##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2009Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    no. 1-33001
  ENOVA SYSTEMS, INC.
 (Exact name of registrant as
    specified in its charter)
  California

95-3056150(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)   1560 West 190th Street, Torrance, California 90501
 (Address of principal executive
    offices, including zip code)
  Registrants telephone number, including area code:
 (310) 527-2800
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value

The NYSE Amex   Securities registered pursuant to Section 12(g) of the
    Act:
   o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   Rule 12b-2 o þ
    DOCUMENTS INCORPORATED BY REFERENCE




---



##### 





ENOVA
    SYSTEMS, INC.
  2009
    FORM 10-K
    ANNUAL REPORT
  TABLE OF
    CONTENTS
   
 PART IItem 1.


BUSINESS


3Item 1A.


RISK FACTORS


15Item 1B.


UNRESOLVED STAFF COMMENTS


18Item 2.


PROPERTIES


18Item 3.


LEGAL PROCEEDINGS


18Item 4.


RESERVED


19PART IIItem 5.


MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


19Item 6.


SELECTED FINANCIAL DATA


20Item 7.


MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


21Item 7A.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


29Item 8.


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


30Item 9


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


53Item 9A(T).


CONTROLS AND PROCEDURES


53Item 9B.


OTHER INFORMATION


53PART IIIItem 10.


DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


54Item 11.


EXECUTIVE COMPENSATION


58Item 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


62Item 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


64Item 14.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


64PART IVItem 15.


EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


65EX-23.1EX-31.1EX-31.2EX-32   2




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PART I  ITEM 1.
    BUSINESS  General
              up-to-date
   3




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##### Table of Contents




    The Company received its certification for ISO 9001:2000 for
    Quality and ISO 14001 for Environmental Management over our
    operational and manufacturing processes in the first quarter of
    2009. In order to receive ISO certifications for quality and
    environmental management systems, an organization must
    demonstrate operating systems and procedures for managing its
    processes to consistently turn out products and services that
    meet customer and regulatory requirements, as well as identify
    and control the environmental impact of its activities, products
    or services.
    The Company implemented a formal kaizen process from
    the second quarter of 2009 aiming to improve manufacturing line
    efficiency and production capacity, which included the
    reconfiguration of the production floor and improved assembly
    and testing processes that resulted in a 30% increase in
    capacity and improved product quality. As a result of these
    efforts, we were able to deliver a record 200 systems to FAW in
    the third quarter of 2009 without increasing production employee
    headcount.
    In the second quarter of 2009, we completed reorganization
    efforts aimed to align our engineering and program management
    functions in support of key customer and product development
    initiatives. This included streamlining our management structure
    and implementing a 36% reduction of our employee headcount in
    2009 as compared to 2008. As the financial structure of the
    Company improved in the second half of 2009, management has
    approved increasing headcount in key areas of engineering in the
    first quarter of 2010 in support of new product launches planned
    during this fiscal year.    Customer

PercentFirst Auto Works Group Corporation


56
%Navistar, Inc.


15
%Hawaii Center for Advanced Transportation Technologies


13
%   Climate
    Change Initiatives and Environmental Legislation
    S-01-07, 2
 4




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##### Table of Contents



5




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##### Table of Contents



Strategic
    Alliances, Partnering and Technology Developments
        
    Freightliner Custom Chassis Corporation (FCCC), a
    division of Daimler Trucks North America, and Enova executed a
    letter of intent to enter into an all-electric commercial
    chassis development program. The development program includes
    close collaboration and will involve the engineering and
    integration of Enovas 120kW all-electric drive system
    technology into target FCCC chassis platforms, including the
    MT-45
    walk-in van chassis. Freightliners highest volume MT-45
    chassis is used by a range of customers, including UPS and
    Federal Express. The strategic agreement consists of four phases
    that include the development of vehicles and placement into
    national fleets. Design, engineering, integration and testing
    activities will be conducted at the FCCC plant in Gaffney, SC
    and the Enova facility in Torrance, CA.
    Enova was awarded an exclusive supplier contract with the
    U.S. General Services Administration (GSA),
    which provides vehicles for government agencies and armed
    forces. Under that contract, Enova will supply Enova Ze
    all-electric walk-in step vans to GSA under the Cargo Vans
    category. Enova also saw further federal fleet penetration via
    GSA with the Smith Electric Vehicles (Smith)
    Newton product offering in the Medium and Heavy Duty vehicle
    category. The Smith Newton is another exclusive, all-electric
    medium and heavy duty truck offering on the GSA product menu.
    Moreover, Navistar continued to demonstrate its leadership in
    the American school bus market with its exclusive GSA contract
    to supply hybrid school buses. Enova is the exclusive supplier
    of hybrid electric drive systems to IC Bus, an affiliated
    division of Navistar.
    During 2009 Enova delivered 280 pre-transmission hybrid drive
    systems to First Auto Works (FAW) of China.
    FAWs Jiefang 12-meter hybrid bus can carry 103 passengers.
    These hybrid power buses are part of Chinas initiative to
    produce 500,000 electric and hybrid power vehicles. The
    initiative will account for 5% of the Chinese automobile market,
    which is in accordance with Chinas three-year development
    plan for its auto industry, released in February 2009.  Class 1-7
   6




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##### Table of Contents



Electric
    and Hybrid-Electric Drive Products
      
    30kW and 90kW all-electric drives
    80/25kW hybrid drive
    80/40kW hybrid drive
    90kW hybrid drive
    combinations of these systems based on customer requirements    
    120kW all-electric drive
    120/60kW hybrid drive
    240/120kW hybrid drive          Hybrid
    and Electric Drive Configurations
   7




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##### Table of Contents



Series Hybrid
    with Diesel Generator
  
  and/or
  Post
    Transmission Parallel Hybrid
  
    Pre
    Transmission Parallel Hybrid
  
   8




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##### Table of Contents



All
    Electric Vehicle Drive System
  
    Definitions:
          Electric
    Drive Motors
      Motor
    Controllers
  easy-to-install DC-to-DC AC-to-DC
   9




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##### Table of Contents



Drive
    Systems
    120 60
  120/60kW
  Drive
    System Accessories
      Battery
    Care Unit
  state-of-charge, kilowatt-hours.
      kilowatt-hours
 10




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##### Table of Contents



Control
    Unit
    Safety
    Disconnect Unit
    High
    Voltage Disconnect Unit
    Wiring
    Harness Connector Kits
    Distributed
    Power Generation for Industrial/Commercial/Residential
    Applications
    20kW
    bi-directional Fuel Cell Power Conditioning System
      Fuel
    Cell Management Unit
   11




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Manufacturing
    Strategy
               12




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##### Table of Contents



Competitive
    Conditions
                
    Providing a full product line of power management, power
    conversion, and system integration
    Providing products that allow the hardware to be software
    programmable and configurable
    Offering a product line designed for the most advanced new fuel
    systems: electric, hybrid, fuel cell and solar power applications
    Providing fully integrated, drop-in energy
    management and conversion system in one box
    Offering systems with reduced footprint and weight, high
    functionality and low cost  characteristics essential
    for all market applications
    Meeting changing and sophisticated requirements of emerging
    alternative power markets and applications.
    Positioning ourselves as a strategic ally with our global
    customer base, manufacturers and our R&D partners. 13




