**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**Form
      10-KSB**





(Mark
      One)





**x
      ANNUAL REPORT UNDER
      SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      fiscal year ended December 31, 2006





**o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      transition period from ______________ to ______________





*Commission
      File Number 0-51696*





**Trulite,
      Inc.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            **20-1372858**State
                or Other Jurisdiction of
            IRS
                EmployerIncorporation
            Identification
                No.




Securities
      registered under Section 12(b) of the Exchange Act:





None.





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, $0.0001 par value per share


(Title
      of
      Class)





Check
      whether issuer is not required to file reports pursuant to Section 13 or 15(d)
      of the Exchange Act o .





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o.





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB o .





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





The
      issuer’s revenues for its most recent fiscal year. $8,333










The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of March
      26,
      2007, was $3,142,614.





As
      of
      March 30, 2007, there were 11,785,491 shares of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE:** Portions
      of the definitive proxy statement for our 2007 annual meeting of stockholders,
      which is to be filed within 120 days after the end of the fiscal year ended
      December 31, 2006, are incorporated by reference into Part III of this Form
      10-KSB, to the extent described in Part III.





**FORWARD-LOOKING
      STATEMENTS**





Certain
      statements made in this Annual Report on Form 10-KSB are “forward-looking
      statements,” which involve known and unknown risks, uncertainties, and other
      factors that could cause actual financial or operating results, performances,
      or
      achievements expressed or implied by such forward-looking statements not to
      occur or be under realized. These forward-looking statements generally are
      based
      on our best estimates of future results, performances, or achievements, current
      conditions and assumptions. Forward-looking statements may be identified by
      the
      use of forward-looking terminology such as “may,” “can,” “could,” “project,”
“expect,” “believe,” “plan,” “predict,” “estimate,” “anticipate,” “intend,”
“continue,” “potential,” “would,” “should,” “aim,” “opportunity,” or similar
      terms, variations of those terms or the negative of those terms, or other
      variations of those terms or comparable words or expressions. These risks and
      uncertainties include, but are not limited to:




1.
            our
                ability to develop and manufacture commercially viable
                products




2.
            the
                continued expansion of our business




3.
            general
                economic conditions in both foreign and domestic
                markets




4.
            lack
                of growth in our industry




5.
            our
                ability to comply with government
                regulations




6.
            a
                failure to manage our business effectively and
                profitably




7.
            our
                ability to sell both new and existing products at profitable, yet
                competitive, prices




You
      should carefully consider these risks, uncertainties, and other information,
      disclosures, and discussions that contain cautionary statements identifying
      important factors that could cause actual results to differ materially from
      those provided in the forward-looking statements. We undertake no obligation
      to
      update or revise any forward-looking statements, whether as a result of new
      information, future events, or otherwise.




2





**PART
      I**





**Item
      1. Business.**




**Overview
      of the Company, Products and Target Markets**




Trulite
      is an emerging technology company engaged in the development and production
      of
      portable and small stationary products that produce hydrogen for the generation
      of electricity for commercial and consumer markets. The Company’s strategy is to
      leverage its unique hydrogen source and control technology to develop fuel
      cell
      products to address end-user applications in three identified markets:
      Industrial Remote Monitoring; Back-up Power Generation; and Recreational
      Off-Site uses.





The
      Company was incorporated in Delaware on July 15, 2004. Later that month, the
      Company purchased all the membership interests of, and merged with, Trulite
      Technology, LC (“Trulite Technology”), a Utah limited liability company. Trulite
      Technology had been formed in May 2002. In October 2003, Trulite Technology
      was
      introduced to William Jackson Berger (“John Berger”) of Contango Capital
      Partners, LP (“CCP”). CCP provided the first round of private funding to the
      Company in July 2004 and effected the merger between the Company and Trulite
      Technology.




In
      January 2004, Trulite Technology received an initial order for two prototype
      chemical hydride cartridges which were delivered in March 2004. In July 2004,
      Trulite Technology delivered four larger chemical hydride cartridges to the
      Naval Research Laboratory.





In
      September 2005, the Company introduced its Kitty Hawk system. This product
      consists of three technologies: one that generates hydrogen gas from dry
      chemical hydride compounds (the HydroCell, a proprietary hydrogen storage
      product that is an environmental-friendly alternative to battery power developed
      from the Company’s prototype chemical hydride cartridges that the Company also
      plans to market as a separate product and with respect to which the Company
      has
      filed four patent applications); one that transforms the hydrogen gas into
      electricity (the fuel cell stack); and one that controls the flow of hydrogen
      for the actual generation of electricity (the control technology, which is
      a
      technology with respect to which the Company has also filed one
      patent).




In
      November 2005, the Company received its first orders for twenty-five Kitty
      Hawk
      systems. The units were manufactured in its Utah product development facility
      and were delivered to a targeted audience in March and April 2006. Also in
      November 2005, the Company received a $25,000 contract from Protonex Technology
      Corporation (“Protonex”) to develop three high energy density prototype
      HydroCells.




The
      original Kitty Hawk system was capable of producing 15 net watts of power.
      The
      Company has developed an enhanced version of the Kitty Hawk, the KH-3X. We
      are
      field testing the unit and plan on selling a small number of the units to obtain
      customer feedback to enhance the next version. The KH-3X has twice the power
      output of the Kitty Hawk 3 product.





We
      are
      currently developing the next version of the Kitty Hawk product series, the
      Kitty Hawk 4. The Kitty Hawk 4 system is expected to be a more robust and
      powerful system capable of generating over three times the power output of
      the
      current KH-3X unit, resulting in approximately 130 watt integrated power system
      able to generate electricity for up to 4 hours at full output. The Kitty Hawk
      4
      is anticipated to be available for field testing by select commercial customers
      by early third quarter of 2007. Field testing is anticipated to take six to
      eight months. Upon completion of field testing, we anticipate units will be
      available for sale and delivery into select commercial and consumer markets.
      The
      expected research and development costs of the Kitty Hawk 4 units are expected
      to be approximately $2.1 million during 2007, including capital expenditures
      of
      $0.2 million. Funding for product development and manufacturing are expected
      to
      come from (i) bridge loans provided by Standard Renewable Energy Group, LLC
      (“SREG”), which owns NewPoint Energy Solutions, LP, a Texas Limited
      Partnership which beneficially owns 45.2% of the Company’s Common Stock and
      Contango Venture Capital Corporation, which beneficially owns 16.98% of the
      Company’s Common Stock and (ii) investments in equity and debt made by external
      investors.





We
      generated $16,667 and $8,333 in revenues from the sale of Hydrocells and Kitty
      Hawk units in 2005 and 2006, respectively.




3




**Overview
      of the Alternative Fuel Industry**




There
      are
      a number of factors that we believe are creating significant changes in the
      landscape of the alternative fuel industry, which in turn present significant
      opportunities for hydrogen generation and fuel cell technologies:




1.
            Users
                of conventional hydrocarbon energy sources (oil and natural gas)
                face
                increasing problems with maintaining supply in the face of growing
                global
                demand;





2.
            Power
                reliability (that is, the electric power provided to commercial and
                consumer markets through the electrical grid) is becoming an increasing
                problem in the United States and other countries due to aging
                infrastructure, necessitating alternative off-grid power
                sources;





3.
            The
                increasing proliferation of electronic devices (for example, cell
                phones,
                portable digital movie and music players and personal computers)
                and their
                power demands are becoming more challenging for conventional battery
                technology to keep pace;





4.
            Increasing
                global environmental and regulatory issues are making the use of
                hydrocarbons ever more difficult;
                and




5.
            Increasing
                geopolitical issues are causing global security concerns related
                to the
                availability and price of oil and natural
                gas.




Due
      to
      these pressures, we believe the energy industry will change dramatically before
      the end of this decade. We believe that both portable and stationary hydrogen
      fuel cell products can provide practical, cost efficient solutions to certain
      of
      the problems presented by the above issues.




Fuel
      cell
      and alternative fuel source technology is still being developed and refined.
      In
      many applications applied research and technology development remains a vitally
      important part of the industry. Reliability, cost and safe deployment of this
      technology will be the key to initial successes.




