UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period
ended March 31, 2005

Commission File Number
0-21138

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.)

|500 West Cypress Creek Road-Suite 100
Ft. Lauderdale, Florida | 33309     
|------------------------------------------------------------- | ----------
|(Address of principal
   executive offices)                   | (Zip Code)

(954) 556-4020(Registrants
telephone number, including area code)

(Former
name, former address, and former fiscal year if changed since last report)

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 X No___

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 12, 2005
|----------------------------------------------- | ------------------------------
|Common stock, par value
         $.01 per share | 347,455,751                   

Transitional Small
Business Format (check one):   Yes ___ No X__



ENER1, INC. AND
SUBSIDIARIES

Form 10-QSB for the
Quarter Ended March 31, 2005

INDEX

|           | Page                                                        |   
|---------- | ----------------------------------------------------------- | --
|Part I     | FINANCIAL INFORMATION                                       |   
|          
|Item 1     | Financial Statements                                       
|          
|           | Condensed Consolidated Balance Sheet                       
|           | (unaudited) as of March 31, 2005                            | 3 
|          
|           | Condensed Consolidated Statements of                       
|           | Operations (unaudited) for the three                       
|           | months ended March 31, 2005 and 2004                        | 4 
|          
|           | Condensed Consolidated Statements of                       
|           | Cash Flows (unaudited) for the three                       
|           | months ended March 31, 2005 and 2004                        | 5 
|          
|           | Notes to Condensed Consolidated                            
|           | Financial Statements (unaudited)                            | 6 
|          
|Item 2     | Management's Discussion and Analysis of                    
|           | Financial Condition and Results of                         
|           | Operations                                                  | 21
|          
|Item 3     | Controls and Procedures                                     | 20
|          
|Part II    | OTHER INFORMATION                                          
|          
|Item 1     | Legal Proceedings                                           | 21
|          
|Item 2     | Unregistered Sales of Equity Securities and Use of Proceeds | 22
|          
|Item 3     | Defaults Upon Senior Securities                             | 23
|          
|Item 5     | Other Information                                           | 24
|          
|Item 6     | Exhibits                                                    | 24
|          
|Signatures | .                                                           | 26



ENER1, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEET (Unaudited) (In thousands except
share data)

|                                                                        | March 31,
2005
|----------------------------------------------------------------------- | --------------
|ASSETS                                                                  |               
|Current assets                                                          |               
|Cash and equivalents                                                    |               
|Prepaid expenses and other current assets                               |               
|Due from related parties (Note 11)                                      |               
|                                                                        |               
|Total current assets                                                    |               
|Property and equipment, net                                             |               
|Investment in EnerStruct  (Notes 4, 10)                                 |               
|Debenture costs                                                         |               
|Other assets (Note 3,)                                                  |               
|                                                                        |               
|Total assets                                                            |               
|                                                                        |               
|LIABILITIES AND STOCKHOLDERS' EQUITY                                    |               
|Current liabilities                                                     |               
|Accounts payable and accrued expenses (Note 6)                          |               
|Current portion of bank installment loan (Note 8)                       |               
|Liabilities of discontinued operations (Note 3)                         |               
|                                                                        |               
|Total current liabilities                                               |               
|Bank installment loan payable (Note 8)                                  |               
|$19,700 senior secured convertible debenture, net of discount of        |               
|$19,700 attributable to warrants and beneficial conversion features     |               
|(Note 9)                                                                |               
|$14,225 senior secured convertible debenture, net of discount of $2,919 |               
|attributable to warrants (Note 15)                                      |               
|                                                                        |               
|                                                                        |               
|                                                                        |               
|                                                                        |               
|Total Liabilities                                                       |               
|Commitments and contingencies (Note 17)                                 |               
|                                                                        |               
|Redeemable preferred stock (Notes 13 and 16)                            |               
|Minority interest (Note 12)                                             |               
|Stockholders' equity                                                    |               
|Common stock, par value $.01 per share, 750,000,000                     |               
|shares authorized, 347,455,751 issued and outstanding                   |               
|Additional paid-in capital                                              |               
|Accumulated deficit                                                     |               
|                                                                        |               
|Total stockholders' equity                                              |               
|                                                                        |               
|                                                                        |               
|                                                                        |               
|Total liabilities and stockholders' equity                              |               
|                                                                        |               

See
notes to condensed consolidated financial statements.



ENER1, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS Unaudited)
(In thousands except share data)

|                                                                        | Three Months Ended March 31, | 
|----------------------------------------------------------------------- | ---------------------------- | 
|
|Net sales                                                               |                              | 
|Cost of goods sold                                                      |                              | 
|                                                                        |                              | 
|Gross profit                                                            |                              | 
|Operating expenses:                                                     |                              | 
|Research and development                                                |                              | 
|Selling, general and administrative                                     |                              | 
|Manufacturing pre-production costs                                      |                              | 
|Interest expense                                                        |                              | 
|                                                                        |                              | 
|                                                                        |                              | 
|Total operating expenses                                                |                              | 
|Loss from operations                                                    |                              | 
|Non-operating income (expense)                                          |                              | 
|Other income (expense), net                                             |                              | 
|                                                                        |                              | 
|Equity in loss on investment in EnerStruct (Notes 4,10)                 |                              | 
|                                                                        |                              | 
|Total non-operating income (expense)                                    |                              | 
|                                                                        |                              | 
|                                                                        |                              | 
|Loss before minority interest, income taxes and discontinued operations |                              | 
|                                                                        |                              | 
|Minority interest (Note 12)                                             |                              | 
|Income Taxes                                                            |                              | 
|                                                                        |                              | 
|Loss from continuing operations                                         |                              | 
|                                                                        |                              | 
|Loss from operations held for disposal (Note 3)                         |                              | 
|                                                                        |                              | 
|Net Loss                                                                |                              | 
|                                                                        |                              | 
|Preferred stock dividends and accretion of discounts (Note 16)          |                              | 
|                                                                        |                              | 
|Net Loss attributable to common stockholders                            |                              | 
|                                                                        |                              | 
|                                                                        |                              | 
|Weighted average shares outstanding                                     |                              | 
|Loss from continuing operations - basic and diluted                     |                              | 
|Loss from discontinued operations - basic and diluted                   |                              | 
|Net loss per share - basic and diluted                                  |                              | 

See
notes to condensed consolidated financial statements.



ENER1, INC. AND
SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands except share data)

|                                                          | Three Months Ended March 31, | 
|--------------------------------------------------------- | ---------------------------- | 
|
|Cash and equivalents provided by (used in):               |                              | 
|Operating activities:                                     |                              | 
|Net loss                                                  |                              | 
|                                                          |                              | 
|Accretion of discount on debentures (Note 15)             |                              | 
|Depreciation and amortization                             |                              | 
|Loss on disposal of assets                                |                              | 
|Minority interest (Note 12)                               |                              | 
|Equity in loss from investment in EnerStruct (Notes 4,10) |                              | 
|Changes in assets and liabilities                         |                              | 
|                                                          |                              | 
|Changes in assets and liabilities of assets held for      |                              | 
|disposal (Note 3)                                         |                              | 
|Compensation expense for stock and options issued for     |                              | 
|services                                                  |                              | 
|                                                          |                              | 
|Net cash used in operating activities                     |                              | 
|Investing activities:                                     |                              | 
|Purchases of machinery and equipment                      |                              | 
|                                                          |                              | 
|Net cash used in investing activities                     |                              | 
|Financing activities:                                     |                              | 
|Repayment of related party notes                          |                              | 
|                                                          |                              | 
|Repayment of bank installment loan                        |                              | 
|Proceeds from sale of preferred stock (Note 14)           |                              | 
|Payment of guaranteed related party debt (Note 8)         |                              | 
|                                                          |                              | 
|Repayment of mortgage note payable (Note 8)               |                              | 
|Repayment of bank loan (Note 8)                           |                              | 
|                                                          |                              | 
|Proceeds from issuance of senior secured debentures,      |                              | 
|net of costs (Notes 9 and 15)                             |                              | 
|Proceeds from exercise of employee stock options          |                              | 
|Proceeds from exercise of warrants (Note 10)              |                              | 
|                                                          |                              | 
|                                                          |                              | 
|Net cash provided by financing activities                 |                              | 
|Net increase in cash and equivalents                      |                              | 
|Beginning balance as of January 1,                        |                              | 
|                                                          |                              | 
|Ending balance as of March 31,                            |                              | 
|                                                          |                              | 

See
notes to condensed consolidated financial statements.



