Ecotality

ECOtality 3rd Quarter 2009 Shareholder Conference Call Transcript

ECOtality, Inc.
Shareholder Update Conference Call
November 24, 2009

Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the ECOtality Incorporated Shareholder Update Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star, followed by the one on your touchtone phone. Please press star, zero, for Operator assistance at any time. And for participants using speaker equipment, please lift your handset prior to making a selection. This conference is being recorded today, November 24, 2009.

I would now like to turn the conference over to Thomas Walsh from Alliance Advisors. Please go ahead, sir.

Thomas Walsh: Thank you.Good afternoon, everyone, and thank you for joining us for the ECOtality Shareholder Update Call. On our call today will be Jonathan Read, CEO of ECOtality; Barry Baer, CFO of ECOtality; and Don Karner, President and CEO of eTec. Following management’s discussion, there will be a Q&A session open to the participants on the call, as the Operator has already mentioned.

Before I get started, I’m going to review the Company’s Safe Harbor statement. Remarks made on this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain, as they are based on current expectations and assumptions concerning future events or future performance of the Company. Listeners are cautioned not to place undo reliance on these forward-looking statements, which are only predictions and speak only of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this conference call and the matters set in the Company’s SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the future-looking statements.

I would now like to turn the call over to ECOtality’s CEO, Mr. Jonathan Read. Jonathan, congratulations on your recent $100 million government grant and the recapitalization of the Company. Jonathan, please go ahead.

Jonathan Read: Thanks, Thomas, and thanks, everybody, for joining us this afternoon. I’d like to start off the call by stating that the current calendar year has been a time of extreme growth and significant progress at ECOtality.

First and foremost, the Company signed a contract with the US Department of Energy for a grant of 99.8 million to undertake the largest deployment of electric vehicles and charging infrastructure in history. As project manager for the electric vehicle project, eTec will oversee the deployment of approximately 10,950 Level 2 chargers and 260 Level 3 fast charges, and seven, I’m sorry, 4,700 Nissan LEAF zero-emission vehicles in five states, Arizona, California, Oregon, Tennessee and Washington. This will mean that eTec will deploy a network of between 2,000 and 2,500 chargers in each of the Project’s markets.

In conjunction with the signing—contract signing, the EV Project officially began on October 1st, 2009. The DOE contract for the project was signed in less than three months, a remarkably short period of time. With the contract officially in place with the US Department of Energy, eTec was able to begin its implementation of the largest electric vehicle transportation project in history.

The Company also experienced another vote of confidence when it was awarded an estimated $8 million from the California Energy Commission to support the deployment of charge infrastructure and electric vehicles in the San Diego region. This additional funding from the California Energy Commission will allow for a substantial increase in the amount of charge infrastructure deployed in the region and will make San Diego one of the most advanced areas for EV charging infrastructure ever. The California Energy Commission awarded funds to projects that had successfully received federal funds from the US Department of Energy’s American Recovery and Reinvestment Act of 2009, the ARRA. This is the type of continued recognition and validation that ECOtality plans to leverage going forward.

The purpose of the EV Project is to assemble and analyze data characterizing vehicle use and charging patterns in diverse topographies and climate conditions assess the effectiveness of charge infrastructure and conduct trials of various revenue systems for public charge infrastructure. By testing and analyzing electric vehicle usage and charging patterns in a simulated mature charging environment, EV Project will foster the expansion of the infrastructure that will be available for widespread EV use throughout the country.

The launch of the EV Project will make widespread electric vehicle use a reality by utilizing the lessons learned from this project to create a blueprint for other cities and countries to adopt electric vehicles. The entire world is watching how these first 4,700 cars will be deployed and the immediate success of the industry is very much tied to the success of the Project in ensuring that the first adopters of the EV technology have a strong and seamless user experience. As such, we will deploy charging stations in the major areas of each of these markets, which will include Seattle, San Diego, Phoenix, Tucson, Portland, Knoxsville, Nashville and Chattanooga. We will begin deploying public and commercial charging stations late next summer, and we intend to deploy at least half the chargers before the cars are launched in December so that the first users will have ample opportunities to charge and will have a strong consumer experience. We are hoping to have all chargers and vehicles deployed by the ensuing summer of 2011.

We are taking on a big responsibility in managing this Project, and it is one which we feel that our Company, along with the strong team of project partners we have assembled, is more than capable of handling. We believe that the Project will have a significant impact on the country by creating new jobs, strengthening America’s energy independence and promoting clean electric transportation that will significantly reduce carbon emissions and protect our environment.