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Research
    and Development
      
    Power Control and Drive Systems and related technologies for
    vehicle applications
    Heavy Duty Drive System development for Buses; Trucks,
    Industrial, Military and Marine applications
    Technical and product development under DOE/DOT/DOD contracts
    Development of new 12kW and 18kW Chargers
    Fuel Cell Generation system power management and process control
    Stationary Power Management and Conversion and related
    technologies
    Systems Integration of these technologies, and
    OEM Technical and Product development    Intellectual
    Property
     14




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##### Table of Contents



Employees
    Available
    and Additional Information
    Form 10-K, Form 10-Q, Form 8-K, 1-800-SEC-0330.
  ITEM 1A.
    RISK
    FACTORS    This annual report on
    Form 10-K,
    including the documents that we incorporate by reference,
    contains statements indicating expectations about future
    performance and other forward-looking statements that involve
    risks and uncertainties. We usually use words such as
    may, will, should,
    expect, plan, anticipate,
    believe, estimate, predict,
    future, intend, potential,
    or continue or the negative of these terms or
    similar expressions to identify forward-looking statements.
    These statements appear throughout the
    Form 10-K
    and are statements regarding our current intent, belief, or
    expectation, primarily with respect to our operations and
    related industry developments. Examples of these statements
    include, but are not limited to, statements regarding the
    following: our expansion plans, our future operating expenses,
    our future losses, our future expenditures for
 15




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##### Table of Contents



research and development and the sufficiency of our cash
    resources. You should not place undue reliance on these
    forward-looking statements, which apply only as of the date of
    this annual report. Our actual results could differ materially
    from those anticipated in these forward-looking statements for
    many reasons, including the risks faced by us and described in
    this Risk Factors section and elsewhere in this
    annual report.
  We cannot guarantee that any forward-looking statement will
    be realized, although we believe we have been prudent in our
    plans and assumptions. Achievement of future results is subject
    to risks, uncertainties and potentially inaccurate assumptions.
    Should known or unknown risks or uncertainties materialize, or
    should underlying assumptions prove inaccurate, actual results
    could differ materially from past results and those anticipated,
    estimated or projected. You should bear this in mind as you
    consider forward-looking statements.
  We undertake no obligation to publicly update forward-looking
    statements, whether as a result of new information, future
    events or otherwise. You are advised, however, to consult any
    further disclosures we make on related subjects in our
    10-Q and
    8-K reports
    to the SEC. Also note that we provide the following cautionary
    discussion of risks, uncertainties and possibly inaccurate
    assumptions relevant to our businesses. These are factors that,
    individually or in the aggregate, we think could cause our
    actual results to differ materially from expected and historical
    results. We note these factors for investors as permitted by the
    Private Securities Litigation Reform Act of 1995. You should
    understand that it is not possible to predict or identify all
    such factors. Consequently, you should not consider the
    following to be a complete discussion of all potential risks or
    uncertainties.
  Our
    history of operating losses and our expectation of continuing
    losses may hurt our ability to reach profitability or continue
    operations.
    Because
    we depend upon sales to a limited number of customers, our
    revenues will be reduced if we lose a major
    customer
    We
    extend credit to our customers, which exposes us to credit
    risk
   16




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##### Table of Contents



Our
    business is affected by current economic and financial market
    conditions in the markets we serve
    The
    nature of our industry is dependent on technological advancement
    and is highly competitive
  and/or
    Our
    industry is affected by political and legislative
    changes
    We are
    subject to increasing emission regulations in a changing
    legislative climate
    We may
    be unable to effectively compete with other companies who have
    significantly greater resources than we have
   17




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We may
    be exposed to product liability or tort claims if our products
    fail, which could adversely impact our results of
    operations
    We are
    highly dependent on a few key personnel and will need to retain
    and attract such personnel in a labor competitive
    market
    There
    are minimal barriers to entry in our market
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES  month-to-month
  ITEM 3.
    LEGAL
    PROCEEDINGS   18




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ITEM 4.
    RESERVED PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    Common StockHigh Price

Low PriceCalendar 2009Fourth Quarter

$
1.94


$
1.00Third Quarter

$
1.45


$
0.51Second Quarter

$
1.08


$
0.60First Quarter

$
0.97


$
0.21Calendar 2008Fourth Quarter

$
2.20


$
0.35Third Quarter

$
3.87


$
1.85Second Quarter

$
5.58


$
3.80First Quarter

$
4.86


$
3.51    19




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##### Table of Contents



Dividend
    Policy
    ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  For and as of the Years Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share data)Statement of Operations DataNet revenues

$
5,622


$
6,443


$
9,175


$
1,666


$
6,084Cost of revenues


5,016



8,224



10,313



2,900



6,001Gross profit (loss)


606



(1,781
)


(1,138
)


(1,234
)


83Operating expensesResearch and development


1,228



2,505



1,947



1,363



804Selling, general and administrative


6,223



8,692



6,428



4,178



2,870Total operating expenses


7,451



11,197



8,375



5,541



3,674Other income and (expense)Interest and other income (expense), net


(196
)


202



343



550



13Equity in losses of non-consolidated joint venture, net


(4
)


(118
)


(177
)


(3
)


(118
)Gain on debt restructuring














1,392



1,569Total other income, net


(200
)


84



166



1,939



1,464Net loss

$
(7,045
)

$
(12,894
)

$
(9,347
)

$
(4,836
)

$
(2,127
)Per common share:Basic and diluted loss per share

$
(0.33
)

$
(0.66
)

$
(0.59
)

$
(0.33
)

