ENER1 INC - FORM 10-Q - May 10, 2011

Attached files

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EX-32.1 - ENER1 INC	v221683_ex32-1.htm
EX-31.2 - ENER1 INC	v221683_ex31-2.htm
EX-32.2 - ENER1 INC	v221683_ex32-2.htm
EX-31.1 - ENER1 INC	v221683_ex31-1.htm
EX-32.3 - ENER1 INC	v221683_ex32-3.htm
EX-10.8 - ENER1 INC	v221683_ex10-8.htm
EX-31.3 - ENER1 INC	v221683_ex31-3.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2011

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

For the transition period from ____________ to ____________

Commission File Number 001-34050

Ener1, Inc.

(Exact name of registrant as specified in its charter)

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

1540 Broadway, Suite 25C

New York, New York 10036

(Address of principal executive offices) (Zip Code)

(212) 920-3500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes R No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No¨

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class	Outstanding as of April 29, 2011
Common Stock, par value $0.01 per share	169,092,179

ENER1, INC.

Form 10-Q for the Quarter Ended March 31, 2011

INDEX

		Page

PART I - FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010	2

	Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010	3

	Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the three months ended March 31, 2011 and 2010	4

	Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 6.	Exhibits	44

Signatures		45

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

ENER1, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share data)

	March 31,			December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	19,403		$	60,310
Restricted cash		11,678			10,961
Accounts receivable, net of allowance of $477 and $444		29,423			23,882
Grant proceeds receivable		936			2,038
Loans receivable		18,179			14,048
Inventories, net of provision for obsolescence of $1,105 and $932		27,344			23,612
Contracts in process		19,705			11,250
Prepaid expenses and other current assets		10,719			1,328
Total current assets		137,387			147,429

Deferred financing costs, net of amortization of $570 and $3,212		2,297			2,867
Property and equipment, net of accumulated depreciation of $18,292 and $15,589		125,626			123,503
Intangible assets, net of accumulated amortization of $5,333 and $4,868		10,751			11,153
Investment in unconsolidated entity		-			58,625
Goodwill		52,807			51,845
Other		1,199			1,122
Total assets	$	330,067		$	396,544

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	34,360		$	41,925
Deferred grant proceeds, current portion		690			552
Income taxes payable		179			337
Current portion of capital leases and other debt obligations		47,061			41,775
Total current liabilities		82,290			84,589

Deferred grant proceeds, less current portion		32,157			31,169
Derivative and financial instruments		25,054			15,453
Long-term debt		48,928			55,992
Other long-term liabilities		2,611			2,049
Deferred income tax liabilities		207			216
Total liabilities		191,247			189,468

Commitments and contingencies

Stockholders' equity
Common stock, $0.01 par value, 300,000,000 shares authorized, 168,397,444 and 163,769,700 issued and outstanding		1,685			1,639
Paid in capital		622,365			607,745
Accumulated other comprehensive income		7,967			6,231
Accumulated deficit		(495,024	)		(410,306	)
Total Ener1, Inc. stockholders' equity		136,993			205,309
Noncontrolling interests		1,827			1,767
Total stockholders' equity		138,820			207,076
Total liabilities and stockholders' equity	$	330,067		$	396,544

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ENER1, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except per share data)

	Three Months Ended
	March 31,
	2011			2010
Net sales	$	23,084		$	10,975
Cost of sales		17,619			9,828
Gross profit		5,465			1,147

Operating expenses:
General and administrative		8,014			5,229
Research and development, net		8,536			9,866
Grant proceeds recognized		(173	)		(28	)
Depreciation and amortization		1,565			1,349
Impairment loss		59,433			-
Total operating expenses		77,375			16,416

Loss from operations		(71,910	)		(15,269	)

Other income (expense)		(12,716	)		(178	)

Loss before income taxes		(84,626	)		(15,447	)
Income tax expense		82			16

Net loss		(84,708	)		(15,463	)
Net income (loss) attributable to noncontrolling interests		10			(126	)

Net loss attributable to Ener1, Inc.	$	(84,718	)	$	(15,337	)

Net loss per share attributable to Ener1, Inc.:
Basic	$	(0.51	)	$	(0.12	)

Diluted	$	(0.51	)	$	(0.13	)

Weighted average shares outstanding
Basic		165,203			124,904

Diluted		165,203			124,968

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ENER1, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands)

	Common Stock		Paid in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit			Noncontrolling Interests			Total Stockholders' Equity
Balance at December 31, 2009	$	1,245	$	451,592	$	4,860	$	(341,505	)	$	1,807		$	117,999

Comprehensive loss:
Net loss		-		-		-		(15,337	)		( 126	)		(15,463	)
Translation adjustment		-		-		1,549		-			20			1,569
Total comprehensive loss											( 106	)		(13,894	)
Shares sold for cash, net of costs		10		4,382		-		-			-			4,392
Stock option and warrant exercises		1		38		-		-			-			39
Reduction in derivative liability		-		297		-		-			-			297
Warrants issued to related party as borrowing fees under a line of credit agreement		-		275		-		-			-			275
Stock-based compensation expense		-		1,013		-		-			-			1,013
Balance at March 31, 2010	$	1,256	$	457,597	$	6,409	$	(356,842	)	$	1,701		$	110,121

					Accumulated
					Other							Total
	Common		Paid in		Comprehensive		Accumulated			Noncontrolling		Stockholders'
	Stock		Capital		Income		Deficit			Interests		Equity

Balance at December 31, 2010	$	1,639	$	607,745	$	6,231	$	(410,306	)	$	1,767	$	207,076

Comprehensive loss:
Net loss		-		-		-		(84,718	)		10		(84,708	)
Translation adjustment		-		-		1,736		-			50		1,786
Total comprehensive loss											60		(82,922	)
Shares sold for cash, net of costs		26		6,779		-		-			-		6,805
Shares issued in advance for debt repayment		19		6,882		-		-			-		6,901
Restricted stock, option and warrant exercises		1		184		-		-			-		185
Stock-based compensation expense		-		775		-		-			-		775
Balance at March 31, 2011	$	1,685	$	622,365	$	7,967	$	(495,024	)	$	1,827	$	138,820

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ENER1, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Three Months Ended
	March 31,
	2011			2010

Operating activities:
Net loss	$	(84,708	)	$	(15,463	)
Adjustments to reconcile net loss to cash used in operating activities:
Loss (gain) on derivative and financial instruments		8,793			(1,525	)
Accretion of discounts on debt		2,379			850
Interest expense related to financing costs		2,277			536
Depreciation and amortization		2,847			2,167
Grant proceeds recognized		(173	)		(28	)
Impairment loss		59,433			-
Stock-based compensation expense		775			1,013
Other non-cash changes		329			863
Changes in certain operating assets and liabilities:
Accounts receivable		(3,918	)		(2,004	)
Grant receivable related to operating expenses		1,101			(306	)
Inventory		(3,412	)		(5,401	)
Contracts in process		(9,502	)		-
Accounts payable and accrued expenses		(8,136	)		11,608
Changes in current assets, liabilities and other, net		(2,376	)		(1,203	)
Net cash used in operating activities		(34,291	)		(8,893	)

Investing activities:
Capital expenditures and equipment deposits		(3,593	)		(16,155	)
Grant proceeds received related to capital expenditures		1,298			6,469
Investment in unconsolidated entity		-			(5,752	)
Loans and advances to unconsolidated entity		(3,800	)		-
Restricted cash		(579	)		(747	)
Other		7			36
Net cash used in investing activities		(6,667	)		(16,149	)

Financing activities:
Proceeds from sale of stock, net		6,805			4,392
Proceeds from credit facility and bank loans		1,590			10,573
Proceeds from related party borrowings		-			5,000
Repayment of senior unsecured notes		(6,967	)		-
Repayment of credit facility, bank loans and capital leases		(1,206	)		(1,621	)
Other		185			39
Net cash provided by financing activities		407			18,383

Effect of exchange rates on cash and cash equivalents		(356	)		(9	)
Net decrease in cash and cash equivalents		(40,907	)		(6,668	)
Cash and cash equivalents - beginning balance		60,310			14,314
Cash and cash equivalents - ending balance	$	19,403		$	7,646

Supplemental Disclosure of Non-cash Investing and Financing Activities:

Non-cash investing and financing activities:
Shares issued for advance payment on senior unsecured notes	$	6,901			-
Put option issued in connection with investment in unconsolidated entity		809			-
Warrants issued in connection with short term borrowings		-			2,166
Warrants issued in connection with related party debt		-			275
Reduction in derivative and financial instruments		-			297
Borrowings pursuant to capital leases and equipment purchases		-			422

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – Business Overview

Nature of the Business

Ener1, Inc. (Ener1, the Company, the Registrant, we, our or us) is a Florida corporation, founded in 1985 and headquartered in New York, New York. We design, develop and manufacture high-performance, prismatic, rechargeable, lithium-ion batteries and battery pack systems for energy storage for use in the transportation, grid energy storage and small pack, or consumer cell product markets. We produce and manufacture battery cells in the United States through our subsidiary EnerDel, Inc. (EnerDel) and in South Korea through oursubsidiary, Ener1 Korea, Inc. (Ener1 Korea).

Ener1 Group, Inc. (Ener1 Group) and Bzinfin, S.A. (Bzinfin), the sole owner of Ener1 Group, collectively owned approximately 47.9% of our outstanding common stock and, with warrants, beneficially owned approximately 55.6% of our common shares on a fully diluted basis as of March 31, 2011. See Note 12, Related Party Transactions.

Our primary products for the transportation markets consist of battery solutions for hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs) and other vehicles such as trucks and buses. In the grid energy storage markets, we are developing energy storage applications for utility grid and commercial applications. Ener1 Korea manufactures lithium-ion batteries for the small format products markets which encompass consumer, industrial and military products. Our primary small format product line consists of commercial prismatic lithium-ion batteries for products such as Motorola’s hand-held scanners.

In 2009 and 2010 we made separate strategic investments in Think Holdings, AS (Think Holdings), a Norwegian limited liability company and the majority owner of Think Global, AS (Think Global), an EV manufacturer. As of March 31, 2011, we controlled approximately 48% of the outstanding voting power in Think Holdings and two individuals who serve on the Board of Directors of Ener1 also serve on the board of directors of Think Holdings. On April 26, 2011, one of these two individuals resigned from the board of directors of Think Holdings. On May 9, 2011, we surrendered to Think Holdings, for no consideration, all shares of Think Holdings’ voting equity held by Ener1, including, without limitation, all shares of Series B Convertible Preferred Stock (Series B Stock). See Note 12, Related Party Transactions.

During 2010, we commenced commercial production and shipment of lithium-ion battery packs to Think Global. In January 2011, we stopped shipping battery packs to Think Global at their direction. We do not know when or if we will recommence shipping battery packs to Think Global, the timing of which would depend on Think Holdings’ ability to raise sufficient capital to continue operations.

At March 31, 2011, the current portion of our short-term borrowings totaled approximately $47.1 million, of which $24.8 million is related to our senior unsecured notes. We anticipate paying the amounts due under the senior unsecured notes in shares of Ener1 common stock as long as certain conditions regarding the trading price and volume of our common stock are met. If these conditions are not met and we are unable to obtain a waiver of these conditions from the holders of the senior unsecured notes, we will need to pay the amounts due under the senior unsecured notes in cash.

In addition to anticipated cash flows from certain operating segments, we intend to fund our operations and provide additional working capital to the Company through the sale of our common stock or other public or private financings available to us to. The pricing, dilution, terms and conditions and our ability to access the public debt and equity markets and the related cost of these activities may be affected by market conditions. Since 2008, the global financial markets have experienced significant price and volume fluctuations. Volatility in debt and equity markets may adversely affect our ability to procure future financing. We believe we have access to sufficient capital to continue our planned operations for the 12 months following the balance sheet date of March 31, 2011.

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of financial position, results of operations, and cash flows. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2010. The year-end consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Principles of Consolidation

Ener1 is the parent company to its wholly-owned subsidiaries: (i) EnerDel, a Delaware corporation, (ii) EnerFuel, Inc. (EnerFuel), a Delaware corporation, (iii) NanoEner, Inc. (NanoEner), a Florida corporation, (iv) EnerDel Japan, Inc. (EnerDel Japan), a Japanese corporation, (v) Ener1 Battery Company (Battery Company), a Florida corporation, and (vi) Ener1 Europe, S.A.S. (Ener1 Europe), a French corporation. Ener1 currently holds a 94% interest in Ener1 Korea. Ener1 Korea has a wholly-owned subsidiary, Emerging Power, Inc. (Emerging Power) a New Jersey corporation.

Our consolidated financial statements reflect our financial statements and those of our wholly-owned and majority-owned domestic and foreign subsidiaries. For consolidated entities in which we own less than a 100% interest, we record net income (loss) attributable to noncontrolling interests in our consolidated statements of operations equal to the percentage of the interests retained by the noncontrolling parties. Intercompany transactions and balances are eliminated in consolidation.

We account for our investment in Think Holdings, an entity over which we exercise significant influence but do not exercise control, using the cost method because the form of our investment is not deemed to be equivalent to common stock for accounting purposes. We review this investment for potential impairment at each reporting period using a three-step process. First, we determine if impairment indicators are present. If an impairment indicator is present then the second step of the test is to determine if the impairment is temporary or other than temporary. If the impairment is other than temporary, then the last step is to determine the fair value of the investment and record an impairment loss for the difference between the fair value and the cost of the investment. See Note 12, Related Party Transactions.

Certain amounts for 2010 have been reclassified to conform to the 2011 presentation.

