1
                               ENOVA SYSTEMS, INC.
                    Notice of Annual Meeting of Shareholders
                           To Be Held August 17, 2004


To the Shareholders of ENOVA SYSTEMS, INC.:

         NOTICE IS HEREBY  GIVEN that the Annual  Meeting of  Shareholders  (the
"Annual  Meeting")  of  Enova  Systems,  Inc.,  a  California  corporation  (the
"Company"),  will be held at GATEWAY  HOLIDAY  INN,  adjacent to ENOVA  SYSTEMS,
Inc.'s principal executive office,  located at 19800 S. Vermont Ave.,  Torrance,
California  90502,  on August  17,  2004,  at 9:00  a.m.,  local  time,  for the
following purposes:

     1.  AMENDMENT TO THE ENOVA SYSTEMS,  INC.  RESTATED AND AMENDED ARTICLES OF
         INCORPORATION  ("ARTICLES OF  INCORPORATION") TO INCREASE THE NUMBER OF
         AUTHORIZED  SHARES  OF  THE  COMPANY'S  COMMON  STOCK.  To  approve  an
         amendment to the Articles of  Incorporation  increasing  the authorized
         number of shares of Common Stock from 500,000,000 shares to 750,000,000
         shares;

     2.  AUTHORIZATION  FOR THE BOARD OF  DIRECTORS  TO  EFFECT A REVERSE  STOCK
         SPLIT  of  the  Company's  Common  Stock  at a  specific  ratio  to  be
         determined by the Board of Directors within a range from one-for-ten to
         one-for-fifty;

     3.  AMENDMENT TO THE ENOVA SYSTEMS, INC. 1996 STOCK OPTION PLAN. To approve
         an increase in the authorized number of shares under the Enova Systems,
         Inc.  1996  Stock  Option  Plan from  45,000,000  shares to  65,000,000
         shares;

     4.  ELECTION OF DIRECTORS.  To elect Directors of the Company as more fully
         described  in the  attached  Proxy  Statement  to serve  until the next
         Annual Meeting of Shareholders or until their respective successors are
         elected and qualified;

     5.  RATIFICATION  OF  INDEPENDENT  AUDITORS.  To ratify the  appointment of
         Singer Lewak Greenbaum & Goldstein LLP as the independent  auditors for
         the Company for the fiscal year ending December 31, 2004; and

     6.  To transact such other  business as may properly come before the Annual
         Meeting and any adjournment or postponement thereof.

         The foregoing  items of business are more fully  described in the Proxy
Statement which is attached and made a part hereof.


                                                                               2

         The Board of Directors has fixed the close of business on June 22, 2004
the record date for  determining the  shareholders  entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.

         After  careful  consideration,  the  Company's  Board of Directors  has
approved  the  proposals  and  recommends  that you  vote in favor of each  such
proposal.


                                              By Order of the Board of Directors
                                               /s/ Carl D. Perry
                                              ----------------------------------
                                              Carl D. Perry
                                              Chief Executive Officer

Torrance, California
July 16, 2004


YOUR VOTE IS VERY IMPORTANT,  REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT  CAREFULLY.  IF YOU DO NOT EXPECT TO ATTEND IN
PERSON,  PLEASE  COMPLETE,  SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING  ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE ANNUAL MEETING
AND VOTE BY BALLOT, YOUR PROXY WILL BE AUTOMATICALLY  REVOKED AND ONLY YOUR VOTE
AT THE ANNUAL MEETING WILL BE COUNTED.




                                                                               3


                                Mailed to Shareholders on or about July 16, 2004

                               ENOVA SYSTEMS, INC.
                           19850 South Magellan Drive
                           Torrance, California 90502
                        ---------------------------------

                                 PROXY STATEMENT
                       ----------------------------------

                     For the Annual Meeting of Shareholders
                          To Be Held on August 17, 2004



         The  enclosed  proxy  ("Proxy")  is solicited on behalf of the Board of
Directors (the "Board") of Enova Systems,  Inc., a California  corporation  (the
"Company"),  for use at the 2004 Annual  Meeting of  Shareholders  to be held on
August 17, 2004 at 9:00 a.m.,  local time, at GATEWAY  HOLIDAY INN,  adjacent to
ENOVA SYSTEMS,  Inc.'s principal  executive office,  located at 19800 S. Vermont
Ave., Torrance, California 90502, and at any adjournment thereof.

         This  Proxy  Statement  and the  accompanying  form of Proxy  are to be
mailed to the  shareholders  entitled to vote at the Annual  Meeting on or about
July 16, 2004.  The specific  proposals to be  considered  and acted upon at the
Annual  Meeting are summarized in the  accompanying  Notice and are described in
more detail in the Proxy  Statement.  All shareholders of record at the close of
business on June 22, 2004 are  entitled to notice of, and to vote at, the Annual
Meeting.

Proxies

         If any  shareholder  does not expect to attend  the  Annual  Meeting in
person,  such  shareholder  may vote by proxy.  The  shares  represented  by the
proxies received, properly marked, dated, executed and not revoked will be voted
at the Annual  Meeting.  Shareholders  are urged to specify their choices on the
enclosed  proxy card.  If a proxy card is signed and  returned  without  choices
specified, in the absence of contrary instructions,  the shares of Common Stock,
Series A Convertible  Preferred Stock ("Series A Preferred  Stock") and Series B
Convertible  Preferred Stock ("Series B Preferred  Stock"),  as the case may be,
represented  by such proxy card will be voted "FOR"  Proposals 1, 2, 3, 4 and 5.
The  Company  does not know of any other  business  that will be  presented  for
action at the Annual Meeting but, if any matter is properly presented, the proxy
holders will vote on such matters in the proxy holders' discretion

Revocability of Proxy

         Any proxy  given  pursuant to this  solicitation  may be revoked by the
person  giving it at any time before it is exercised  by: (i)  delivering to the
Company  at  its  executive  offices,   19850  South  Magellan  Drive  Torrance,
California 90502 (to the attention of Carl D. Perry, the Company's President), a
written  notice of revocation or a duly executed  proxy bearing a later date; or
(ii) attending the Annual Meeting and voting in person.

Solicitation

         The  solicitation  of proxies will be conducted by mail and the Company
will bear all attendant costs. These costs will include the expense of preparing
and mailing proxy  materials for the Annual Meeting and  reimbursements  paid to
brokerage   firms  and  others  for  their   expenses   incurred  in  forwarding
solicitation  material  regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
telephonically, by facsimile or by other electronic or written means through its
officers,  directors and regular employees, none of whom will receive additional
compensation for assisting with the solicitation.


                                                                               4

Record Date and Voting

         The close of  business  on June 22,  2004 has been  fixed as the record
date (the "Record Date") for  determining the holders of shares of Common Stock,
Series A Preferred  Stock,  and Series B Preferred Stock of the Company entitled
to notice of and to vote at the Annual  Meeting.  As of the close of business on
the Record Date, the Company had 401,895,856  shares of Common Stock,  2,747,512
shares of Series A Preferred  Stock,  and 1,217,196 shares of Series B Preferred
Stock, outstanding and entitled to vote at the Annual Meeting.

         The  presence  at the Annual  Meeting  of a  majority  of the shares of
Common  Stock,  Series A Preferred  Stock,  and Series B Preferred  Stock of the
Company in the aggregate on an as converted basis, or approximately  203,945,958
of these  shares on an as  converted  basis  either in person or by proxy,  will
constitute a quorum for the transaction of business at the Annual Meeting.

         Each outstanding  share of Common Stock and Series A Preferred Stock on
the Record  Date is  entitled  to one (1) vote,  and each  outstanding  share of
Series B Preferred  Stock on the Record Date is entitled to two (2) votes on all
matters  voted on at the  Annual  Meeting,  except  that (i) the  holders of the
Series B Preferred  Stock are voting as a separate  class to fill two  vacancies
allotted to the Series B  Preferred  Stock by voting for two (2)  directors  and
(ii) the  holders of the Common  Stock and the holders of the Series A Preferred
Stock  are  voting  together  as a  single  class  for the  election  of six (6)
directors (as more fully described below).  Cumulative voting may be used in the
election  of  directors  to be  elected  by the  Common  Stock and the  Series A
Preferred  Stock,  voting together as a class,  and in the election of directors
elected by the Series B Preferred Stock. Under cumulative voting, each holder of
Common  Stock and each holder of Series A Preferred  Stock may cast for a single
candidate,  or distribute among the candidates as such holder chooses,  a number
of votes equal to the number of candidates (six (6) at this meeting)  multiplied
by the  number of shares  held by such  shareholder.  Likewise,  each  holder of
Series B Preferred Stock may cast for a single  candidate or distribute  between
the two (2)  candidates as such holder  chooses,  a number of votes equal to the
number of  candidates  (two (2) at this  meeting)  multiplied  by the  number of
shares  held by such  shareholder.  Cumulative  voting  will apply only to those
candidates  whose  names have been  placed in  nomination  prior to  voting.  No
shareholder shall be entitled to cumulate votes unless the shareholder has given
notice at the meeting,  prior to the voting, of the  shareholder's  intention to
cumulate the shareholder's  votes. If any one shareholder gives such notice, all
shareholders  may cumulate their votes for  candidates in nomination,  except to
the extent that if a shareholder  withholds  votes from the nominees.  The proxy
holders named in the accompanying form of proxy, in their sole discretion,  will
vote such proxy for, and, if  necessary,  exercise  cumulative  voting rights to
secure the election of the nominees listed below as directors of the Company.

         The Common  Stock,  Series A  Preferred  Stock,  and Series B Preferred
Stock will vote together as a single class on all matters  scheduled to be voted
on at the Annual Meeting, other than Proposal 4, the election of directors,  for
which the Series B Preferred  Stock,  voting as a separate class,  shall vote to
elect two (2) of the directors,  and the  outstanding  Common Stock and Series A
Preferred  Stock,  voting  together as a single  class,  shall vote to elect the
remaining  directors.  Additionally,   approval  of  each  of  Proposal  1,  the
authorization  to increase the  authorized  number of shares of Common Stock and
Proposal 2, the authorization for the Board to effect a reverse stock split at a
specific  ratio to be determined  by the Board of Directors  within a range from
one-for-ten to one-for-fifty,  requires a separate class vote of the outstanding
Common Stock.

         An affirmative vote of a majority of the issued and outstanding  shares
of Common Stock (not just shares present and voting at the meeting)  voting as a
separate  class,  and an  affirmative  vote  of a  majority  of the  issued  and
outstanding  shares of Common  Stock,  Series A  Preferred  Stock,  and Series B
Preferred  Stock in the  aggregate  voting  together as a class (not just shares
present and voting at the  meeting) is required  for  approval of Proposals 1, 2
and 3. An affirmative vote of a majority of the shares of Common Stock, Series A
Preferred  Stock,  and  Series B  Preferred  Stock,  present  and  voting at the
meeting,  either in person or by proxy,  is required  for approval of Proposal 5
(ratification  of  independent  auditors).  With  respect  to  the  election  of
directors (Proposal 4), the nominees receiving the highest number of affirmative
votes of the shares entitled to be voted for them will be declared elected.


                                                                               5

         An automated system administered by the Company's Common Stock transfer
agent will tabulate votes of the holders of Common Stock,  Series A and Series B
Preferred  Stock cast by proxy.  An employee of the Company will tabulate  votes
cast in person at the Annual Meeting.  Abstentions and broker non-votes are each
included in the  determination  of the number of shares present and voting,  and
each is tabulated  separately.  However,  broker  non-votes  are not counted for
purposes of  determining  the number of votes cast with  respect to a particular
proposal.  In  determining  whether  a  proposal  (other  than the  election  of
directors)  has been  approved,  abstentions  are  counted as votes  against the
proposal  and broker  non-votes  are not  counted  as votes for or  against  the
proposal,  except broker  non-votes  will have the effect of a negative vote for
Proposal 1, 2 and 3 since such proposals  require the approval of an affirmative
vote of a majority of the outstanding  shares of the Company's Common Stock (not
just shares present and voting at the meeting) voting as a separate  class,  and
an affirmative vote of a majority of the Common Stock, Series A Preferred Stock,
and Series B Preferred Stock (not just shares present and voting at the meeting)
voting together as a class. As for the election of directors (Proposal 4), votes
against,  votes withheld,  abstentions  and broker  non-votes will have no legal
effect.

         The Annual  Report of the Company for the year ended  December 31, 2003
has been mailed  concurrently  with the mailing of the Notice of Annual  Meeting
and Proxy Statement to all shareholders entitled to notice of and to vote at the
Annual Meeting.  The Annual Report is not incorporated into this Proxy Statement
and is not considered proxy-soliciting material.

         Please  mark,   date,  sign  and  return  the  enclosed  Proxy  in  the
accompanying  postage-prepaid,  return  envelope as soon as possible so that, if
you do not attend the Annual Meeting, your shares may be voted.


                                                                               6

                 MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING


                                 PROPOSAL NO. 1
                                AMENDMENT OF THE
                 COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
                           THE AUTHORIZED COMMON STOCK


         The Board of Directors has adopted a resolution proposing and declaring
the advisability of amending the Company's Articles of Incorporation to increase
the number of shares of Common  Stock that the  Company is  authorized  to issue
from 500,000,000  shares to 750,000,000  shares. The Board of Directors directed
that this proposed amendment be considered at the Annual Meeting of Shareholders
on August 17, 2004. The Board believes this capital structure more appropriately
reflects the present and future needs of the Company.  The  authorization  of an
additional  250,000,000 shares of Common Stock would give the Board of Directors
the express authority, without further action of the shareholders, to issue such
shares of Common Stock from time to time as the Board deems necessary. A copy of
the text of this  proposed  amendment  to the Articles of  Incorporation  of the
Company is set forth in full as Exhibit A attached to this Proxy  Statement  and
is hereby incorporated  herein by this reference;  provided,  however,  that the
text of the amendment is subject to change as may be required by the  California
Secretary of State.