$
(0.18
)Weighted average number of common shares outstanding


21,385



19,660



15,796



14,802



11,644Balance Sheet DataTotal assets

$
22,011


$
19,242


$
21,173


$
15,730


$
21,973Long-term debt

$
1,286


$
1,263


$
1,306


$
1,295


$
2,321Shareholders equity

$
17,247


$
14,143


$
14,177


$
11,964


$
16,604  20




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Overview
        
    Enova achieved its certification for ISO 9001:2000 for Quality
    and ISO 14001 for Environmental Management over its operational
    and manufacturing processes. In order to receive ISO
    certifications for quality and environmental management systems,
    an organization must demonstrate operating systems and
    procedures for managing its processes to consistently turn out
    products and services that meet customer and regulatory
    requirements, as well as identify and control the environmental
    impact of its activities, products or services.
    Our customer, Navistar, with Enova Systems as a co-applicant,
    was selected to receive a cost-shared award of up to
    $10 million under the Department of Energy Plug-in Hybrid
    Electric Vehicle (PHEV) Technology Acceleration and
    Deployment Activity program to develop and deploy 60 plug-in
    electric hybrid school buses, including engine-off all-electric
    drive capability.
    Enova was awarded an exclusive supplier contract with the
    U.S. General Services Administration (GSA),
    which provides vehicles for government agencies and armed
    forces. Under this contract, Enova will supply Enova Ze
    all-electric walk-in step vans to GSA under the Cargo Vans
    category.
    Freightliner Custom Chassis Corporation (FCCC), a
    division of Daimler Trucks North America, executed a letter of
    intent with Enova to enter into an all-electric commercial
    chassis development program. The development program includes
    close collaboration and will involve the engineering and
    integration of Enovas 120kW all-electric drive system
    technology into target FCCC chassis platforms, including the
    MT-45
    walk-in van chassis. FCCCs highest volume MT-45 chassis is
    used by a range of customers including UPS and Federal Express.
    The strategic agreement consists of four phases that include the
    development of vehicles and placement into national fleets.
    Design, engineering, integration and testing activities will be
    conducted at the FCCC plant in Gaffney, SC and the Enova
    facility in Torrance, CA.
    Enova delivered 280 pre-transmission hybrid drive systems to
    First Auto Works (FAW) of China. FAWs Jiefang
    12-meter hybrid bus can carry 103 passengers. These hybrid power
    buses are part of Chinas initiative to produce 500,000
    electric and hybrid power vehicles. The initiative will account
    for 5% of the 21




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Chinese automobile market, which is in accordance with
    Chinas three-year development plan for its auto industry,
    released in February 2009.  
    Enova saw further federal fleet penetration potential via GSA
    with the Smith Electric Vehicles (Smith)
    Newton product offering in the Medium and Heavy Duty vehicle
    category. The Smith Newton is another exclusive, all-electric
    medium and heavy duty truck offering on the GSA product menu.
    Moreover, Navistar continued to demonstrate its leadership in
    the American school bus market with its exclusive GSA contract
    to supply hybrid school buses. Enova is the exclusive supplier
    of hybrid electric drive systems to IC Bus, an affiliated
    division of Navistar.
    The state of Kentucky won a $13 million Department of
    Energy Clean Cities Grant for hybrid school buses. Our customer,
    Navistar Corporation, claims 90% of the market for school buses
    in Kentucky. Enova has already installed our post-transmission
    hybrid drive system with a new, lighter weight lithium ion
    battery in a demonstration bus. Other Clean Cities grants may be
    available for an additional $5 million. We continue to work
    closely with Navistar and anticipate we may benefit from these
    programs starting in 2010.    state-of-the-art on-site on-site back-up
      Critical
    Accounting Policies
    Cash and cash equivalents
 22




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##### Table of Contents



Allowance for doubtful accounts
  Inventory first-in,
  Inventory reserve
  Property and Equipment
    Impairment of Long-Lived Assets 360-10-35-15,
  Equity Method Investment
  Stock-Based Compensation
   23




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Revenue recognition
  
    Persuasive evidence of an arrangement exists;
    Delivery has occurred or services have been rendered;
    The fee for the arrangement is fixed or determinable; and
    Collectibility is reasonably assured.  Persuasive Evidence of an Arrangement
  Delivery Has Occurred or Services Have Been
    Rendered
  The Fee for the Arrangement is Fixed or
    Determinable
  Collectibility is Reasonably Assured customer-by-customer
  605-25  605-25) and/or 605-25 ASC 605-25
  percentage-of-completion
   24




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##### Table of Contents



work-in-progress.
        Research and Development
  Recent
    Accounting Pronouncements
      other-than-temporary other-than-temporary other-than-temporary other-than-temporary
   25




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##### Table of Contents



Subsequent Events
      No. 2009-13, Revenue Recognition Multiple-Deliverable Revenue Arrangements a consensus
    of the FASB Emerging Issues Task Force. 605-25 Revenue Recognition-Multiple Element Arrangements No. 2009-13
   26




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##### Table of Contents



Results
    of Operations
  Years
    Ended December 31, 2009 and 2008
  Net Revenues.
  Cost of Revenues.
  Gross Margin.
  Research and Development Expenses.
  Selling, General and Administrative
    Expenses.
 27




---



##### Table of Contents



Interest and Other Income (Expense).
  Equity in losses of non-consolidated joint
    venture.
  Liquidity
    and Capital Resources
  and/or
       28




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   29




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  ENOVA
    SYSTEMS, INC.
  CONTENTS
 December 31,
    2009 and 2008
  PageREPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


31FINANCIAL STATEMENTSBalance Sheets


32Statements of Operations


33Statements of Stockholders Equity


34Statements of Cash Flows


35Notes to Financial Statements


36  30




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               31




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##### Table of Contents



ENOVA
    SYSTEMS, INC.
  BALANCE
    SHEETS
  December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
13,078,000


$
5,324,000Short term investments


200,000



2,000,000Accounts receivable, net


1,442,000



808,000Inventories and supplies, net


5,605,000



7,649,000Prepaid expenses and other current assets


263,000



215,000Total current assets


20,588,000



15,996,000Property and equipment, net


1,363,000



1,829,000Investment in non-consolidated joint venture






1,352,000Intangible assets, net


60,000



65,000Total assets

$
22,011,000


$
19,242,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
415,000


$
592,000Deferred revenues


357,000



Accrued payroll and related expenses


277,000



295,000Other accrued liabilities


1,287,000



1,859,000Current portion of notes payable


68,000



98,000Total current liabilities


2,404,000



2,844,000Accrued interest payable


1,074,000



992,000Notes payable, net of current portion


1,286,000



1,263,000Total liabilities


4,764,000



5,099,000Commitments and contingencies (Note 11)Stockholders equity:Series A convertible preferred stock  no par
    value, 30,000,000 shares authorized; 2,652,000 shares
    issued and outstanding; liquidating preference at $0.60 per
    share as of December 31, 2009 and 2008


530,000



530,000Series B convertible preferred stock  no par
    value, 5,000,000 shares authorized; 546,000 shares
    issued and outstanding; liquidating preference at $2 per share
    as of December 31, 2009 and 2008


1,094,000



1,094,000Common stock  no par value, 750,000,000 shares
    authorized; 31,404,000 and 20,817,000 shares issued and
    outstanding as of December 31, 2009 and 2008, respectively


143,995,000



134,233,000Additional paid-in capital


8,336,000



7,949,000Accumulated deficit


(136,708,000
)


(129,663,000
)Total stockholders equity


17,247,000



14,143,000Total liabilities and stockholders equity

$
22,011,000


$
19,242,000    32




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##### Table of Contents



ENOVA
    SYSTEMS, INC.
  STATEMENTS
    OF OPERATIONS
  For the Years EndedDecember 31,2009


2008Revenues

$
5,622,000


$
6,443,000Cost of revenues


5,016,000



8,224,000Gross income(loss)


606,000



(1,781,000
)Operating expensesResearch and development


1,228,000



2,505,000Selling, general & administrative


6,223,000



8,692,000Total operating expenses


7,451,000



11,197,000Operating loss


(6,845,000
)


(12,978,000
)Other income and (expense)Interest and other income (expense), net


(196,000
)