Foreign Currencies

Subsidiaries located outside the United States of America use the local currency as the functional currency. We translate assets and liabilities denominated in foreign currencies using exchange rates in effect at the balance sheet date and equity accounts at historical exchange rates. We translate revenues and expenses using average exchange rates during the period. Translation adjustments resulting from this process are shown as a separate component of accumulated other comprehensive income within stockholders’ equity. Foreign currency transaction gains and losses are reported in other income (expense) in the statements of operations.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) requires our management to make estimates and judgments that may affect the reported amounts presented and disclosed in our consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to: revenue recognition and related allowances; derivative and financial instruments; inventories; impairments of long-lived assets, including intangible assets and goodwill; income taxes, including the valuation allowance for deferred tax assets; product warranty reserves; contingencies and litigation; as well as stock-based payments, warrants, valuation of beneficial conversion feature, if any, on convertible securities; and other financing matters.

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

We base these estimates on historical experience and various other factors that we believe to be reasonable, the results of which form the basis for making judgments under the circumstances. Due to the inherent uncertainty involved in making these estimates, actual results reported may differ from the these estimates under different assumptions or conditions.

Note 2 – New Accounting Pronouncements

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued accounting pronouncements that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

Note 3 – Supplemental Financial Information

Revenue Recognition

Revenue is recognized when persuasive evidence of a sales arrangement exists, the price is fixed or determinable, title and risk of loss are transferred, collectability is reasonably assured, product returns are reasonably estimable and there are no remaining significant obligations or customer acceptance requirements. When a sales arrangement contains multiple elements, we evaluate the agreement to determine if separate units of accounting exist within the arrangement. If separate units of accounting exist within the arrangement, we allocate revenue to each element based on the relative fair value of each of the elements.

Product Revenues

Revenue from product sales is recognized when title and risk of loss have passed to the customer, which is typically upon shipment, with the exception of revenue from long term construction contracts, which is recognized using the percentage of completion method. Battery related sales by Ener1 Korea are recognized at the delivery point or the receipt point of the bill of lading, depending on whether the sale is domestic or an export.

We began offering limited warranties on battery packs when commercial production and sales of battery packs commenced during 2010. The estimated cost of the limited warranty is reflected as a component of cost of sales in the period the revenue is recognized. The warranty period ends on the earlier of the passage of a specified period of time or the occurrence of a specified number of charge and discharge cycles of the battery packs. The warranty provides that the battery packs will conform to specifications and be free from defects in design, materials and workmanship.

Ener1 Korea offers customers a right of return and reserves for such returns are estimated using historical information. Ener1 Korea does not provide discounts, rebates, product guarantees or warranties.

Research and Development Services

Proceeds from cost-sharing arrangements with federal government agencies and grants from foreign government agencies are generally recognized as a reduction of research and development expenses. Proceeds from cost-sharing arrangements with commercial entities are generally recognized using the percentage of completion method. To date, these cost-sharing arrangements with commercial entities have been for the development and sale of a customer specified prototype and the costs incurred are classified as research and development expenses.

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Grant Proceeds Receivable and Deferred Grant Proceeds

In August 2009, we were awarded a grant of $118.5 million under the Automotive Battery Manufacturing Initiative (ABMI), which is administered by the Department of Energy (DOE). The proceeds from the grant are primarily being used to purchase production equipment for capacity at our existing facilities. Under the ABMI grant, we receive one incentive dollar for each dollar we spend of our own funds.

ABMI grant proceeds related to the purchase of assets are recorded as deferred grant proceeds and recognized as a reduction of operating expenses over the periods during which depreciation on the assets is charged and in proportion to the amount of the depreciation charge. We begin depreciating a purchased asset on the date the asset is placed in service. ABMI grant proceeds used to pay operating expenses are recorded as a reduction of research and development expenses and totaled approximately $2.9 million and $468,000 during the three months ended March 31, 2011 and 2010, respectively.

Inventories

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

	March 31,			December 31,
	2011			2010

Raw materials and supplies	$	13,050		$	12,108
Work in process		8,294			7,085
Finished goods		7,105			5,351
		28,449			24,544
less: provision for obsolescence		(1,105	)		(932	)
	$	27,344		$	23,612

We establish reserves for obsolete or slow-moving inventory based on management’s analysis of inventory levels and future sales forecasts at the end of each accounting period.

Prepaid Expense and Other Current Assets

On March 3, 2011, we issued approximately 1.9 million registered shares of Ener1 common stock pursuant to a registration statement on Form S-3 filed with the Securities and Exchange Commission as an advance payment for the quarterly installment of principal and interest due on April 1, 2011 under a senior unsecured note. The fair value of these shares of approximately $6.9 million, is recorded in prepaid expenses and other current assets. See Note 6, Short-Term and Long-Term Borrowings.

Property and Equipment

The components of property and equipment were as follows (in thousands):

	March 31,			December 31,
	2011			2010

Land	$	2,185		$	2,134
Building and building improvements		5,951			5,818
Machinery and equipment		53,386			49,815
Office equipment, furniture and other		5,184			4,463
Leasehold improvements		14,977			14,934
Equipment deposits		6,875			7,238
Construction in progress		55,360			54,690
		143,918			139,092
less: accumulated depreciation		(18,292	)		(15,589	)
	$	125,626		$	123,503

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Construction in progress includes payments for equipment being constructed by third parties specifically for our use and equipment not yet placed in service. Depreciation on these assets will commence when we place the assets in service. During the period ended March 31, 2011, we recorded capitalized interest expense of approximately $782,000, which is included in construction in progress as of March 31, 2011. Assets recorded under capital leases were approximately $8.4 million at March 31, 2011 and December 31, 2010.

Depreciation expense for the periods ended March 31, 2011 and March 31, 2010 was approximately $2.4 million and $1.6 million, respectively.

Intangible Assets and Goodwill

The components of intangible assets, all of which are finite-lived, were as follows (in thousands, except useful life data):

	Useful	As of March 31, 2011							As of December 31, 2010
	life	Carrying		Accumulated					Carrying		Accumulated
	(in yrs)	Amount		Amortization			Net		Amount		Amortization			Net

Patented and unpatented technology	10	$	13,910	$	(3,662	)	$	10,248	$	13,908	$	(3,315	)	$	10,593
Electric vehicle battery technology	4.2		1,199		(696	)		503		1,166		(606	)		560
Customer relationships	2.2		975		(975	)		-		947		(947	)		-
		$	16,084	$	(5,333	)	$	10,751	$	16,021	$	(4,868	)	$	11,153

Goodwill	Indefinite	$	52,807	$	-		$	52,807	$	51,845	$	-		$	51,845

Certain intangible assets and goodwill are subject to foreign currency translation and the translation adjustment is recorded as a component of accumulated other comprehensive income within stockholders’ equity in the consolidated balance sheets.

Intangible asset amortization expense was approximately $421,000 and $526,000 for the periods ended March 31, 2011 and 2010, respectively. The following table reflects the estimated future amortization expense related to intangible assets as of March 31, 2011 (in thousands):

Year Ended December 31,

2011	$	1,639
2012		1,588
2013		1,362
2014		1,362
2015		1,362
Thereafter		3,438

	$	10,751

As disclosed in Note 13, Operating Segment and Geographic Information, the Company revised its reportable operating segments as of January 1, 2011. We have not completed the reallocation of goodwill to our new reportable operating segments as of March 31, 2011.

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ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Accounts Payable and Accrued Expenses

The components of accounts payable and accrued expenses were as follows (in thousands):

	March 31,		December 31,
	2011		2010

Accounts payable	$	19,496	$	27,616
Accrued other		4,229		6,027
Accrued financing fee		5,920		4,504
Accrued compensation and benefits		3,436		2,921
Customer advances		916		617
Product warranty reserves		363		240
	$	34,360	$	41,925

The accounts payable balance at March 31, 2011 and December 31, 2010 includes approximately $473,000 and $5.0 million, respectively, related to equipment purchases made under the ABMI grant. The accrued financing fees represent minimum fees for premiums payable under senior unsecured notes and advisory services payable by Ener1. See Note 6, Short-Term and Long-Term Borrowings.

Warranty Reserves

We record the estimated cost of warranties, which we began offering in May 2010 when commercial production and sales of battery packs commenced, in cost of sales in the period the revenue is recognized. We use internal durability testing data, comparative industry information and industry sources to develop the warranty reserve. If actual warranty claims differ from these estimates, adjustments to the product warranty reserve could have a material effect on our consolidated financial statements. The components of the product warranty liability, as of March 31, 2011 and December 31, 2010, were as follows (in thousands):

	March 31,			December 31,
	2011			2010

Balance, beginning of period	$	894		$	-
Provision for new warranties		306			894
Balance, end of period		1,200			894
less: current portion		(363	)		(240	)
Long term portion	$	837		$	654

Note 4 – Earnings per Share

Net loss per share-basic is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Net loss per share-diluted is calculated by including in the number of common shares outstanding, the number of common shares potentially issuable if in-the-money options or warrants are exercised or in-the-money convertible debt is converted into common stock and the effect of the exercise of options and warrants or conversion of convertible debt on the net loss per share. In addition, in calculating net loss per share-diluted we assume in-the-money warrants containing dilution protection features are exercised, which may cause the gain or loss on derivative instruments to increase or decrease, which will, in turn cause the net loss per share-diluted, if dilutive, to increase. Also, in calculating net loss per share-diluted we assume financial instruments are exercised, which may cause the gain or loss on financial instruments to increase or decrease, which will in turn, cause the net loss per share-diluted, if dilutive, to increase. Lastly, in calculating net loss per share-diluted we assume that amounts due under our senior unsecured notes are settled with shares of our common stock, which may cause the interest expense under such notes to decrease, which may in turn cause the net loss per share diluted, if dilutive, to increase.

- 11 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Following is a reconciliation of net loss attributable to Ener1 and weighted average common shares outstanding for purposes of calculating basic and diluted loss per share (in thousands, except per share data):

	Three Months Ended
	March 31,
	2011			2010

Net loss for basic loss per share	$	(84,718	)	$	(15,337	)
Adjustment for gain on certain derivative instruments		-			(1,521	)
Net loss for diluted loss per share	$	(84,718	)	$	(16,858	)

Weighted average number of common shares outstanding:
Basic		165,203			124,904
Effect of dilutive securities:
Certain warrants		-			64
Diluted		165,203			124,968

Net loss per share attributable to Ener1, Inc.:
Basic	$	(0.51	)	$	(0.12	)
Diluted	$	(0.51	)	$	(0.13	)

Note 5 – Other Income (Expenses)

The components of other income (expense) were as follows (in thousands):

	Three Months Ended
	March 31,
	2011			2010

Other income (expense):
Interest expense	$	(3,972	)	$	(2,002	)
Interest income		376			35
Gain on derivative instruments		5,148			1,525
Loss on financial instruments		(13,941	)		-
Foreign currency loss		(367	)		(50	)
Other		40			314
Total other income (expense)	$	(12,716	)	$	(178	)

- 12 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 6 – Short-Term and Long-Term Borrowings

The components of short-term and long-term borrowings were as follows (in thousands):

	March 31, 2011				December 31, 2010
	Current		Long-Term		Current		Long-Term

8.25% Senior Unsecured Notes due March 2013	$	17,069	$	24,980	$	17,001	$	29,391
8.25% Senior Unsecured Notes due July 2013		7,689		13,394		4,469		15,342
6.00% Senior Convertible Notes due August 2015		55		10,000		192		10,000
8.50% Convertible Bonds due January 2013		-		444		-		430
Bank loans and other financing		19,946		-		17,635		-
Capital lease obligations		2,302		110		2,478		829
	$	47,061	$	48,928	$	41,775	$	55,992

Senior Unsecured Notes

In September 2010, Ener1 sold $55 million of 8.25% senior unsecured notes (the Notes), 960,926 shares of Ener1 common stock and warrants to purchase up to 2,882,776 shares of Ener1 common stock (the Purchase Agreement Warrants) at an initial exercise price of $3.82 per share for aggregate consideration of $55 million (Purchase Agreement I).

In December 2010, Ener1 sold an additional $25 million of Notes, 339,783 shares of Ener1 common stock and Purchase Agreement Warrants to purchase up to 1,019,353 shares of Ener1 common stock at an initial exercise price of $4.68 for aggregate consideration of $25 million (Purchase Agreement II).

We may pay amounts due on the Notes in cash, or, if certain conditions are met, in shares of Ener1 common stock or a combination of cash and shares of Ener1 common stock, all of which will result in premium payments above the face value plus stated interest. The stated interest rate on the Notes is 8.25%, but the payments for principal and interest due on any payment date will be computed to give effect to recent share prices, valuing the shares of our common stock at 91.75% of a weighted average share price over a pricing period ending shortly before the payment date.

The principal of the Notes is payable in ten equal quarterly installments. The first installment payment for the Notes sold under Purchase Agreement I was paid, in cash, on January 3, 2011, resulting in a premium payment of approximately $523,000, and the second installment payment was paid in shares of Ener1 common stock on April 1, 2011, resulting in a premium payment of approximately $617,000. The first installment payment for the Notes sold under Purchase Agreement II was paid, in cash, on April 1, 2011, resulting in a premium payment of approximately $226,000.

We are required to register for resale under the Securities Act the maximum number of shares of Ener1 common stock we may elect to issue in payment of amounts due under the Notes issued under Purchase Agreement I and Purchase Agreement II. The registration statement registering the resale of common stock issuable to repay obligations under Notes issued under Purchase Agreement I was declared effective on December 31, 2010. On February 11, 2011, we filed a registration statement to register the resale of shares we may elect to issue to repay obligations under Notes issued under Purchase Agreement II. The $6.4 million held in restricted cash accounts, representing the first two installment payments due on the Notes issued under Purchase Agreement II, will be released when this registration statement is declared effective. The April 1, 2011 installment payment for the Notes issued under Purchase Agreement II was made using $3.2 million of funds that were released from the restricted cash accounts. The registration statement registering the resale of common stock issuable to repay obligations under Notes issued under Purchase Agreement II was declared effective on May 9, 2011.