Purposes  and Effects of the  Amendment  to Increase  the  Authorized  Number of
Shares of Common Stock

Number of Shares of Common Stock Issued and Issuable upon Exercise or Conversion
Exceeds Number of Authorized Shares

         As of June 22, 2004, the Company had approximately 401,895,856shares of
Common Stock issued and  outstanding,  2,747,512 shares of Common Stock issuable
upon conversion of outstanding  Series A Preferred  Stock,  2,434,392  shares of
Common Stock issuable upon conversion of outstanding  Series B Preferred  Stock,
16,954,188 shares of Common Stock issuable upon exercise of outstanding  options
and warrants, and approximately 10,000,000 shares of Common Stock issuable under
a  contractual  commitment  with  Hyundai  Heavy  Industries,  for  a  total  of
approximately  436,531,379  shares  issued  and  outstanding  or  issuable  upon
exercise  or  conversion  of  presently   outstanding   options,   warrants  and
convertible securities.  500,000,000 shares of Common Stock are authorized to be
issued under the Company's Articles of Incorporation as currently in effect.

Need for Additional Financing and Flexibility

         The  proposed  increase  in the  authorized  number of shares of Common
Stock  will  allow  the  Company  to  reserve  an  additional  number  of shares
sufficient to provide flexibility for the future. In particular, the Company may
require  additional  funding  in 2004 and  beyond  for its  operations  and will
therefore  need the increased  number of authorized  shares to raise  additional
equity. In addition,  the additional authorized shares may be used in the future
for  any  other  proper  corporate  purpose  approved  by the  Board,  including
corporate mergers or acquisitions,  an increase in the number of shares reserved
under the Company's  stock option  plans,  stock  dividends or splits,  or other
corporate purposes.  Furthermore,  the Company needs additional shares available
upon the exercise of additional  options that may be granted under the Company's
1996 Stock Option Plan,  particularly if Proposal 3 is approved. At present, the
Company  has  no  plans,  agreements  or  understandings  for  the  issuance  of
additional shares of capital stock or options  therefor,  other than pursuant to
the 1996 Stock Option Plan, upon exercise of outstanding options and warrants or
options granted hereafter under the 1996 Stock Option Plan, pursuant to existing
contractual  commitments and upon  conversion of outstanding  shares of Series A
Preferred Stock and Series B Preferred Stock. No further action or authorization
by the  shareholders  would be  necessary  prior to the  issuance of  additional
shares unless applicable laws or regulations require such approval.

         The Board of Directors  believes the increase in the authorized  shares
is necessary to provide the Company  with the  flexibility  to act in the future
with respect to financings,  acquisitions  and other corporate  purposes without
the delay and expense  associated with obtaining  special  shareholder  approval
each time an opportunity requiring the issuance of shares may arise.


                                                                               7

Effects of the Amendment

         Each  additional  share of Common Stock  authorized by the amendment to
the Articles of Incorporation  would have the same rights and privileges as each
share of Common Stock currently authorized or outstanding.

         An issuance of additional shares by the Company could have an effect on
the potential realizable value of a shareholder's  investment. In the absence of
a proportionate  increase in the Company's  earnings and book value, an increase
in the  aggregate  number of  outstanding  shares of the  Company  caused by the
issuance of the additional  shares would dilute the earnings per share and could
dilute  the book  value per  share of all  outstanding  shares of the  Company's
capital  stock.  If such factors were reflected in the price per share of Common
Stock,  the potential  realizable  value of a shareholder's  investment could be
adversely affected.

Vote Required

         The  approval  of  the  amendment  of  the  Articles  of  Incorporation
increasing  the  authorized  number  of  shares of  Common  Stock  requires  the
affirmative vote of a majority of the outstanding shares of Common Stock, voting
separately as a class, and the affirmative vote of a majority of the outstanding
shares of Common  Stock and  Series A  Preferred  Stock and  Series B  Preferred
Stock,  voting  together as a single  class (with both the Common  Stock and the
Series A  Preferred  Stock  having one vote per share and the Series B Preferred
Stock having two votes per share).


          THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
                       PROPOSED AMENDMENT OF THE COMPANY'S
           ARTICLES OF INCORPORATION INCREASING THE AUTHORIZED NUMBER
                            OF SHARES OF COMMON STOCK


                                                                               8

                                 PROPOSAL NO. 2
                         AUTHORIZATION FOR THE BOARD TO
                          EFFECT A REVERSE STOCK SPLIT
                                 IN A RANGE FROM
                          ONE-FOR-TEN TO ONE-FOR-FIFTY


General

         The Company's  shareholders are being asked in Proposal 2 to act upon a
proposal to authorize the Board of  Directors,  in its  discretion,  to effect a
reverse stock split of the Company's  Common Stock at a specific ratio,  ranging
from  one-for-ten to  one-for-fifty,  to be determined by the Board of Directors
within a twelve month period from the date of the Annual Meeting.

         An  amendment  of the  Company's  Articles  of  Incorporation  will  be
required to effect a reverse  stock split.  The complete  text of the form of an
amendment to the Articles of  Incorporation  for the reverse  stock split is set
forth in Exhibit B to this Proxy Statement; provided, however, that such text is
subject  to  amendment  to  include  such  changes  as  may be  required  by the
California  Secretary of State.  If Proposal 2 is approved by the requisite vote
of the  Company's  shareholders,  then the  Board  of  Directors  will  have the
authority, for the twelve month period following the date of the Annual Meeting,
to  determine  the  specific  ratio of a reverse  stock  split  within the range
described  herein and to effect one reverse stock split of the Company's  Common
Stock in such specific ratio. To effectuate the reverse stock split, the Company
would fill in the specific ratio of the stock split in the attached amendment to
the  Articles  of  Incorporation  and file  the  amendment  with the  California
Secretary  of  State.  Effective  as of the date and  time  and  filing  of such
amendment,  such reverse stock split will be effective. Each share of the Common
Stock issued and outstanding  immediately prior to effective time of the reverse
stock split (the "Old Common  Stock"),  will be,  automatically  and without any
action on the part of the shareholders,  converted into and reconstituted into a
fraction  of a share of the  Company's  Common  Stock (the "New  Common  Stock")
represented by the specific  ratio approved by the Board of Directors.  However,
no fractional  shares of Common Stock would be issued as a result of the reverse
stock split. In lieu of any such fractional  share interest,  each holder of Old
Common Stock who would  otherwise  be entitled to receive a fractional  share of
New Common  Stock would  receive  cash in lieu of such  fractional  share of New
Common Stock in an amount equal to the product  obtained by multiplying  (a) the
average of the  high-bid and  low-asked  per share prices of the Common Stock as
reported on the NASDAQ electronic  "Bulletin Board" on the effective date of the
reverse  stock  split  (appropriately  adjusted  as the Board of  Directors  may
determine ) by (b) the number of shares of Old Common  Stock held by such holder
that would otherwise have been exchanged for such fractional share interest. For
example,  if the  shareholders  approve  Proposal  2 and the Board of  Directors
authorizes a reverse stock split in the ratio of one-for-sixteen, then, upon the
date  and  the  time  of  the  filing  of  the  amendment  to  the  Articles  of
Incorporation  to effect such stock  split,  each share of the Old Common  Stock
will be converted into and  reconstituted  as 1/16th of a share of the Company's
New Common Stock. No fractional shares would be issued in connection  therewith.
As a result, any shareholder who held less than sixteen shares of the Old Common
Stock  would  no  longer  have any  stock  interest  in the  Company  after  the
one-for-sixteen  reverse  stock split but instead  would  receive  cash for such
shareholder's  fractional  interest,  the amount of which would be determined in
the manner described above.

         Shortly after the effective date of a reverse stock split, shareholders
will be asked to surrender certificates  representing shares of Old Common Stock
in accordance  with the  procedures  set forth in a letter of  transmittal to be
sent by the Company. Upon such surrender, a certificate  representing the number
of shares of New  Common  Stock  each such  shareholder  is deemed to own (after
giving effect to the specific  reverse stock split) will be issued and forwarded
to the  shareholders  (and  cash  in  lieu of any  fractional  share  interest).
However,  pending surrender,  each certificate representing shares of Old Common
Stock will  continue to be valid but will  represent the number of shares of New
Common  Stock (and cash in lieu of  fractional  shares of Old Common  Stock,  as
described  above) that such  shareholder is deemed to own after giving effect to
the reverse stock split.  SHAREHOLDERS  SHOULD NOT SEND THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE A TRANSMITTAL LETTER.


                                                                               9

Purposes of the Proposed Reverse Stock Split

         As of the record date, the Company had outstanding  401,895,856  shares
of Common Stock and the stock price in the over-the-counter  market on that date
(based on the  average of the  high-bid  and  low-asked  per share  price of the
Common Stock as reported on the NASDAQ electronic "Bulletin Board" on that date)
was $0.15 per  share,  resulting  in a market  capitalization  of  approximately
$60,000,000.  The Board of  Directors  has  determined  that the  Company  has a
relatively  high  number  of  shares  outstanding  given  the  Company's  market
capitalization, operating results and shareholders' equity. If the Board were to
effect a reverse  stock split,  the Company  will  decrease the number of shares
outstanding, which should result in a proportionate increase in the price of the
Company's Common Stock.

         The  Board  believes  that  a  reverse  stock  split  may  enhance  the
acceptability  of the Common Stock by the financial  community and the investing
public.  The reduction in the number of issued and outstanding  shares of Common
Stock  caused by a reverse  stock  split is  anticipated  initially  to increase
proportionally  the per share market price of the Common  Stock.  The Board also
believes  that a reverse  stock  split may  result in a broader  market  for the
Common Stock than that which  currently  exists.  The expected  increased  price
level may  encourage  interest  and  trading  in the Common  Stock and  possibly
promote  greater  liquidity  for  the  Company's  shareholders,   although  such
liquidity could be adversely  affected by the reduced number of shares of Common
Stock   outstanding   after  the  effective  date  of  a  reverse  stock  split.
Additionally,  a variety of  brokerage  house  policies  and  practices  tend to
discourage  individual brokers within those firms from dealing with lower priced
stocks due to the trading  volatility  often associated with lower priced stock.
Some of  those  policies  and  practices  pertain  to the  payment  of  broker's
commissions and to time consuming  procedures that function to make the handling
of lower priced stocks economically  unattractive to brokers.  In addition,  the
structure of trading commissions tends to have an adverse impact upon holders of
lower priced stock  because the  brokerage  commission on a sale of lower priced
stock  generally  represents  a higher  percentage  of the sales  price than the
commission on a relatively higher priced issue. The Board of Directors  believes
that a reverse stock split may result in a price level for the Common Stock that
will reduce,  to some extent,  the effect of the  above-referenced  policies and
practices  of  brokerage  firms and  diminish  the  adverse  impact  of  trading
commissions  on the market for the Common  Stock.  Any  reduction  in  brokerage
commissions  resulting  from the  proposed  reverse  stock  split may be offset,
however, in whole or in part, by increased brokerage  commissions required to be
paid by shareholders selling "odd lots" created by such reverse stock splits.

         There can be no assurance  that any or all of the effects  described in
this Proxy Statement will occur, including,  without limitation, that the market
price per share of New Common Stock after a reverse stock split will be equal to
the applicable multiple of the market price per share of Old Common Stock before
a reverse stock split, or that such price will either exceed or remain in excess
of the current market price. Further,  there is no assurance that the market for
the  Common  Stock will be  improved.  Shareholders  should  note that the Board
cannot  predict  what effect any specific  reverse  stock split will have on the
market price of the Common Stock.

         At the last annual meeting,  held on December 5, 2002, the shareholders
of the Company  approved four  separate  reverse stock splits (one in a ratio of
1-for-20,  one in a ratio of 1-for-15, one in the ratio of 1-for-10 and one in a
ratio of 1-for-5).  However,  the Company did not implement any of these reverse
stock splits.  The Board of Directors  believes that  shareholder  approval of a
range of exchange  ratios  (rather  than a fixed  exchange  ratio)  provides the
Company with the flexibility to achieve the desired results of the reverse stock
split at a ratio that,  at the time of a reverse  stock  split,  would be in the
best interests of the Company and its shareholders.  If the shareholders approve
Proposal 2, the Board of Directors  would effect a reverse stock split only upon
the  Board's  determination  that a  reverse  stock  split  would be in the best
interests of the Company and its shareholders at that time. If the Board were to
effect a reverse  stock  split,  the Board would set the timing for such reverse
stock split and select the specific ratio within the range set forth herein.  No
further action on the part of shareholders  will be required to either implement
or abandon a reverse stock split.  If shareholders  approve  Proposal 2, and the
Board of Directors  determines to implement a reverse  stock split,  the Company
would  communicate  to the public,  prior to the effective  date of such reverse
stock split, additional details regarding the reverse stock split, including the
specific  ratio the  Board has  selected.  If the  Board of  Directors  does not
implement the reverse stock split within twelve months from the Annual  Meeting,
the authority granted in this proposal to implement the reverse stock split will
terminate. The Board of Directors reserves its right to elect not to proceed, or
may abandon,  the reverse stock split if it determines,  in its sole discretion,
that  this  proposal  is not in the  best  interests  of  the  Company  and  its
shareholders.