ENER1, INC. AND
SUBSIDIARIES                                               NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

1.    
          BASIS OF PRESENTATION

The accompanying unaudited condensed
consolidated financial statements for Ener1, Inc. (Ener1 or the
Company) have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with the
instructions to Form 10-QSB for quarterly reports under Section 13 or 15 (d) of the
Securities Exchange Act of 1934. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and such adjustments are
of a normal recurring nature. Operating results for the three months ended March 31, 2005
are not necessarily indicative of the results that may be expected for the year ending
December 31, 2005. The audited financial statements at December 31, 2004, which are
included in the Companys Annual Report on Form 10-KSB, should be read in conjunction
with these condensed consolidated financial statements.

2.    
          GOING CONCERN

The accompanying condensed
consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has experienced net operating losses since 1997 and
negative cash flows from operations since 1999 through March 31, 2005, and has an
accumulated deficit of $102.2 million as of March 31, 2005. It is likely that the
Companys operations will continue to incur negative cash flows through March 31,
2006, and additional financing will be required to fund the Companys planned
operations. If additional financing is not obtained, such a condition, among others, will
give rise to substantial doubt about the Companys ability to continue as a going
concern for a reasonable period of time. The condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going concern.

3.     NATURE OF
BUSINESS and DISCONTINUED OPERATIONS

Nature of Business

Ener1s primary lines of
business consist of the development and marketing of advanced lithium batteries and
certain battery components such as electrodes, fuel cell components, fuel cell testing
apparatus and nanotechnology-related manufacturing processes and materials. The
Companys current business focus is the result of changes over the past several years
arising from new investments in the Company, changes in research and development
activities and the acquisition of a battery business from its majority shareholder in 2002.

Ener1 is a Florida corporation
founded in 1985. Ener1 was formerly named Inprimis, Inc. and before that it was named Boca
Research, Inc. During 2002 and 2003, the Company manufactured set-top boxes and related
network communications products through subcontractors and marketed those products to the
hospitality and healthcare markets through its 49% owned subsidiary EnerLook Solutions,
Inc. (f/k/a EnerLook Health Care Solutions, Inc. and now known as Ener EL Holdings, Inc.)
(EnerLook), and to other markets through its former Digital Media Technologies
Division. In 2003, the majority of the assets in the Digital Media Technologies Division
were transferred to EnerLook (see Discontinued Operations and Sale of Assets of
EnerLook below).

In January 2002, Ener1 Group, Inc.
(Ener1 Group) acquired a majority interest in the Company and as a result of
subsequent transactions, owned approximately 88% of the outstanding common stock of the
Company as of March 31, 2005.



One of Ener1 Groups
subsidiaries, Ener1 Battery Company (Ener1 Battery or the Battery
Company), became a wholly owned subsidiary of the Company on September 6, 2002 when
the Company acquired 100% of its outstanding capital stock from Ener1 Group. Ener1
Batterys business of developing and marketing lithium ion and other lithium
technology batteries is now operated by the Companys EnerDel subsidiary (see below).

Concurrent with the acquisition of
the Battery Company in 2002, the Company began to transition its business away from the
set-top box and engineering services businesses of its Digital Media Technologies Division
and EnerLook and to focus instead on the clean energy business and lithium batteries in
particular. In addition, in 2003 the Company began developing fuel cell components and
systems. The Company has also developed a fuel cell testing fixture using technologies
contained in one of its pending patent applications.

In January 2002, the Company began to
develop products for neutralizing the harmful effects of electromagnetic radiation in
electric power transmission lines and equipment through its wholly owned subsidiary, Ener1
Technologies, Inc. (Technologies). Technologies has a license to use a patent
held by Vector Energy Corporation (a subsidiary of Ener1 Group) in connection with
development of such products. Technologies is a development stage company and it has not
recorded any revenue since its formation. Technologies suspended activities in 2003 and
has no ongoing activities at this time. The Company has not determined if or when it may
resume activities in Technologies.

In August 2003, the Company formed a
joint venture company, named EnerStruct, Inc., with ITOCHU Corporation of Japan to pursue
technology development and marketing opportunities for lithium batteries in Japan. The
Company and ITOCHU have each licensed to EnerStruct some of their respective battery
technologies for use in Japanese markets.

On September 12, 2003, the Battery
Company finalized the acquisition of Ener1s research and development partner company
in Ukraine, known as Ener1 Ukraine (Ener1 Ukraine). Ener1 Ukraine conducts
research and development activities for the Company at facilities in Ukraine. Ener1
Ukraines battery-related patents and rights in patent applications were assigned to
EnerDel in October 2004.

The Company formed NanoEner, Inc.
(NanoEner) on April 2, 2004 to develop new markets and applications for
Ener1s proprietary technologies to manufacture nanomaterials. Ener1 currently uses
these technologies in the development of nanomaterials for lithium batteries and other
high-energy storage devices.

On October 20, 2004, the Company and
a unit of Delphi Corporation each contributed lithium battery related assets to EnerDel,
Inc., which was formed on October 18, 2004 in connection with that transaction. The
Company owns 80.5% of the outstanding stock of EnerDel, and Delphi owns 19.5%. All of the
Companys lithium battery business has been conducted through EnerDel since its
formation.

The Company formed a new subsidiary,
EnerFuel, Inc., on October 29, 2004 through which the Company conducts its fuel cell
related operations.

Discontinued Operations

Effective December 2003, the
Companys Digital Media/EnerLook segment was deemed by the Company to be
held-for-sale, and certain of the revenues, expenses, assets and liabilities of this
segment were classified as discontinued operations. Substantially all remaining resources
were redirected to the Companys continuing operations, accordingly, these costs are
included in continuing operations.

On December 15, 2003, the Company,
EnerLook, Ener1 Group and T.& V. Rental Co., Inc. (TVR) entered into an
arrangement pursuant to which (1) TVR agreed to manage EnerLooks business for up to
six months in return for any profits earned by EnerLook, (2) EnerLook was granted the
option, exercisable at any time on or before June 15, 2004, to acquire 100% of TVRs
outstanding stock for $16,000,000 in cash, plus 4,000,000 shares of the Companys
stock held by Ener1 Group; and (3) TVR was granted the option to acquire substantially all
of the assets of EnerLook in exchange for 5% of a limited liability company that would own
all the respective assets of TVR and EnerLook, such option to become exercisable if
EnerLook did not exercise the option described in clause (2) above. EnerLook did not
exercise the option described in clause (2) and on June 15, 2004, TVR notified EnerLook of
TVRs intent to exercise its option to acquire substantially all of the assets of
EnerLook, and shortly thereafter the EnerLook employees were transferred to, and became the employees of, TVR
Communications, LLC, a limited liability company formed by TVR to hold all of TVRs
assets and EnerLooks assets. The Company, EnerLook, Ener1 Group and TVR
Communications, LLC entered into an Asset Purchase Agreement dated as of September 30,
2004, providing for the sale of substantially all of EnerLooks assets to TVR
Communications, LLC, in exchange for a 5% membership interest in TVR Communications, LLC.
The asset sale to TVR closed on December 7, 2004.



TVR paid EnerLook approximately
$550,000 to fund EnerLooks operations from December 15, 2003 through June 15, 2004
and the 5% membership interest acquired by the Company as part of the December 7, 2004
asset sale to TVR was valued at $115,000.

4.    
          SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The
accompanying consolidated financial statements include Ener1, Inc. and its wholly owned
subsidiaries: Ener1 Battery Company; Ener1 Technologies, Inc; EnerNow Technologies, Inc.;
Boca Research of Delaware, Inc.; Boca Research International, Inc.; Boca Research Holland
B.V.; Boca Research (UK) Limited; Boca Research International Holdings Ltd.; Boca Global,
Inc.; AppsCom, Inc.; Ener1 Ukraine; EnerDel, Inc. (80.5% owned); NanoEner, Inc.; and
EnerFuel, Inc. It also includes as discontinued operations the Companys 49% owned
subsidiary, EnerLook Solutions, Inc. Intercompany accounts and transactions have been
eliminated in consolidation. EnerDel, NanoEner, EnerFuel, and Ener1 Ukraine (see above)
have ongoing operations. The Battery Company operations are limited as of October 20, 2004
to holding real estate, the use of which is made available to EnerDel under certain
agreements. Ener1 Technologies has also conducted operations, but is not currently active.

Use of Estimates: The preparation of
consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
materially from those estimates.

Loss Per Share: Basic loss per share
excludes dilution and is computed by dividing the loss attributable to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted loss
per share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the entity. Diluted
loss per share is computed by dividing income or loss available to common stockholders by
the sum of the weighted average number of common shares outstanding for the period and
dilutive potential common shares outstanding unless consideration of such dilutive
potential common shares would result in anti-dilution. Common stock equivalents were not
considered in the calculation of diluted loss per share as their effect would have been
anti-dilutive for the three month periods ended March 31, 2005 and 2004.