- 13 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The estimated fair value of the shares of Ener1 common stock, the Purchase Agreement Warrants and the premium payments in connection with the Notes have been recorded as a debt discount and are being amortized to interest expense, using the effective interest method, over the term of the Notes. The Purchase Agreement Warrants are immediately exercisable and expire five years from the date of grant. The Purchase Agreement Warrants contain certain anti-dilution protection features and the fair value of these features has been recognized in the accompanying consolidated balance sheet as a derivative instrument. See Note 7, Fair Value of Derivative and Financial Instruments.

The components of the Notes as of March 31, 2011 are as follows (in thousands):

	Purchase Agreement I			Purchase Agreement II			Totals

Remaining face value of the Notes	$	49,500		$	25,000		$	74,500
Debt discount, net		(8,424	)		(4,426	)		(12,850	)
Accrued interest		973			509			1,482
Balance, end of period		42,049			21,083			63,132
less: current portion		(17,069	)		(7,689	)		(24,758	)
Long-term portion	$	24,980		$	13,394		$	38,374

The amortization of debt discount, using the effective interest method, and the future amortization over the remaining life of the Notes are as follows (in thousands):

	Purchase Agreement I			Purchase Agreement II			Totals

Original issue discount	$	12,871		$	5,280		$	18,151
Amortized to expense		(4,447	)		(855	)		(5,302	)
Balance, end of period	$	8,424		$	4,425		$	12,849

Future Amortization:
Year ended December 31, 2011	$	4,713		$	2,226		$	6,939
Year ended December 31, 2012		3,523			1,857			5,380
Year ended December 31, 2013		188			342			530
	$	8,424		$	4,425		$	12,849

- 14 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Financing costs associated with the sale of the Notes have been recorded as deferred financing costs and are being amortized to interest expense over the term of the Notes. The amortization of deferred financing costs, using the effective interest method, and the future amortization over the remaining life of the Notes are as follows (in thousands):

	Purchase Agreement I			Purchase Agreement II			Totals

Financing costs incurred	$	2,324		$	1,048		$	3,372
Amortized to expense		(864	)		(212	)		(1,076	)
Balance, end of year	$	1,460		$	836		$	2,296

Future Amortization:
Year ended December 31, 2011	$	856		$	497		$	1,353
Year ended December 31, 2012		577			321			898
Year ended December 31, 2013		28			18			46
	$	1,461		$	836		$	2,297

Senior Convertible Notes

In August and September 2010, Ener1 sold an aggregate of $10 million in Senior Convertible Notes (the Convertible Notes) to Itochu Corporation, a Japanese corporation (Itochu). The Convertible Notes bear interest at 6.0% per annum and the interest is payable in arrears on February 26th and August 26th of each year. The first interest payment was made on February 25, 2011. Itochu has the right to convert all or any part of the outstanding principal and unpaid interest into shares of Ener1 common stock at a conversion price of $3.612 per share. The Convertible Notes mature in August 2015.

In December 2010, Mr. Kasagawa, the chief financial officer of the Aerospace and Industrial Systems Division of Itochu, was elected to serve as a director of the Company.

Convertible Bonds

On January 25, 2008, Ener1 Korea issued convertible bonds with an aggregate principal amount of $9.2 million maturing on January 25, 2013 (Ener1 Korea Convertible Bonds). Interest accrues on the Ener1 Korea Convertible Bonds at 8.5% per annum and is payable at maturity. Prior to December 2012, principal due under the bonds may be converted by the holder into shares of Ener1 Korea common stock at a fixed conversion price of 750 Korean Won per share. Upon conversion, the principal amount to be converted is translated from United States Dollars to Korean Won, using the exchange rate in effect on the date of conversion.

Ener1 acquired 96% of the principal amount of the Ener1 Korea Convertible Bonds in October 2008 in connection with Ener1’s acquisition of Ener1 Korea. In December 2009, Ener1 converted $6.9 million of the outstanding principal of the Ener1 Korea Convertible Bonds into shares of Ener1 Korea common stock. At March 31, 2011, approximately $2.7 million in principal and accrued interest of the Ener1 Korea Convertible Bonds was outstanding and is convertible into up to 2,804,635 shares of Ener1 Korea common stock. We owned approximately 84% of the outstanding principal balance of the Ener1 Korea Convertible Bonds at March 31, 2011 and have eliminated the principal and related accrued interest in consolidation.

- 15 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Bank loans

Ener1 Korea maintains bank loans denominated in Korean Won, consisting of trade financing agreements and letters of credit. The total amount available at March 31, 2011 under these loans was approximately $15.7 million, of which $13.3 million was outstanding, based on the period-end exchange rate of 1,107.2 Korean Won per United States Dollar. The amounts are scheduled for repayment at various times throughout 2011 and the first quarter of 2012.

Ener1 Korea has an equipment loan that is also denominated in Korean Won. The total amount available and outstanding at March 31, 2011 was approximately $4.5 million. The loan bears interest at 7.85% and is scheduled to mature in October 2011.

Ener1 Korea’s wholly-owned subsidiary Emerging Power has a $2 million line of credit with a commercial bank that is denominated in United States Dollars. At March 31, 2011, $1.8 million was outstanding under this line of credit which was then scheduled to mature in June 2011. In April 2011, Emerging Power amended the line of credit to increase the amount available up to $4 million and extend the maturity date to April 2012.

Certain bank deposits, land, buildings and equipment owned by Ener1 Korea and Emerging Power are pledged as collateral for their respective bank loans.

Capital lease obligations

We are obligated under capital lease agreements for payments relating to certain machinery and production equipment totaling $8.4 million, including the bargain purchase option which management intends to exercise. Assets under these capital leases are recorded as part of property and equipment in the accompanying balance sheets. The following table summarizes the activity in our capital leases (in thousands):

	March 31,			December 31,
	2011			2010

Balance, beginning of period	$	3,307		$	5,073
Borrowings		-			754
Repayments		(919	)		(2,614	)
Amortization of debt issuance costs		24			94
Balance, end of period		2,412			3,307
less: current portion		(2,302	)		(2,478	)
Long term capital lease obligation	$	110		$	829

Note 7 – Fair Value of Derivative and Financial Instruments

We record the fair value of derivative instruments and financial instruments in our consolidated balance sheet and reflect the changes in fair value as gain or loss on derivative instruments and financial instruments. Our derivative instruments are not designated as hedging instruments.

Derivative Instruments

We issued freestanding warrants in connection with capital raising activities during 2004 that contained dilution protection features requiring exercise price adjustments if we issued securities deemed to be dilutive to the warrants (2004 Warrants).

In connection with our credit agreement with Credit Suisse AG, Cayman Islands Branch (Credit Suisse), we issued warrants to Credit Suisse (Credit Suisse Warrants) in 2010. In connection with the sale of the Notes we issued the Purchase Agreement Warrants in 2010 to the purchasers of the Notes. The Credit Suisse Warrants and the Purchase Agreement Warrants contain dilution protection features requiring exercise price adjustments if we issue securities that are deemed to be dilutive to the warrants.

- 16 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In accordance with applicable accounting guidance, the conversion feature of the Ener1 Korea Convertible Bonds was bifurcated and recorded as a derivative instrument. As foreign currency rates fluctuate, the number of shares of Ener1 Korea stock to be issued upon conversion fluctuates.

Financial Instruments

In May 2010, in connection with our investment in Think Holdings, Ener1 agreed that certain investors that purchased Think Holdings’ Series B Stock could require Ener1 to issue shares of Ener1 common stock to the investors in exchange for their shares of Series B Stock and half of their warrants to purchase Series B Stock (the Ener1 Put Option). See Note 12, Related Party Transactions.

When an investor exercises its Ener1 Put Option, each share of Series B Stock will have a stated value of $1.67 per share. The Ener1 common stock issued in exchange for Series B Stock will be valued at the greater of (i) the preceding 15-day volume weighted average price of Ener1 common stock or (ii) $4.00 per share. The total amount of Ener1 common stock issuable upon exercise of the Ener1 Put Option is capped at $27.5 million and at March 31, 2011, Ener1 may be required to issue up to approximately $15.1 million in shares in connection with the Ener1 Put Option. Investors originally had until May 5, 2011 to exercise the Ener1 Put Option and, upon exercise, would receive unregistered shares of Ener1 common stock. We are currently negotiating put right extension agreements with investors who have rights pursuant to the Ener1 Put Option (Put Right Extension Agreement) to, among other things, postpone the date on which the Ener1 Put Option may be exercised from May 5, 2011 to September 15, 2011 and provide that on such date, all shares of Series B Stock held by investors that exercise the Ener1 Put Option will be exchanged for shares of Ener1 common stock issued under a registration statement.

In January 2011, we entered into an expanded put right agreement (the Investinor Expanded Put Right) with Investinor AS (Investinor), an existing shareholder of Think Holdings. Pursuant to the Investinor Expanded Put Right, Investinor provided $2.5 million in bridge financing to Think Holdings and waived certain shareholder rights in Think Holdings. In connection with the bridge financing provided by Investinor, Ener1 agreed that Investinor could require Ener1 to issue shares of Ener1 common stock to Investinor in exchange for their shares of Series B Stock into which such bridge financing would be converted.

Upon exercise of the Investinor Expanded Put Right, the exchange price for each share of Series B Stock will be equal to the then current United States dollar equivalent of 10 Norwegian Kroner per share. The Ener1 common stock issued in exchange for Series B Stock will be valued at the greater of (i) the preceding 15-day volume weighted average price of Ener1 common stock or (ii) $4.00 per share. Under the initial terms of the Investinor Expanded Put Right, Investinor had until May 5, 2011 to exercise the Investinor Expanded Put Right. Ener1 agreed to register the resale of the unregistered shares of Ener1 common stock Investinor received upon exercise of the put right.

We also extended to Investinor, under the Investinor Expanded Put Right, the right to transfer to Ener1 an additional 3,007,400 shares of Series B Stock under the same terms and conditions of the Investinor Expanded Put Right. Investinor also had the right to transfer to Ener1 2,000,000 shares of Series B Stock under the Ener1 Put Option, which is now encompassed under the Investinor Expanded Put Right and the exchange price for each share of Series B Stock will be equal to the then current United States dollar equivalent of 10 Norwegian Kroner per share.

In accordance with applicable accounting standards, in January 2011, we initially recognized the fair value of the Investinor Expanded Put Right by increasing our investment in unconsolidated entity by approximately $731,000.

- 17 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of April 4, 2011, Ener1 amended the Investinor Expanded Put Right (the Amended Investinor Expanded Put Right) to, among other things, suspend Investinor’s right to put their shares of Series B Stock to Ener1 until the earlier to occur of: (i) June 15, 2011 or (ii) the date on which Ener1’s ownership of the outstanding voting equity of Think Holdings falls below 20%. Investinor has until July 15, 2011 to exercise the Amended Investinor Expanded Right. In addition, at such date, Investinor may exchange its rights under the $2.5 million in bridge financing for shares of Ener1 common stock and no longer has to first convert the bridge financing it provided to Think Holdings into shares of Series B Stock. Ener1 also agreed to issue shares of Ener1 common stock to Investinor upon exercise of the Amended Investinor Expanded Put Right under a registration statement. Investinor agreed not to sell more than one-third of the Ener1 shares it receives in the exchange during each thirty day period following the exchange.

In January 2011, Ener1 entered into an expanded put right agreement (the Scatec Expanded Put Right) with Scatec AS (Scatec), an existing shareholder of Think Holdings in connection with Scatec’s agreement to provide bridge financing of 2.4 million Norwegian Kroner to Think Holdings in January 2011. The Scatec Expanded Put Right provided Scatec with the right to put up to 259,740 shares of Series B Stock as well as the 240,000 shares of Series B Stock into which the bridge financing may be converted, to Ener1 in exchange for shares of Ener1 common stock. Scatec originally had until May 5, 2011 to exercise the Scatec Expanded Put Right and, upon exercise, would receive unregistered shares of Ener1 common stock. We are currently negotiating a Put Right Extension with Scatec.

In accordance with applicable accounting standards, in January 2011, we initially recognized the fair value of the Scatec Expanded Put Right by increasing our investment in unconsolidated entity by approximately $77,000.

Lattice Valuation Model

Freestanding Warrants

We valued the 2004 Warrants using a lattice valuation model, for which management understands the methodologies, with the assistance of a valuation consultant. This model incorporates factors such as the price of Ener1’s common stock, contractual terms of the warrants, expiration date of the warrants, and risk-free interest rates, as well as assumptions about future financings by Ener1, volatility of Ener1 common stock, and warrant holder behavior on key dates, including warrant exercise dates and period end reporting dates. These assumptions are reviewed quarterly and are subject to change. Changes to these assumptions could materially affect management’s estimate of the fair value of the 2004 Warrants.

Our management estimates that the fair value of the derivative liability associated with the 2004 Warrants that remain outstanding as of March 31, 2011 is approximately $1.6 million. Some of the key assumptions on which this estimate is based include, but are not limited to, projected annual volatility of Ener1 common stock of 63% and assumptions that holders of the 2004 Warrants will exercise the warrants when Ener1’s common stock price is equal to 200% of the exercise price.

Financial Instruments

With the assistance of a valuation consultant, we valued the Ener1 Put Option, the Investinor Expanded Put Right, the Amended Investinor Expanded Put Right and the Scatec Expanded Put Right (collectively the Put Options), using a lattice valuation model, for which management understands the methodologies, in which the value of Ener1 common stock and the value of Series B Stock is projected and correlated to determine if the holders of the Put Options would exercise the put rights. This model also incorporates factors such as the volatility of Ener1’s common stock, contractual terms of the Put Options, and the expiration date of the Put Options, as well as the restriction, where applicable, on the resale of the Ener1 shares received when the put right is exercised. Because the shares of Series B Stock are not publicly traded, the values of the Series B Stock and warrants were determined using recent investments in Think Holdings and the average stock prices of 14 comparable companies that operate in the same industry as, and are similar in size to, Think Holdings. Volatility of the Series B Stock was estimated using the average volatility of the common stock of the same 14 comparable companies.