While the Company believes that home charging systems will play a vital role in the growth of electric vehicle markets, management maintains that the ability to quickly and conveniently recharge vehicles on the go, by fast charging, is pivotal to the mass consumer acceptance of electric transportation. We believe that this project is the first major step towards making large scale electric vehicle infrastructure a reality. We remain in contact with every major vehicle manufacturer, as well as many of the largest utilities, to assist them in the planning and implementation of systems related to vehicle charging and infrastructure.

As I previously indicated, we expect to convert these discussions into firm contracts for our products on an extremely large scale. While we currently have a few competitors in this space, none match our technological superiority and EV expertise, nor do they have the current sales pipeline and anticipated manufacturing volume that this Project provides us. As more EVs are brought to market, the space will get crowded very quickly and we are working to capitalize on the charger volume and high profile of this Project to cement our leadership position in the market.

The real reward of this Project for the Company: industry recognition, validation, knowledge, and the network that we will build. The ability to demonstrate the same kinds of successes as A123, TESSA and various solar companies will in turn allow us to raise capital and grow. The stimulus grant received revived the Company and set it on a path toward growth and success, exactly what the Administration envisioned for the ARRA program. It allowed us to successfully refinance, save jobs, create new jobs, advance renewable vehicle infrastructure and find new financing that will allow us to quickly expand and, again, add new jobs. Earning the grant was—has certainly validated our status as an immediate market leader and management is focused on maintaining this position and leveraging our market dominance to create strong bottom line financial growth.

The Company has also recently entered into definitive agreements with multiple institutional investors, including existing shareholders, for capital investment of approximately 20.5 million in equity financing. In addition to the capital raise, the debenture holders of ECOtality have converted 9.1 of existing debentures and related warrants into equity. The restructuring is a huge step for the Company as it provides management with control of the Company’s future, eliminates debt, eliminates our existing warrant overhang and overcomes other major hurdles. The elimination of debt and warrants significantly strengthens ECOtality’s capital structure for the current and future shareholders. Management believes the transaction will make the Company more attractive for the future acquisition of capital and that it properly positions us to gain additional market share.

Yesterday we announced that FINRA had approved our 60 to 1 reverse stock split and that our ticker symbol has now been changed to ETLE. The split simplifies the understanding and visibility of our earnings on a per share basis, makes ECOtality more attractive and provides the ability to retain long-term institutional shareholders through a higher share price and manageable share count. Additionally, the reduced share count will significantly reduce administrative transaction and regulatory cost related to the number of shares authorized and outstanding and moves us closer to the opportunity of listing our common stock on the NASDAQ capital market or other national exchange. The move to NASDAQ will be an extremely positive move for the Company as it will create a more stable trading pattern, remove some of the inherent risks from daily fluctuation that characterizes the bulletin board exchange.

Overall, the refinancing of the Company provides us will over 20.5 million in working capital, eliminates debt, provides a new elevated floor for the stock and will garner further institutional attention and gets us the fully listed exchange. The net proceeds of the investment funds will be utilized as working capital to support the initial requirements of the $99.8 million award from the Department of Energy and will provide the Company with the necessary financial capabilities to meet its anticipated expansion as a leader in the electric vehicle charging infrastructure. It also lends additional credibility to ECOtality’s balance sheet when being reviewed by potential clients and partners. This is especially true when ECOtality’s balance sheet is compared to many of the major tier one automotive suppliers, providing us with a stronger position to receive many of the larger contracts from the major automotive OEMs.

The financing also reflects a strong confidence in ECOtality by new and current investors and significantly strengthens our financial position as we seek increased shareholder value through strong bottom line growth. With this capital, we can better leverage our unparalleled EV infrastructure experience and superior charging technologies to become the immediate international leader in EV infrastructure.

Another noteworthy milestone was reached when ECOtality signed definitive agreements with Shenzhen Goch Investments which represents—which established two joint venture companies in China. Shenzhen Goch, or SGI, has committed to providing up to 10 million to fund joint venture equity with ECOtality to manufacture and assemble electric vehicle charging equipment and 5 million to fund a joint venture to market and sell these charging systems in China. China is being hailed as the growth driver for the global economy in the coming years and ECOtality will be at the forefront of this growth. The joint venture with Shenzhen Goch provides the Company’s—and expands the Company’s role as a global leader in the electric transportation market and provides the necessary resources and team to attain rapid penetration into the China market.

