007.4.30
                
                Form
      of Registration Rights Agreement among Ener1, Inc., Ener1 Group, Inc. and
      Enable Growth and Enable Opportunity dated May 10, 2007 filed in the
      registration statement on Form SB-2A on September 4,
  2007.4.31
                
                Form
      of Securities Purchase Agreement among Ener1, Inc., Ener1 Group, Inc. and
      Enable Growth and Enable Opportunity dated May 10, 2007 filed in the
      registration statement on Form SB-2A on September 4,
  2007.4.32
                
                Series
      B Stock Amendment Agreement between Ener1, Inc., Ener1 Group, Inc. and
      Cofis Compagnie Fiduciaire S.A. dated October 4, 2007 incorporated by
      reference to Exhibit 4.30  to the Registrant’s Current Report on
      Form 8-K dated October 4,
2007.
  - 40
-
 
 4.33
                
                Amended
      Certificate of Designation of Series B Convertible Preferred Stock of
      Ener1, Inc., dated October 10, 2007 incorporated by reference to Exhibit
      4.30 of Registrant’s Quarterly Report on Form 10-QSB, filed November 14,
      2007.4.34
                
                Form
      of Warrant to purchase 57,600,000 shares of Common Stock of the
      Registrant, issued to certain investors named therein, dated November 19,
      2007, incorporated by reference to Exhibit 10.3 to the Registrant’s
      Current Report on Form 8-K dated November 20, 2007.4.35
                
                Registration
      Rights Agreement dated November 19, 2007, by and between Ener1, Inc. and
      certain investors named therein, incorporated by reference to Exhibit 10.2
      to the Registrant’s Current Report on Form 8-K dated November 20,
      2007.4.36
                
                Form
      of Warrant to Purchase Common Stock of the Registrant issued pursuant to
      Series B Stock Amendment Agreement between Ener1, Inc., Ener1 Group, Inc.
      and Cofis Compagnie Fiduciaire S.A., incorporated by reference to Exhibit
      4.32 of the Registrant’s Annual Report on Form 10-KSB for the period ended
      December 31, 2007 filed on March 12, 2008.4.37
                
                Warrant
      issued to Alpha Class Investments, Ltd., dated October 24, 2008, to
      purchase 2,560,000 shares of Common Stock of the Registrant at a price per
      share of $7.50, incorporated by reference to Exhibit 4.1 to the
      Registrant’s Current Report on Form 8-K dated October 30,
      2008.4.38
                
                Warrant
      to Purchase Common Stock of Ener1, Inc. under Line of Credit Agreement
      dated December 29, 2008, incorporated by reference to Exhibit 4.1 to the
      Registrant’s Current Report on Form 8-K dated December 30,
      2008.10.1
                
                2002
      Stock Participation Plan incorporated by reference to Exhibit C of the
      Registrant's Schedule 14A filed on April 15, 2002, SEC File No.
      000-21138.10.2
                
                2002
      Non-Employee Director Stock Participation Plan incorporated by reference
      to Exhibit D of the Registrant’s Schedule 14A filed on May 15, 2002, SEC
      File No. 000-21138.10.3
                
                License
      and Royalty Agreement by and among the Registrant, Ener1 Battery Company
      and ITOCHU Corporation, dated July 25, 2003, incorporated by reference to
      Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-QSB for the
      quarter ended September 30, 2003, SEC File No.
  000-21138.10.4
                
                Shareholders
      Agreement by and between ITOCHU and the Registrant, dated July 25, 2003,
      incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly
      Report on Form 10-QSB for the quarter ended September 30, 2003, SEC File
      No. 000-21138.10.5
                
                Amendment
      to Subscription and Investment Agreement by ITOCHU Corporation and the
      Registrant, dated January 31, 2004, incorporated by reference to Exhibit
      10.20 to the Registrant’s Annual Report on Form 10-KSB for the period
      ended December 31, 2003, SEC File No. 000-21138.10.6
                