202,000Equity in losses of non-consolidated joint venture, net


(4,000
)


(118,000
)Total other income, net


(200,000
)


84,000Net loss

$
(7,045,000
)

$
(12,894,000
)Basic and diluted loss per share

$
(0.33
)

$
(0.66
)Weighted average number of common shares outstanding


21,385,000



19,660,000    33




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##### Table of Contents



ENOVA
    SYSTEMS, INC.
  STATEMENTS
    OF STOCKHOLDERS EQUITY
  Convertible Preferred Stock








AdditionalSeries A


Series B


Common Stock


Paid-in


AccumulatedShares


Amount


Shares


Amount


Shares


Amount


Capital


Deficit


TotalBalance, December 31, 2007


2,652,000


$
530,000



546,000


$
1,094,000



17,182,000



$122,000,000


$
7,322,000


$
(116,769,000
)

$
14,177,000Issuance of common stock for cash


















3,430,000



12,008,000











12,008,000Issuance of common stock for director services


















153,000



174,000











174,000Issuance of common stock for employee services


















52,000



51,000











51,000Stock option expense


























627,000







627,000Net loss






























(12,894,000
)


(12,894,000
)Balance, December 31, 2008


2,652,000


$
530,000



546,000


$
1,094,000



20,817,000



$134,233,000


$
7,949,000


$
(129,663,000
)

$
14,143,000Issuance of common stock upon exercise of stock options


















23,000



5,000











5,000Issuance of common stock for cash


















10,348,000



9,420,000











9,420,000Issuance of common stock for director services


















158,000



165,000











165,000Issuance of common stock for employee services


















58,000



172,000











172,000Stock option expense


























387,000







387,000Net loss






























(7,045,000
)


(7,045,000
)Balance, December 31, 2009


2,652,000


$
530,000



546,000


$
1,094,000



31,404,000



$143,995,000


$
8,336,000


$
(136,708,000
)

$
17,247,000    34




---



##### Table of Contents





ENOVA
    SYSTEMS, INC.
  STATEMENTS
    OF CASH FLOWS
  For the Years EndedDecember 31,2009


2008Cash flows from operating activitiesNet loss

$
(7,045,000
)

$
(12,894,000
)Adjustments to reconcile net loss to net cash used in operating
    activitiesDepreciation and amortization


605,000



593,000Loss on asset disposal


58,000



Inventory reserve


714,000



803,000Reserve for doubtful accounts






575,000Equity in losses of non-consolidated joint venture


10,000



118,000Gain from dissolution of non-consolidated joint venture


(6,000
)


Issuance of common stock for director services


165,000



174,000Issuance of common stock for employee services


172,000



51,000Stock option expense


387,000



627,000(Increase) decrease in:Accounts receivable


(644,000
)


2,873,000Inventories and supplies


2,509,000



(4,887,000
)Prepaid expenses and other current assets


(48,000
)


242,000Increase (decrease) in:Accounts payable


(100,000
)


(1,285,000
)Deferred revenues


357,000



(101,000
)Accrued payroll and related expenses


(18,000
)


(385,000
)Other accrued liabilities


(607,000
)


(204,000
)Accrued interest payable


82,000



118,000Net cash used in operating activities


(3,409,000
)


(13,582,000
)Cash flows from investing activitiesPurchases of short-term investments


(200,000
)


(2,000,000
)Maturities of short-term investments


2,000,000



Proceeds from the dissolution of non-consolidated joint venture


137,000



Purchases of property and equipment


(135,000
)


(1,524,000
)Net cash provided by (used in) investing activities


1,802,000



(3,524,000
)Cash flows from financing activitiesPayments on notes payable


(64,000
)


(63,000
)Net proceeds from sales of common stock


9,420,000



12,008,000Proceeds from the exercise of stock options


5,000



Net cash provided by financing activities


9,361,000



11,945,000Net increase (decrease) in cash and cash equivalents


7,754,000



(5,161,000
)Cash and cash equivalents, beginning of period


5,324,000



10,485,000Cash and cash equivalents, end of period

$
13,078,000


$
5,324,000Supplemental disclosure of cash flow informationInterest paid

$
7,000


$
9,000Assets acquired through financing arrangements

$
57,000


$
23,000Net assets acquired in exchange for Enovas interest in
    joint venture:Inventory

$
1,179,000


$
Reduction of related party payable, net of receivable

$
32,000


$
    35




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS
  1.
    Description
    of Business  General
    Liquidity
    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Revenue
    Recognition
      
    Persuasive evidence of an arrangement exists;
    Delivery has occurred or services have been rendered;
    The fee for the arrangement is fixed or determinable; and
    Collectibility is reasonably assured.  Persuasive Evidence of an Arrangement
  Delivery Has Occurred or Services Have Been
    Rendered
 36




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  The Fee for the Arrangement is Fixed or
    Determinable
  Collectibility is Reasonably Assured customer-by-customer
  605-25 605-25) and/or 605-25 605-25
  percentage-of-completion work-in-progress.
  Deferred
    Revenues
    Warranty
    Costs
   37




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Cash
    and Cash Equivalents
    Short-Term
    Investments
    Accounts
    Receivable and Allowance for Doubtful Accounts
    Inventory
  work-in-progress, first-in,
  Inventory
    reserve
    Property
    and Equipment
   38




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Impairment
    of Long-Lived Assets
  360-10-35-15,
    Equity
    Method Investment
    Patents
    Impairment
    of Intangible Assets
   39




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Fair
    Value of Financial Instruments
  825-10-25, instrument-by-instrument
      Stock-Based
    Compensation
      Advertising
    Expense
    Research
    and Development
    Income
    Taxes
   40




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Loss
    Per Share
      Fiscal Years EndedDecember 31,2009


2008Options to purchase common stock


1,410,000



623,000Series A and B preferred shares conversion


84,000



84,000Potential equivalent shares excluded


1,494,000



707,000   Commitments
    and Contingencies
      Estimates
    Concentration
    of Credit Risk
   41




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Major
    Customers
    Recent
    Accounting Pronouncements
        Subsequent Events
   42




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      No. 2009-13, Revenue Recognition Multiple-Deliverable Revenue Arrangements a consensus
    of the FASB Emerging Issues Task Force. 605-25 Revenue Recognition-Multiple Element Arrangements No. 2009-13
      3.
    Inventory  (first-in,
  2009


2008Raw materials

$
6,341,000


$
7,114,000Work-in-process


132,000



391,000Finished Goods


111,000



1,047,000Reserve for obsolescence


(979,000
)


(903,000
)$
5,605,000


$
7,649,000  43




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    4.
    Property
    and Equipment    2009


2008Computers and software

$
556,000


$
598,000Machinery and equipment


795,000



1,470,000Furniture and office equipment


98,000



107,000Demonstration vehicles and buses


507,000



346,000Leasehold improvements


1,348,000



1,348,000Construction in progress


8,000



3,312,000



3,869,000Less accumulated depreciation and amortization


(1,949,000
)