- 18 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Our management estimates that the aggregate fair value of the Put Options that remain outstanding as of March 31, 2011 is approximately $16.1 million. The key assumptions on which this estimate is based include, but are not limited to, projected annual volatility of Ener1 common stock of 63% and a zero value for a share of Series B Stock, which relate to the determination that all holders of the Put Options would exercise their respective put rights. Each share of Series B Stock was valued at zero based on the write down of our investment in Think Holdings to zero at March 31, 2011. See Note 12, Related Party Transactions.

Black-Scholes Valuation Model

Freestanding Warrants

We use a Black-Scholes pricing model to determine the fair value of the Credit Suisse Warrants and the Purchase Agreement Warrants. This model uses market sourced inputs such as interest rates, stock price and volatility, the selection of which requires management’s judgment.

The fair value of the Credit Suisse Warrants on key dates was estimated using the following inputs:

	Volatility			Interest Rate			Stock Price		Term in Years

December 31, 2010		63.9	%		0.3	%	$	3.79		1.2
March 31, 2011		60.3	%		0.3	%	$	2.96		1.0

Based on these inputs, the derivative liability associated with the Credit Suisse Warrants as of March 31, 2011 was $398,000 and the gain on derivative liability for the period ended March 31, 2011 was approximately $596,000.

The fair value of the Purchase Agreement Warrants on key dates was estimated using the following inputs:

	Volatility			Interest Rate			Stock Price		Term in Years

December 31, 2010		84.7% - 93.4	%		2.0	%	$	3.79		4.7 - 5.0
March 31, 2011		84.5% - 85.9	%		2.2	%	$	2.96		4.4 - 4.8

Based on these inputs, the derivative liability associated with the Purchase Agreement Warrants as of March 31, 2011 was $6.9 million and the gain on derivative liability for the period ended March 31, 2011 was approximately $2.9 million.

Ener1 Korea Convertible Bonds

We use a Black-Scholes pricing model to determine the fair value of the Ener1 Korea Convertible Bonds. This model uses market sourced inputs such as interest rates, stock price and volatility, the selection of which requires management’s judgment. Because the bonds are convertible into shares of Ener1 Korea common stock, stock prices were estimated using the average stock price of four comparable Korean companies which operate in the same industry as, and are similar in size to, Ener1 Korea, with a 30% liquidity discount. Volatility of the Ener1 Korea common stock was estimated using the average volatility of the common stock of the same four comparable Korean companies. Interest rates represent the Korean government bond rate for securities with a maturity that approximates the estimated expected life of the Ener1 Korea Convertible Bonds.

The fair value of the Ener1 Korea Convertible Bonds on key dates was estimated using the following inputs:

	Volatility			Interest Rate			Stock Price		Term in Years

December 31, 2010		60.1	%		4.1	%	$	0.52		2.1
March 31, 2011		59.0	%		4.1	%	$	0.58		1.8

- 19 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We have certain liabilities recorded at fair value which have been classified as Level 3 within the fair value hierarchy based on the three levels of inputs that may be used to measure fair value as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Our Level 3 liabilities as of March 31, 2011 consist of the 2004 Warrants, the Credit Suisse Warrants, the Purchase Agreement Warrants, the Put Options and the Ener1 Korea Convertible Bonds.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value during the period ended March 31, 2011 (in thousands):

	Carrying		Fair Value Measurements Using
	Value		Level 1		Level 2		Level 3		Total

Warrants	$	8,931	$	-	$	-	$	8,931	$	8,931
Put Options		16,089		-		-		16,089		16,089
Convertible bonds		34		-		-		34		34
	$	25,054	$	-	$	-	$	25,054	$	25,054

Level 3 Valuation Techniques

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all financial instruments measured at fair value on a recurring basis using significant unobservable inputs (in thousands):

						Convertible
	Warrants			Put Options		Bonds		Totals

Balance at December 31, 2010	$	14,084		$	1,340	$	29	$	15,453
Total realized/unrealized (gains) or losses:
Included in other income and expense		(5,153	)		13,941		5		8,793
Included in other comprehensive income		-			-		-		-
Included in stockholders' equity		-			-		-		-
Purchases, issuances and settlements		-			808		-		808
Transfers in and/or out of Level 3		-			-		-		-
Balance at March 31, 2011	$	8,931		$	16,089	$	34	$	25,054

Ener1 Korea may from time to time hold derivative instruments for managing exposure to foreign currency primarily to hedge against the foreign exchange risk arising from accounts receivable from domestic subsidiaries. These derivative instruments are measured at fair value as they are not designated as hedges based on the criteria established under US GAAP, and gains or losses from changes in the fair value are recognized in earnings.

- 20 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 8 – Sales of Common Stock

Open Market Sale Agreement

In January 2010, we entered into an open market sale agreement (the 2010 Open Market Sale Agreement) with Jefferies & Company, Inc. (Jefferies), to sell shares of Ener1 common stock on Ener1’s behalf from time to time, as instructed by Ener1, with an aggregate sales price of up to $60 million. The compensation to Jefferies is 3.0% of gross proceeds of the sales price per share. We began selling shares under the 2010 Open Market Sale Agreement in February 2010 and through December 31, 2010 we sold 2,069,250 shares for an aggregate purchase price of $8.2 million, at an average price of $3.94 per share. After deducting fees and expense of $430,000, we received net proceeds of $7.7 million from the sale of these shares.

From January 1, 2011 to March 31, 2011, under the 2010 Open Market Sale Agreement we sold 2,577,789 shares for an aggregate purchase price of $7 million. After deducting fees and expenses of $210,000, we received net proceeds of $6.8 million from the sale of these shares.

Note 9 – Stock-Based Compensation

At March 31, 2011, we had seven active stock-based compensation plans which provide for the grant of incentive and non-qualified stock options, restricted stock and bonuses to officers, directors, employees and consultants. The Compensation Committee of the Board of Directors administers the plans and has the authority to determine the recipients to whom awards will be made, the respective vesting and forfeiture terms, the amounts of the awards and other terms. Under the terms of the plans, the option exercise price approved by the Compensation Committee shall not be less than the fair market value of Ener1 common stock at the date of grant.

Performance options are earned based on achievement of specifically identified performance criteria and are subject to forfeiture if such performance criteria are not met. These options usually vest ratably over a three year period, but cannot be exercised unless the options are both earned and vested. We also award incentive options from time to time which generally vest over a three or five year period. Compensation expense is recorded on a straight-line basis over the vesting periods and is based on the amount of awards expected to be earned and vested. Beginning in February 2009, we also granted restricted stock to certain employees. The restrictions may lapse based on the passage of time, the achievement of specifically identified performance criteria or other terms. Compensation expense is determined at the grant date, based on the closing price of our common stock, and is recorded on a straight-line basis over the restriction period.

Compensation expense (net of estimated forfeitures) related to awards under our stock-based compensation plans for the periods ended March 31, 2011 and 2010 was approximately $762,000 and $1 million, respectively. The total unrecognized compensation expense (net of estimated forfeitures) related to non-vested awards, as of March 31, 2011 is approximately $7.9 million and is expected to be expensed in future years as follows (in thousands):

Unrecognized compensation expense:

2011	$	2,740
2012		2,704
2013		1,577
2014		625
2015		263
	$	7,909

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

- 21 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

A summary of the activity in our stock option plans is as follows:

	Options			Weighted average exercise price		Weighted average remaining contractual life		Aggregate intrinsic value

Balance at January 1, 2011		5,365,157		$	3.71		3.8	$	3,897,606

Granted		645,000		$	3.15
Exercised		(99,006	)	$	1.86
Forfeited or expired		(227,144	)	$	4.24
Balance at March 31, 2011		5,684,007		$	3.66		3.7	$	3,659,630

Exercisable at March 31, 2011		3,663,413		$	3.70		2.7	$	3,338,130

The intrinsic value of options exercised during the periods ended March 31, 2011 and 2010, was approximately $252,000 and $138,000, respectively.

The weighted average fair value of non-vested options and restricted stock during the period ended March 31, 2011 is as follows:

				Weighted
	Non-vested			average
	Options			fair value

Non-vested at January 1, 2011		1,552,916		$	3.18

Granted		645,000			2.81
Vested		49,822			1.00
Forfeited		(227,144	)		4.24
Non-vested at March 31, 2011		2,020,594		$	2.70

				Weighted
	Restricted			average
	Stock			fair value

Non-vested at January 1, 2011		1,456,000		$	3.57

Granted		225,000			3.32
Vested		(10,000	)		3.93
Forfeited		(60,000	)		3.59
Non-vested at March 31, 2011		1,611,000		$	3.53

- 22 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following key assumptions:

	2011
Expected term	4 - 6 yrs
Risk free interest rate	1.9% - 2.4%
Expected volatility	83.4% - 102.4%
Expected dividend yield	0%

Expected term

The expected term represents the period over which the stock options are expected to be outstanding. It has been determined using the “simplified method” which is based on a calculation that determines the midpoint between the vesting date and the end of the contractual term.

Risk free interest rate

The risk free interest rate assumption is based on the implied yield currently available on United States Treasury issues with a remaining term equivalent to the expected term of the stock options.

Expected volatility

The expected volatility assumptions are based upon the weekly closing stock price of Ener1’s common stock since January 2002, when Ener1 underwent a change in control. We determined that share prices prior to January 2002 do not reflect the ongoing business valuation of our operations.

Dividend yield

We do not intend to pay dividends on our common stock in the foreseeable future. Accordingly, we use a dividend yield of zero in our assumptions.

The following table summarizes stock option information for options outstanding at March 31, 2011:

	Options Outstanding
Exercise price range	Number of options		Weighted average remaining contractual life		Weighted average exercise price		Aggregate instrinsic value

$0.49 - $1.61		656,821		0.7	$	1.61	$	1,467,433
$2.10 - $4.25		3,629,997		4.6		3.07		2,192,197
$4.83 - $4.90		422,427		1.7		4.90		-
$5.18 - $6.79		812,975		3.6		6.54		-
$7.15 - $7.63		161,787		2.4		7.33		-
Totals		5,684,007		3.7	$	3.66	$	3,659,630

- 23 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table summarizes stock option information for options exercisable at March 31, 2011:

	Options Exercisable
Exercise price range	Number of options		Weighted average remaining contractual life		Weighted average exercise price		Aggregate instrinsic value

$0.49 - $1.61		656,821		0.7	$	1.61	$	1,467,433
$2.10 - $4.25		1,745,831		3.3		2.77		1,870,697
$4.83 - $4.90		422,427		1.7		4.90		-
$5.18 - $6.79		709,047		3.6		6.53		-
$7.15 - $7.63		129,287		2.4		7.36		-
Totals		3,663,413		2.7	$	3.70	$	3,338,130

Note 10 - Warrants

A summary of the activity for warrants is as follows:

	Warrants			Weighted average exercise price		Weighted average remaining contractual life		Aggregate intrinsic value

Balance at January 1, 2011		42,659,126		$	3.87		2.8	$	28,470,084

Granted		-			-
Exercised		-			-
Expired		(1,562,500	)		8.25
Balance at March 31, 2011		41,096,626		$	3.70		2.6	$	11,887,831

Exercisable at March 31, 2011		40,632,462		$	3.69		2.6	$	11,887,831

The weighted average fair value of non-vested warrants during the period ended March 31, 2011 is as follows:

				Weighted
	Non-vested			average
	Warrants			fair value

Non-vested at January 1, 2011		2,890,834		$	4.16

Granted		-			-
Vested		(2,426,670	)		4.11
Forfeited		-			-
Non-vested at March 31, 2011		464,164		$	4.41

The fair value of warrants granted, if any, is estimated on the date of the grant using the Black-Scholes option pricing model with the following key assumptions:

- 24 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Expected term

The expected term represents the period over which the warrants are expected to be outstanding.

Risk-free interest rate

The risk free interest rate assumption is based on the implied yield currently available on United States Treasury issues with a remaining term equivalent to the expected term of the warrants.

Expected volatility

Dividend yield

We do not intend to pay dividends on our common stock in the foreseeable future. Accordingly, we use a dividend yield of zero in our assumptions.

The following table summarizes warrant information for warrants outstanding at March 31, 2011:

	Warrants Outstanding
Exercise price range	Number of warrants		Weighted average remaining contractual life		Weighted average exercise price		Aggregate instrinsic value

$2.10 - $2.80		18,166,712		1.0	$	2.31	$	11,887,831
$4.83 - $5.95		19,378,809		4.2		4.12		-
$7.50 - $8.88		2,935,717		2.3		7.27		-
$10.50 - $17.57		615,388		3.1		14.62		-
		41,096,626		2.6	$	3.70	$	11,887,831

The following table summarizes warrant information for warrants exercisable at March 31, 2011:

	Warrants Exercisable
Exercise price range	Number of warrants		Weighted average remaining contractual life		Weighted average exercise price		Aggregate instrinsic value

$2.10 - $2.80		18,166,712		1.0	$	2.31	$	11,887,831
$4.83 - $5.95		18,914,645		4.2		4.11		-
$7.50 - $8.88		2,935,717		2.3		7.27		-
$10.50 - $17.57		615,388		3.1		14.62		-
		40,632,462		2.6	$	3.69	$	11,887,831

- 25 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 11 – Noncontrolling Interests

The following table reconciles equity attributable to the noncontrolling interests in Ener1 Korea, our majority-owned subsidiary (in thousands):

	Three Months Ended
	March 31,
	2011		2010

Balance, beginning of period	$	1,767	$	1,807
Net income (loss) attributable to noncontrolling interests		10		(126	)
Translation adjustments		50		20
Balance, end of period	$	1,827	$	1,701

Note 12 – Related Party Transactions

Investment in Unconsolidated Entity

During 2009 and 2010, we made strategic investments in Think Holdings, the majority owner of Think Global, pursuant to a securities investment and subscription agreement for shares of Series B Stock in 2009 (SISA) and in 2010 (Second SISA).

