**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**Washington,
      D.C. 20549**


**FORM
      10-Q**




**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the quarterly period ended: September 30, 2008****Or****o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**Commission
      File Number: 000-50983**




**ECOTALITY,
      INC.**


(Exact
      name of registrant as specified in its charter)




**Nevada**
            **68-0515422**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**6821
                E Thomas Road, Scottsdale, Arizona**
            **85251**(Address
                of principal executive offices)
            (Zip
                Code)





**(480)
      219-5005**





(Registrant’s
      telephone number, including area code)




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


Yes x No o





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




Large
                accelerated filero
            
            Accelerated
                filero
            
            Non-accelerated
                filero
              (Do
                not check of a smaller reporting company)
            
            Smaller
                reporting companyþ




Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act).




Yes o No x




**Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of November 13, 2008**


**129,297,861**







**ECOtality,
      Inc.**




**Table
      of Contents**





PART
                I - FINANCIAL INFORMATIONFinancial
                Statements:Condensed
                Consolidated Balance Sheet
            
            
            3Condensed
                Consolidated Statements of Operations
            
            
            4Condensed
                Consolidated Statements of Cash Flows
            
            
            5Notes
                to Condensed Consolidated Financial Statements
            
            
            6Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            
            
            22Quantitative
                and Qualitative Disclosures about Market Risk
            
            
            33Controls
                and Procedures
            
            
            33PART
                II - OTHER INFORMATION
            
            
            34Legal
                Proceedings
            
            
            34Risk
                Factors
            
            
            34Unregistered
                Sales of Equity Securities
            
            
            34Defaults
                Upon Senior Securities
            
            
            35Submission
                of Matters to a Vote of Security Holders
            
            
            35Exhibits
                and Reports on Form 8-K
            
            
            36SIGNATURES
            
            
            38


2





**ECOtality,
      Inc.**


**Condensed
      Consolidated Balance Sheets**





**September 30, 2008**
            
            **December 31, 2007**(unaudited)
            
            (audited)**Assets**Current
                assets:Cash
            
            $
            580,239
            
            $
            677,318Certificates
                of deposit
            
            
            -
            
            
            1,197,784Receivables,
                net of allowance for bad debt of $35,028 and $21,743 as of 09/30/08
                and
                12/31/07 respectively
            
            
            2,558,919
            
            
            2,387,542Inventory,
                net of allowance for obsolescence of $73,000 and $293,934 as of 09/30/08
                and 12/31/07 respectively
            
            
            1,555,421
            
            
            1,791,174Prepaid
                Financing Charges
            
            
            2,378,672
            
            
            -Prepaid
                expenses and other current assets
            
            
            193,024
            
            
            477,186Total
                current assets
            
            
            7,266,275
            
            
            6,531,004Fixed
                assets, net accumulated depreciation of $4,137,363 and $3,884,302
                as of
                09/30/08 and 12/31/07 respectively
            
            
            1,766,002
            
            
            2,027,142Goodwill
            
            
            3,495,878
            
            
            3,095,878Total
                assets
            
            $
            12,528,155
            
            $
            11,654,025**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Accounts
                payable
            
            $
            1,489,320
            
            $
            1,317,916Accrued
                liabilities
            
            
            653,411
            
            
            610,615Accrued
                Interest
            
            
            1,654,564
            
            
            60,131Liability
                for purchase price
            
            
            2,775,253
            
            
            4,075,000Note
                Payable
            
            
            300,000
            
            
            -Current
                portion of LT Debt, net of discount of $1,530,101 and 1,174,075 as
                of
                09/30/08 and 12/31/07 respectively
            
            
            2,264,981
            
            
            1,147,241Total
                current liabilities
            
            
            9,137,530
            
            
            7,210,903Total
                LT Liabilities, net of discount of $931,261 and $2,494,910 as of
                09/30/08
                and 12/31/07 respectively
            
            
            2,854,351
            
            
            1,808,314Stockholders’
                equity:Preferred
                  stock, $0.001 par value, 200,000,000 sharesauthorized,
                  no shares issued and outstanding
            
            
            -
            
            
            -Common
                  stock, $0.001 par value, 300,000,000 sharesauthorized, 125,122,861
                  and 124,224,528 shares issued and outstanding as of 09/30/08 and
                  12/31/07,
                  respectively
            
            
            125,123
            
            
            124,225Additional
                paid-in capital
            
            
            33,180,683
            
            
            30,780,992Retained
                deficit
            
            
            (32,736,657
            )
            
            (28,270,409
            )Accumulated
                Foreign Currency Translation Adjustments
            
            
            (32,877
            )
            
            -Total
                stockholders' equity
            
            
            536,273
            
            
            2,634,808Total
                liabilities and stockholders' equity
            
            $
            12,528,155
            
            $
            11,654,025





The
      accompanying notes are an integral part of these financial
      statements


3





**ECOtality,
      Inc.**


**Condensed
      Consolidated Statement of Operations**


**(Unaudited)**





**Three Months Ended**
            
            **Nine Months Ended****September 30,**
            
            **September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Revenue
            
            $
            2,900,819
            
            $
            235,237
            
            $
            8,654,868
            
            $
            270,701Cost
                of goods sold
            
            
            1,871,940
            
            
            173,357
            
            
            5,156,240
            
            
            193,683Gross
                profit
            
            
            1,028,879
            
            
            61,880
            
            
            3,498,628
            
            
            77,018Expenses**:**Depreciation
            
            
            203,665
            
            
            48,693
            
            
            469,669
            
            
            144,982General
                and administrative expenses
            
            
            1,534,492
            
            
            1,196,555
            
            
            5,431,071
            
            
            2,360,566Research
                and development
            
            
            138,143
            
            
            466,668
            
            
            285,777
            
            
            1,160,191Settlement
                Expense
            
            
            -
            
            
            -
            
            
            -
            
            
            1,800,000Impairment
                Expense
            
            
            -
            
            
            102,620
            
            
            -
            
            
            429,402Total
                expenses
            
            
            1,876,300
            
            
            1,814,536
            
            
            6,186,517
            
            
            5,895,141Operating
                loss
            
            
            (847,421
            )
            
            (1,752,656
            )
            
            (2,687,889
            )
            
            (5,818,123
            )Other
                income:Interest
                income
            
            
            616
            
            
            16,456
            
            
            9,778
            
            
            51,824Other
                Income - Working Capital True Up
            
            
            375,877
            
            
            -
            
            
            375,877
            
            
            -Total
                other income
            
            
            376,493
            
            
            16,456
            
            
            385,655
            
            
            51,824Other
                expenses:Interest
                expense
            
            
            1,109,666
            
            
            4,415
            
            
            2,175,279
            
            
            12,501(Gain)
                / Loss on Disposal of Assets
            
            
            (16,165
            )
            
            -
            
            
            (11,271
            )
            
            -Accrued
                expense - Potential Registration Rights Penalty
            
            
            -
            
            
            (827,998
            )
            
            -
            
            
            1,069,497Total
                other expenses
            
            
            1,093,501
            
            
            (823,583
            )
            
            2,164,008
            
            
            1,081,998Loss
                from operations before income taxes
            
            
            (1,564,429
            )
            
            (912,617
            )
            
            (4,466,242
            )
            
            (6,848,297
            )Provision
                for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                (loss)
            
            $
            (1,564,429
            )
            $
            (912,617
            )
            $
            (4,466,242
            )
            $
            (6,848,297
            )Weighted
                  average number ofcommon
                  shares outstanding - basic and fully diluted
            
            
            124,932,194
            
            
            107,367,169
            
            
            124,711,559
            
            
            108,376,419Net
                (loss) per share-basic and fully diluted
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.04
            )
            $
            (0.06
            )





The
      accompanying notes are an integral part of these financial
      statements


4





**ECOtality,
      Inc.**


**Condensed
      Consolidated Statement of Cash Flows**


**(unaudited)**





**Nine Months Ended****September 30,****2008**
            
            **2007****Cash
                flows from operating activities**Net
                Income (loss)
            
            $
            (4,466,242
            )
            $
            (6,848,298
            )Adjustments
                to reconcile:Stock
                and options issued for services and compensation
            
            
            147,601
            
            
            180,417Shares
                issued for settlement
            
            
            -
            
            
            1,200,000Shares
                Accrued for registration penalty
            
            
            -
            
            
            1,069,497Depreciation
            
            
            469,669
            
            
            144,982Amortization
                of stock issued for services
            
            
            217,989
            
            
            -Amortization
                of discount on notes payable
            
            
            1,207,623
            
            
            -Gain
                on disposal of assets
            
            
            (11,271
            )
            
            -Changes
                in operating assets and liabilities:Certificate
                of deposit
            
            
            1,197,784
            
            
            449,089Accounts
                Receivable
            
            
            (164,613
            )
            
            (13,087
            )Inventory
            
            
            210,729
            
            
            (13,575
            )Prepaid
                expenses and other
            
            
            (1,027,672
            )
            
            (569,943
            )Accounts
                Payable
            
            
            173,402
            
            
            248,388Accrued
                Liabilities
            
            
            1,934,639
            
            
            15,229Net
                cash provided (used) by operating activities
            
            
            (110,361
            )
            
            (4,137,301
            )**Cash
                flows from investing activities**Purchase
                of fixed assets
            
            
            (250,469
            )
            
            (647,908
            )Proceeds
                from sales of fixed assets
            
            
            54,357
            
            
            -Impairment
                of assets
            
            
            -
            
            
            406,782Investment
                in subsidiaries
            
            
            -
            
            
            (745,000
            )Net
                cash (used) by investing activities
            
            
            (196,114
            )
            
            (986,126
            )**Cash
                flows from financing activities**Proceeds
                from mortgage payable
            
            
            -
            
            
            287,500Proceeds
                from notes payable
            
            
            300,000Payments
                on notes payable
            
            
            (57,723
            )
            
            -Net
                cash provided (used) by financing activities
            
            
            242,275
            
            
            287,500Effects
                of exchange rate changes
            
            
            (32,877
            )
            
            -Net
                increase (decrease) in cash
            
            
            (97,078
            )
            
            (4,835,927
            )Cash –
                beginning
            
            
            677,318
            
            
            5,047,968Cash –
                ending
            
            $
            580,239
            
            $
            212,041Supplemental
                disclosures:Interest
                paid
            
            $
            243,782
            
            $
            12,501Income
                Taxes paid
            
            $
            -
            
            $
            -Non-cash
                transactions:Stock
                and options issued for services
            
            $
            147,601
            
            $
            180,417Number
                of options issued
            
            
            550,000
            
            
            0Number
                  of shares issued
            
            
            565,000
            
            
            1,240,000Stock
                issued for settlement
            
            $
            -
            
            $
            1,200,000Shares
                of stock issued
            
            
            -
            
            
            1,500,000Stock
                issued for acquisition
            
            $
            -
            
            $
            189,000Shares
                of stock issued
            
            
            -
            
            
            300,000Amortization
                of stock issued for services
            
            $
            217,989
            
            $
            -Amortization
                of discount on notes payable
            
            $
            1,207,622
            
            $
            -Note
                Payable converted for common stock
            
            $
            100,000
            
            $
            -Shares
                of stock issued
            
            
            333,333
            
            
            -





The
      accompanying notes are an integral part of these financial
      statements


5




**ECOTALITY,
      INC.**





**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**(UNAUDITED)**




**Note
      1 - History and organization of the company**





The
      Company was organized April 21, 1999 (Date of Inception) under the laws of
      the
      State of Nevada, as Alchemy Enterprises, Ltd.  The Company was initially
      authorized to issue 25,000 shares of its no par value common stock.





On
      October 29, 2002, the Company amended its articles of incorporation to increase
      its authorized capital to 25,000,000 shares with a par value of $0.001.  On
      January 26, 2005, the Company amended its articles of incorporation again,
      increasing authorized capital to 100,000,000 shares of common stock with a
      par
      value of $0.001.  On March 1, 2006, the Company amended its articles of
      incorporation, increasing authorized capital to 300,000,000 shares of common
      stock, each with a par value of $0.001, and 200,000,000 shares of preferred
      stock, each with a par value of $0.001.





On
      November 26, 2006, the Company amended its articles of incorporation to change
      its name from Alchemy Enterprises, Ltd. to ECOtality, Inc to better reflect
      its
      renewable energy strategy.




The
      former business of the Company was to market a private-label biodegradable
      product line. During the year ended December 31, 2006, the board of directors
      changed the Company’s focus toward developing an electric power cell
      technology.





On
      June 11, 2007, the Company acquired the assets of the FuelCellStore.com, a
      small web based seller of educational fuel cell products. The FuelCellStore.com
      product line includes demonstration kits, educational materials, fuel cell
      systems and component parts.  It also offers consulting services on
      establishing educational programs for all levels of educational institutions.
      FuelCellStore.com now operates as a wholly owned subsidiary call ECOtality
      Stores, Inc. See note 3 for further information.





On
      October 1, 2007, the Company purchased certain assets of Innergy Power
      Corporation and its wholly owned subsidiary, Portable Energy De Mexico, S.A.
      DE
      C.V. Innergy Power Corporation designs and manufactures standard and custom
      solar-power and integrated solar-battery solutions for government, industrial
      and consumer applications. See note 3 for further information.





On
      November 6, 2007 the Company acquired all the outstanding capital stock of
      Electric Transportation Engineering Corporation, as well as its affiliated
      company The Clarity Group (collectively referred to as eTec). eTec develops
      and
      provides fast-charge systems designed for electric vehicle (EVs and PHEVs)
      mobile material handling, airport ground support and marine and transit
      applications. eTec also tests and develops plug-in hybrids, advanced battery
      systems and hydrogen ICE conversions. See note 3 for further
      information.





On
      December 6, 2007 the Company acquired through eTec the Minit-Charger business
      of
      Edison Enterprises. Minit-Charger makes products that enable fast charging
      of
      mobile material handling equipment using revolutionary proprietary technologies.
      See note 3 for further information.





The
      consolidated financial statements as of September 30, 2008 include the accounts
      of ECOtality, Innergy Power Corporation and eTec. All significant inter-company
      balances and transactions have been eliminated. ECOtality and its subsidiaries
      will collectively be referred herein as the “Company”.




**Note
      2 - Summary of Significant Accounting Policies**





Use
      of
      estimates


Preparation
      of financial statements in conformity with generally accepted accounting
      principles requires management to make estimates and assumptions that affect
      the
      reported amounts of assets and liabilities and disclosures of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenue and expenses during the reporting period. Significant estimates
      have
      been used by management in conjunction with the measurement of the valuation
      allowance relating to deferred tax assets and future cash flows associated
      with
      long-lived assets. Actual results could differ from those
      estimates.


6





**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Cash
      and
      cash equivalents


For
      financial statement presentation purposes, the Company considers short-term,
      highly liquid investments with original maturities of three months or less
      to be
      cash and cash equivalents.





Interest
      income is credited to cash balances as earned. For the three months ended
      September 30, 2008 and 2007 interest income was $616 and $16,456, respectively.
      For the nine months ended September 30, 2008 and 2007 interest income was $9,778
      and $51,824 respectively.





Credit
      Risk


Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist principally of cash deposits and accounts receivable. The Company
      maintains cash and cash equivalent balances at financial institutions that
      are
      insured by the Federal Deposit Insurance Corporation up to $100,000 for 2007
      and
      $250,000 for 2008.  Deposits with these banks may exceed the amount of
      insurance provided on such deposits.  At September 30, 2008 and 2007, the
      Company had approximately $112,000 and $1,677,719 in excess of FDIC insured
      limits, respectively.





Accounts
      receivable at September 30, 2008 was $2,558,919, and at December 31, 2007 was
      $2,387,542. At September 30, 2008 we had two customers that represented in
      excess of 10% of our receivable balance. The first, Diamond Foods (Nasdaq
      ticker: DMND) had a balance of $318,025, the second, Parkway Systems (division
      of H.E. Butt Grocery) had a balance of $268,192. The Company has not experienced
      material losses in the past from these or any other significant customers and
      continues to monitor its exposures to minimize potential credit
      losses.





Impairment
      of long-lived assets and intangible assets


The
      Company follows the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets” and SFAS No. 142, “Goodwill and other
      intangible assets”, which addresses financial accounting and reporting for
      acquired goodwill and other intangible assets. Management regularly reviews
      property, equipment, intangibles and other long-lived assets for possible
      impairment. This review occurs quarterly, or more frequently if events or
      changes in circumstances indicate the carrying amount of the asset may not
      be
      recoverable. If there is indication of impairment, then management prepares
      an
      estimate of future cash flows expected to result from the use of the asset
      and
      its eventual disposition. If these cash flows are less than the carrying amount
      of the asset, an impairment loss is recognized to write down the asset to its
      estimated fair value. Management believes that the accounting estimate related
      to impairment of its property and equipment, is a “critical accounting estimate”
because: (1) it is highly susceptible to change from period to period
      because it requires management to estimate fair value, which is based on
      assumptions about cash flows and discount rates; and (2) the impact that
      recognizing an impairment would have on the assets reported on our balance
      sheet, as well as net income, could be material. Management’s assumptions about
      cash flows and discount rates require significant judgment because actual
      revenues and expenses have fluctuated in the past and are expected to continue
      to do so. During the three months ended September 30, 2008 and 2007, the Company
      had impairment expense of $0 and $102,620, respectively. For the nine months
      ended September 30, 2008 and 2007, the Company had impairment expense of $0
      and
      $429,402 respectively.




Revenue
      recognition


The
      Company’s revenue recognition policies are in compliance with Staff Accounting
      Bulletin (SAB) 104 and Accounting Research Bulletin (ARB) 45. Revenue is
      recognized when a formal arrangement exists, the price is fixed or determinable,
      all obligations have been performed pursuant to the terms of the formal
      arrangement and collectibility is reasonably assured.





Sales
      related to long-term contracts for services (such as engineering, product
      development and testing) extending over several years are accounted for under
      the percentage-of-completion method of accounting under the American Institute
      of Certified Public Accountants’ Statement of Position 81-1, *Accounting for Performance of Construction-Type and Certain Production-Type
      Contracts* .
      Sales
      and earnings under these contracts are recorded based on the ratio of actual
      costs incurred to total estimated costs expected to be incurred related to
      the
      contract under the cost-to-cost method. Anticipated losses on contracts are
      recognized in full in the period in which losses become probable and
      estimable.





For
      all
      other sales of product or services the Company recognizes revenues based on
      the
      terms of the customer agreement.  The customer agreement takes the form of
      either a contract or a customer purchase order and each provides information
      with respect to the product or service being sold and the sales price.  If
      the customer agreement does not have specific delivery or customer acceptance
      terms, revenue is recognized at the time of shipment of the product to the
      customer.