(2,040,000
)Total

$
1,363,000


$
1,829,000     5.
    Other
    Accrued Liabilities    December 31,


December 31,2009


2008Accrued Inventory Received

$
334,000


$
743,000Accrued Professional Services


395,000



571,000Accrued Warranty


558,000



545,000Total

$
1,287,000


$
1,859,000     2009


2008Balance at beginning of year

$
545,000


$
734,000Accruals for warranties issued during the period


383,000



377,000Warranty claims


(370,000
)


(566,000
)Balance at end of year

$
558,000


$
545,000   6.
    Investment
    in Non-Consolidated Joint Venture  ITC   44




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##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          AmountCash received at settlement

$
137,000Inventory received in settlement of purchase orders with HHI for
    Enovas share in joint venture


1,179,000Related party receivables and payables settled for Enovas
    share in joint venture


32,000Settlement amount


1,348,000Less: Joint venture investment balance as of April 6, 2009


(1,342,000
)Net gain resulting from dissolution of the joint venture

$
6,000       7.
    Intangible
    Assets      2009


2008Patents

$
93,000


$
93,000Less accumulated amortization


(33,000
)


(28,000
)Total

$
60,000


$
65,000  45




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    8.
    Notes
    Payable    2009


2008Secured note payable to Credit Managers Association of
    California, bearing interest at prime plus 3% (6.25% as of
    December 31, 2009), and is adjusted annually in April
    through maturity. Principal and unpaid interest due in April
    2016. A sinking fund escrow may be funded with 10% of future
    equity financing, as defined in the Agreement

$
1,238,000


$
1,238,000Secured note payable to a financial institution in the original
    amount of $95,000, bearing interest at 6.21%, payable in 36
    equal monthly installments of principal and interest through
    October 1, 2009






27,000Secured note payable to a financial institution in the original
    amount of $35,000, bearing interest at 10.45%, payable in 30
    equal monthly installments of principal and interest through
    November 1, 2009






14,000Secured note payable to a financial institution in the original
    amount of $23,000, bearing interest at 11.70%, payable in 36
    equal monthly installments of principal and interest through
    October 1, 2010


8,000



15,000Secured note payable to a Coca Cola Enterprises in the original
    amount of $40,000, bearing interest at 10% per annum. Principal
    and unpaid interest due on demand


40,000



40,000Secured note payable to a financial institution in the original
    amount of $39,000, bearing interest at 4.99% per annum, payable
    in 48 equal monthly installments of principal and interest
    through September 1, 2011


18,000



27,000Secured note payable to a financial institution in the original
    amount of $38,000, bearing interest at 8.25% per annum, payable
    in 60 equal monthly installments of principal and interest
    through February 19, 2014


32,000



Secured note payable to a financial institution in the original
    amount of $19,000, bearing interest at 10.50% per annum, payable
    in 60 equal monthly installments of principal and interest
    through August 25, 2014


18,000



1,354,000



1,361,000Less current portion


(68,000
)


(98,000
)Long-term portion

$
1,286,000


$
1,263,000    46




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ending

PrincipalDecember 31

Amounts2010

$
68,0002011


19,0002012


12,0002013


13,0002014


4,000Thereafter


1,238,000Total

$
1,354,000   9.
    Revolving
    Credit Agreement      10.
    Deferred
    Revenues    11.
    Commitments
    and Contingencies  Leases
  month-to-month month-to-month
 47




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ending

OperatingDecember 31

Leases2010

$
439,0002011


439,0002012


439,0002013


2014


Total

$
1,317,000   12.
    Stockholders
    Equity  Common
    Stock
            Series A
    Preferred Stock
  one-to-one
 48




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Series B
    Preferred Stock
  two-for-one
  13.
    Stock
    Options  Stock
    Option Program Description
           49




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      WeightedWeighted


AverageNumber of


Average


Remaining


AggregateShare


Exercise


Contractual


IntrinsicOptions


Price


Term


ValueOutstanding at December 31, 2007


329,000


$
4.23



5.85


$
Granted


420,000


$
3.82



9.74


$
Exercised













$
Forfeited or Cancelled


(126,000
)

$
3.91






$
Outstanding at December 31, 2008


623,000


$
4.02



7.09


$
Granted


903,000


$
0.89



8.60



Exercised


(23,000
)

$
0.23







Forfeited or Cancelled


(93,000
)

$
3.67






$
Outstanding at December 31, 2009


1,410,000


$
2.10



7.65


$
822,000Exercisable at December 31, 2009


531,000


$
3.40



6.28


$
134,000       Unvested


Weighted-AverageNumber of


Grant Date FairOptions


ValueUnvested balance at December 31, 2008


236,000


$
2.88Granted


903,000


$
0.69Vested


(223,000
)

$
1.68Forfeited


(37,000
)

$
2.28Unvested balance at December 31, 2009


879,000


$
0.98  50




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Fiscal Year EndedDecember 31,2009

2008Total intrinsic value of stock options exercised

$
13,000


$
Cash received from stock option exercises

$
5,000


$
Gross income tax benefit from the exercise of stock options

$



$
   Valuation
    and Expense Information
    Fiscal Year EndedDecember 31,2009

2008Expected life (in years)


2-3



4Average risk-free interest rate


2
%


3
%Expected volatility


120 - 194
%


111 - 113
%Expected dividend yield


0
%


0
%Forfeiture rate


3
%


3
%     14.
    Income
    Taxes    2009


2008Deferred tax assetsNet operating loss carry-forwards

$
25,440,000


$
34,163,000Stock based compensation


248,000



357,000Other, net


(421,000
)


(6,000
)25,267,000



34,514,000Less valuation allowance


(25,267,000
)


(34,514,000
)Net deferred tax assets

$



$
      51




---



##### Table of Contents



ENOVA
    SYSTEMS, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      December 31,


December 31,2009


2008Tax benefit computed at 34%

$
(2,395,000
)

$
(4,384,000
)Change in valuation allowance


(9,247,000
)


(3,156,000
)State tax (net of Federal benefit)


(389,000
)


(748,000
)Change in carryovers and tax attributes


12,031,000



8,288,000Net tax benefit

$



$
   15.
    Related
    Party Transactions      16.
    Employee
    Benefit Plan    17.
    Geographic
    Area Data    2009


2008United States

$
1,660,000


$
2,726,000China


3,142,000



249,000United Kingdom


534,000



2,033,000Italy


161,000



274,000Korea


111,000



256,000Canada


14,000



Japan






259,000Norway






646,000Total

$
5,622,000


$
6,443,000   18.
    Subsequent
    Events  Form 10-K
 52




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURES    ITEM 9A(T).
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(b) Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
        Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION  Shareholders
    Meeting convened on December 8, 2009
   53




---



##### Table of Contents



Directors

For

WithheldRichard Davies


14,654,886



93,211John Micek


14,654,996



93,101Edwin Riddell


14,596,111



151,986Roy Roberts


14,598,137



149,960Michael Staran


14,589,195



158,902John Wallace


14,586,418



149,150       PART III
  ITEM 10.DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    Name