Stock Compensation: Options granted
to employees under the Companys Stock Option Plans are accounted for by using the
intrinsic method under APB Opinion 25, Accounting for Stock Issued to Employees (APB 25).
In October 1995, the Financial Accounting Standards Board issued Statement No. 123,
Accounting for Stock-Based Compensation (SFAS 123), which defines a fair value base method
of accounting for stock options. Certain aspects of the accounting standards prescribed by
SFAS 123 are optional and therefore, the Company has continued to account for stock
options under the intrinsic value method specified in APB 25. The Company has adopted the
disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123). Accordingly, compensation cost has been
recognized for grants under the stock option plans only when the exercise prices of
employee stock options are less than the market prices or fair values of the underlying
stock on the date of grant. If compensation cost had been determined based on the fair
value at the grant date for all awards consistent with the provisions of SFAS 123, the
Companys net loss and loss per share would have been as indicated below for the
three month periods ended March 31, 2005 and 2004:

|                                                                                 | 2005 | 2004
|-------------------------------------------------------------------------------- | ---- | ----
|Net loss, as reported                                                            |      |     
|Plus: compensation recorded for stock options issued                             |      |     
|Less: proforma stock based employee compensation, net of tax                     |      |     
|                                                                                 |      |     
|Net loss, proforma                                                               |      |     
|                                                                                 |      |     
|Loss per share (including preferred stock dividends and accretion of discounts): |      |     
|Basic and diluted as reported                                                    |      |     
|Basic and diluted proforma                                                       |      |     



Investment in EnerStruct: The
Companys 49% investment in EnerStruct is accounted for in accordance with the equity
method (See Note 10).

Research and Development: Research
and Development Costs, including the cost of equipment and other assets used in research
and development activities that do not have alternative future use, are expensed as
incurred.

Income Taxes: The Company provides
for income taxes in accordance with the liability method. Deferred income tax assets and
liabilities are computed for differences between the financial statement carrying values
and the tax bases of assets and liabilities and carryforwards that will result in taxable
or deductible amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the amount more
likely than not to be realized. Income tax expense or benefit is the tax payable or
refundable for the period plus or minus the change during the period in deferred tax
assets and liabilities.

Recently Issued Accounting
Pronouncements and Interpretations:

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs, an amendment of ARB No. 43. SFAS No.151 amends
the guidance in ARB No. 43, Inventory Pricing, for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage) requiring that
those items be recognized as current-period expenses regardless of whether they meet the
criterion of so abnormal. This statement also requires that allocation of
fixed production overheads to the costs of conversion be based on the normal capacity of
the production facilities. The statement is effective for inventory costs incurred during
the fiscal years beginning after June 15, 2005. Management does not expect this statement
to have a material impact on the Companys consolidated financial position or results
of operations.

In December 2004, the FASB issued
SFAS No. 153, which is effective for fiscal periods beginning after June 15, 2005. In the
past, the net book value of the assets relinquished in a non-monetary transaction was used
to measure the value of the assets exchanged. Under SFAS No. 153, assets exchanged in a
non-monetary transaction will be valued at fair value instead of the net book value of the
asset relinquished, as long as the transaction has commercial substance and the fair value
of the assets exchanged is determinable within reasonable limits. The adoption of SFAS No.
153 is not anticipated to have a material effect on the Companys financial
statements.

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-Based Payment (Statement 123(R)), which is a revision
of FASB Statement No. 123, Accounting for Stock-Based Compensation (Statement 123).
Statement 123(R) supersedes APB Opinion No 25, Accounting for Stock Issued to Employees,
and amends FASB Statement No. 95, Statement of Cash Flows. Statement 123 (R) requires all
share-based payments to employees, including grants of employee stock options, to be
recognized at the date of grant in the income statement based on their fair values. Pro
forma disclosure is no longer an alternative. Statement 123(R) is effective at the
beginning of the first interim or annual period beginning after December 15, 2005. The
impact of adoption of Statement 123(R) cannot be accurately predicted at this time
because it will depend on levels of share-based payments in the future. However, had the
Company adopted Statement 123(R) in prior periods, the impact of the standard would have
approximated the impact of Statement 123 as described in the disclosure of pro forma net
income and earnings per share in the note above. Statement 123(R) also requires the
benefits of tax deductions in excess of recognized compensation cost to be reported as a
financing cash flow, rather than as an operating cash flow as required under current
literature. This requirement will reduce net operating cash flows and increase financing
cash flows in periods after adoption. The Company cannot estimate what those amounts will
be in the future because they depend on, among other things, when employees exercise stock
options. The Company expects to adopt Statement 123(R) on January 1, 2006.



5.     SEGMENT
REPORTING

As of March 31, 2005, the Company is
organized based upon the following segments: Digital Media Division / EnerLook (which is
classified as discontinued operations), EnerDel, Inc., EnerFuel, Inc., NanoEner, Inc.,
Ener1 Battery Company, and, Ener1 Technologies, Inc. EnerDel, Inc. develops and markets
advanced lithium batteries. EnerFuel, Inc. develops and markets fuel cells and fuel cell
systems. NanoEner, Inc. is developing nanotechnology related manufacturing processes and
materials. Ener1 Battery Company provides facilities to EnerDel, Inc. Ener1 Technologies,
Inc. had no activities during either of the three month periods ended March 31, 2004 and
2005.

The accounting policies of the
segments are the same as those described in the Summary of Significant Accounting
Policies. Transactions between segments, consisting principally of product sales and
purchases, are recorded at the consummated sales price. The Company evaluates the
performance of its segments and allocates resources to them based on anticipated future
contribution.

|                         | Three months ended March 31,
|------------------------ | ----------------------------
|
|Sales                    |                             
|Discontinued operations  |                             
|EnerDel                  |                             
|EnerFuel                 |                             
|Battery                  |                             
|                         |                             
|Net Sales                |                             
|                         |                             
|Net Loss                 |                             
|Corporate                |                             
|Discontinued operations  |                             
|Battery                  |                             
|EnerDel                  |                             
|NanoEner                 |                             
|EnerFuel                 |                             
|Minority interest        |                             
|                         |                             
|Net Loss                 |                             
|Assets                   |                             
|Corporate                |                             
|Discontinued operations  |                             
|Battery                  |                             
|EnerDel                  |                             
|NanoEner                 |                             
|EnerFuel                 |                             
|Ener1 Technologies, Inc. |                             
|                         |                             
|Assets                   |                             



6.     ACCRUED
EXPENSES

Accrued expenses principally consists
of accrued salaries, and related benefits and accrued professional fees, which are
included in accounts payable and accrued expenses on the accompanying condensed
consolidated balance sheet.

7.     CONSOLIDATION
OF 49% SUBSIDIARY (ENERLOOK)

When formed in February 2002,
EnerLook Health Care Solutions, Inc. was formed as a 51% subsidiary of the Company.
EnerLooks name was changed to EnerLook Solutions, Inc. in May 2003 and then to Ener
EL Holdings, Inc. in December 2004. In early 2003, EnerLook issued 333,333 shares of
common stock to Solution Investment Group, LLC in exchange for $250,000 and 125,000 shares
to an employee, reducing the Companys ownership to approximately 49%. Ener1 Group
owns approximately 43% of the outstanding common stock of EnerLook. Since EnerLook was
formed, the Company has consolidated EnerLooks results of operations and its balance
sheet as part of the Companys consolidated financial statements. Ownership of a
subsidiary below 51% is most often recorded under the equity method of accounting, rather
than consolidating the subsidiarys results of operations with the less than 51%
parent company, as it is presumed that the less than 51% parent company does not control
the subsidiary. The Company has elected to continue consolidating this subsidiary as part
of its financial statements because the Company and Ener1 Group are related parties which
exercise substantial control over the activities of EnerLook and own an aggregate of 92%
of EnerLooks outstanding common stock. Management believes that the reduction in its
ownership percentage of EnerLooks common stock from 51% to 49% does not materially
reduce the control the Company exercises over EnerLooks operations. Effective
December 15, 2003, EnerLooks operations were deemed to be discontinued operations.

In the second quarter of 2003, the
Company transferred certain assets of its Digital Media division to EnerLook in order to
consolidate the Companys set top box business, which delivered interactive
information and entertainment systems and services to customers in vertical markets such
as hospitality and healthcare. As part of this restructuring, the Company transferred net
assets in the amount of approximately $1.0 million to EnerLook, resulting in an
intercompany receivable from EnerLook in the amount of $1.0 million. In December 2003,
management decided to discontinue the operations of this segment and conveyed operating
control of this operating segment to T. & V. Rental Co., Inc. (TVR) a third party. In
December, 2004 the Company sold substantially all of the assets of EnerLook to TVR.