According to a recent industry report by Pike Research, the global market for electric vehicle charging equipment is expected to become a $2 billion annual industry by 2015, in which China is expected to be the world leader with 47.8% of annual EVSC sales. China has already surpassed the US in vehicle production, 13 million to our 12 million this year, and is expected to pass 40 million vehicles per year by 2018. Shenzhen, where the JV is expected to establish its main facility, will serve as one of the 13 pilot cities in China that will pioneer the introduction of electric vehicles. The joint venture between Shenzhen Goch and ECOtality will help provide the charge infrastructure that will enable Shenzhen and China to achieve our new energy objectives.

We have had meetings and discussions with over eight cities and provinces in China, as well as meetings with the Ministry of Science and Technology and the state power company to press forward on standards consistent with the US and our products. Additionally, we are in discussions with vehicle and battery manufacturers on both the industrial and on-roadside and expect that we will have strong advanced position for these projects and technologies that are launched on the international and China fronts.

We will continue to bolster our position as the market leader for on-road EV infrastructure. We will continue to maintain our focus on the airport ground support and industrial markets for battery fast charging stations. While American fast charge market has ample room for substantial growth, the same markets in China have tremendous immediate financial potential. Currently, there is no fast charging for international applications in China and we believe our joint venture will see substantial immediate growth in this sector, as our fast charging technology provides a cost efficient solution for manufacturing and distribution facilities to enhance productivity, improve worker safety, reduce annual fueling cost and dramatically decrease emissions. We believe that ECOtality possesses the ability to become an immediate industry leader in any and all facets of battery fast charging, both domestically and abroad.

We have established a strong and diverse revenue base secured—and secured many strategic relationships. Our confidence in our position to be a leading provider of electric transportation infrastructure is based on our best-in-class technology, our noted experience in the infrastructure arena and our knowledge of electric vehicles. While we are pleased with the recent operating successes we have achieved, we believe that there will be significant additional business expansion announcements in this sector over the upcoming months.

Our existing business lines continue to provide us with a strong organic revenue base from which to grow and we will remain focused about identifying and capitalizing upon new opportunities that lie ahead in the future. We believe that an upward turn in the economy is near and that industrial cap ex spending is not far off. This, coupled with the expansion of our markets into foreign countries, as well as synthesizing international product opportunities for enhanced offering in the US, will provide strong industrial product sales in the upcoming quarters.

The US government has proven its commitment to both renewable energy sector and the growth of EV infrastructure. It also showed its confidence in ECOtality with a $99.8 million grant. We believe that the foundation for—with the—we believe that the foundation for significant growth of this Company has been significantly established. Management understands that now is the time to focus on execution. We will remain dedicated to increased earnings, expand relationship with automobile manufacturers and achieve our goal of improved shareholder value.

I would now like to turn the call over to Barry Baer, Chief Financial Officer, so he can discuss the Company’s most recent financial reports. Barry?

Barry Baer: Thank you, Jonathan. In the quarter ended September 30th, 2009, ECOtality recognized revenues of 1.9 million compared to the quarter ended September 30th, 2008, of 2.9 million. This reduction in revenue is largely related to the effect of the slowing economy, particularly in our industrial sales, and the focusing of resources on securing Department of Energy and other stimulus contracts.

Total operating expenses during the three months ended September 30th, 2009, were 11.4 million compared to 1.88 million for the three months ended September 30th, 2008. General and administrative expenses were 11.3 million or 99% of total operating expenses for those three months ended September 30th, 2009, compared with 1.53 million or 82% for the three months ended September 30th, 2008. The increase in general and administrative expenses is attributable to retention equity for achieving contract target objectives set in our May 18th SEC filing as agreed to by our Board of Directors, the debt holders and investors, as well as a comprehensive true-up in settlement of our original eTec acquisition in 2007 and that is also reflected in our May 18th SEC filing.

I would like to clarify that there may have been some unclear language in ECOtality’s quarter three earnings announcement last week that may have given the impression that executive bonuses are being issued as a result of the Department of Energy grant. This is not the case. ECOtality has not and will not use any Recovery Act funds to pay executive bonuses. Indeed, the Company has yet to receive any funds from the Department of Energy under the ARRA grant. Under the DOE contract, eTec will not receive any up-front funding. According to the terms of the contract, eTec will receive a 50% cost reimbursement for costs associated with the infrastructure build-out. All Department of Energy funds will be used for the intended purpose of the grant, to reimburse half of the cost of building and testing electric vehicle charging infrastructure in the identified test markets.