                                                                              10

         Principal Effects of a Reverse Stock Split

         Contingent upon shareholder and Board approval, the reverse stock split
will be effected by filing with the  California  Secretary of State an amendment
to the Company's  Articles of Incorporation in substantially the form of Exhibit
B  attached  hereto  (subject  to change as may be  required  by the  California
Secretary of State),  setting forth therein the specific  ratio  approved by the
Board.  The amendment and the reverse stock split will be effective  immediately
upon such filing.

         Without  any  further  action  on  the  part  of  the  Company  or  the
shareholders,  after the filing of an  amendment  to the  Company's  Articles of
Incorporation  effecting  the approved  reverse  stock split,  the shares of Old
Common  Stock will be  converted  into and  reconstituted  into the  appropriate
number of shares of New Common Stock  resulting from the approved  reverse stock
split  (and,  where  applicable,  cash  in  lieu of any  fractional  shares,  as
described  elsewhere in this Proxy  Statement).  Each shareholder will own fewer
shares of our Common Stock following a reverse stock split.  However,  a reverse
stock  split will affect all of the holders of our Common  Stock  uniformly  and
will not affect any shareholder's  percentage ownership of the Company except to
the extent  that the reverse  stock split  results in  fractional  shares.  As a
result of paying  cash in lieu of  fractional  shares  resulting  from a reverse
stock split, a number of shareholders (those holding fewer shares than the ratio
of the approved  reverse stock split) will be eliminated as  shareholders of the
Company.  Because such  transaction  would be automatic  and effective as to all
shares outstanding prior to the reverse stock split,  shareholders who otherwise
may wish to retain  their  existing  equity  interest  in the  Company  would be
adversely affected.  The Company expects that, based on the number of holders of
our Common  Stock as of the record date for the Annual  Meeting  and  assuming a
one-for-ten   reverse  stock  split,   approximately  750  shares  of  currently
outstanding  shares of Common Stock would result in fractional  share  interests
for which cash would be paid and  approximately  10 holders of our Common  Stock
would be eliminated as a shareholder of the Company.  The Company  expects that,
based on the number of holders of our Common Stock as of the record date for the
Annual Meeting and assuming a one-for-fifty  reverse stock split,  approximately
13,500  shares of currently  outstanding  shares of Common Stock would result in
fractional  share  interests for which cash would be paid and  approximately  45
holders of our Common Stock would be eliminated as a shareholder of the Company.
Shares of Common Stock no longer outstanding as a result of the fractional share
settlement  procedure will be returned to authorized but unissued  shares of the
Company.

         There will be no material differences between the rights of the holders
of the shares of Common Stock  outstanding  prior to the reverse stock split and
those  outstanding  after the reverse stock split is effected  (other than those
arising from the fractional  share  settlement) as all shareholders are affected
uniformly in a revisers  stock  split.  The reverse  stock split will,  however,
result in certain  adjustments to the voting rights and conversion ratios of the
Series A  Preferred  Stock  and the  Series  B  Preferred  Stock.  Specifically,
pursuant to the terms of the Company's  Articles of  Incorporation,  the reverse
stock split will result in an  adjustment  to the voting  rights of the Series A
Preferred  Stock and the Series B Preferred  Stock so that once a reverse  stock
split is effected,  the relative voting power of such shares to the voting power
of the Common Stock and to the voting  power of the other series of  outstanding
Preferred Stock will be in the same proportion as existed  immediately  prior to
such reverse stock split. For example,  assuming a one-for-twenty  reverse stock
split is  approved,  this  adjustment  would result in a reduction in the voting
power of each share of the Series A  Preferred  Stock from one vote per share to
1/20th of a vote per share and a reduction  in the voting  power of the Series B
Preferred Stock from 2 votes per share to 1/10th of a vote per share.  Thus, the
proportionate  voting  power of the  holders of the voting  stock of the Company
would not be  affected.  The  proposed  reverse  stock split will also result in
adjustments  being made to the conversion ratios of the Series A Preferred Stock
and the Series B Preferred  Stock so that such shares will be  convertible  into
such  number of shares of Common  Stock  that a holder of such  Preferred  Stock
would have been  entitled to receive if such  Preferred  Stock were to have been
converted into Common Stock immediately prior to a proposed reverse stock split.
For example, under such adjustments,  after a one-for-twenty reverse stock split
is  made  effective,  each  share  of the  Series  A  Preferred  Stock  will  be
convertible  into 1/20th of a share of Common Stock, as compared to one share of
Common Stock prior to the one-for-twenty  reverse stock split, and each share of
the Series B  Preferred  Stock  will be  convertible  into  1/10th of a share of
Common  Stock,  as  compared to 2 shares of Common  Stock prior to the  one-for-
twenty reverse stock split.

         In addition, all outstanding options and warrants to purchase shares of
Common  Stock  would be  adjusted as a result of any  reverse  stock  split,  as
required by the terms of those securities.  In particular,  the number of shares
issuable upon the exercise of each instrument would be reduced, and the exercise
price per share, if applicable, would be


                                                                              11

increased,  in  accordance  with the terms of each  instrument  and based on the
ratio of the  reverse  stock  split.  Also,  the number of shares  reserved  for
issuance  under our existing  stock option and equity  incentive  plans would be
reduced proportionally based on the ratio of the reverse stock split.

         Consummation  of a reverse  stock  split  will not alter the  number of
authorized  shares of Common  Stock which will remain at  500,000,000  shares or
750,000,000 shares if Proposal 1 is approved. As discussed above,  proportionate
voting  rights and other  rights of the  holders of Common  Stock and  Preferred
Stock will not be altered by a reverse  stock  split  (other than as a result of
the payment of cash in lieu of fractional  shares, as described above, and other
than the proportionate change in the number of shares of Common Stock into which
the outstanding  shares of Series A Preferred Stock and Series B Preferred Stock
are convertible or for which options or warrants may be exercised).

         Shareholders should note that certain disadvantages may result from the
adoption  of the  proposed  reverse  stock  split.  In the event  Proposal  2 is
approved by the shareholders and the Board of Directors approves a reverse stock
split at a specific  ratio,  the number of  outstanding  shares of Common  Stock
would be  decreased as a result of the reverse  stock  split,  but the number of
authorized  shares of Common Stock would not be so decreased.  The Company would
therefore have the authority to issue a greater number of shares of Common Stock
following  the  reverse  stock  split  without  the need to  obtain  shareholder
approval to authorize  additional shares. Any such additional  issuance may have
the effect of significantly  reducing the interest of the existing  shareholders
of the Company with respect to earnings per share, voting, liquidation value and
book and  market  value  per  share.  Although  the  Company  believes  that the
availability  of such  additional  shares  would  provide the  Company  with the
flexibility  to meet  business  needs as they may  arise  and to take  advantage
quickly  of  favorable  opportunities,  there are no  current  plans to use such
additional shares.

         This proposal has been prompted  solely by the business  considerations
discussed in the preceding  paragraphs.  Nevertheless,  the additional shares of
Common Stock that would become  available  for issuance if a reverse stock split
is effected  could also be used by the Company's  management to oppose a hostile
takeover attempt or delay or prevent changes in control or changes in or removal
of  management,  including  transactions  that are  favored by a majority of the
shareholders or in which the shareholders  might otherwise receive a premium for
their shares over  then-current  market  prices or benefit in some other manner.
For example,  without further shareholder approval, the Board of Directors could
sell shares of Common Stock in a private  transaction  to  purchasers  who would
oppose a  takeover  or  favor  the  current  Board of  Directors.  The  Board of
Directors is not aware of any pending takeover or other  transactions that would
result in a change in control of the  Company,  and the proposal was not adopted
to thwart any such efforts.

         The Common Stock is currently  registered  under  Section  12(g) of the
Securities  Exchange  Act of 1934 (the  "Exchange  Act") and,  as a result,  the
Company is subject  to the  periodic  reporting  and other  requirements  of the
Exchange  Act. No reverse  stock split that would be permitted to be effected by
approval of Proposal 2 is anticipated to effect the  registration  of the Common
Stock under the Exchange Act. After the Effective Date, trades of the New Common
Stock will  continue to be reported on the NASDAQ  electronic  "Bulletin  Board"
under the  Company's  symbol  "ENVA."  No  reverse  stock  split  that  would be
permitted to be effected by approval of Proposal 2 is anticipated to result in a
"Rule 13e-3 transaction" as defined under the Exchange Act.

         California law prohibits the payment of cash for  fractional  shares if
it would result in the  cancellation of more than 10% of the outstanding  shares
of any class of stock.  Thus, the Company is prohibited from effecting a reverse
stock split if that stock split would result in cancellation of more that 10% of
the Old Common Stock.

         The following table depicts,  by way of example,  the potential effects
of a reverse stock split,  assuming  certain  exchange ratios within the one-for
ten to the  one-for-fifty  range,  upon the  number of  shares  of Common  Stock
outstanding,  the number of shares of Common Stock reserved for future  issuance
and the number of authorized  but unissued  shares of Common Stock that would be
available for issuance  after the reverse stock split at each given ratio.  Such
effects are calculated on the basis of 401,895,856 shares issued and outstanding
as of the record date for the Annual Meeting.  As discussed above, the number of
shares of Common Stock authorized for issuance under our Articles of




                                                                              12

Incorporation  would remain  unaffected by a reverse  stock split.  Although the
following table sets forth examples of various  reverse stock split ratios,  the
Board may choose any ratio within the authorized range.




                                                           Shares               Shares               Shares
    Reverse Stock Split           Common Stock          Reserved for        Authorized for       Available for
                                Outstanding (1)         Issuance (2)         Issuance (3)         Issuance (4)
----------------------------  ---------------------  -------------------  -------------------  -------------------
                                                                                           
     Before Split                      401,895,856           29,454,188          500,000,000           68,649,956
     1-for-10                           40,189,586            2,945,419          500,000,000          456,864,996
     1-for-20                           20,094,793            1,472,709          500,000,000          478,432,498
     1-for-30                           13,396,529              981,806          500,000,000          485,621,665
     1-for-40                           10,047,396              736,355          500,000,000          489,216,249
     1-for-50                            8,037,917              589,084          500,000,000          491,372,999


----------------------------

(1)   Represents  the total number of shares of Common Stock  outstanding  after
      the  reverse  stock  split,  but  without  giving  effect  to any  changes
      resulting from the payment of cash in lieu of fractional shares.

(2)   Represents  the  total  number of shares  of  Common  Stock  reserved  for
      issuance  upon  conversion  of  Series  A  Preferred  Stock  and  Series B
      Preferred Stock and exercise of outstanding options, warrants, convertible
      debt and other rights agreements, but without giving effect to any changes
      resulting from the payment of cash in lieu of fractional shares.

(3)   Represents  the total  number of shares  of Common  Stock  authorized  for
      issuance as of June 22, 2004.

(4)   Represents  the total  number of shares  of  Common  Stock  available  for
      issuance  after  giving  effect to the reverse  stock  split,  but without
      giving effect to any changes resulting from the payment of cash in lieu of
      fractional shares.

Accounting Matters

         Because the Common Stock has no par value, the reverse stock split will
not affect the stated capital on the Company's balance sheet attributable to the
Common  Stock.  The costs for payment of the cost of  fractional  shares will be
deducted from the Common Stock account on the balance  sheet.  The per share net
income  or loss  and per  share  net  book  value of the  Common  Stock  will be
increased as a result of the reverse  stock split,  because  there will be fewer
shares of Common Stock outstanding.  In addition,  all per-share income and loss
numbers for prior years will be restated to reflect the reverse stock split.

No Dissenters Rights

         In   connection   with  the  approval  of  the  reverse   stock  split,
shareholders  of the Company will not have a right to dissent and obtain payment
for their shares under California law or the Company's Articles of Incorporation
or bylaws.

Federal Income Tax Consequences of the Proposed Reverse Stock Splits

         The Company has not sought and will not seek an opinion of counsel or a
ruling from the  Internal  Revenue  Service  regarding  the  federal  income tax
consequences of the four proposed reverse stock splits. The following discussion
sets forth the material  United  States  federal  income tax  consequences  that
management  believes will apply with respect to the Company and the shareholders
of the  Company  who are  United  States  holders at the  effective  time of the
reverse  stock split  (based on laws in effect as of the date of mailing of this
Proxy  Statement).  This  discussion  does not address the tax  consequences  of
transactions  effectuated  prior to or after any approved  reverse  stock split,
including,  without limitation, the tax consequences of the exercise of options,
warrants or similar rights to purchase stock. Furthermore,  no foreign, state or
local tax  considerations  are addressed  herein.  For these purposes,  a United
States holder is a shareholder  that is: (i) a citizen or resident of the United
States, (ii) a domestic corporation,  (iii) an estate whose income is subject to
United States federal income tax regardless of its source,  or (iv) a trust if a
United  States  court  can  exercise   primary   supervision  over  the  trust's
administration  and one or more United States  persons are authorized to control
all  substantial  decisions of the trust.  This discussion is a summary only and
each shareholder is urged to consult with his, her or its own tax advisors as to
the tax effects of a reverse stock split to him, her or it.