8.    
          DEBT AND DEBT GUARANTEES:

In January 2004, the Company issued
$20,000,000 in aggregate principal amount of senior secured convertible debentures due
January 2009, and warrants to purchase up to 16,000,000 shares of common stock, in a
private placement. (See Note 9.) In connection with the issuance of the debentures, the Company was
required to have all security interests in the land, building, patents, and production
equipment owned by the Battery Company released. In order to effect this release, in
January 2004, the Company paid: $2,200,000 to Meliorbanca Gallo S.P.A. to satisfy certain
obligations of Ener1 S.R.L. an Italian company related to the Company by common ownership;
$704,000, representing all of the outstanding balances due to Interbay Funding on a
mortgage note collateralized by the land and building owned by the Battery Company; and
$1,600,000 to Saint Petersburg Joint Stock Bank Tavrichesky to satisfy two notes which
were secured by a pledge of a patent owned by Ener1 Ukraine, which is a 100% subsidiary of
Ener1 Battery.

In March 2004, the Battery Company
obtained a loan secured by a vehicle. The total amount due under the loan as of March 31,
2005 is $108,767 plus interest payable over 5 years in equal monthly payments of
approximately $2,600. On March 11, 2005, the Company issued $14,225,000 in aggregate principal amount of senior
secured convertible debentures due March 2009 and warrants to purchase up to 7,112,500 shares of common stock, in a
private placement (See Note 15) .

9.    
          SENIOR SECURED CONVERTIBLE DEBENTURES DUE 2009

In January 2004, the Company issued
$20,000,000 in aggregate principal amount of senior secured convertible debentures due
January 2009. The interest rate under these debentures is currently 15%. The
Companys obligations under the debentures are collateralized by the land and
building owned by the Battery Company, as well as by certain battery production equipment
owned by the Battery Company and used by EnerDel. The debentures are convertible into
common stock of Ener1 at a current conversion price of $1.233 per share. As part of the
transaction, the Company issued warrants with a ten-year term to purchase a total of
16,000,000 common shares at the current exercise price of $2.37 per share. Proceeds from
the sale were used to pay expenses of the sale and repay debt, including $1,040,817 owed
to related parties. Direct costs associated with the debentures of approximately
$1,473,000, including $1,200,000 of investment banking fees, were incurred.



Accounting Principles Board Opinion
No. 14, entitled Accounting for Convertible Debt Issued with Stock Purchase
Warrants, provides that the portion of the proceeds from debt securities issued with
detachable stock purchase warrants that is allocable to the warrants should be accounted
for as paid-in capital. The allocation should be based on the relative fair values of the
two securities at time of issuance. Any resulting discount or premium on the debt
securities should be accounted for as such. In addition, Emerging Issues Task Force
Release Nos. 98-5 and 00-27 state that any embedded beneficial conversion features present
in convertible securities should be valued separately at issuance. The embedded beneficial
conversion feature should be recognized and measured by allocating a portion of the
proceeds equal to the intrinsic value of that feature to additional paid-in capital. That
amount should be calculated at the commitment date as the difference between the effective
conversion price and the fair value of the common stock or other securities into which the
security is convertible, multiplied by the number of shares into which the security is
convertible. The Emerging Issues Task Force observed that in certain circumstances, the
intrinsic value of the beneficial conversion feature may be greater than the proceeds
allocated to the convertible instrument. In those situations, the amount of the discount
assigned to the beneficial conversion feature is limited to the amount of the proceeds
allocated to the convertible instrument. For convertible instruments that have a stated
redemption date (such as debt and mandatorily redeemable preferred stock) the discount
resulting from recording a beneficial conversion option should be accreted from the date
of issuance to the stated redemption date of the convertible instrument. In the event of
early conversion or default, the remaining discount would be recognized as interest
expense during the period in which such early conversion or default occurs.

In applying the provisions of the
above pronouncements, the Company recorded a discount on the convertible debentures in the
amount of $20,000,000. This discount is being accreted to interest expense using the
interest method over the life of the debentures (five years). As the effective interest
rate, which is determined by dividing the actual interest rate on the convertible
debentures by the discounted debt amount, approaches infinity, the interest expense to be
recorded approximates the future cash payments. Total interest expense on the debentures
for the three month periods ended March 31, 2004 and 2005 was $208,333 and $660,770,
respectively. The remaining discount on the convertible debentures as of March 31, 2005
was $19,700,000, after conversion of $300,000 of debentures.

Interest expense related to the
accretion of the discount for the calendar years ending after December 31, 2004 is
expected to be as follows and would be accelerated upon early conversion or default of the
instrument:

|                             |  | 
|---------------------------- |  | 
|Year ended December 31, 2005 |  | 
|Year ended December 31, 2006 |  | 
|Year ended December 31, 2007 |  | 
|Year ended December 31, 2008 |  | 
|Year ended December 31, 2009 |  | 

Subject to the conditions and
limitations specifically provided in the Securities Purchase Agreement under which the
debentures were sold, the holders of the debentures have the right to convert, at any time
and from time to time after the issue date, all or any part of the outstanding and unpaid
principal amount of the debentures into shares of the common stock of the Company. During
the year ended December 31, 2004, $300,000 in principal amount of the debentures was
converted into common stock of the Company at the conversion price of $1.25 per share in
accordance with the terms and conditions of the debentures.

Under the terms of the debentures,
interest is due quarterly and the interest rate was to remain at 5% if the Company
achieved certain milestones set forth in the debentures by July 19, 2004. The Company did
not achieve these milestones and, as a result, the interest rate charged on the debentures
was increased to 7.5%, effective July 19, 2004. In addition, the Company did not achieve
certain milestones as of January 21, 2005, and accordingly, the interest rate increased to
15%.

Notwithstanding the financial
statement presentation required by the above pronouncements, the Company remains legally
obligated to repay the aggregate principal amount of the outstanding debentures plus all
accrued interest thereon at the rate(s) set forth in the debentures. As of December 31,
2004, $19,700,000 in aggregate principal amount of the debentures was outstanding. The
principal amount of any debentures that are converted to common stock of the Company
pursuant to the terms of the debentures shall not be deemed outstanding immediately
following such conversion.



10.    
          ITOCHU CORPORATION INVESTMENT and INVESTMENT in ENERSTRUCT

On July 25, 2003, the Company entered
into a Subscription and Investment Agreement with ITOCHU Corporation, under which the
Company issued 14,000,000 shares of its common stock in a private sale to ITOCHU
Corporation at a price of $0.25 per share, for $3.5 million. In addition, the Company
granted the following options to ITOCHU to increase its ownership of common stock at the
following prices: During the six month period from July 25, 2003 through January 24, 2004,
ITOCHU had the option to purchase up to 12,461,861 shares of common stock, for $0.70 per
share. During January 2004, ITOCHU exercised a portion of these options and purchased
1,500,000 shares for $1,050,000. During the period from January 25, 2004 through January
31, 2005, ITOCHU had the option to purchase up to 9,346,396 shares of common stock for
$4.00 per share. These options expired unexercised on January 31, 2005.

Using the proceeds of the ITOCHU
investment, the Company invested $2,003,339 in a new Japanese company called EnerStruct,
Inc. (EnerStruct), in exchange for a 49% ownership interest in EnerStruct.
ITOCHU owns the remaining 51% of EnerStruct, for which it invested $1,100,000 plus
equipment totaling approximately $500,000. At March 31, 2005, the Companys original
investment in EnerStruct was reduced by $986,953 which represents the Companys share
of EnerStructs losses through that date.

In connection with the foregoing
activities, the Company and Ener1 Battery have entered into a license agreement with
ITOCHU and EnerStruct and agreed to provide EnerStruct with an exclusive license (for
Japan only) to use the technologies covered by two of Ener1 Batterys pending patent
applications. In July 2004, this license became non-exclusive. In October 2004, this
license was transferred to EnerDel. ITOCHU has also licensed to EnerStruct, on an
exclusive basis, several of its patents relating to its lithium battery technologies. In
April 2005, EnerDel entered into an agreement with EnerStruct, under which EnerDel paid
EnerStruct $1 million in prepayment for engineering services related to optimization of
EnerDels lithium battery production lines and further development of
EnerStructs high-rate battery technology. If development of this technology is
successfully completed, use of such technology would be licensed to EnerDel on terms set
forth in the agreement and certain other terms to be negotiated at that time.

Summarized information of EnerStruct
is as follows as of March 31, 2005 and for the three month period then ended:

|                  | 
|----------------- | 
|Cash              | 
|Total assets      | 
|Total liabilities | 
|Net loss          | 

11.    
          RELATED PARTY TRANSACTIONS:

Ener1 Group and its subsidiaries have
from time to time used various services and employees of the Company. The Company billed
Ener1 Group and its subsidiaries for the actual cost of these services and employees.
Similarly, the Company has from time to time used various services and employees of
Ener1Group and its subsidiaries, and Ener1 Group has billed the Company for the actual
cost of these services and employees. As of March 31, 2005, the net balance due to the
Company from Ener1 Group and its subsidiaries was $89,824.

