**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM10-QSB**

 

**(Mark One)**

 
| **x**                                                   | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|---------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                    |                                                                                          |
| **For  the quarterly period ended: September 30, 2007** |
|                                                    |                                                                                          |
| **Or**                                                  |
|                                                    |                                                                                          |
| **o**                                                   | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For thetransition period from             to**

 

**CommissionFile Number: 000-50983**

 

**ECOTALITY,INC.**

 (Exact name ofregistrant 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’stelephone number, including area code)

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

 

 Indicate by checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.

 

Yes x    No o

 

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

 

Yes o    No x

 

**APPLICABLEONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVEYEARS:**

 

 Indicate by checkmark whether the registrant has filed all documents and reports required to befiled by Sections 12, 13 or15(d) of the Securities Exchange Act of 1934subsequent to the distribution of securities under a plan confirmed by a court.

 

Yes o    No o

 

**APPLICABLEONLY TO CORPORATE ISSUERS:**

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as ofNovember 12,2007:

122,224,528

 

----

 

**Ecotality,Inc.**

**(ADevelopment Stage Company)**

 

**Table ofContents**
|                                                   |   |
|--------------------------------------------------------|--------|
| PART I - FINANCIAL INFORMATION                         | 3      |
|                                                   |   |
| Unaudited Condensed Consolidated Financial  Statements | 3      |
|                                                   |   |
| Condensed Consolidated Balance Sheet                   | 4      |
|                                                   |   |
| Condensed Consolidated Statements of  Operations       | 5      |
|                                                   |   |
| Condensed Consolidated Statements of Cash Flows        | 6      |
|                                                   |   |
| Notes                                                  | 7      |
|                                                   |   |
| Management’s Discussion  and Plan of Operation    | 14     |
|                                                   |   |
| Controls and Procedures                                | 19     |
|                                                   |   |
| PART II - OTHER INFORMATION                            | 20     |
|                                                   |   |
| Legal Proceedings                                      | 20     |
|                                                   |   |
| Unregistered Sales of Equity  Securities               | 20     |
|                                                   |   |
| Submission of Matters to a  Vote of Security Holders   | 21     |
|                                                   |   |
| Exhibits and Reports on Form  8-K                      | 22     |
|                                                   |   |
| SIGNATURES                                             | 23     |

 

2

----

 

**PART I -FINANCIAL INFORMATION**

 

**Unaudited CondensedConsolidated Financial Statements**

 

 The accompanyingunaudited condensed consolidated financial statements have been prepared inaccordance with generally accepted accounting principles for interim financialreporting and pursuant to the rules and regulations of the Securities andExchange Commission (“Commission”).  While these statements reflect allnormal recurring adjustments which are,in the opinion of management, necessaryfor fair presentation of the results of the interim period, they do not includeall of the information and footnotes required by generally accepted accountingprinciples for complete financial statements.  For further information,refer to the financial statements and footnotes thereto, which are included inthe Company’s Registration Statement on Form 10-KSB previously filed with theCommission on March 30, 2007, and subsequent amendments made thereto.

 

3

----

 

**Ecotality,Inc.**

(a Development StageCompany)

 

**Condensed Consolidated****BalanceSheet**

**(unaudited)**

** **
| ** **                                                                                                 | ** ** | **September 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                                 | ** ** | **2007**               | ** ** |
| **Assets**                                                                                                 | ** ** | ** **             | ** ** |
|                                                                                                       |       |                   |       |
| Current assets:                                                                                            |       |                   |       |
| Cash                                                                                                       |       | $                      | 212,041    |   |
| Accounts  Receivable                                                                                       |       | 36,930                 |       |
| Prepaid expenses                                                                                           |       | 658,828                |       |
| Inventory                                                                                                  |       | 193,350                |       |
| Certificate of  Deposit                                                                                    |       | 1,565,678              |       |
|                                                                                                       |       |                   |       |
| Total current  assets                                                                                      |       | 2,666,827              |       |
|                                                                                                       |       |                   |       |
| Fixed assets                                                                                               |       |                   |       |
| Building                                                                                                   |       | 575,615                |       |
| Computers and  Equipment                                                                                   |       | 56,008                 |       |
| Vehicle                                                                                                    |       | 823,785                |       |
| Accumulated  Depreciation                                                                                  |       | (166,069               | )          |
| Total Fixed  Assets                                                                                        |       | 1,289,339              |       |
|                                                                                                       |       |                   |       |
| Total Assets                                                                                               |       | 3,956,166              |       |
|                                                                                                       |       |                   |       |
| **Liabilities  and Stockholders’ Equity**                                                             | ** ** | ** **             | ** ** |
|                                                                                                       |       |                   |       |
| Current  liabilities:                                                                                      |       |                   |       |
| Accounts payable                                                                                           |       | 527,463                |       |
| Payroll  liabilities                                                                                       |       | 27,533                 |       |
| Contingent  Liability-Potential Registration Rights Penalty                                                |       | 1,069,497              |       |
| Total current  liabilities                                                                                 |       | 1624,493               |       |
|                                                                                                       |       |                   |       |
| Long Term  Liabilities                                                                                     |       |                   |       |
| Mortgage Payable                                                                                           |       | 287,500                |       |
| Total Long Term  Liabilities                                                                               |       | 287,500                |       |
|                                                                                                       |       |                   |       |
| Stockholders’  equity                                                                                 |       |                   |       |
| Preferred stock,  $0.001 par value, 200,000,000 shares authorized, no shares issued and  outstanding       |       | —                 |       |
| Common stock,  $0.001 par value, 300,000,000 shares authorized, 108,974,538 shares issued  and outstanding |       | 108,975                |       |
| Additional  paid-in capital                                                                                |       | 23,806,925             |       |
| Unamortized  stock issued for services                                                                     |       | (444,983               | )          |
| (Deficit)  accumulated during development stage                                                            |       | (21,426,744            | )          |
| Total  Stockholders’ Equity                                                                           |       | 2,044,173              |       |
|                                                                                                       |       |                   |       |
| Total Liabilities  and Stockholders’ Equity                                                           |       | $                      | 3,956,166  |   |
|                                                                                                            |            |                        |            |  |  |

 

The accompanying notesare an integral part of these financial statements.

 

4

----

 

**Ecotality,Inc.**

(a Development StageCompany)

 

**Condensed Consolidated Statement of Operations**

**(unaudited)**

** **
| ** **                                                         | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** | **April 21, 1999** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|------------------------------|------------|
| ** **                                                         | ** ** | **September 30,**           | ** ** | **September 30,**          | ** ** | **(Inception) to**      | ** ** |
| ** **                                                         | ** ** | **2007**                         | ** ** | **2006**                        | ** ** | **2007**                     | ** ** | **2006** | ** ** | **September 30, 2007** | ** ** |
| Revenue                                                            |       | $                                | 235,237    |                            | $          | —                       |       | $ | 270,701 |   | $ | — |   | $ | 271,533 |   |
| Cost of Goods Sold                                                 |       | 173,357                          |       | —                          |       | 193,683                      |       | — |   | 194,190 |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   | — |   |
| Gross Profit                                                       |       | 61,880                           |       | —                          |       | 77,018                       |       | — |   | 77,463 |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Expenses:                                                          |       |                             |       |                            |       |                         |       |   |   |   |   |
| Depreciation                                                       |       | 48,693                           |       | 1,966                           |       | 144,982                      |       | 3,455 |   | 166,069 |   |
| Licenses and  permits                                              |       | 0                                |       | 1,385                           |       | 1,739                        |       | 8,222,272 |   | 8,224,361 |   |
| General and  administrative expenses                               |       | 1,196,555                        |       | 1,383,943                       |       | 2,358,827                    |       | 4,513,794 |   | 7,163,914 |   |
| Research and  Development                                          |       | 466,668                          |       | 416,249                         |       | 1,160,191                    |       | 816,249 |   | 2,248,295 |   |
| Impairment  Expense                                                |       | 102,620                          |       | —                          |       | 429,402                      |       | — |   | 429,402 |   |
| Settlement  Expense                                                |       | —                           |       | —                          |       | 1,800,000                    |       | — |   | 1,800,000 |   |
| Total expenses                                                     |       | 1,814,536                        |       | 1,803,543                       |       | 5,895,141                    |       | 13,555,770 |   | 20,032,041 |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Operating Loss                                                     |       | (1,752,656                       | )          | (1,803,543                      | )          | (5,818,123                   | )          | (13,555,770 | ) | (19,954,578 | ) |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Other income                                                       |       |                             |       |                            |       |                         |       |   |   |   |   |
| Interest income                                                    |       | 16,456                           |       | —                          |       | 51,824                       |       | — |   | 66,731 |   |
| Total other  income                                                |       | 16,456                           |       | —                          |       | 51,824                       |       | — |   | 66,731 |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Other expenses:                                                    |       |                             |       |                            |       |                         |       |   |   |   |   |
| Interest expense                                                   |       | 4,415                            |       | 189,760                         |       | 12,501                       |       | 228,658 |   | 469,297 |   |
| Accrued  expense-potential registration rights penalty             |       | (827,998                         | )          | —                          |       | 1,069,497                    |       | — |   | 1,069,497 |   |
| Total other  expenses                                              |       | (823,582                         | )          | 189,760                         |       | 1,081,999                    |       | 228,658 |   | 1,538,795 |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Loss from  operations before income taxes                          |       | (912,618                         | )          | (1,993,303                      | )          | (6,848,298                   | )          | (13,784,428 | ) | (21,426,744 | ) |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Provision for  income taxes                                        |       | —                           |       | —                          |       | —                       |       | — |   | — |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| (Loss) from  continuing operations                                 |       | $                                | (912,618   | )                               | $          | (1,993,303                   | )          | $ | (6,848,298 | ) | (13,784,428 | ) | (21,426,744 | ) |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Net (loss)                                                         |       | $                                | (912,618   | )                               | $          | (1,993,303                   | )          | $ | (6,848,298 | ) | $ | (13,784,428 | ) | $ | (21,426,744 | ) |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Weighted average  number of common shares outstanding — basic |       | 107,367,169                      |       | 78,851,296                      |       | 108,376,419                  |       | 73,581,174 |   |   |   |
|                                                               |       |                             |       |                            |       |                         |       |   |   |   |   |
| Net (loss) per  share — basic                                 |       | $                                | (0.01      | )                               | $          | (0.03                        | )          | $ | (0.06 | ) | $ | (0.19 | ) |   |   |

 

The accompanying notesare an integral part of these financial statements.