As a result of receiving the Department of Energy grant and several other recent positive events, ECOtality restructured its debt and equity profile in accordance with a financial plan that we detailed in the May 18th SEC filing. This financial plan was filed with the SEC prior to the DOE grant submission and award and was crafted collaboratively as identified earlier by the Board, its investors and the Company’s debt holders.

Based on our vulnerable financial condition at the time of the May 18th, 2009, filing, temporary measures were taken to keep the Company afloat, including the issuance of new equity to debt holders to extend overdue debt, thereby diluting management’s ownership stake in the Company, while also deferring compensation and payments due to certain executives. As detailed in the filings, it was agreed by all parties that should the Company regain more solid financial footing, a series of actions would be triggered that would return the Company to a more typical corporate financial structure. This occurred on November 16th, 2009, as we documented in our related 8-K SEC filings, with the Company’s raising $20.5 million in new private equity in converting all of its 9.1 million in debt to equity. This allows the Company to meet large capital needs required to complete the work under the 50% cost reimbursement of the DOE grant award.

This refinancing ensures the completion of the DOE program and was completed with institutional investors or supporters of the May 18th SEC filing and the capital needs of the Department of Energy contract. The DOE award was one of many contracts we used as a key factor in restoring the financial integrity of the Company, not because the Department of Energy money that was flowed through the Company for the charging infrastructure project, but instead because the grant was seen by customers, investors and the financial world as a sign of the viability for ECOtality and the future of the electric vehicle charging market. Therefore as a result of the DOE grant, other positive business and financial events occurred, which in turn triggered our May18th SEC filing. The provision of equity and non-cash provides management with a vested interest with shareholders and provides the necessary incentives to move the Company forward in being the leader in the electric vehicle infrastructure market.

Lastly, in addition to recalibrating the debt and equity structure of the Company, the May 2009 plan also included repayment to two executives for a comprehensive true-up and settlement of the original eTec acquisition by ECOtality, which we also outlined. This cash payment amounts to $1 million. All other compensation that we have provided was in the form of equity and further solidifies management’s investment in the long-term success of the Company in the electric vehicle market.

We recorded an operating loss of 15.7 million for the quarter ended September 30th, 2009, compared with a loss of 1.6 million for the quarter ended September 30th, 2008. For comparative purposes, the operating loss included the one-time expenses previously mentioned, as well as other increased expenses related to our efforts to restructure our debt and obtain new capital.

I’d like now to review our financial data for the nine months ended September 30th, 2008.

In the nine months ended September 30th, 2009, ECOtality had revenues of 6.1 million compared to the nine months ended September 2008 of 8.65 million. Total operating expenses during the nine months ended September 30th, 2009, were 14.5 million compared to 6.2 million for the nine months ended September 30th, 2008. General and administrative expenses were 14.2 million for the nine months ended September 30th, 2009, compared with 5.4 million for the nine months ended September 30th, 2008.

The Company recorded an operating loss of 20.3 million for the nine months ended September 30th this year compared with a loss of 4.46 million for the nine months ended, the same quarter 2008. This operating loss is attributable, as I discussed, to the increased interest expense accrual for the non-cash impact of the consideration given in return for the waivers granted by our debenture holders, as well as the one-time retention acquisition settlement true-up expenses that I have previously described.

This concludes the financial results portion of the call and we’ll now turn you back to Jonathan Read, our CEO.

Jonathan Read: Thanks, Barry. In conclusion, the third quarter was marked by huge operational milestones, strong strategic relationships and a rapidly emerging electric vehicle market. With every major auto manufacturer announcing plans to bring to market PHEVs and EV models within the next 18 months, we are at a pivotal inflection point for the transportation industry and are confident that we’ll play a major role in providing the infrastructure to support the shift to clean electric transportation.

Going forward, our primary financial objectives remain to achieve overall profitability while maintaining focus on organic growth, strategic technology development and the optimization of operations in order to increase profit margins. We emphasize our strategy in order to continue our growth and improve our bottom line. These efforts will allow us to reach our primary goal of achieving increased shareholder value. I look forward to the Department of Energy project and working closely with all the related utilities and implementing the first ever significant fast charge vehicle infrastructure.