Warranty
      Liability


The
      Company warrants a limited number of Minit-Charger products against defects
      for
      periods up to 33 months. The estimate of warranty liability is based on
      historical product data and anticipated future costs. Should actual failure
      rates differ significantly from our estimates, we record the impact of these
      unforeseen costs or cost reductions in subsequent periods and update our
      assumptions and forecasting models accordingly. At the time of our acquisition
      of Minit-Charger at December 31, 2007 the warranty reserve was $231,303. At
      September 30, 2008 the reserve was $182,093.





Accounts
      receivable


Accounts
      receivable are carried on a gross basis, with no discounting, less the allowance
      for doubtful accounts. Management estimates the allowance for doubtful accounts
      based on existing economic conditions, the financial conditions of the
      customers, and the amount and the age of past due accounts. Receivables are
      considered past due if full payment is not received by the contractual due
      date.
      Past due accounts are generally written off against the allowance for doubtful
      accounts only after all collection attempts have been exhausted. There is no
      collateral held by the Company for accounts receivable. The allowance for
      doubtful accounts was $35,028 and $21,743 as of September 30, 2008 and December
      31, 2007, respectively.


7




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**




Inventory


Inventory
      is valued at the lower of cost, determined on a first-in, first-out basis,
      or
      market. Inventory includes material, labor, and factory overhead required in
      the
      production of our products. Inventory obsolescence is examined on a regular
      basis. The allowance for obsolescence as of September 30, 2008 and December
      31,
      2007 was $73,000 and $293,934 respectively. ****





Advertising
      costs


The
      Company expenses all costs of advertising as incurred. Included in general
      and
      administrative expenses for the three months ended September 30, 2008 and 2007
      were advertising costs of $4,518 and $15,624 respectively. Included in general
      and administrative expenses for the nine months ended September 30, 2008 and
      2007 were advertising costs of 22,072 and $15,624 respectively.





Research
      and development costs


Research
      and development costs are charged to expense when incurred. For the three months
      ended September 30, 2008 and 2007, research and development costs were
      $138,143 **** and
      $466,668, respectively. For the nine months ended September 30, 2008 and 2007
      research and development costs were $285,777 and $1,160,191
      respectively.





Contingencies


The
      Company is not currently a party to any pending or threatened legal proceedings.
       Based on information currently available, management is not aware of any
      matters that would have a material adverse effect on the Company’s financial
      condition, results of operations or cash flows.





Fair
      Value of Financial Instruments


The
      carrying amounts of the Company’s financial instruments, including cash and cash
      equivalents, accounts receivable, accounts payable, accrued expenses and notes
      payable approximate their fair values based on their short-term nature. Fair
      value estimates discussed herein are based upon certain market assumptions
      and
      pertinent information available to management as of September 30, 2008 and
      December 31, 2007.  The respective carrying value of certain
      on-balance-sheet financial instruments approximated their fair values.





Loss
      per
      Common Share


Net
      loss
      per share is provided in accordance with Statement of Financial Accounting
      Standards No. 128 (SFAS 128), “Earnings Per Share”. We present basic loss
      per share (“EPS”) and diluted EPS on the face of statements of operations.
 Basic EPS is computed by dividing reported losses by the weighted average
      shares outstanding.   Except where the result would be anti-dilutive to
      income from continuing operations, diluted earnings per share has been computed
      assuming the conversion of the convertible long-term debt and the elimination
      of
      the related interest expense, and the exercise of stock warrants. Loss per
      common share has been computed using the weighted average number of common
      shares outstanding during the year. For the three months and the nine months
      ended September 30, 2008 and 2007, the assumed conversion of convertible
      long-term debt and the exercise of stock warrants are anti-dilutive due to
      the
      Company’s net losses and are excluded in determining diluted loss per
      share.





Foreign
      Currency Translation FAS 52


In
      2008,
      a Company subsidiary, Portable Energy De Mexico operated outside the United
      States and their local currency is their functional currency. The functional
      currency is translated into U.S. dollars for balance sheet accounts using the
      period end rates in effect as of the balance sheet date and the average exchange
      rate for revenue and expense accounts for each respective period. The
      translation adjustments are deferred as a separate component of stockholders'
      equity, within other comprehensive loss, net of tax where
      applicable.





In
      2008,
      a Company subsidiary, eTec, conducted a portion of their business in Canadian
      Dollars. Because their functional currency is US dollars, the impact of the
      translation was taken directly to the income statement and included in General
      and Administrative expense.





Stock-Based
      Compensation


The
      Company records stock-based compensation in accordance with SFAS No. 123R “Share
      Based Payments”, using the fair value method. All transactions in which goods or
      services are the consideration received for the issuance of equity instruments
      are accounted for based on Emerging Issues Task Force Issue No. 96-18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees for
      Acquiring, or in Conjunction with Selling, Goods or Services” using the fair
      value of the consideration received or the fair value of the equity instrument
      issued, whichever is more reliably measurable.




8




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Property
      and Equipment


Property
      and equipment are recorded at historical cost.  Minor additions and
      renewals are expensed in the year incurred.  Major additions and renewals
      are capitalized and depreciated over their estimated useful lives.  When
      property and equipment are retired or otherwise disposed of, the cost and
      accumulated depreciation are removed from the accounts and any resulting gain
      or
      loss is included in the results of operations for the respective period.
 The Company uses other depreciation methods (generally accelerated) for
      tax purposes where appropriate.  The estimated useful lives for significant
      property and equipment categories are as follows:





Equipment
            5-7
                yearsBuildings
            39
                years





Income
      Taxes


The
      Company has adopted the provisions of SFAS No. 109, “Accounting for Income
      Taxes" which requires recognition of deferred tax liabilities and assets for
      the
      expected future tax consequences of events that have been included in the
      financial statements or tax returns.  Under this method, deferred tax
      liabilities and assets are determined based on the difference between the
      financial statement and tax basis of assets and liabilities using enacted tax
      rates in effect for the year in which the differences are expected to reverse.
      Deferred income tax expenses or benefits are based on the changes in the asset
      or liability each period. If available evidence suggests that it is more likely
      than not that some portion or all of the deferred tax assets will not be
      realized, a valuation allowance is required to reduce the deferred tax assets
      to
      the amount that is more likely than not to be realized.  A valuation
      allowance is provided for those deferred tax assets for which the related
      benefits will likely not be realized. Future changes in such valuation allowance
      are included in the provision for deferred income taxes in the period of
      change.





Deferred
      income taxes may arise from temporary differences resulting from income and
      expense items reported for financial accounting and tax purposes in different
      periods. Deferred taxes are classified as current or non-current, depending
      on
      the classification of assets and liabilities to which they relate. Deferred
      taxes arising from temporary differences that are not related to an asset or
      liability are classified as current or non-current depending on the periods
      in
      which the temporary differences are expected to reverse.





The
      Company adopted FASB Interpretation Number 48, Accounting for Uncertainty in
      Income Taxes, as of January 1, 2007. FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in the companies’ financial statements in
      accordance with FASB Statement No. 109, Accounting for Income Taxes. As a
      result, the Company applies a more-likely-than-not recognition threshold for
      all
      tax uncertainties. FIN 48 only allows the recognition of those tax benefits
      that
      have a greater than fifty percent likelihood of being sustained upon examination
      by the taxing authorities. As a result of implementing FIN 48, the Company
      reviewed its tax positions and determined there were no outstanding, or
      retroactive tax positions with less than a fifty percent likelihood of being
      sustained upon examination, therefore the implementation of this standard has
      not had a material affect on the Company.





The
      Company does not anticipate any significant changes to its total unrecognized
      tax benefits with the next twelve months. As of September 30, 2008 no income
      tax
      expense has been incurred.





Dividends


The
      Company has not adopted any policy regarding payment of dividends.  No
      dividends have been paid or declared since inception.  For the foreseeable
      future, the Company intends to retain any earnings to finance the development
      and expansion of its business and it does not anticipate paying any cash
      dividends on its common stock.  Any future determination to pay dividends
      will be at the discretion of the Board of Directors and will be dependent upon
      then existing conditions, including the Company’s financial condition and
      results of operations, capital requirements, contractual restrictions, business
      prospects and other factors that the board of directors considers
      relevant.


9




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Segment
      reporting


SFAS No. 131,
      “Disclosures about Segments of an Enterprise and Related Information,” requires
      disclosures related to components of a company for which separate financial
      information is available that is evaluated regularly by a company’s chief
      operating decision maker in deciding the allocation of resources and assessing
      performance. Upon completion of FuelCellStores.com, Innergy Power Corporation,
      Electric Transportation Engineering Corporation (eTec) and eTec’s Minit-Charger
      business acquisitions from June through December 2007, the Company identified
      its segments based on the way management expects to organize the Company to
      assess performance and make operating decisions regarding the allocation of
      resources. In accordance with the criteria in SFAS No. 131, “Disclosure
      about Segments of an Enterprise and Related Information,” the Company has
      concluded it has three reportable segments for the three months ended and nine
      months ended September 30, 2008; ECOtality Stores, DBA Fuel Cell Store segment,
      Innergy Power segment and eTec segment. The ECOtality Stores segment is the
      online marketplace for fuel cell-related products and technologies with online
      distribution sites in the U.S., Japan, Russia, Italy and Portugal. The Innergy
      Power segment is comprised of the sale of solar batteries and other solar and
      battery powered devices to end-users. The eTec segment relates to sale of
      fast-charge systems for material handling and airport ground support
      applications to the testing and development of plug-in hybrids, advanced battery
      systems and hydrogen ICE conversions and consulting revenues. This segment
      also
      includes the Minit-Charger business which relates to the research, development
      and testing of advanced transportation and energy systems with a focus on
      alternative-fuel, hybrid and electric vehicles and infrastructures.  eTec
      holds exclusive patent rights to the eTec SuperChargeTM and Minit-Charger systems
      - battery fast charge systems that allow for faster charging with less heat
      generation and longer battery life than conventional chargers. The Company
      has
      aggregated these subsidiaries into three reportable segments: Ecotality/Fuel
      Cell Store, eTec and Innergy.





While
      management is currently assessing how it evaluates segment performance, we
      currently utilize income (loss) from operations, excluding depreciation of
      corporate assets. We also exclude goodwill from segment assets. There were
      no
      inter-segment sales during the three or nine months ended September 30,
      2008.





Recent
      Accounting pronouncements





In
      September of 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”
(SFAS No. 157). SFAS No. 157 establishes a framework for measuring
      fair value under generally accepted accounting procedures and expands
      disclosures on fair value measurements. This statement applies under previously
      established valuation pronouncements and does not require the changing of any
      fair value measurements, though it may cause some valuation procedures to
      change. Under SFAS No. 157, fair value is established by the price that
      would be received to sell the item or the amount to be paid to transfer the
      liability of the asset as opposed to the price to be paid for the asset or
      received to transfer the liability. Further, it defines fair value as a market
      specific valuation as opposed to an entity specific valuation, though the
      statement does recognize that there may be instances when the low amount of
      market activity for a particular item or liability may challenge an entity’s
      ability to establish a market amount. In the instances that the item is
      restricted, this pronouncement states that the owner of the asset or liability
      should take into consideration what affects the restriction would have if viewed
      from the perspective of the buyer or assumer of the liability. This statement
      is
      effective for all assets valued in financial statements for fiscal years
      beginning after November 15, 2007. Although SFAS No. 157 applies to and
      amends the provisions of existing FASB and AICPA pronouncements, it does not,
      of
      itself, require any new fair value measurements, nor does it establish valuation
      standards.  SFAS No. 157 applies to all other accounting pronouncements
      requiring or permitting fair value measurements, except for: SFAS No. 123(R),
      share-based payment and related pronouncements, the practicability exceptions
      to
      fair value determinations allowed by various other authoritative pronouncements,
      and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue
      recognition. The Company is currently evaluating the impact of SFAS No. 157
      to its financial position and result of operations.


10




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





In
      July
      2006, the FASB issued FASB Interpretation No. 48 “Accounting for Uncertain
      Tax Positions” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty
      in income taxes recognized in an enterprise’s financial statements in accordance
      with FASB Statement No. 109 “Accounting for Income Taxes”. It prescribes a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken,
      in
      a tax return. FIN 48 also provides guidance on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure, and
      transition. FIN 48 is effective for fiscal years beginning after
      December 15, 2006. The implementation of this standard did not have a
      material impact on the Company’s financial position, results of operations or
      cash flows for the three or the nine months ended September 30,
      2008.





In
      December 2007, FASB issued Statement of Financial Accounting Standards No.
      141
      (revised 2007) on Business Combinations. This guidance retains the fundamental
      requirements in Statement 141 that the acquisition method of accounting (which
      Statement 141 called the purchase method) be used for all business combinations
      and for an acquirer to be identified for each business combination. This
      Statement defines the acquirer as the entity that obtains control of one or
      more
      businesses in the business combination and establishes the acquisition date
      as
      the date that the acquirer achieves control. This guidance requires an acquirer
      to recognize the assets acquired, the liabilities assumed, and any
      non-controlling interest in the acquired at the acquisition date, measured
      at
      their fair values as of that date, with limited exceptions specified in the
      Statement. It replaces Statement 141’s cost-allocation process, which required
      the cost of an acquisition to be allocated to the individual assets acquired
      and
      liabilities assumed based on their estimated fair values. For example, Statement
      141 required the acquirer to include the costs incurred to effect the
      acquisition (acquisition- related costs) in the cost of the acquisition that
      was
      allocated to the assets acquired and the liabilities assumed. This guidance
      requires those costs to be recognized separately from the acquisition. In
      addition, in accordance with Statement 141, restructuring costs that the
      acquirer expected but was not obligated to incur were recognized as if they
      were
      a liability assumed at the acquisition date. This guidance requires the acquirer
      to recognize those costs separately from the business combination. The Company
      has followed the above guidance in accounting for all acquisitions that occurred
      in 2007.





Reclassifications


Certain
      reclassifications have been made to the prior years’ financial statements to
      conform to the current year presentation.  These reclassifications had no
      effect on previously reported results of operations or retained
      earnings.





Year
      end


The
      Company has adopted December 31 as its fiscal year end.




Note
      3 -
      Acquisitions and Goodwill




FuelCellStore.com
      acquisition


On
      June 11, 2007, the Company acquired the assets of the FuelCellStore.com, a
      small web based seller of educational fuel cell products. The FuelCellStore.com
      product line includes demonstration kits, educational materials, fuel cell
      systems and component parts.  It also offers consulting services on
      establishing educational programs for all levels of educational institutions.
      FuelCellStore.com now operates as a wholly owned subsidiary called ECOtality
      Stores, Inc. The acquisition has been accounted for under the purchase
      accounting method pursuant to SFAS 141. Our consolidated financial statements
      for the year ended December 31, 2007 and the three and nine months ended
      September 30, 2008 include the financial results of ECOtality Stores, Inc.
      subsequent to the date of the acquisition.





The
      fair
      value of the transaction was $539,000. The company paid $350,000 in cash and
      issued 300,000 shares of common stock, which was valued at $189,000 based on
      the
      closing market price on the date of the agreement.


11




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Innergy
      Power Corporation acquisition


On
      October 1, 2007, the Company acquired certain assets of the Innergy Power
      Corporation and its wholly owned subsidiary, Portable Energy De Mexico, S.A.
      DE
      C.V. Innergy Power Corporation designs and manufactures standard and custom
      solar-power and integrated solar-battery solutions for government, industrial
      and consumer applications. The acquisition has been accounted for under the
      purchase accounting method pursuant to SFAS 141. Our consolidated financial
      statements for the year ended December 31, 2007, and the three and nine months
      ended September 30, 2008 include the financial results of Innergy Power
      Corporation and its subsidiary subsequent to the date of the
      acquisition.





The
      fair
      market value of the transaction was $3,000,000. The Company issued 3,000,000
      shares of the Company’s common stock for the acquisition.  The Company
      guaranteed to the sellers that the shares would be worth $1 each ($3,000,000)
      during the 30-day period commencing 11 months from the closing date. If the
      shares were not worth $3,000,000, the company would be required to either (a)
      issue additional shares such that the total shares are worth $3,000,000 at
      that
      time or, (b) issue a total of 4,000,000 new shares, or (c) pay cash to the
      seller such that the aggregate value of the 3,000,000 shares plus the cash
      given
      would equal $3,000,000.





The
      fair
      value of the 3,000,000 shares of common stock given, based on the closing price
      of the Company’s common stock on December 31, 2007, was $555,000. A liability
      for the balance of $2,445,000 was recorded as a current liability for purchase
      price on the consolidated balance sheet as of December 31, 2007. This liability
      has been reduced to reflect the value of the closing price of the Company’s
      common stock of September 30, 2008, assuming option (b) above, that a maximum
      of
      4,000,000 shares will be issued. The amount of the current liability for
      purchase price has been updated to $280,000 on the consolidated balance sheet
      at
      September 30, 2008.




eTec
      acquisition


On
      November 6, 2007, the Company acquired all the outstanding capital stock of
      Electric Transportation Engineering Corporation, as well as its affiliated
      company The Clarity Group (collectively referred to as eTec). eTec develops
      and
      provides fast-charge systems designed for electric vehicle (EVs and PHEVs),
      mobile material handling, airport ground support, and marine and transit
      applications. eTec also tests and develops plug-in hybrids, advanced battery
      systems and hydrogen ICE conversions. The acquisition has been accounted for
      under the purchase accounting method pursuant to SFAS 141. Our consolidated
      financial statements for the year ended December 31, 2007 include the financial
      results of eTec subsequent to the date of the acquisition.





The
      fair
      market value of the transaction was $5,437,193. The Company paid $2,500,000
      in
      cash, issued a $500,000 note payable, and issued 6,500,000 shares of the
      company’s common stock for the acquisition, which was valued at $1,820,000 based
      on the closing market price on the date of the agreement.  The total value
      of the transaction also includes $217,193 in direct acquisition costs and the
      subsequent Net Working Capital Adjustment discussed below.





The
      $500,000 is payable in monthly installments of $50,000 beginning December of
      2007. The note payable balance as of September 30, 2008 was
      $247,253.





Included
      in the purchase agreement was a Net Working Capital Adjustment which called
      for
      an adjustment to the purchase price to be made via a post-Closing payment from
      the Sellers to the Buyers or the Buyers to the Seller to the extent that the
      actual Net Working Capital as of the Closing Date was more or less than the
      agreed Net Working Capital Target. A reconciliation of actual vs. target net
      working capital was presented by the Sellers in August 2008 and a True Up
      Payment of $400,000 from the Buyers to the Sellers was agreed to in full
      satisfaction of this purchase agreement requirement. The resulting note payable
      represents an adjustment of the purchase price, and as such has been recorded
      as
      an increase to Goodwill of $400,000.