 

5

----

 

**Ecotality,Inc.**

(a Development StageCompany)

 

**Condensed Consolidated Statements of Cash Flows**

**(unaudited)**

** **
| ** **                                                                      | ** ** | **Nine Months Ended** | ** ** | **April 21, 1999** | ** ** |
|---------------------------------------------------------------------------------|------------|---------------------------------|------------|------------------------------|------------|
| ** **                                                                      | ** ** | **September 30,**          | ** ** | **(Inception) to**      | ** ** |
| ** **                                                                      | ** ** | **2007**                        | ** ** | **2006**                     | ** ** | **September 30, 2007** | ** ** |
| **Cash  flows from operating activities**                                       | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** ** | ** ** |
| Net (loss)                                                                      |       | $                               | (6,848,298 | )                            | $          | (13,784,428 | ) | $ | (21,426,744 | ) |
| Adjustments to  reconcile net (loss) to Net cash (used) by operatingactivities: |       |                            |       |                         |       |   |   |
| Stock  compensation - related party                                             |       | —                          |       | 2,475,006                    |       | 2,475,006 |   |
| Stock  Compensation                                                             |       | 75,000                          |       |                         |       | 75,000 |   |
| Shares issued  for services                                                     |       | 105,417                         |       | —                       |       | 106,417 |   |
| Shares issued  for licenses                                                     |       | —                          |       | 8,217,391                    |       | 8,217,391 |   |
| Shares issued  for settlement                                                   |       | 1,200,000                       |       | —                       |       | 1,200,000 |   |
| Shares Accrued  for registration penalty                                        |       | 1,069,497                       |       | 0                            |       | 1,069,497 |   |
| Depreciation                                                                    |       | 144,982                         |       | 3,455                        |       | 166,069 |   |
| Warrants issued  with notes payable                                             |       | —                          |       | 154,519                      |       | 382,656 |   |
| Stock split  adjustments                                                        |       | —                          |       | —                       |       | 38,412 |   |
| Changes in  operating assets and liabilities:                                   |       |                            |       |                         |       |   |   |
| (Increase)  decrease in inventory                                               |       | (13,575                         | )          | 2,453                        |       | (13,575 | ) |
| (Increase)  decrease in accounts receivable                                     |       | (13,087                         | )          |                         |       | (12,907 | ) |
| (Increase) in  interest income from Certificate of Deposit                      |       | 449,089                         |       | —                       |       | 449,089 |   |
| (Increase) in  prepaid expenses                                                 |       | (569,943                        | )          | (20,500                      | )          | (658,828 | ) |
| Increase in  accounts payable                                                   |       | 248,388                         |       | 170,211                      |       | 817,480 |   |
| Increase in  accrued interest                                                   |       | —                          |       | 9,083                        |       | — |   |
| Increase in  payroll liabilities                                                |       | 15,229                          |       | 16,475                       |       | 27,633 |   |
| Net cash (used)  by operating activities                                        |       | (4,137,301                      | )          | (2,756,335                   | )          | (7,087,403 | ) |
|                                                                            |       |                            |       |                         |       |   |   |
| **Cash  flows from investing activities**                                       | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** ** | ** ** |
| Purchase of  fixed assets                                                       |       | (647,908                        | )          | (19,389                      | )          | (1,422,005 | ) |
| Impairment of  assets                                                           |       | 406,782                         |       | —                       |       | 406,782 |   |
| Investment in  subsidiaries                                                     |       | (745,000                        | )          | —                       |       | (745,000 | ) |
| Purchase of  Certificate of Deposit                                             |       | —                          |       |                         |       | (2,014,767 | ) |
| Net cash (used)  by investing activities                                        |       | (986,126                        | )          | (19,389                      | )          | (3,774,990 | ) |
|                                                                            |       |                            |       |                         |       |   |   |
| **Cash  flows from financing activities**                                       | ** ** | ** **                      | ** ** | ** **                   | ** ** | ** ** | ** ** |
| Proceeds from  mortgage payable                                                 |       | 287,500                         |       | 1,425,000                    |       | 287,500 |   |
| Proceeds from  notes payable                                                    |       | —                          |       | (750,000                     | )          | 1,425,000 |   |
| Repayments of  notes payable                                                    |       | —                          |       | —                       |       | (1,425,000 | ) |
| Issuance of  common stock                                                       |       | 0                               |       | 6,031,105                    |       | 10,786,934 |   |
| Net cash  provided by financing activities                                      |       | 287,500                         |       | 6,706,105                    |       | 11,074,434 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Net (decrease)  increase in cash                                                |       | (4,835,927                      | )          | 3,930,381                    |       | 212,041 |   |
| Cash - beginning                                                                |       | 5,047,968                       |       | 5,878                        |       | — |   |
| Cash - ending                                                                   |       | $                               | 212,041    |                         | $          | 3,936,259 |   | $ | 212,041 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Supplemental  disclosures;                                                      |       |                            |       |                         |       |   |   |
| Interest paid                                                                   |       | $                               | 12,501     |                         | $          | 65,056 |   | $ | 469,297 |   |
| Income taxes  paid                                                              |       | $                               | —     |                         | $          | — |   | $ | — |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Non-cash  transactions:                                                         |       |                            |       |                         |       |   |   |
| Stock  compensation-Related Party                                               |       | $                               | —     |                         | $          | 2,475,006 |   | $ | 2,475,006 |   |
| Number of shares  issued for executive compensation                             |       | —                          |       | 7,500,018                    |       | 7,500,018 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Share issued for  services                                                      |       | $                               | 105,417    |                         | $          | — |   | $ | 401,400 |   |
| Number of shares  issued for services                                           |       | 790,000                         |       | —                       |       | 36,084,200 |   |
| Share issued for  licenses                                                      |       | $                               | —     |                         | $          | 8,217,391 |   | $ | 8,217,391 |   |
| Number of shares  issued for licenses                                           |       | —                          |       | 5,869,565                    |       | 5,869,565 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Share issued for  financing costs                                               |       | $                               | —     |                         | $          | — |   | 382,656 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Shares issued  for settlement                                                   |       | $                               | 1,200,000  |                         | $          | — |   | $ | 1,200,000 |   |
| Number of shares  issued for settlement                                         |       | 1,500,000                       |       | —                       |       | 1,500,000 |   |
|                                                                            |       |                            |       |                         |       |   |   |
| Shares issued  for acquisition                                                  |       | $                               | 189,000    |                         | 0          |   | 0 |   |
| Number of Shares  issued for acquisition                                        |       | 300,000                         |       | 0                            |       | 0 |   |
| Shares issued  for employee compensation                                        |       | $                               | 75,000     |                         | —     |   | — |   |
| Number of shares  issued for compensation                                       |       | 450,000                         |       | —                       |       | — |   |

 

The accompanying notesare an integral part of these financial statements. 

 

6

----

** **

**Ecotality, Inc**

(a Development StageCompany)

 

**CondensedConsolidated Financial Statements**

(Unaudited)

 

**Note 1 - Basis of presentation**

 

The interim condensed consolidated financial statements includedherein, presented in accordance with United States generally acceptedaccounting principles and stated in US dollars, have been prepared by theCompany, without audit, pursuant to the rules and regulations of the Securitiesand Exchange Commission (SEC).  Certain information and footnotedisclosures normally included in financial statements prepared in accordancewith generally accepted accounting principles have been condensed or omittedpursuant to such rules and regulations, although the Company believes that thedisclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normalrecurring adjustments, which, in the opinion of management, are necessary forfair presentation of the information contained therein.  It is suggestedthat these consolidated interim financial statements be read in conjunctionwith the financial statements of the Company for the year ended December 31,2006 and notes thereto included in the Company’s 10-KSB annual report. The Company follows the same accounting policies in the preparation ofinterim reports.

 

Results of operations for the interim periods are not indicative ofannual results.

 

**Note 2 - History and organization ofthe company**

 

The Company was organized April 21, 1999 (Date of Inception) under thelaws of the State of Nevada, as Alchemy Enterprises,Ltd.  The Company haslimited operations and is considered a development stage company.  TheCompany was initially authorized to issue 25,000 shares of its no par valuecommon stock.

 

On October 29, 2002, the Company amended its articles of incorporationto 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 ofincorporation again, increasing authorized capital to 100,000,000 shares ofcommon stock with a par value of $0.001.  Subsequently, on March 1, 2006,the Company amended its articles of incorporation, increasing authorizedcapital 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 incorporationto change its name from Alchemy Enterprises, Ltd. to Ecotality, Inc.