With that, I’d like to open the floor for questions of myself, Barry Baer and Don Karner, the CEO of eTec.

Operator: Thank you, sir. We will now begin the question and answer session. As a reminder, if you have a question, please press the star, followed by the one on your touchtone phone. If you’d like to withdraw your question, please press the star, followed by two. If using speaker equipment, please lift the handset before making your selection. One moment, please, for our first question.

Our first question comes from the line of Brian Kremer with Roth Capital Partners. Please go ahead.

Brian Kremer: Hi, good afternoon.

Jonathan Read: Good afternoon.

Brian Kremer: Could you, Jonathan, maybe talk about – I’ll get to the DOE project in a second – but the other pieces of ECOtality and what you see both near and long term now that this part has really taken off and as primarily what investors are going to be focused on in the near term?

Jonathan Read: Well as I mentioned, thanks for the question, Brian. As I mentioned in our call, we’re—while the on-road vehicle side is extremely exciting and probably without the question the greatest upside for the Company, these vehicles are coming online in late 2010 so we expect to use the DOE grant to push us forward to a leadership position and be there before the rest of the competitors. But we’re also very focused on our off-road commercial and industrial side. We believe that with very small market penetration of electric fast charging in the electric field overall, that we have tremendous growth both here, domestically and internationally, and we’ll be announcing some other expansions of our industrial side over the upcoming months.

Additionally, we’re now being able to put to use our manufacturing facilities in San Diego, which are doing some specialty solar work, as well as battery work, to assist in the build-out of the chargers and necessary requirements for the DOE contract and other contracts. So we’re very bullish about the fact that the asset base that we have and the business base that we have is going to provide the platform for—that will allow us to complete this really rather major contract that we have with the DOE.

Brian Kremer: Okay. But in terms of the solar part, I mean it sounds like, you know, you’ll continue to do that as well and any—the fuel cell store, I guess it is…

Jonathan Read: We—it’s very hard to deal with that question. Fuel cell store is profitable. It’s contributing to the Company but ultimately as our management tasks ramp up, I think we are going to look at rationalizing some of those less than core businesses on a go-forward basis, not because they’re not profitable but really just because of the deflection of management attention.

Brian Kremer: Sure, okay. Now to the DOE grant, could you walk us through how that’s going to be recognized? Is it going to be R&D? What—how is that money when it comes in from DOE to reimburse and how will that flow through the income statement and what have you?

Jonathan Read: It flows through the Company as revenue, as straight top line revenue, and it is reimbursement for the payment of goods and services provided by the Company. So it’s straight top line revenue.

Brian Kremer: Okay. And now I thought I heard you say, or someone say that – and maybe I misunderstood – that the money that you just raised was going to be enough to cover perhaps maybe your expenses, your part of the DOE project. I’m assuming other, you know, it’s a very large team, so there’s going to be contributions I’m assuming from all the different parties towards that other 50% cost reimbursement. How does that work in terms of you receiving payment from some of those other parties? What does that look like?

Jonathan Read: Other parties are contributing goods and services as well and we believe that the initial tranche of 21.5 that we’ve raised is going to be—get us a long way to completing what we view as a heavy front-end load of the DOE contract. It moves from heavy contribution on the first half of the three-year program to a much reduced capital requirement the last year and a half of the program. We think also though that the change in the Company has put it into a position, a financial position, where we can now start looking our traditional bank financing and bridge financing to cover the reimbursement portion of the contract in the upcoming years, provided of course that the capital markets loosen just a bit to consider DOE reimbursement as a solid lending basis.

So we do see that it’s enough to get us going and probably complete the project but would not preclude the fact that we’d have to look at some debt or, and/or some new equity down the road.

Brian Kremer: Okay. So, I mean, you’re doing the project management and the manufacturing of the fast chargers. Are you selling those to utilities to—how—who—do you own those? Will you own those and what’s that look like?

Jonathan Read: Don, I’d let Don Karner answer that question.

Brian Kremer: Okay.

Don Karner: Thank you, Jonathan. I—as we install the, both Level 2 and the Level 3 fast chargers through the duration of the Project, we’ll retain ownership of those through the Project. The anticipation is the Level 2 chargers at the end of the Project would be turned over to the host site and that’s part of the give-to-get, if you will, to place the chargers there. We receive a significant amount of in-kind cost share from the location of the chargers through the host and so there’s a bit of give-to-get there. On the Level 3, we would anticipate retaining ownership of the Level 3 chargers and putting together some kind of (unintelligible) agreement with the sites .