A
      fuel
      cell is a non-mechanical device (it is a very thin membrane similar to a
      computer chip) that converts hydrogen gas (the fuel source) and oxygen into
      electricity and water. The water is a non-toxic by-product resulting from the
      process of generating electricity and is eliminated during the electricity
      conversion process. Each fuel cell (that is, each “chip”) produces a given
      amount of power when the hydrogen and oxygen are combined (the power output
      is
      measured in watts). When several fuel cells are combined or “stacked,” they
      create a fuel cell stack.




Products
      utilizing fuel cell technology include fuel cell buses, numerous military
      applications, auxiliary power units, remote power, and other transportation
      applications. Broad commercialization of fuel cell usage depends on developing
      a
      cost effective product. Products will be commercialized at price points that
      make sense to both commercial and consumer markets. Stationary and portable
      applications currently lead the way, as fuel cells replace or recharge batteries
      in light industrial and transportation applications.




Portable
      applications such as in the premium battery markets, where fuel cells improve
      run time and can be cost-competitive, appear to be leading the early efforts
      of
      commercialization. This initial focus should also help demonstrate product
      performance, reliability and durability. It should also reduce production costs,
      establish codes and standards for fuel cell technology, build a skilled labor
      force, develop the nation’s hydrogen infrastructure and create public awareness
      and acceptance.





There
      will be winners and losers in the commercialization process as the technology
      develops, but we believe it is too early to tell which technologies will
      ultimately dominate in certain applications. However, the future direction
      of
      the industry appears clear in some major application areas, such as Proton
      Exchange Membrane (“PEM”) fuel cell technology, the technology used in our Kitty
      Hawk products.  A
      portable fuel cell industry survey by *Fuel
      Cell Today* in
      December 2006 indicated that over 75% of the companies surveyed are focusing
      their efforts on PEM fuel cells or the closely related Direct Methanol Fuel
      Cell
      technologies. PEM fuel cells continue to be of most interest to fuel cell
      developers. The survey also suggests that government actions to address fuel
      costs, supply risks, and the environment could positively and dramatically
      impact fuel cell industry prospects in the next two to three years.




4




General
      trends indicate that, in the next three to five years, delays in product launch
      might occur due to either fuel cell performance issues or non technical issues
      such as lack of codification of codes and standards. These delays may result
      in
      slow adoption of fuel cell products in both the commercial and consumer
      markets.




**Our
      Products**




We
      have
      two products: the HydroCell and the Kitty Hawk power system.




Our
      HydroCell is a technology that utilizes a cartridge filled with a chemical
      hydride (sodium borohydride) that, when injected with water, produces hydrogen
      on demand for portable and stationary power devices. Each cartridge can generate
      about 500 milliliters/minute of hydrogen. Each cartridge is compact and
      lightweight, weighing only about 175 grams. Power-to-weight ratio (the ability
      to generate the same or more energy by cutting the weight of the generating
      device) is one of many important factors in gaining market acceptance for
      alternative power sources. The HydroCell technology enables fuel cells to run
      at
      least two to three times longer than existing fuel cell and battery technology,
      while weighing significantly less than these technologies. The key to the
      HydroCell’s efficient design is that it uses moist air exiting a PEM fuel cell
      to produce hydrogen for the PEM fuel cell stack. Water recycling not only
      enables the HydroCell to produce several liters of hydrogen from a lightweight
      package, but also means that the HydroCell produces hydrogen only when the
      fuel
      cell stack is operating. The proprietary control technology used inside the
      HydroCell and the cartridges make possible the safe production of hydrogen.
      The
      internal cartridge components allow the energy-dense chemical hydride to react
      with the injected water in a controlled manner while providing for complete
      reactivity of the material.




The
      HydroCell fuel source can be marketed as a separate product and is a metallic
      cylinder approximately two inches in diameter and six inches in height holding
      the chemical hydride. When water is injected into the cylinder, it creates
      a
      chemical reaction which generates hydrogen gas. The hydrogen gas is transformed
      into electricity via the fuel cell, which then powers the product in which
      it is
      installed. The container is sealed to prevent moisture from entering the
      cylinder and to ensure the chemical hydride does not escape the cylinder. The
      cylinder is robust and will not break if dropped, resulting in a reliable and
      safe product that is easy to manufacture.





We
      believe the significance of the HydroCell is the proprietary, chemical hydride
      mixture and chemical reaction process wherein the generation of hydrogen does
      not occur until water is added to the chemical hydride. Given that the hydride
      is inert until water is added, a HydroCell cartridge can be kept in storage
      for
      a minimum of three years without losing its energy density. In other words,
      the
      energy level doesn’t get weaker over time. We believe the HydroCell has the
      highest energy density of any known portable hydrogen source currently available
      in the market. This is a significant difference from offerings of our
      competitors, as we believe there are no “dry hydride” technologies currently
      available to the consumer market. Our dry hydride technology for generating
      hydrogen makes it possible to build HydroCell cartridges capable of generating
      hydrogen for over 100 continuous hours by increasing the size of the cartridge
      and adding more chemical hydride.




We
      believe the HydroCell’s design offers the following advantages:




1.
            Safety
                - Hydrogen is produced only as it is needed, making it a safer
                product;





2.
            Reliability
                - The HydroCell has few moving parts, making it a reliable fuel
                source;





3.
            Reusability
                and Cost - The HydroCell cartridges are inexpensive compared with
                the
                costs associated with generating an equal amount of energy from
                conventional energy sources over the life span of one HydroCell cartridge
                since the cartridge can be refilled, thereby reducing the total cost
                of
                ownership to the consumer;





4.
            Disposability
                - The HydroCell cartridges are disposable. The by-product is an inert,
                solid, chemical oxide with minimal health hazard that can be discarded
                in
                landfills; and





5.
            Shelf
                Life - The HydroCell can lie dormant for up to thirty-six months
                without
                losing its energy density.




Our
      second product is the Kitty Hawk power system, consisting of the HydroCell,
      the
      fuel cell stack and the Company’s patented control technology that controls the
      flow of hydrogen for the actual generation of electricity. The Kitty Hawk units
      are rectangular in shape, weigh about ten pounds and are easily
      portable.




The
      control technology is an integrated, programmable electronic circuit (that
      is,
      the circuit can be programmed to perform specific tasks) that is used to control
      the flow of hydrogen and oxygen to the fuel cell stack. The purpose of the
      control technology is to ensure the proper amount of hydrogen is generated
      to
      power the device that is attached to the Kitty Hawk product. If too much or
      too
      little hydrogen is generated, the efficiency of the Kitty Hawk is significantly
      reduced resulting in the unit’s inability to adequately power the attached
      devices.




5




We
      manufacture the fuel cell stack, develop product enhancements and engage in
      new
      product development on the fuel cell stack. We first introduced the Kitty Hawk
      power system in September 2005. The Kitty Hawk products can generate hydrogen
      for up to three hours at full power. The initial product was capable of
      generating 15 net watts of power and the second generation, the KH-3X, is
      capable of generating 30 net watts of usable power. Although the product
      generates approximately 40 to 50 watts of power, the system requires
      approximately 15 to 20 watts of power internally to run the unit. The result
      is
      25 to 30 watts of usable power (depending on the product), which is more than
      sufficient to run a radio while concurrently charging a cell phone.





The
      KH-3X
      has a number of enhancements: improved physical design; noise reduction; faster
      start-up cycle (several seconds versus two to three minutes); fuel level gauge
      to indicate the level of energy remaining in the cartridge; an attached carrying
      handle; a status display screen indicating the power output of the unit;
      interior technical modifications to eliminate hose pinching and increased power
      output to 30 watts of power. Each of these enhancements required several steps
      including designing and building the enhancement; testing the enhancement to
      ensure it performs as specified; incorporating and testing the enhancement
      in
      the KH-3X unit and testing the KH-3X unit in a customer environment. The
      designing, building and testing of the enhancements began in March 2006 and
      were
      completed by the third quarter of 2006. The testing of the enhancements is
      on-going.