Age

PositionRichard Davies(3)(5)


41


DirectorJarett Fenton


33


Chief Financial OfficerJohn Micek(1)


57


DirectorJohn Mullins


45


Chief Operating OfficerEdwin O. Riddell


68


DirectorRoy Roberts(2)(4)(5)


71


DirectorMichael Staran


49


Chief Executive Officer and DirectorJohn Wallace(2)(4)(5)


61


Director     (1)
    
    Audit Committee Chairman(2)
    
    Audit Committee Member(3)
    
    Compensation Committee Chairman(4)
    
    Compensation Committee Member(5)
    
    Nomination and Governance Committee  Richard Davies.
 54




---



##### Table of Contents



Jarett Fenton, Chief Financial
    Officer.
  John J. Micek.
  John Mullins.
  Edwin O. Riddell.
  Roy S. Roberts.
 55




---



##### Table of Contents



Michael Staran.
  John R. Wallace.
    Board of
    Directors and its Committee
      Audit Committee.
 56




---



##### Table of Contents



www.enovasystems.com
  Compensation Committee.
  (www.enovasystems.com).
  Nominating and Governance Committee. www.enovasystems.com
  Code of
    Ethics
   57




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##### Table of Contents



www.enovasystems.com
  Section 16(a)
    Beneficial Ownership Reporting Compliance
    ITEM 11.
    EXECUTIVE
    COMPENSATION    SUMMARY
    COMPENSATION TABLE
  Stock

Options

All otherFiscal

Salary

Bonus

Awards

Awards

Compensation

TotalName and Principal Position

Year

($)

($)(A)

($)(B)

($)(C)

($)(D)

($)Michael Staran


2009


$
250,000


$
140,000






$
162,261


$
76,850


$
629,111Chief Executive Officer


2008


$
249,653






$
285,000


$
286,020


$
51,911


$
872,584Jarett Fenton


2009


$
185,050


$
60,000






$
95,687


$
16,174


$
356,911Chief Financial Officer


2008


$
183,007










$
200,214


$
14,379


$
397,600John Mullins(E)


2009


$
175,346


$
50,000






$
72,306


$
277


$
297,929Chief Operating Officer     (A)
    
    The Board of Directors awarded discretionary bonuses to the
    companys officers in December based on several factors,
    predominately due to the negotiation of the equity raise with
    the payment of minimal investment banking fees in December 2009.(B)
    
    Stock awards issued to employees as compensation for services
    are valued in accordance to SEC rules as the grant date value at
    issuance in accordance with FASB ASC 718.(C)
    
    The valuation of option awards issued to employees are
    calculated in accordance with SEC rules as the grant date value
    in accordance with FASB ASC 718 consistent with the assumptions
    set forth in Note 13 to the financial statements in this
    Annual Report on
    Form 10-K.
    Amounts in 2008 have been recomputed under the same methodology
    in accordance with SEC rules.(D)
    
    For Mr. Staran, the amount shown attributable to 2009
    includes (i) $34,314 for lease of apartment and related
    insurance; (ii) $18,418 for auto allowance and insurance;
    (iii) $2,218 value of life insurance premiums paid; and
    (iv) $15,505 in medical insurance premiums. For
    Mr. Fenton, the amount shown attributable to 2009 includes
    (i) $2,218 value of life insurance premiums paid;
    (ii) $3,436 in medical insurance premiums paid; and
    iii) $8,828 in auto allowance and insurance. In 2008, the
    amounts shown attributable for Mr. Staran include:
    (i) $35,475 for lease of apartment and related insurance;
    (ii) $15,505 in medical insurance premiums; and
    (iii) $2,218 value of life insurance premiums paid. In
    2008, the amounts shown attributable for Mr. Fenton
    include: (i) $2,218 value of life insurance premiums paid;
    (ii) $4,020 in medical insurance premiums paid; and
    iii) $6,599 in auto allowance and insurance. 58




---



##### Table of Contents



(E)
    
    Mr. Mullins became a named executive officer in 2009.  Employment
    Agreement
  Michael
    Staran
          Outstanding
    Equity Awards at Fiscal Year-Ended December 31,
    2009
  Option Awards

Stock AwardsNumber of

Number of





Number of

Market Value ofSecurities

Securities





Shares or

Shares orUnderlying

Underlying





Units of

Units ofUnexercised

Unexercised

Option

Option

Stock That

Stock ThatOptions (#)

Options (#)

Exercise

Expiration

Have Not

Have NotName

Exercisable

Unexercisable

Price

Date

Vested (#)

Vested ($)Michael Staran






100,000
(A)

$
1.26



12/18/2019



25,000
(F)

$
46,250



100,000
(B)

$
0.80



4/13/2014







66,667



33,333
(C)

$
3.81



3/23/2018







23,000






$
4.35



9/21/2015







Jarett Fenton






50,000
(A)

$
1.26



12/18/2019











70,000
(B)

$
0.80



4/13/2014







46,667



23,333
(C)

$
3.81



3/23/2018







John Mullins






50,000
(A)

$
1.26



12/18/2019







7,500



22,500
(D)

$
0.80



4/13/2019







15,000



15,000
(E)

$
0.21



3/11/2019







     (A)
    
    The options were granted on December 18, 2009 and vest over
    three years on a quarterly basis on the last day of each
    calendar quarter provided the option holder is then an officer
    of Enova as of such date. The first 1/12 or 8.33% of the shares
    under each option vested on January 1, 2010. In the event
    there is a change of control of Enova, the options will become
    fully vested.(B)
    
    The options were granted on April 14, 2009 and vest over
    three years on an annual basis on the anniversary of the grant
    date provided the option holder is then an officer of Enova as
    of such date. The first 1/3 or 33.33% of the shares under each
    option will vest on April 14, 2010. In the event there is a
    change of control of Enova, the options will become fully vested.(C)
    
    The options were granted on March 24, 2008 and vest over
    three years on an annual basis on December 31st of each
    year, provided the option holder is then an officer of Enova as
    of such date. The second 1/3 or 33.33% of 59




---



##### Table of Contents



the shares under each option vested on December 31, 2009.
    In the event there is a change of control of Enova, the options
    will become fully vested.(D)
    
    The options were granted on April 14, 2009 and vest over
    three years on a quarterly basis on the last day of each
    calendar quarter provided the option holder is then an officer
    of Enova as of such date. The first 1/12 or 8.33% of the shares
    under each option vested on June 30, 2009. In the event
    there is a change of control of Enova, the options will become
    fully vested.(E)
    
    The options were granted on March 12, 2009 and vest over
    two years on a quarterly basis on the last day of each calendar
    quarter provided the option holder is then an officer of Enova
    as of such date. The first 1/8 or 12.5% of the shares under each
    option vested on March 31, 2009. In the event there is a
    change of control of Enova, the options will become fully vested.(F)
    