 

The former business of the Company was to market a private-labelbio-degradable product line.  During the year ended December 31, 2006, theboard of directors changed the Company’s focus toward developing an electricpower cell technology.

 

On June 11, 2007, the Company bought the assets of the FuelCellStore.com,a small web based seller of educational fuel cell products. TheFuelCellStore.com product line includes demonstration kits, educationalmaterials, fuel cell systems and component parts.  It also offersconsulting services on establishing educational programs for all levels ofeducational institutions.

 

On August 13, 2007 the Company’s registration covering the resale byour 277 selling stockholders of 34,499,920 shares of its’common stock and6,899,982 shares of the Company’s common stock underlying common stock purchasewarrants held by the selling stockholders was deemed effective by theSecurities and Exchange Commission.

 

On September 18, 2007, the Company signed an agreement to purchase theassets of Innergy Power Corporation and its wholly-owned subsidiary, PortableEnergy De Mexico, S.A. DE C.V. InnergyPower Corporation designs andmanufactures standard and custom solar-power and integrated solar-batterysolutions for government, industrial and consumer applications.

 

**Note 3 - Fixed assets**

 

Fixed assets as of September 30, 2007 consisted of the following:

 

| Computer  equipment       |   | $        | 56,008    |   |
|---------------------------|--------|----------|-----------|--------|
| Vehicles                  |   | 823,785  |      |
| Building                  |   | 575,615  |      |
| Accumulated  depreciation |   | (166,069 | )         |
|                      |   | $        | 1,289,339 |   |

 

Depreciation expense totaled $144,982 and $3,455, for the nine monthsended September 30, 2007 and 2006 respectively.

 

7

----

 

**Note 4 - Debt and interest expense**

 

On February 9, 2006, the Company conducted a private offering of debtsecurities, whereby it raised $750,000 in bridge loan financing from threenon-affiliated individuals.  The notes were due August 9, 2006, bear aninterest rate of 10.5% calculated annually and contain no prepayment penalty. The maturity date of the notes was subsequently extended to October 9,2006.  The notes were repaid on September 29, 2006 including interest of$50,056.

 

In connection with the February 9, 2006 debt offering, the note holderswere issued warrants to purchase shares of the Company’s par value commonstock.  Resultantly, a discount of $92 was attributed to the value of thenotes, which amount is being amortized over a period of six months.  As ofDecember 31, 2006, a total of $92 has been amortized and recorded as interestexpense.  See note 7 for additional discussion regarding the issuance ofwarrants.

 

On July 7, 2006, the Company raised $275,000 in bridge loan financingfrom one shareholder and one non-affiliated entity.  The notes are dueDecember 29, 2006, bear an interest rate of 10.5% calculated annually andcontain no prepayment penalty.  The notes were repaid on October 2, 2006including interest of $6,724.

 

In connection with the July 7, 2006 debt offering, the note holderswere issued warrants to purchase shares of the Company’s par value commonstock.  Resultantly, a discount of $223,391 was attributed to the value ofthe notes, which amount is being amortized over a period of approximately sixmonths.  As of December 31, 2006, a total of $223,391 has been amortizedand recorded as interest expense.  See note 7 for additional discussionregarding the issuance of warrants.

 

On August 3, 2006, the Company raised $100,000 in bridge loan financingfrom one shareholder and one non-affiliated entity. The notes are dueDecember 29, 2006, bear an interest rate of 10.5% calculated annually andcontain no prepayment penalty. The notes were repaid on October 2, 2006including interest of $1,668.

 

In connection with the August 3, 2006 debt offering, the note holderswere issued warrants to purchase shares of the Company’s par value commonstock.  Resultantly, a discount of $79,079 was attributed to the value ofthe notes, which amount is being amortized over a period of approximately fivemonths.  As of December 31, 2006, a total of $79,079 has been amortizedand recorded as interest expense.  See note 7 for additional discussionregarding the issuance of warrants.

 

On September 9, 2006, the Company raised $100,000 in bridge loanfinancing from one shareholder and one non-affiliated entity.  The notesare due December 29, 2006, bear an interest rate of 10.5% calculated annuallyand contain no prepayment penalty.  The notes were repaid on October 2,2006 including interest of $552.

 

In connection with the September 9, 2006 debt offering, the noteholders were issued warrants to purchase shares of the Company’s par valuecommon stock.  Resultantly, a discount of $80,094 was attributed to thevalue of the notes, which amount is being amortized over a period ofapproximately four months.  As of December 31, 2006, a total of $80,094has been amortized and recorded as interest expense.  See note 7 foradditional discussion regarding the issuance of warrants.

 

On September 27, 2006, the Company raised $200,000 in bridge loanfinancing from one shareholder and one non-affiliated entity.  The notes aredue December 29, 2006, are non-interest bearing and contain no prepaymentpenalty.  The notes were paid on October 2, 2006.

 

Interest expense totaled $12,501 and $228,658 for the nine months endedSeptember 30, 2007 and 2006 respectively.

 

8

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**Note 5 - Long Term Debt**

 

On January 16, 2007, the Company purchased an office building for anaggregate price of $575,615.  A total of $287,959 has been paid and a taxcredit has been recorded in the amount of $156.  The remaining balance of$287,500 is structured as an interest-only loan from a third-party, bears aninterest rate of 6.75% calculated annually, with monthly payments in the amountof $1,617 due beginning on February 16, 2007.  The entire principal balanceis due on or before January 16, 2012.

 

**Note 6 - Stockholders’ equity**

 

The Company is authorized to issue 300,000,000 shares of its $0.001 parvalue common stock and 200,000,000 shares of $0.001par value preferred stock.

 

On May 17, 2004, the Company closed their Regulation D, Rule 504offering, registered in Nevada, and issued a total of14,647,094 shares of its$0.001 par value common stock in exchange for cash of $41,500.

 

On February 15, 2006, the Company issued 7,500,018 shares of its $0.001par value common stock to an individual who is an officer and director asexecutive compensation valued at $2,475,006, calculated at the fair marketvalue of $0.33, on March 2, 2006 when the company began trading shares ofstock..

 

On March 23, 2006, three warrant holders exercised their rights topurchase shares of par value common stock of the Company. As a result, theCompany issued an aggregate of 1,071,429 shares of common stock at a price pershare of $0.35, for total cash proceeds of $375,000.  See note 7 for additionaldiscussion on this issue.

 

On June 12, 2006, the Company entered into a License Agreement withCalifornia Institute of Technology, whereby the Company issued 5,869,565 sharesof common stock at a fair market value of $1.40 per share, based on the quotedmarket price on the grant date, for licenses and permits carrying an aggregatevalue of $8,217,391.  See note 8 for additional discussion of this issue.

 

During the year ended December 31, 2006, the Company conducted aprivate placement of its common stock pursuant to Regulation D, Rule 506. As of December 31, 2006, the Company issued 34,499,920 shares of its$0.001 par value common stock at a price per share of $0.35, for total grossproceeds of $12,074,935.  The total offering costs related to thisissuance was $9,352,713.  These sharesand warants underlying these shares were declared effective by The Securitiesand Exchange Commission on August 13, 2007.

 

On February 15, 2007, the Company entered into a Settlement Agreementand Release to the Technology Contribution Agreement, originally entered intoon February 15, 2006, to settle and resolve all known disputes anduncertainties between the Company and Howard Foote, Elliott Winfield andUniversal Power Vehicles, Inc.  In accordance with the Settlement, theParties confirm the assignment, transfer and conveyance of all right, title andinterest in and to the Intellectual Property transferred in the ContributionAgreement.  In consideration, the Company agreed to pay to Foote, Winfieldand UPV cash in the amount of$600,000.  Additionally, the Parties receivedcommon stock in the aggregate amount of 1,500,000 shares of the Company, as pera separate escrow agreement between Foote, Winfield and Mr Harlod Sciotto, anofficer and director of the Company. The shares were owned by Mr Sciotto andnot the company. The escrow also provided for: (1) the immediate release fromescrow and return to Harold Sciotto of 32,500,000 shares of our common stock;and (2) the immediate release to Ecotality of 6,000,000 shares of our commonstock from escrow for cancellation.  The 6,000,000 shares were cancelledimmediately upon receipt at their par value amount of $6,000 and that paid incapital was reduced by that amount.  The value of the shares transferred wasbased upon market value ($1,200,000) at the time of the transaction and havebeen reflected as an expense in our financial statements with a correspondingcredit to paid in capital in accordance with SEC bulletins topic 5:T.

 

On June 11, 2007, we agreed to buy the assets of the FuelCellStore.comfor $350,000 in cash and to issue 300,000 shares of our common stock.  .Our common stock was valued at its closing market price on the date of theagreement.  The closing price was$.63 per share, on that date for a totalvalue of $189,000 and a total price paid,,cash and  stock, of$539,000.  The 300,000 shares of our common stock have been issued asof  September 30, 2007.

 

On August 30th, 2007, the company issued a total of 450,000shares of common stock to three employees an incentive. The stock was valued atthe current market price of $0.50 at the date of issue for a total of $225,000.This amount will be amortized over the term of agreement contained as part ofemployment. Accordingly, $75,000 has been amortized for the quarter endedSeptember 30th, 2007. The un-amortized amount is $150,000, whichwill be amortized through August 1st, 2008.