We
      are
      currently developing the Kitty Hawk 4. The product will be designed to have
      a
      power output over three times great than the KH-3X. Product enhancements to
      the
      Kitty Hawk 4 will include: reducing the overhead required to run the Kitty
      Hawk
      4 power system; increased ruggedness and enhanced ergonomics and physical
      design.




The
      design of the Kitty Hawk 4 system commenced in September 2006 and development
      is
      anticipated to be completed by the third quarter of 2007. Field testing is
      anticipated to take six to eight months. Upon completion of field testing,
      we
      anticipate units will be available for sale and delivery into select commercial
      and consumer markets.




**Marketing
      Focus**




We
      are
      focusing our initial efforts on three distinct markets:




***Industrial
      Remote Monitoring*** *:* The
      primary target market for remote monitoring is the pipeline and wellhead
      applications for remote sensing and monitoring of operating conditions in oil
      and gas fields. Characteristically, these fields tend to be in remote locations
      with harsh operating environments, making access difficult. The conventional
      power sources used to operate these facilities are solar panels and batteries.
      Solar panels turn sunlight into electricity that powers the batteries which,
      in
      turn, operate the sensing and monitoring devices. However, there are a number
      of
      challenges with solar energy: if the weather is cloudy for three days or more,
      electricity can’t be generated to power the batteries, making consistent and
      reliable monitoring of such facilities difficult, if not impossible. Solar
      panels are also subject to a variety of abuses, from vandalism to roaming
      animals knocking down the panels, rendering them inoperative. The repair and
      maintenance of these facilities is time consuming and costly, especially in
      remote environments. The impact of the lack of monitoring data may result in
      significant loss of revenue and potentially may create an operational hazard.
      We
      seek to penetrate this market for the following reasons:




1.
            Major
                oil producers have indicated an interest in replacing the common
                lead acid
                battery/solar panel combination due to high staffing requirements
                and
                operating costs required to maintain conventional batteries and a
                lack of
                reliability, especially in adverse weather
                conditions;





2.
            As
                the price of crude oil remains high, formerly abandoned or plugged
                wells
                are coming on-line, thereby substantially increasing the size of
                the total
                available market; and




3.
            Our
                management team and Board of Directors have knowledge of this segment,
                as
                well as numerous industry
                relationships.




The
      Company believes the HydroCell-powered Kitty Hawk is less expensive than
      comparable sources of energy on the market capable of producing 25 watts of
      power for several hours. We believe the power output of the Kitty Hawk system
      is
      capable of supporting typical user applications in this market. We are currently
      testing a HydroCell capable of powering a Kitty Hawk system for over 100
      continuous hours. Product enhancements are planned to develop a HydroCell that
      is capable of generating 10,000 watt hours of power which is equivalent to
      running a Kitty Hawk unit for seven hundred and twenty continuous
      hours.




6





***Back-up
      Power:*** With
      increasing outages in electrical supply to homes and businesses due to weather
      and peak demand requirements on the electrical industry complex, consumers
      are
      interested in a back-up power supply that can power critical components
      (refrigerators, freezers, alarm systems, electronic equipment, fans, etc.)
      for
      an extended period of time. Consumers want portable power so that they can
      decide what devices should be powered under which circumstances. Our hydrogen
      fuel cell products can provide a good solution since they can be used indoors
      and are portable. The HydroCells are small and can be stored for an extended
      period of time before use. Our products can power devices that need either
      AC or
      DC power and can also recharge batteries and battery powered devices, such
      as
      cell phones, laptop computers and power tools. Our fuel cell is more convenient,
      quieter and environmentally friendly than a gasoline generator.





***Recreational
      Off-Site Usage:*** This
      target market is focused on high-end recreational camping, including a very
      specific niche target of environmentally conscious campers. We seek to enter
      this market for the following reasons:




1.
            We
                believe that interest in the environment will continue to rise and
                that a
                segment of the environmental consumer market is willing to pay a
                premium
                for environmentally friendly
                technology;





2.
            We
                hope that entering this market will broaden the visibility of our
                products
                (specifically, the Kitty Hawk power system) to the broader consumer
                market, which is the first step to entering the retail market
                space;





3.
            This
                market will provide us with a good test for product performance (e.g.,
                reliability, ease of use, new applications) as well as “new learnings”
                which will enable the Company to enhance and adapt its product offerings
                based on consumer feedback; and





4.
            Our
                existing product has attributes ideally suited to this market segment:
                compact, portable, significantly lighter than batteries, environmentally
                friendly (water is the only by-product), high reliability, low
                maintenance, ease of use and long shelf
                life.





**Continuous
      Technology and Product Innovation**




We
      are
      committed to continuous technology and product innovation as a means of
      achieving and maintaining sustainable competitive advantages. Our research
      and
      product development group in Utah is narrowly focused on new technology
      innovation. The group’s responsibility is to create a portfolio of emerging
      technologies specific to the hydrogen generation and fuel cell space. The senior
      management team reviews the portfolio and those projects which have the highest
      likelihood of commercialization will be selected for the research agenda.
      Quarterly milestones, as well as performance and test metrics, are established
      to determine the viability of commercialization of the technology. If the test
      criteria are met, the technology is then further developed and optimized for
      manufacturing. Our goal is to continuously enhance our existing product lines
      and leverage our market and product knowledge into new products.





Once
      the
      product is tested and optimized, it is turned over to the manufacturing team
      for
      production. The manufacturing team is responsible for continuous innovation
      of
      the product’s performance, as well as design for manufacture. In November 2005,
      we established a manual production line sufficient to meet production
      requirement of five fuel cell units and 35 HydroCells per month. Our near term
      goal is for the manufacturing facilities to ramp up to meet a potential demand
      of 20 fuel cells and 200 HydroCells per month. At such time as demand reaches
      a
      run rate of 80 Kitty Hawk units per month and 800 HydroCells per month, we
      anticipate that manufacturing will transition from manual to automated
      processes. Thereafter, outsourcing relationships are expected to be established
      for a few simple, non-proprietary sub-components. Full outsourcing likely will
      begin once volume demand approaches 250 fuel cells per month and 1,500
      HydroCells per month. This outsourcing event will trigger the beginning of
      the
      shift to a final assembly and test facility at our own manufacturing site
      located in Texas.





**Utilize
      Strategic Relationships**




Strategic
      relationships are critical to us for research, product development and volume
      manufacturing. As used in this context, these relationships are agreements
      with
      companies to perform specific activities on our behalf for which we do not
      have
      or may not want to develop the competencies to accomplish. In return, we will
      offer activities or provide competencies that are not available to the
      counterparties. It is expected that these relationships will be dissolvable
      at
      any time and may be formed for the objective of entering a market or developing
      a technology. We expect to seek out relationships with companies for product
      design and product development. As we enter into higher volume production,
      we
      intend to seek out strategic relationships for manufacturing, distribution
      and
      logistics.




7




We
      currently do not intend to actively pursue markets other than as set forth
      herein. However, if opportunities arise through strategic relationships with
      companies specializing in non-competitive markets, we expect to carefully
      evaluate such opportunities before making a final determination.




**Strong
      Corporate Culture**




We
      believe a strong corporate culture is the foundation for a successful, enduring
      enterprise. There are two principles which have been imbedded in the culture
      of
      the Company since its inception:




*1.*
            *Integrity
                above reproach*:
                All members of our team and strategic partners are committed to conducting
                business in an ethical manner with our customers, suppliers, partners,
                employees, and the communities in which we operate. There is zero
                tolerance for behavior at any level that does not adhere to this
                principle.





*2.*
            *Frugality:*We
                and our strategic partners are committed to the prudent allocation
                of
                resources. In every aspect of normal business activities, resource
                allocations are carefully weighed before making a decision. Alternatives
                are thoroughly discussed to determine if there is a better, more
                efficient
                option. We intend to make investments in technology and people in
                order to
                retain and enhance our competitive position and create fair returns
                for
                our stockholders.




**Intellectual
      Property**




We
      have
      filed five patent applications for the HydroCell and control system. We make
      every effort to protect our knowledge of our processes and
      procedures.





**Competition**




We
      believe that the HydroCell technology is unique and offers significant
      advantages over hydrogen generation technology offered by our competitors.
      The
      HydroCell is a lightweight, compact fuel cell system that, to the Company’s
      knowledge, when combined with water recycling, produces more hydrogen for its
      size and weight than any other hydrogen source currently available on the
      market.