The Company, its wholly owned
subsidiary, Ener1 Acquisition Corp. (Acquisition), and Splinex Technology,
Inc. (Splinex) entered into a Merger Agreement dated as of June 9, 2004, and
subsequently amended, providing for the merger of Acquisition into Splinex. Upon closing,
which occurred in January 2005, the Company received 5,000,000 shares of Splinex common
stock, which represented 5% of the then outstanding shares of Splinex common stock, and,
in accordance with the Merger Agreement, the Company declared a dividend to distribute these shares to the Companys shareholders of
record as of
January 17, 2005. The Company recorded the amount of this dividend as $150,000. Closing of the merger was subject to the satisfaction of certain
conditions, including, among others, the effectiveness of the registration statement on
Form S-1 filed on June 24, 2004 by Splinex with the Securities and Exchange Commission to
register the dividend by the Company of the shares of Splinex common stock to be issued in
the merger.



Two of the Companys directors,
Dr. Peter Novak and Mike Zoi, collectively beneficially own 75% of the outstanding common
stock of Ener1 Group, Inc., which owns approximately 88% of the outstanding common stock
of the Company. Novak and Zoi also beneficially own an aggregate of 25% of the voting
membership interests (and an aggregate of 25.5% of the economic membership interests) of
Splinex, LLC, which holds approximately 95% of the outstanding common stock of Splinex.
The remaining membership interests of Splinex, LLC are held by Mikhail Zingarevich (a
director of Splinex and the brother of Boris Zingarevich, a 25% shareholder of Ener1
Group), who beneficially owns 12.75% of the economic membership interests (and 12.5% of
the voting membership interests) of Splinex, LLC and Alexander Malovik, who beneficially
owns 50% of the voting membership interests (and 49% of the economic membership interests)
of Splinex, LLC.

Two of the Companys directors,
Kevin P. Fitzgerald and Peter Novak, are also directors of Splinex. Dr. Novak was also the
President of Splinex from its inception February 7, 2004 to August 31, 2004.

12.    
          ENERDEL FORMATION

On October 26, 2004, the Company
combined certain of its lithium battery assets with those of Delphi Automotive Systems,
LLC and Delphi Technologies, Inc. (collectively, Delphi) into a newly
organized Delaware corporation, EnerDel, Inc. (EnerDel). The Company completed
the transactions pursuant to, among other documents, a Formation, Subscription and
Stockholders Agreement (the Formation Agreement) between the Company and
Delphi, dated as of October 20, 2004. Pursuant to the Formation Agreement, the Company
received 80.5% of EnerDels issued and outstanding shares of common stock in
consideration for the contribution by the Company and its subsidiaries of the following
assets to EnerDel:

| |  | $15
million in cash;
| | - | --------------------

| |  | the
right to use certain lithium battery related equipment in Ener1 Battery Companys
Ft. Lauderdale manufacturing facility valued at $11,938,315, along with a
nominally-priced purchase option for such equipment, which option is exercisable only
upon termination of the security interest granted in favor of the holders of the
Debentures;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Ener1
Batterys battery-related intellectual property portfolio, which is licensed to
Ener1 for non-lithium battery uses under an exclusive, perpetual and royalty-free
license; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Ener1
Ukraines battery-related intellectual property portfolio, which is licensed to
Ener1 for non-lithium battery uses under an exclusive, perpetual and royalty-free
license.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, Ener1 Battery agreed to
make available to EnerDel space in Ener1 Batterys building in Fort Lauderdale
containing Ener1 Batterys above-described battery related equipment. Ener1 also
caused to be licensed to EnerDel certain vapor deposition technology for use in connection
with EnerDels lithium battery-related operations.

Pursuant to the Formation Agreement,
Delphi received:

| |  | 19.5%
of EnerDel's issued and outstanding shares of common stock;
| | - | -----------------------------------------------------------------

| |  | 8,000
shares of EnerDels 8.25% Series A Preferred Stock with an aggregate face and
liquidation value of $8 million (the Series A Preferred Stock) (see Note 16);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | immediately
exercisable warrants with a ten year term to purchase up to 1.75 million shares of the
Companys common stock for $0.70 per share; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | immediately
exercisable warrants with a ten year term to purchase up to 5.25 million shares of the
Companys common stock for $1.00 per share.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



The Series A Preferred Stock was
exchangeable, at any time prior to January 31, 2005, at the option of the holder, into up
to 6,956,521 shares of Ener1 common stock, based on an exchange rate of 869.5652 shares of
our common stock for each share of Series A Preferred Stock. This exchange right was not
exercised.

The Series A Preferred Stock must be
redeemed by EnerDel for cash, at the liquidation value plus accrued and unpaid dividends
upon certain circumstances (including the completion of an initial public offering of
EnerDels common stock). If the Series A Preferred Stock is not redeemed within four
(4) years after issuance, then at the holders option, it may be redeemed by EnerDel
at the liquidation value plus accrued and unpaid dividends in exchange for cash, an
EnerDel promissory note, or a combination of both, at EnerDels option, such note to
be payable in four equal quarterly installments and bearing interest at 8.25% per annum.

In consideration of the foregoing,
Delphi contributed to EnerDel its lithium battery-related equipment valued at $8,517,600
and its lithium battery-related patent portfolio valued at $5,100,000, which is licensed
back to Delphi for non-lithium battery uses under an exclusive, perpetual and royalty-free
license. In addition, Delphi entered into an agreement with EnerDel pursuant to which
EnerDel subleased those portions of Delphis Indianapolis facilities that contained
lithium battery operations.

Pursuant to the Registration Rights
Agreement dated as of October 20, 2004, between the Company and Delphi Automotive, the
EnerDel shares of common stock issued in the transaction and the shares of the
Companys common stock issuable upon exercise of the above-described warrants are
subject to certain demand and piggyback registration rights. In addition, pursuant to the
Formation Agreement, the Company and Delphi have agreed to provide one another with
certain tag-along rights and rights of first refusal in the event either party desires to
sell any of its respective EnerDel securities received in the transaction.

A number of the assets transferred
from Delphi and Ener1 during the formation of EnerDel were considered to be assets to be
used in Research and Development Activities (R&D) because the assets were being used
in product development and prototyping efforts at the time of the transfer. The Company
anticipates that EnerDel will continue to use the transferred assets in R&D activities
on future product development and prototyping projects and alternatively EnerDel intends
to use certain of the transferred assets for production of lithium batteries in response
to anticipated future customer orders. As such uses are contingent upon the successful
completion of current R&D projects and/or receipt of such orders, this equipment was
expensed to R&D upon acquisition in accordance with SFAS No.2.

Statement of Financial Accounting
Standards No. 2 Accounting for Research and Development Costs requires that
assets to be used in R&D activities are to be immediately charged to income unless an
alternative future use for the asset exists. AICPA Practice Aid, Assets
Acquired in a Business Combination to be Used in Research and Development Activities
states that for an asset acquired for use in an R&D activity to have an alternative
future use: (a) it is reasonably expected that the combined enterprise will use the
asset acquired in the alternative manner and that the asset embodies an
anticipated capacity singly or in combination with other assets, to contribute directly or
indirectly to future net cash flows (economic benefit) from that alternative
use; (b) the combined enterprises use of the asset acquired is not
contingent on further development of the asset subsequent to the acquisition date (that
is, the asset can be used in the alternative manner in the condition in which it existed
at the acquisition date), and (c) is identified by the acquiring company at
the acquisition date.

Though the Company intends to use the
equipment in future product development projects and for future production it is unable to
specifically identify the projects or products at this time due to the indeterminable
nature of specific future customer needs and therefore does not meet the requirement in
(c) above for alternative future uses. Similarly, because of the currently
indeterminable nature of future customer needs, the Company cannot project the
economic benefit of specific future R&D projects or of future anticipated
customer production and therefore the Company does not meet the requirement in (a) above
for alternate uses, Finally, because future specific customer requirements may
require modification, or further development, of the transferred assets before future
product development projects or customer production can commence, the Company does not
meet the requirement in (b) above.

Consequently, due to the inability to
meet the requirements for alternate future uses above, the Company has charged
Research and Development (R&D) expense for the value of the certain assets that were
transferred to EnerDel at its formation.



13.     SALE of
SERIES B PREFERRED STOCK and WARRANTS to PURCHASE COMMON STOCK

In order to finance its contribution
of $15 million in cash to EnerDel (see Note 12), the Company entered into a Subscription
Agreement as of October 15, 2004, with Cofis Compagnie Fiduciaire S.A., a Swiss trust
company (Cofis). The securities issued pursuant to the Subscription Agreement
are beneficially owned by an affiliate of Ener1 Group, Inc., the Companys majority
shareholder.