Brian Kremer: Okay, great. I’ll hop off for now. Thanks.

Jonathan Read: Thanks, Brian.

Operator: Once again, ladies and gentlemen, if there are any additional questions, please press star, one at this time.

Our next question comes from the line of Tom Lettenberger with Harris Investments. Go ahead.

Tom Lettenberger: Hi, thanks for taking the call. Just a quick question. You know, post the restructuring and the reverse split, what are the total number of shares outstanding now?

Barry Baer: This is Barry Baer. The current common shares outstanding post split is 6,709,800, of which—that’s post split for all the common shares. Is that—and that’s your question?

Tom Lettenberger: Yes, and wasn’t there going to be some type of conversion from the preferred…?

Barry Baer: There are currently 8,597,000 conver—preferred convertible, and once eligible, they will be allowed to be converted on a one-to-one basis to common.

Tom Lettenberger: Okay, so if we did a fully diluted count right now, it would be 15 million or so?

Barry Baer: That is correct.

Tom Lettenberger: Okay. Good enough, thanks.

Jonathan Read: Just so that you’re aware, the preferred have no rights or privileges beyond those rights and privileges of common, and in fact, they’re non-voting until they’re converted to common.

Tom Lettenberger: And they are expected to be converted; what is the requirement there?

Barry Baer: There are certain…

Jonathan Read: There are certain…

Barry Baer: Go ahead, Jon.

Jonathan Read: Holdback provision and agreements among the preferred shareholders about the timing of their conversion. But I would expect over the course of time that, over the next year or so that they would be converted.

Tom Lettenberger: Okay. All right, thank you.

Operator: And our next question does come from the line Tom Richards. Please go ahead.

Tom Richards: Yes, hi. Hello?

Jonathan Read: Hi, Tom, how are you?

Tom Richards: Hi, good. Yes, my question is, how do you plan long term to dominate—capture the majority of the market share on charging stations cross country? And how would you differentiate yourselves now and long term against the possible competitors? I know that one competitor in the market right now that’s not public is Coolum Technologies . Their—they have charge point stations across the country right now, and they’ve, I understand that they’ve set up charging stations in several cities already and they might be pairing up with some auto manufacturers as well.

Jonathan Read: Right, well this is going to be a—number one, I love the word dominance, and I’m glad you’re thinking the same way we are. This is going to be a huge industry. This infrastructure is going to spread virally, not only in the United States but worldwide. The big differentiator with us is that, along with our Level 2 charging of the—which is a slower two to four hour charging that Coolum does, we are the leaders in fast charging. Coolum does not have a fast charge product. We have the ability to charge, for instance, a vehicle like the new lease that Nissan will be rolling out; we have the ability to charge that car in 20 to 25 minutes. That is a huge differentiator between us and two to three hour or four hour charge. So we think that our strength and our forte in (inaudible) charge is going differentiate us, number one. And number two, we think that there’s much more to do with charging in terms of the network and with our ability to wallop people with quite convenient technology in terms of providing user services, that we will be a step above, both in fast charging and our overall technology.

Tom Richards: And, hello? Am I still there?

Jonathan Read: Yes.

Tom Richards: Yes, and with the fast charging technology that you’re using, now is that unique to yourselves, is that a patented technology, whatever you’re using for that fast charging, or…?

Jonathan Read: Absolutely. It’s a patented technology. We have over 52 national and international patents; they form the basis of the Chinese wanting to join with us. And it certainly is a powerful, a very unique capability. We charge batteries faster and better than anybody in the industry.

Tom Richards: So you’re going to be doing—you also do have the Level 1 and Level 2, but the fast charging, I understand that’s going to support specifically the lithium ion batteries in cars, is that correct?

Jonathan Read: It—we do fast charging from everything from lead acid to lithium ion.

Tom Richards: Okay.

Jonathan Read: And we can recognize your battery when you come into the charger.

Tom Richards: Okay. I have no further questions.

Jonathan Read: Thank you.

Tom Richards: Thanks.

Operator: And once again, ladies and gentlemen, if you would like to ask a question at this time, please press star, one on your touchtone phone.

And our next question comes from the line of David Allen. Please go ahead.

David Allen: Yes, I had a quick question; are you part of the electrification coalition? And if not, why?