                                                                              13

         The Company  believes that a reverse stock split, if effectuated,  will
have the following federal income tax effects:

1.   A shareholder will not recognize gain or loss on the exchange of Old Common
     Stock for New Common Stock  resulting  from a reverse  stock split.  In the
     aggregate,  the shareholder's basis in shares of New Common Stock resulting
     from a reverse  stock  split will equal his,  her or its basis in shares of
     Old Common Stock,  excluding any basis attributable to shares of Old Common
     Stock which the  shareholder  surrenders  for cash in lieu of a  fractional
     share of New Common Stock resulting from a reverse stock split.

2.   A  shareholder's  holding  period for tax purposes for shares of New Common
     Stock will be the same as the holding period for tax purposes of the shares
     of Old Common Stock exchanged therefor.

3.   The proposed  reverse stock split  (regardless of the ratio  selected) will
     constitute a reorganization  within the meaning of Section  368(a)(1)(e) of
     the  Internal   Revenue  Code  or  will   otherwise   qualify  for  general
     non-recognition  treatment,  and the Company will not recognize any gain or
     loss as a result of any of the proposed reverse stock splits.

4.   To the extent a  shareholder  receives  cash from the  Company in lieu of a
     fractional  share of Common Stock resulting from the proposed reverse stock
     split,  the  shareholder  will be treated  for tax  purposes  as though the
     shareholder sold the fractional  share to the Company.  The receipt of cash
     in the deemed sale of a  fractional  share will result in a taxable gain or
     loss equal to the  difference  between the amount of cash  received and the
     holder's adjusted federal income tax basis in the fractional share. Gain or
     loss  will  generally  be  a  capital  gain  or  loss.  Capital  gain  of a
     non-corporate  United States holder is generally taxed at a lower rate than
     other  income  if the  property  has been  held  more  than one  year.  The
     deduction of capital losses is subject to certain limitations.

Vote Required for  Shareholder  Approval of a Reverse Stock Split within a range
from One-for-Ten to One-for-Fifty.

         The approval of this Proposal No. 2 requires the affirmative  vote of a
majority of the  outstanding  shares of Common  Stock,  voting  separately  as a
class,  and the  affirmative  vote of a majority  of the  outstanding  shares of
Common  Stock,  Series A Preferred  Stock and Series B Preferred  Stock,  voting
together  as a  single  class  (with  both the  Common  Stock  and the  Series A
Preferred  Stock  having  one vote per share and the  Series B  Preferred  Stock
having 2 votes per share).


         THE BOARD RECOMMENDS A VOTE FOR THE AUTHORIZATION OF THE BOARD
                     TO AMEND THE ARTICLES OF INCORPORATION
               TO EFFECT A REVERSE STOCK SPLIT WITHIN A RANGE FROM
                           ONE-TO TEN TO ONE-TO FIFTY




                                                                              14

                                 PROPOSAL NO. 3
                           AMENDMENT TO THE COMPANY'S
                             1996 STOCK OPTION PLAN


General

         The  Company's  shareholders  are being asked to act upon a proposal to
amend the  Company's  1996 Stock  Option Plan (the "1996  Plan") to increase the
authorized number of shares reserved thereunder from 45,000,000 to 65,000,000.

         A general  description  of the  principal  terms of the 1996 Plan,  the
amendment  approved by the Board of Directors and the purpose of such  amendment
are set forth below.  This description is qualified in its entirety by the terms
of the 1996 Plan. A copy of the actual 1996 Plan  document  has been  previously
filed  with the SEC.  A copy of this  document  will also be  furnished  without
charge to any shareholder  upon written request made prior to the meeting to the
attention of the Acting Chief Financial  Officer of the Company at its executive
offices in Torrance, California.

General Description

         In October 1996, the Board of Directors of the Company adopted the 1996
Plan. A total of  15,000,000  shares have been  reserved for issuance  under the
1996 Plan.  Options  granted under the 1996 Plan may be either  incentive  stock
options,  as defined in Section 422 of the  Internal  Revenue  Code of 1986,  or
nonstatutory stock options. Currently, the total number of shares issuable under
both the 1996 Plan is 45,000,000  shares. The Board of Directors has approved an
amendment  to the 1996 Plan to  increase  the  number of shares of Common  Stock
reserved for issuance thereunder by 20,000,000 shares, bringing the total number
of shares  issuable  under  the 1996  Plan to  65,000,000.  The  proposed  share
increase to the 1996 Plan will assure that a sufficient  reserve of Common Stock
will be available under the 1996 Plan to provide the Company with the continuing
opportunity to utilize  equity  incentives to attract and retain the services of
employees essential to the Company's long-term growth and financial success.

Description of 1996 Plan

         Administration.  With  respect to the grant of options to  directors or
employees who are also officers or directors,  the 1996 Plan is  administered by
(i) the Board of Directors of the Company, or (ii) a committee designated by the
Board and  constituted in such a manner as to comply with applicable laws and to
permit such grants and related  transactions  to be exempt from Section 16(b) of
the  Exchange  Act in  accordance  with Rule  16b-3.  With  respect to grants to
employees or consultants who are neither  officers nor directors of the Company,
the 1996 Plan is administered by the Board or by a committee of the Board.

         The  administrators  of the 1996 Plan have full power to  select,  from
among the  employees,  directors  and  consultants  of the Company  eligible for
grants,  the  individuals  to whom  options will be granted,  to  determine  the
specific  terms and  conditions  of each grant,  including  the number of shares
subject to each option, to amend the terms of outstanding  options granted under
the 1996  Plan  (except  that any  amendments  that  would  adversely  affect an
optionee's  rights  under an  outstanding  option  may not be made  without  the
optionee's written consent), and to interpret and construe the terms of the 1996
Plan and options granted  thereunder,  all subject to the provisions of the 1996
Plan. The  interpretation  and construction of any provision of the 1996 Plan by
the administrators  shall be final and conclusive.  Members of the Board receive
no  additional   compensation   for  their  services  in  connection   with  the
administration of the 1996 Plan.

         Eligibility.  The 1996 Plan  provides  that options to purchase  Common
Stock may be granted to employees (including officers and directors who are also
employees),  directors  and  consultants  to the  Company  or its  subsidiaries.
Incentive  stock options may only be granted to employees.  As of June 22, 2004,
there were  approximately  40 persons eligible to receive options under the 1996
Plan, of which approximately 25 persons were eligible to receive incentive stock
options.

         Stock  Options.  Each  option  granted  under  the  1996  Plan is to be
evidenced  by a written  stock  option  agreement  between  the  Company and the
optionee and is subject to the following additional terms and conditions:


                                                                              15

     (a) Exercise of the Option.  The Board or its  committee  determines on the
date of grant when  options will become  exercisable.  An option is exercised by
giving written notice of exercise to the Company,  specifying the number of full
shares of Common Stock to be  purchased  and  tendering  payment of the purchase
price to the Company.  The acceptable  methods of payment for shares issued upon
exercise of an option are set forth in the option  agreement  and may consist of
(1) cash;  (2)  check;  (3)  promissory  note;  (4) the  delivery  of a properly
executed  exercise  notice  together  with  such  other   documentation  as  the
Administrator shall require to effect an exercise and delivery to the Company of
the amount of sale or loan proceeds  required to pay the exercise price; (5) any
combination of the foregoing methods; or (6) such other consideration and method
of payment as may be  determined by the 1996 Plan  administrators  and permitted
under applicable laws.

     (b) Exercise  Price.  The exercise price of options  granted under the 1996
Plan is determined on the date of grant.  The exercise price of incentive  stock
options  must be at least 100% of the fair market  value per share of the Common
Stock at the time of grant. In the case of incentive stock options granted to an
employee  who at the time of grant owns more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary,  the exercise price
must be at least 110% of the fair market  value per share of the Common Stock at
the time of grant.  The exercise price of nonstatutory  stock options must be at
least 85% of the fair market  value per share of the Common Stock at the time of
grant.  The exercise price of nonstatutory  stock options granted to an employee
who at the time of grant owns more than 10% of the voting  power of all  classes
of stock of the Company or any parent or subsidiary,  the exercise price must be
at least 110% of the fair market value per share of the Common Stock at the time
of grant.  In the event of the grant of a  nonstatutory  option with an exercise
price  below the then fair  market  value of the Common  Stock,  the  difference
between fair market  value on the date of grant and the exercise  price would be
treated as a compensation  expense for accounting  purposes and would  therefore
affect the Company's earnings.  For purposes of the 1996 Plan, fair market value
is defined as the  closing  sale price of the Common  Stock as  reported  on the
National  Association  of Securities  Dealers  (NASD)  "Bulletin  Board" on last
market trading day prior to the time of grant.  Based on the foregoing  formula,
as of June 22,  2004,  the fair market value of the  Company's  Common Stock was
$0.15 per share.

     (c) Termination.  If the optionee's employment,  directorship or consulting
relationship  with the Company is terminated for any reason (other than death or
disability), options may be exercised within such period as is determined by the
Board or its  committee  (up to three  months  in the  case of  incentive  stock
options) after such  termination as to all or part of the shares as to which the
optionee was entitled to exercise at the date of such termination, provided that
the option is exercised no later than its expiration date.

     (d) Disability. If an optionee is unable to continue his or her employment,
directorship  or  consulting  relationship  with  the  Company  as a  result  of
disability,  options may be exercised at any time within 12 months from the date
of  disability  to the  extent  such  options  were  exercisable  at the date of
disability,  provided that the option is exercised no later than its  expiration
date.  With respect to  incentive  stock  options,  if the  disability  is not a
"disability" as defined in Section 22(e)(3) of the Code, an optionee's incentive
stock options shall automatically  convert into nonstatutory  options on the day
three months and one day following the date of termination of the optionee.

     (e) Death. If an optionee should die while serving as an employee, director
or  consultant  of the  Company,  options may be exercised at any time within 12
months after the date of death by the optionee's estate or a person who acquired
the right to  exercise  the option by bequest  or  inheritance,  but only to the
extent that such options would have been exercisable by the optionee at the date
of death,  provided  that the option is exercised  no later than its  expiration
date.

     (f) Term and Termination of Options. At the time an option is granted,  the
Board or its  committee  determines  the period  within  which the option may be
exercised.  In no event may the term of an incentive stock option be longer than
ten (10) years. No option may be exercised by any person after the expiration of
its term. An incentive stock option granted to an optionee who, at the time such
option is granted,  owns stock  possessing  more than 10% of the voting power of
all classes of stock of the  Company,  may not have a term of more than five (5)
years.

     (g)   Transferability  of  Options.   An  incentive  stock  option  is  not
transferable  by the  optionee,  other than by will or the laws of  descent  and
distribution,  and is  exercisable  during the  optionee's  lifetime only by the
optionee.  A nonstatutory  option shall be transferable to the extent determined
by the administrator and as provided in an optionee's option agreement.


                                                                              16

     (h) Other  Provisions.  The option  agreement may contain such other terms,
provisions  and  conditions  not  inconsistent  with  the  1996  Plan  as may be
determined by the Board or its committee.

         Adjustments;  Mergers and Asset Sales. In the event any change, such as
a  stock  split,  reverse  stock  split,  stock  dividend,   or  combination  or
reclassification  of the Common Stock,  is made in the Company's  capitalization
without receipt of consideration by the Company, which results in an increase or
decrease in the number of  outstanding  shares of Common Stock,  an  appropriate
adjustment  shall be made in the  number of  shares  under the 1996 Plan and the
price per share covered by each outstanding option.

         In the event of the merger or consolidation of the Company in which the
Company is not the surviving corporation,  or a proposed sale, transfer or other
disposition  of  all  or  substantially  all of the  assets  of the  Company  in
connection  with the complete  liquidation or  dissolution of the Company,  or a
reverse  merger  in which  the  Company  is the  surviving  entity  but in which
securities  possessing  more than 50% of the total combined  voting power of the
Company's  outstanding  securities  are  transferred  to  a  person  or  persons
different from those who held such securities  immediately prior to such merger,
each outstanding option shall automatically  become fully vested and exercisable
and released  from any  restrictions  on transfer and  repurchase  or forfeiture
rights,  unless  such  option  is  assumed  or  substituted  by  such  successor
corporation  or replaced with a comparable  option with respect to shares in the
surviving  corporation,  or such  option  is  replaced  with a  comparable  cash
incentive  program  of  the  successor  corporation,   or  unless  the  vesting,
exercisability  and  release  of such  option is  subject  to other  limitations
imposed by the 1996 Plan administrators at the time of granting such options.

         Amendment,  Suspension and  Termination of the 1996 Plan. The Board may
amend the 1996 Plan at any time or from time to time or may suspend or terminate
the 1996 Plan without  approval of the  shareholders;  provided,  however,  that
shareholder  approval is required  for any  amendment to the 1996 Plan for which
shareholder approval would be required under applicable law, as in effect at the
time. Any amendment, suspension or termination of the 1996 Plan shall not affect
options already granted, and such options shall remain in full force and effect,
unless  mutually  agreed  otherwise in writing between the optionee and the Plan
administrators.  The Board may  accelerate  any option or waive any condition or
restriction pertaining to such option at any time. The Board may also substitute
new stock options for  previously  granted stock options,  including  previously
granted stock options having higher option  prices,  and may reduce the exercise
price of any option to the then  current fair market  value,  if the fair market
value of the Common Stock covered by such option shall have  declined  since the
date the option was  granted.  In any event,  the 1996 Plan shall  terminate  in
October  2006.  Any options  outstanding  under the 1996 Plan at the time of its
termination shall remain outstanding until they expire by their terms.