 

The following table summarizes the shares issued for professionalservices as per agreement with each of the service providers:

 
| **Description**          | ** ** | **Date of Shares  Issue** | ** ** | **Current market   price on date of  issue** | ** **     | **Amortization through  Sept. 30th, 2007** | ** ** | **Un-amortized  amount** | ** ** |
|--------------------------|------------|---------------------------|------------|----------------------------------------------|----------------|--------------------------------------------|------------|--------------------------|------------|
| Alliance  Advisors LLC   |       | Sept. 4th,  2007          |       | $                                            | 0.51 per share |                                       | $          | 33,150.00                |       | $ | 165,750.00 |   |
| Cross Check  Capital LLC |       | August 22nd,  2007        |       | $                                            | 0.50 per share |                                       | $          | 41,666.67                |       | $ | 83,333.33 |   |
| Quality Stocks,  LLC     |       | Sept. 4th,  2007          |       | $                                            | 0.51 per share |                                       | $          | 30,600.00                |       | $ | 45,900.00 |   |
| Total                    |       |                      |       |                                         |           | $                                          | 105,416.67 |                     | $          | 294,983.00 |   |

 

As of September 30th, 2007, there is an un-amortized amountof $444,983.33 towards stock expense issued for services and compensation,which will be amortized in to expenses through August 1st, 2008.

 

9

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**Note 7 - Warrants**

 

As of January 1, 2006, there were no warrants outstanding.

 

On February 9, 2006, the Company issued warrants to purchase shares ofthe Company’s par value common stock to three non-affiliated individuals inconjunction with bridge loan agreements.  The warrant holders were grantedthe right to purchase atotal of 1,071,429 shares of common stock of the Companyfor an aggregate purchase price of $375,000 or $0.35 a share.  Theaggregate fair value of such warrants totaled $92 based on the Black SchoelesMerton pricing model using the following estimates:  4 % risk free rate,100 % volatility and expected life of the warrants of 6 months.  On March23, 2006, all of these warrants were exercised for total gross proceeds of$375,000.

 

On July 7, 2006, the Company issued warrants to purchase shares of theCompany’s par value common stock to one shareholder and one non-affiliatedentity in conjunction with bridge loan agreements.  The warrant holderswere granted the right to purchase a total of 1,100,000 shares of common stockof the Company for an a purchase price of $1,562,00 or $1.42 a share. Theaggregate fair value of such warrants totaled $223,391 based on the BlackSchoeles Merton pricing model using the following estimates:  4% risk freerate, 100% volatility and expected life of 5 years.

 

On August 3, 2006, the Company issued warrants to purchase shares ofthe Company’s par value common stock to one shareholder and one non-affiliatedentity in conjunction with bridge loan agreements.  The warrant holderswere granted the right to purchase a total of 400,000 shares of common stock ofthe Company for a purchase price of $496,000 or $1.24 a share.  Theaggregate fair value of such warrants totaled $79,079 based on the BlackSchoeles Merton pricing model using the following estimates:  4% risk freerate, 100% volatility and expected life of 5 years.

 

On September 6, 2006, the Company issued warrants to purchase shares ofthe Company’s par value common stock to one shareholder and one non-affiliatedentity in conjunction with bridge loan agreements.  The warrant holderswere granted the right to purchase a total of 400,000 shares of common stock ofthe Company for a purchase price of $528,000 or $1.32 a share.  Theaggregate fair value of such warrants totaled $80,094 based on the BlackSchoeles Merton pricing model using the following estimates:  4% risk freerate, 100% volatility and expected life of 5 years.

 

On October 27, 2006 the Company issued warrants to purchase shares ofthe Company’s par value common stock to the brokers of Brookstreet SecuritiesCorporation as additional consideration for their acting as placement agent. The warrant holders were granted the right to purchase a total of6,899,982 shares of common stock of the Company for a purchase priceof$2,414,994, or $0.35 per share.  The aggregate fair value of suchwarrants totaled $7,638,212 based on the Black Schoeles Merton pricing modelusing the following estimates:  4% risk free rate, 91% volatility andexpected life of 5 years.  The Company netted the fair market value of thewarrants against expenses related the offering of common stock conducted byBrookstreet Securities Corporation.

 

Paragraph 5 (Registration Rights) of the Subscription Agreement for theprivate placement described above states that  ”If the Company fails to(i) file the Registration Statement with the SEC on or prior to 60 days afterthe Closing Date, (ii) obtain effectiveness of the Registration Statement bythe SEC on or prior to 150 days after the Closing Date, or (iii) maintaineffectiveness of the Registration Statement for 12 months after the date ofeffectiveness, the Company shall be obligated to issue to the undersignedadditional Shares”  The Registration Rights paragraph further holds thatif we fail or fail to obtain or maintain the effectiveness of the registrationstatement, within 30 days following the determination date (date upon which wefail to meet the 60 or 150 day requirement)  we are to issue to thesubscribers the number of shares equal 1% of the number of shares issued as apart of this subscription and do so on a weekly basis until such time as we areincompliance with the registration requirement.  Further, the number ofshares issued as “penalty shares” in aggregate cannot exceed 10%of the numberof shares originally subscribed..  As of March 31, 2007 the Company had not incurred any penalties(compensatory or otherwise), however, theCompany reserved $3,001,493 on March 31, 2007 for incurring any penalties inconjunction with this registration.  The amount reserved was based uponthe maximum number of shares that may be issued and the closing price of ashare of common stock of $.87 on March 31, 2007.  At September 30, 2007,the closing price of a share of the Company’s common stock was $.31. TheCompany reduced the amount  reserved by $1,931,995 on its September 30,2007condensed consolidated financial statements such that the amount reservedis $1,069,498.  Shares of the Company’scommon stock were issued in relation to this penalty on November 2, 2007.

 

10

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**Note 7 - Warrants (Continued)**

 

The following is a summary of the status of all of the Company’s stockwarrants as of September 30, 2007 and changes during the nine months ended:
| ** **                                  | ** ** | **Number  Of Shares** | ** ** | **Weighted-Average  Exercise Price** | ** ** |
|---------------------------------------------|------------|----------------------------|------------|-------------------------------------------|------------|
| Outstanding at  December 31, 2005           |       | 0                          |       | $                                         | 0.00       |   |
| Granted                                     |       | 1,071,429                  |       | $                                         | 0.35       |   |
| Exercised                                   |       | (1,071,429                 | )          | $                                         | 0.35       |   |
| Cancelled                                   |       | 0                          |       | $                                         | 0.00       |   |
| Outstanding at  September 30, 2006          |       | 0                          |       | $                                         | 0.00       |   |
| Granted                                     |       | 8,799,982                  |       | $                                         | 0.57       |   |
| Exercised                                   |       | 0                          |       | $                                         | 0.00       |   |
| Cancelled                                   |       | 0                          |       | $                                         | 0.00       |   |
| Outstanding at  December 31, 2006           |       | 8,799,982                  |       | $                                         | 0.57       |   |
| Granted                                     |       | 0                          |       | $                                         | 0.00       |   |
| Exercised                                   |       | 0                          |       | $                                         | 0.00       |   |
| Cancelled                                   |       | 0                          |       | $                                         | 0.00       |   |
| Outstanding at  September 30, 2007          |       | 8,799,982                  |       | $                                         | 0.57       |   |
| Warrants  exercisable at September 30, 2007 |       | 8,799,982                  |       | $                                         | 0.57       |   |

 

The following tables summarize information about stock warrantsoutstanding and exercisable at September 30, 2007

 

**STOCKWARRANTS OUTSTANDING**

** **
| **Range of Exercise Prices** | ** ** | **Number of  Shares  Outstanding** | ** ** | **Weighted-Average  Remaining  Contractual  Life in Years** | ** ** | **Weighted-Average  Exercise Price** | ** ** |
|----------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------------------------------------|------------|-------------------------------------------|------------|
| $ 0.35                            |       | 6,899,982                               |       | 4.08                                                                  |       | $                                         | 0.35       |   |
| $ 1.24 - $ 1.42              |       | 1,900,000                               |       | 3.82                                                                  |       | $                                         | 1.36       |   |
|                                   |       | 8,799,982                               |       | 4.02                                                                  |       | $                                         | 0.57       |   |

 

**STOCKWARRANTS EXERCISABLE**

** **
| **Range of Exercise Prices** | ** ** | **Number of  Shares  Exercisable** | ** ** | **Weighted-Average  Exercise Price** | ** ** |
|----------------------------------------|------------|-----------------------------------------|------------|-------------------------------------------|------------|
| $ 0.35                            |       | 6,899,982                               |       | $                                         | 0.35       |   |
| $ 1.24-$ 1.42                |       | 1,900,000                               |       | $                                         | 1.36       |   |
|                                   |       | 8,799,982                               |       | $                                         | 0.57       |   |

 

**Note 8 - Commitments andcontingencies**

 

On February 15, 2006, the Company entered into a TechnologyContribution Agreement with two individuals to acquire the rights, titles andinterests to the intellectual property for the development of an electric powercell.  In exchange for the rights to this intellectual property, theCompany agreed to finance the development of the electric power cell system upto $1,350,000 and payoff $15,000 in interest costs for related debt.  Todate through September 30,, 2007, $2,248,295 has been recorded as research anddevelopment expense in relation to the technology and $15,000 as interestexpense.

 

11

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**Note 8 - Commitments andcontingencies (continued)**

 

On February 15, 2006, the Company entered into a consulting agreementwith Universal Power Vehicles Corporation for annual compensation of $200,000. The term of the agreement is three years and may be extended uponagreement by both parties.  The Company prepaid one-half of thecompensation upon execution of the agreement, with the remaining compensationto be paid monthly beginning August 15.  The Company fully amortized $100,000as an expense in the year ended December 31, 2006. The consultingagreement has subsequently been terminated, without penalty, and no additionalpayments will be made.