Although
      there are a number of competitors that provide fuel cell technologies, most
      of
      these competitors do not offer a single-vendor, integrated solution consisting
      of the hydrogen source, the control technology, and the fuel cell. We believe
      our HydroCell and the integrated power system products have created a business
      model that gives us a competitive advantage. We believe our business model
      affords us the opportunity to sell the integrated power system products in
      line
      with the price point of competing fuel cell products.





**Employees**




We
        currently have 14 full-time employees, all of whom are involved in research
        and
        development. The Company’s President and CEO and Chief Financial Officer work
        part time on a basis allocated by SREG. The Company also hires temporary
        employees from time to time as needed.


**RISK
      FACTORS**





*There
      are numerous and varied risks, known and unknown, that may prevent us from
      achieving our goals, including those described below. The risks described below
      are not the only ones we will face. Additional risks not presently known to
      us
      or that we currently deem immaterial may also impair our financial performance
      and business operations. If any of these risks actually occurs, our business,
      financial condition, or results of operations may be materially adversely
      affected*




**Our
      business is difficult to evaluate because we are a development stage
      company.**




The
      Company is a development stage company that was formed in July 2004, to further
      the research and development of fuel source and fuel cell systems. To date,
      we
      have manufactured and marketed only twenty-five Kitty Hawk integrated power
      systems to select customers and manufactured about 50 KH-3X units. The Kitty
      Hawk products were delivered to a select customer in February and March 2006.
      Accordingly, there is only a limited basis upon which to evaluate our business
      and prospects. An investor in our Company should consider the challenges,
      expenses, and difficulties we will face as a development stage company seeking
      to develop and manufacture a new product in a relatively new
      market.




8




**Our
      independent registered public accounting firm has expressed substantial doubt
      about our ability to continue as a going concern.**




We
      received an audit report for the year ended December 31, 2006, from our
      independent registered accounting firm containing an explanatory paragraph
      expressing substantial doubt about our ability to continue as a going concern.
      The Company has no significant operating history as of December 31, 2006, and
      since inception, the Company has not had significant revenues. Management raised
      additional equity and debt financing to fund operations and to provide
      additional working capital. However, there is no assurance that such financing
      will be in amounts sufficient to meet the Company’s needs. These conditions
      raise substantial doubt about the Company’s ability to continue as a going
      concern.




**We
      cannot guarantee that we will not again be required to restate our consolidated
      financial statements.**




Since
      our
      inception, we have restated our consolidated financial statements on more than
      one occasion to correct errors in our financial statements. For example, our
      Quarterly Report on Form 10-QSB/A filed with the Commission on December 22,
      2006, restated our financial statements at and for the period ended June 30,
      2006, to make a correction to the valuation of our common stock for the purposes
      of accounting for stock-based compensation. We believe that we have developed
      processes and procedures that will ensure that our financial statements,
      including the financial statements contained in Form 10KSB, accurately reflect
      our financial position and results of operations. However, we cannot guarantee
      that in the future we will not again be required to restate our financial
      statements.





**We
      expect to have a need for additional capital as we continue to execute our
      business plan.**




To
      achieve and maintain competitiveness and continue our growth, we expect to
      raise
      substantial funds. Our forecast for the period for which our financial resources
      will be adequate to support our operations involves risks and uncertainties
      and
      actual results could be better or worse as a result of a number of factors.
      We
      anticipate the need to raise additional capital to develop, promote, and
      distribute our products. Such additional funding may be raised through public
      or
      private, equity or debt financings. Additional funding may not be available
      under favorable terms, if at all. If adequate funds are not available, we may
      be
      required to curtail operations significantly or to obtain funds on terms not
      as
      favorable as we would hope. We hope to raise an additional $2.0 million to
      $5.0
      million in funding. It is anticipated that we will need to raise these monies
      in
      2007. These funds will be required for recruiting and hiring additional
      technical staff, for purchasing materials for the manufacture of KH-3X and
      Kitty
      Hawk 4 units, for labor costs associated with manufacturing, for marketing
      expenses and for product development and enhancements to the Kitty Hawk product
      line.




**Technological
      changes could force us to drastically alter our business
      plan.**




The
      quest
      for alternate energy sources is being undertaken by numerous governments,
      corporations, universities and other institutions and individuals throughout
      the
      world. Many of these participants have far greater experience and resources
      than
      the Company and have been engaged in these activities for a longer period of
      time. In the event that commercially ready applications for alternative energy
      sources similar in nature to ours are introduced into the marketplace, we may
      be
      forced to alter our business plan. This can be expected to be costly and cause
      substantial delays in, or prevent us entirely from, realizing our
      objectives.




**The**  **Company
      must demonstrate value and reliability in order to gain consumer
      acceptance.**




The
      cost
      of our fuel cell system is more than that of existing and competing energy
      providers. If we are unable to reduce our manufacturing and materials costs
      to
      produce products that are more cost-effective and reliable than those of our
      competitors, consumers may be unlikely to purchase our products. The price
      of
      our fuel cell system depends, in large part, on material and manufacturing
      costs. We cannot guarantee that we will be able to lower these costs without
      affecting the reliability and performance of our product.




**The
      Company has limited experience manufacturing or selling fuel cells and fuel
      cell
      systems.**




The
      Company has limited experience in producing, marketing, and selling any products
      or services on a commercial basis. To date, we have focused primarily on
      research and development and have only limited experience manufacturing fuel
      cells or fuel source systems on a large-volume, commercial basis. We believe
      that in order to make our products profitable we would have to produce our
      products through a high-volume automated process. We do not know whether or
      when
      we would be able to develop efficient, automated, low-cost manufacturing
      capabilities. Even if we are successful in developing such capabilities, we
      cannot ensure that we will do so in time to meet our product commercialization
      schedule or to satisfy the requirements of our customers, and
      stockholders.




9




**We
      expect that some of our fuel source products will only be commercially viable
      as
      a component of other companies’ products, and these companies may choose not to
      include our fuel source system in their products.**




Certain
      of our fuel source products must be integrated into products manufactured by
      original equipment manufacturers (“OEMs”). We cannot guarantee that OEMs will
      manufacture these products. If they manufacture such products, no assurances
      can
      be given as to whether they will choose to incorporate our products or that
      such
      integration will be on financial and other business terms acceptable or
      profitable to us. In addition, any integration, design, marketing, manufacturing
      or other problems encountered by an OEM could adversely affect the market for
      our products and we would have no ability to control the response to such
      problems.




**We
      will need to rely on third parties for the proper execution of our business
      strategy.**




Strategic
      relationships are critical to us for research, product development, and volume
      manufacturing. We will seek out strategic relationships for product design
      and
      development. As the Company enters into higher volume production, we will seek
      out strategic relationships for manufacturing, distribution and
      logistics.




Outsourcing
      is expected to happen in phases. First, we will work with raw material and
      individual component manufacturing. We will control all the development,
      manufacturing, and quality internally for the initial small-volume ramp-up
      sufficient to meet a five fuel cell and 35 HydroCell per month rate. Our near
      term goal is for the manufacturing facilities to ramp up to meet a potential
      demand of 20 fuel cells and 200 HydroCells per month. At such time as demand
      reaches a run rate of 80 Kitty Hawk units per month and 800 HydroCells per
      month, we anticipate that manufacturing will transition from manual to automated
      processes. Thereafter, outsourcing relationships are expected to be established
      for a few simple non-proprietary sub-components. Full outsourcing likely will
      begin once volume demand approaches 250 fuel cells per month and 1,500
      HydroCells per month. This outsourcing event will trigger the beginning of
      the
      shift to a final assembly and test facility at our own manufacturing site
      located in Texas.