The
      balance of the note payable attributable to the Working Capital True up as
      of
      September 30, 2008 was $400,000 and is due in full on December 15,
      2008.





The
      aggregate purchase price, including the Working Capital Adjustment above, has
      been allocated to the assets acquired and liabilities assumed on their
      preliminary estimated fair values at the date of the acquisition. The
      preliminary estimate of the excess of purchase price over the fair value of
      net
      tangible assets acquired has been allocated to identifiable intangible assets
      and goodwill. In accordance with U.S. generally accepted accounting principles,
      we have up to twelve months from closing of the acquisition to finalize the
      valuation. The purchase price allocation is preliminary, pending finalization
      of
      our valuation of certain liabilities assumed. The following table summarizes
      the
      preliminary estimate of fair value of assets as part of the acquisition with
      eTec.




2007Tangible
                assets acquired, net of liabilities assumed
            
            $
            1,941,315Goodwill
            
            
            3,495,878$
            5,437,193




In
      accordance with SFAS No. 144, “Accounting for the impairment or disposal of long
      lived assets”, the Company reviewed the goodwill for impairment. Due to a proven
      track record of cash flows generated by the assets acquired, no impairment
      was
      taken during the year ended December 31, 2007. Impairment expense relating
      to
      this acquisition was $0 for the three months ended September 30, 2008.


12




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Minit-Charger
      acquisition


On
      December 6, 2007 the Company acquired through eTec the Minit-Charger business
      of
      Edison Enterprises. Minit-Charger makes products that enable fast charging
      of
      mobile material handling equipment using revolutionary proprietary technologies.
      The acquisition has been accounted for under the purchase accounting method
      pursuant to SFAS 14.





The
      fair
      market value of the transaction was $3,000,000. The company paid $1,000,000
      in
      cash and issued 2,000,000 shares of the company’s common stock for the
      acquisition.  The company guaranteed to the sellers that the shares would
      be worth $1 each ($2,000,000) by the tenth day following the first anniversary
      date of the transaction. If the shares are not worth $2,000,000, the company
      would be required to either issue additional shares such that the total shares
      are worth $2,000,000 at that time or pay cash to the seller so that the
      aggregate value of the 2,000,000 shares plus the cash given would equal
      $2,000,000.





The
      fair
      value of the common stock given, based on the closing price of the Company’s
      common stock on December 31, 2007, was $370,000. A liability for the balance
      of
      $1,630,000 based on the December 31 closing price was recorded as a current
      liability for purchase price on the consolidated balance sheet as of December
      31, 2007. This liability has been increased to reflect the value of the closing
      price of the Company’s common stock of September 30, 2008 and the amount of the
      current liability for purchase price has been updated to $1,860,000 on the
      consolidated balance sheet at September 30, 2008.





Included
      in the purchase agreement with Edison was a Net Working Capital Adjustment
      which
      called for an adjustment to the purchase price to be made via a post-Closing
      payment from the Sellers to the Buyers or the Buyers to the Seller to the extent
      that the actual Net Working Capital as of the Closing Date was more or less
      than
      the agreed Net Working Capital Target. A reconciliation of actual vs. target
      net
      working capital was presented to the Sellers in April 2008. Based on this
      reconciliation and additional documentation and updates from both parties,
      as of
      September 30, 2008 the original April reconciliation had been adjusted leaving
      a
      tentative True Up Payment of $375,877 due from the Sellers. While additional
      items that may result in an increase to this amount are to be discussed with
      the
      Seller in November 2008, this amount represents our most conservative estimate
      based on agreed items as of September 30, 2008. This amount was recorded as
      an
      accounts receivable amount and the full balance was outstanding at September
      30,
      2008. This True Up represents an adjustment of the purchase price. As all
      goodwill associated with the MinitCharger acquisition was impaired and written
      down to $0 in year ended December 31, 2007, the $375,877 has been recorded
      as
      other income in our eTec business segment.




Pro
      forma
      financial statements





The
      unaudited pro forma consolidated statement of operations for the three months
      and nine months ended September 30, 2008 and 2007 combine the historical results
      of ECOtality, Inc and the unaudited pro forma results of the four companies
      acquired during 2007 and gives effect to the acquisitions as if they occurred
      on
      January 1, 2007 **.** Pro
      forma adjustments have been made related to impairment of goodwill. The pro
      forma consolidated results do not purport to be indicative of results that
      would
      have occurred had the acquisition been in effect for the periods presented,
      nor
      do they claim to be indicative of the results that will be obtained in the
      future, and do not include any adjustments for cost savings or other synergies
      achieved in the consolidations of the companies.





The
      following table contains unaudited pro forma results for the three months and
      nine months ended September 30, 2008 and 2007 as if the acquisitions had
      occurred on January 1, 2007:




13




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





**3 Months ended September 30, 2008**2008
            
            2007Reported
            
            Pro Forma
            
            Reported
            
            Pro FormaNet
                Revenues
            
            $
            2,900,819
            
            $
            2,900,819
            
            $
            235,237
            
            $
            3,239,035Net
                Income (loss)
            
            $
            (1,564,429
            )
            $
            (1,564,429
            )
            $
            (912,617
            )
            $
            (1,397,918
            )Net
                (loss) per share-basic and fully diluted
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )





**9 Months Ended September 30, 2008**2008
            
            2007Reported
            
            Pro Forma
            
            Reported
            
            Pro FormaNet
                Revenues
            
            $
            8,654,868
            
            $
            8,654,868
            
            $
            270,701
            
            $
            9,625,215Net
                Income (loss)
            
            $
            (4,466,242
            )
            $
            (4,466,242
            )
            $
            (6,848,297
            )
            $
            (8,014,824
            )Net
                (loss) per share-basic and fully diluted
            
            $
            (0.04
            )
            $
            (0.04
            )
            $
            (0.06
            )
            $
            (0.07
            )




**Note
      4 - Fixed assets**





Fixed
      assets as of September 30, 2008 and December 31, 2007 consisted of the
      following:





**At September 30,**
            
            **At December 31,****2008**
            
            **2007**Equipment
            
            $
            3,148,197
            
            $
            3,350,128Buildings
            
            
            575,615
            
            
            617,765Vehicles
            
            
            1,600,849
            
            
            1,589,315Furniture
                and fixtures
            
            
            47,409
            
            
            47,957Leasehold
                improvements
            
            
            470,380
            
            
            306,280Computer
                Software
            
            
            60,914
            
            
            -5,903,364
            
            
            5,911,445Less:
                accumulated depreciation
            
            
            (4,137,363
            )
            
            (3,884,302
            )$
            1,766,002
            
            $
            2,027,142





Depreciation
      expense totaled $203,665 and $48,693, for the quarters ended September 30,
      2008
      and 2007 respectively. Depreciation expense for the nine months ended September
      30, 2008 was $469,669, and for the nine months ended September 30, 2007 was
      $144,982.





**Note
      5 - Notes payable**





For
      the
      nine months ended September 30, 2007:




14


**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**




On
      January 16, 2007, the Company purchased an office building for an aggregate
      price of $575,615. $287,959 in cash was paid and the remaining balance of
      $287,500 was structured as an interest-only loan. The loan bears an interest
      rate of 6.75% calculated annually, with monthly interest-only payments due
      beginning on February 16, 2007.  The entire principal balance is due
      on or before January 16, 2012 and is recorded as a long-term note payable
      on the consolidated financial statements.





Interest
      expense totaled $4,415 for the three months ended September 30,
      2007.




For
      the
      nine months ended September 30, 2008:





During
      2007, the Company incurred a $500,000 note payable to the previous owners of
      eTec through the acquisition of eTec. The loan is payable in ten monthly
      installments of $50,000 each. See note 3 for details. As of September 30, 2008,
      $247,253 was owed and recorded as an accrued liability on the consolidated
      financial statements.





During
      2007, the Company acquired a note payable in the acquisition of eTec. The note
      related to a vehicle that was also acquired in the acquisition. As of September
      30, 2008 the vehicle had been sold and the related note payable was paid in
      full.





In
      November and December of 2007, the Company received gross proceeds of $5,000,000
      in exchange for a note payable of $5,882,356 as part of a private offering
      of 8%
      Secured Convertible Debentures (the “Debentures”).  The debentures were
      convertible into common stock at $0.30 per share. Debenture principal payments
      were due beginning in May and June of 2008 (1/24th of the outstanding amount
      is
      due each month thereafter). In connection with these debentures, the Company
      issued debenture holders warrants (“the Warrants”) to purchase up to 9,803,925
      shares of the Company’s common stock with an exercise price of $0.32. The
      warrants were exercisable immediately upon issue. The Warrants expire five
      years
      from the date of issue.  The aggregate fair value of the Warrants equaled
      $2,272,942 based on the Black-Scholes pricing model using the following
      assumptions: 3.39%-3.99% risk free rate, 162.69% volatility, and strike price
      of
      $0.32, market price of $0.22-$0.32, no yield, and an expected life of 912 days.
      The gross proceeds received were bifurcated between the note payable and the
      warrants issued and a discount of $3,876,256 was recorded. The discount is
      being
      amortized over the loan term of two and one half years.  As of September
      30, 2008, a total of $1,414,894, had been amortized and recorded as interest
      expense and $2,461,362 remains as the unamortized discount.  See note 7 for
      additional discussion regarding the issuance of warrants.





On
      August
      29, 2008 the Company signed an Amendment to the Debenture agreements deferring
      the payments indicated above. The purpose of the agreement is to provide the
      Company time to fund its working capital requirements internally through organic
      growth as well as to obtain both short and long term funding through equity
      financing and other sources of capital.





The
      waiver, deferment agreement aligns with the Company’s short term working capital
      plan and provides time to achieve company objectives in this regard. In exchange
      for the Amendment to the Debentures, the Company agreed to:


A.
            Waiver
                of interest payments due between May-December 2008


B.
            Deferment
                of monthly redemptions for the period May-December
                2008.


C.
            Increase
                to the outstanding principal amount plus accrued interest though
                December
                31, 2008 for the debentures by 120% as of the effective date of the
                agreement.


D.
            Reset
                of the common stock conversion rate from $0.30 to
                $0.15.


E.
            Commencement
                of principal payments starting January 1, 2009 with no change to
                the
                redemption period (May 2010)


F.
            Commencement
                of interest payments @ 8% per year April 1, 2009 (first payment
                due).


G.
            Inclusion
                of make whole provisions to reset common stock warrant conversion
                prices
                to the value used to “true-up” both the Innergy Power Company and
                Minit-Charger (Edison) acquisitions when both “true-ups” are completed.
                For both of these acquisitions the Sellers were issued shares which
                the
                Company guaranteed would be worth $1.00 per share for the thirty
                days
                prior to the anniversary date of the purchase. This guarantee requires
                the
                issuance of additional shares or payment in cash for the difference
                in the
                share price on the respective anniversary dates. In the case of Innergy,
                the number of required “true up” shares is capped at
                4,000,000.


H.
            Inclusion
                of further make whole provisions to issue additional warrants adequate
                to
                maintain the pro rata debenture ownership % when fully diluted as
                per
                schedule 13 in the waiver
                agreement.


I.
            Compliance
                with covenants per quarterly public reports issued for the periods
                ending
                June 30,


September
      30, and December 31, 2008 for the following:


1.
            Net
                cash used


2.
            Current
                ratio adjusted for non-cash
                liabilities


3.
            Corporate
                Headquarters accounts payable
                amount





During
      the period ended September 30, 2008 the impact to the financial statements
      for
      the provisions of the waiver noted above were estimated and the resulting costs
      are being amortized over the waiver period.


1.
            The
                increase to principal of $1,559,859 (see letter “C” above) was added to
                the long term note, $1,157,315 was capitalized in prepaid financing
                charges and the portion of the increase attributable to the nine
                month
                period ending September 30, 2008 of $402,544, less previously accrued
                interest (now incorporated in the principal) of $191,438 was charged
                to
                interest expense.


2.
            The
                estimated change in value of the original 9,803,925 debenture warrants
                related to the pending reset of the exercise price (see letter “G” above)
                was calculated by using the Volume Weighted Average Price (VWAP)
                for the
                most recent 30 days prior to September 30, 2008 of $0.08 as the estimated
                new exercise price following the reset and the warrants were valued
                first
                at their current exercise price then at the estimated new price using
                the
                Black Scholes Model using the following assumptions: Strike Price
                $0.32
                (old) and $0.08 (new), Stock Price $0.10 (price on date of agreement),
                time 780 days for November Warrants and 795 for December Warrants,
                Volatility 146.39%, Risk Free Interest Rate 3.83%. The increase in
                value
                calculated totaled $207,941. Of the total, $154,279 was capitalized
                as
                prepaid financing costs and will be amortized over the remainder
                of the
                waiver period. The portion attributable to the 9 month period ending
                September 30, 2008 of $53,662 was charged to interest
                expense.


3.
            The
                estimated number of additional warrants required to be issued to
                true up
                to the original aggregate exercise price for the November and December
                Warrants (see letter “G” above) following the reset of the exercise price
                was calculated using the difference between the current aggregate
                exercise
                price of $3,137,256 (9,803,925 total warrants at original exercise
                price
                $0.32), and the new aggregate exercise price of $784,314 following
                the
                reset of the exercise price to $0.08. This difference totaled $2,352,942
                requiring the issuance of an estimated 29,411,775 warrants (at $0.08)
                to
                maintain the previous aggregate exercise price. The new warrants
                were
                valued at $1,438,235 using the Black Scholes Model with the following
                assumptions: Strike Price $0.08, Stock Price $0.07 (price at September
                30,
                2008), time 753 days, Volatility 146.39%, Risk Free Rate 3.83%. Of
                the
                total, $1,067,077 was capitalized as prepaid financing costs and
                will be
                amortized over the remainder of the waiver period. The portion of
                the
                expense of issuing the new warrants that was attributable to the
                9 month
                period ending September 30, 2008 of $371,158 was charged to interest
                expense.





On
      August 29, 2008, Mr. Donald Karner, a director of the Company, and Kathryn
      Forbes agreed to provide the Company a line of credit for up to $650,000. This
      Line is secured by a second position on receivables (junior to previously issued
      debentures). During the 9 months ended September 30, 2008, $300,000 was advanced
      by Mr. Karner and Ms. Forbes. Further advances above $450,000 are contingent
      on
      the Company securing additional financing as agreed by October 26, 2008. This
      line carries a loan fee of $45,000 payable when the line expires on December 15,
      2008. No other interest payments or fees are required under the agreement.
      The
      fee of $45,000 is being expensed over the life of the Line. Imputed interest
      of
      $1,425 and financing charges of $6,962 were expensed in the 9 month period
      ending September 30, 2008. All amounts advanced under the Line are due and
      payable in full on December 15, 2008. The balance of the note payable was
      $300,000 at September 30, 2008.


15


**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





The
      current portion of the debentures is recorded, net of a $1,530,101 discount,
      at
      $2,294,981 at September 30, 2008. The long-term portion of the debentures is
      recorded, net of a $931,261 discount, is $3,785,612 at September 30,
      2008.





Accrued
      interest relating to the debentures was $2,854,351 at September 30, 2008 (see
      note on waiver above) and $60,131 at December 31, 2007.





Interest
      expense totaled $1,109,666 and $4,415 for the three months ended September
      30,
      2008 and 2007 respectively, and $2,175,279 and $12,501 for the nine months
      ended
      September 30, 2008 and 2007 respectively.





**Note
      6 - Stockholders’ equity**





There
      were 124,224,528 shares of common stock issued and outstanding at December
      31,
      2007.




During
      the year ended December 31, 2007, the Company issued 11,800,000 shares in four
      different acquisitions. See Note 3 for further information.





During
      the year ended December 31, 2007, the Company issued a total of 750,000 shares
      of common stock to employees as an incentive. The stock was valued at the
      current market price at the date of issue for a total of $316,000. Of this
      amount $91,000 was expensed and $225,000 was recorded as unamortized cost of
      stock issued for services to be amortized over the periods of the related
      agreements. During the nine months ended September 30, 2008, $112,500 has been
      amortized and $0 remains in unamortized cost of stock issued for
      services.





In
      January 2008, 175,000 shares of $0.001 common stock were issued to employees
      of
      eTec. The cost of issuance for these shares was recorded at $0.155, the close
      price of the stock on the date of grant and was charged to compensation
      expense.





In
      February 2008, BridgePointe Capital, one of the holders of the convertible
      debentures described in Note 5, converted $100,000 of debentures into 333,332
      shares of $0.001 common stock at a conversion price of $0.30. This conversion
      was made in two equal installments, the first on February 1 st ,
      2008
      and the second on February 29 th , 2008.
      As a result of these conversions, a reduction to the outstanding debenture
      balance in the amount of $100,000 and a corresponding reduction to the remaining
      discount on the debenture of $55,797 were recorded.




16




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**




During
      the year ended December 31, 2007, the Company signed an employment agreement
      with the CEO of the Company. The Company agreed to issue a total of 1,000,000
      options for shares of common stock currently and issue another 1,000,000 options
      to him one year from the date of the agreement. The options issued in 2007
      have
      a term of ten years and a strike price of $0.30. The aggregate fair value of
      the
      Warrants equals $281,300 based on the Black-Scholes pricing model using the
      following assumptions: 3.95% risk free rate, 162.69% volatility, a strike price
      of $0.30, market price of $0.32, no yield, and an expected life of 5 years.
      This
      amount was recorded as unamortized cost of stock issued for services to be
      amortized over the two-year period of the agreement. During the three and the
      nine months ended September 30, 2008 $35,163 and $105,487 respectively have
      been
      amortized into expense and at September 30, 2008 $152,369 remains in unamortized
      cost of stock issued for services. The options to be issued in 2008 were treated
      as earned equally over the two-year term of the agreement so that 375,000
      of these options were earned as of September 30, 2008. The options to be issued
      in 2008 were valued on a monthly basis during the 9 months ended September
      30,
      2008 using the Black-Scholes pricing model and the related expense over that
      period totaled $53,626. The remainder of the options will be expensed over
      the
      two-year term of the agreement as they are earned.




During
      the year ended December 31, 2007, the Company issued a total of 790,000 shares
      of common stock to consultants for services. The stock was valued at the current
      market price at the date of issue for a total of $400,400. This amount was
      recorded as a prepaid expense for services to be amortized over the periods
      of
      the related agreements. During the three and the nine months ended September
      30,
      2008, $16,575 and $116,025 respectively have been amortized and into expense
      and
      $0 remains in prepaid expenses.