                Securities
      Purchase Agreement, dated as of January 16, 2004 by and among Ener1, Inc.
      and the entities whose names appear on the signature pages thereof,
      incorporated by reference to Exhibit 10.1 to the Registrant's Current
      Report on Form 8-K dated January 21, 2004, SEC File No.
      000-21138.10.7
                
                Security
      Agreement dated as of January 16, 2004 by and among Ener1 Battery Company
      and the entities whose names appear on the signature pages thereof,
      incorporated by reference to Exhibit 10.2 to the Registrant's Current
      Report on Form 8-K dated January 21, 2004, SEC File No.
      000-21138.10.8
                
                Subsidiary
      Guaranty dated January 16, 2004 made by Ener1 Battery Company in favor of
      the Investors named therein, incorporated by reference to Exhibit 10.3 to
      the Registrant’s Current Report on Form 8-K dated January 21, 2004, SEC
      File No. 000-21138.
  - 41
-
 
 10.
      9
                
                Mortgage,
      Security Agreement and Assignment of Leases and Rents dated January 16,
      2004 by Ener1 Battery Registrant to Satellite Asset Management, L.P.,
      incorporated by reference to Exhibit 10.4 to the Registrant’s Current
      Report on Form 8-K dated January 21, 2004, SEC File No.
      000-21138.10.10
                
                Waiver
      Agreement dated January 2004 by and between the Registrant and Ener1
      Group, Inc. incorporated by reference to Exhibit 10.31 to the Registrant’s
      Annual Report on Form 10-KSB for the period ended December 31, 2003 filed
      on March 31, 2004, SEC File No. 000-21138.10.11
                
                EnerDel,
      Inc. Formation, Subscription and Stockholders’ Agreement entered into by
      and between Delphi Automotive Systems LLC and Ener1, Inc., dated as of
      October 20, 2004 incorporated by reference to Ener1, Inc.’s Form 8-K filed
      on October 26, 2004.10.12
                
                Form
      of Subscription Agreement dated as of October 15, 2004, by and between
      Ener1, Inc. and various investors for the purchase of 150,000 shares of
      Ener1, Inc.’s Series B 7% Convertible Preferred Stock, incorporated by
      reference to Exhibit 10.20 to Registrant’s Annual Report on Form 10-KSB
      for the period ending December 31, 2004.10.13
                
                Lease
      Agreement dated October 20, 2004 between Ener1 Battery Company and
      EnerDel, Inc, incorporated by reference to Exhibit 10.22 to Registrant’s
      Annual Report on Form 10-KSB for the period ending December 31,
      2004.10.14
                
                Bill
      of Sale dated October 20, 2004, by Delphi Automotive Systems LLC in favor
      of EnerDel, Inc. in favor of transactions contemplated by the Formation,
      Subscription and Shareholders’ Agreement of EnerDel, Inc. dated as of
      October 20, 2004 by and among Delphi, Ener1 Inc. and EnerDel, incorporated
      by reference to Exhibit 10.23 to Registrant’s Annual Report on Form 10-KSB
      for the period ending December 31, 2004.10.15
                
                Delphi
      Technologies, Inc. Assignment of Certain Inventions or Improvements dated
      October 20, 2004, incorporated by reference to Exhibit 10.24 to
      Registrant’s Annual Report on Form 10-KSB for the period ending December
      31, 2004.10.16
                
                License
      Agreement by and between Delphi Technologies, Inc. and EnerDel, Inc. by
      reference to Exhibit 10.25 to Registrant’s Annual Report on Form 10-KSB
      for the period ending December 31, 2004.10.17
                
                Ener1
      Battery Company Assignment of Intellectual Property to EnerDel, Inc, dated
      October 20, 2004, incorporated by reference to Exhibit 10.26 to
      Registrant's Annual Report on Form 10-KSB for the period ending December
      31, 2004.10.18
                
                License
      Agreement dated October 20, 2004 by and between Ener1, Inc. and EnerDel,
      Inc, incorporated by reference to Exhibit 10.27 to Registrant's Annual
      Report on Form 10-KSB for the period ending December 31,
    2004.10.19
                