    Equity shares totaling 75,000 shares were granted on
    April 4, 2008 and vest over three years on an annual basis
    on December 31st of each year, provided the holder is then
    an officer of Enova as of such date. The second 1/3 or 33.33% of
    the shares vested on December 31, 2009. In the event there
    is a change of control of Enova, the shares will become fully
    vested.  Current
    Equity Incentive Plans
    Change
    of Control and Retirement Arrangements
     60




---



##### Table of Contents



Director
    Compensation
    Fees





Nonequity

NonqualifiedEarned or





Incentive

DeferredPaid in

Stock

Option

Plan

Compensation

All OtherNon-Executive

Cash

Awards

Awards

Compensation

Earnings

Compensation

TotalDirector Name

($)

($)(C)

($)(D)

($)

($)

($)

($)Bjorn Ahlstrom(A)

$
15,000


$
22,500


















$
37,500Malcolm Currie(A)

$
15,000


$
22,500


















$
37,500Richard Davies(B)


























John Micek

$
20,000


$
30,000


$
27,376














$
77,376Edwin Riddell

$
20,000


$
30,000


$
27,376














$
77,376Roy Roberts

$
20,000


$
30,000


$
27,376














$
77,376John Wallace

$
20,000


$
30,000


$
27,376














$
77,376     (A)
    
    Messrs. Ahlstrom and Currie resigned their position as
    Director effective December 8, 2009.(B)
    
    Mr. Davies elected not to receive compensation for his
    services in the year ended December 31, 2009.(C)
    
    Stock awards issued to directors as compensation for services
    are valued in accordance to SEC rules as the grant date value at
    issuance in accordance with FASB ASC 718.(D)
    
    The options vest over one year on a quarterly basis on the last
    day of each calendar quarter provided the option holder is then
    a director of Enova as of such date. The first 1/4 or 25% of the
    shares under each option will vest on March 31, 2010. In
    the event there is a change of control of Enova, the options
    will become fully vested.  out-of-pocket
 61




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##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Regulation 13D-G.
  Percent of Common Stock,Series A and Series BNumber of

Percent of

Preferred Stock,Shares of

Common

and Common StockOwner

Common Stock

Stock

Voting TogetherJagen, Pty., Ltd.(1)


3,222,222



10.3
%


10.2
%9 Oxford Street, South Ybarra 3141 Melbourne,
    Victoria AustraliaShell Asset Management BV(2)


6,054,960



19.3
%


19.2
%Sir Winston Churchillaan 366H, 2285 SJ Rijswijk ZH, The
    NetherlandsJ O Hambro Capital Management Group Limited(3)


2,227,500



7.1
%


7.1
%Ground Floor, Ryder Court 14 Ryder Street London, United Kingdom
    SW1Y 6QBGAM Holdings AG(4)


2,244,275



7.1
%


7.1
%Klaustrasse 10 8008 Zurich, SwitzerlandSpecial Situation Fund, L.P.(5)


4,530,814



14.4
%


14.4
%527 Madison Avenue, Suite 2600, New York, NY 10022Swiss Global Asset Management AG(6)


1,771,750



5.6
%


5.6
%69, route dEsch, L-1470, LuxembourgJarett Fenton(8)


83,333



0.3
%


0.3
%Michael Staran(9)


210,166



0.7
%


0.7
%John Mullins(10)


57,083



0.2
%


0.2
%Bjorn Ahlstrom


67,292



0.2
%


0.2
%Malcolm R. Currie


79,960



0.3
%


0.3
%Richard Davies(1)(7)


3,222,222



10.3
%


10.2
%John J. Micek(11)


192,533



0.6
%


0.6
%Roy S. Roberts(11)


59,870



0.2
%


0.2
%John R. Wallace(11)


80,563



0.3
%


0.3
%Edwin O. Riddell(12)


140,514



0.4
%


0.4
%All Executive Officers and Directors as a group


4,193,536



13.4
%


13.3
%     (1)
    
    Jagen Pty. Ltd. (Jagen) shares beneficial ownership with
    Jagens controlling shareholder, the B. Liberman Family
    Trust and its trustee, Jagen Nominees, Pty. Ltd. Mr. Davies
    is Managing Director for Jagen. Boris and Helen Liberman possess
    ultimate voting and discretionary authority over the shares.(2)
    
    Based on a Form 3 filed December 15, 2009. Shell Asset
    Management Company BV manages assets of The Shell Group and its
    subsidiaries and affiliates, including certain pension plans
    organized for the benefit of employees of The Shell Group. As
    such, The Shell Group and such subsidiaries and affiliates,
    including such 62




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##### Table of Contents



pension plans, have the right to the receipt of dividends from,
    and the proceeds from the sale of, the shares of common stock.(3)
    
    Based upon a Holding(s) in Company filed on August 19, 2008
    via the Regulatory News Service (RNS) on the London
    Stock Exchange.(4)
    
    Based upon a Schedule 13G/A filed February 11, 2009,
    GAM Holding AG holds shared voting and investment power with its
    wholly-owned subsidiaries, GAM International Management Limited
    (GIML) and GAM London Limited (GAM London) of which GIML is the
    investment adviser of GAM Global Diversified and GAM London is
    the investment adviser of SJP GAM Managed-Life, SJP GAM
    Managed  Pension, SJPI GAM Sterling Managed Fund and
    SJPI GAM US Dollar Managed Fund.(5)
    
    Based on a Schedule 13G filed January 7, 2010. MGP
    Advisors Limited (MGP) is the general partner of the
    Special Situations Fund III, QP, L.P. AWM Investment
    Company, Inc. (AWM) is the general partner of MGP
    and the general partner of and investment adviser to the Special
    Situations Cayman Fund, L.P. Austin W. Marxe and David M.
    Greenhouse are the principal owners of MGP and AWM. Through
    their control of MGP and AWM, Messrs. Marxe and Greenhouse
    share voting and investment power over the portfolio securities
    of each of the funds listed above.(6)
    
    Based on a Schedule 13G filed December 31, 2009. SAM
    Sustainable Asset Management AG (SAM), as investment
    adviser of the Julius Bar Multipartner SAM Smart Energy Fund
    (part of the Julius Barr Multipartner SICAV), holds
    investment power over the shares listed above. The voting power
    of the shares listed above is held by the Julius Barr
    Multipartner SICAV fund administrator, Swiss & Global
    Asset Management Ltd. Zurich, which has delegated such voting
    power over the shares listed above to SAM which in turn, has
    delegated such voting power to Robeco Institutional Asset
    Management.(7)
    
    Mr. Davies has elected not to receive quarterly
    compensation for his services as director.(8)
    
    Includes 78,333 shares of common stock underlying stock
    options that are exercisable within 60 days.(9)
    
    Includes 139,666 shares of common stock underlying stock
    options that are exercisable within 60 days.(10)
    
    Includes 57,083 shares of common stock underlying stock
    options that are exercisable within 60 days.(11)
    
    Includes 8,625 shares of common stock underlying stock
    options that are exercisable within 60 days.(12)
    
    Includes 60,847 shares of common stock underlying stock
    options that are exercisable within 60 days.  Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Available forFuture Issuance UnderNumber of Securities to