We
      do not
      believe we should have difficulty obtaining contractors for any of this work
      or
      to supplement or replace existing contractors if any of those relationships
      were
      to be insufficient or terminate, or if the sales volume were such that we needed
      additional contractors to support the increases in sales volume. No assurance
      can be given that a suitable contractor can be found or that once found, it
      will
      consistently meet the Company’s demands with regard to timing or quality. It is
      possible, however, that difficulties in supplementing or replacing current
      contractors could develop in the future because of factors that we cannot
      predict at this time, creating a potential material adverse effect on the
      Company. The availability of raw materials may have a material adverse effect
      on
      the Company’s results of operations. Because we use only the highest quality
      components, any restriction on the availability or use of such raw materials,
      whether as the result of a reduction in supply, natural disaster, or
      environmental restrictions, could have a material adverse effect on the
      business, financial condition, and results of operations of the
      Company.





**We
      may be unable to raise additional capital to pursue our commercialization
      strategy.**




Our
      product development and commercialization schedule may be delayed if we are
      unable to properly fund the Company and execute our business plan. We do not
      know whether we will be able to secure additional funding or funding on terms
      that are acceptable to us.




**If
      additional capital is raised through the issuance of stock, stockholders’
ownership interest may be diluted.**




One
      of
      the factors that generally affects the market price of publicly traded equity
      securities is the number of shares outstanding in relationship to assets, net
      worth, earnings or anticipated earnings. If a public market develops for the
      Company’s shares, or if the Company determines to register for sale to the
      public those shares of Common Stock granted in any business combination or
      issued in any capital-raising activity, a material amount of dilution can be
      expected to cause the market price of our Common Stock to decline. Furthermore,
      the public perception of future dilution can have the same effect even if the
      actual dilution does not occur.




In
      order
      for us to obtain additional capital, we may find it necessary to issue
      securities conveying rights senior to those of the holders of the Company’s
      common stock. Those rights may include voting rights, liquidation preferences
      and conversion rights. To the extent we convey senior rights; the value of
      the
      Company’s common stock can be expected to decline.




10




**If
      we incur indebtedness, we may become too highly leveraged and would be in risk
      of default.**




There
      is
      no contractual or regulatory limit to the amount of debt we can take on,
      although we intend to follow a conservative debt policy. If our policy were
      to
      change or be eliminated due to unforeseen circumstances, we could become more
      highly leveraged, which could adversely affect our ability to meet our
      obligations, and we would then be in risk of default, which could have a
      material adverse effect on our financial condition, results of operations,
      business prospects and long term future viability.




**A
      large-scale consumer market for our products may never develop or take longer
      to
      develop than we anticipate.**




A
      large-scale consumer market for our products may never develop or may develop
      more slowly than we anticipate. Fuel cell technology is an emerging market,
      and
      we are unsure whether there will ever be popular demand for such products.
      The
      development of a large-scale market may be affected by many factors, some of
      which are beyond our control, including:




1.the
                competitive cost of fuel cell systems2.the
                emergence of newer and more competitive technology3.the
                future cost of raw materials4.regulatory
                requirements5.consumer
                perceptions regarding the safety of our product6.consumer
                reluctance to try new products and
                technologies




If
      a
      large-scale consumer market fails to develop or develops more slowly than we
      anticipate, we may be unable to recover losses incurred in the development
      of
      our products.




**Changes
      in environmental policies could hurt the market for our products and deter
      potential investors.**




Although
      many governments have made the development of alternative energy sources, fuel
      cells in particular, a priority, we cannot assure you that these governments
      will not change their environmental policies or that any change would not
      negatively affect our business. Research for alternative energy is influenced
      by
      governmental regulations and policies concerning energy research or
      conservation. Depending on the nature of the governmental regulations, it could
      be easier and more cost efficient, or more difficult and costly, to raise funds
      and conduct research or to manufacture, market or sell our products in a given
      country. Governmental regulations may also impose more stringent requirements
      for the transport of the hydrogen fuel source, thereby increasing the costs
      of
      distribution.




**Changes
      in governmental regulation could hurt the market for our products and negatively
      affect our ability to attract potential consumers.**




The
      energy industry is influenced by state and federal regulations and policies.
      Any
      change in the present policies could affect additional investment in alternative
      forms of energy and decrease demand for our products.




Fuel
      cell
      technology may be subject to future governmental regulation, which could affect
      the market for our product. As our products are introduced to the market, we
      may
      be subject to additional laws and regulations. We do not know the extent to
      which this will affect our ability to distribute our products. In addition,
      any
      future regulation may increase our production costs and the cost of our final
      product.




**We
      currently face and will continue to face significant
      competition.**




Our
      products, the HydroCell hydrogen generation system and the Kitty Hawk integrated
      power system, are expected to face significant competition. Many companies
      with
      substantially greater resources are developing similar hydride hydrogen
      generation technologies and are enhancing their fuel cell technologies. We
      cannot be sure that customers will use our products in lieu of competitor’s
      product offerings in the target markets we have identified. Further, the
      development of new technology may affect the popularity and profitability of
      our
      products or render our products obsolete.




11




**We
      depend on our intellectual property, and our failure to protect that technology
      could adversely affect our future success.**




We
      rely
      in part on our five patent applications to protect our intellectual property.
      Additionally, we make every effort to protect our knowledge of our processes
      and
      procedures. Failure to protect our existing intellectual property could cause
      the loss of our exclusivity or the right to use the technology we developed.
      If
      we do not adequately protect our intellectual property rights, we may have
      to
      pay others for the right to use their technology.




We
      could
      face litigation regarding the legitimacy of our patents and we cannot ensure
      that we will be successful in such suits. These suits may result in the
      invalidation of our patent rights or the licensing of these rights to
      others.




We
      protect our proprietary intellectual property, including intellectual property
      that may not be patented, through the use of confidentiality agreements. We
      cannot assure you that these agreements will not be breached or that we will
      have an adequate remedy in the event that they are breached.




**The
      Company may be unable to attract or retain key personnel, which would adversely
      affect our operations.**




Our
      team
      consists of several scientists and we also employ engineers and researchers
      to
      help develop our products. Our future success depends on our ability to attract
      and retain a highly skilled workforce, consisting of scientists, engineers,
      researchers and marketing professionals. We cannot assure you that we will
      be
      able to attract and retain such personnel. Our inability to do so could
      negatively impact our success.




On
      March
      24, 2006, Dr. Kevin Shurtleff, the Company’s founder, resigned as a member of
      the Company’s Board of Directors and as an officer of the Company to pursue
      other interests and opportunities in areas not related to hydrogen fuel source
      and fuel cell technology. Dr. Shurtleff agreed to continue to work for the
      Company on a part-time basis for twenty hours per week to assist the Company
      in
      developing its control program technology and to transfer his knowledge of
      its
      hydrogen source technology.





We
      believe we have taken due care and diligence to capture all intellectual
      property developed by Dr. Shurtleff during his tenure with the Company and
      have
      taken other measures to ensure that the Company’s progress in the area of
      hydrogen fuel source development will not be impeded if Dr. Shurtleff leaves
      its
      employ.




We
      believe the measures taken to ensure the capture of all intellectual property
      and the competencies of the current staff will not impact the continuation
      of
      product development of the hydrogen fuel source or compromise the Company’s
      ability to continue product development in the hydrogen fuel source area in
      the
      future. However, there can be no assurances that we will not be impacted by
      Dr.
      Shurtleff’s resignation as director and officer or his possible future departure
      from the Company.




**Authorization
      of Preferred Stock**




Our
      Certificate of Incorporation authorizes the issuance of up to 1,500,000 shares
      of preferred stock with designations, rights and preferences determined from
      time to time by our Board of Directors. Accordingly, our Board of Directors
      is
      empowered to issue, without stockholder approval, preferred stock with dividend,
      liquidation, conversion, voting or other rights which could adversely affect
      the
      voting power or other rights of the holders of the Common Stock. As of March
      30,
      2007, there were no shares of preferred stock outstanding. If shares of
      preferred stock are issued, such shares could affect the rights of holders
      of
      our Common stock.