 

On February 15, 2006, the Company entered into an employment agreementwith an individual who is an officer and director of the Company.  Thecompensation is $120,000 annually.  Additionally, the Company issued7,500,018 shares of par value common stock to this individual as executivecompensation valued at $2,475,006.  The term of the agreement is one yearand is automatically renewed annually.  On February 15, 2007, theemployment agreement was renewed with compensation to be $222,000 annually.

 

On February 16, 2006, the Company entered into an employment agreementwith an individual who is an officer and director of the Company for annualcompensation of $120,000.  The term of the agreement is for one year andwas automatically renewed on February 15, 2007.

 

On March 21, 2006, the Company entered into a lease agreement to rentoffice space at a rate of $547 per month and requires are fundable deposit of$500, which was paid by the Company during the period ended March 31, 2006. On October 31, 2006, the Company added an addendum to the original leaseagreement to rent additional office space at a rate of $547 per month andrequires an additional refundable deposit of $500, which was paid by theCompany during the period ended December 31, 2006. The deposits wererecorded in prepaid expenses, but have been expensed during the three months endedMarch 31, 2007.  The lease and addendum expired collectively on March 31,2007 and was not renewed.

 

On June 12, 2006, the Company entered into a License Agreement withCalifornia Institute of Technology, whereby the Company obtained certainexclusive and non-exclusive intellectual property licenses pertaining to thedevelopment of an electronic fuel cell technology, in exchange for 5,869,565shares of common stock of the Company with a fair market value of $8,217,391,which amount has been recorded as licenses and permits expense.  TheLicense Agreement carries an annual maintenance fee of $50,000, with the firstpayment due on or about June 12, 2009.  The License Agreement carries aperpetual term, subject to default, infringement, expiration, revocation orunenforceability of the License Agreement and the licenses granted thereby.

 

On  April 5, 2007 we were obligated to issue 344,999 shares perweek for a maximum of 10 weeks as a penalty to the investors of the privateplacement for failure to register their shares by that date.  We arecurrently obligated, therefore to issue an aggregate of 3,449,990 shares prorata to the investors but are not required to register these shares. On March31,2007 , the Company reserved $3,001,493  for incurring any penalties inconjunction with the registration.  The amount reserved was based upon themaximum number of shares that may be issued and the closing price of a share ofcommon stock of $.87 on March 31,2007.  However at September 30, 2007,theclosing price of a share of the Company’s common stock was $.31. The Companyreduced the amount  reserved by $1,931,995on its September 30, 2007condensed consolidated financial statements such that the amount reserved is$1,069,497. The shares of the Company’s common stock were issued November2,2007 in relation to this penalty.

 

On June 11, 2007, we agreed to buy the assets of the FuelCellStore.comfor $350,000 in cash and to issue 300,000 shares of our common stock.  .Our common stock was valued at its closing market price on the date of theagreement.  The closing price was$.63 per share, on that date for a totalvalue of $189,000 and a total price paid,cash and  stock, of$539,000.  The 300,000 shares of our common stock have been issued as ofSeptember 30, 2007.

 

12

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Note 9  Impairment of Intangible Assets

 

We agreed to buy the assets of the FuelCellStore.com for $350,000 incash and to issue 300,000 shares of our common stock .Our common stock wasvalued at its closing market price on the date of the agreement.  Theclosing price was $.63 per share, on that date for a total value of $189,000and a total price paid, cash and  stock, of $539,000.  Of the assetsacquired the Company assigned a value to $179,775 to merchandise inventory,$8,600 to fixed assets, and  $23,843 to current accounts receivable.  In accordance with SFAS No. 144 “Accounting for the Impairment ordisposal of Long Lived assets”  the Company reviewed the intangible assetsthat were acquired, including the customer data base, and internally developedsoftware and determined that the intangible assets did not have value to thecompany. Therefore, the difference between the assets noted and the price paidfor the assets $326,782 have been allocated to intangible assets were impairedand written off at June 30, 2007 due to the lack of proven future cash flowsgenerated by the assets acquired.  We impaired an additional $102,620during the period ended September 30, 2007 as a result of reviewing the longlived assets acquired.

 

Note 10 Subsequent Events

 

On September 18, 2007, the Registrant signed an agreement to purchasethe certain assets of Innergy Power Corporation and its wholly-ownedsubsidiary, Portable Energy De Mexico, S.A. DE C.V. (collectively the “Sellers”). InnergyPower Corporation designs and manufactures standard and customsolar-power and integrated solar-battery solutions for government, industrialand consumer applications.  The purchase price for the assets was3,000,000 shares of the Company’s common stock (the “Shares”).  TheCompany has guaranteed to the Sellers that the Shares will be worth$3,000,000during the 30 day period commencing 11 months from the closing dateor the Company will be required to either issue additional shares such that thetotal shares are worth $3,000,000 at that time or pay the seller $3,000,000 incash.  The Shares are subject to piggy back registration rights and a lockup agreement to be executed by the Sellers’ stockholders.  The purchaseclosed on October 18, 2007. The 3,000,000 shares were issued October 1,2007.

 

On November 6, 2007, the Company signed a stock purchase agreement withDonald Karner and Kevin Morrow, whereby the Company purchased all of the issuedand outstanding capital stock of Electric Transportation EngineeringCorporation, as well as its affiliated company Clarity Group (both of which arecollectively referred to as “ETEC”).  ETEC provides technical support andfield services for all aspects of electric vehicle infrastructure.  ETECwill operate as a subsidiary of the Company and there will be no changes to thecompany’s management team.

 

The aggregate purchase price for the outstanding capital stock of ETECis $3,000,000 in cash and 6,500,000 shares of the Company’s common stock (the “Shares”). Of the $3,000,000 in cash to be paid to ETEC, $2,500,000 was due uponclosing of the stock purchase agreement and $500,000 will be paid in 10 equalmonthly installments, beginning December 1, 2007.  The 6,500,000 shareswill be issued in the following manner: 3,250,000 upon the close of the stockpurchase agreement and 3,250,000 to be issued on the first anniversary of theclosing of the stock purchase agreement, which date shall be November 6, 2008. The Shares bear a restricted legend and are not subject to piggy backregistration rights.  The 6,500,000 shares were issued November 2007.

 

On November 6, 2007, the Company sold an aggregate of $4,117,649 ofconvertible debentures to three shareholders and one non affiliated investor. The notes bear interest at 8% per annum and are due May 6, 2010.  Asadditional consideration for the notes, the Company issued an aggregate of6,862,748 common stock purchase warrants, each exercisable to purchase oneshare of common stock at $0.32 per share.

 

On April 5, 2007 the Company was obligated to issue 344,999 shares perweek for a maximum of 10 weeks as a penalty to the investors of the privateplacement for failure to register their shares by that date.  The Companywas obligated, therefore to issue an aggregate of 3,449,990 shares pro rata tothe investors but are not required to register these shares. The 3,449,990shares of the Company’s common stock were issued November 2, 2007.

 

On October 10, 2007, we issued 100,000 shares of the Company’s commonstock to the founder of the Fuel Cell Store as a bonus for executing anemployment agreement with the Company,

 

On October 11, 2007 Mr Jerry Linn, a Director of the Company andChairman of its Scence and Technology Committee, was issued 200,000 shares ofthe Company’s common stock.

 

13

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

 

*Forward-Looking Statements*

 

 This QuarterlyReport contains forward-looking statements about our business, financialcondition and prospects that reflect management’s assumptions and beliefs basedon information currently available.  We can give no assurance that theexpectations indicated by such forward-looking statements will be realized. If any of our management’s assumptions should prove incorrect, or if anyof the risks and uncertainties underlying such expectations should materialize,Alchemy’s actual results may differ materially from those indicated by theforward-looking statements.

 

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

 

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

 

**Overview**

 

 We wereincorporated in the State of Nevada on April 21, 1999, as a marketer ofprivate-label biodegradable cleaning chemicals.  On February 15, 2006, weentered into and closed a Technology Contribution Agreement with Howard Footeand Elliot Winfield (“Transferors”), pursuant to which we acquired all ofTransferors’ right, title and interest in and to a certain electric power cell(“EPC”) technology to be used in connection with the development of an improvedelectric battery represented by a U.S. Patent Office patent application (the “Technology”). As a result of the Technology Contribution Agreement, our board ofdirectors made a decision to change our business focus from marketing chemicalproducts toward developing the EPC technology.

 

 We are adevelopment stage company seeking to design and license a cost efficientelectric power cell for use in motorized vehicles and industrial equipment. A power or fuel cell is an electrochemical device that combines hydrogenand oxygen to produce electric power without combustion.  We have enteredinto a development agreement with JPL to develop, build and patent a prototype100 kilowatts electric power cell.  We also have entered into a licenseagreement for certain exclusive patent rights and non-exclusive technologyrights from CalTech, which is the operator of JPL and assignee of its patentand technology rights.