In connection with the Second SISA, we agreed to grant the Ener1 Put Option to other investors that purchased Series B Stock under the Second SISA. In January 2011, we agreed to grant the Investinor Expanded Put Right to Investinor, and subsequently amended the terms of this right on April 4, 2011 pursuant to the Amended Investinor Expanded Put Right. Also in January 2011, we agreed to grant the Scatec Expanded Put Right to Scatec. Scatec and other investors in Think Holdings have notified us of their intention to exercise their rights pursuant to the Scatec Expanded Put Right and the Ener1 Put Option, respectively, and we are currently in negotiations with these investors to enter into Put Right Extension Agreements. See Note, 7 Derivative and Financial Instruments.

We review our investment in Think Holdings for potential impairment at each reporting period in accordance with applicable accounting standards. Based on our review of this investment at March 31, 2011, we determined our investment in Think Holdings was impaired primarily due to the uncertainty of when or if Think Global will recommence operations, which will depend on Think Holdings’ ability to raise sufficient capital to continue operations subsequent to May 31, 2011. As a result, we recorded an impairment loss of approximately $59.4 million during the three months ended March 31, 2011.

At March 31, 2011, we controlled approximately 48% of the outstanding voting power in Think Holdings and Mr. Gassenheimer who serves on the Board of Ener1, also serve on the board of directors of Think Holdings. Mr. Baker, who serves on the Board of Ener1, also served on the board of directors of Think Holdings until April 26, 2011, when he resigned from the board of directors of Think Holdings. On May 9, 2011, we surrendered to Think Holdings, for no consideration, all shares of Think Holdings’ voting equity held by Ener1, including, without limitation, all shares of Series B Stock, based on our determination that our investment in Think Holdings was impaired and written down to zero. We continue to monitor our activity with Think Holdings for potential transactions that may require the consolidation of the accounts of Think Holdings with the accounts of Ener1.

In April, Think Global received approximately $3.5 million and anticipates receiving an additional $2 million from Bzinfin, which, based on our knowledge, we expect will enable the company to continue its operations through May 31, 2011.

- 26 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Accounts Receivable

As of March 31, 2011, our accounts receivable balance with Think Global totaled approximately $14.1million, all of which is past due. As of March 31, 2011, we have not established an allowance for doubtful accounts as our management believes we will realize full value on these accounts receivable, which may include our receipt of equity or other value in connection with a potential equity restructuring of Think Holdings. We will continue to evaluate whether events or circumstances have occurred or have failed to occur which may impact the collectability of these accounts receivable. If we determine the collectability of these accounts receivable are impacted, we will recognize a loss up to approximately $14.1 million, which could have a material adverse affect on our financial position and results of operations in future reporting periods.

Loans Receivable

As of March 31, 2011, the outstanding balance of our loans receivable with Think Holdings, including accrued interest, totaled approximately $18.2 million, of which $9.1 million is outstanding under a revolving line of credit and $9.1 million is outstanding pursuant to short-term working capital loans.

On February 28, 2011, we amended the existing revolving line of credit agreement (Amended Revolving LOC Agreement) with Think Holdings, increased the principal amount available under the credit agreement from $5 million to $15 million and extended the maturity date to March 31, 2011. On March 9, 2011, we extended the maturity date of the Amended Revolving LOC Agreement from March 31, 2011 to May 1, 2011. We subsequently extended the maturity date to June 15, 2011. All funds advanced to Think Holdings under the Amended Revolving LOC Agreement bear interest at a rate of 12% per annum and are secured by the assets and properties of Think North America, Inc., an indirect subsidiary of Think Holdings, pursuant to a security agreement. During the three months ended March 31, 2011, we advanced approximately $3.8 million to Think Holdings pursuant to the Amended Revolving LOC Agreement. Currently, we do not plan to advance any additional funds to Think Holdings pursuant to the Amended Revolving LOC Agreement.

During 2010, we made several short-term working capital loans to Think Holdings totaling $8.9 million, with an interest rate of 5.0% per annum, originally scheduled to mature on December 31, 2010. We may, at our option, convert these loans including accrued and unpaid interest, into shares of Think Holdings Series B Stock. On February 28, 2011, we extended the maturity date of these loans from December 31, 2010 to May 1, 2011. We subsequently extended the maturity date to June 15, 2011.

As of March 31, 2011, our management believes we will realize full value on these loans receivable, which may include our receipt of equity or other value in connection with a potential equity restructuring of Think Holdings. We will continue to evaluate whether events or circumstances have occurred or have failed to occur which may impact the collectability of these loans. If we determine the collectability of these loans receivable are impacted, we will recognize a loss up to approximately $18.2 million which could have a material adverse affect on our financial position and results of operations in future reporting periods.

- 27 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 13 - Operating Segment and Geographic Information

Operating segments are designed to allocate resources internally and provide a framework for management responsibility. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

As of January 1, 2011, we revised our reportable operating segments in conjunction with the implementation of a new organizational structure, which reflects how the chief decision maker evaluates the performance of our business. Our new reportable operating segments consist of the following: Transportation, Grid Energy Storage and Small Pack. This reporting structure is designed to allocate resources internally among these three operating segments and provide a framework for management responsibility with respect to each operating segment.

The Transportation segment produces batteries and battery solutions for hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs) and other vehicles such as trucks and buses.

The Grid Energy Storage segment develops and manufactures energy storage applications for utility grid and commercial applications.

The Small Pack segment, which includes industrial cell product markets, manufactures lithium-ion batteries for sale to customers in the handheld scanner, personal digital assistant and medical device markets.

Our chief operating decision maker is our Chief Executive Officer. Transactions between segments, consisting principally of product sales and purchases, are recorded at the consummated sales price. The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2010.

The following table provides summarized financial information regarding our reportable operating segments and the comparative information provided for the three months ended March 31, 2010 has been reclassified to conform to the new reportable operating segments:

- 28 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands)	Transportation			Grid Energy Storage			Small Pack			Non-segment Items (1)			Total
Three Months Ended March 31, 2011
External sales	$	2,176		$	9,502		$	11,406					$	23,084
Intersegment sales		-			-			7,689			(7,689	)		-
Total net sales		2,176			9,502			19,095			(7,689	)		23,084

Loss from operations		(5,120	)		(7,435	)		(98	)		(59,257	)		(71,910	)
Other income (expense)														(12,716	)
Loss before income taxes														(84,626	)
Income tax expense (benefit)														82
Net loss														(84,708	)
Net income attributable to noncontrolling interests														10
Net loss attributable to Ener1, Inc.													$	(84,718	)

Three Months Ended March 31, 2010
External Sales	$	805		$	-		$	10,170					$	10,975
Intersegment Sales		-			-			1,107			(1,107	)		-
Total Sales		805			-			11,277			(1,107	)		10,975

Loss from Operations		(13,315	)		-			(1,638	)		(316	)		(15,269	)
Other Income/Expense														(178	)
Loss Before Income Taxes														(15,447	)
Income Tax Expense (Benefit)														16
Net loss														(15,463	)
Net loss attributable to noncontrolling interests														(126	)
Net loss attributable to Ener1, Inc.													$	(15,337	)

(1) Represents the elimination of intersegment sales and profit from intersegment inventory sales. The three months ended March 31, 2011, includes an impairment loss of approximately $59.4 million. See Note 12, Related Party Transactions.

We have not disclosed total assets by reportable operating segment because such information is not used by the chief operating decision maker to evaluate the performance of our business. We have not completed the reallocation of goodwill to our new reportable operating segments as of March 31, 2011.

The following table provides certain information by geographic area (in thousands). Net sales attributed to geographic areas are based on the location where the sale originated.

- 29 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Three Months Ended
	March 31,
	2011			2010
Net sales:
U.S.	$	21,632		$	7,763
South Korea		14,616			8,150
Intersegment transfers		(13,164	)		(4,938	)
Total net sales	$	23,084		$	10,975

Net income (loss) attributable to Ener1, Inc.
U.S.	$	(85,004	)	$	(13,947	)
South Korea		37			(1,094	)
Intersegment transfers		249			(296	)
Net loss attributable to Ener1, Inc.	$	(84,718	)	$	(15,337	)

	March 31,			December 31,
	2011			2010
Assets:
U.S.	$	250,686		$	318,077
South Korea		79,381			78,467
Total assets	$	330,067		$	396,544

We are dependent on several clients for a significant portion of net sales. Sales from customers accounting for 10% or more of total net sales from all segments on a combined basis are as follows (in thousands):

	Three Months Ended
	March 31,
	2011				2010
Mobile Gas Turbine Electric Powerplants	$	9,362	41	%	$	-	0	%
Symbol Technologies (Motorola)		3,090	13	%		3,124	28	%
Bren-Tronics		1,407	6	%		1,445	13	%
	$	13,859			$	4,569

- 30 -

ENER1, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 14 – Commitments and Contingencies

Litigation

Ener1 receives communications from time to time alleging various claims. These claims may include, but are not limited to, product liability claims, claims relating to employment matters, collections of accounts payable and alleged infringement of intellectual property rights of third parties. Ener1 cannot predict when such claims may be made, the outcome of any such claims or the effect of any such claims on its operating results, financial condition, or cash flows. As of March 31, 2011, there were no material pending legal proceedings.

Purchase Commitments

Ener1 has outstanding commitments with and has submitted purchase orders to various suppliers to purchase machinery, equipment and inventory. These commitments are not recorded in the accompanying consolidated balance sheets and totaled approximately $19.9 million as of March 31, 2011.

Other Commitments

Ener1 has entered into employment agreements with certain key employees and executive officers requiring Ener1 to make severance payments to these individuals if their employment is terminated under circumstances specified in the agreements. The maximum contingent liability pursuant to these provisions is $2.7 million.

Note 15 – Subsequent Events

See Note 7, Derivative and Financial Instruments and Note 12, Related Party Transactions for a description of certain events that have occurred subsequent to March 31, 2011.

- 31 -

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

Ener1, Inc. and its consolidated subsidiaries are sometimes referred to in this Quarterly Report as Ener1, the Company, the Registrant, we, our or us.

CAUTIONARY STATEMENTS CONCERNING FORWARD LOOKING INFORMATION

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve substantial risks and uncertainties. All statements, other than statements of historical fact, including statements regarding our strategy, future operations, prospects, future financial position, future revenues, cash flow from operations, available cash, operating costs, capital and other expenditures, financing plans, capital structure, contractual obligations, legal proceedings and claims, future economic performance, future collections of accounts receivable and loans receivable due from Think Holdings; potential restructuring of our investment in Think Holdings; management’s plans, goals and objectives for future operations and growth and markets for our planned products and stock, are forward-looking statements. The words anticipate, believe, estimate, expect, intend, may, plan, predict, project, will and would and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.

A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk Factors in Part II, Item 1A of this Quarterly Report. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010 (the 2010 Form 10-K), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission and our Consolidated Financial Statements and the accompanying notes included in this Quarterly Report on Form 10-Q.

EXECUTIVE SUMMARY AND RECENT DEVELOPMENTS

We design, develop and manufacture high-performance, prismatic, rechargeable, lithium-ion batteries and battery pack systems for energy storage. We produce and manufacture battery cells in the United States through our subsidiary EnerDel, Inc. (EnerDel) and in South Korea through our subsidiary, Ener1 Korea, Inc. (Ener1 Korea).

We raised $6.8 million from sales of common stock in the public market during the period ended March 31, 2011 under an open market sale agreement and subsequently, through April 29, 2011, we raised an additional $2.3 million from sales of common stock in the public market under this agreement.

- 32 -

As of January 1, 2011, we revised our reportable operating segments in conjunction with the implementation of a new organizational structure, which reflects how the chief operating decision maker evaluates the performance of our business. Our new reportable operating segments consist of the following: Transportation, Grid Energy Storage and Small Pack. This reporting structure is designed to allocate resources internally among these three operating segments and provide a framework for management responsibility with respect to each operating segment.

The Grid Energy Storage segment develops and manufactures energy storage applications for utility grid and commercial applications. Our current customers in this segment include Mobile Gas Turbine Electric Powerplants (MGTES) and Portland General Electric (PGE).

In January 2011, we entered into a joint venture agreement (the JV Agreement) with Wanxiang EV Co. Ltd (Wanxiang), which operates the electric vehicle division of Wanxiang Group, to form a joint venture company (the Joint Venture) to design, manufacture, sell and service lithium-ion battery cells and lithium-ion battery packs, primarily in China, Hong Kong, Taiwan and Macau. The Joint Venture will be a limited liability company established under the laws of the People’s Republic of China. The terms of the JV Agreement, including each party’s obligation to make contributions to the Joint Venture and the timing of such contributions, as well as information regarding how Ener1 plans to raise the funds required to make its contribution to the Joint Venture, are described in the 2010 Form 10-K.

Transactions with Think Holdings

In September 2009, we amended the existing supply agreement with Think Global, an EV manufacturer, for our production of battery packs for their Think City EV. During 2009 and 2010, Ener1 gradually increased its equity investment in Think Holdings, AS (Think Holdings) the majority owner of Think Global. This increased commitment to Think Holdings reflected our strategic assessment of the potential significance of EVs in the transportation industry as a market for lithium-ion battery technology. While we continue to believe that EVs are a significant potential market for lithium-ion battery technology, we also now expect EV adoption will be at a more gradual pace and take longer than had been expected due primarily to vehicle cost and slower build out of infrastructure than originally anticipated. We do not currently intend to loan any additional funds to Think Holdings or purchase additional equity securities from Think Holdings.