                Ener1
      Daughter Enterprise with Foreign Investments of Ener1 Battery Company
      Assignment of Intellectual Property to EnerDel, Inc, incorporated by
      reference to Exhibit 10.28 to Registrant's Annual Report on Form 10-KSB
      for the period ending December 31, 2004.10.20
                
                Option
      to Purchase Agreement dated October 20, 2004 between EnerDel, Inc.; Ener1,
      Inc.; and Ener1 Battery Company, incorporated by reference to Exhibit
      10.29 to Registrant's Annual Report on Form 10-KSB for the period ending
      December 31, 2004.10.21
                
                Ener1
      Services Agreement effective October 20, 2004 by and between EnerDel, Inc.
      and Ener1, Inc, incorporated by reference to Exhibit 10.30 to Registrant’s
      Annual Report on Form 10-KSB for the period ending December 31,
      2004.10.22
                
                Engineering
      Services Agreement effective October 20, 2004 by and between EnerDel, Inc.
      and Delphi Automotive Systems LLC, incorporated by reference to Exhibit
      10.31 to Registrant’s Annual Report on Form 10-KSB for the period ending
      December 31, 2004.
  - 42
-
 
 10.23
                
                Transition
      Services Agreement dated as of October 20, 2004 entered into by and
      between Delphi Automotive Systems LLC and EnerDel, Inc, incorporated by
      reference to Exhibit 10.32 to Registrant’s Annual Report on Form 10-KSB
      for the period ending December 31, 2004.10.24
                
                Assignment/Assumption
      of License Agreement dated October 20, 2004, among Ener1, Inc., Ener1
      Battery Company and EnerDel, Inc., incorporated by reference to Exhibit
      10.34 of the Registrant’s Annual Report on Form 10-KSB for the period
      ending December 31, 2004.10.25
                
                Form
      of Securities Purchase Agreement, dated as of March 11, 2005 by and among
      Ener1, Inc. and the purchasers of Ener1's 7.5% Senior Secured Convertible
      Debentures and Warrants to purchase shares of common stock, incorporated
      by reference to Exhibit 10.1 of the Registrant’s current report on Form
      8-K filed March 15, 2005.10.26
                
                Form
      of Security Agreement dated as of March 14, 2005 by and among Ener1, Inc.
      and the purchasers of Ener1’s 7.5% Senior Secured Convertible Debentures,
      incorporated by reference to Exhibit 10.2 of the Registrant’s current
      report on Form 8-K filed March 15, 2005.10.27
                
                Form
      of Intercreditor Agreement dated as of March 11, 2004, among Ener1, Inc.,
      the purchasers of Ener1's 7.5% Senior Secured Convertible Debentures and
      the purchasers of Ener1, Inc.’s 7.5% Senior Secured Convertible
      Debentures, incorporated by reference to Exhibit 10.3 of the Registrant’s
      current report on Form 8-K filed March 15, 2005.10.28
                
                Ener1,
      Inc. Form of Option Grant Agreement under Employment Agreement with Kevin
      P. Fitzgerald, incorporated by reference to Exhibit 10.39 of Registrant’s
      Registration Statement on Form SB-2 (Registration No. 333-124745), filed
      May 9, 2005.10.29
                
                Agreement
      between EnerDel, Inc. and EnerStruct, Inc., entered into as of April 12,
      2005, incorporated by reference to Exhibit 10.40 of Registrant’s
      Registration Statement on Form SB-2 (Registration No. 333-124745), filed
      May 9, 2005.10.30
                
                Form
      of Stock Option Agreement under the Registrant’s 2002 Non-Employee
      Director Stock Participation Plan, incorporated by reference to Exhibit
      10.41 of Registrant’s Registration Statement on Form SB-2 (Registration
      No. 333-124745), filed May 9, 2005.10.31
                
                Form
      of Director Appointment Letter, incorporated by reference to Exhibit 10.42
      of Registrant’s Registration Statement on Form SB-2 (Registration No.
      333-124745), filed May 9, 2005.10.32
                