**Penny
      Stock Regulations may impose certain restrictions on marketability of the
      Company’s securities.**




The
      trading of the Company’s Common Stock is subject to rules pertaining to “penny
      stocks.” The Securities and Exchange Commission (“SEC”) has adopted regulations
      which generally define a “penny stock” to be any equity security that has a
      market price (as defined) of less than $5.00 per share or an exercise price
      of
      less than $5.00 per share, subject to certain exceptions. As a result, the
      Company’s Common Stock is subject to rules that impose additional sales practice
      requirements on broker-dealers who sell such securities to persons other than
      established clients and “accredited investors.” For transactions covered by
      these rules, the broker-dealer must make a special suitability determination
      for
      the purchase of such securities and have received the purchaser’s written
      consent to the transaction prior to the purchase. Additionally, for any
      transaction involving a penny stock, unless exempt, the rules require the
      delivery, prior to the transaction, of a risk disclosure document mandated
      by
      the SEC relating to the penny stock market. The broker-dealer must also disclose
      the commission payable to both the broker-dealer and the registered
      representative, current quotations for the securities and, if the broker-dealer
      is the sole market maker, the broker-dealer must disclose this fact and the
      broker-dealer’s presumed control over the market. Finally, monthly statements
      must be sent disclosing recent price information for the penny stock held in
      the
      account and information on the limited market in penny stocks. Consequently,
      the
“penny stock” rules may restrict the ability of broker-dealers to sell shares of
      the Company’s Common Stock and may affect the ability of investors to sell such
      shares of Common Stock in the secondary market and the price at which such
      investors can sell any of such shares.





12




Investors
      should be aware that, according to the SEC, the market for penny stocks has
      suffered in recent years from patterns of fraud and abuse. Such patterns
      include:


1.
              control
                  of the market for the security by one or a few broker-dealers that
                  are
                  often related to the promoter or
                  issuer
  2.
                manipulation
                    of prices through prearranged matching of purchases and sales
                    and false
                    and misleading press releases
  3.
                “boiler
                    room” practices involving high pressure sales tactics and unrealistic
                    price projections by inexperienced sales
                    persons
  4.
                excessive
                    and undisclosed bid-ask differentials and markups by selling
                    broker-dealers
  5.
                the
                    wholesale dumping of the same securities by promoters and broker-dealers
                    after prices have been manipulated to a desired level, along
                    with the
                    inevitable collapse of those prices with consequent investor
                    losses





The
      Company’s management is aware of the abuses that have occurred historically in
      the penny stock market.





**Item
      2. Property.**





The
      Company leases space in Bluffdale, Utah. The facility serves as the Company’s
      research, product development and manufacturing center. The facility encompasses
      approximately 5,500 square feet rented by the Company at a monthly rate for
      the
      first five months of 2006 of $2,700 and $2,739 for the last seven months of
      2006, for a total lease expense in 2006 of $32,673. The lease originally expired
      on May 31, 2006, and has been extended until August 31, 2007.




On
      August
      1, 2006, the Company subleased office space from SREG at a monthly rent of
      $1,905 beginning August 1, 2006, with a term of one year. Therefore, rental
      expense for 2006 was $9,525. Future rental commitments as of December 31, 2006,
      totaled approximately $13,335.




13





**Item
      3. Legal Proceedings.**





The Company is not party to any legal proceedings nor is it aware of any
      investigation, claim or demand made on the Company that may reasonably result
      in
      any legal proceedings.




**Item
      4. Submission of Matters to a Vote of Security Holders.**





None.




**PART
      II**




**Item
      5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases
      of
      Equity Securities.**





**Common
      Stock and Preferred Stock**





The
      Company is authorized by its Certificate of Incorporation to issue an aggregate
      of 21,500,000 shares of capital stock, comprising of 20,000,000 shares of common
      stock, par value $.0001 per share (the "Common Stock") and 1,500,000 shares
      of
      preferred stock, par value $.0001 per share (the “Preferred Stock”). As of March
      30, 2007, 11,785,491 shares of Common Stock and no shares of Preferred Stock
      were issued and outstanding.





*Common
      Stock*





All
      shares of Common Stock are of the same class and have equal rights and
      attributes. The holders of Common Stock are entitled to one vote per share
      on
      all matters submitted to a vote of stockholders of the Company. All stockholders
      are entitled to share equally in dividends, if any, as may be declared from
      time
      to time by the Board of Directors out of funds legally available. In the event
      of liquidation, the holders of Common Stock are entitled to share ratably in
      all
      assets remaining after payment of all liabilities. The stockholders do not
      have
      cumulative or preemptive rights.





On
      April
      10, 2005, the Company’s Board of Directors authorized a five for one split on
      all Common Stock issued prior to that date.





As
      of
      March 21, 2007, there were 56 record holders of 11,785,491 shares of Common
      Stock issued and outstanding.





The
      Company’s Common Stock is listed under the symbol TRUL on the NASDAQ
      over-the-counter bulletin board.





*Preferred
      Stock*





The
      Company is authorized by its Certificate of Incorporation to designate and
      issue
      up to 1,500,000 shares of Preferred Stock. As of March 30, 2007, there were
      no
      shares of Preferred Stock issued and outstanding.




**Dividend
      Policy**





The
      Company has paid no dividends on its Common Stock.





On
      April
      13, 2006, the Company’s Board of Directors approved the payment of dividends
      equal to an aggregate of $113,138, to be paid in the form of Common Stock to
      all
      of the holders of the Series A Preferred Stock. This dividend had accrued from
      July 22, 2004 to March 31, 2006. On May 5, 2006, the Company’s Board of
      Directors approved an additional dividend, which had accrued from April 1,
      2006
      to May 2, 2006, but had not been paid, to be paid in the form of Common Stock
      to
      all the holders of the Series A Preferred Stock. Accordingly, 291,361 shares
      of
      the Company’s Common Stock were issued: 283,118 shares to CCP; 2,576 shares to
      Dr. Kevin Shurtleff; and 5,667 shares to Andrew Nielson. The holders of the
      Series A Preferred Stock have since converted their preferred shares to shares
      of Common Stock and no more dividends shall be declared and paid on those shares
      of Series A Preferred Stock.




**Equity
      Compensation Plans**




14





Plan
                  Category
              
              Number
                  of securities
                to
                  be issued upon
                exercise
                  of outstanding
                options
                  and rights
                (a)
              
              Weighted-average
                exercise
                  price of
                outstanding
                  options
                and
                  rights
                (b)
              
              Number
                  of securities
                remaining
                  available for
                future
                  issuance under
                equity
                  compensation
                plans
                  (excluding securities
                reflected
                  in column (a))
                (c)Equity
                  compensation plans approved by securityholders
              
              
              -
              
              
              -
              
              
              -Equity
                  compensation plans not approved bysecurity
                  holders (1)(2)
              
              
              2,344,764
              
              $
              0.94
              
              
              765,841Total
              
              
              2,344,764
              
              $
              0.94
              
              
              765,841




(1)
      The
      Company’s Board of Directors adopted the Trulite, Inc. Stock Option Plan (the
“Plan”) on April 11, 2005. The Plan is to be administered by the Company’s Board
      of Directors and consists of up to 3,110,805 shares of Common Stock in a stock
      option pool which may be granted in the form of options to employees, directors,
      consultants and advisors to the Company. The number of options, option price,
      vesting and exercise schedules and the duration of all options shall all be
      determined by the Company’s Board of Directors at the time of grant. Incentive
      stock options expire no later than seven years after the date of grant.





(2)
      Does
      not include warrants to purchase an aggregate of 1,400,000 shares of common
      stock.





**Recent
      Sales of Unregistered Securities**





In
      June
      2005, pursuant to Rule 504 of Regulation D promulgated under the Securities
      Act,
      Trulite sold 1,134,725 shares of its Series A Preferred Stock to one investor,
      CCP, for an average cash consideration of $0.84 per share, for an aggregate
      investment of $950,000.





The
      Company raised additional equity of $1,000,000 during April 2006 through the
      issuance of common stock for cash consideration of $1.00 per share. These
      issuances of common stock to 12 accredited investors also included one year
      warrants to purchase an additional 1,000,000 shares of common stock of the
      Company at an exercise price of $1.50 per common share that expires on April
      13,
      2007, which was extended to April 13, 2008 (see
      Note
      12 in the attached Notes to Financial Statements).The value of the
      warrants is included as additional paid in capital.