During
      the year ended December 31, 2007, The Company signed several employment
      agreements agreeing to issue a total of 175,000 shares of common stock to the
      employees for their service over their contract period, with the right to
      receive the stock vesting one year from the date of the agreements. These
      agreements vest on October 1, 2008. For the nine months ended September 30,
      2008
      $12,250 has been charged to compensation expense





In
      August
      2008, the Company issued a total of 390,000 shares of common stock to a
      consultant for services. The stock was valued at the current market price at
      the
      date of issue for a total of $54,600. This amount was recorded as a prepaid
      expense for services to be amortized over the period of the related agreement.
      During the nine months ended September 30, 2008, $9,100 has been amortized
      and
      into expense and $45,500 remains in prepaid expenses.




There
      were 125,122,861 shares of common stock issued and outstanding at September
      30,
      2008.





There
      is
      no preferred stock issued or outstanding as of September 30,
      2008.


17




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**




**Note
      7 - Options and Warrants**




As
      of
      December 31, 2007, there were 8,799,982 options and warrants
      outstanding.




During
      the year ended December 31, 2007, the Company signed an employment agreement
      with the CEO of the Company. The Company agreed to issue a total of 1,000,000
      options for shares of common stock currently and issue another 1,000,000 options
      to him one year from the date of the agreement. The options issued in 2007
      have
      a term of ten years and a strike price of $0.30. The aggregate fair value of
      the
      Warrants equals $281,300 based on the Black-Scholes pricing model using the
      following assumptions: 3.95% risk free rate, 162.69% volatility, and strike
      price of $0.30, market price of $0.32, no yield, and an expected life of 5
      years. This amount was recorded as unamortized cost of stock issued for services
      to be amortized over the two-year period of the agreement. During the three
      and
      the nine months ended September 30, 2008, $35,163 and $105,487 respectively
      have
      been amortized into expense and at September 30, 2008 $152,369 remains in
      unamortized cost of stock issued for services. The options to be issued in
      2008
      were treated as earned equally over the two-year term of the agreement so
      that 375,000 of these options were earned as of September 30, 2008. The
      options to be issued in 2008 were valued on a monthly basis during the 9 months
      ended September 30, 2008 using the Black-Scholes pricing model and the related
      expense over that period totaled $53,626. The remainder of the options will
      be
      expensed over the two-year term of the agreement as they are earned.





In
      November and December of 2007, the Company received gross proceeds of $5,000,000
      in exchange for a note payable of $5,882,356 as part of a private offering
      of 8%
      Secured Convertible Debentures (the “Debentures”).  The debentures were
      convertible into common stock at $0.30 per share. Debenture principal payments
      were due beginning in May and June of 2008 (1/24th of the outstanding amount
      is
      due each month thereafter). In connection with these debentures, the Company
      issued debenture holders warrants (“the Warrants”) to purchase up to 9,803,925
      shares of the Company’s common stock with an exercise price of $0.32. The
      warrants were exercisable immediately upon issue. The Warrants expired five
      years from the date of issue.  The aggregate fair value of the Warrants
      equaled $2,272,942 based on the Black-Scholes pricing model using the following
      assumptions: 3.39%-3.99% risk free rate, 162.69% volatility, and strike price
      of
      $0.32, market price of $0.22-$0.32, no yield, and an expected life of 912 days.
      The gross proceeds received were bifurcated between the note payable and the
      warrants issued and a discount of $3,876,256 was recorded. The discount is
      being
      amortized over the loan term of two and one half years.  As of September
      30, 2008, a total of $1,414,894, had been amortized and recorded as interest
      expense and $2,461,362 remains as the unamortized discount.  See note 7 for
      additional discussion regarding the issuance of warrants.





On
      August
      29, 2008 the Company signed an Amendment to the Debenture agreements deferring
      the payments indicated above. The purpose of the agreement is to provide the
      Company time to fund its working capital requirements internally through organic
      growth as well as to obtain both short and long term funding through equity
      financing and other sources of capital.





The
      waiver, deferment agreement aligns with the Company’s short term working capital
      plan and provides time to achieve company objectives in this regard. In exchange
      for the Amendment to the Debentures, the Company agreed to:


A.
            Waiver
                of interest payments due between May-December 2008


B.
            Deferment
                of monthly redemptions for the period May-December
                2008.


C.
            Increase
                to the outstanding principal amount plus accrued interest though
                December
                31, 2008 for the debentures by 120% as of the effective date of the
                agreement.


D.
            Reset
                of the common stock conversion rate from $0.30 to
                $0.15.


E.
            Commencement
                of principal payments starting January 1, 2009 with no change to
                the
                redemption period (May 2010)


F.
            Commencement
                of interest payments @8% per year April 1, 2009 (first payment
                due).


G.
            Inclusion
                of make whole provisions to reset common stock warrant conversion
                prices
                to the value used to “true-up” both the Innergy Power Company and
                Minit-Charger (Edison) acquisitions when both “true-ups” are completed.
                For both of these acquisitions the Sellers were issued shares which
                the
                Company guaranteed would be worth $1.00 per share for the thirty
                days
                prior to the anniversary date of the purchase. This guarantee requires
                the
                issuance of additional shares or payment in cash for the difference
                in the
                share price on the respective anniversary dates. In the case of Innergy,
                the number of required “true up” shares is capped at
                4,000,000.


H.
            Inclusion
                of further make whole provisions to issue additional warrants adequate
                to
                maintain the pro rata debenture ownership % when fully diluted as
                per
                schedule 13 in the waiver
                agreement.


I.
            Compliance
                with covenants per quarterly public reports issued for the periods
                ending
                June 30,


September
      30, and December 31, 2008 for the following:


1.
            Net
                cash used


2.
            Current
                ratio adjusted for non-cash
                liabilities


3.
            Corporate
                Headquarters accounts payable
                amount




During
      the period ended September 30, 2008 the impact to the financial statements
      for
      the provisions of the waiver noted above were estimated and the resulting costs
      are being amortized over the waiver period.


1.
            The
                increase to principal of $1,559,859 (see letter “C” above) was added to
                the long term note, $1,157,315 was capitalized in prepaid financing
                charges and the portion of the increase attributable to the nine
                month
                period ending September 30, 2008 of $402,544, less previously accrued
                interest (now incorporated in the principal) of $191,438 was charged
                to
                interest expense.


2.
            The
                estimated change in value of the original 9,803,925 debenture warrants
                related to the pending reset of the exercise price (see letter “G” above)
                was calculated by using the Volume Weighted Average Price (VWAP)
                for the
                most recent 30 days prior to September 30, 2008 of $0.08 as the estimated
                new exercise price following the reset and the warrants were valued
                first
                at their current exercise price then at the estimated new price using
                the
                Black Scholes Model using the following assumptions as follows: Strike
                Price $0.32 (old) and $0.08 (new), Stock Price $0.10 (price on date
                of
                agreement), time 780 days for November Warrants and 795 for December
                Warrants, Volatility 146.39%, Risk Free Interest Rate 3.83%. The
                increase
                in value calculated totaled $207,941. Of the total, $154,279 was
                capitalized as prepaid financing costs and will be amortized over
                the
                remainder of the waiver period. The portion attributable to the 9
                month
                period ending September 30, 2008 of $53,662 was charged to interest
                expense.


3.
            The
                estimated number of additional of warrants required to be issued
                to true
                up to the original aggregate exercise price for the November and
                December
                Warrants (see letter “G” above) following the reset of the exercise price
                was calculated using the difference between the current aggregate
                exercise
                price of $3,137,256 (9,803,925 total warrants at original exercise
                price
                $0.32), and the new aggregate exercise price of $784,314 following
                the
                reset of the exercise price to $0.08. This difference totaled $2,352,942
                requiring the issuance of an estimated 29,411,775 warrants (at $0.08)
                to
                maintain the previous aggregate exercise price. The new warrants
                were
                valued at $1,438,235 using the Black Scholes Model with the following
                assumptions: Strike Price $0.08, Stock Price $0.07 (price at September
                30,
                2008), time 753 days, Volatility 146.39%, Risk Free Rate 3.83%. Of
                the
                total, $1,067,077 was capitalized as prepaid financing costs and
                will be
                amortized over the remainder of the waiver period. The portion of
                the
                expense of issuing the new warrants that was attributable to the
                9 month
                period ending September 30, 2008 of $371,158 was charged to interest
                expense.




As
      of
      September 30, 2008, there were 19,075,462 options and warrants
      outstanding.





The
      following is a summary of the status of the Company’s stock
      warrants:





***Number***
            
            ***Weighted-Average******Of
                Shares***
            
            ***Exercise Price***Outstanding
                at December 31, 2006
            
            
            **8,799,982**
            
            **$**
            **0.57**Granted
            
            
            **11,753,925**
            
            **$**
            **0.31**Exercised
            
            
            **(1,478,445**
            **)**
            **$**
            **0.35**Cancelled
            
            
            **0**
            
            **$**
            **0.00**Outstanding
                at December 31,2007
            
            
            **19,075,462**
            
            **$**
            **0.42**Granted
            
            
            **0**
            
            **$**
            **0.00**Exercised
            
            
            **0**
            
            **$**
            **0.00**Cancelled
            
            
            **0**
            
            **$**
            **0.00**Outstanding
                at September 30, 2008
            
            
            **19,075,462**
            
            **$**
            **0.42**





**STOCK
                WARRANTS OUTSTANDING*****Weighted-***
              ***Average***
            
            ***Weighted-******Number
                of***
            
            ***Remaining***
            
            ***Average******Range
                of***
            
            ***Shares***
            
            ***Contractual***
            
            ***Exercise******Exercise
                Prices***
            
            ***Outstanding***
            
            ***Life
                in Years***
            
            ***Price*****$0.35**
            
            
            **5,421,537**
            
            
            **3.08**
            
            **$**
            **0.35****$1.24
                - $1.42**
            
            
            **1,900,000**
            
            
            **2.8**
            
            **$**
            **1.36****$0.32**
            
            
            **6,862,748**
            
            
            **4.08**
            
            **$**
            **0.32****$0.32**
            
            
            **2,941,177**
            
            
            **4.17**
            
            **$**
            **0.32****$0.30**
            
            
            **1,000,000**
            
            
            **9.08**
            
            **$**
            **0.30****$0.19**
            
            
            **950,000**
            
            
            **9.25**
            
            **$**
            **0.19****19,075,462**
            
            
            **4.2**
            
            **$**
            **0.42**




**STOCK
                WARRANTS EXERCISABLE*****Number
                of***
            
            ***Weighted-******Range
                of***
            
            ***Shares***
            
            ***Average******Exercise
                Prices***
            
            ***Exercisable***
            
            ***Exercise
                Price*****$0.35**
            
            
            **5,421,537**
            
            **$**
            **0.35****$1.24
                - $1.42**
            
            
            **1,900,000**
            
            **$**
            **1.36****$0.32**
            
            
            **6,862,748**
            
            **$**
            **0.32****$0.32**
            
            
            **2,941,177**
            
            **$**
            **0.32****$0.30**
            
            
            **1,000,000**
            
            **$**
            **0.30****$0.18**
            
            
            **950,000**
            
            **$**
            **0.18****19,075,462**
            
            **$**
            **0.42**




18




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**




**Note 8
      - Commitments and contingencies**





As
      of
      September 30, 2008, the Company has five leases in effect for operating space.
      Future obligations under these commitments are $63,059 for 2008, $202,045 for
      2009, $150,324 for 2010, and $217,468 for 2011 and thereafter.





In
      June
      of 2006, the Company entered into a License Agreement with California Institute
      of Technology, whereby the Company obtained certain exclusive and non-exclusive
      intellectual property licenses pertaining to the development of an electronic
      fuel cell technology. The License Agreement carries an annual maintenance fee
      of
      $50,000, with the first payment due on or about June 12, 2009. The License
      Agreement carries a perpetual term, subject to default, infringement,
      expiration, revocation or unenforceability of the License Agreement and the
      licenses granted thereby.





**Note 9
      - Segment Reporting**





SFAS No. 131,
      “Disclosures about Segments of an Enterprise and Related Information,” requires
      disclosures related to components of a company for which separate financial
      information is available that is evaluated regularly by a company’s chief
      operating decision maker in deciding the allocation of resources and assessing
      performance. Upon completion of FuelCellStores.com, Innergy Power Corporation,
      Electric Transportation Engineering Corporation (eTec) and eTec’s *Minit-Charger* business
      acquisitions from June through December 2007, the Company identified its
      segments based on the way management expects to organize the Company to assess
      performance and make operating decisions regarding the allocation of resources.
      In accordance with the criteria in SFAS No. 131, “Disclosure about Segments
      of an Enterprise and Related Information,” the Company has concluded it has
      three reportable segments for the quarter ended March 31, 2008;
      ECOtality/ECOtality Stores segment, Innergy Power segment and eTec segment.
      The
      ECOtality/ECOtality Stores segment is the online marketplace for fuel
      cell-related products and technologies with online distribution sites in the
      U.S., Japan, Russia, Italy and Portugal. The Innergy Power segment is comprised
      of the sale of solar batteries and other solar and battery powered devices
      to
      end-users. The eTec segment relates to sale of battery fast-charge systems
      and
      to the testing and development of electric vehicles, plug-in hybrids, advanced
      battery systems and hydrogen ICE conversions and consulting revenues. Consulting
      services related to the research, development and testing of advanced
      transportation and energy systems with a primary focus on alternative-fuel,
      hybrid and electric vehicles and infrastructures. The eTec segment also includes
      the *Minit-Charger* business
      which is engaged in the sale of proprietary battery fast-charge systems and
      technologies for electric vehicle (EVs and PHEVs), mobile material handling,
      airport ground support, and marine and transit applications. eTec holds
      exclusive patent rights to the eTec *SuperChargeTM* and *Minit-Charger* systems
      - battery fast charge systems that allow for faster charging with less heat
      generation and longer battery life than conventional chargers. The Company
      has
      aggregated these subsidiaries into three reportable segments: ECOtality/Fuel
      Cell Store, eTec and Innergy.





While
      management is currently assessing how it evaluates segment performance, we
      currently utilize income (loss) from operations, excluding depreciation of
      corporate assets. We also exclude goodwill from segment assets. There were
      no
      inter-segment sales during the three or nine months ended September 30,
      2008.





The
      Company did not have separate segments for the three or nine months ended
      September 30, 2007.


19




**ECOTALITY,
      INC.**




**NOTES TO
      CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS — (Continued)**





Summarized
      financial information concerning the Company’s reportable segments for the three
      and nine months ended September 30, 2008 is as follows:





**THREE MONTHS ENDED SEPTEMBER 30, 2008****ETEC**
            
            **INNERGY**
            
            **FUEL CELL**
              **STORE**
            
            **TOTAL**Total
                net operating revenues
            
            $
            2,131,669
            
            $
            533,317
            
            $
            235,833
            
            $
            2,900,819Depreciation
                and amortization
            
            $
            168,267
            
            $
            1,097
            
            $
            1,187
            
            $
            170,551Operating
                income (loss)
            
            $
            (36,631
            )
            $
            (75,575
            )
            $
            56,016
            
            $
            (56,190
            )Interest
                Income (expense)
            
            $
            (843
            )
            $
            84
            
            $
            -
            
            $
            (759
            )Gain
                / (Loss) on disposal of assets
            
            $
            16,165
            
            $
            -
            
            $
            -
            
            $
            16,165Other
                Income - Working Capital True Up
            
            $
            375,877
            
            $
            -
            
            $
            -
            
            $
            375,877**Segment
                Income before Corporate Overhead Allocation**
            
            **$**
            **354,568**
            
            **$**
            **(75,491**
            **)**
            **$**
            **56,016**
            
            **$**
            **335,093**Corporate
                Overhead Allocation
            
            $
            1,371,531
            
            $
            343,140
            
            $
            151,737
            
            $
            1,866,407Segment
                Income / (Loss)
            
            $
            (1,016,963
            )
            $
            (418,631
            )
            $
            (95,721
            )
            $
            (1,531,314
            )Not
                Included in segment income:Depreciation
                on Corporate Assets
            
            
            
            
            
            
            
            
            
            
            $
            33,114Reported
                Net income after tax
            
            
            
            
            
            
            
            
            
            
            $
            (1,564,429
            )Capital
                Expenditures
            
            $
            76,023
            
            $
            6,193
            
            $
            -
            
            $
            82,216Total
                segment assets - excluding intercompany receivables
            
            $
            4,324,668
            
            $
            658,435
            
            $
            177,604
            
            $
            5,160,707Other
                items Not included in Segment Assets:Goodwill
            
            
            
            
            
            
            
            
            
            
            $
            3,495,878Other
                Corporate Assets
            
            
            
            
            
            
            
            
            
            
            $
            3,871,570Total
                Reported Assets
            
            
            
            
            
            
            
            
            
            
            $
            12,528,155




**NINE MONTHS ENDED SEPTEMBER 30, 2008****ETEC**
            
            **INNERGY**
            
            **FUEL CELL**
              **STORE**
            
            **TOTAL**Total
                net operating revenues
            
            $
            6,086,676
            
            $
            1,920,162
            
            $
            648,029
            
            $
            8,654,867Depreciation
                and amortization
            
            $
            359,676
            
            $
            5,196
            
            $
            2,670
            
            $
            367,542Operating
                income (loss)
            
            $
            46,382
            
            $
            46,538
            
            $
            44,930
            
            $
            137,850Interest
                Income
            
            $
            2,914
            
            $
            519
            
            $
            -
            
            $
            3,433Gain
                / (Loss) on disposal of assets
            
            $
            18,219
            
            $
            -
            
            $
            -
            
            $
            18,219Other
                Income - Working Capital True Up
            
            $
            375,877
            
            $
            -
            
            $
            -
            
            $
            375,877**Segment
                Income before Corporate Overhead Allocation**
            
            **$**
            **443,392**
            
            **$**
            **47,057**
            
            **$**
            **44,930**
            
            **$**
            **535,379**Corporate
                Overhead Allocation
            
            $
            3,456,303
            
            $
            1,074,177
            
            $
            369,014
            
            $
            4,899,494Segment
                Income / (Loss)
            
            $
            (3,012,911
            )
            $
            (1,027,120
            )
            $
            (324,084
            )
            $
            (4,364,115
            )Not
                Included in segment income:Depreciation
                on Corporate Assets
            
            
            
            
            
            
            
            
            
            
            $
            102,127Reported
                Net income after tax
            
            
            
            
            
            
            
            
            
            
            $
            (4,466,242
            )Capital
                Expenditures
            
            $
            241,444
            
            $
            9,025
            
            $
            -
            
            $
            250,469Total
                segment assets - excluding intercompany receivables
            
            $
            4,324,668
            
            $
            658,435
            
            $
            177,604
            
            $
            5,160,707Other
                items Not included in Segment Assets:Goodwill
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            3,495,878Other
                Corporate Assets
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            3,871,570Total
                Reported Assets
            
            
            
            
            
            
            
            
            
            
            $
            12,528,155





**Note
      10 Related Party Transactions**





On
      August
      29, 2008, Mr. Donald Karner, a director of the Company, and Kathryn Forbes
      agreed to provide the Company a line of credit for up to $650,000. This Line
      is
      secured by a second position on receivables (junior to previously issued
      debentures). During the 9 months ended September 30, 2008, $300,000 was advanced
      by Mr. Karner and Ms. Forbes. Further advances above $450,000 are contingent
      on
      the Company securing additional financing as agreed by October 26, 2008. This
      line carries a loan fee of $45,000 payable when the line expires on December
      15,
      2008. No other interest payments or fees are required under the agreement.
      The
      fee of $45,000 is being expensed over the life of the line. Imputed interest
      of
      $1,425 and financing charges of $6,962 were expensed in the 9 month period
      ending September 30, 2008. All amounts advanced under the Line are due and
      payable in full on December 15, 2008. The balance of the note payable was
      $300,000 at September 30, 2008.