 

 Under our agreementwith JPL, we have hired it to engineer a magnesium-based system that produces ahybrid power source creating hydrogen fuel and electricity on demand, for whichwe expect to pay JPL a total of $1,350,000.  We believe that availablehydrogen fuel cell technology methods are bulky, unreliable, expensive orenergy inefficient.  We are seeking to build and improve upon existinghydrogen fuel cell technologies and combine it with our system to achieve safe,clean and reusable power.  A cost efficient EPC and storage system maymake future electric propulsion devices as practical as the current generationof gasoline-powered systems.  If we are successful in commerciallydeveloping our EPC, we intend to sublicense the technology under our exclusivelicense agreement with CalTech for a broad range of applications includingvarious types of motorized vehicles and industrial equipment.  We hope toderive revenue from technology sublicense fees, fuel licensing fees andfees forthe design and technical support of refueling stations and royalty fees.

 

 On February 15,2007, we entered into a Settlement Agreement with Howard Foote, ElliottWinfield and Universal PowerVehicles Corporation (UPV) to settle and resolveall known disputes and uncertainties between them and us related to allagreements and contracts entered into concerning the fuel cell intellectualproperty and technology.  In accordance with the Settlement, Foote, Winfieldand UPV confirmed the assignment, transfer and conveyance of all right, titleand interest in and to the electric power cell and reactor technology beingdeveloped by us.  In consideration, we paid to Foote, Winfield and PV cashin the amount of $600,000.  Additionally, Foote, Winfield and UPV received1,500,000 shares of our common stock.

 

14

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 In connection withthe Settlement, an officer and director of Ecotality entered into an escrowagreement with Foote,Winfield and UPV, which cancels and supersedes separateprior escrow agreements entered into with Foote and Winfield, UPV individually,on February 15, 2006.  The 2006 Escrow provided for the potential issuanceof an aggregate of 40,000,082 shares of our common stock to Foote, Winfield,UPV, upon the achievement of certain performance standards, as set forth insaid 2006 Escrow.  The 2007 Escrow provides for: (1) the immediate releaseof 1,500,000 shares of our common stock held per the 2006 Escrow to the Foote,Winfield, UPV; (2) the immediate release from escrow and return to HaroldSciotto of 32,500,000 shares ofour common stock; and (3) the immediate releaseto Ecotality of 6,000,000 shares of our common stock from escrow forcancellation.

 

 On March 19, 2007,we received a memorandum from the National Aeronautics and Space Administration’sJet Propulsion Laboratory reporting that significant performance advancementshave been made with regard to the HydratusTM, an on-demand hydrogen storage anddelivery system fueled by magnesium and water, JPL has been developing on ourbehalf.  In summary, the JPL memo states that, in laboratory tests of themodified HydratusTM, the following has occurred:

 1.

 Hydrogen-fuel storage capacity, by weight forthe entire system, has increased from 4.7% to between 8% and 9%, depending onoperating mode, allowing the modified HydratusTM to meet the Department ofEnergy’s 2010 goal of 6% hydrogen storage capacity.

 2.

 A drop in operating temperature of the modifiedHydratusTM of 300-400 degrees Centigrade will allow the use of less expensivematerials in system construction.

 3.

 The amount of heat generated by the modifiedHydratusTM has decreased significantly by approximately 80% is expected toresult in reduced system complexity, in terms of cost and size. Additionally, because less energy is generated, and subsequently wastedduring operation, the regeneration efficiency of the reaction products isincreasedby approximately 400%.

 As a result of thetechnical, performance and cost advancements, JPL recommended all futureresearch and development efforts be shifted to focus on the modified HydratusTMand all associated systems and processes.  JPL and Ecotality have agreedto develop and test a 7kW prototype, which JPL believes is suitable to powervarious commercial applications, as well as can be scaled for future systems. Additionally, JPL and Ecotality plan to design and test a full-size 65 kWHydratusTM suitable for application in a bus.

 

During the course of ourresearch and development efforts, we determined that Hydratus was no longer anappropriate name for our long term commercialization plans. Thus on September1, 2007, we changed the name of Hydratus to Hydrality and all referencessubsequent  to September 1, 2007 arebeing made to Hydrality.

 

      On June 11, 2007, we bought the assets of the FuelCellStore.com, a small webbased seller of educational fuel cell products. The FuelCellStore.com productline includes demonstration kits, educational materials, fuel cell systems andcomponent parts.  It also offers consulting services on establishingeducational programs for all levels of educational institutions.  Sincethe Fuel Cell Store was significantly smaller than we are, we were not requiredto provide audited financial statements for it.  We operate the  FuelCell Store. through our wholly-owned subsidiary, Ecotality Stores, Inc. While revenue producing activities ,facilities and employees have intitiallyremained the same, we intend to change the distribution system through barcoding and inventory control procedures, and expand the customer base throughincreased emphasis on marketing.  We sell Fuel Cell Store Products throughour own Ecotality Store’s website.

 

     We agreed to buy the assets of the FuelCellStore.com for $350,000 in cash andto issue 300,000 shares of our common stock.  . Our common stock will bevalued at its closing market price on the date of the agreement.  Theclosing price was $.63 per share, on that date for a total value of $189,000and a total price paid cash and  stock, of $539,000.   We concludedthis to be an asset purchase rather than a business purchase because wedid not acquire their debt and they continue to exist after the purchase iscompleted.  Of the assets acquired we identified and assigned a valueof  $179,775 in merchandise inventory,$8,600 in fixed assets,, and $23,843 in current accounts receivable.   Wereviewed the intangible assets that we acquired, including the customer data base,and internally developed software and determined that the intangible assets didnot have value to us. Therefore, the difference between the assets notedand the price paid for the assets $326,782 have been allocated tointangible assets and   impaired and written off due to the lack ofproven future cash flows generated by the assets acquired.

 

On September 18, 2007, wesigned an agreement to purchase the certain assets of Innergy Power Corporationand its wholly-owned subsidiary, Portable Energy De Mexico, S.A. DE C.V. (the “sellers”).  InnergyPower Corporation designs andmanufactures standard and custom solar-power and integrated solar-batterysolutions forgovernment, industrial and consumer applications.  Thepurchase price for the assets was 3,000,000 shares of  our common stock.  We have guaranteed to the Sellers that theShares will be worth $3,000,000 during the 30 day period commencing 11 monthsfrom the closing date or we will be required to either issue additional sharessuch that the total shares are worth $3,000,000 at that time or pay the seller$3,000,000 in cash.  The Shares are subject to piggy back registrationrights and a lock up agreement to be executed by the Sellers’stockholders.  The agreement is scheduled to close in early October, 2007and is subject to customary conditions including satisfactory due diligenceresults

 

On November 6, 2007, wesigned a stock purchase agreement with two non affiliated individuals wherebywe purchased all of the issued and outstanding capital stock of ElectricTransportation Engineering Corporation, as well as its affiliated companyClarity Group (both of which are collectively referred to as “ETEC”).  ETEC provides technical support and fieldservices for all aspects of electric vehicle infrastructure.  ETEC will operate as a subsidiary of theCompany and there will be no changes to the company’s management team.  The aggregate purchase price for theoutstanding capital stock of ETEC is $3,000,000 in cash and 6,500,000 shares ofthe Company’s common stock (the “Shares”). Of the $3,000,000 in cash to be paid to ETEC, $2,500,000 was due uponclosing of the stock purchase agreement and $500,000 will be paid in 10 equalmonthly installments, beginning December 1, 2007.  The 6,500,000 shares will be issued in thefollowing manner: 3,250,000 upon the close of the stock purchase agreement and3,250,000 to be issued on the first anniversary of the closing of the stockpurchase agreement, which date shall be November 6, 2008.  

 

15

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**Management’sDiscussion**

 

*Operating Expenses*

*Three Months Ended September 30,2007 Compared to the Three Months Ended September 30, 2006*

 

Total expenses for thethree month period ended September 30, 2007 were $1,814,536. Approximately18.5% of these expenses were research and development costsrelated to engineering work performed for us by the Jet Propulsion Laboratoriesand other firms supporting our project. In addition to the research anddevelopment costs for the three months ended September 30, 2007, we incurred$1,196,555 in general and administrative expenses, of which $250,445 can beattributed to accounting, legal, and professional fees related to theregistration of our common stock, public entity accounting and reportingrequirements and acquisition activities. In addition, we incurred $114,750 inexecutive compensation, issued $225,000 in shares related to employeeemployment agreements, and $48,693 in depreciation expenses.  In comparingoperating expenses for the three months ending September 30, 2007 and September30, 2006  expenses for the 2007 periodare overall consistent with those of 2006 when excluding employment agreementcompensation.

16

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 In comparison, total expenses during the three month period endedSeptember 30, 2006 were $1,803,543.  A material component of totalexpenses during this period was attributable to $416,249  in research and development costsspecifically related to the power cell technology acquired under the TechnologyContribution Agreement. In addition to the research and development expenses,we also incurred $1,383,943 in general and administrative expenses. We alsoincurred $1,966 in depreciation expense during this period.

 

*Nine Months Ended September 30, 2007Compared to the Nine Months Ended September 30, 2006*

 

Total expenses for the nine month period ended September 30, 2007 were$5,895,141  Approximately 17.9% of these expenses were research anddevelopment costs related to engineering work performed for us by the JetPropulsion Laboratories and other firms supporting our project. In addition tothe research and development costs for the nine months ended September 30,2007, we incurred $2,358,827 in general and administrative expenses, of whichapproximately $529,044 can be attributed to accounting and legal, related to registration of our common stock,public entity accounting and reporting requirements and acquisition of theassets of the Fuel Cell Store as well as other acquisition activities. Inaddition, included in general and administrative expense is $306,750 inexecutive compensation and we incurred  $144,982 in depreciation expenses.Approximately 27.7% of our operating expenses for the nine months are for the$1,800,000 in expenses for the settlement with Howard Foot and ElliotWinfield.  The settlement expense is considered part of our operatingcosts due to the nature of our business regarding intellectual property. Our expenses for the nine months compare favorably to the expenses incurred thefirst nine months of 2006 excluding our common stock issued to the CaliforniaInstitute of Technology.