In January 2011, we stopped shipping battery packs to Think Global at their direction. We do not know when or if we will recommence shipping battery packs to Think Global, the timing of which will depend on Think Holdings’ ability to raise sufficient capital to continue operations. In April, Think Global received approximately $3.5 million and anticipates receiving an additional $2 million, from Bzinfin which, based on our knowledge, we expect will enable the company to continue its operations through May 31, 2011.

As of March 31, 2011, our accounts receivable balance with Think Global totaled approximately $14.1million, all of which is past due. We have not established an allowance for doubtful accounts as management believes we will realize full value on these accounts receivable, which may include our receipt of equity or other value in connection with a potential equity restructuring of Think Holdings. We will continue to evaluate whether events or circumstances have occurred or have failed to occur which may impact the collectability of these accounts receivable. If we determine the collectability of these accounts receivable are impacted, we will recognize a loss up to approximately $14.1 million, which could have a material adverse affect on our financial position and results of operations in future reporting periods.

- 33 -

As of March 31, 2011, we have outstanding loans receivable from Think Holdings, including accrued interest, totaling approximately $18.2 million, of which $9.1 million is outstanding under a revolving line of credit and $9.1 million is outstanding pursuant to short-term working capital loans. On February 28, 2011, we amended the revolving line of credit to increase the principal amount from $5 million to $15 million and during the three months ended March 31, 2011, we advanced approximately $3.8 million under this line of credit. All funds advanced to Think Holdings under the revolving line of credit bear interest at a rate of 12% per annum and are secured by the assets and properties of Think North America, Inc., an indirect subsidiary of Think Holdings, pursuant to a security agreement. We may, at our option, convert the $9.1 million of short-term working capital loans into shares of Think Holdings Series B Covertible Preferred Stock (Series B Stock). In May, we extended the maturity dates of both the revolving line of credit and the short-term working capital loans to June 15, 2011. Management believes we will realize full value of these loans receivable, which may include our receipt of equity or other value in connection with a potential equity restructuring of Think Holdings. We will continue to evaluate whether events or circumstances have occurred or have failed to occur which may impact the collectability of these loans. If we determine the collectability of these loans receivable are impacted, we will recognize a loss up to approximately $18.2 million which could have a material adverse affect on our financial position and results of operations in future reporting periods.

We reviewed our equity investment in Think Holdings for potential impairment at March 31, 2011 and we determined that our investment in Think Holdings was impaired primarily due to the uncertainty of when or if Think Global will recommence operations, which will depend on Think Holdings’ ability to raise sufficient capital to continue operations. As a result, we recorded an impairment loss of approximately $59.4 million during the three months ended March 31, 2011.

At March 31, 2011, we controlled approximately 48% of the outstanding voting power in Think Holdings and Mr. Gassenheimer, one of our directors, also serves on the board of directors of Think Holdings. Mr. Baker, who is also one of our directors, served on the board of directors of Think Holdings until April 26, 2011, when he resigned from Think Holdings board. On May 9, 2011, we surrendered to Think Holdings, for no consideration, all shares of Think Holdings’ voting equity held by Ener1, including, without limitation, all shares of Series B Stock, based on our determination that our investment in Think Holdings was impaired and written down to zero.

During 2010 and 2011, we granted to certain shareholders of Think Holdings the right to exchange a portion of their shares of Series B Stock in Think Holdings for unregistered shares of Ener1 common stock (the Put Options). Certain investors have notified us of their intention to exercise their rights pursuant to the Put Options and we are currently in negotiations with these investors to postpone the date on which the Put Options may be exercised to September 15, 2011. In addition, during 2011 we granted to Investinor, AS (Investinor), an existing shareholder of Think Holdings, the right to exchange all of their shares of Series B Stock in Think Holdings and their rights under a $2.5 million convertible note from Think Holdings for registered shares of Ener1 common stock. Investinor may exercise these rights on the earlier of June 15, 2011 or the date Ener1 owns less than 20% of the outstanding voting equity of Think Holdings.

As described in Part II, Item 1A, Risk Factors of this Quarterly Report on Form 10-Q, upon the occurrence of certain events, we may be required to consolidate Think Holdings’ operating results with our own. The potential consequences of consolidating Think Holdings’ operating results with our own are also discussed in Risk Factors in the 2010 Form 10-K.

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RESULTS OF OPERATIONS AND OPERATING SEGMENTS

Our reportable operating segments consist of the following: Transportation, Grid Energy Storage and Small Pack.

Net loss attributable to Ener1 for the three months ended March 31, 2011 was $84.7 million, or $0.51per diluted share, compared to a net loss attributable to Ener1 of $15.3 million, or $0.13 per diluted share, for the same period ended March 31, 2010. Net sales for the three months ended March 31, 2011 were $23.1 million, compared to net sales of $11 million for the same period ended March 31, 2010.

The $69.4 million increase in net loss was a result of the one-time $59.4 million impairment charge recorded during the three months ended March 31, 2011 to write down the investment in Think Holdings and the $13.9 million loss on financial instruments, which is primarily attributable to the impaired value of the investment in Think Holdings. The impairment charge and loss on financial instruments totaled $73.3 million, or $0.44 per diluted share, for the three months ended March 31, 2011. The increase in net loss has been partially offset by the $4.3 million increase in gross profit, which is primarily due to improved results from grid energy storage and small pack.

General and administrative expenses increased and research and development expenses decreased during the period ended March 31, 2011 in comparison to the period ended March 31, 2010 because certain expenses previously classified as research and development expenses for the period ended March 31, 2010 are now classified as general and administrative expenses for the period ended March 31, 2011 due to the commencement of commercial production in May 2010.

We used $34.3 million of operating cash flows for the three months ended March 31, 2011, compared to $8.9 million for the same period ended 2010. See the section titled Liquidity and Capital Resources in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of items impacting cash flows.

The following information has been derived from the accompanying unaudited consolidated financial statements for the three months ended March 31, 2011 and 2010 and is presented in thousands:

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	Three Months Ended
	March 31,						Change
	2011			2010			$			%
Net sales:
Transportation	$	2,176		$	805		$	1,371			170	%
Grid energy storage		9,502			-			9,502			100	%
Small pack		19,095			11,277			7,818			69	%
Non-segment items		(7,689	)		(1,107	)		(6,582	)		*
Total net sales		23,084			10,975			12,109			110	%

Cost of sales:
Transportation		2,818			-			2,818			100	%
Grid energy storage		6,213			-			6,213			100	%
Small pack		16,454			10,441			6,013			58	%
Non-segment items		(7,866	)		(613	)		(7,253	)		*
Total cost of sales		17,619			9,828			7,791			79	%

Gross profit:
Transportation		(642	)		805			(1,447	)		-180	%
Grid energy storage		3,289			-			3,289			100	%
Small pack		2,641			836			1,805			216	%
Non-segment items		177			(494	)		671			*
Total gross profit		5,465			1,147			4,318			376	%

Operating expenses:
General and administrative		8,014			5,229			2,785			53	%
Research and development, net		8,536			9,866			(1,330	)		-13	%
Grant proceeds recognized		(173	)		(28	)		(145	)		*
Depreciation and amortization		1,565			1,349			216			16	%
Impairment loss		59,433			-			59,433			*
Total operating expenses		77,375			16,416			60,959			371	%
Loss from operations		(71,910	)		(15,269	)		(56,641	)		371	%

Other income (expense):
Interest expense		(3,972	)		(2,002	)		(1,970	)		98	%
Gain (loss) on derivative instruments		5,148			1,525			3,623			238	%
Gain (loss) on financial instruments		(13,941	)		-			(13,941	)		100	%
Foreign currency gain (loss)		(367	)		(50	)		(317	)		*
Other		416			349			67			*
Total other income (expense)		(12,716	)		(178	)		(12,538	)		*

Loss before income taxes		(84,626	)		(15,447	)		(69,179	)		448	%
Income tax expense		82			16			66			*
Net loss		(84,708	)		(15,463	)		(69,245	)		448	%
Net income (loss) attributable to noncontrolling interests		10			(126	)		136			*
Net loss attributable to Ener1, Inc.	$	(84,718	)	$	(15,337	)	$	(69,381	)

* - Percentage change not meaningful information.

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Net Sales

Sales increased in all segments primarily due to an increase in demand for lithium-ion batteries and battery pack systems for energy storage. The primary drivers for the increase in sales were:

Transportation segment revenue increased due to an increase in EV battery pack commercial sales to Think Global of approximately $816,000 and an increase in EV battery pack prototype sales to various customers from $640,000 during the three months ended March 31, 2010 to $1.1 million for the same period ended 2011, an increase of $409,000.

In January 2011, we stopped shipping EV battery packs to Think Global at their direction. We will not recognize further revenue from sales of EV battery packs to Think Global unless they recommence production of the Think City vehicle and direct us to start shipping EV battery packs to Think Global.

Grid energy storage revenue increased due to an increase in the number of our customers for grid energy storage products and increased demand for lithium-ion battery units to power grid energy storage systems. Revenue in this segment is currently recognized using the percentage of completion method due to the long term nature of these construction contracts. We began recognizing revenue in grid energy storage during the fourth quarter of 2010.

Our domestic sales of small cell battery packs to commercial customers, which is included in the small pack operating segment, increased by approximately $1.2 million, or 12%, due to an increase in the number of customers, specifically for our military and medical battery pack applications.

Cost of Sales and Gross Profit

Cost of sales increased in the transportation segment primarily due to the commencement of commercial production and sales of EV battery packs in May 2010. The increase in cost of sales in the grid energy storage segment is a result of the increase in demand for power grid energy storage systems as this segment commenced in late 2010. The increase in cost of sales for the small pack segment is due to the increase in net sales.

Also included in cost of sales is depreciation expense of approximately $1.3 million for the three months ended March 31, 2011, an increase of approximately $464,000 or 57%, primarily due to battery manufacturing and production equipment placed in service in late 2010.

General and Administrative Expenses

General and administrative expenses increased primarily due to an increase in salary and benefits of $1.8 million which was partially offset by a decrease in stock-based compensation of $191,000. Legal and professional fees increased $478,000 primarily due to an increase in costs associated with filing, maintaining and protecting our patents and technology and fees paid for consulting services with various government agencies. Facilities related expenses increased $233,000 and insurance, licenses and fees increased approximately $251,000, all primarily due to the commencement of commercial production in May 2010 at our Indiana facilities.

Research and Development Expenses

Research and development expenses decreased primarily due to $2.9 million received in proceeds from the Automotive Battery Manufacturing Initiative (ABMI) grant during the period ended March 31, 2011, as compared to $468,000 received during the same period of 2010. These proceeds are used to pay operating expenses related to machine qualification and direct application engineering and are treated as a reduction of research and development expenses. Travel related expenses decreased $300,000, professional fees decreased $227,000 and stock-based compensation expense decreased $108,000.

The foregoing decreases were partially offset by an increase in salaries and benefits of $465,000 as a result of the increase in our workforce. Facilities-related expenses increased approximately $496,000 primarily due to the expansion of production activities. Materials and non-capitalized equipment increased $689,000 as we continue to ramp up commercial production and prototype sales.

We present proceeds from our cost-sharing arrangements with federal government agencies as a reduction of research and development expenses. Proceeds received under these cost-sharing arrangements were $694,000 and $878,000 for the periods ended March 31, 2011 and 2010, respectively.

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Grant Proceeds Recognized

Proceeds from government grants related to asset purchases are recorded as deferred grant proceeds and recognized as a reduction of operating expense over the periods during which depreciation on the assets is charged, and in proportion to the amount of the depreciation charge. We begin depreciating a purchased asset on the date the assets are placed in service. During the three months ended March 31, 2011 and 2010 we recognized approximately $173,000 and $28,000 in grant proceeds, respectively.

Depreciation and Amortization Expense

Depreciation expense, included in operating expenses, increased $321,000 as a direct result of the increase in our property and equipment and is reflected in the consolidated statements of operations as follows (in thousands):

	March 31,				Change
	2011		2010		$			%
Depreciation expense:
Cost of sales	$	1,282	$	818	$	464			57	%
Operating expenses		1,144		823		321			39	%
Total depreciation expense	$	2,426	$	1,641	$	785			48	%

Amortization expense:
Operating expenses		421		526		(105	)		-20	%

Total depreciation and amortization	$	2,847	$	2,167	$	680			31	%

Impairment Loss

We review our investment in Think Holdings for potential impairment at each reporting period. Based on our review at March 31, 2011, we determined our investment in Think Holdings was impaired primarily due to the uncertainty of when or if Think Global will recommence operations, which depends on Think Holdings ability to raise sufficient capital to continue operations. As a result, we recorded an impairment loss of approximately $59.4 million during the three months ended March 31, 2011.

Interest Expense

Interest expense represents a combination of cash and non-cash interest related to our deferred financing costs, borrowings with banks, capital leases and other debt instruments, as well as debt issuance costs. The cash and non-cash components of interest expense are (in thousands):

	Three Months Ended
	March 31,				Change
	2011		2010		$		%
Cash	$	1,931	$	130	$	1,801		1385	%
Non-cash		2,041		1,872		169		9	%
Total interest expense	$	3,972	$	2,002	$	1,970		98	%

The increase in cash interest expense is due to a $5.3 million increase in short-term borrowings. Non-cash interest expense related to the amortization of deferred financing costs and debt issuance costs associated with the fair value of equity securities issued in connection with debt financing arrangements totaled approximately $3.4 million for the period ended March 31, 2011, partially offset by the $1.4 million of interest expense capitalized as construction in progress, a component of property and equipment, and cost of sales within the grid energy storage segment.

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Gain on Derivative Instruments

The increase in gain on derivative instruments during the three months ended March 31, 2011 is primarily related to free standing warrants containing dilution protection features granted in connection with our senior unsecured notes in September 2010 and December 2010, which resulted in an increase in gain on derivative instruments of $2.9 million. In addition, the overall decline in the price of Ener1 common stock has resulted in an increase in gain on derivative instruments of approximately $1.2 million. These increases have been partially offset by the decrease in gain on derivative instruments of approximately $480,000 resulting from the expiration of the dilution protection feature contained in certain free standing warrants which expired during the period ended March 31, 2010.