In
      addition, in April 2006, the Company issued 300,000 shares of Common Stock
      and
      warrants to purchase 400,000 shares of Common Stock at an exercise price of
      $3.00 per share to Jelco and Boru, pursuant to each of their consulting
      agreements.





All
      purchasers of the Company’s securities represented in writing that they were
      accredited investors and acquired the securities for their own accounts. A
      legend was placed on the stock certificates stating that the securities have
      not
      been registered under the Securities Act and cannot be sold or otherwise
      transferred without an effective registration or an exemption
      therefrom.




**Item
      6. Management’s Discussion and Analysis**





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our audited financial statements for the twelve
      months ended December 31, 2006 and 2005, with their explanatory notes included
      as part of this Form 10-KSB.





*Overview
      and Plan of Operation*





Trulite
      is engaged in the development and production of portable and stationary products
      that produce hydrogen for the generation of electricity for commercial and
      consumer markets. Our strategy is to leverage the Company’s unique hydrogen
      source and control technology to develop fuel cell products to address end-user
      applications in three identified markets: Industrial Remote Monitoring; Back-up
      Power Generation; and Recreational Off-Site uses.




15





The
      Company is a development stage company and, as such, has not had any meaningful
      revenues and has accumulated a deficit since it’s inception on July 15, 2004.
      From July 15, 2004 through December 31, 2004, the Company had $1,750 in sales.
      For the years ended December 31, 2005 and 2006, the Company had revenue of
      $16,667 and $8,333, respectively. We estimate that we will begin to have
      commercially viable products resulting from the ongoing research and development
      and product development by the fourth quarter of 2007. Research and development
      expenditures will be made to further enhance the performance of the hydrogen
      fuel sources, to develop the electronics that control the process to generate
      electricity, to improve the performance of the fuel cells and other components,
      to increase the electrical output of the products and to test the performance
      and reliability of the products. Since our inception, we have spent $2.267
      million in research and development and anticipate that we will spend at least
      $2.0 million in 2007, prior to having the first products commercially available.
      We will have ongoing research and development expenditures for the foreseeable
      future as products are developed for new applications and markets. The timing,
      amount and success of the research and development and manufacturing estimates
      are dependent on a number of factors that are difficult to project, including
      but not limited to the availability of qualified people, the success of the
      technologies under development, the cost to implement technologies, the cost
      of
      the product, the requirements of the marketplace, regulatory requirements,
      the
      availability of funds, and other factors.





We
      do not
      currently have sufficient capital to fully execute our business plan and we
      anticipate the need to raise additional capital to develop, promote, and
      distribute our product. Historically, our activities have been funded through
      a
      combination of common and preferred stock issuances and loans from existing
      investors. Our current financial plans require us to secure between $2.0 million
      and $5.0 million in 2007. Additional funding may be raised through public or
      private, equity or debt financings. Additional funding may not be available
      under favorable terms, if at all. If adequate funds are not available, we may
      be
      required to curtail operations significantly or to obtain funds on terms not
      as
      favorable as we would hope.





16


Selected
      operating data for the years ended December 31, 2006 and 2005:





**Year
                  Ended December 31,****2006**
              
              **2005**Sales
              
              $
              8,333
              
              $
              16,667Cost
                  of sales
              
              
              5,912
              
              
              12,216GROSS
                  PROFIT
              
              
              2,421
              
              
              4,451Operating
                  expenses:Research
                  and development
              
              
              1,142,472
              
              
              410,958Depreciation
              
              
              14,848
              
              
              6,823General
                  and administrative
              
              
              2,264,463
              
              
              412,877TOTAL
                  OPERATING EXPENSES
              
              
              3,421,783
              
              
              830,658LOSS
                  FROM OPERATIONS
              
              
              (3,419,362
              )
              
              (826,207
              )Other
                  income (expense):Interest
                  expense
              
              
              (29,726
              )
              
              (663
              )Interest
                  income
              
              
              5,794
              
              
              5,329Other
              
              
              -
              
              
              (4,411
              )TOTAL
                  OTHER INCOME (EXPENSE)
              
              
              (23,932
              )
              
              255LOSS
                  BEFORE INCOME TAXES
              
              
              (3,443,294
              )
              
              (825,952
              )Income
                  taxes
              
              
              -
              
              
              -NET
                  LOSS
              
              
              (3,443,294
              )
              
              (825,952
              )Preferred
                  stock dividends
              
              
              (39,275
              )
              
              (84,074
              )Deemed
                  dividend on conversion ofpreferred
                  stock to common stock
              
              
              (1,586,150
              )
              
              -NET
                  LOSS ATTRIBUTABLE TOCOMMON
                  STOCKHOLDERS
              
              $
              (5,068,719
              )
              $
              (910,026
              )


**Revenues**




For
      the
      year ended December 31, 2006, revenues totaled $8,333 versus $16,667 for the
      year ended December 31, 2005.




**Gross
      profit**




For
      the
      twelve months ended December 31, 2006, gross profit was $2,421 compared to
      $4,451 for 2005.




**Operating
      expenses**




Operating
      expenses were $3,421,783 for the year ended December 31, 2006. This compares
      to
      operating expenses of $830,658 for 2005. Research and development expenses
      increased to $1,142,472 for 2006, compared to $410,958 for 2005. The Company
      increased its research and development expenditures during 2006 and produced
      its
      first demonstration units. Depreciation expense increased $8,025
      during 2006. General
      and administrative costs increased to $2,264,463 in 2006, as compared to
      $412,877 in 2005, primarily due to higher personnel-related costs, stock-based
      compensation and increased legal and accounting fees resulting from the level
      of
      effort required to register the Company’s securities.




Prior
      to
      January 1, 2006, we accounted for our stock option plan using the intrinsic
      value method of accounting provided under APB Opinion No. 25, “Accounting
      for Stock Issued to Employees,” and related interpretations. This was permitted
      by SFAS No. 123, “Accounting for Stock-Based Compensation,” under which no
      compensation expense was recognized for stock options. Stock-based compensation
      expense using the fair value method under SFAS 123 was included as a pro forma
      disclosure in the financial statement footnotes and such disclosure continues
      to
      be provided herein for periods prior to 2006.




17





Effective
      January 1, 2006, we adopted the fair value recognition provisions of SFAS
      No. 123(R), “Share-Based Payment,” using the modified-prospective transition
      method. Under this transition method, compensation cost recognized in 2006
      includes: (a) compensation cost for all stock-based payments granted through
      December 31, 2005, for which the requisite service period had not been
      completed as of December 31, 2005, based on the grant date fair value
      estimated in accordance with the original provisions of SFAS No. 123 and
      (b) compensation cost for all stock-based payments granted subsequent to
      December 31, 2005, based on the grant date fair value estimated in
      accordance with the provisions of SFAS 123(R). As permitted under the transition
      rules for SFAS 123(R), results for prior periods have not been
      restated.





As
      a
      result of adopting SFAS No. 123(R), we recognized $511,157 of stock-based
      compensation expense related to stock options during 2006. Basic and diluted
      earnings per share were both $0.06 lower for the year ended December 31, 2006,
      than if we had continued to account for stock-based compensation under APB
      No.
      25.




**Other
      Income (Expense)**




For
      the
      year ended December 31, 2006, other income (expense) was a loss of $23,932,
      as
      compared to income of $255 for 2005, primarily as a result of higher interest
      expense on outstanding borrowings.




**Preferred
      dividends and deemed dividend on conversion of preferred stock to common
      stock**





In
      May
      2006, all of our 8% Cumulative Convertible Series A Preferred Stock was
      converted into common stock.




The
      8%
      Cumulative Convertible Series A Preferred Stock (“Series A Preferred Stock”) had
      a liquidation value of $1.00 per share plus dividends whether or not earned
      or
      declared from the issuance date thereof at the annual rate of eight percent
      (8%)
      (the “Preferred Dividends”) of $1.00 per share (the “Original Issue Price”),
      payable at our option in cash or in shares of Series A Preferred Stock. In
      addition, the Preferred Stock had preferential treatment in liquidation to
      all
      common stock and any other stock of the Company ranking junior to the Series
      A
      Preferred Stock. Accretion of cumulative dividends outstanding on these shares
      was $39,275 and $84,074 for the twelve months ended December 31 2006 and 2005,
      respectively.