Amended Plan Benefits

         The Company cannot now determine the number of options to be granted in
the future  under the 1996 Plan,  as proposed to be  amended,  to its  executive
officers,  directors or employees.  There were no grants of stock options to the
Named  Executive  Officer (as defined  below) under the 1996 Plan during  fiscal
2003. The Company granted options  covering an aggregate of 9,998,451  shares of
Common Stock to its other employees under the 1996 Plan during fiscal 2003.

Certain Federal Income Tax Information

         An optionee who is granted an incentive stock option will not recognize
taxable  income  either at the time of grant or exercise,  although the exercise
may  subject the  optionee  to the  alternative  minimum  tax.  Upon the sale or
exchange  of the shares  more than two years  after  grant of the option and one
year after  exercise,  any gain or loss will be treated as capital gain or loss.
If these holding periods are not satisfied, the optionee will recognize ordinary
income  at the time of sale or  exchange  equal to the  difference  between  the
exercise  price and the lower of (i) the fair market  value of the shares at the
date of the option  exercise,  or (ii) the sale price of the shares. A different
rule for measuring  ordinary income upon such a premature  disposition may apply
if the  optionee  is  subject  to  Section  16 of the  Exchange  Act.  Any  gain
recognized on such a premature disposition of the shares in excess of the amount
treated as ordinary income will be characterized as capital gain.


                                                                              17

         An optionee will not recognize any taxable income at the time he or she
is granted a nonstatutory option.  However, upon its exercise, the optionee will
recognize  taxable  income  generally  measured as the excess of the fair market
value of the shares  purchased  over the  purchase  price.  Any  taxable  income
recognized in connection  with an option  exercise by an optionee who is also an
employee of the Company will be subject to tax withholding by the Company.  Upon
resale of such shares by the optionee,  any  difference  between the sales price
and the fair  market  value of shares  on the date the  optionee  purchased  the
shares will be treated as capital gain or loss.

         An  optionee's  gain or loss on the sale or exchange of his shares,  to
the extent any gain is not treated as ordinary income under the foregoing rules,
will generally  represent capital gain or loss. Under current law, the following
holding  periods and maximum  federal tax rates will  generally  apply for sales
made in 2004:

                                          Classification of Maximum
                                  -------------------------------------------
     Holding Period                 Gain or Loss          Federal Tax Rate
--------------------------        ------------------     --------------------
--------------------------        ------------------     --------------------

    One Year or Less                 Short-Term                  35%

   More Than One Year                 Long-Term                  15%

         These maximum rates are subject to several special computational rules,
and optionees are instructed to consult their  personal tax advisors  concerning
their own tax situations.

         The Company will  generally be entitled to a tax  deduction in the same
amount as the ordinary  income  recognized by an optionee with respect to shares
acquired upon exercise of an option.

         The foregoing  summary of the federal income tax  consequences  of 1996
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy Statement. This summary does not purport to be complete, and does not
discuss foreign, state or local tax consequences.

Shares Reserved for Issuance

         The Company has reserved 45,000,000 shares of Common Stock for issuance
under the 1996 Plan.  In order to continue to attract  new  talented  employees,
directors and  consultants,  it is proposed  that the 1996 Plan be amended,  and
that the Company  increase  the number of shares of Common  Stock  reserved  for
issuance thereunder to 65,000,000 shares of Common Stock.

Vote Required

         The affirmative  vote of the holders of a majority of the shares of the
Company's Common Stock,  Series A Preferred Stock, and Series B Preferred Stock,
voting together as a single class, present or represented by proxy at the Annual
Meeting,  is  required  to  approve  the  amendment  to the 1996 Plan which will
increase the number of shares of Common Stock  reserved for issuance  thereunder
by 20,000,000  shares,  bringing the total number of shares  issuable  under the
1996 Plan to 65,000,000.


           THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
                                OF THE 1996 PLAN


                                                                              18

                                 PROPOSAL NO. 4
                              ELECTION OF DIRECTORS


         A slate of eight (8)  Directors  will be presented  for election at the
Annual  Meeting,  each of whom will  serve  until  the next  annual  meeting  of
shareholders or until a successor is elected or appointed and qualified or until
the  Director's  earlier  resignation  or  removal.  The  Company's  Articles of
Incorporation  provide  that the  holders  of the Series B  Preferred  Stock are
entitled, voting as a separate class, to elect two (2) members of the Board. The
holders of the Common Stock and Series A Preferred  Stock,  voting together as a
single class, are entitled to elect the balance of the members of the Board. Two
(2)  nominees  have been  nominated  for election by the holders of the Series B
Preferred  Stock and six (6) nominees  have been  nominated  for election by the
holders of the Common Stock and Series A Preferred Stock.

         The Series B Preferred  Stock proxy  holders  will vote,  as a separate
class,  the proxies received by them to elect as the Series B nominees Donald H.
Dreyer and John J. Micek III.  The  Common  Stock and Series A  Preferred  Stock
proxy  holders will vote,  as a single  class,  the proxies  received by them to
elect as their six (6) nominees: Bjorn Ahlstrom,  Malcolm R. Currie, Ph.D., Carl
D. Perry,  Anthony N.  Rawlinson,  Edwin O.  Riddell and John R.  Wallace.  With
respect to any proposed nominee,  if that nominee is unable or declines to serve
as a Director at the time of the Annual  Meeting,  the proxies will be voted for
any nominee designated by the proxy holders to fill such vacancy. However, it is
not  expected  that any  nominee  will be unable or will  decline  to serve as a
Director. If shareholders nominate persons other than the Company's nominees for
election as Directors,  the Common Stock, Series A Preferred Stock, and Series B
Preferred  Stock  proxy  holders  may  vote  all  proxies  received  by  them in
accordance with  cumulative  voting if invoked to assure the election of as many
of the Company's nominees as possible. The term of office of each person elected
as a Director will continue  until the next annual  meeting of  shareholders  or
until the  Director's  successor  has been  elected  or  appointed  or until the
Director's earlier resignation or removal.

Certain  information  about the nominees for the Board of Directors is furnished
below.

Proposed Common Stock and Series A Preferred Stock Nominees:

         Bjorn Ahlstrom,  Director. Mr. Ahlstrom was appointed to fill a vacancy
on the Board of Directors in June 2004. Mr.  Ahlstrom  currently is a consultant
in the heavy-duty  vehicle  industry.  Mr. Ahlstrom retired as Chairman of Volvo
Group North  America,  Inc. on April 1, 2004.  Prior to that,  Mr.  Ahlstrom was
President and Chief Executive  Officer of Volvo North America  Corporation  from
1971 until 1994.  During this term,  Volvo North America  Corporation  owned and
operated  Volvo's  businesses  in  the  United  States  and  Canada.  Under  Mr.
Ahlstrom's  leadership,  VNAC grew from a $50 million car  importer in the early
1970s to a $6 billion company with  manufacturing  and marketing  operations for
cars,  trucks,  marine engines,  and financial  services.  In 1981, Mr. Ahlstrom
received  the Royal Order of the North Star from King Carl XVI Gustaf of Sweden.
The United  States  Government  awarded  him the Medal of Peace and  Commerce in
1983. He received the Ellis Island Medal of Honor in 1990. Mr. Ahlstrom has been
awarded honorary Doctor of Law degree from St John's University,  NY, and Ramapo
College of New Jersey.

         Malcolm R. Currie,  Ph.D.,  Director.  Dr. Currie was re-elected to the
Board of Directors in 1999.  Dr.  Currie had served as a Director of the Company
from 1995 through 1997.  From 1986 until 1992, Dr. Currie served as Chairman and
Chief Executive Officer of Hughes Aircraft Co., and from 1985 until 1988, he was
the Chief Executive Officer of Delco Electronics.  His career in electronics and
management  has included  research with many patents and papers in microwave and
millimeter wave electronics,  laser,  space systems,  and related fields. He has
led major programs in radar,  commercial satellites,  communication systems, and
defense  electronics.  He served as  Undersecretary  of Defense for Research and
Engineering,  the Defense Science Board,  and currently  serves on the Boards of
Directors of LSI Logic,  Inamed Corp.,  Innovative Micro Technology,  Regal One,
and Currie  Technologies.  He is past  president  of the  American  Institute of
Aeronautics  and  Astronautics,  and is a Member of the Board of Trustees of the
University of Southern California.

         Carl D. Perry,  Chief Executive  Officer,  President and Director.  Mr.
Perry  served as a Director and as an  Executive  Vice  President of the Company
from July 1993 until  November  1997. In November 1997, Mr. Perry was elected as
Chairman  of the Board and  Chief  Executive  Officer  of the  Company,  and was
elected President in June 1999.


                                                                              19

In July 1999,  Mr. Perry resigned his position as Chairman of the Board to allow
Mr. Anthony  Rawlinson to become  Chairman.  He served as Acting Chief Financial
Officer of the Company from November 1997 to March 2004. Mr. Perry  continues as
Chief  Executive  Officer and President and as a Director.  Prior to joining the
Company, he was an international aerospace and financial consultant from 1989 to
1993. Mr. Perry served as Executive  Vice  President of Canadair Ltd.,  Canada's
largest aerospace  corporation,  from 1984 to 1989, where he conducted strategic
planning,  worldwide marketing,  and international joint ventures.  From 1979 to
1983,  Mr.  Perry  served as  Executive  Vice  President  of the  Howard  Hughes
Helicopter  Company,  now  known  as  Boeing  Helicopter  Company,  where he was
responsible  for  general  management,   worldwide  business  development,   and
international operations.

         Anthony  N.  Rawlinson,  Chairman  of  the  Board.  Mr.  Rawlinson  was
appointed  non-executive  Chairman of the Board in July 1999.  Since  1996,  Mr.
Rawlinson has been Managing  Director of the Global Value  Investment  Portfolio
Management Pte. Ltd., a Singapore based  International  Fund Management  Company
managing  discretionary  equity portfolios for  institutions,  pension funds and
clients  globally.  Mr.  Rawlinson  has more than  twenty  years  experience  in
international  fund  management.  Mr.  Rawlinson is a specialist in analysis and
investment in high technology  companies.  From 1996 to 1999, Mr.  Rawlinson was
Chairman  of  IXLA  Ltd.,  an  Australian  public  company  in the  field  of PC
photography  software and its wholly  owned  subsidiary,  photohighway.com.  Mr.
Rawlinson  is also a Chairman of  Cardsoft,  Inc.,  a high  technology  software
company with secure java based solutions for mobile phones and handheld devices.

         Edwin O. Riddell, Director. Mr. Riddell has served as a Director of the
Company since June 1995.  From March 1999 to the present,  Mr.  Riddell has been
President of CR  Transportation  Services,  a consultant to the electric vehicle
industry.  From January 1991 to March 1999, Mr. Riddell has served as Manager of
the  Transportation  Business Unit in the Customer Systems Group at the Electric
Power Research Institute in Palo Alto, California,  and from 1985 until November
1990,  he  served  with  the  Transportation  Group,  Inc.  as  Vice  President,
Engineering,  working on electric public  transportation  systems.  From 1979 to
1985,  he was Vice  President and General  Manager of Lift U, Inc.,  the leading
manufacturer  of  handicapped  wheelchair  lifts for the transit  industry.  Mr.
Riddell has also worked with Ford,  Chrysler,  and General Motors in the area of
auto design  (styling),  and has worked as a member of senior  management  for a
number of public transit vehicle manufacturers. Mr. Riddell has been a member of
the  American  Public  Transportation   Association's  (APTA)  Member  Board  of
Governors for over 15 years,  and has served on APTA's Board of  Directors.  Mr.
Riddell was also Managing Partner of the U.S. Advanced Battery Consortium.

         John R. Wallace, Director. Mr. Wallace was elected as a Director of the
Company in December 2002. He retired from the Ford Motor Company in 2002, and is
currently  serving  as a  consultant  to the  Company  for fuel cell and  hybrid
electric vehicle strategy. Prior to his retirement, he was executive director of
TH!NK Group. He has been active in Ford Motor Company's alternative fuel vehicle
programs  since  1990,  serving  first  as:  Director,   Technology  Development
Programs;  then as Director,  Electric Vehicle Programs;  Director,  Alternative
Fuel Vehicles and finally Director,  Environmental Vehicles. He is past Chairman
of the Board of Directors  of TH!NK  Nordic;  he is past  chairman of the United
States  Advanced  Battery  Consortium;   Co-Chairman  of  the  Electric  Vehicle
Association  of the  Americas,  and past  Chairman of the  California  Fuel Cell
Partnership.  He  served  as  Director  of Ford's  Electronic  Systems  Research
Laboratory,  Research  Staff,  from 1988  through  1990.  Prior to joining  Ford
Research  Staff,  he was president of Ford  Microelectronics,  Inc., in Colorado
Springs,  Colorado.  His other experience  includes work as program manager with
Intel Corporation.  He also served as Director,  Western Development Center, for
Perkin-Elmer Corporation and as President of Precision Microdesign, Inc.

Proposed Series B Preferred Stock Nominees:

         Donald H. Dreyer,  Director.  Mr.  Dreyer was elected a Director of the
Company in January  1997.  Mr.  Dreyer is President and CEO of Dreyer & Company,
Inc., a consultancy in credit,  accounts  receivable  and  insolvency  services,
which he founded in 1990.  Mr.  Dreyer  has served as  Chairman  of the Board of
Credit  Managers  Association  of  California  during  the 1994 to 1995 term and
remains a current member. Mr. Dreyer is also a member of the American Bankruptcy
Institute and the National Advisory Committee of Dun & Bradstreet, Inc.