Loss on Financial Instruments

The $13.9 million loss on financial instruments during the period ended March 31, 2011 is primarily attributable to the impaired value of the investment in Think Holdings, which results in a greater fair value of the Put Options granted in May 2010 and January 2011.

LIQUIDITY AND CAPITAL RESOURCES

We raised $6.8 million from sales of equity securities during the period ended March 31, 2011. The Company had cash and cash equivalents of $19.4 million, restricted cash of $11.7 million and working capital of $55 million at March 31, 2011.

Cash Flow Summary

The following information has been derived from the accompanying unaudited consolidated financial statements for the three months ended March 31, 2011 and 2010 and is presented in thousands. Cash and cash equivalents decreased by $40.9 million during the three months ended March 31, 2011. The change in cash and cash equivalents is as follows (in thousands):

	Three Months Ended
	March 31,
	2011			2010

Net loss	$	(84,708	)	$	(15,463	)
Non-cash items		76,660			3,876
Net change in working capital items		(26,243	)		2,694
Operating activities		(34,291	)		(8,893	)
Investing activities		(6,667	)		(16,149	)
Financing activities		407			18,383
Effects of exchange rates		(356	)		(9	)
Net decrease in cash and cash equivalents	$	(40,907	)	$	(6,668	)
Cash and cash equivalents, beginning of period		60,310			14,314
Cash and cash equivalents, end of period	$	19,403		$	7,646

Operating Activities

Cash used in operating activities is primarily driven by our net loss, adjusted for non-cash items and changes in working capital. Non-cash items consist primarily of impairment loss, depreciation and amortization, stock-based compensation, interest expense, accretion of debt discounts and gains or losses on derivative and financial instruments.

Net cash used in operating activities increased $25.4 million during the period ended March 31, 2011, as compared to the same period in 2010, due primarily to the $69.3 million increase in our net loss and the $28.9 million decrease in working capital items, partially offset by the $72.8 million increase in non-cash items.

The net change in working capital items is primarily due to the decrease in accounts payable and accrued expenses of $19.7 million. In addition, the increase in accounts receivable, inventory and contracts in process totaled approximately $9.4 million, which is directly related to the commencement of commercial production and the grid energy storage segment in 2010.

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Non-cash items increased primarily due to the impairment loss and the increase in loss on derivative and financial instruments as well as an increase in interest expense and accretion of debt discounts.

Investing activities

Net cash used in investing activities for the period ended March 31, 2011 was $6.7 million, a decrease of $9.4 million, compared to $16.1 million for the same period in 2010. The decrease is comprised primarily of a $7.4 million decrease in net cash used for purchases of property, plant and equipment as we are coming to the end of the first phase of our capital expansion plan. In addition, we invested in and advanced approximately $2 million less to Think Holdings during the period ended March 31, 2011 as compared to the same period in 2010.

Financing activities

Net cash provided by financing activities for the period ended March 31, 2011 was $407,000, a decrease of $18 million, compared to $18.4 million for the same period in 2010. The decrease in cash provided by financing activities is comprised principally of an $11.6 million decrease in proceeds from the sale of equity securities and borrowings and an increase in the repayment of senior unsecured notes and borrowings of $6.6 million.

Sale of Stock

In January 2010, we entered into an open market sale agreement (the 2010 Open Market Sale Agreement) under which Jefferies & Company, Inc. (Jefferies) agreed to sell on our behalf, from time to time as we instruct, up to $60 million in shares of Ener1 common stock in the public market. Sales under this agreement began on February 3, 2010 and through March 31, 2011 we raised net proceeds totaling $14.7 million, including $6.8 million during the three months ended March 31, 2011.

Management’s Assessment of Liquidity

We have historically financed, and expect to continue to finance, our operations through public and private offerings of debt and equity securities. We raised $6.8 million through sales of equity securities during the quarter ended March 31, 2011.

As described in Part II, Item 1A, Risk Factors of this Quarterly Report on Form 10-Q, upon the occurrence of certain events, we may be required to consolidate Think Holdings’ operating results with our own, which may have a material adverse impact on our ability to access the public and private debt and equity markets.

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Under our capital expenditure plan to increase our cell and battery pack production capacity, we intend to spend a total of $75.9 million at our Indiana facilities. These capital expenditure plans are designed to increase our cell and battery pack production capacity to reach capacity levels in 2011 that we anticipate would enable us to produce the equivalent of 900 EV packs per month. In January 2010, we began utilizing the funds available to us under the ABMI grant awarded to us by the United States Department of Energy (DOE) in August 2009 to execute our capital expansion strategy for our Indiana facility. Through March 31, 2011, we have invested $66.4 million in manufacturing equipment and capacity expansion for our production facilities in Indiana and $33.2 million of these costs have been funded under the ABMI grant.

We expect to receive a total of $5.2 million from our active cost-sharing arrangements with the DOE and the United States Advanced Battery Consortium through September 2012, which would reduce our future research and development expenses.

We have also applied to the DOE for a long-term low interest loan of approximately $290 million under the Advanced Technology Vehicle Manufacturing Incentives Program (ATVM). We originally submitted our application on December 30, 2008, and our application was determined to be “substantially complete” on January 22, 2009. We are currently negotiating a term sheet in connection with this loan. If we receive an ATVM loan, we would anticipate using the proceeds to further expand our battery production capacity in 2013 and 2014. In addition, if we receive the ATVM loan, the loan program will require us to match every eighty cents of loan proceeds with twenty cents of our own investment. Indiana state and local government authorities have also provided us approximately $80 million of grants and tax offsets to assist in our expansion plans. With proceeds under the ATVM loan, if approved and received, and combined with the funds available under the ABMI program and the Indiana state and local incentives, we plan to increase our domestic production capacity to an estimated manufacturing capacity of 3.12GWh, or the equivalent of 120,000 EV battery packs per year, in the 2015 timeframe.

Contractual Obligations

Ener1 has outstanding commitments with, and submitted purchase orders to, various suppliers to purchase machinery and equipment. These commitments are not recorded in the accompanying consolidated balance sheets and totaled approximately $19.9 million as of March 31, 2011.

Application of Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Preparing financial statements requires management to make estimates, judgments and assumptions regarding uncertainties that may affect the reported amounts of assets, liabilities, revenue and expenses. These estimates, judgments and assumptions are affected by management’s application of accounting policies. We base our estimates, judgments and assumptions on historical experience and other relevant factors that are believed to be reasonable under the circumstances. In any given reporting period, our actual results may differ from the estimates, judgments and assumptions used in preparing our consolidated financial statements.

Refer to Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2010 for a discussion of our critical accounting estimates.

New Accounting Standards

Refer to Note 2, New Accounting Pronouncements, in Notes to Consolidated Financial Statements, for a discussion regarding new accounting standards.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have international operations that expose us to foreign currency exchange risks.

We conduct a portion of our business in foreign countries and are subject to transactional currency exposures that arise when our foreign subsidiaries enter into transactions denominated in currencies other than their own local currency. We do not have any long term supply agreements with suppliers that are denominated in a foreign currency as of March 31, 2011, but we are exposed to currency exchange risk when purchases are denominated in a foreign currency. Currently, the majority of our principal suppliers are based in China, Japan and Korea and we may not be able to negotiate payment terms that are denominated in United States Dollars. As a result, any future decline in the United States Dollar against the Chinese Yuan, the Japanese Yen or the Korean Won will increase the amount we may have to pay to our suppliers and could have a material impact on our financial condition, results of operations and cash flows.

For the period ended March 31, 2011, revenue denominated in foreign currencies was approximately 7.46% of total revenue and this revenue would have increased or decreased by approximately $173,000 if the United States dollar exchange rate used strengthened or weakened, respectively, by 10%. In addition, we have assets and liabilities denominated in foreign currencies. A 10% strengthening or weakening of the United States dollar exchange rate against all currencies to which we have exposure at March 31, 2011 would have resulted in an increase or decrease, respectively, of approximately $6.5 million in the carrying amount of net assets.

In addition, we are exposed to fluctuations in foreign exchange rates from translating the results of our Korean and Japanese operations to United States Dollars. At March 31, 2011 and December 31, 2010, the translation adjustment recognized in accumulated comprehensive income was $8 million and $6.2 million, respectively.

To date, we have not entered into any derivative financial instruments for purposes of reducing our exposure to adverse fluctuations in foreign currency exchange rates that are designated as hedges. We are not exposed to market risk from changes in interest rates due to the fixed nature of interest rates associated with our debt instruments and the short-term nature of our debt instruments that have variable interest rates.

We have approximately $52.8 million in goodwill as of March 31, 2011. As of March 31, 2011, we believe our goodwill is not impaired; however, changes in the economy, the industries in which we operate and our own relative performance could change the assumptions used to evaluate goodwill. In the event that we determine that goodwill has been impaired, we would recognize an impairment charge equal to the amount by which the carrying amount of the goodwill exceeds the implied fair value.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules and forms and that such information is accumulated and communicated to our management including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of March 31, 2011, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). This evaluation was done under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. Based on this evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that as of March 31, 2011, such disclosure controls and procedures were effective. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

Refer to Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2010 for a full discussion of our risk factors.

We depend on a limited number of customers, for a significant portion of our revenue, and the loss of our most significant or several of our smaller customers would materially adversely affect our business and results of operation, and we may not be able to obtain contractual commitments for minimum volume orders with respect to the sale of our products.

A significant portion of our revenue is currently, and we expect will continue to be, generated from a limited number of customers. Sales to Motorola have represented a significant portion of our small pack revenue in the past. Sales to Think Global have represented nearly all of our automotive revenue in the past, and in January 2011 we stopped shipping battery packs to Think Global at their direction. We do not know when or if we will recommence shipping battery packs to Think Global, the timing of which would depend on Think Holdings’ ability to raise sufficient capital to continue its operations. Additionally, sales to MGTES represent a significant portion of our total revenue for the foreseeable future. In October 2010, we entered into a supply agreement with MGTES to provide lithium-ion battery units to power grid energy storage systems in Russia. A delay in providing products to MGTES would adversely affect our 2011 and 2012 revenues and profitability and would have a material adverse affect on our business, and would further potentially subject us to liquidated damages under the supply agreement for failure to deliver product in a timely manner. Although the composition of our customer base will vary from period to period, we expect that most of our revenue will continue, for the foreseeable future, to come from a relatively small number of customers.

In addition, our contracts with our customers do not include long-term commitments or minimum volumes that ensure future sales of our products. Consequently, our financial results may fluctuate significantly from period-to-period based on the actions of one or more of our significant customers. A customer may take actions that affect us for reasons that we cannot anticipate or control, such as reasons related to the customer’s financial condition, changes in the customer’s business strategy or operations, the introduction of alternative or competing products or as the result of the perceived quality or cost-effectiveness of our products. Our agreements with our customers may be cancelled if we fail to meet certain product specifications or materially breach the agreement or for reasons outside of our control. In addition, our customers may seek to renegotiate the terms of current agreements or renewals. The loss of or a reduction in sales or anticipated sales to our most significant or several of our smaller customers could have a material adverse effect on our business, operating results, financial condition and prospects.

Our investment in Think Holdings and our dependence on Think Global as an automotive customer could materially adversely affect our profitability and business.

As of March 31, 2011, we determined the value of our investment in the equity of Think Holdings was $0 and we recorded an impairment loss of approximately $59.4 million, as well as a loss of $13.9 million on financial instruments whose value is linked to the value of Think Holdings Series B Stock. As of March 31, 2011, we believe we will realize full value on our loans receivable and accounts receivable, which together total approximately $32.3 million. However, if we conclude that these receivables are not collectible, we will recognize a loss up to approximately $32.3 million which could have a material adverse affect on our financial position and results of operations in future reporting periods.

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We entered into an amended Supply Agreement with Think Global to supply lithium-ion battery packs for the Think City EV commencing in 2010. We were also a significant investor in Think Holdings, which is the majority owner of Think Global. In January 2011, we stopped shipping battery packs to Think Global at their direction until Think Holdings raises sufficient capital to continue its operations. We cannot assure you if or when we will recommence shipments to Think Global. We will not recognize further revenue from sales to Think Global until they recommence production of Think City and direct us to start shipping EV battery packs. This cessation of shipments or delays in Think Global’s start-up plans and financing activities would adversely affect our expected 2011 and 2012 revenues and profitability, based on the percentage of automotive sales anticipated to be from Think Global, and could have a material adverse effect on our business. Think Global, in its corporate history, has been through insolvency proceedings on three separate occasions, including most recently in 2009. Think Global is entering new markets and faces the risks associated with the launch of a new vehicle, including achieving production levels, managing production costs, managing their supply chain, financing the costs associated with production levels and higher working capital requirements, gaining consumer acceptance, delivering vehicles on time, servicing new customers, satisfying warranty claims and other issues related to manufacturing, selling and servicing automobiles. As a result of the above operational and profitability challenges Think Global and Think Holdings have been facing, and we expect may continue to face, we are also indirectly exposed to these risks. If we were required to consolidate the results of Think Holdings into our own financial results and financial statements, we would face these risks and the negative financial results of Think Holdings directly. In addition, any revenue we derive from sales to Think Global would be eliminated in the process of consolidating their financial results with ours. Think Holdings and Think Global also face many of the same (or similar) risks as we do, including, among others, transportation industry-related risks, manufacturing-related risks and risks associated with the need for additional financing, and which are contained in these risk factors.

The consolidation of Think Holdings’ financial statements with our own could materially adversely affect our ability to raise capital.