The Company issued the following
securities to Cofis in exchange for an aggregate purchase price of $15 million in cash:

| |  | 150,000
shares of Series B 7% Convertible Preferred Stock, par value $0.01 per share (the Series
B Preferred) (see Note 16);
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | a
warrant to purchase 4,166,666 shares of common stock at an exercise price of $1.25 per
share; and
| | - | ---------------------------------------------------------------------------------------------------

| |  | a
warrant to purchase 4,166,666 shares of common stock at an exercise price of $1.50 per
share.
| | - | -----------------------------------------------------------------------------------------------

The Series B Preferred has a
liquidation preference of $100.00 per share. Dividends accrue on each share of Series B
Preferred at the annual rate of seven percent of the liquidation value and are payable
semi-annually, beginning November 1, 2005. Dividends are payable in the form of additional
shares of Series B Preferred for the first two years following issuance of the Series B
Preferred and in cash thereafter, and, as of March 31, 2005, there was an accrued dividend
payable recorded of $463,151 payable to Cofis.

If the Company files a registration
statement with the SEC to register an offering of Common Stock, the holder of the Series B
Preferred shall have the right to convert that number of shares of Series B Preferred
equal to up to 50% of the then-unredeemed aggregate liquidation value of said Series B
Preferred into Common Stock in order to include such Common Stock in the registration
statement. The conversion ratio shall be established by dividing the liquidation value per
share of Series B Preferred by the price established for the Common Stock in the offering.
These rights to convert the Series B Preferred and to include the Common Stock issued upon
conversion in the registration statement are subject to the discretion of the underwriters
for the offering.

The Series B Preferred is redeemable
by the Company at any time in part or whole at 100% of the liquidation value, plus accrued
and unpaid dividends. Any such redemption at Ener1s option would only be effected
with consent of holders of the Companys senior secured debentures due 2009, pursuant
to the terms of the documents related to those debentures. The Series B Preferred is
redeemable at the option of the holder once 100% of those debentures are converted or
repaid.

Each of the warrants has a term of
ten years and may be exercised in whole or in part at any time prior to the expiration of
the warrants. The exercise price must be paid in cash. The holder of the warrants may not
transfer the warrants without Ener1s consent.

14.     AGREEMENT
WITH ENER1 GROUP

Effective as of October 15, 2004, the
Company entered into an agreement with Ener1 Group, Inc., its majority shareholder, under
which Ener1 Group agreed to purchase, from time to time, at the Companys request, up
to 30,000 shares of the Series B Preferred at a purchase price of $100.00 per share (or an
aggregate purchase price of $3 million), which includes warrants to purchase up to 833,334
shares of its common stock at an exercise price of $1.25 per share, and warrants to
purchase up to 833,334 shares of its common stock at an exercise price of $1.50 per share.

If the Company requires Ener1 Group
to purchase any of the Series B Preferred and warrants pursuant to this agreement, it will
pay Ener1 Group a fee equal to one third of the aggregate purchase price for the
securities purchased specifically by Ener1 Group, in return for Ener1 Groups
assistance in arranging the sales of Series B Preferred.

In March 2005, at the
Companys request, Ener1 Group purchased 2,500 of the Companys Series B
Preferred shares, and warrants to purchase 138,890 shares of the Companys common
stock, for an aggregate purchase price of $250,000.



15.    
          7.5% SENIOR SECURED CONVERTIBLE DEBENTURES DUE 2009

On March 11, 2005, the Company
entered into a securities purchase agreement under which Ener1 agreed to issue $14,225,000
in aggregate principal amount of 7.5% Senior Secured Convertible Debentures due March 2009
(the Debentures) and Warrants to purchase 7,112,500 shares of common stock of
Ener1. The securities were issued on March 14, 2005. The net proceeds of the issuance was
$13,133,781 after direct placement costs of $1,091,219. The Debentures mature on March 14,
2009. Interest is payable quarterly in arrears on March 31, June 30, September 30 and
December 31, beginning March 31, 2005. The interest rate will increase to 15% per year if
Ener1 fails to meet certain milestones as of the first anniversary of the date of issuance
of the Debentures.

The Debentures are convertible by the
holder at any time prior to maturity into shares of common stock of the Company, initially
at $1.00 per share, subject to adjustment upon certain events, including as a result of
the sale of equity securities by the Company at a price below the conversion price. The
Company may require that a specified amount of the principal of the Debentures be
converted if the milestones are satisfied for a period of 22 consecutive trading days.

At any time on or after March 14,
2008, Ener1 may prepay some or the entire principal of the Debentures at a price of one
hundred and three percent (103%) of the amount of unpaid principal, plus accrued interest.
Upon certain change in control events or upon an event of default (as defined in the
Debentures) a holder may require the Company to repurchase such holders Debentures
in cash at the price specified in the Debentures.

The Debentures are senior to the
Companys existing and future indebtedness and pari passu with the Companys
Senior Secured Debentures due 2009 issued in January 2004 (the Existing
Debentures). The Security Agreement provides that the Company will grant a security
interest in favor of the investors in certain collateral if certain events occur.

In connection with the issuance of
the Debentures, the Company issued warrants to purchase the Company's common stock to the investors to purchase an aggregate of
up to 4,267,500 shares of common stock at $1.15 per share and an aggregate of up to 2,845,000 shares of common stock at
$1.25 per share (the Warrants). The initial exercise prices are subject to adjustment upon certain
events, including as a result of the sale of equity securities by the Company at a price
below the exercise price. A discount on the debentures of approximately $2,953,000 was
recorded to additional paid in capital based on the relative fair value of the warrants issued to the investors who purchased the Debentures.
This discount will be amortized to interest expense over the life of the Debentures using
the interest method.

The
Company also agreed to issue Warrants to purchase up to 426,750 shares of common stock with an exercise
price of $1.00 to SG Cowen & Co., LLC, which acted as placement agent for the private
placement. The fair market value of the warrants was determined to be $213,375 and was
recorded as deferred debenture costs.

The Warrants are exercisable (in
whole or in part) at any time on or before March 14, 2010.

If the Company or any of its
subsidiaries issue capital stock prior to March 15, 2006, the purchasers of the Debentures
have the right, with certain exceptions, to purchase up to twenty percent of the capital
stock issued by Ener1 or its subsidiary.

The Company will be required to make
certain payments to the holders of the Debentures and the Warrants if certain deadlines
with respect to the registration of the resale of the common stock underlying the
Debentures and Warrants are not met or if the shelf registration statement effecting such
registration is otherwise unavailable for the resale of the securities.



16.    
          REDEEMABLE PREFERRED STOCK

EnerDel Series A
Preferred Stock

On October 20, 2004, the Board of
Directors of EnerDel Inc. approved the creation of EnerDel Series A Preferred Stock. The
shares of such series were designated: Non Voting, Cumulative and Redeemable Series A
Preferred Stock, with a par value of $ 0.01, and a liquidation value of $1,000. There are
500,000 shares authorized and 8,000 shares outstanding at March 31, 2005.

The holders of EnerDel Series A
Preferred Stock are entitled to receive dividends as declared by the Board of Directors of
EnerDel at the rate of 8.25% of the liquidation value per share, per annum, payable in cash
annually, commencing on December 31, 2005, and thereafter on the last day of December of
each year that any EnerDel Series A Preferred Stock is outstanding.

The shares of Series A Preferred
Stock are redeemable as follows: a) EnerDel may acquire shares in the market; b) if
EnerDel proposes to register shares of common stock under the Securities Act of 1933, then
EnerDel must redeem all Series A Preferred Stock in full, including all accrued and unpaid
dividends for cash, from the proceeds received from the closing of such completed public
offering; c) all EnerDel Series A Preferred Stock must be redeemed in full, including all
accrued and unpaid dividends, concurrently with and out of the proceeds of the completion
of any public offering for cash registering EnerDel Common Stock for stockholders of
EnerDel that have contractual rights to require EnerDel to register shares of common stock
as part of such proposed registration; d) in the event that EnerDel has not redeemed all
shares of EnerDel Series A Preferred Stock on or before the 4th anniversary of the date of
the certificate, then the holder(s) of the EnerDel Series A Preferred Stock shall have the
option to require EnerDel company to redeem all of the EnerDel Series A Preferred Stock
within 10 days after notifying the company of their exercise of such option.

The initial carrying amount of the
EnerDel Series A Preferred Stock was recorded at its fair value of $3,700,000. The
carrying amount of the EnerDel Series A Preferred Stock was increased by $598,442 due to
accretion of the discount, and by $292,932 due to accrued dividends through March 31,
2005. The carrying amount of the EnerDel Series A Preferred Stock at March 31, 2005 was
$4,591,374.

Ener1, Inc. Series B
Convertible Preferred Stock

On October 13th, 2004, the Board of
Directors of Ener1, Inc. approved the creation of Ener1 Series B Convertible Preferred
Stock. The shares of such series were designated: Series B Convertible Preferred Stock,
with a par value of $0.01, and a liquidation value of $100. There are 180,000 shares authorized
and 152,500 shares outstanding at March 31, 2005.