         John J. Micek III,  Director.  Mr.  Micek was elected a Director of the
Company in April 1999. Mr. Micek served as the Company's Vice President, General
Counsel and  Secretary  from March 1994 to March 1997.  From June 1997 to August
1998,  Mr.  Micek was COO Sboof  Pelion  Systems,  Inc.  Mr.  Micek is currently
Managing  Director  of


                                                                              20

Silicon Prairie Partners,  LP. He also is a practicing attorney  specializing in
corporate  finance  and  business  development  in Palo Alto,  CA. He is a Board
Member of Universal  Warranty and also sits on the boards of UTEK Corp.,  Pelion
Systems, Inc., Universal Assurors Agency, Inc., and Armanino Foods.

                  THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
                    THE ELECTION OF THE NOMINEES NAMED ABOVE

Directors, Nominees and Executive Officers

         The following table sets forth certain  information with respect to the
Directors, nominees for Directors and executive officers of the Company:

         Directors, Nominees and Executive Officers

Name                                       Age         Position
Anthony N. Rawlinson                       48          Chairman of the Board
Carl D. Perry                              71          Chief Executive Officer,
                                                       President and Director
Malcolm R. Currie, Ph.D. (2)               77          Director
Donald H. Dreyer (1)                       66          Director
John J. Micek III (1)                      51          Director
Edwin O. Riddell (2)                       61          Director
John R. Wallace                            55          Director
Bjorn Ahlstrom                             70          Director
Larry B. Lombard                           43          Acting Chief Financial
                                                       Officer
Edward M. Moore                            42          Chief Operating Officer

----------------------------

(1)   Member of the Audit Committee

(2)   Member of the Compensation Committee


         Biographical information regarding Directors and nominees for Directors
is set forth above.

         Larry B.  Lombard,  Acting Chief  Financial  Officer.  Mr.  Lombard was
appointed  Acting Chief  Financial  Officer in March 2004.  He has served as the
Company's  Director of Finance and  Administration  since 1998.  Mr. Lombard has
over  twenty  years  experience  in  management  and finance for a wide range of
companies including software development,  insurance,  petroleum and banking. He
received his BA in Business  Economics,  University of California at Los Angeles
and his MBA in Global Management from the University of Phoenix.

         Edward M. Moore, Chief Operating Officer. Mr. Moore was appointed Chief
Operating  Officer in March 2004. He has served as the Company's Vice President,
Marketing and Sales since 2000.  Mr. Moore was vice  president,  sales for E-Bus
from 1999 to 2000.  Mr.  Moore  has  experience  in  creating  and  implementing
strategic marketing plans for both domestic and international markets. He has an
extensive background in the alternative fuels and drive system industry,  having
worked  with GM Hughes,  AeroEnvironment  and E-Bus in both the  technology  and
marketing  fields.  He received his BS,  Occupational  Education  from  Southern
Illinois University and his MBA from the University of Phoenix.

Relationships Among Directors or Executive Officers

         There are no family relationships among any of the Directors,  nominees
or executive officers of the Company.


                                                                              21

         Meetings and  committees of the Board of Directors of Rule  4200(a)(15)
of the National  Association  of  Securities  Dealers'  listing  standards.  All
members of the Board of Directors  participate in the  consideration of director
nominees.

Nomination of Directors

         The  Board  of  Directors  does  not  have  a  separately   constituted
nominating  committee.  The Board believes that it is appropriate under existing
circumstances not to have a separate  nominating  committee because the Board is
comprised of only seven existing  members (there is currently one vacancy on the
Board), six of whom are "independent"  within the meaning of Rule 4200(a)(15) of
the National  Association of Securities Dealers' listing standards.  All members
of the Board of Directors participate in the consideration of director nominees.
The  Board  of  Directors  does  not have a formal  policy  with  regard  to the
consideration of any director candidates  recommended by shareholders.  However,
the Board of Directors would consider for possible nomination qualified nominees
recommended  by  shareholders.  Shareholders  who wish to  propose  a  qualified
nominee for consideration  should submit complete information as to the identity
and qualifications of that person to the Secretary of the Company at 19850 South
Magellan Drive, Torrance,  California 90502 sufficiently in advance of an annual
meeting.  Absent special circumstances,  the Board of Directors will continue to
nominate qualified incumbent Directors whom the Board of Directors believes will
continue to make important  contributions  to the Board of Directors.  The Board
generally requires that nominees be persons of sound ethical character,  be able
to represent all shareholders  fairly,  have no material  conflicts of interest,
have demonstrated professional achievement,  have meaningful experience and have
a general  appreciation of the major business issues facing Enova.  The Board of
Directors does not have a formal process for identifying and evaluating nominees
for Director.

Compensation of Directors

         Directors  who  are  employees  of  the  Company  do  not  receive  any
compensation  for their services as Directors.  All Directors are reimbursed for
expenses incurred in connection with attending Board and committee meetings.

         In  September  1999,  the  Company's  Board  of  Directors  unanimously
approved  a  compensation  package  for  outside  directors  consisting  of  the
following  consideration.  For each  meeting  attended in person,  each  outside
director is to receive  $1,000 in cash and $2,000 of stock valued on the date of
the meeting at the  average of the closing ask and bid prices on that date.  For
each telephonic Board meeting attended, each outside director is to receive $250
in cash and $250 of stock  valued on the date of the  meeting at the  average of
the  closing  ask and bid  prices  on that  date.  For each  meeting  of a Board
committee  attended in person, the committee chairman is to receive $500 in cash
and $500 of  stock  valued  on the date of the  meeting  at the  average  of the
closing ask and bid prices on that date.  As of January  2002,  this package was
amended to include  like  compensation  of $500 in cash and $500 in stock to all
committee  members in attendance at each  committee  meeting.  All Directors are
also  reimbursed for expenses  incurred in connection  with attending  Board and
committee  meetings.  In May 2004, the Company's Board of Directors  unanimously
approved an increase in  compensation  for outside  directors  which doubled the
amount of cash and stock paid for the various directors' meetings.

         For and with respect to fiscal 2003,  754,167  shares of the  Company's
Common Stock were issued under the above described compensation plan for outside
directors.  As of the record date for the Annual Meeting,  2,841,476 shares have
been issued under the  compensation  plan for  Directors  since its inception in
September 1999.

Certain Relationships and Related Transactions

         The following are certain transactions entered into between the Company
and its officers,  directors,  nominees for director and principal  shareholders
and their affiliates since January 1, 2003:

James M. Strock

         The Company has entered into a consulting agreement with James Strock &
Company,  a corporation  wholly owned by James M. Strock. Mr. Strock served as a
Director  of the  Company  from July 2000 until his  resignation  in March 2004.
Under the terms of that consulting agreement,  the Company retained Mr. Strock's
services for a minimum monthly retainer of $3,000 plus reasonable expenses. This
consulting agreement was terminated in April 2003. During 2003, the Company paid
Mr. Strock $17,000 in cash for consulting  services and expenses and $12,000 for
directors fees


                                                                              22

(which latter amount includes the cash paid and the value of the stock issued to
him pursuant to the outside directors compensation package described above).

John R. Wallace

         The  Company  has  entered  into a  consulting  agreement  with John R.
Wallace  wherein the Company  compensates  Mr. Wallace at the rate of $1,500 per
day plus reasonable  expenses for consulting  services rendered.  Mr. Wallace is
not  compensated per this agreement when acting in the capacity of a director of
the  Company.  During  2003,  the Company  paid Mr.  Wallace  $6,000 in cash for
consulting  services and expenses and $12,000 for  directors  fees (which latter
amount  includes the cash paid and the value of the stock issued to him pursuant
to the outside directors' compensation package described above).

Donald H. Dreyer

         The Company utilizes the consulting service of Donald H. Dreyer wherein
the Company  compensates Mr. Dreyer at the rate of $150 per hour plus reasonable
expenses for consulting  services  rendered.  Mr. Dreyer is not compensated when
acting in the  capacity of a director  of the Company  other than the fees noted
above.  During 2003,  the Company paid Mr. Dreyer $10,000 in cash for consulting
services  and  expenses  and $12,000 for  directors  fees (which  latter  amount
includes  the cash paid and the value of the stock issued to him pursuant to the
outside directors' compensation package described above).


                                                                              23

                  EXECUTIVE COMPENSATION AND OTHER INFORMATION

Summary Compensation Table

         The following table sets forth all compensation earned by the Company's
Chief Executive Officer and each of the other most highly compensated  executive
officers of the Company whose annual salary and bonus exceeded  $100,000 for the
years ended December 31, 2003, 2002 and 2001 (collectively, the "Named Executive
Officers").  Mr.  Carl D. Perry was the sole  executive  officer of the  Company
whose salary exceeded $100,000 as of December 31, 2003.



                                Summary Compensation Table
Name and Principal Position                            Annual Compensation
-------------------------------                      ------------------------
                                                       Year        Salary         Bonus
                                                                     ($)           ($)
                                                     ----------  ------------   -----------
                                                                       
Carl D. Perry (1)                                      2003        139,615         --
Chief Executive Officer and President                  2002        150,000         --
                                                       2001        160,989        30,000
                                                                                (earned
                                                                                 in 2002)

----------------------------

(1)   Mr. Perry was elected as Chief  Executive  Officer in November  1997.  Mr.
      Perry's  current  salary is $120,000 per year, a 20%  voluntary  reduction
      from the prior year's salary.  Mr. Perry served as Acting Chief  Financial
      Officer  during the periods  reflected in the above chart and through June
      22, 2004.

Option/SAR Grants

         No grants of stock options or stock  appreciation  rights ("SARs") were
made during the year ended December 31, 2003 to the Named Executive Officer.

Option Exercises and Option Values

         The Named  Executive  Officer did not exercise  any options  during the
year ended December 31, 2003. All options of the Named Executive Officer expired
prior to December 31, 2003 without exercise.

Compensation Committee Interlocks and Insider Participation

         The Compensation Committee of the Board of Directors currently consists
of Edwin O. Riddell and Malcolm R. Currie,  Ph.D. Neither of such persons was an
officer or employee of Enova during the fiscal year ended December 31, 2003, has
previously  been an employee of the  Company nor had any  relationship  with the
Company other than as a Director of the Company.

Compensation Committee Report on Executive Compensation

         Compensation  Policy. The Company's  Compensation Policy as established
by the  Compensation  Committee  of the  Board of  Directors  is that  executive
officers' total annual cash compensation should vary with the performance of the
Company and that long-term incentives awarded to such officers should be aligned
with  the  interest  of the  Company's  shareholders.  The  Company's  executive
compensation  program is designed to attract and retain  executive  officers who
will contribute to the Company's long-term success, to reward executive officers
who  contribute to the Company's  financial  performance  and to link  executive
officer compensation and shareholder  interests through the 1996 Plan. The terms
and  conditions of these plans were more fully  discussed in the Company's  Form
S-1 Registration Statement filed with the SEC on July 26, 2002.

         Compensation  of  the  Company's  executive  officers  consists  of two
principal components:  salary and long-term incentive compensation consisting of
stock option grants.


                                                                              24

         Base  Salary and Bonus.  Base  salary and bonus of the Chief  Executive
Officer  as  established  are  determined  by a  subjective  assessment  of  the
executive officer's  performance in light of the officer's  responsibilities and
position with the Company and the Company's performance during prior periods. In
evaluating  overall  Company  performance,  the primary focus is upon  financial
performance for the relevant annual period  measured by operating  income.  Base
salaries for all executive  officers are reviewed  periodically and from time to
time  by  the  Compensation  Committee  and  adjusted  appropriately.  Incentive
compensation is reviewed  periodically and from time to time by the Compensation
Committee and adjusted accordingly.

         Long-term  Incentive  Compensation.  The Company  believes  that option
grants (i) align executive  interests with  shareholder  interests by creating a
direct link between  compensation and shareholder return, (ii) give executives a
significant,  long-term interest in the Company's success, and (iii) help retain
key executives in a competitive market for executive talent.

         The Company's 1996 Plan authorizes the Committee to grant stock options
to employees and consultants,  including  executives.  Currently,  option grants
will  only be made  under  the 1996  Plan and will be made  from time to time to
executives  whose  contributions  have or will have a significant  impact on the
Company's long-term performance.  The Company's  determination of whether option
grants are appropriate each year is based upon individual  performance  measures
established for each  individual.  Options are not  necessarily  granted to each
executive during each year. Options granted to executive officers typically vest
in equal monthly installments over a period of five years and expire either five
or ten years from the date of grant.  No stock options were granted to the Named
Executive Officer during fiscal 2003.

         Compensation   of  Chief   Executive   Officer.   In  determining   the
compensation  of Carl D.  Perry,  the  Chief  Executive  Officer,  the  Board of
Directors considered the expense to replace an executive of Mr. Perry's caliber.
The Board therefore established a compensation package for 2003 consisting of an
annual salary of $150,000 plus a bonus to be determined based on the performance
of the Company. In June 2003, Mr. Perry voluntarily reduced his annual salary to
$120,000 in an effort to reduce overhead of the Company.  As of the record date,
Mr.  Perry's  annual  salary has not been  reinstated  to its prior  level.  The
Compensation  Committee  believes that Mr.  Perry's  dedication,  commitment and
experience  have been vitally  important to the successful and ongoing growth of
the Company.  Mr. Perry's overall  compensation  for the year ended December 31,
2003 consisted  solely of base salary.  Mr. Perry did not receive any additional
options  or  other  stock-based  compensation  during  2003 at his  request.  In
determining Mr. Perry's compensation,  the Compensation  Committee evaluated Mr.
Perry's  personal  performance,  the  performance of the Company and Mr. Perry's
long-term  commitment to the success of the Company. The Committee believes that
the salary  paid to Mr.  Perry in 2003 was  appropriate  based on the  financial
condition of the Company.