Weighted-Average


Equity Compensationbe Issued upon Exercise


Exercise Price of


Plans (Excludingof Outstanding Options,


Outstanding Options,


Securities Reflected inWarrants and Rights


Warrants and Rights


Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by security holders


1,410,000


$
2.10



1,663,000Equity compensation plans not approved by security holders










Total


1,410,000


$
2.10



1,663,000  63




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##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    Independence
    of Board of Directors and its Committees
    Audit Committee.
    Compensation Committee.
  Nominating and Governance Committee.
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Pre-Approval
    of Audit and Permissible Non-Audit Services
  case-by-case
 64




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##### Table of Contents



Audit
    Fees
    2009


2008Audit Fees

$
195,000


$
216,000Audit-Related Fees

$
25,000


$
6,000Tax Fees

$
13,000


$
13,500All Other Fees






Total

$
233,000


$
235,500    PART IV ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a) 1. Financial Statements
    (a) 2. Financial Statement Schedule
    (a) 3. Exhibits
  Exhibit #

Description3
.1

Our Amended and Restated Articles of Incorporation (incorporated
    by reference to Exhibit 3.1 of our Annual Report on
    Form 10-K
    for the fiscal year ending December 31, 2006, as filed on
    April 2, 2007)3
.2

Our Amended and Restated bylaws (incorporated by reference to
    Exhibit 3.2 of our Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2009, as filed on
    November 12, 2009)10
.1

Form of Indemnification Agreement (incorporated by reference to
    Exhibit 10.26 of our Quarterly Report on
    Form 10-Q
    for the period ended June 30, 2005, as filed on
    August 15, 2005)10
.2

Form of Security Agreement entered into May 31, 1995
    between us and Credit Managers Association of California,
    Trustee (incorporated by reference to Exhibit 10.65 of our
    Quarterly Report on
    Form 10-Q
    for the period ended April 30, 1996, as filed on
    June 14, 1996)10
.3

Commercial Promissory Note dated October 10, 2007 between
    us and Union Bank of California (incorporated by reference to
    Exhibit 10.3 of our Annual Report
    Form 10-K
    for the period ended December 31 2007, as filed on
    March 26, 2008)10
.4

Placing Agreement in connection with an application to join AIM
    dated July 19, 2005 between us and Investec Bank (UK)
    Limited (incorporated by reference to Exhibit 10.28 of our
    amended Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2005, as filed
    November 21, 2005)10
.5

Agreement relating to the appointment of a Nominated Adviser and
    Broker dated July 19, 2005 between us and Investec Bank
    (UK) Limited (incorporated by reference to Exhibit 10.29 of
    our amended Quarterly Report on
    Form 10-Q
    for the period ended September 30, 2005, as filed
    November 21, 2005)10
.6

Placing Agreement dated July 25, 2007 between us and
    Investec Bank (UK) Limited (incorporated by reference to
    Exhibit 10 of our Current Report on
    Form 8-K
    as amended filed August 7, 2007)10
.7

Facility Lease Agreement entered into October 17, 2007
    between us and Sunshine Distribution L.P., (incorporated by
    reference to Exhibit 10.1 of our Current Report on
    Form 8-K
    filed October 23, 2007)10
.8

Retirement Agreement and Limited Release entered into
    July 12, 2007 between us and Edwin Riddell, formerly our
    Chief Executive Officer and President (incorporated by reference
    to Exhibit 10 of our Current Report on
    Form 8-K
    as amended filed July 16, 2007)+ 65




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##### Table of Contents



Exhibit #

Description10
.9

Employment Agreement entered into February 11, 2008 between
    us and Michael Staran, our President and Chief Executive Officer
    (incorporated by reference to Exhibit 10.1 of our Current
    Report on
    Form 8-K
    filed February 15, 2008)+10
.10

Letter Agreement entered into March 27, 2007 between us and
    Michael Staran, Executive Vice President and currently our
    President and Chief Executive Officer (incorporated by reference
    to Exhibit 10.1 of our Current Report on
    Form 8-K
    filed April 4, 2007)+10
.11

Placing Agreement entered into March 26, 2008 (incorporated
    by reference to Exhibit 10 of our Current Report on
    Form 8-K/A
    filed April 4, 2008)10
.12

Securities Purchase Agreement entered into April 23, 2008
    (incorporated by reference to Exhibit 10.1 of our Current
    Report on
    Form 8-K
    filed April 24, 2008)10
.13

Registration Rights Agreement entered into April 23, 2008
    (incorporated by reference to Exhibit 10.2 of our Current
    Report on
    Form 8-K
    filed April 24, 2008)10
.14

Supply Agreement with Navistar, Inc. entered into May 16,
    2008 (incorporated by reference to Exhibit 10.4 of our
    Quarterly Report on
    Form 10-Q
    for the three month period ending July 30, 2008, as filed
    on August 14, 2008) #10
.15

Stock Purchase Agreement entered into April 6, 2009
    (incorporated by reference to Exhibit 99.1 of our Current
    Report on
    Form 8-K
    filed April 6, 2009)10
.16

Joint Venture Dissolution and Termination Agreement entered into
    April 6, 2009 (incorporated by reference to
    Exhibit 99.2 of our Current Report on
    Form 8-K
    filed April 6, 2009)10
.17

Securities Purchase Agreement entered into October 29, 2009
    (incorporated by reference to Exhibit 99.1 of our Current
    Report on
    Form 8-K
    filed October 30, 2009)10
.18

Placing Agreement entered into October 29, 2009
    (incorporated by reference to Exhibit 99.3 of our Current
    Report on
    Form 8-K
    filed October 30, 2009)10
.19

Registration Rights Agreement entered into December 15,
    2009 (incorporated by reference to Exhibit 99.1 of our
    Current Report on
    Form 8-K
    filed December 15, 2009)23
.1

Consent of PMB Helin Donovan*31
.1

Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002*31
.2

Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002*32


Certification Pursuant to 18 U.S.C. Section 1350*     *
    
    Filed herewith.+
    
    Management contract or compensatory plan or arrangement.#
    
    Portions of the exhibit have been omitted pursuant to a request
    for confidential treatment submitted to the Securities and
    Exchange Commission. 66




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##### Table of Contents



SIGNATURES
    ENOVA SYSTEMS, INC.
  By:
    /s/  Michael
    Staran       POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Michael
    StaranMichael
    Staran

Chief Executive Officer,
    President, and Director
    (Principal Executive Officer)

March 26, 2010/s/  Jarett
    FentonJarett
    Fenton

Chief Financial Officer
    (Principal Financial Officer and
    Principal Accounting Officer)

March 26, 2010/s/  John
    R. WallaceJohn
    R. Wallace

Director, Chairman of the Board

March 26, 2010/s/  Richard
    DaviesRichard
    Davies

Director

March 26, 2010/s/  John
    MicekJohn
    Micek

Director

March 26, 2010/s/  Roy
    RobertsRoy
    Roberts

Director

March 26, 2010/s/  Edwin
    RiddellEdwin
    Riddell

Director

March 26, 2010  67