The Ener1 Series B Convertible
Preferred Stock ranks: a) junior to any other class or series of capital stock of Ener1
hereafter created, specifically ranking by it's terms, senior to the Ener1 Series B
Convertible Preferred Stock; b) senior to Ener1s common stock; c) senior to any
class or series of capital stock hereafter created not specifically ranking by its
terms senior to the Ener1 Series B Convertible Preferred Stock; and, d) pari passu with
any class or series of capital stock created specifically ranking by its terms on parity
with the Ener1 Series B Convertible Preferred Stock.

The holders of Ener1 Series B
Convertible Preferred Stock are entitled to dividends payable semi-annually, in arrears,
on November 1 of each year during which the Ener1 Series B Convertible Preferred Stock is
outstanding, beginning November 1, 2005. For the first two years after issuance of the
Ener1 Series B Convertible Preferred Stock, dividends are to be paid-in-kind, in the form
of additional shares of Ener1 Series B Convertible Preferred Stock, at the rate of 7.0% of
the liquidation value; thereafter, dividends are to be paid in cash at the rate of 7.0% of the
liquidation value. The dividends are cumulative.



The shares of Ener1 Series B
Convertible Preferred Stock are redeemable by Ener1 at any time in part or whole at 100%
of the liquidation value, plus accrued and unpaid dividends. The Ener1 Series B Convertible
Preferred Stock is redeemable by the holder when 100% of the Companys Senior Secured
Debentures due January 20, 2009 (Note 10) are liquidated. If liquidation of the Senior
Secured Debentures occurs in full before January 20, 2009, redemption shall be in 24 equal
monthly installments beginning 30 days from the date of notice by the holder.

On October 15, 2004, the Company
entered into a subscription agreement with Cofis Compagnie Fiduciaire S.A., for the sale
of 150,000 shares of the Ener1 Series B Convertible Preferred Stock, warrants to
purchase 4,166,666 shares of the Companys common stock at an exercise price of $1.25
and warrants to purchase 4,166,666 shares of the Companys common stock at an
exercise price of $1.50 per share for an aggregate consideration of $15,000,000.

The initial carrying amount of the
Ener1 Series B Convertible Preferred stock was recorded at its fair value. The company,
utilizing the Black Scholes Model calculated the discount on the preferred stock
attributed to the warrants that were issued in connection with the preferred stock to be $4,666,666. The carrying amount of $10,333,334, which is
net of discounts, was recorded as Redeemable Preferred Stock. The carrying amount will be
periodically increased by accretion of the discount and dividends charged to
Paid-in-Capital.

In March, 2005 The Company issued to Ener1 Group
2,500 shares of Series B Convertible Preferred stock at a purchase price of $100
per share in accordance with the financing agreement the Company has with Ener1 Group
described in Note 14. Purchase of the Series B Preferred entitled Ener1 Group to receive
warrants to purchase 69,445 shares of the Company common stock at an exercise price
of $1.25 per share and warrants to purchase 69,445 shares of the Companys common
stock at $1.50 per share. The initial carrying amount of the Series B Convertible
Preferred stock was recorded at its fair value. The Black Scholes Model was used to
calculate the discount on the preferred stock attributable to the warrants, which was
determined to be $97,223. The carrying amount of $152,777, which is net of discounts, was
recorded as Redeemable Preferred Stock. The carrying amount is periodically increased by
accretion of the discount to interest expense and dividends accrued. The carrying amount
of Ener1 Groups Series B Convertible Preferred stock at March 31, 2005 was $161,146.

The carrying amount of the aggregate
outstanding Ener1 Series B Convertible Preferred Stock at March 31, 2005 was $11,659,344,
consisting of the original net fair value of $10,486,111, accretion of the discount of
$705,481, and accrued dividends of $467,752.

The table below is an explanation
of the components of redeemable preferred stock as of March 31, 2005

|                                   | Ener1
Series B | EnerDel
Series A | Total
|---------------------------------- | -------------- | ---------------- | -----
|Carrying amount                    |                |                  | $    
|Accumulated accretion of discounts |                |                  |      
|Cumulative dividends               |                |                  |      
|                                   |                |                  |      
|                                   |                |                  | $    
|                                   |                |                  |      

17.     COMMITMENTS
AND CONTINGENCIES

Litigation

The Company receives communications
from time to time alleging various claims. These claims include, but are not limited to,
allegations that certain of the Companys products infringe the patent rights of
other third parties. The Company cannot predict the outcome of any such claims or the
effect of any such claims on the Companys operating results, financial condition, or
cash flows.



Lease Commitments

In April 2005 the Company entered
into a 5 year and 2 month operating lease for office facilities located at 712 Fifth
Avenue, New York, New York. The lease provides for fixed rent of $426,240 per annum
through the balance of the lease term.

18.       
          STOCK and OPTION ISSUANCES DURING QUARTER ENDED MARCH 31, 2005

Effective March 1, 2005, pursuant
to a financing commitment agreement between the Company and Ener1 Group, (Note 14), the
Company issued 2,500 shares of Series B Convertible Preferred Stock to Ener1 Group.

Effective March 1, 2005, as part
of the financing commitment agreement between the Company and Ener1 Group, the Company
also issued warrants to purchase 69,445 shares of the Companys common stock at an
exercise price of $1.25 per share, and warrants to purchase 69,445 shares of the
Companys common stock at an exercise price of $1.50 per share.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $7,122,000, (Note 14), 2,136,600
shares of warrants to purchase common stock at an exercise price of $1.15 and 1,424,400 shares
 at an exercise price of $1.25 were granted to Satellite
Strategic Finance Partners, Ltd.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $2,878.000, (See Note 14),
863,400 shares of detachable warrants at an exercise price of $1.15 and 575,600
shares of detachable warrants at an exercise price of $1.25 were granted to
Satellite Strategic Finance Associates, LLC.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $2,000,000, (See Note 14),
600,000 shares of detachable warrants at an exercise price of $1.15 and 400,000
shares of detachable warrants at an exercise price of $1.25 were granted to
Omicron Master Trust.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $750,000, (See Note 14), 225,000
shares of Series A detachable warrants at an exercise price of $1.15 and 150,000 shares of
Series B detachable warrants at an exercise price of $1.25 were granted to Castle Creek
Technology Partners, LLC.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $725,000, (See Note 14), 217,500
shares of detachable warrants at an exercise price of $1.15 and 145,000 shares of
detachable warrants at an exercise price of $1.25 were granted to SG Private
Banking (Suisse) S.A.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $385,000, (See Note 14), 115,500
shares of detachable warrants at an exercise price of $1.15 and 77,000 shares of
detachable warrants at an exercise price of $1.25 were granted to Basso
Multi-Strategy Holding Fund, Ltd.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $115,000, (See Note 14), 34,500
shares of detachable warrants at an exercise price of $1.15 and 23,000 shares of
detachable warrants at an exercise price of $1.25 were granted to Basso Private
Opportunity Holding Fund, Ltd.

Effective March 14, 2005, pursuant to
the issuance of a convertible debenture in the amount of $250,000, (See Note 14), 75,000
shares of detachable warrants at an exercise price of $1.15 and 50,000 shares of
detachable warrants at an exercise price of $1.25 were granted to Iroquois
Capital LP.



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

This report on Form 10-QSB contains
forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 23E of the Securities Act of 1934, as amended. These
statements relate to our expectations regarding future events or future financial
performance. Any statements contained in this report that are not statements of historical
fact may be deemed forward-looking statements. In some cases, forward-looking statements
can be identified by terminology such as may, will,
should, expect, plan, anticipate,
intend, believe, estimate, predict,
potential or continue, or the negative of such terms or other
comparable terminology. These statements are only predictions and are subject to a number
of assumptions, risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements. The
following important factors, in addition to those discussed 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: general economic conditions; competition; our ability to control costs;
changes within our industries; release of new and upgraded products and services by us or
our competitors; development of our sales force; employee retention; managerial execution;
legal and regulatory issues; changes in accounting policies or practices; and successful
adoption of our products and services.

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 Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and
other filings with the Securities and Exchange Commission and the condensed consolidated
financial statements and related notes included in this Quarterly Report.

Results of Operations

Net Sales.  We had no
significant sales from continuing operations in either of the three month periods ended
March 31, 2005 and 2004.

Gross Profit (Loss) We had no
significant gross profit or loss from continuing operations in either of the three month
periods ended March 31, 2005 and 2004.

Research & Development
Expenses (R&D) R&D expenses increased $1,743,990 during the three
months ended March 31, 2005, from $509,633 to $2,253,623 when compared to the same period
in 2004. This increase is primarily due to an increase of $1,248,157, in battery R&D
resulting from the formation of EnerDel Inc; an increase of $282,561, in R&D conducted
by NanoEner due to the purchase of VDS equipment for research and development; and an
increase of $213,272, in Fuel Cell R&D to build sample fuel cell stacks.