         Compensation Policy Regarding Deductibility. The Company is required to
disclose   its  policy   regarding   qualifying   executive   compensation   for
deductibility  under Section 162(m) of the Internal  Revenue Code which provides
that,  for purposes of the regular income tax and the  alternative  minimum tax,
the otherwise  allowable deduction for compensation paid or accrued with respect
to a covered  employee of a  publicly-held  corporation is limited to $1 million
per year. For the fiscal year ended  December 31, 2003, no executive  officer of
the Company  received in excess of $1 million in compensation  from the Company.
The 1996 Plan is structured so that any compensation deemed paid to an executive
officer when he exercises an outstanding option under the Plan, with an exercise
price  equal to the fair  market  value of the option  shares on the grant date,
will qualify as performance-based  compensation which will not be subject to the
$1 million limitation. The Compensation Committee currently intends to limit the
dollar  amount of all other  compensation  payable  to the  Company's  executive
officers to no more than $1 million.

Submitted by the Compensation Committee:

Edwin O. Riddell
Malcolm R. Currie, Ph.D.


                                                                              25

Stock Performance Graph

         The graph below compares the cumulative total shareholder return on our
Common  Stock with the  cumulative  total  return on the Standard & Poor's Small
Capitalization  600 Index and an index of peer companies selected by us. A group
of five other electric vehicle companies comprise the peer group index.(1)

         The period shown  commences on December 31, 1998,  and ends on December
31, 2003,  the end of our last fiscal year.  The graph  assumes an investment of
$100 on December 31, 1998 and the reinvestment of any dividends. The comparisons
in the graph below are based upon historical data and are not indicative of, nor
intended to forecast, future performance of our Common Stock.


  [The following table was depicted as a line graph in the printed material.]


ENOVA SYSTEMS INC
                                      Cumulative Total Return
                     -------------------------------------------------------
                      12/98     12/99     12/00     12/01     12/02    12/03
ENOVA SYSTEMS, INC.  100.00   1048.39    548.39    483.87    258.06   435.48
S & P SMALLCAP 600   100.00    112.40    125.67    133.89    114.30   158.63
PEER GROUP           100.00    179.53    157.93    100.05     48.78    75.62


* $100  invested  on  12/31/98  in  stock  or  index-including  reinvestment  of
dividends.  Fiscal year ending  December 31. 1 - Companies  included in the peer
group index are Amerigon,  Inc.  (ARGN),  Electric Fuel Corp.  (EFCX) - Electric
Fuel Corp changed it's name to Arotech Corp. (ARTX),  Energy Conversion Devices,
Inc. (ENER), Unique Mobility (UQM), and Valence Technology, Inc. (VLNC).


Copyright(c)  2002 Standard & Poor's,  a division of The McGraw-Hill  Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm

Employment Agreements

         Carl  D.  Perry,  Chief  Executive  Officer  of  the  Company,  has  no
employment agreement and is an "at will" employee with the Company.


                                                                              26

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information known to the Company
with respect to  beneficial  ownership of the Company's  Common Stock,  Series A
Preferred  Stock and Series B Preferred Stock as of the record date, by (i) each
shareholder  known to the Company to own beneficially more than 5% of such class
or series of securities;  (ii) each of the Company's  Directors and nominees for
Director;  (iii)  the sole  Named  Executive  Officer;  and  (iv) all  executive
officers and Directors as a group.  Except as indicated in the footnotes to this
table and subject to applicable  community  property  laws, the persons named in
the table, based on information  provided by such persons,  have sole voting and
investment power with respect to all shares of Common Stock,  Series A Preferred
Stock and Series B Preferred Stock shown as beneficially owned by them.





                                                    Shares               Percentage of
                                                 Beneficially         Shares Beneficially        Voting
   Name and Address of Beneficial Owner            Owned (1)               Owned (2)         Percentage (3)
--------------------------------------------  --------------------   ---------------------- -----------------
                                                                                         
Jagen, Pty., Ltd.                                     145,000,000             33.22%              35.62%
9 Oxford Street, South Ybarra 3141
Melbourne, Victoria Australia

Hyundai Heavy Industries, Co.                          33,076,923(4)           7.58%               5.67%
1 Cheona-Dong, Dong-Ku
Ulsan, Korea

Citibank N.A.                                          31,405,754              7.19%               7.71%
111 Wall Street, 8th Floor
New York, NY  10043

Jean Schulz                                             1,329,111(5)           *                   *
4900 Upper Ridge Road
Santa Rosa, CA 95404

Delphi Delco Electronics                                1,278,720(6)           *                   *
2151 E. Lincoln Road
Kokomo IN 46904-9005

Bjorn Ahlstrom                                                 -               *                   *

Carl D. Perry                                          10,000,500              2.29%               2.46%

Anthony N. Rawlinson                                   25,430,759              5.83%               6.25%

John J. Micek III                                       1,521,691(7)           *                   *

Edwin O. Riddell                                          675,756              *                   *

Malcolm R. Currie, Ph.D.                                  565,126              *                   *

Donald H. Dreyer                                          488,620              *                   *

John R. Wallace                                           159,524              *                   *

Larry B. Lombard                                        1,800,000(8)           *                   *

Edward M. Moore                                         1,022,256(9)           *                   *

All Directors and executive officers                   41,664,232(10)          9.54%               9.87%
as a group (9 persons)


----------------------
*        Indicates less than 1%

(1)      Number of Common Stock shares includes Series A Preferred Stock, Series
         B Preferred  Stock and Common Stock shares  issuable  pursuant to stock
         options,  warrants and other  securities  convertible into Common Stock
         beneficially  held by the  person  or class in  question  which  may be
         exercised or converted within 60 days after June 22, 2004.

(2)      The  percentages  are based on the  number  of shares of Common  Stock,
         Series A  Preferred  Stock and Series B  Preferred  Stock  owned by the
         shareholder  divided  by  the  sum  of:  (i)  the  total  Common  Stock
         outstanding,   (ii)  the  Series  A  Preferred   Stock  owned  by  such
         shareholder;   (iii)  the  Series  B  Preferred  Stock  owned  by  such
         shareholder;  and (iv) Common  Stock  issuable  pursuant  to  warrants,
         options and other convertible  securities exercisable or convertible by
         such shareholder within sixty (60) days after June 22, 2004.


                                                                              27

(3)      The  percentages  are based on the  number  of shares of Common  Stock,
         Series A Preferred  Stock and/or Series B Preferred  Stock owned by the
         shareholder  divided  by  the  sum  of:  (i)  the  total  Common  Stock
         outstanding,  (ii) the total Series A Preferred  Stock  outstanding and
         (iii) the total Series B Preferred Stock  outstanding.  This percentage
         calculation has been included to show more accurately the actual voting
         power of each of the  shareholders,  since the  calculation  takes into
         account  the fact that the  outstanding  Series A  Preferred  Stock and
         Series B Preferred  Stock are entitled to vote together with the Common
         Stock as a single  class on  certain  matters  to be voted  upon by the
         shareholders.

(4)      Includes 10,000,000 shares of Common Stock issuable pursuant to a Stock
         Purchase  Agreement  between Hyundai Heavy  Industries,  Ltd. and Enova
         Systems,  Inc.  for  $1.5M  of  Enova  restricted  common  stock  at an
         estimated  prices  of $0.15  per share  based on the  weighted  average
         market  closing price of Enova's  common stock at June 22, 2004 for the
         prior ninety day period.

(5)      The number of shares shown represents the ownership of 1,329,111 shares
         of Series A  Preferred  Stock,  each of which is  convertible  into one
         share of Common Stock. These 1,329,111 shares represent more than 5% of
         the outstanding shares of Series A Preferred Stock.

(6)      The number of shares shown  represents  the ownership of 639,360 shares
         of Series B  Preferred  Stock,  each of which is  convertible  into two
         shares of Common Stock.  These 639,360 shares represent more than 5% of
         the outstanding shares of Series B Preferred Stock.

(7)      Includes  1,000,000  shares of Common Stock  issued to Silicon  Prairie
         Partners,  LP, a limited  partnership in which John J. Micek III is the
         general partner.

(8)      Includes  1,000,000  shares of Common Stock issuable  pursuant to stock
         options exercisable at a price of $.16 per share.

(9)      Includes  1,000,000  shares of Common Stock issuable  pursuant to stock
         options exercisable at prices from $.17 to $.20 per share.

(10)     Includes  2,000,000  shares of Common Stock issuable  pursuant to stock
         options exercisable at prices from $.16 to $.20 per share and 1,000,000
         shares of  Common  Stock  issued to  Silicon  Prairie  Partners,  LP, a
         limited partnership in which John J. Micek III is the general partner.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the Exchange  Act requires  persons who own more than
10% of the  Company's  Common Stock and the  Company's  Directors  and executive
officers  (collectively,  "Reporting  Persons") to file reports of ownership and
changes in ownership of the Company's  equity  securities to the  Securities and
Exchange  Commission.  Copies of these reports are also required to be delivered
to the Company.

         The Company believes,  based solely on its review of the copies of such
reports received or written representations from certain Reporting Persons, that
each of Messrs.  Rawlinson,  Riddell, Currie, Micek, Wallace and Dreyer, each of
whom is a Director of Enova,  and James M. Strock (who resigned as a Director of
Enova in March 2004),  failed to file on a timely basis three  separate Form 4s,
each of which Form 4 reported one transaction,  namely the issuance of shares of
Common Stock in partial  payment of directors' fees for August and November 2003
and February 2004.


                                                                              28

                                 PROPOSAL NO. 5
               RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS


         It is the Company's  policy that the Audit  Committee is to approve the
engagement of the Company's independent  auditors.  The Audit Committee approved
of the engagement of Singer Lewak Greenbaum & Goldstein LLP ("Singer  Lewak") as
the Company's independent auditors on November 21, 2003 to prepare the Company's
audited financial  statements for the year ended December 31, 2003. Singer Lewak
has offices in several locations throughout Southern California and is among the
top twenty auditing firms with regard to the number of public companies audited.
The Audit  Committee  subsequently  approved the  engagement  of Singer Lewak to
continue as the Company's  independent  auditors for the  Company's  year ending
December 31, 2004. In the event that  ratification of this selection of auditors
is not approved by a majority of the shares of Common Stock,  Series A Preferred
Stock, and Series B Preferred Stock voting at the Annual Meeting in person or by
proxy, management will review its future selection of auditors.

         A  representative  of Singer  Lewak is  expected  to be  present at the
Annual Meeting.  The representative will have an opportunity to make a statement
and is expected to be available to respond to appropriate questions.

         Moss Adams LLP ("Moss  Adams") had served as the  independent  auditors
for the Company for the fiscal years ended December 31. 2001 and 2002 and during
the interim  periods from January 1,2003 through  November 21, 2003. On November
21,  2003,  the Company  dismissed  Moss Adams and engaged  Singer  Lewak as its
independent  auditors  to audit its  financial  statements  for its year  ending
December 31, 2003. This decision was approved by the Company's Audit  Committee.
Prior  to such  engagement,  the  Company  did not  consult  with  Singer  Lewak
regarding the application of accounting  principles to a specific,  completed or
contemplated transaction, or the type of audit opinion that might be rendered on
the Company's financial statements.

         During the fiscal  years  ended  December  31,  2001 and 2002,  and the
subsequent interim period through November 21, 2003, there were no disagreements
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure or auditing scope or procedure, which disagreements,  if not resolved
to the satisfaction of Moss Adams, would have caused it to make reference to the
subject matter of the  disagreements in connection with its reports,  except the
following:

     o   In connection with the audit of the Company's financial  statements for
         the year ended December 31, 2002,  Moss Adams had a  disagreement  with
         the Company over the valuation of inventory.

     o   In connection with the review of the Company's financial statements for
         the quarter  ended  September 30, 2003,  Moss Adams had a  disagreement
         with the Company over the allowance for uncollectible receivables.

     o   The Audit Committee and the management of the Company discussed each of
         these  disagreements  with Moss Adams and  resolved the matters to each
         party's  satisfaction  prior to the filing of the Company's  applicable
         Form 10-K and Form 10-Q,  respectively.  The  Company  authorized  Moss
         Adams to respond fully to inquiries  from Singer Lewak  concerning  the
         matters described in the bullet points immediately above.

         During  the  fiscal  years  ended  December  31,  2001  and 2002 or the
subsequent interim period through the date of Moss Adams' dismissal,  Moss Adams
did not advise the Company that the internal controls  necessary for the Company
to develop reliable financial statements were inadequate, except as follows:

     o   In connection with its audit of the Company's financial  statements for
         the year ended  December  31,  2002 and 2001,  Moss Adams  advised  the
         Company of a reportable  condition  involving  the  Company's  internal
         controls in its  procedures  for tracking and reporting  inventory.  In
         2002,  this was  reported  to the  Company  by Moss Adams as a material
         weakness. Moss Adams informed the Company that (i) controls were not in
         place to timely detect possible  inventory  misstatements  and (ii) the
         inability  to  timely  detect  these   possible   misstatements   could
         potentially  misstate  cost of goods  sold in the  quarterly  financial
         statements.  In response,  management  timely  proposed and implemented
         certain improvements to address these concerns.