**Note
      11 Subsequent Events**





On
      October 1, 2008 the Company signed an employment agreement granting 75,000
      shares of common stock vesting 1 year from the date of the employment
      agreement.





On
      October 7, 2008, an additional $150,000 was advanced on our Line of Credit
      with
      Mr. Karner and Ms. Forbes.





On
      October 31, 2008, 175,000 shares of $0.001 common stock were issued to employees
      in accordance with employment agreements.





On
      October 1, 2007, the Company acquired certain assets of the Innergy Power
      Corporation and its wholly owned subsidiary, Portable Energy De Mexico, S.A.
      DE
      C.V. The fair market value of the transaction was $3,000,000. The Company issued
      3,000,000 shares of the Company’s common stock for the acquisition.  The
      Company guaranteed to the sellers that the shares would be worth $1 each
      ($3,000,000) during the 30-day period commencing 11 months from the closing
      date. If the shares were not worth $3,000,000, the company would be required
      to
      either (a) issue additional shares such that the total shares are worth
      $3,000,000 at that time or, (b) issue a total of 4,000,000 new shares, or (c)
      pay cash to the seller such that the aggregate value of the 3,000,000 shares
      plus the cash given would equal $3,000,000. On October 17, 2008, 4,000,000
      shares were issued to Innergy Power Corporation in full satisfaction of our
      purchase obligation to them.


20




**Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





The
      following discussion and analysis provides information which management believes
      is relevant to an assessment and understanding of the Company’s results of
      operations and financial condition. The discussion should be read in conjunction
      with the Condensed Consolidated Financial Statements and the related notes
      thereto.





***Forward-Looking
      Statements***




This
      Quarterly Report contains forward-looking statements about our business,
      financial condition and prospects that reflect management’s assumptions and
      beliefs based on information currently available.  We can give no assurance
      that the expectations indicated by such forward-looking statements will be
      realized.  If any of our management’s assumptions should prove incorrect,
      or if any of the risks and uncertainties underlying such expectations should
      materialize, Ecotality’s actual results may differ materially from those
      indicated by the forward-looking statements.





The
      key
      factors that are not within our control and that may have a direct bearing
      on
      operating results include, but are not limited to, acceptance of our services,
      our ability to expand our customer base, managements’ ability to raise capital
      in the future, the retention of key employees and changes in the regulation
      of
      our industry.




There
      may
      be other risks and circumstances that management may be unable to predict.
       When used in this Quarterly Report, words such as, *“believes,”*  *“expects,”
      “intends,”*  *“plans,”*  *”anticipates,”*  *“estimates”* and similar expressions are intended to identify forward-looking statements,
      although there may be certain forward-looking statements not accompanied by
      such
      expressions.




21




**GENERAL**




The
      following discussion and analysis provides information that management believes
      is relevant to an assessment and understanding of the Company’s results of
      operations and financial condition. The discussion should be read in conjunction
      with the Condensed Consolidated Financial Statements and the related notes
      thereto, contained elsewhere in this Form 10-Q.





**Business
      Development and Summary**





ECOtality,
      Inc. is a Nevada corporation that was incorporated in 1999. We are a leader
      in
      clean electric transportation and storage technologies. Through innovation,
      acquisitions, and strategic partnerships, we accelerate the market applicability
      of advanced electric technologies to replace carbon-based fuels. In 2007,
      through a number of platform acquisitions we transitioned from a
      development-stage company into a revenue-producing company focused on providing
      clean electric and renewable energy products and solutions.





We
      operate with a commercial “electro-centric” strategy, targeting only products
      and companies that are involved in the creation, storage, and/or delivery of
      clean or renewable electric power. This strategy has resulted in the development
      and acquisition of various operating companies and the establishment of solar,
      hydrogen, and energy storage divisions. We are developing a diverse technology
      product base that is linked through the ability to deliver comprehensive
      electro-centric energy alternatives and solutions for commercial customers
      seeking to implement greenhouse gas reduction programs (GRPs) and to prepare
      for
      the anticipated consumer and governmental moves to carbon caps and taxes. We
      also believe that by building a technologically diverse multi-product base
      we
      can mitigate the uncertainty of renewable energy demand and regulatory changes.
      With our primary focus on commercially advancing clean electro-centric
      technologies, we are focused on improving the world’s prevailing and most
      dominant energy system - electricity.





The
      current operations of the Company consist of:





***Electric
      Transportation Engineering Corporation (eTec)***





Electric
      Transportation Engineering Corporation (eTec) was incorporated in Arizona in
      1996 to support the development and installation of battery charging
      infrastructures for electric vehicles, and conducts research, development and
      testing of advanced transportation and energy systems. Specializing in
      alternative-fuel, hybrid and electric vehicles and infrastructures, eTec offers
      consulting, technical support and field services and is committed to developing
      and commercially advancing clean electric technologies with clear market
      advantages. eTec also holds exclusive patent rights for their flagship products,
      the *eTec
      SuperChargeTM* -
      battery fast-charge systems that allow for rapid charging while generating
      less
      heat and promoting longer battery life than conventional chargers. This
      technology was licensed to eTec from Norvic Traction in 1999. The *eTec
      SuperCharge* system
      (recently consolidated into the eTec *Minit-Charger* brand)
      is specifically designed for airport ground support equipment, neighborhood
      electric vehicle operations, and marine and transit systems. Since the
      acquisition of the technology, eTec has made considerable engineering and
      product advancements and is currently a leader in providing these clean electric
      fast-charging technologies to airports throughout North America.





eTec
      has
      a comparatively long history in clean and renewable technologies and has various
      standing contractual relationships as a test contractor and/or primary and
      consulting engineer for projects with the United States Department of Energy
      (DoE), several national research laboratories, national energy storage
      consortiums, and large electric utilities where they provide services in energy
      storage, monitoring, systems design and fabrication, product and vehicle
      testing, and product development. Their work has been in the areas of advanced
      battery technologies, fast charging technologies, hydrogen creation, storage
      and
      dispensing systems, electric vehicle systems, recharging stations, and coal
      gasification programs.





eTec
      was
      acquired as an expansion platform for its core expertise in battery
      technologies, fast charging systems, energy distribution infrastructure, and
      advanced vehicle technologies and testing, which includes electric vehicle
      (EV),
      hybrid electric vehicle (HEV), plug-in hybrid electric vehicle (PHEV) and
      hydrogen vehicle technologies. We believe that eTec and its subsidiaries will
      expand its core technologies through new product development, joint ventures,
      acquisitions and organic growth.





***Edison
      MinitCharger***





Edison *Minit-Charger* was a
      subsidiary of Edison Source, a division of Edison International (the Southern
      California energy conglomerate). Edison originally acquired Norvic Traction
      Technology, which became Edison *Minit-Charger* , for
      its unique fast charge and complex battery maintenance technologies that are
      primarily used in mobile material handling applications (forklifts, pallet
      jacks, etc.). Edison *Minit-Charger* has
      been, and continues to be a leader in providing battery fast-charging systems
      for the mobile material handling industry. The core *Minit-Charger* technology allows for material handling equipment to convert to electric power
      systems that can be charged quickly, conveniently and efficiently, thereby
      eliminating the need for propane or diesel-powered equipment or for backup
      batteries and costly change-out operations required with traditional
      straight-line charging. Following the initial acquisition of Norvic, Edison
      engineers completed many advancements of the technology and received numerous
      patents all of which were transferred to us in our acquisition of the
      subsidiary. *Minit-Charger* has a
      large customer base that consists of Fortune 500 companies and other corporate
      entities throughout North America.





Our
      acquisition of Edison *Minit-Charger* greatly
      increased the size of our company and reunited the technologies and advancements
      that sprung from the original Norvic Traction technology: Edison’s *Minit-Charger* and
      eTec’s *SuperCharge* products. It allows the unification of the underlying fast-charging technologies
      under a single engineering, manufacturing and sales entity ( *eTec
      Minit-Charger* ) and
      puts us in a leadership position in the rapidly growing clean technology sector
      of electric vehicle infrastructure technologies.




22




***Innergy
      Power Systems***





Founded
      in 1989, Innergy Power Systems is a division of ECOtality, Inc. and is based
      in
      San Diego, California with a manufacturing facility in Tijuana, Mexico. Innergy
      is the only North American manufacturer of both renewable energy solar modules
      and thin-sealed rechargeable batteries, as its solar photovoltaic (PV) product
      line addresses the burgeoning worldwide demand for solar energy products and
      off-grid power. Innergy’s fiberglass reinforced panel (FRP) solar modules are
      designed to meet a broad range of applications for emergency preparedness and
      recreation, where quality, durability, rugged construction and light weight
      are
      important in the outdoor environment. Applications include logistics tracking,
      asset management systems, off-grid lighting, mobile communications, mobile
      computing, recreational vehicles, signaling devices and surveillance
      cameras.





Innergy
      and our wholly owned subsidiary, Portable Energy De Mexico, S.A. DE C.V., were
      acquired as platform acquisitions that provide us the ability to further expand
      our production and manufacturing of solar products and energy storage devices.
      We viewed this acquisition as the starting point of a major move to provide
      solar products and solutions for current and developing commercial markets.
      While we expect solar to become a major future energy source, Innergy’s battery
      systems that support the growing electric vehicle market is quickly expanding
      and we expect the combination of solar solutions and new batter sales to
      contribute to our long and short-term earnings and revenue growth. Innergy
      is
      actively pursuing growth opportunities through product line expansion, joint
      ventures, acquisitions, and manufacturing contracts.




***ECOtality
      Stores (dba Fuel Cell Store)***





ECOtality
      Stores (dba Fuel Cell Store) is our wholly owned subsidiary and operates as
      our
      online retail division. Fuel Cell Store (www.fuelcellstore.com) is an e-commerce
      marketplace that offers consumers the widest array of fuel cell products from
      around the globe. Based in San Diego, California and with active international
      operations in Japan, Russia, Italy, and Portugal, Fuel Cell Store develops,
      manufacturers, and sells a diverse and comprehensive range of fuel cell products
      that includes fuel cell stacks, systems, component parts and educational
      materials. In addition to primary retail operations, Fuel Cell Store also offers
      consulting services for high schools, colleges, and leading research institutes
      and is available to host workshops, conferences and corporate events. Fuel
      Cell
      Store is the leading market place for fuel cell stack, component, and hydrogen
      storage manufacturers to unite with consumers and is an attractive source for
      hydrogen and fuel cell industry activity and direction.




***HydralityTM***





HydralityTM
      is our initial technology and is a complex reactor system that stores and
      delivers hydrogen on-demand using magnesium compounds and water. When used
      in
      conjunction with existing fuel cell technology, Hydrality emits only pure water
      and produces no harmful emissions. An electric power cell or fuel cell is an
      electrochemical device that combines hydrogen and oxygen to produce electric
      power without combustion.




The
      EPC/Hydrality technology, which was initially developed in conjunction with
      NASA’s Jet Propulsion Laboratory (JPL) and subsequently advanced by Arizona
      State University, Green Mountain Engineering and Airboss Aerospace, Inc.
      continues to have strong promise for a variety of commercial applications.
      While
      we initially sought to design and license a cost efficient Hydrality system
      for
      use in motorized vehicles and industrial equipment, we have identified several
      additional and promising applications for Hydrality that include stationary
      applications for remote power, back-up power systems, and large scale industrial
      and utility use.




We
      expect
      to derive revenue from technology license fees, technology transfer fees, fuel
      licensing fees and fees for the design, installation and technical support
      of
      Hydrality systems and by third parties.




23




**Products**





We
      currently offer the following products:





·
            Minit-Charger
                fast charge systems




·
            eTec
                SuperCharge fast charge systems (consolidated under the*eTec Minit-Charger*brand)




·
            Industrial
                battery systems





·
            Energy
                engineering services (hydrogen, solar, battery, coal gasification,
                energy
                delivery infrastructure, etc...)





·
            Solar
                panel production





·
            Specialty
                solar solutions





·
            Specialty
                thin-sealed lead battery products





·
            Proprietary
                solar products for consumer, emergency response programs and remote
                power
                systems.





·
            Third-party
                hydrogen and education related
                products




·
            Hydrality
              technology





**Customers**





We
      have a
      strong base of commercial, industrial, institutional, governmental, and utility
      customers. As the move to renewable clean energy continues to advance, we
      believe that our positioning within the commercial sector gives us an advantage
      over companies who focus on consumer products or distribution. Our customer
      base
      includes many Fortune 500 companies, hundreds of colleges and universities,
      international research institutes, major electric utilities, the Department
      of
      Energy, the Department of Transportation, major industry research consortiums,
      vehicle manufacturers and original equipment manufacturers (OEM). By providing
      testing and engineering services, as well as being a product provider, we are
      on
      the cutting edge of technology and product development for the production,
      storage and delivery of renewable energy sources, which allows us to develop
      innovative product solutions for industry and government needs. Our customers
      use our products in industrial applications and for OEM
      applications.





We
      believe that commercial/industrial entities will be the early adopters of
      renewable energy technologies and products, precipitated by regulatory,
      financial, employee, and customer pressure. We also believe this sector will
      provide the most stable demand and will be less prone to overall economy or
      “fad” pressures. For the immediate future, we plan to focus our efforts and
      products on this high value added business sector.





**Manufacturing**





We
      have
      manufacturing facilities in Mexico operated under a maquilladora program for
      the
      production of solar and battery products. The facility is highly
      labor-intensive. We have a high-value assembly operation in Phoenix, Arizona.
      Additionally, we have manufacturing agreements with third parties in Canada,
      Germany, and China.





We
      expect
      to expand our Mexican operations significantly in 2008, as well as the
      high-value manufacturing capability in Arizona. We are currently planning for
      new leased facilities in Mexico to handle our anticipated growth. Part of our
      strategic growth plan would include more mechanized production systems,
      inclusive of International Organization for Standardization (ISO) quality and
      environmental certifications. We believe that our existing plant in Arizona
      has
      sufficient room for anticipated growth.




24




**Research
      and Development**




We
      devoted a large percentage of our 2007 research and development expenditures
      to
      the Hydrality project. This expenditure was with third-party technology and
      engineering partners such as NASA’s Jet Propulsion Laboratories (JPL) and
      others. We have determined that we will rationalize and capacitate our
      technology research and development expenditures at levels in-line with
      traditional operating technology companies based upon a reasonable percentage
      of
      revenues. Given the proven and commercially viable clean technology companies
      we
      acquired in 2007, we have determined we are well positioned with our strategy
      to
      grow through a combination of organic growth of existing operations and
      potential acquisitions of other mid-stage companies that are congruous with
      our
      clean electro-centric strategy.





We
      have
      determined that the vagaries of the hydrogen industry, the advancement of other
      renewable technologies to the commercial forefront, and the potentially long
      and
      expensive road to commercialization and profitability for hydrogen technologies
      necessitate that we prudently and significantly scale back our hydrogen research
      and development expenditures, and proceed only on the basis of joint development
      projects with third-parties or significantly subsidized development with
      potential licensees or federal grants.





This
      shift to joint development projects and the scaling back on our hydrogen
      research and development expenditures is clearly reflected in our 2008 operating
      results. The most significant research and development expenditures for 2008
      relate to final payments on Hydrality- related projects initiated in 2007 that
      were scheduled for completion in the first half of 2008.




**Sales
      and Marketing**





We
      are
      actively marketing all of our companies and products under the ECOtality brand
      as well as under their historic brand names. We are striving to build a strong
      corporate identity as a purveyor of “clean electric and renewable energy”
products and solutions. This corporate branding of group products is an
      important part of our strategy to provide individual and integrated
      electro-centric products and solutions. All marketing programs are or will
      be
      dually targeted towards “green products and green returns.” Product marketing is
      handled on a divisional and subsidiary level, with cross-marketing efforts
      to be
      a key element of the corporate marketing program. Corporate marketing and
      overall brand management, investor relations and group representation is handled
      out of corporate headquarters in Scottsdale, Arizona.





The
      majority of our products and services are sold directly on a
      business-to-business basis. ECOtality Stores operates internet sales operations
      of hydrogen fuel cell products and educational kits and
      systems.





**Government**





The
      energy industry is highly regulated. Several states in the U.S. along with
      Canada and various countries in Europe and Asia have adopted a variety of
      government subsidies to allow new renewable sources of energy and technologies
      to compete with conventional fossil fuel based sources. Government grants for
      research and development are often the precursors to the acceptance of and
      government incentives for new clean technologies. We closely track government
      policy and strategy as it relates to renewable and clean tech energy. eTec
      has a
      large portfolio of DOE contracts and is in regular contact with leaders of
      U.S
      energy and technology policies.





Solar
      power is increasingly becoming more attractive to consumers due to government
      subsidies and incentives that generally focus on grid-connected systems and
      take
      several forms, including feed-in tariffs, net metering programs, renewable
      portfolio standards, rebates, tax incentives and low-interest loans. Some
      programs further specify that a portion of the renewable energy quota must
      be
      from solar electricity.




25




Tax
      incentive programs exist in the United States at both the federal and state
      level and can take the form of investment tax credits, accelerated depreciation
      and property tax exemptions. Several governments also facilitate low interest
      loans for photovoltaic systems, either through direct lending, credit
      enhancement, or other programs.