Selling, General, and
Administrative Expenses (SGA) SG&A expenses increased 19.3%, or
approximately $475,000, from $2,460,000 to $2,935,000 during the three months ended March
31, 2005, when compared to the same period in 2004. This increase is primarily due to an
increase of 698%, or $288,000, in depreciation because of battery production lines being
put into service during the quarter ended March 31, 2005; an increase of 71%, or $150,000,
in outside services; an increase of 454%, or $143,000, in rent expense due to the
acquisition of office space from Delphi; an increase of $74,000 from $0.00, in computer
and IT costs to support the new engineering center in Indianapolis; an increase of 241%,
or $55,700, in travel and travel related expenses due to the new office in Indianapolis;
an increase of 715%, or $25,000, in postage expenses; an increase of 222%, or $25,000, in
office supplies; and an increase of 2%, or $10,000 in all other expense categories
partially offset by a decrease of 12.2%, or $112,000, in administrative salaries; a
decrease of 23%, or $184,000, in professional fees.

Manufacturing Pre-production
Costs. Beginning in June 2004, we began preparing our battery manufacturing plant in Fort Lauderdale to
begin production, in addition to continuing our research and development activities.
Manufacturing pre-production cost for the three months ended March 31, 2005 and 2004 were
$793,000 and $0 respectively. These expenses were incurred for implementing new
manufacturing infrastructure, including new personnel, policies, and procedures.



Liquidity and Capital
Resources

As of December 31, 2004, we had
working capital of $11.8 million. As of March 31, 2005, our working capital was $19.0
million, which included $21 million consisting of cash and equivalents offset by $2 million in current liabilities. During the period
from December 31, 2004 through March 31, 2005, our working capital increased by $7.2
million. This increase was primarily the result of the receipt of net proceeds of $13.1
million from the sale of our 7.5% Senior
Secured Convertible Debentures due March 2009 and warrants to purchase our common stock.

During the three month period ended
March 31, 2005 we purchased $152,728 of capital equipment, of which: $20,920 was for
manufacturing equipment in our battery manufacturing plant; and $131,808 was for
administrative equipment, primarily computing equipment.

We will require additional capital
within the next twelve months to support the activities of EnerDel, EnerFuel and NanoEner.
We intend to seek additional financing, which may take the form of equity or debt funding.
We cannot assure you that any such required capital will be available on terms acceptable
to us, if at all, and, at such time or times as it we require it. If additional financing is not obtained, such a condition, among others, will
give rise to substantial doubt about the Companys ability to continue as a going
concern for a reasonable period of time.

Critical Accounting
Policies

The preparation of financial
statements and related disclosures in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and revenues and expenses during
the period reported. The following accounting policies involve a critical accounting
estimate because they are particularly dependent on estimates and assumptions made
by management about matters that are highly uncertain at the time the accounting estimates
are made. In addition, while we have used our best estimates based on facts and
circumstances available to us at the time, different estimates reasonably could have been
used in the current period. Changes in the accounting estimates we used are reasonably
likely to occur from period to period which may have a material impact on the presentation
of our financial condition and results of operations. We review these estimates and
assumptions periodically and reflect the effects of revisions in the period that they are
determined to be necessary.

Accounting for employee
stock options

As permitted under Statement of
Financial Accounting Standard No. 123 (SFAS No. 123), Accounting for Stock-Based
Compensation, we account for employee stock options in accordance with Accounting
Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock
Issued to Employees. Under APB No. 25, we recognize compensation cost based on the
intrinsic value of the equity instrument awarded as determined at the measurement date. We
disclose the required pro forma information in our notes to consolidated financial
statements as if the fair value method prescribed by SFAS No. 123 had been applied.

In December 2004, the FASB issued
SFAS No.123 (revised 2004), Share-Based Payment (Statement 123(R)), which is a revision of
FASB Statement No. 123, Accounting for Stock-Based Compensation (Statement 123). Statement
123(R) supersedes APB Opinion No25, Accounting for Stock Issued to Employees, and amends
FASB Statement No. 95, Statement of Cash flows. Statement 123 (R) requires all share-based
payments to employees, including grants of employee stock options, to be recognized at the
date of grant in the income statement based on their fair values. Pro forma disclosure is
no longer an alternative. Statement 123(R) is effective at the beginning of the first
interim or annual period beginning after December 15, 2005. The impact of adoption of
Statement 123(R) cannot be accurately predicted at this time since it will depend on
levels of share-based payments in the future. However, had we adopted Statement
123(R) in prior periods, the impact of the standard would have approximated the impact of
Statement 123 as described in the disclosure of pro forma net income and earnings per
share in the notes to our financial statements. Statement 123(R) also requires the benefits of tax deductions in
excess of recognized compensation cost to be reported as a financing cash flow, rather
than as an operating cash flow as required under current literature. This requirement will
reduce net operating cash flows and increase financing cash flows in periods after
adoption. The Company cannot estimate what those amounts will be in the future because
they depend on, among other things, when employees exercise stock options. We
expect to adopt Statement 123(R) on January 1, 2006.



Item
3.  Controls and Procedures

We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms, and that
such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow for timely
decisions regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, 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 management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.

As of March 31, 2005, we carried out
an evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures. Based
on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures were effective and were operating at the reasonable
assurance level.

There have been no changes in our
internal control over financial reporting during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.



PART II.  OTHER
INFORMATION

Item 1.  Legal
Proceedings

We receive communications from time
to time alleging various claims against us and our subsidiaries. These claims include, but
are not limited to, 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.

Item
2.  Unregistered Sales of Equity Securities and Use of Proceeds

On March 1, 2005, we issued 2,500
shares of Series B Preferred Stock and warrants to purchase 138,890 shares of our common
stock, for an aggregate purchase price of $250,000 to Ener1 Group. The issuance of these
securities was exempt from registration under Rule 506 of Regulation D and under Section
4(2) of the Securities Act of 1933, as sales not involving a public offering.

Item 6.  Exhibits

| | 4.1 | Form
of 5% Senior Secured Convertible Debenture incorporated by reference to Exhibit 4.1 to
our Current Report on Form 8-K dated January 21, 2004.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2 | Form
of Warrant to Purchase Common Stock incorporated by reference to Exhibit 4.2 to our
Current Report on Form 8-K dated January 21, 2004.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.4 | Form
of 7.5% Senior Secured Convertible Debenture incorporated by reference to Exhibit 4.1 to
the Registrants Current Report on Form 8-K dated March 15, 2005.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.5 | Form
of Warrant to Purchase Common Stock incorporated by reference to Exhibit 4.2 to the
Registrants Current Report on Form 8-K dated March 15, 2005.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.6 | Registration
Rights Agreement, dated as of March 14, 2005, 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 March 15, 2005.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.7 | 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.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.8 | Registration
Rights Agreement by and between Ener1 and Delphi Automotive Systems LLC, dated October
20, 2004, incorporated by reference to Exhibit 10.33 to Ener1s Annual Report on
Form 10-KSB for the period ending December 31, 2004.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.9 | Form
of Warrant to Purchase Common Stock of Ener1, dated October 20, 2004 Issued to Delphi
Automotive Systems, LLC, incorporated by reference to Exhibit 4.4 to Amendment No. 1 to
Ener1s Quarterly Report on Form 10-QSB/A for the period ending September 30, 2004.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.10 | 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 of the Registrants
Registration Statement on Form SB-2 filed on May 9, 2005 (Commission File No.
333-124745).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.11 | 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 to the Registrants Annual Report on Form
10-KSB for the period ending December 31, 2004.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.12 | 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 to the Registrants Annual Report on Form
10-KSB for the period ending December 31, 2004.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | 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 Item 10.2 of Registrants Current Report on Form 8-K dated March 15,
2005.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 | 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 incorporated by
reference to Item 10.1 of Registrants Current Report on Form 8-K dated March 15,
2005
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 | 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 5% Senior Secured Convertible Debentures incorporated by reference to Item
10.3 of Registrants Current Report on Form 8 K dated March 15, 2005
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certification
of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002
| | ---- | ------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002
| | ---- | ------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certification
of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certification
of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 of the undersigned thereunto duly authorized.

|                                                                                                                        |                                                                                                                                                                                                                                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dated: May 16, 2005
                   
                   
                   
                   
Dated: May 16, 2005 | ENER1, INC.
By:  /s/ Kevin P. Fitzgerald              
Kevin P. Fitzgerald
Chief Executive Officer
(Principal Executive Officer and Duly Authorized
Officer)
By: /s/ James Calarco
James Calarco
Interim Chief Financial Officer, Controller (Duly Authorized Principal Financial and Accounting
Officer and Duly Authorized Officer)