                Letter
      Agreement between the Registrant and Ener1 Group, Inc., dated October 15,
      2004, regarding a financing commitment provided by Ener1 Group, Inc. to
      the Registrant, incorporated by reference to Exhibit 10.43 of Registrant’s
      Registration Statement on Form SB-2 (Registration No. 333-124745), filed
      May 9, 2005.10.33
                
                Option
      Agreement between Ener1, Inc. and Ulrik Grape dated October 1, 2005,
      incorporated by reference to Exhibit 10.42 of Registrant's Annual Report
      on Form 10-KSB for the period ended December 31, 2005.10.34
                
                Employment
      Agreement between EnerDel, Inc. and Ulrik Grape dated October 1, 2005,
      incorporated by reference to Exhibit 10.43 of Registrant's Annual Report
      on Form 10-KSB for the period ended December 31, 2005.10.35
                
                Tax
      Allocation Agreement dated March 1, 2006 between the Registrant and Ener1
      Group, Inc. incorporated by reference to Exhibit 10.44 of Registrant's
      Annual Report on Form 10-KSB for the period ended December 31,
      2005.10.36
                
                Purchase
      Agreement dated January 5, 2007, by and among Ener1 Group, Inc., Ener1,
      and Credit Suisse Securities (USA) LLC incorporated herein by reference to
      Exhibit 10.01 to Registrant’s current report on Form 8-K dated January 8,
      2007.
  - 43
-
 
 10.
      37
                
                Warrant
      Exercise Agreement, dated as of March 30, 2006, by and between the Company
      and Ener1 Group, Inc., incorporated by reference to Exhibit 10.1 of
      Registrant's Current Report on Form 8-K dated April 5,
    2006.10.38
                
                Securities
      Purchase Agreement dated November 19, 2007, by and between Ener1, Inc. and
      certain investors named therein, incorporated by reference to Exhibit 10.1
      to the Registrant’s Current Report on Form 8-K dated November 20,
      2007.10.39
                
                Commercial
      Lease between EnerDel, Inc. and Universal Tool & Engineering Company,
      dated March 1, 2007 incorporated herein by reference to Exhibit 10.1 to
      the Registrant’s Quarterly Report on Form 10-QSB filed November 14,
      2007.10.40
                
                Purchase
      Money Financing Agreement for Additional Improvements between EnerDel,
      Inc. and Universal Tool & Engineering Company, dated March 1, 2007
      incorporated herein by referenced to Exhibit 10.2 of the Registrant’s
      Quarterly Report on Form 10-QSB filed November 14,
2007.10.41
                
                Supply
      Agreement dated October 15, 2007, by and between EnerDel, Inc. and Think
      Global of Oslo, Norway incorporated herein by reference to Exhibit 10.50
      to Registrant’s Form 8-K dated October 15, 2007.10.42
                
                Line
      of Credit Agreement dated December 29, 2008, incorporated herein by
      reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated
      December 31, 2008.10.44
                
                Tax
      Allocation Agreement dated May 7, 2009 by and between Ener1, Inc. and
      certain subsidiaries named therein.10.45
                
                2002
      Stock Participation Plan as amended May 7, 2009.10.46
                
                2002
      Non-Employee Director Stock Participation Plan as amended May 7,
      2009.10.47
                
                Ener1,
      Inc. 2007 Stock Incentive Plan as amended May 7,
  2009.31.1
                
                Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer.*31.2
                
                Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer.*32.1
                
                Section
      1350 Certification of Chief Executive Officer.*32.2
                
                Section
      1350 Certification of Chief Financial
Officer.*
  * Filed
herewith
  - 44
-
  ENER1,
INC. AND SUBSIDIARIES
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 ENER1,
      INC.Dated: January
      19, 2010
                      by:
                      /s/
      Charles GassenheimerCharles
      GassenheimerChief
      Executive Officer and Chairman of the Board(Principal
      Executive Officer)Dated: January
      19, 2010
                      by:
                      /s/
      Gerard A. HerlihyGerard
      A. HerlihyChief
      Financial Officer(Principal
      Financial Officer and
                        Principal
      Accounting
Officer)
  - 45
-