Gradual
      government increases to Corporate Average Fuel Economy (CAFE) standards on
      vehicle mileage minimums, along with high gas prices and consumer ecology
      preferences, are forcing vehicle OEMs to actively seek alternatives to
      petroleum-powered internal combustion engines (ICE). There is considerable
      jockeying for a leadership role between two factions - biofuels vs. electric
      vehicles (HEVs, PHEVs and pure EVs). We are well positioned to play a
      substantial role in the electric vehicle sector and the associated establishment
      of an electric infrastructure for PHEVs and EVs.





Our
      Hydrality system may be subject to regulation under the 2002 National Electric
      Code (“NEC”), which is a model code adopted by the National Fire Protection
      Association that governs, among other things, the installation of fuel cell
      systems.  Accordingly, any of our systems installed in a jurisdiction that
      has adopted the 2002 NEC must be installed in accordance with Article 692.
       In addition, product safety standards have been established covering the
      overall fuel cell system and the power conversion electronics. There may be
      new
      regulations with respect to fuel cells, but we do not currently know the extent
      to which any new regulations may impact our ability to distribute, sell or
      install and service Hydrality. If Hydrality reaches the commercialization
      stage and we begin distributing our systems to our early target markets,
      federal, state or local government entities may seek to impose
      regulations.




The
      Federal Bayh-Dole Act requires the California Institute of Technology (CalTech-
      operators of NASA’s JPL) to grant to the Federal government a worldwide,
      non-exclusive, non-transferable, irrevocable, paid-up license in connection
      with
      any invention developed under the license agreement.  Therefore,
      under this provision, the Federal government would have a license to use
      each subject invention for NASA-related applications and for other applications
      of the Federal government.





The
      Federal government also retains “March-in Rights, ” which would allow the
      Federal government to grant licenses to others if:  (1) we do not “achieve
      practical application” of a subject invention (i.e. commercialize the
      technology); (2) such action is necessary to alleviate health or safety needs
      that are not reasonably satisfied by us; (3) such action is necessary to meet
      requirements for public use specified by federal regulations and such
      requirements are not reasonably satisfied by us; or (4) such action is necessary
      because we and/or our sub licensees are manufacturing patented products
      outside of the United States.  We believe that the Federal government is
      not likely to exercise its March-in Rights with regard to any of our patented
      technology because March-in Rights have rarely, if ever, been invoked by the
      Federal government since the Bayh-Dole Act was enacted in 1980. However, we
      cannot assure you that the Federal government will not invoke its March-in
      Rights against us in the future.




**General
      Competition**




Currently,
      we believe that we have no direct competitors and that our consolidated and
      diverse offering of products and technologies in multiple renewable energies
      sectors differentiates us from others in the industry and gives us a competitive
      advantage. While many of our individual technologies and products do have direct
      market competition, we are aware of no other entity that has consolidated its
      products and technology offerings to extend to such diverse renewable energy
      market segments.




As
      competition in the renewable energy sectors is intense, the potential
      competition for each of the individual products and technologies that we offer
      ranges from development stage companies to major domestic and international
      companies, many of which have financial, technical, marketing, sales,
      manufacturing, distribution and other resources that are significantly greater
      than ours.




**Hydrality
      Competition**




Hydrality
      is a complex reactor system that is currently in developmental stages and stores
      and delivers hydrogen on-demand using magnesium compounds and water. As
      Hydrality provides an alternative method of storage and delivery of hydrogen,
      it
      competes with current suppliers of delivered hydrogen and with other
      manufacturers of on-site hydrogen generators. Competitors in the delivered
      hydrogen market include Airgas, Inc., Air Liquide, Air Products and
      Chemicals, Inc., Linde AG, Praxair Technology, Inc., and Distributed Energy
      Systems Corporation. Hydrality will also compete with older generations of
      electrolysis-based hydrogen generation equipment sold by Hydrogenics
      Corporation, Statoil Hydro, Teledyne Energy Systems, Inc., and other companies.
      We believe that many of these current hydrogen creation, storage and delivery
      methods are bulky, unreliable, expensive, energy inefficient, contain hazardous
      materials, or require the assistance of mechanical compressors to produce
      hydrogen at high pressures.




There
      are
      a number of companies located in the United States, Canada and abroad that
      are
      developing Proton Exchange Membrane (PEM) fuel cell technology. These companies
      include Ballard Power Systems Inc., General Motors Corporation,
      Giner, Inc., Honda Motor Company, Toyota Motor Corporation, SANYO Electric
      Co., Ltd., IdaTech LLC, Hydrogenics Corporation, Nuvera Fuel Cells, Plug Power
      Inc. and United Technologies Corporation. Although we believe these companies
      are currently primarily targeting vehicular and residential applications, they
      could decide to enter the hydrogen generation and backup power markets we
      address. We may also encounter competition from companies that have developed
      or
      are developing fuel cells based on non-PEM technology, as well as other
      distributed hydrogen generation technologies.




26




**Fast-Charge
        Competition**
  The *eTec
        SuperCharge* and *Minit-Charger* systems
        (recently consolidated under the *eTec
        Minit-Charger* brand)
        are designed for material handling applications, airport ground support
        equipment and electric vehicles. We believe that the principal competitive
        factors in the markets for our battery fast charging products and services
        include product performance, features, acquisition cost, lifetime operating
        cost, including maintenance and support, ease of use, integration with existing
        equipment, quality, reliability, customer support, brand and
        reputation.
  The
        primary direct competitors to the *eTec
        SuperCharge* and *Minit-Charger systems* are
        other fast charge suppliers, including AeroVironment, Inc., Aker Wade Power
        Technologies LLC, Power Designers, LLC, and C&D Technologies, Inc. Some of
        the major industrial battery suppliers have begun to align themselves with
        fast
        charge suppliers, creating a potentially more significant source of competition.
        In addition, the *eTec
        SuperCharge* and *Minit-Charger* systems
        compete against the traditional method of battery changing. Competitors in
        this
        area include suppliers of battery changing equipment and infrastructure,
        designers of battery changing rooms, battery manufacturers and dealers who
        may
        experience reduced sales volume because the *eTec
        SuperCharge* and *Minit-Charger* fast
        charge systems reduces or eliminate the need for extra batteries.
 
 **Retail
        Fuel Cell Competition**
 
 Fuel
        Cell
        Store has active operations in the United States, Japan, Russia, Italy, and
        Portugal, and is an online retailer (e-commerce) that develops, manufacturers,
        and sells a diverse and comprehensive range of fuel cell products. We believe
        that the principal competitive factors in the retail fuel cell and e-commerce
        markets include breadth of product offerings, product quality, product
        availability, distribution capabilities, internet rankings, ease of use of
        the
        website, customer service, technical support, brand and reputation.
  The
        primary direct competitors to Fuel Cell Store are fuel cell manufacturers,
        and
        other fuel cell e-commerce sites. Fuel cell manufacturers that sell products
        directly to consumers include Heliocentris Fuel Cells AG, Horizon Fuel Cell
        Technologies, Ltd., BCS Fuel Cells, Inc., Electrochem, Inc., and Fuel Cell
        Scientific, LLC. New e-commerce sites that are coming online in the U.S.
        and
        abroad and are duplicating the Fuel Cell Store format and sourcing from similar
        vendors are providing growing competition. These companies include GasHub
        Technology, JHT Power, H-Tech, Inc., Element-1 Power Systems, and miniHYDROGEN.
        Other renewable technologies, including solar and wind, as well as advanced
        batteries and conventional fossil fuel technologies are also competing
        technologies for fuel cells.
 
 **Solar
        Competition**
  The
        market for solar electric power technologies is competitive and continually
        evolving. Innergy’s solar products compete with a large number of competitors in
        the solar power market, including BP Solar International Inc., Evergreen
        Solar,
        Inc., First Solar Inc., Kyocera Corporation, Mitsubishi Electric Corporation,
        Motech Industries Inc., Q-Cells AG, Sanyo Corporation, Sharp Corporation,
        SolarWorld AG and Suntech Power Holdings Co., Ltd. Many of these companies
        have
        established strong market positions, greater name recognition, a more
        established distribution network and a larger installed base of customers.
        Some
        competitors also have more available capital and significantly greater access
        to
        financial, technical, manufacturing, marketing, sales, distribution, management
        and other resources than we do. Many of our competitors also have
        well-established relationships with our current and potential suppliers,
        resellers and their customers and have extensive knowledge of our target
        markets. As a result, our competitors may be able to devote greater
        resources to the research, development, promotion and sale of their products
        and
        respond more quickly to evolving industry standards and changing customer
        requirements than we can.
  In
        addition to intense market competitors, universities, research institutions
        and
        other companies have brought to market advanced and alternative technologies
        such as thin films and concentrators, which may compete with our technology
        in
        certain applications. Furthermore, the solar power market in general competes
        with other sources of renewable energy and conventional power
        generation.
  The
        principal elements of competition in the solar systems market include technical
        expertise, experience, delivery capabilities, diversity of product offerings,
        financing structures, marketing and sales, price, product performance, quality
        and reliability, and technical service and support. We believe that we compete
        favorably with respect to each of these factors, although we may be at a
        disadvantage in comparison to larger companies with broader product lines
        and
        greater technical service and support capabilities and financial
        resources.
 
 **Intellectual
        Property**
 
 Our
        success depends, in part, on our ability to maintain and protect our proprietary
        technology and to conduct our business without infringing on the proprietary
        rights of others. We rely primarily on a combination of patents, trademarks
        and
        trade secrets, as well as employee and third party confidentiality agreements,
        to safeguard our intellectual property. As of December 31, 2007, in the
        United States we held three patent applications and 16 issued patents, which
        will expire at various times between 2010 and 2021 if all maintenance fees
        are
        paid. We also held two PCT patent applications, two Canadian patent
        applications, one Japanese patent application, one European patent application,
        11 issued Canadian patents, four issued Japanese patents, seven issued European
        patents, and one issued Australian patent. Our patent applications and any
        future patent applications, might not result in a patent being issued with
        the
        scope of the claims we seek, or at all and any patents we may receive may
        be
        challenged, invalidated, or declared unenforceable. We continually assess
        appropriate occasions for seeking patent protection for those aspects of
        our
        technology, designs and methodologies and processes that we believe provide
        significant competitive advantages. Our patents and patent applications
        generally relate to our hydrogen, battery charging, and thin-cell battery
        technologies.
  27
  In
        May
        2006, CalTech filed a provisional patent application on the hydrogen technology
        being developed pursuant to a task plan between ECOtality and Jet Propulsion
        Laboratory (“JPL”), a Federally Funded Research and Development Center for the
        National Aeronautics and Space Administration (“NASA”).  The California
        Institute of Technology (“CalTech”) is the operator of JPL and assignee of its
        patent and technology rights.  On May 7, 2007, a non-provisional
        patent application was filed by Stinson Morrison Hecker LLP in the name of
        California Institute of Technology as assignee and ECOtality, Inc. as
        exclusive licensee of the technology, for a Method and System for Storing
        and
        Generating Hydrogen, claiming priority from a provisional application filed
        by
        CalTech on May 8, 2006. The details of the patent application and
        invention are confidential until publication or issue, which did not occur
        prior
        December 31, 2007. The patent application is generally directed towards the
        hydrogen reactor design that has been under development.
 
 On
        June
        12, 2006, we entered into a License Agreement with California Institute of
        Technology, which operates JPL, whereby we acquired certain exclusive licensed
        patent and/or patent applications rights and improvement patent rights related
        to research performed under the JPL Task Plan No. 82-10777, as well as a
        nonexclusive licensed technology rights developed as a result of the Task
        Plan.
 The license agreement with CalTech relates to CalTech’s rights to patents
        and technology based on inventions that are:  (a) identified in the license
        agreement, (b) developed under the development agreement with JPL, (c) related
        to electric power cell technology developed at JPL with the involvement of
        our
        personnel, or (d) funded, in whole or in part, by us (the “CalTech Rights”).
 As partial consideration paid in connection with the License Agreement, we
        issued 5,869,565 shares of our common stock to CalTech with a fair market
        value
        of $1.40 per share, based upon the closing price of our common stock on June
        12,
        2006, for a total aggregate value of $8,217,391.  Furthermore, we are
        obligated to pay an annual maintenance fee of $50,000 to CalTech, beginning
        on
        June 12, 2009, continuing until the expiration, revocation, invalidation
        or
        unenforceability of the last exclusively licensed patent rights or improvement
        patent rights.  The License Agreement carries a perpetual term, subject to
        default, infringement, expiration, revocation or unenforceability of the
        License
        Agreement and the licenses granted thereby.
 
 With
        regard to patented CalTech Rights, CalTech has granted us the exclusive
        worldwide license, with the right to grant and authorize sublicenses, to
        make,
        have made, import, use, sell, and offer for sale any products, devices, systems,
        articles of manufacture, and compositions of matter, or processes or services
        that are covered by the patented CalTech Rights.  With regard to
        non-patented CalTech Rights, CalTech has granted us a non-exclusive worldwide
        license, with the right to grant and authorize sublicenses, to make, have
        made,
        import, use, sell, offer for sale, reproduce, distribute, display, perform,
        create derivative works of, and otherwise exploit products, devices, systems,
        articles of manufacture, and compositions of matter, or processes or services
        that utilize the technology covered by the non-patented CalTech Rights.
 The non-patented CalTech Rights include technology necessary for the
        development or use of our products or services, as may be disclosed in any
        patent applications filed by CalTech or requested by us and consented to
        by
        CalTech.
 
 All
        license rights granted by CalTech are subject to a reservation of rights
        by
        CalTech for non-commercial education and research purposes and U.S. Government
        rights provided under the Bayh-Dole Act, 35 U.S.C. § 200 et seq. and 37 C.F.R. §
401 et seq. as indicated below.
 
 As
        of
        September 30, 2008, we held six United States federal trademark
        registrations **** (including
        eTec SUPERCHARGE®, MINIT-TRAK®, MINIT-WATCH®, INNERGY POWER®, THINLINE®, and
        POWER PLANT®) and 13 pending applications for federal registration of trademarks
        (including ECOTALITYTM, HYDRALITYTM, ELETRICELLTM, ELECTRAWINDTM, BIOSOLINATM,
        SOLATRICITYTM, MAKING HYDROGEN POWER A REALITYTM, and related logos). We also own
        various common law trademark rights and Canadian trademark
        registrations.
 
 With
        respect to, among other things, proprietary know-how that is not patentable
        and
        processes for which patents are difficult to enforce, we rely on trade secret
        protection and confidentiality agreements to safeguard our interests. We
        believe
        that many elements of our products and manufacturing process involve proprietary
        know-how, technology, or data that are not covered by patents or patent
        applications, including technical processes, equipment designs, algorithms
        and
        procedures. We have taken security measures to protect these elements. All
        of
        our research and development personnel have entered into confidentiality
        and
        proprietary information agreements with us. These agreements address
        intellectual property protection issues and require our employees to assign
        to
        us all of the inventions, designs and technologies they develop during the
        course of employment with us. We also require our customers and business
        partners to enter into confidentiality agreements before we disclose any
        sensitive aspects of our solar cells, technology, or business
        plans.
  **Employees**
  As
        of
        September 30, 2008, we had 63 employees, including 35 in manufacturing and
        the
        rest in research and development, sales and marketing, and general and
        administration positions. None of our employees are represented by labor
        unions
        or covered by a collective bargaining agreement. As we expand domestically
        and
        internationally, however, we may encounter employees who desire union
        representation. We believe that relations with our employees are
        good.
  **Results
        of Operations**
 
 THREE
        MONTHS ENDED SEPTEMBER 30, 2008, COMPARED WITH THREE MONTHS ENDED SEPTEMBER
        30, 2007
  28
  CONSOLIDATED
        RESULTS
 
 *Our
        results in the first three quarters of the year are reflective of our work
        to
        integrate our acquisitions and to form a solid organizational base for future
        growth. The first quarter ended March 31, 2008 was one of transition with
        the
        second quarter ended June 30, 2008 being spent fine tuning our operations,
        reducing costs and aligning our newly formed organization around our goals
        for
        continued growth and enhanced profitability. The third quarter ended September
        30, 2008, while not the period of growth we had positioned ourselves for,
        demonstrates our success in building a solid platform that allowed us to
        effectively manage costs and maintain revenue levels in a period of severe
        economic downturn. The national economic climate has had a limiting effect
        on
        our growth plans and our ability to internally generate cash to meet our
        overall
        corporate requirements. This down turn in the economy regardless of sector
        has
        impacted our overall results.*
 
 It
        is
        difficult to compare third quarter 2008 results to those of third quarter
        2007
        as we have transformed ourselves from being a development stage company to
        a
        growth oriented renewable energy company. Thus, the variations indicated
        in our
        results of operations described below are based upon this
        transformation.
 
 *As
        planned, the results for three months ended September 30, 2008 are indicative
        of
        our focus on tight overhead cost controls and improvement of operational
        efficiencies following the successful integration of our 2007 acquisitions
        in
        the previous quarters. Not planned, however was the flat demand for deliveries
        of our fast charging units and consulting services as well as the unanticipated
        decrease in production in our manufacturing facility in
        Mexico.*
 
 In
        the
        three months ended September 30, 2008, we had revenues of $2,900,819 compared
        to
        the three months ended September 30, 2007 of $235,237. The 2007 revenue is
        attributable to Fuel Cell Store. The 2008 figure was generated from Fuel
        Cell
        Store, as well as the three subsequent acquisitions (eTec, Minit-Charger
        and
        Innergy) made in the fourth quarter of 2007. The cost of goods sold percentage
        for the three months ended September 30, 2008 was 65% leaving us with a gross
        profit of $1,028,879. The increase in revenues in 2008 as compared to 2007
        is
        consistent with our efforts by the end of 2007 to move from being a development
        stage company to a revenue-generating renewable energy company.
 
 Total
        operating expenses during the three months ended September 30, 2008 were
        $1,876,300 compared to $1,814,536 for three months ended September 30, 2007.
        General and administrative expenses including depreciation were $1,738,157
        or
        93% of total operating expenses for the three months ended September 30,
        2008
        compared with $1,245,248 or 67% for the three months ended September 30,
        2007.
 