                                                                              29

         The Company  authorized  Moss Adams to respond fully to inquiries  from
Singer Lewak  concerning the matters  described in the bullet point  immediately
above.

         No report of Moss Adams on the financial  statements of the Company for
either of the years ended December 31, 2001 or 2002 contained an adverse opinion
or a disclaimer of opinion or was qualified or modified as to uncertainty, audit
scope or accounting principles.  The Company provided both Moss Adams and Singer
Lewak with a copy of the foregoing disclosures.

         Singer Lewak billed the Company the following amounts for the following
services with respect to the fiscal year ended December 31, 2003:

         Audit Fees:                $49,878
         Audit-Related Fees:        $0
         Tax Fees:                  $0
         All Other Fees:            $0

         Moss Adams billed the Company the following  aggregate  amounts for the
following  services with respect to the fiscal year ended  December 31, 2002 and
the period from January 1, 2003 through December 31, 2003:

         2003

         Audit Fees:                $110,223
         Audit-Related Fees:        $0
         Tax Fees:                  $0
         All Other Fees:            $0

         2002

         Audit Fees:                $82,916
         Audit-Related Fees:        $0
         Tax Fees:                  $0
         All Other Fees:            $0


            THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
          OF THE APPOINTMENT OF SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
                      AS THE COMPANY'S INDEPENDENT AUDITORS
                     FOR THE YEAR ENDING DECEMBER 31, 2004.


                                                                              30

Audit  Committee  Report on the Audited  Financial  Statements  and  Independent
Auditors

         The Audit  Committee  meets at least quarterly to discuss the quarterly
reviewed and annual  audited  financial  statements  of the  Company.  The Audit
Committee  held four  meetings in fiscal 2003.  Management  and the  independent
auditors are present at all Audit  Committee  meetings to discuss the  financial
statements,  the results of audits and  reviews,  and the  auditor's  management
report.

         The Audit  Committee  has reviewed and discussed  with the  independent
auditors the matters required to be discussed by SAS 61. The Audit Committee has
received the written disclosures and the letter from the independent accountants
required by  Independence  Standards  Board Standard No.1 and has discussed with
the independent accountant the independent accountant's independence.

         Based on the  review  and  discussions  referred  to  above,  the Audit
Committee  recommended  to the Board of  Directors  that the  audited  financial
statements  be  included  in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended December 31, 2003 for filing with the Commission.

Submitted by the Audit Committee,

Donald H. Dreyer
John J. Micek III

CODE OF ETHICS

         Enova has  adopted  a code of  ethics  that  applies  to its  principal
executive officer,  principal financial officer, principal accounting officer or
controller and all persons  performing  similar  functions,  if any. The Company
will provide to any person without charge,  upon request, a copy of such code of
ethics.  Requests  should  be made in  writing  to Enova  Systems,  Inc.,  Larry
Lombard,  Acting Chief Financial  Officer,  19850 S. Magellan  Drive,  Torrance,
California 90502.

SHAREHOLDER PROPOSALS AND COMMUNICATION WITH THE BOARD

         To be  considered  for  presentation  to  the  annual  meeting  of  the
Company's  shareholders  to be held in  2005,  a  shareholder  proposal  must be
received by Carl D. Perry, Chief Executive Officer,  Enova Systems,  Inc., 19850
South Magellan Drive, Torrance,  California,  no later than March 17, 2005. If a
shareholder  intends to present a proposal  at the annual  meeting to be held in
2005 but does not seek inclusion of the proposal in the proxy statement for that
meeting,  the proxy holders for that meeting will be entitled to exercise  their
discretionary  authority on that proposal if the Company does not have notice of
the proposal by May 31, 2005.

OTHER MATTERS

         The  Board  of  Directors  knows  of no other  business  which  will be
presented  at the Annual  Meeting.  If any other  business is  properly  brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in respect  thereof in  accordance  with the  judgment  of the  persons
voting the proxies.


                                                                              31

         It is  important  that the proxies be returned  promptly  and that your
shares  be  represented.  Shareholders  are  urged to mark,  date,  execute  and
promptly return the accompanying proxy card in the enclosed envelope.

                                           By Order of the Board of Directors,


                                           /s/ Carl D. Perry
                                           -------------------------
                                           Carl D. Perry
                                           President and Chief Executive Officer


July 16, 2004
Torrance, California


                                                                              32

                               ENOVA SYSTEMS, INC.
           This Proxy is Solicited on Behalf of the Board of Directors
                     For the Annual Meeting of Stockholders
                                 August 17, 2004

The  undersigned  stockholder of Common Stock and/or Series A Preferred Stock of
ENOVA SYSTEMS,  INC., a California  corporation,  hereby acknowledges receipt of
the Notice of Annual Meeting of  Shareholders  and Proxy  Statement,  each dated
July 16, 2004,  and the Annual  Report on Form 10-K for the year ended  December
31, 2003, as amended, and hereby appoints Carl D. Perry and Larry B. Lombard, or
any of them, proxies, with full power to each of substitution,  on behalf and in
the name of the  undersigned,  to represent the  undersigned  at the 2004 Annual
Meeting of Shareholders of ENOVA SYSTEMS, INC. to be held on Tuesday, August 17,
2004,  at 9:00 a.m.,  local time at the GATEWAY  HOLIDAY INN,  adjacent to ENOVA
SYSTEMS,  Inc.'s principal  executive office,  located at 19800 S. Vermont Ave.,
Torrance,  California 90502, and at any adjournment or adjournments thereof, and
to vote all  shares  of Common  Stock and  Series A  Preferred  Stock  which the
undersigned would be entitled to vote if then and there personally  present,  on
the matters set forth below.

PROPOSAL 1.    To approve an amendment  to the Restated and Amended  Articles of
               Incorporation  increasing  the  authorized  number  of  shares of
               Common Stock from 500,000,000 shares to 750,000,000 shares;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 2.    To authorize  the Board of  Directors  to effect a reverse  stock
               split of the  Company's  Common  Stock at a specific  ratio to be
               determined  by  the  Board  of  Directors  within  a  range  from
               one-for-ten  to  one-for-fifty  within a 12 month period from the
               date of the Annual Meeting;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 3.    To approve an increase in the  authorized  number of shares under
               the Enova  Systems,  Inc. 1996 Stock Option Plan from  45,000,000
               shares to 65,000,000 shares;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 4.    To  elect  Anthony  Rawlinson,  Carl D.  Perry,  Bjorn  Ahlstrom,
               Malcolm  R.  Currie,  Edwin O.  Riddell  and John R.  Wallace  as
               Directors of Enova  Systems,  Inc. to serve until the next Annual
               Meeting of Shareholders or until their respective  successors are
               elected and  qualified;

               [ ] FOR all nominees listed below  [ ] WITHHOLD AUTHORITY to vote
                                                     (except as indicated) for
                                                      all nominees listed below

               If you wish to  withhold  authority  to vote  for any  individual
               nominee,  strike  a  line  through  the  nominee's  name  in  the
               following list below:

                    Anthony Rawlinson,  Carl D. Perry,  Bjorn Ahlstrom,
                   Malcolm R. Currie,  Edwin O. Riddell,  John R. Wallace


PROPOSAL 5.    To ratify the  appointment of Singer Lewak  Greenbaum & Goldstein
               LLP as the  independent  auditors  for the  Company  for the year
               ending December 31, 2004;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN



                                                                              33

         THIS PROXY WILL BE VOTED AS DIRECTED  OR, IF NO CONTRARY  DIRECTION  IS
INDICATED,  WILL BE VOTED FOR ALL OF THE  PROPOSALS  SET FORTH ABOVE AND AS SAID
PROXIES MAY DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.

                                             -----------------------------------
                                                          Signature

                                             -----------------------------------
                                                          Signature

                                             Dated:_________________________2004


                                             This proxy should be marked,  dated
                                             and  signed  by the  stockholder(s)
                                             exactly as his or her name  appears
                                             hereon,  and  returned  promptly in
                                             the  envelope   enclosed.   Persons
                                             signing  in  a  fiduciary  capacity
                                             should so  indicate.  If shares are
                                             by joint  tenants  or as  community
                                             property, both should sign.



                                                                              34


                               ENOVA SYSTEMS, INC.
           This Proxy is Solicited on Behalf of the Board of Directors
                     For the Annual Meeting of Stockholders
                                 August 17, 2004

The undersigned  stockholder of Series B Preferred Stock of ENOVA SYSTEMS, INC.,
a California  corporation,  hereby acknowledges  receipt of the Notice of Annual
Meeting of Shareholders and Proxy  Statement,  each dated July 16, 2004, and the
Annual  Report on Form 10-K, as amended,  for the year ended  December 31, 2003,
and hereby appoints Carl D. Perry and Larry B. Lombard, or any of them, proxies,
with  full  power  to each of  substitution,  on  behalf  and in the name of the
undersigned,  to  represent  the  undersigned  at the  2004  Annual  Meeting  of
Shareholders of ENOVA SYSTEMS,  INC. to be held on Tuesday,  August 17, 2004, at
9:00 a.m.,  local time at the GATEWAY  HOLIDAY INN,  adjacent to ENOVA  SYSTEMS,
Inc.'s principal executive office,  located at 19800 S. Vermont Ave.,  Torrance,
California  90502, and at any adjournment or adjournments  thereof,  and to vote
all shares of Series B Preferred Stock which the  undersigned  would be entitled
to vote if then and there personally present, on the matters set forth below.

PROPOSAL 1.    To approve an amendment  to the Restated and Amended  Articles of
               Incorporation  increasing  the  authorized  number  of  shares of
               Common Stock from 500,000,000 shares to 750,000,000 shares;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 2.    To authorize  the Board of  Directors  to effect a reverse  stock
               split of the  Company's  Common  Stock at a specific  ratio to be
               determined  by  the  Board  of  Directors  within  a  range  from
               one-for-ten to one-for-fifty at any time within a 12 month period
               from the date of the Annual Meeting;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 3.    To approve an increase in the  authorized  number of shares under
               the Enova  Systems,  Inc. 1996 Stock Option Plan from  45,000,000
               shares to 65,000,000 shares;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


PROPOSAL 4.    To elect  Donald H. Dreyer and John J. Micek III as  Directors of
               Enova  Systems,  Inc. to serve  until the next Annual  Meeting of
               Shareholders or until their respective successors are elected and
               qualified;

               [ ] FOR all nominees listed below  [ ] WITHHOLD AUTHORITY to vote
                                                   (except as indicated) for all
                                                    nominees listed below


               If you wish to  withhold  authority  to vote  for any  individual
               nominee,  strike  a  line  through  the  nominee's  name  in  the
               following list below:

                       Donald H. Dreyer,  John J. Micek III


PROPOSAL 5.    To ratify the  appointment of Singer Lewak  Greenbaum & Goldstein
               LLP as the  independent  auditors  for the  Company  for the year
               ending December 31, 2004;

                 [ ] FOR                 [ ] AGAINST              [ ] ABSTAIN


                                                                              35

         THIS PROXY WILL BE VOTED AS DIRECTED  OR, IF NO CONTRARY  DIRECTION  IS
INDICATED,  WILL BE VOTED FOR ALL OF THE  PROPOSALS  SET FORTH ABOVE AND AS SAID
PROXIES MAY DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.


                                             -----------------------------------
                                                         Signature


                                             -----------------------------------
                                                         Signature


                                             Dated:_________________________2004


                                             This proxy should be marked,  dated
                                             and  signed  by the  stockholder(s)
                                             exactly as his or her name  appears
                                             hereon,  and  returned  promptly in
                                             the  envelope   enclosed.   Persons
                                             signing  in  a  fiduciary  capacity
                                             should so  indicate.  If shares are
                                             by joint  tenants  or as  community
                                             property, both should sign.



                                                                              36

                                    EXHIBIT A

            FORM OF AMENDMENT TO INCREASE AUTHORIZED NUMBER OF SHARES


         The second sentence of Article III of the Restated and Amended Articles
of  Incorporation  of this  Corporation  is amended to read in its  entirety  as
follows:

         "This  Corporation  is  authorized to issue Seven Hundred Fifty Million
(750,000,000) shares of Common Stock and Thirty-five Million (35,000,000) shares
of Preferred Stock."



                                                                              37
                                    EXHIBIT B

                         FORM OF REVERSE SPLIT AMENDMENT

                         FORM OF REVERSE SPLIT AMENDMENT


         Assuming  that  Proposal 1 is approved and the  amendment  contemplated
thereby is effected,  the text for an amendment to effectuate a proposed reverse
stock split would be in substantially the following form:

         "This  Corporation  is  authorized to issue Seven Hundred Fifty Million
(750,000,000) shares of Common Stock and Thirty-five Million (35,000,000) shares
of  Preferred  Stock.  Upon the  amendment  of Article III of the  Restated  and
Amended  Articles  of  Incorporation  of  this  Corporation,   each  issued  and
outstanding  share of Common Stock of this  Corporation  shall be converted into
[____]  share of Common  Stock,  there being no  conversion  of any  outstanding
shares of Preferred Stock. In lieu of any fractional shares to which a holder of
Common Stock would otherwise be entitled,  this Corporation shall pay cash equal
to (a) the average of the high-bid and  low-asked per share prices of the Common
Stock as reported on the NASDAQ  electronic  "Bulletin  Board" on the  effective
date  of the  reverse  stock  split  (appropriately  adjusted  as the  Board  of
Directors may determine)  multiplied by (b) the number of shares of Common Stock
held by such holder that would otherwise have been exchanged for such fractional
share interest."