 

 

 In comparison, total expenses during the nine month period endedSeptember 30, 2006 were $13,555,770.  A material component of totalexpenses during this period was attributable to $816,249 in research anddevelopment costs specifically related to the power cell technology acquiredunder the Technology Contribution Agreement. In addition to research anddevelopment expenses, for the nine months ended September 30, 2006 we alsoincurred $4,513,794 in general and administrative expenses, including 2,528,756in executive compensation.  Approximately $2,475,006 in executivecompensation was related to the issuance of our common stock to ourCEO.   As indicated above, a material expense for the period was ourentering into a License Agreement with California Institute of Technology. Weincurred $3,455 in depreciation expense during this period.

 

17

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We realized our first full quarter of operating revenues during thethree month period ended September 30, 2007.  Since this was ourinitial operating revenue, we do not have comparability data for the firstthree or nine  months of 2006. This firstfull quarter of operating revenues in the amount of $235,237 were generated byselling our first products through our web site.  This initial period required expendituresrelated to upgrading the web site, obtaining necessary licensures, and puttingin place new operational systems.  Costof goods sold percentage for the period beginning June 11, 2007  and ending September 30, 2007 was 71.5%.

 

Our operating loss forthe nine months ended September 30, 2007 was $6,848,298.  This comparesfavorably with the operating loss of $13,784,428 for the nine months endedSeptember 30, 2006. While our operating loss from inception to September 30,2007 was $21,426,744, we expect to continue to incur ongoing operatinglosses for the near future, because the Technology acquired in the TechnologyContribution Agreement is still in the research and development stage asindicated above and we will continue to incur research and development costs.  Our full revenue generating capacity will not be realized until we areable to effectively demonstrate the commercial ability of our Technology, ofwhich there can be no assurance and fully integrating the acquisitions that wehave made during 2007.

 

For the three monthsended September 30, 2007, we realized total other income of $16,456, and forthe nine months ended September 30, 2007, $51,824 consisting solely of interestincome.  We also incurred interest expense in the amount of $4,415 duringthe three months ended September 30, 2007, and $12,501 for the nine monthsended September 30, 2007 compared to the $189,760 incurred for the  three months ended September 30, 2006 and$228,658 for the nine months ended September 30, 2006.   In additionto these other income and expense items, we have reserved $1,069,497 forincurring any penalties in conjunction with registering our common shares ofstock with the SEC.  The amount we reserved is based upon the maximumnumber of shares that will be issued and the closing price of a share of ourcommon stock of $.32 on September 30, 2007.  Shares of our common stockhave been issued in conjunction with this reservation of shares on November 2,2007. In conjunction with our acquisition of the assets of the Fuel Cell Store,we impaired intangible assets in the amount of $429,402 during the period endedSeptember 30, 2007. After taking other income and expenses into account, ourloss from continuing operations was $1,506,783 during the three months endedSeptember 30, 2007 and $1,993,303 for the three months ended September 30,2006.  Comparability for these periods is difficult as the September 30,2007 loss was mitigated by our reducing the amount reserved in conjunction withthe penalty shares and the September 30, 2006 loss is mitigated by significantinterest expense paid for loans repaid during the period.

 

*Liquidity and Capital Resources*

 

 The availability ofcapital resources is a limiting factor to our continuing research anddevelopment efforts as a renewable energy company.

 

 On April 10, 2006,we entered into a letter of intent with Brookstreet Capital, an investmentbanking firm, to act as a placement agent in connection with a privateplacement of our unregistered common stock, pursuant to Regulation D, Rule506,offered solely to accredited investors.  The private placement wasconducted on a best efforts basis and there was no assurance that any or all ofthe securities offered thereby would be sold.  As of October 31, 2006, wesold 34,499,920 shares of our $0.001 par value common stock.  Theaggregate gross proceeds received in this private placement was $12,074,935.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 valueof warrants to purchase shares of our common stock issued to the placement agent.

 

 

 The proceedsgenerated from the private placement should allow us to continue our EPCresearch and development program per our overall business plan.  However,there can be no assurance that these capital resources will result inprofitable operations through the sale of commercial products and licenses.

 

 To finance theacquisition of ETEC described above, on November 6, 2007, we sold an aggregateof $4,117,649 of convertible debentures to three shareholders and one nonaffiliated investor.  The notes bearinterest at 8% per annum and are due May 6, 2010.  As additional consideration for the notes,the Company issued an aggregate of 6,862,748 common stock purchase warrants,each exercisable to purchase one share of common stock at $0.32 per share.

 

*Management’s Plan of Operation*

 

 As described inLiquidity and Capital Resources, above, we raised gross proceeds of $12,074,935in a private placement. The warrants underlying the common shares issuedin connection with this private placement may generate up to an additionalworking capital over the next four (4) years beginning fiscal year 2007 forwarrants that may not be exercised as cashless warrants.  As of September30, 2007 we had available to us approximately $1,814,518 in cash, certificatesof deposit and accounts receivable to meet our operating requirements.  Inplanning for fiscal year 2007, to achieve our research and development goals wedeveloped an overall operating budget of $3,650,000, including $2,100,000 forresearch and development projects.  In addition, we identified thefollowing other major costs: (1) $717,000 for officer ($400,000) and employee($317,000) compensation, (2) $425,000 for advertising, marketing, website andnew media operations, and (3) $260,000 for professional and legal fees. These identified categories and costs are generally consistent with ourexpenses incurred during the year ended December 31, 2006 and remain consistentwith the nine months ended September 30, 2007 other than accounting, legal andprofessional fees that are related to acquisition activities.  We do notanticipate the purchase or sale of any major capital equipment, nor do weanticipate adding a significant number of employees.  The compensationamounts indicated above for both officers and employees do not reflect anystock options or grants that may be awarded during the course of the year inaccordance with our Stock Incentive Plan.

 

 Our efforts duringfiscal year 2007 continue to be directed at achieving our research anddevelopment objectives, and represent at least 60% of our operating plan. While we have established a budget for how we will spend our research anddevelopment funds, we may have to spend more dollars than planned. However, given available funds and our plan for fiscal 2007, we anticipatethat we have adequate capital resources to complete our objectives for the yearas they relate to our research and development activities.

 

18

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*Working Capital*

 

 Net working capitalis an important measure of our ability to finance our operations.  Giventhat our net working capital at December 31, 2006 was positive and continues toremain positive through the nine months ended September 30, 2007 by $1,042,334or a ratio of 1.6 to 1 ,and  that our private placement efforts have beensuccessful to date, we believe we have adequate working capital to maintain ourresearch and development efforts during 2007 as a minimum.  We may need toobtain additional financing prior to having profitable commercial operations. Inorder to finance our acquisitions, we have sold debentures as indicated in theliquidity section and may need to do so in the future.

 

 We do not have anyoff-balance sheet arrangements.

 

 We currently do notown any significant plant or equipment that we would seek to sell in the nearfuture.

 

 We do notanticipate the need to add significant numbers of full- or part- time employeesover the next 12 months.  We plan to outsource the research anddevelopment and production of our products.

 

**Controls and Procedures**

 

 We have establisheda set of disclosure controls and procedures designed to ensure that informationrequired to be disclosed by us in our reports filed under the SecuritiesExchange Act, is recorded, processed, summarized and reported within the timeperiods specified by the SEC’s rules and forms.  Disclosure controls havealso designed with the objective of ensuring that this information isaccumulated and communicated to our management, including our chief executiveofficer and chief financial officer, as appropriate, to allow timely decisionsregarding required disclosure.  We believe our disclosure controls andinternal controls are effective as of September 30, 2007.

 

 We do not expectthat our disclosure controls or internal controls over financial reporting willprevent all errors or all instances of fraud.  A control system, no matterhow well designed and operated, can provide only reasonable, not absolute,assurance that the control system’s objectives will be met.  Further, thedesign of a control system must reflect the fact that there are resourceconstraints, and the benefits of controls must be considered relative to theircosts.  Management is required to apply its judgment in evaluating thecost-benefit relationship of possible controls and procedures. Because of theinherent limitations in all control systems, no evaluation of controls canprovide absolute assurance that all control issues and instances of fraud, ifany, within our company have been detected.  These inherent limitationsinclude the realities that judgments indecision-making can be faulty, and thatbreakdowns can occur because of simple error or mistake.  Because of theinherent limitation of a cost-effective control system, misstatements due toerror or fraud may occur and not be detected.

 

19

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**PART II- OTHER INFORMATION**

 

**Legal Proceedings**

 

 No Director,officer, significant employee, or consultant of Ecotality, Inc. has beenconvicted in a criminal proceeding, exclusive of traffic violations.

 

 No Director,officer, significant employee, or consultant of Ecotality, Inc. has beenpermanently or temporarily enjoined, barred, suspended, or otherwise limitedfrom involvement in any type of business, securities or banking activities.

 

 No Director,officer, significant employee or consultant of Ecotality, Inc. has beenconvicted of violating a federal or state securities or commodities law.