 To
        understand the change in General and Administrative (G&A) expenses for the 3
        months ended September 30, 2008 as compared to September 30, 2007, it is
        important to note that G&A expenses for the period ended September 30, 2008
        are made up of Corporate Headquarters spending of $708,962 and subsidiary
        spending of $1,024,101 as compared to Corporate Headquarters spending of
        $990,181 and subsidiary spending of $255,067 for the 3 month period ended
        September 30, 2007. The 28% reduction in Corporate Headquarters G&A spending
        is the direct result of tight cost controls implemented in 2008. The change
        in
        subsidiary spending is attributable to the timing of our business acquisitions
        in 2007. Only one of our subsidiaries, Fuel Cell Store was included in the
        3
        months ended September 30, 2007 figures. Fuel Cell Store made up the total
        subsidiary spending for the 3 month period ended September 30, 2007 at $255,067.
        For the 3 month period ending September 30, 2008 Fuel Cell Store made up
        just
        $14,000 of the subsidiary G&A spending, a 94% decrease from the same period
        the previous year; the businesses added in the fourth quarter of 2007 eTec
        /
        Minit-Charger and Innergy made up the remaining $1,009,548.
 
 Details
        around the general and operating expenses incurred during the 3 months ended
        September 30, 2008 as compared to the 3 months ended September 30, 2007 are
        described below:
  Professional
        fees were $83,952 for the 3 months ended September 30, 2008 compared with
        $93,830 for the 3 months ended September 30, 2007. New media, marketing,
        advertising and investor and public relations expenses were $93,968 for the
        3 months ended September 30, and $41,449 for the 3 months ended September
        30,
        2007. The increase from 2007 is attributable to our current focus on securing
        outside capital to help fund our growth. Legal fees were down 50%, at $62,359
        for the 3 months ended September 30, 2008 compared with $124,618 for the
        3
        months ended September 30, 2007 and accounting fees were down 83% at $25,925
        for
        the 3 months ended September 30, 2008 compared with $149,369 for the 3 months
        ended September 30, 2007. Executive compensation was $155,750 for the 3
        months ended September 30, 2008 compared with $114,750 for the 3 months ended
        September 30, 2007. The slightly higher figure in 2008 is attributable to
        stock
        awards to our chief executive officer. Depreciation expense was $203,665
        for the
        3 months ended September 30, 2008 compared to $48,693 for the 3 months ended
        September 30, 2007. The increase is related to depreciation for the assets
        acquired as part of the acquisitions. All other general and administrative
        spending totaled $1,316,203 for the 3 months ended September 30, 2008 compared
        to $672,539 for the 3 months ended September 30, 2007.
 
 Expenses
        for research and development totaled $138,143 for the three months ended
        September 30, 2008 compared to $466,668 for the three months ended
        September 30, 2007. This reduction reflects our continued focused strategy
        on
        applications with short-term commercialization potential supported through
        joint
        projects and grants to help defray costs. Since one of our primary objectives
        continues to be the commercial advancement of clean electric technologies
        that
        reduce our dependence upon carbon based fuels, we have retained a strong
        focus
        on research and development activities, and expect to continue to incur
        additional research and development costs, although at a significantly reduced
        rate, for the foreseeable future.
 
 The
        impairment expense of $102,620 for three months ended September 30, 2007
        is
        attributable to the acquisition of Fuel Cell Store.
  Our
        operating loss of $847,421 for the three months ended September 30, 2008
        compared with the loss of $1,752,656 for the three months ended September
        30,
        2007 reflects our transition to a revenue generating company per the
        revenue and operational analysis above.
 
 For
        the
        three months ended September 30, 2008, we earned interest income in the amount
        of $616 compared with $16,456 for the three months ended September 30,
        2007.
 
 Interest
        expense was $1,109,666 for the 3 months ended September 30, 2008 compared
        to
        $4,415 for the 3 months ended September 30, 2007. The materially higher amount
        for 2008 was driven by recording the cost of the waiver of interest and
        principal payments from May to December 2008 on our convertible debentures
        issued in November and December of 2007. Other income was $392,042 for the
        3
        months ended September 30, 2008 compared to $827,998 for the 3 months ended
        September 30, 2007. The 2008 figure is primarily attributable to the Working
        Capital True Up payment related to our acquisition of the MinitCharger business.
        The higher 2007 figure is attributable to the reversal of reserve we established
        in the quarter ending September 30, 2007 to cover penalties in conjunction
        with
        registering our common shares of stock with the SEC.  The amount reserved
        was based upon the number of shares that were issued. This reserve was
        subsequently settled with the issuance of shares of our common
        stock.
  29
  Our
        net
        loss after other income and expenses for three months ended September 30,
        2008
        was $1,564,429 as compared with a loss of $912,617 for the three months ended
        September 30, 2007. Excluding the favorable impacts of the $827,998 registration
        rights accrual reversal in 2007 and the Working Capital True up Payment of
        $375,877 in 2008 noted above, the three months ended September 30, 2008 results
        are down only $199,691 as compared to the same period ended September 30,
        2007.
        The lower results are largely attributable to the downturn in the economy
        which
        has curtailed our planned growth. This growth was needed to allow us to fund
        our
        working capital needs internally. When this was not achieved, we successfully
        secured a waiver to allow us more time, but this waiver from our debenture
        holders resulted in significantly higher interest expense.
 
 NINE
        MONTHS ENDED SEPTEMBER 30, 2008, COMPARED WITH NINE MONTHS ENDED SEPTEMBER
        30,
        2007
 
 It
        is
        difficult to compare the nine months ended September 30 2008 results for
        the
        same period in 2007 as we have transformed ourselves from being a development
        stage company to a growth oriented renewable energy company. Thus, the
        variations reflected in our results of operations described below are based
        upon
        this transformation and the impact of the global economic slowdown.
 
 In
        the
        nine months ended September 30, 2008, we had revenues of $8,654,868 compared
        to
        the six months ended September 30, 2007 of $270,701. The 2007 revenue is
        attributable to Fuel Cell Store only, while the 2008 figure includes the
        three
        subsequent acquisitions (eTec/Minit Charger and Innergy) made in the fourth
        quarter of 2007. The cost of goods sold percentage for the nine months ending
        September 30, 2008 was 60% leaving us with a gross profit of $3,498,628,
        as
        compared to 72% and $77,018 for the same period in 2007. The increase in
        revenues in 2008 as compared to 2007 is consistent with our efforts in 2007
        to
        move from being a development stage company to a revenue-generating renewable
        energy company.
 
 Total
        operating expenses during the nine months ended September 30, 2008 were
        $6,186,517 compared to $5,895,141 for nine months ended September 30, 2007.
        General and administrative expenses including depreciation were $5,900,740
        or
        95% of total operating expenses for nine months ended September 30, 2008
        compared with $2,505,548 or 42% for the nine months ended September30, 2007.
        While not comparable to the general and operating expenses incurred during
        the 9
        months ended September 30, 2007, changes in these expenses are described
        below: ****
  Professional
        fees were $372,899 for the nine months ended September 30, 2008 compared
        with
        $303,952 for the nine months ended September 30, 2007. This change reflects
        the
        increased resources required for our transition and our overall increase
        in
        size. New media, marketing, advertising and investor and public relations
        expenses were down 25% at $217,133 for the nine months ended September 30,
        2008 as compared to $289,834 for the nine months ended September 30, 2007.
        This
        reduction may be attributed to our acquisition activities in 2007 that required
        significant public relation and investor activities. Legal fees were $394,838
        for the nine months ended September 30, 2008 compared with $246,633 for the
        nine
        months ended September 30, 2007. The difference in legal fees are attributable
        to transition phase post-acquisition filing and organizational requirements.
        Accounting fees were $147,481 for the nine months ended September 30, 2008
        compared with $233,923 for the nine months ended September 30, 2007. The
        accounting fees in 2007 included additional activities related to our
        acquisitions. Executive compensation was $503,038 for the nine months ended
        September 30, 2008 compared with $300,990 for the nine months ended September
        30, 2007. The higher figure in 2008 is attributable to stock awards to our
        chief
        executive officer. Depreciation expense was $469,669 for the nine months
        ended
        September 30, 2008 compared to $144,982 for the nine months ended September
        30,
        2007. The increase is related to depreciation for the assets acquired as
        part of
        the acquisitions. All other general and administrative spending totaled
        $3,795,673 for the nine months ended September 30, 2008 compared to $985,234
        for
        the nine months ended September 30, 2007. The increase is attributable to
        our
        acquisitions which represent $3,224,667 of nine months ended September 30,
        2008
        expenses, as compared to a total of $283,900 for the comparable period in
        2007.
 
 Expenses
        for research and development totaled $285,777 for the nine months ended
        September 30, 2008 compared to $1,160,191 for the nine months ended
        September 30, 2007. This reduction reflects our focused strategy on applications
        with short-term commercialization potential supported through joint projects
        and
        grants to help defray costs. Since one of our primary objectives continues
        to be
        the commercial advancement of clean electric technologies that reduce our
        dependence upon carbon based fuels, we have retained a strong focus on research
        and development activities, and expect to continue to incur additional research
        and development costs, although at a significantly reduced rate, for the
        foreseeable future.
 
 The
        settlement expense of $1,800,000 for the nine months ended September 30,
        2007 is
        related to the settlement with Howard Foote and Elliott Winfield in resolution
        of all known disputes and uncertainties between them and us related to all
        agreements and contract entered into concerning the fuel cell intellectual
        property and technology. We have included this expense as part of our operating
        costs due to the nature of our business regarding intellectual
        property.
 
 The
        impairment expense of $429,402 for nine months ended September 30, 2007 is
        attributable to the acquisition of Fuel Cell Store.
  Our
        operating loss of $2,687,889 for the nine months ended September 30, 2008
        compared with the loss of $5,818,123 for the nine months ended September
        30,
        2007 reflects the impact of the settlement and impairment expenses in 2007,
        as well as our transition to a revenue generating company per the revenue
        and
        operational analysis above.
 
 For
        the
        nine months ended September 30, 2008, we earned interest income in the amount
        of
        $9,778 compared with $51,824 for the nine months ended September 30,
        2007.
 
 Interest
        expense was $2,175,279 for the nine months ended September 30, 2008 compared
        to
        $12,501 for the nine months ended September 30, 2007. The higher amount for
        2008
        was driven by the standard interest and the additional fees related to our
        waiver on the convertible debentures we issued in November and December of
        2007.
        Other income was $387,148 for the nine months ended September 30, 2008 compared
        to ($1,069,497) for the nine months ended September 30, 2007. The 2008 figure
        is
        primarily attributable to the Net Working Capital True up of $375,887 associated
        with our Minit-Charger acquisition. The 2007 figure is attributable to the
        reserve we established in the nine months ending September 30, 2007 to cover
        penalties in conjunction with registering our common shares of stock with
        the
        SEC.  The amount reserved was based upon the number of shares that were
        issued.
  30
  *Liquidity
        and Capital Resources*
  As
        of
        September 30, 2008, we had $580,239 of cash on hand compared to September
        30,
        2007 balances of $212,041 of cash on hand and $1,565,678 in certificates
        of
        deposit.
 
 We
        used
        cash for operating activities in the nine months ended September 30, 2008
        in the
        amount of $110,361 compared to a use of cash of ($4,137,301) for the same
        period
        in 2007. Cash used in investing activities was $196,114 for the nine months
        ended September 30, 2008 compared to $986,126 for 2007. The higher amount
        in the
        nine months ended September 30, 2007 was related to the purchase of a building
        and investment in our subsidiaries.
 
 Cash
        generated in financing activities was $242,277 in the nine months ended
        September 30, 2008 compared to the generation of $287,500 in cash in 2007.
        The
        cash generated in 2008 is related to our Line of Credit with Mr. Karner and
        Ms.
        Forbes, our 2007 cash was attributable to the mortgage of our corporate
        headquarters. Of note is that for the nine months ended September 30, 2008,
        net
        cash used was $97,078 compared to $4,835,927 for the nine months ended September
        30, 2007. This significant improvement is indicative of our transition to
        being
        a revenue generating company.
 
 Our
        current financing activities are described below:
 
 Focused
        cost controls and operational efficiencies implemented in the first six months
        of 2008 supported our ability during that period to generate funds internally
        to
        meet our operating cash requirements. Accounts payable for Corporate
        Headquarters activities not clearly attributable to a single subsidiary were
        $492,516 at September 30, 2008, attributable to research and development,
        investor relations, legal and accounting costs.
 
 Given
        our
        competitive edge in the fast charger market, as well as having an efficient
        plant operating capacity in Mexico, we believed our strengths in the alternative
        energy field would allow us to achieve our planned objectives, generate adequate
        levels of working capital again in the 3 month period ending September 30,
        2008.
        These assumptions, however, did not adequately capture the magnitude nor
        the
        speed of the economic down turn and its subsequent impact in even the
        alternative energy field. These external forces restricting growth and access
        to
        capital simultaneously resulted in our financing options being very limited
        and
        expensive.
 
 To
        bridge
        this period required the establishment of a line of credit and relief from
        debt
        service requirements as we continued to pursue our objectives of raising
        working
        capital through equity or other sources. Following a period of negotiation
        with
        our debenture holders, we reached agreement to waive payment of principal
        and
        interest for the period May through December 31, 2008 to provide us the time
        needed to begin funding our requirements internally through planned organic
        growth and to seek other equity financing options. The consideration for
        this
        waiver/deferment was material to our fiscal operations but necessary to seeking
        our growth objectives. We further negotiated a line of Credit with one of
        our
        Directors for advances up to $650,000 to provide additional strength to our
        cash
        position in the short term.
 
 These
        successful cash management efforts in the nine months ended September 30,
        2008,
        while adequate for that period require additional measures, most notably
        a
        successful capital raise and organic growth of our operations to allow us
        to
        meet our obligations going forward.
 
 *Management’s
        Plan of Operation*
 
 Our
        overall plan of operation calls for sustained organic growth. We believed
        that
        the acquisitions we completed during 2007 would provide us with a base to
        support this objective and this growth was reflected in our budget and business
        plans for 2008. However, growth consistent with our plans did not occur in
        the
        third quarter. Sales, consulting services and manufacturing levels remained
        at
        second quarter levels..
 
 We
        have
        continued to leverage current invested capital through focused cash management,
        lean corporate staffing, tight inventory controls and cost-effective operating
        procedures throughout our organization. This leveraged growth strategy supports
        our business model in developing commercial applications for the growing
        clean
        electric transportation business sector. However we have leveraged our business
        upon future growth and an ability to sustain our operations dependent
        upon:
 (1)
              continued
                  tight management of overall operations while improving
                  margin
 (2)
              obtaining
                  additional working capital to sustain our growth objectives
 (3)
              public
                  and private support of alternative energy such that there is a
                  requirement
                  to build the related infrastructure throughout the United States
 (4)
              economic
                  improvement in the US both from a liquidity standpoint and willingness
                  of
                  the market to invest in alternative energy
                  infrastructure
 
 *Working
        Capital*
  Net
        working capital is an important measure of our ability to finance our
        operations.  Our net working capital at September 30, 2008 was negative by
        $1,871,255 or a ratio of 0.80 to 1. **** This
        ratio is significantly impacted by the reserve we have established to cover
        the
        maximum possible liability associated with the issuance of common stock price
        guarantees due in 2008 per certain of our acquisition agreements. It should
        be
        noted that we have the ability to meet this obligation through the issuance
        of
        cash or equity at our discretion.
 
 We
        do not
        have any off-balance sheet arrangements.
 
 We
        do not
        anticipate the need to add significant numbers of full- or part- time employees
        over the next 12 months.  We continue to outsource the research and
        development and other activities where it is cost effective to do
        so.
 
 *Commitments
        and Long Term Liabilities*
 
 On
        June
        12, 2006, the Company entered into a License Agreement with California Institute
        of Technology, whereby the Company obtained certain exclusive and non-exclusive
        intellectual property licenses pertaining to the development of an electronic
        fuel cell technology, in exchange for 5,869,565 shares of common stock of
        the
        Company with a fair market value of $8,217,391.  The License Agreement
        carries an annual maintenance fee of $50,000, with the first payment due
        on or
        about June 12, 2009.  The License Agreement carries a perpetual term,
        subject to default, infringement, expiration, revocation or unenforceability
        of
        the License Agreement and the licenses granted thereby.
 
 On
        January 19, 2007 we purchased a small (1,750 square feet) stand alone office
        building at a cost of $575,615.  A total of $287,959 has been paid and a
        tax credit has been recorded in the amount of $156.  The remaining balance
        of $287,500 is structured as an interest-only loan from a non affiliated
        third-party, bears an interest rate of 6.75% calculated annually, with monthly
        payments in the amount of $1,617 due beginning on February 16, 2007. The
        entire principal balance is due on or before January 16, 2012.
  31
  As
        of
        September 30, 2008, the Company has five leases in effect for operating space.
        Future obligations under these commitments are $63,059 for 2008, $202,045
        for
        2009, $150,324 for 2010, and $217,468 for 2011 and thereafter
 
 In
        November and December of 2007, the Company received gross proceeds of $5,000,000
        in exchange for a note payable of $5,882,356 as part of a private offering
        of 8%
        Secured Convertible Debentures (the “Debentures”).  The debentures were
        convertible into common stock at $0.30 per share. Debenture principal payments
        were due beginning in May and June of 2008 (1/24th of the outstanding amount
        is
        due each month thereafter). In connection with these debentures, the Company
        issued debenture holders warrants (“the Warrants”) to purchase up to 9,803,925
        shares of the Company’s common stock with an exercise price of $0.32. The
        warrants were exercisable immediately upon issue. The Warrants expired five
        years from the date of issue.  The aggregate fair value of the Warrants
        equaled $2,272,942 based on the Black-Scholes pricing model using the following
        assumptions: 3.39%-3.99% risk free rate, 162.69% volatility, and strike price
        of
        $0.32, market price of $0.22-$0.32, no yield, and an expected life of 912
        days.
        The gross proceeds received were bifurcated between the note payable and
        the
        warrants issued and a discount of $3,876,256 was recorded. The discount is
        being
        amortized over the loan term of two and one half years.  As of September
        30, 2008, a total of $1,414,894, had been amortized and recorded as interest
        expense and $2,461,362 remains as the unamortized discount.  See note 7 for
        additional discussion regarding the issuance of warrants.
 
 On
        August
        29, 2008 the Company signed an Amendment to the Debenture agreements deferring
        the payments indicated above. The purpose of the agreement is to provide
        the
        Company time to fund its working capital requirements internally through
        organic
        growth as well as to obtain both short and long term funding through equity
        financing and other sources of capital.
 