Jonathan Read: We are not part of the electrification coalition at this point and the reason we did not participate in it is because, while we agree with many of its tenants, we weren’t quite certain if we wanted to sign off on, how shall I say, dictating to the Department of Energy or other people in the nation how this process should take place. And so, while a couple of our competitors are members of it, we’ve opted to do our business in a more quiet forum, and instead of writing mandates, we basically have felt that it’s much better to lead through example, propose solutions and work independently with entities versus working within a group.

David Allen: Okay. And then one final question. I saw that Nissan is working with Reliant Energy in Houston, and they’re going to be putting some LEAFs there in the future. Is ECOtality going to be involved with that in any way?

Jonathan Read: We are in discussions with Nissan about a number of expansions of our business relationship. Right now, we’re focused on these five cities—the five markets and 11 cities. And, I mean that is a significant move in itself and we certainly hope to be involved in Houston but at this point have not contracted.

David Allen: All right, thanks.

Operator: And our next question comes from the line of Brian Kremer with Roth Capital Partners. Please go ahead.

Brian Kremer: Hi, just two follow-ups, if I might. I’ll give you them both, and then I’ll just listen in on the answers. The first would be, I guess a follow-up with the Reliant question; the DOE awarded some more-smart grid projects today, this time classified as demonstration projects. And a number of those included electric vehicles and integration of the electric vehicle into the smart grid. So if you might comment on—I mean you’ve already said that you’re talking to many utilities; if you can say anything about any specific utilities or any of those larger type of projects? And then the second one would be China and how you see the first projects rolling out in China. Thanks.

Jonathan Read: What I’d like to do is turn—Don Karner and his team have a wealth of experience having come from the utilities. I’d like him to address the utility question.

Don Karner: Thank you, Jonathan. We are a partner on several of the demonstration projects. To be honest with you, I have not had an opportunity to evaluate which utilities got awards. Utilities were fine on those contracts and we were a sub-contractor, but we have provided quotes (inaudible) number of contracts, and obviously, we’ll be making contact with anyone that we weren’t a (unintelligible) offer them services and identified as (unintelligible).

Jonathan Read: Thank you. And in addition to that, Brian, I would just like to add that we’re currently doing the first vehicle-to-grid test program for the Department of Energy, and we’re actively working with GridPoint on that project. So we’re very much involved with—and with a number of other folks, with vehicle-to-grid, grid interface and smart-grid applications.

Brian Kremer: Okay, great.

Jonathan Read: On your second question about China, I think that what’s going to happen—what we’re going to see, what we anticipate our first step would be, would be the rollout of electric charge infrastructure for public transportation –by that I mean fast charging for buses – as well as then followed up by demonstration programs for a number of cities in China for vehicle charging for on-road cars and vehicles. China faces a huge problem in terms of pollution. It also presents a huge challenge to anybody looking at electric vehicle infrastructure because so much of the new living is becoming vertical versus horizontal, high rises with limited parking so we feel that fast charge has even more legs in China overall. So we see, again, the first rollout public transportation, demonstration programs in conjunction with a number of universities that we’re speaking to in China, similar to what we’re doing with the DOE here, and then followed out by complete rollouts in—on a city-by-city or province-by-province basis. But I would expect that we would see some announcements and hope that we would see some announcements either—probably first quarter of next year in terms of public transportation.

Operator: And, ladies and gentlemen, this does conclude the question and answer session. Management, please continue with any closing remarks.

Jonathan Read: Well I just would like to thank everybody for being with the Company. We went through some really rough times. We weathered this incredible economic downturn in the United States. We have proven ourselves to be somewhat visionary and forward-looking in being able to see and capitalize on what was—is turning out to be the big move in alternative energy transportation, which is electric transportation. Don Karner and his team have been through this before and we’re very proud that we’re being recognized and have restructured the Company in such a way that we’re in a great position for the upcoming year and the rollout of electric vehicles.

So we thank you for your support and look forward to answering any other questions you may have by just calling us at the office. Thank you.

Operator: Ladies and gentlemen, this concludes the ECOtality Incorporated Shareholder Update conference call. If there are any further questions regarding this call, please contact the Alliance Advisors at 212-398-3486, as well as this conference will be available for replay after 5:30 p.m. Mountain Standard Time today through December 1st, 2009, at midnight. You may access the replay system at any time by dialing 303-790-3030 or 1-800-406-7325 and entering the access code 4186310.

Thank you for your participation. You may now disconnect.