 

 Ecotality, Inc. isnot a party to any pending legal proceedings

 

** Unregistered Salesof Equity Securities**

 

 On or about March1, 2004, we commenced an offering of shares common stock in accordance withRegulation D, Rule504 of the Securities Act, registered by qualification in theState of Nevada. On May 17, 2004, we completed the offering ,whereby we sold830,000 shares of common stock, par value, at a price of $0.05 per share to 30investors, of which 29 are unaffiliated shareholders of record and one is oursole officer and director. The 30 non-affiliated, non-accredited shareholdershold 790,000 shares of our common stock. The one affiliated shareholder(Mr. Harold Sciotto) holds 40,000 shares of common stock. The offering wassold for $41,500 in cash. All investors were, at the time of purchase,residents of the State of Nevada.

 

 This offering wasmade in reliance upon an exemption from the registration provisions of theSecurities Act of 1933, as amended, in accordance with Regulation D, Rule 504of the Act. In addition, this offering was underwritten on a best effortsbasis. In regards to the offering closed in May 2004, listed below are thefactual circumstances which support the availability of Rule 504:

 

1.                              At the time of the offering, we were notsubject to the reporting requirements of section 13 or section 15(d) of theExchange 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 havepursued a specific business plan, and continue to do so

 

2.                              We were issued a permit to sell securitiesby the State of Nevada, pursuant to our application for registration byqualification of offering of our common stock in that state. The applicationfor registration by qualification was filed pursuant to the provisions of NRS90.490, which requires the public filing and delivery to investors of asubstantive disclosure document before sale. In May 2004, we completed anoffering of shares of common stock pursuant to Regulation D, Rule 504 of theSecurities Act of 1933, as amended, and the registration by qualification ofsaid offering in the State of Nevada, whereby we sold 830,000 shares of ourcommon stock to a total of 30 shareholders. One of these purchasers is our soleofficer and director, although at the time of purchase, he was not. The entireoffering was conducted exclusively in the State of Nevada, pursuant to thepermit issued by the State of Nevada.

 

3.                              The aggregate offering price for theoffering closed in May 2004 was $41,500, all of which was collected from theoffering.

 

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On June 12, 2006, weissued 5,869,565 shares of our common stock, with a fair market value of $1.40per share, for an aggregate value of $8,217,391, to CalTech pursuant to aLicense Agreement.  As a result of the issuance, CalTech holds atSeptember 30, 2007 approximately 5.4% of our issued and outstanding commonstock.  At the time of the issuance, CalTech had fair access to and allavailable material information about our company was made available.  Theshares bear a restrictive transfer legend.  The issuance of stock toCalTech was made in accordance with an exemption from registration contained inSection 4(2) of the Securities Act of 1933.

 

On July 7, 2006, weissued warrants to purchase shares of our common stock to one share holder andone non-affiliated entity in conjunction with bridge loan agreements. Each warrant holder was granted the right to purchase 550,000 shares ofcommon stock for an aggregate purchase price of $781,000 or $1.42 a share.  Theissuance of the stock purchase warrants was made in accordance with anexemption from registration contained in Section 4(2) of the Securities Act of1933.

 

On August 3, 2006, weissued warrants to purchase shares our common stock to one shareholder and onnon-affiliated entity in conjunction with bridge loan agreements.  Eachwarrant holder was granted the right to purchase 200,000 shares of common stockfor an aggregate purchase price of $248,000 or $1.24 a share.  Theissuance of the stock purchase warrants was made in accordance with anexemption from registration contained in Section 4(2) of the Securities Act of1933.

 

On September 6, 2006, weissued warrants to purchase shares of our common stock to one shareholder andone non-affiliated entity in conjunction with bridge loan agreements. Each warrant holder was granted the right to purchase 200,000 shares ofcommon 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 withan exemption from registration contained in Section 4(2) of the Securities Actof 1933.

 

In October 2006 we issuedan aggregate of 34,499,920 shares of our common stock to a group of 277accredited investors through Brookstreet Securities Corporation, as PlacementAgent, at $0.35 per share pursuant to the exemption provided by Section 4(2) ofthe Act and Rule 506 of Regulation D promulgated there under.  The shareswere offered solely to accredited investors, no form of general advertising wasused, all investors took the shares as an investment and not with the intent todistribute and all shares were issued with a restrictive legend thereon. The total offering costs related to this issuance was $9,352,713, ofwhich $1,714,501 was paid in cash and $7,638,212 of which was the fair marketvalue of warrants to purchase shares of our common stock issued to theplacement agent.  As additional consideration for acting as our PlacementAgent, we issued to Brookstreet warrants to acquire 6,899,982 shares of ourcommon stock at $0.35 per share until October 27, 2011.  Since the closeof the offering, the actual uses of the proceeds from the offering used forworking capital, or for which at least five percent of the total proceeds hasbeen used, were as follows:

 

| **Item**                             | ** ** | **Amount** | ** ** |
|--------------------------------------|------------|------------|------------|
| **Use of  Net Proceeds:**            | ** ** | ** ** | ** ** |
| Development of  EPC technology       |       | $          | 8,749      |   |
| Investor  relations expenses         |       | 146,675    |       |
| General and  administrative expenses |       | 445,039    |       |
| Repayment of  debt                   |       | 1,425,000  |       |
| Working capital                      |       | 437,898    |       |
|                                 |       |       |       |
| **Total**                            |       | $          | 2,463,361  |   |

 

 The actual uses ofproceeds described above for legal and professional fees and working capitalwere consistent with theanticipated uses of proceeds described in theProspectus for the offering.

 

**Submission of Mattersto a Vote of Security Holders**

 

None

 

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**Exhibits and Reportson Form 8-K**

** **
| **Exhibit Number** | ** ** | **Name and/or Identification of Exhibit**                                          | ** ** |
|--------------------|------------|------------------------------------------------------------------------------------|------------|
| ** **         | ** ** | ** **                                                                         | ** ** | ** ** | ** ** |
| 2                  |       | Plan of Purchase, Sale, Reorganization, arrangement,  liquidation or succession    |       |
|               |       | a.                                                                                 |       | 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-Laws                                            |       |
|               |       | a.                                                                                 |       | Articles of Incorporation filed on April 21, 1999  (3) |   |
|               |       | b.                                                                                 |       | Amendment to Articles of Incorporation filed on  November 27, 2006 |   |
|               |       | c.                                                                                 |       | Amendment to Articles of Incorporation filed on  November 27, 2006 |   |
|               |       | d.                                                                                 |       | Amendment to Articles of Incorporation filed on  November 27, 2006 (4) |   |
|               |       | e.                                                                                 |       | Restated Bylaws (5) |   |
|               |       | Material Contracts                                                                 |       |
|               |       | a.                                                                                 |       | 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) Certification                                              |       |
|               |       |                                                                               |       |   |   |
| 32                 |       | Certification under Section 906 of the  Sarbanes-Oxley Act (18 U S C Section 1350) |       |
|               |       |                                                                               |       |   |   |
| 99                 |       | Additional Exhibits                                                                |       |
|               |       | a.                                                                                 |       | Escrow Agreement (6) |   |
|               |       | b.                                                                                 |       | Letter from NASA/Jet Propulsion Laboratories (8) |   |
|               |       | c.                                                                                 |       | Press Release (9) |   |
|               |       |                                                                               |       |   |   |
|                    |            |                                                                                    |            |  |  |  |  |  |

----

Notes:

 

1.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on February 21, 2006.

 

2.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on July 12, 2006.

 

3.                               Incorporated by reference to theRegistration Statement on Form 10SB12G, as amended, previously filed with theSEC on March 3, 2005.

 

4.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on December 4, 2006.

 

5.                               Incorporated by reference herein to theForm SB-2, previously filed with the SEC on February 12, 2007.

 

6.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on February 21, 2007.

 

7.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on January 30, 2007.

 

8.                               Incorporated by reference herein to theForm 8-K, previously filed with the SEC on March 27, 2007.

 

9.                               Incorporated by reference herein to theForm 8-K previously filed with the SEC on September 20, 2007

 

 

| **Date of 8-K** | ** ** | **Items Disclosed on Form 8-K** | ** ** |
|-----------------|------------|---------------------------------|------------|
|            |       |                            |       |
| January 30      |       | Items 4.01, and  9.01      |       |
|            |       |                            |       |
| February 21     |       | Items 1.01, 1.02, 5.02 and 9.01 |       |
|            |       |                            |       |
| March 27        |       | Items 7.01 and 9.01             |       |

 

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**SIGNATURES**

 

 In accordance withthe Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the datesindicated.

 

**ECOTALITY,INC.**

** **
| **Signature**         | ** ** | **Title**                     | ** ** | **Date**          |
|-----------------------|------------|-------------------------------|------------|-------------------|
|                  |       |                          |       |              |
| /s/ Jonathan R. Read  |       | Chief Executive  Officer,     |       | November 14, 2007 |
| Jonathan R. Read      |       | President and Director        |       |              |
|                  |       |                          |       |              |
| /s/ Harold W. Sciotto |       | Secretary, Treasurer          |       | November 14, 2007 |
| Harold W. Sciotto     |       | and Director                  |       |              |
|                  |       |                          |       |              |
| /s/ Barry S. Baer     |       | Chief Financial Officer       |       | November 14, 2007 |
| Barry S. Baer         |       | Principal Accounting  Officer |       |              |
|                  |       |                          |       |              |
| /s/ Jerry Y. S. Lin   |       | Director                      |       | November 14, 2007 |
| Jerry Y. S. Lin       |       |                          |       |              |
|                  |       |                          |       |              |
| /s/ Slade Mead        |       | Director                      |       | November 14, 2007 |
| Slade Mead            |       |                          |       |              |

 

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