 The
        waiver, deferment agreement aligns with the Company’s short term working capital
        plan and provides time to achieve company objectives in this regard. In exchange
        for the Amendment to the Debentures, the Company agreed to:
 A.
              Waiver
                  of interest payments due between May-December 2008
 B.
              Deferment
                  of monthly redemptions for the period May-December
                  2008.
 C.
              Increase
                  to the outstanding principal amount plus accrued interest though
                  December
                  31, 2008 for the debentures by 120% as of the effective date of
                  the
                  agreement.
 D.
              Reset
                  of the common stock conversion rate from $0.30 to
                  $0.15.
 E.
              Commencement
                  of principal payments starting January 1, 2009 with no change to
                  the
                  redemption period (May 2010)
 F.
              Commencement
                  of interest payments @ 8% per year April 1, 2009 (first payment
                  due).
 G.
              Inclusion
                  of make whole provisions to reset common stock warrant conversion
                  prices
                  to the value used to “true-up” both the Innergy Power Company and
                  Minit-Charger (Edison) acquisitions when both “true-ups” are completed.
                  For both of these acquisitions the Sellers were issued shares which
                  the
                  Company guaranteed would be worth $1.00 per share for the thirty
                  days
                  prior to the anniversary date of the purchase. This guarantee requires
                  the
                  issuance of additional shares or payment in cash for the difference
                  in the
                  share price on the respective anniversary dates. In the case of
                  Innergy,
                  the number of required “true up” shares is capped at
                  4,000,000.
 H.
              Inclusion
                  of further make whole provisions to issue additional warrants adequate
                  to
                  maintain the pro rata debenture ownership % when fully diluted
                  as per
                  schedule 13 in the waiver
                  agreement.
 I.
              Compliance
                  with covenants per quarterly public reports issued for the periods
                  ending
                  June 30, September 30, and December 31, 2008 for the
                  following:
 1.
              Net
                  cash used
 2.
              Current
                  ratio adjusted for non-cash
                  liabilities
 3.
              Corporate
                  Headquarters accounts payable
                  amount
 
 During
        the period ended September 30, 2008 the impact to the financial statements
        for
        the provisions of the waiver noted above were estimated and the resulting
        costs
        are being amortized over the waiver period.
 1.
              The
                  increase to principal of $1,559,859 (see letter “C” above) was added to
                  the long term note, $1,157,315 was capitalized in prepaid financing
                  charges and the portion of the increase attributable to the nine
                  month
                  period ending September 30, 2008 of $402,544, less previously accrued
                  interest (now incorporated in the principal) of $191,438 was charged
                  to
                  interest expense.
 2.
              The
                  estimated change in value of the original 9,803,925 debenture warrants
                  related to the pending reset of the exercise price (see letter
“G” above)
                  was calculated by using the Volume Weighted Average Price (VWAP)
                  for the
                  most recent 30 days prior to September 30, 2008 of $0.08 as the
                  estimated
                  new exercise price following the reset and the warrants were valued
                  first
                  at their current exercise price then at the estimated new price
                  using the
                  Black Scholes Model using the following assumptions as follows:
                  Strike
                  Price $0.32 (old) and $0.08 (new), Stock Price $0.10 (price on
                  date of
                  agreement), time 780 days for November Warrants and 795 for December
                  Warrants, Volatility 146.39%, Risk Free Interest Rate 3.83%. The
                  increase
                  in value calculated totaled $207,941. Of the total, $154,279 was
                  capitalized as prepaid financing costs and will be amortized over
                  the
                  remainder of the waiver period. The portion attributable to the
                  9 month
                  period ending September 30, 2008 of $53,662 was charged to interest
                  expense.
 3.
              The
                  estimated number of additional warrants required to be issued to
                  true up
                  to the original aggregate exercise price for the November and December
                  Warrants (see letter “G” above) following the reset of the exercise price
                  was calculated using the difference between the current aggregate
                  exercise
                  price of $3,137,256 (9,803,925 total warrants at original exercise
                  price
                  $0.32), and the new aggregate exercise price of $784,314 following
                  the
                  reset of the exercise price to $0.08. This difference totaled $2,352,942
                  requiring the issuance of an estimated 29,411,775 warrants (at
                  $0.08) to
                  maintain the previous aggregate exercise price. The new warrants
                  were
                  valued at $1,438,235 using the Black Scholes Model with the following
                  assumptions: Strike Price $0.08, Stock Price $0.07 (price at September
                  30,
                  2008), time 753 days, Volatility 146.39%, Risk Free Rate 3.83%.
                  Of the
                  total, $1,067,077 was capitalized as prepaid financing costs and
                  will be
                  amortized over the remainder of the waiver period. The portion
                  of the
                  expense of issuing the new warrants that was attributable to the
                  9 month
                  period ending September 30, 2008 of $371,158 was charged to interest
                  expense.
 
 On
        August 29, 2008, Mr. Donald Karner, a director of the Company, and Kathryn
        Forbes agreed to provide the Company a line of credit for up to $650,000.
        This
        Line is secured by a second position on receivables (junior to previously
        issued
        debentures). During the 9 months ended September 30, 2008, $300,000 was advanced
        by Mr. Karner and Ms. Forbes. Further advances above $450,000 are contingent
        on
        the Company securing additional financing as agreed by October 26, 2008.
        This
        line carries a loan fee of $45,000 payable when the line expires on December
        15,
        2008. No other interest payments or fees are required under the agreement.
        The
        fee of $45,000 is being expensed over the life of the Line. Imputed interest
        of
        $1,425 and financing charges of $6,962 were expensed in the 9 month period
        ending September 30, 2008. All amounts advanced under the Line are due and
        payable in full on December 15, 2008. The balance of the note payable was
        $300,000 at September 30, 2008.
  **Quantitative
        and Qualitative Disclosures about Market Risk**
 
 There
        were no material changes in the Company’s market risk from January 1, 2008 to
        September 30, 2008.
 
 **Controls
        and Procedures**
 
 Conclusion
        Regarding the Effectiveness of Disclosure Controls and Procedures
  We
        maintain a set of disclosure controls and procedures designed to ensure that
        information required to be disclosed by us in the reports filed under the
        Securities Exchange Act, is recorded, processed, summarized and reported
        within
        the time periods specified by the Commission’s rules and forms.
 Disclosure controls are also designed with the objective of ensuring that
        this information is accumulated and communicated to our management, including
        our chief executive officer and chief financial officer, as appropriate,
        to
        allow timely decisions regarding required disclosure.  In view of our
        restatement of the financial statements for the year ended December 31,
        2006, management reevaluated its disclosure controls and deemed them
        ineffective.  During fiscal year 2007, we made the following changes in our
        disclosure controls and procedures to increase their effectiveness; adding
        an
        individual to record transactions in our books of account after they have
        been
        reviewed by appropriate company officials, reemphasizing proper posting of
        transactions, having an independent accountant review transactions for
        compliance with applicable guidance, reviewing our chart of accounts to ensure
        that account classifications are in place, ensuring accounting personnel
        attend
        continuing professional education, and adding a professional accountant to
        specifically oversee all reporting for us and our subsidiaries. We evaluated
        the
        effectiveness of our disclosure controls and procedures (as defined in Rule
        13a-15(e) under the Securities Exchange Act of 1934, as amended) for the
        three
        month period ended September 30, 2008. As a result of this evaluation, we
        concluded that our disclosure controls and procedures are effective for the
        3
        month period ended September 30, 2008
 
 Changes
        in Internal Control
 
 There
        were no changes in our internal control over financial reporting that occurred
        during the three months ended September 30, 2008 that have materially affected,
        or are reasonably likely to materially affect, our internal control over
        financial reporting.
 
 32
  **PART
        II - OTHER INFORMATION**
  **Legal
        Proceedings**
  None
        of
        our directors, officers, significant employees, or affiliates has been convicted
        in a criminal proceeding, exclusive of traffic violations.
 
 None
        of
        our directors, officers, significant employees, or affiliates has been
        permanently or temporarily enjoined, barred, suspended, or otherwise limited
        from involvement in any type of business, securities or banking
        activities.
 
 None
        of
        our directors, officers, significant employees, or affiliates of has been
        convicted of violating a federal or state securities or commodities
        law.
 
 We
        are
        not a party to any pending legal proceedings.
  ***Risk
        Factors***
  In
        addition to the other information set forth in this report, you should carefully
        consider the risk factors discussed in “Risk Factors” in our Annual Report on
        Form 10-K for the year ended December 31, 2007, which could materially
        affect our business, financial condition or future results. We caution the
        reader that these risk factors may not be exhaustive. We operate in a
        continually changing business environment and new risks emerge from time
        to
        time. Management cannot predict such new risk factors, nor can we assess
        the
        impact, if any, of such new risk factors on our business or to the extent
        to
        which any factor or combination of factors may impact our business. There
        have
        not been any material changes during the three months September 30, 2008
        from
        the risk factors disclosed in the above-mentioned Form 10-K for the year
        ended December 31, 2007.
 
 **Unregistered
        Sales of Equity Securities**
  On
        or
        about March 1, 2004, we commenced an offering of shares common stock in
        accordance with Regulation D, Rule504 of the Securities Act, registered by
        qualification in the State of Nevada. On May 17, 2004, we completed the
        offering, whereby we sold 830,000 shares of common stock, par value, at a
        price
        of $0.05 per share to 30 investors, of which 29 are unaffiliated shareholders
        of
        record and one is our sole officer and director. The 30 non-affiliated,
        non-accredited shareholders hold 790,000 shares of our common stock. The
        one
        affiliated shareholder (Mr. Harold Sciotto) holds 40,000 shares of common
        stock. The offering was sold for $41,500 in cash. All investors were, at
        the
        time of purchase, residents of the State of Nevada.
 
 This
        offering was made in reliance upon an exemption from the registration provisions
        of the Securities Act of 1933, as amended, in accordance with Regulation
        D, Rule
        504 of the Act. In addition, this offering was underwritten on a best efforts
        basis. In regards to the offering closed in May 2004, listed below are the
        factual circumstances which support the availability of Rule 504:
  1.
              At
                  the time of the offering, we were not subject to the reporting
                  requirements of section 13 or section 15(d) of the Exchange Act.
                  Further,
                  we are not now, nor were we at the time of the offering, considered
                  to be
                  an investment company. Finally, since inception, we have pursued
                  a
                  specific business plan, and continue to do so.2.
              We
                  were issued a permit to sell securities by the State of Nevada,
                  pursuant
                  to our application for registration by qualification of offering
                  of our
                  common stock in that state. The application for registration by
                  qualification was filed pursuant to the provisions of NRS 90.490,
                  which
                  requires the public filing and delivery to investors of a substantive
                  disclosure document before sale. In May 2004, we completed an offering
                  of
                  shares of common stock pursuant to Regulation D, Rule 504 of the
                  Securities Act of 1933, as amended, and the registration by qualification
                  of said offering in the State of Nevada, whereby we sold 830,000
                  shares of
                  our common stock to a total of 30 shareholders. One of these purchasers
                  is
                  our sole officer and director, although at the time of purchase,
                  he was
                  not. The entire offering was conducted exclusively in the State
                  of Nevada,
                  pursuant to the permit issued by the State of Nevada.3.
              The
                  aggregate offering price for the offering closed in May 2004 was
                  $41,500,
                  all of which was collected from the
                  offering.
  33
  On
        June
        12, 2006, we issued 5,869,565 shares of our common stock, with a fair market
        value of $1.40 per share, for an aggregate value of $8,217,391, to CalTech
        pursuant to a License Agreement.  As a result of the issuance, CalTech
        holds at September 30, 2007 approximately 5.4% of our issued and outstanding
        common stock.  At the time of the issuance, CalTech had fair access to and
        all available material information about our company was made available.
         The shares bear a restrictive transfer legend.  The issuance of stock
        to CalTech was made in accordance with an exemption from registration contained
        in Section 4(2) of the Securities Act of 1933.
  On
        July
        7, 2006, we issued warrants to purchase shares of our common stock to one
        share
        holder and one non-affiliated entity in conjunction with bridge loan agreements.
         Each warrant holder was granted the right to purchase 550,000 shares of
        common stock for an aggregate purchase price of $781,000 or $1.42 a share.
         The issuance of the stock purchase warrants was made in accordance with an
        exemption from registration contained in Section 4(2) of the Securities Act
        of
        1933.
  On
        August
        3, 2006, we issued warrants to purchase shares our common stock to one
        shareholder and on non-affiliated entity in conjunction with bridge loan
        agreements.  Each warrant holder was granted the right to purchase 200,000
        shares of common stock for an aggregate purchase price of $248,000 or $1.24
        a
        share.  The issuance of the stock purchase warrants was made in accordance
        with an exemption from registration contained in Section 4(2) of the Securities
        Act of 1933.
 
 On
        September 6, 2006, we issued warrants to purchase shares of our common stock
        to
        one shareholder and one non-affiliated entity in conjunction with bridge
        loan
        agreements.  Each warrant holder was granted the right to purchase 200,000
        shares of common stock for an aggregate purchase price of $264,000 or $1.32
        a
        share.  The issuance of the stock purchase warrants was made in accordance
        with an exemption from registration contained in Section 4(2) of the Securities
        Act of 1933.
 
 In
        October 2006 we issued an aggregate of 34,499,920 shares of our common stock
        to
        a group of 277 accredited investors through Brookstreet Securities Corporation,
        as Placement Agent, at $0.35 per share pursuant to the exemption provided
        by
        Section 4(2) of the Act and Rule 506 of Regulation D promulgated there under.
         The shares were offered solely to accredited investors, no form of general
        advertising was used, and all investors took the shares as an investment
        and not
        with the intent to distribute and all shares were issued with a restrictive
        legend thereon.  The total offering costs related to this issuance was
        $9,352,713, of which $1,714,501 was paid in cash and $7,638,212 of which
        was the
        fair market value of warrants to purchase shares of our common stock issued
        to
        the placement agent.  As additional consideration for acting as our
        Placement Agent, we issued to Brookstreet warrants to acquire 6,899,982 shares
        of our common stock at $0.35 per share until October 27, 2011.  Since the
        close of the offering, the actual uses of the proceeds from the offering
        used
        for working capital, or for which at least five percent of the total proceeds
        has been used, were as follows:
  **Item**
              
              **Amount****Use
                  of Net Proceeds:**Development
                  of EPC technology
              
              $
              8,749Investor
                  relations expenses
              
              
              146,675General
                  and administrative expenses
              
              
              445,039Repayment
                  of debt
              
              
              1,425,000Working
                  capital
              
              
              437,898**Total**
              
              $
              2,463,361
  The
        actual uses of proceeds described above for legal and professional fees and
        working capital were consistent with the anticipated uses of proceeds described
        in the Prospectus for the offering.
  **Defaults
        upon Senior Securities**
 
 As
        of
        this filing there are no defaults upon senior securities for the nine months
        ended September 30, 2008.
 
 **Submission
        of Matters to a Vote of Security Holders**
  None
  34
  **Exhibits
        and Reports on Form 8-K**
  **Exhibit Number**
              
              **Name
                  and/or Identification of Exhibit**2
              
              Plan
                  of Purchase, Sale, Reorganization, arrangement, liquidation or
                  successiona.      Technology
                  Contribution Agreement and Exhibits thereto (1)b.      License
                  Agreement with California Institute of Technology (2)c.      Agreement
                  for purchase and sale of assets (9)3
              
              Articles
                  of Incorporation & By-Lawsa.      Articles
                  of Incorporation filed on April 21, 1999 (3)b.      Amendment
                  to Articles of Incorporation filed on November 27, 2006c.      Amendment
                  to Articles of Incorporation filed on November 27, 2006d.      Amendment
                  to Articles of Incorporation filed on November 27, 2006
                  (4)e.      Restated
                  Bylaws (5)Material
                  Contractsa.      Purchase
                  Order with Hydrogenics Corporation (4)b.      Settlement
                  Agreement and Release (6)16
              
              Letter
                  on change in certifying accountant (7)31
              
              Rule
                  13a-14(a/15d-14(a) Certification32
              
              Certification
                  under Section 906 of the Sarbanes-Oxley Act (18 U S C Section
                  1350)99
              
              Additional
                  Exhibitsa.      Escrow
                  Agreement (6)b.      Letter
                  from NASA/Jet Propulsion Laboratories (8)c.      Press
                  Release (9)
  Notes:
 
 1.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  February 21, 2006.2.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on July
                  12, 2006.3.
              Incorporated
                  by reference to the Registration Statement on Form 10SB12G, as
                  amended,
                  previously filed with the SEC on March 3, 2005.4.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  December 4, 2006.5.
              Incorporated
                  by reference herein to the Form SB-2, previously filed with the
                  SEC on
                  February 12, 2007.6.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  February 21, 2007.7.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  January 30, 2007.
  35
  8.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  March 27, 2007.9.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on June
                  15, 2007.10.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on July
                  10, 2007.11.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  September 20, 2007.12.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  November 2, 2007.13.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  November 9, 2007.14.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  December 7, 2007.15.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  December 11, 2007.16.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  December 26, 2007.17.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  December 31, 2007.18.
              Incorporated
                  by reference herein to the Form SB-2, previously filed with the
                  SEC on
                  January 8, 2008.19.
              Incorporated
                  by reference herein to the Form SB-2, previously filed with the
                  SEC on
                  January 31, 2008.20.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  January 31, 2008.21.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  April 11, 2008.22.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  September 4, 2008.23.
              Incorporated
                  by reference herein to the Form 8-K, previously filed with the
                  SEC on
                  September 25, 2008.
  **Date
                  of 8-K**
              
              **Items
                  Disclosed on Form 8-fK**January
                  30
              
              Items
                  4.01, and  9.01January
                  31
              
              Items
                  2.01, and  9.01February
                  21
              
              Items
                  1.01, 1.02, 5.02 and 9.01March
                  27
              
              Items
                  7.01 and 9.01April
                  11
              
              Items
                  7.01, and  9.01September
                  4
              
              Items
                  2.03 and 9.01September
                  25
              
              Items
                  2.04 and 5.02 and 9.01
 
 36
 **SIGNATURES**
  In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the registrant and in the capacities and on
        the
        dates indicated.
 
 **ECOTALITY,
                  INC.**Signature
              
              Title
              
              Date/s/
                  Jonathan R. Read
              
              Chief
                  Executive Officer,
              
              **November
                  18, 2008**Jonathan
                  R. Read
              
              President
                  and Director/s/
                  Harold W. Sciotto
              
              Secretary,
                  Treasurer
              
              **November
                  18, 2008**Harold
                  W. Sciotto
              
              and
                  Director/s/
                  Barry S. Baer
              
              Chief
                  Financial Officer
              
              **November18,
                  2008**Barry
                  S. Baer
              
              Principal
                  Accounting Officer/s/
                  Jerry Y. S. Lin
              
              Director
              
              **November18,
                  2008**Jerry
                  Y. S. Lin/s/
                  E. Slade Mead
              
              Director
              
              **November
                  18, 2008**E.
                  Slade Mead/s/
                  Donald B. Karner
              
              Director
              
              **November
                  18, 2008**Donald
                  B. Karner
  37