We currently have approximately $14.1 million in outstanding receivables under the Think Supply Agreement. Although there remains a possibility that we may receive cash in payment of these outstanding receivables, we currently expect to receive equity or other value for these receivables in connection with a potential equity restructuring of Think Holdings. Accepting equity or other value for payment of these receivables in a potential equity restructuring of Think Holdings could require us, under generally accepted accounting principles in the United States (US GAAP), to consolidate Think Holdings’ operating results with our own. We have also made several loans to Think Holdings totaling $18.2 million as of March 31, 2011, including accrued interest, which loans mature on June 15, 2011. Similar to our outstanding receivables under the Supply Agreement, there is the possibility that we may accept equity or other value rather than cash as repayment of these loans in a potential equity restructuring of Think Holdings which could cause us to require consolidation. Upon consolidation of Think Holdings, we may be required to file with our SEC reports audited historical financial statements for Think Holdings, and we will be required to consolidate Think Holdings’ operating results with our own in our financial statements as of and for periods following the date when consolidation is required. Think Holdings does not currently report its financial results in accordance with US GAAP and we cannot assure you that we will be able to disclose on a timely basis as required under the securities laws any historical financial statements of Think Holdings or our consolidated results of operations for future periods. If we are unable to report Think Holdings’ historical financial statements or our consolidated financial statements for future periods in a timely manner as required under the securities laws, we would be unable to raise additional capital through registered public securities offerings and we may be unable to raise capital through private or unregistered sales of our securities. The inability to raise capital through the public and private markets would have a material adverse effect on our financial condition and our ability to implement our business plans. In addition, if we are not able to make filings required under the Exchange Act on a timely basis, we may not be able to pay the principal and interest due on our senior unsecured notes with shares of Ener1 common stock, and may be required to make such payments in cash instead, which could materially adversely affect our liquidity and financial condition.

If we consolidate Think Holdings’ operating results with our own, we may have to devote a significant amount of time, management and financial resources to successfully integrate Think Holdings’ financial and accounting systems with our existing systems, and we may be unable to do so in a timely and non-disruptive manner.

Item 6. Exhibits.

See exhibits listed under the Exhibit Index below.

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ENER1, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENER1, INC.

Dated: May 10, 2011	by:	/s/ Charles Gassenheimer
		Charles Gassenheimer
		Chief Executive Officer, Chairman
		(Principal Executive Officer)

Dated: May 10, 2011	by:	/s/ Jeffrey Seidel
		Jeffrey Seidel
		Chief Financial Officer
		(Principal Financial Officer)

Dated: May 10, 2011	by:	/s/ Robert R. Kamischke
		Robert R. Kamischke
		Chief Accounting Officer and Vice President of Finance
		(Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit Number		Description
2.1		Purchase Agreement, entered into on October 16, 2008, by and between Ener1, Inc. and TVG Asian Communications Fund II, L.P. and Rosebud Securities Limited to acquire 83% ownership interest in Enertech International, Inc., incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated October 30, 2008.

3.1		Amended and Restated Articles of Incorporation of the Registrant, dated February 12, 1993, incorporated by reference to Exhibit 3(i) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, SEC File No. 000-21138.

3.2		Articles of Amendment to Amended and Restated Articles of Incorporation, dated March 11, 2002, incorporated by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001, SEC File No. 000-21138.

3.3		Articles of Amendment to Amended and Restated Articles of Incorporation, dated October 21, 2002, incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K dated October 28, 2002, SEC File No. 000-21138.

3.4		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit A of the Registrant's Schedule 14C filed on December 6, 2004, SEC File No. 000-21138.

3.5		By-laws of the Registrant, incorporated by reference to Exhibit 3.4 of the Registrant's Registration Statement on Form SB-2 (Registration No. 333-112837), filed February 13, 2004.

3.6		Amendment to By-laws of the Registrant, dated January 5, 2005, incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K dated January 12, 2005, SEC File No. 000-21138.

3.7		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit B of the Registrant's Schedule 14C filed December 10, 2007.

3.8		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit 3.8 of the Registrant’s Current Report on Form 8-K filed April 24, 2008.

3.9		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit B of the Registrant’s Schedule 14C filed July 22, 2008.

3.10		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit B of the Registrant’s Schedule 14C filed December 11, 2008.

3.11		Articles of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit of the Registrant’s Schedule 14C filed June 11, 2010.

3.12		Article of Amendment to Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit 3.12 of the Registrant’s Annual Report on Form 10-K filed March 10, 2011.

4.1		Form of Warrant to Purchase Common Stock issued pursuant to Securities Purchase Agreement, dated January 16, 2004, incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated January 21, 2004, SEC File No. 000-21138.

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4.2		Certificate of Designations of Series B Convertible Preferred Stock, dated October 15, 2004, incorporated by reference to Exhibit 3.6 of the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2004, SEC File No. 000-21138.

4.3		Warrant to Purchase Common Stock issued October 20, 2004 to Delphi Automotive Systems, LLC, to purchase up to 7,000,000 shares of Common Stock, incorporated by reference to Exhibit 4.6 of the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2004, SEC File No. 000-21138.

4.4		Form of Warrant to Purchase Common Stock of Ener1, Inc., dated December 9, 2004 issued to Merriman Curhan Ford & Co., incorporated by reference to Exhibit 4.10 to the Registrant’s Registration Statement on Form SB-2 (Registration No. 333-124745), filed May 9, 2005.

4.5		Warrant issued to Ener1 Group, Inc. dated June 30, 2006 to purchase 9,000,000 shares of Common Stock of the Registrant incorporated by reference to Exhibit 4.17 of Registrant's Quarterly Report on Form 10-QSB, filed August 21, 2006.

4.6		Warrant issued to Ener1 Group, Inc. dated June 30, 2006 to purchase 20,000,000 shares of Common Stock of the Registrant incorporated by reference to Exhibit 4.18 of Registrant's Quarterly Report on Form 10-QSB, filed August 21, 2006.

4.7		Form of Warrant to Purchase Common Stock of Ener1, Inc. issued to Ener1 Group on August 29, 2006, incorporated by reference to Exhibit 4.17 of Registrant's Form SB-2/A filed September 5, 2006.

4.8		Warrant issued to Ener1 Group, Inc. dated September 30, 2006 to purchase 9,000,000 shares of Common Stock of the Registrant, incorporated by reference to Exhibit 4.20 of Registrant's Quarterly Report on Form 10-QSB for the period ending September 30, 2006.

4.9		Warrant issued to Ener1 Group, Inc. dated September 30, 2006 to purchase 9,000,000 shares of Common Stock of the Registrant, incorporated by reference to Exhibit 4.21 of Registrant's Quarterly Report on Form 10-QSB for the period ending September 30, 2006.

4.10		Form of Warrant to purchase 9,000,000 and 18,000,000 shares of Common Stock of the Registrant, issued to Ener1 Group, Inc., incorporated by reference to Exhibit 4.27 to the Registrant’s Registration Statement on Form SB-2 filed on February 14, 2007.

4.11		Warrant issued to Charles Gassenheimer dated January 5, 2007 to purchase 500,000 shares of common stock of the Registrant, incorporated by reference to Exhibit 4.28 to the Registrant’s Registration Statement on Form SB-2 filed on February 14, 2007.

4.12		Form of Warrant to Purchase Common Stock of the Registrant issued pursuant to Series B Stock Amendment Agreement between Ener1, Inc., Ener1 Group, Inc. and Cofis Compagnie Fiduciaire S.A., incorporated by reference to Exhibit 4.36 of the Registrant’s Annual Report on Form 10-KSB for the period ended December 31, 2007 filed on March 12, 2008.

4.13		Warrant Agreement with Credit Suisse Securities (USA) LLC, dated as of March 23, 2010, incorporated by reference to Exhibit 1.3 to the Registrant’s Current Report on Form 8-K dated March 23, 2010.

4.14		Securities Purchase Agreement with Ener1 Group, Inc., dated June 1, 2010, incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-Q dated August 5, 2010.

4.15		Warrant Agreement with Ener1 Group, Inc., dated as of June 8, 2010, to purchase 3,000,000 shares of Common Stock of the Registrant at a price per share of $3.48 (Class A Warrant), incorporated by reference to Exhibit 4.19 to the Registrant’s Form 10-Q dated August 5, 2010.

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4.16		Warrant Agreement with Ener1 Group, Inc., dated as of June 8, 2010, to purchase 5,000,000 shares of Common Stock of the Registrant at a price per share of $4.40 (Class B Warrant), incorporated by reference to Exhibit 4.20 to the Registrant’s Form 10-Q dated August 5, 2010.

4.17		Conversion Agreement with Bzinfin, S.A., dated August 3, 2010, incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-Q dated August 5, 2010.

4.18		Warrant Agreement with Bzinfin, S.A., dated as of August 3, 2010, to purchase 863,806 shares of Common Stock of the Registrant at a price per share of $3.40 (Class A Warrant), incorporated by reference to Exhibit 4.21 to the Registrant’s Form 10-Q dated August 5, 2010.

4.19		Warrant Agreement with Bzinfin, S.A., dated as of August 3, 2010, to purchase 1,457,672 shares of Common Stock of the Registrant at a price per share of $4.25 (Class B Warrant), incorporated by reference to Exhibit 4.22 to the Registrant’s Form 10-Q dated August 5, 2010.

4.20		Note Purchase Agreement, dated as of August 27, 2010, by and between Ener1, Inc. and Itochu Corporation, incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated September 2, 2010.

4.21		$4,000,0000 6% Senior Convertible Note, dated August 27, 2010, issued by Ener1, Inc. to Itochu Corporation, incorporated by reference to Exhibit 1.2 to the Registrant’s Current Report on Form 8-K dated September 2, 2010.

4.22		$6,000,000 6% Senior Convertible Note, dated September 15, 2010, issued by Ener1, Inc. to Itochu Corporation, incorporated by reference to Exhibit 4.23 to the Registrant’s Form 10-Q dated November 4, 2010.

4.23		Form of Note, incorporated by reference to Exhibit 1.2 to the Registrant’s Current Report on Form 8-K dated September 3, 2010.

4.24		Form of Warrant, incorporated by reference to Exhibit 1.3 to the Registrant’s Current Report on Form 8-K dated September 3, 2010.

4.25		Registration Rights Agreement, dated as of September 2, 2010, by and between Ener1, Inc. and the investors party thereto, incorporated by reference to Exhibit 1.4 to the Registrant’s Current Report on Form 8-K dated September 3, 2010.

4.26		Warrant Agreement with Ener1 Group, Inc., dated as of September 21, 2010, to purchase 910,000 shares of Common Stock of the Registrant at a price per share of $3.53 (Class C Warrant), incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated September 23, 2010.

4.27		Warrant Agreement with Ener1 Group, Inc., dated as of September 21, 2010, to purchase 1,516,670 shares of Common Stock of the Registrant at a price per share of $4.46 (Class D Warrant), incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated September 23, 2010.

4.28		Warrant Agreement with Ener1 Group, Inc., dated as of October 1, 2010, to purchase 174,062 shares of Common Stock of the Registrant at a price per share of $3.7877 (Class E Warrant), incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated October 7, 2010.

4.29		Warrant Agreement with Ener1 Group, Inc., dated as of October 1, 2010, to purchase 290,102 shares of Common Stock of the Registrant at a price per share of $4.79 (Class F Warrant), incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated October 7, 2010.

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4.30		Think Holdings AS Promissory Note, dated October 1, 2010, incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated October 7, 2010.

4.31		Amended Think Holdings AS Promissory Note, dated October 1, 2010 incorporated by reference to Exhibit 4.32 to the Registrant’s Form 10-Q dated November 4, 2010.

4.32		Think Holdings AS Promissory Note, dated October 28, 2010 incorporated by reference to Exhibit4.33 to the Registrant’s Form 10-Q dated November 4, 2010.

4.33		Form of Note, incorporated by reference to Exhibit 1.2 to the Registrant’s Current Report on Form 8-K dated January 3, 2011.

4.34		Form of Warrant, incorporated by reference to Exhibit 1.3 to the Registrant’s Current Report on Form 8-K dated January 3, 2011.

4.35		Registration Rights Agreement, dated as of December 31, 2010, by and between Ener1, Inc. and the investors party thereto, incorporated by reference to Exhibit 1.4 to the Registrant’s Current Report on Form 8-K dated January 3, 2011.

10.1		Sino-Foreign Equity Joint Venture Contract between Ener1, Inc. and Wanxiang EV Co., Ltd., dated as of January 17, 2011, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated January 21, 2011.

10.2		Expanded Put Right Agreement between Ener1, Inc. and Investinor AS, dated January 4, 2011, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated January 10, 2011.

10.3		Amended and Restated Revolving Line of Credit Agreement between Ener1, Inc., Think Holdings AS, Think Global AS and Think North America, Inc. dated as of February 28, 2011, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated March 4, 2011.

10.4		Amended and Restated Security Agreement between Ener1, Inc., Think Holdings AS, Think Global AS and Think North America, Inc., dated as of February 28, 2011, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated March 4, 2011.

10.5		Norwegian Security Agreement between Ener1, Inc., Think Holdings AS and Think Global AS, dated February 28, 2011, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated March 4, 2011.

10.6		Extension of Repayment Date Agreement between Ener1, Inc., Think Holdings AS, Think Global AS and Think North America, Inc., dated March 9, 2011, incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K dated March 10, 2011.

10.7		Employment Agreement between Ener1, Inc. and Christopher L. Cowger, dated as of March 21, 2011, incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated March 25, 2011.

10.8	*	Extension of Repayment Date Agreement between Ener1, Inc., Think Holdings AS, Think Global AS and Think North America, Inc., dated May 1, 2011.

31.1	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

31.3	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer.

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32.1	‡	Section 1350 Certification of Chief Executive Officer.

32.2	‡	Section 1350 Certification of Chief Financial Officer.

32.3	‡	Section 1350 Certification of Chief Accounting Officer.

* Filed herewith.

‡ Furnished herewith.

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Attached files

ENER1 INC Reports

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