Each
      share of Series A Preferred Stock was convertible at any time into common shares
      by dividing the original issue price by a conversion price as defined. The
      Series A Preferred Stock was redeemable at the option of the majority holders
      in
      cash at $1.00 per share plus all accrued and unpaid Preferred Dividends on
      the
      fifth anniversary of the date of initial issuance or other events relating
      to
      change in 25% or more of the outstanding voting stock of the Company or a merger
      or consolidation as defined. Each holder of Series A Preferred Stock was
      entitled to the number of votes equal to the number of whole shares of Common
      Stock into which the shares of Series A Preferred Stock was
      convertible.




On
      May 2,
      2006, 1,454,725 shares of Series A Preferred Stock were converted into 6,562,630
      shares of common stock. In addition, the cumulative accreted dividends of
      $129,973 were converted into 291,361 shares of common stock. Upon the conversion
      of the Series A Preferred Stock, we recorded a non-cash charge of $1,424,762
      to
      reflect the deemed dividend on conversion in accordance with EITF Topic D-42,
      “The Effect on the Calculation of Earnings per Share for the Redemption or
      Induced Conversion of Preferred Stock.” In addition, we recorded a non-cash
      charge of $161,388 to reflect the deemed dividend on conversion of accreted
      dividends. The total of the two “deemed dividends” was $1,586,150. The amount of
      charge is equal to the difference in the value at the time of exchange of the
      shares of common stock exchanged for the preferred stock minus the value of
      the
      shares that the holders of the preferred stock otherwise would have had the
      right to receive upon conversion of the preferred stock. The charge did not
      affect our reported revenue, operating income, net loss, assets, liabilities
      or
      stockholders’ (deficit) equity.





**Historical
      Sources of Cash**




During
      the period from July 15, 2004 (inception) though December 31, 2004, the Company
      financed its operations principally through the sale of an aggregate of $300,000
      of Series A Preferred Stock. The Company, for the year ended
      December 31, 2005, financed its operations through the sale of an
      aggregate of $950,000 of Series A Preferred Stock, along with sale of three
      Kitty Hawk units. The Company conducted a private placement in April 2006,
      raising $1,000,000 through the sale of 1,000,000 shares of Common Stock and
      warrants. In addition, during 2006, the Company borrowed $1,250,000
      pursuant to promissory notes with related parties. Subsequent to December 31,
      2006, the Company borrowed an additional $600,000 with these same
      parties.




18




**Cash
      position and sources and uses of cash**




Our
      cash
      position at December 31, 2006, was $275,957 as compared to $235,982 at December
      31, 2005.




Our
      operating activities for the year ended December 31, 2006, used cash in the
      amount of $2,178,136, as compared to $810,732 used in 2005. Cash used in
      operating activities for 2006 and 2005, reflected a net loss of $3,443,294
      and
      $825,952, respectively, both partially offset by adding back the non-cash
      charges associated with depreciation, common stock and warrants issued for
      consulting and management services and stock-based compensation.




The
      Company used $31,889 and $29,751 in investing activities for the purchase of
      property and equipment for the years ended December 31, 2006 and 2005,
      respectively.




The
      Company had cash inflows from financing activities of $1,000,000 during 2006
      from the issuance of common stock and warrants and $950,000 during 2005 from
      issuances of preferred stock. During 2006, the Company also had financing cash
      inflows of $1,250,000 from the issuance of the above noted promissory
      notes.




**Capital
      Resources Going Forward**




Our
      intended plan of operations for 2007 is to manufacture, sell and distribute
      limited quantities of our product and to continue to develop our products.
      In
      the past, the Company primarily used funds derived from the private placement
      of
      its securities to fund its operations.




Cash
      on
      hand as of December 31, 2006, and cash generated by operations in conjunction
      with our working capital, will not be sufficient to continue our business for
      the next twelve months. We continually review our overall capital and funding
      needs, taking into account current business needs, as well as the Company’s
      future goals and requirements. Based on our business strategy, we believe we
      will need to increase our available capital through the incurrence of debt
      and
      the sale of additional securities.




On
      February 6, 2007, we incurred indebtedness of $360,000 pursuant to the terms
      of
      a promissory note with Standard Renewable Energy Group, LLC (“SREG”). SREG owns
      NewPoint Energy Solutions, LP (“NewPoint”), the owner of approximately 45% of
      the Company’s common stock. The note bears interest at a rate of 11.25% until
      August 6, 2007, at which time the rate will become the prime rate plus 3%.
      The
      note matures on October 31, 2007 and we may prepay the note at any time without
      penalty.




On
      February 6, 2007, we incurred indebtedness of $240,000 pursuant to the terms
      of
      a promissory note with Contango Venture Capital Corporation, LLC which
      beneficially owns approximately 17.0% of the Company’s common stock. The note
      bears interest at a rate of 11.25% until August 6, 2007, at which time the
      rate
      will become the prime rate plus 3%. The note matures on October 31, 2007 and
      we
      may prepay the note at any time without penalty.




Should
      our costs and expenses prove to be greater than we currently anticipate, or
      should we change our current business plan in a manner that will increase or
      accelerate our anticipated costs and expenses, the depletion of our working
      capital would be accelerated. To the extent it becomes necessary to raise
      additional cash in the future as our cash on hand and working capital resources
      are depleted, we intend to raise additional capital through the sale of
      additional equity securities, public or private sale of debt or equity
      securities, debt financing or short term loans, or a combination of these
      options. We currently do not have a binding commitment for, or readily available
      sources of, additional financing. We cannot give any assurance that we will
      be
      able to secure the additional cash or working capital that we may require to
      continue our operations under such circumstances or that it will be on terms
      that would not hinder our ability to execute our business strategy.




Our
      anticipated costs are estimates based upon our current business plan. Our actual
      costs could vary materially from these estimates. Further, we could change
      our
      current business plans, which may also result in a change in our anticipated
      costs.





**Going
      Concern**





We
      received an audit report for the year ended December 31, 2006, from our
      independent registered accounting firm containing an explanatory paragraph
      expressing substantial doubt about our ability to continue as a going concern.
      We have had no significant operating history as of December 31, 2006, and since
      inception, we have not had significant revenues. We have raised additional
      equity and debt financing to fund operations and to provide additional working
      capital. However, the amount raised to date is not sufficient to meet our needs
      over the next twelve months and there are no assurances that we will be able
      to
      raise sufficient funds to continue our operations. These conditions raise
      substantial doubt about the Company’s ability to continue as a going
      concern.




19





**Contractual
      Obligations**





The
      following is a summary of our contractual obligations as of December 31,
      2006:


**Contractual
                  Obligations**
              
              **Total**
              
              **<
                  1Year**
              
              **1-3
                  Years**
              
              **3-5
                  years**
              
              **Thereafter**Notes
                  Payable
              
              $
              1,250,000
              
              $
              1,250,000
              
              $
              -
              
              $
              -
              
              $
              -Total
              
              $
              1,250,000
              
              $
              1,250,000
              
              $
              -
              
              $
              -
              
              $
              -




**Off
      Balance Sheet Arrangements**




There
      are
      no guarantees, commitments, lease and debt agreements or other agreements that
      would trigger adverse changes in our credit rating, earnings, or cash flows,
      including requirements to perform under stand by agreements.




**Critical
      Accounting Policies**




The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our financial statements, which have been prepared in accordance
      with
      accounting principles generally accepted in the United States of
      America.




On
      an
      ongoing basis, we evaluate our estimates and impairment of long lived assets.
      We
      base our estimates on historical experience and on various other assumptions
      that we believe to be reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying value of assets and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates, including those for the above described items
      are
      reasonable.





Our
      accounting policies are more fully described in Note 2 - “Summary of Significant
      Accounting Policies” in our December 31, 2006, audited financial statements. As
      disclosed in Note 2 the preparation of financial statements in conformity with
      accounting principles generally accepted in the United States requires
      management to make estimates and assumptions about future events that affect
      the
      amounts reported in the financial statements and accompanying notes. Future
      events and their effects cannot be determined with absolute certainty.
      Therefore, the determination of estimates requires the exercise of judgment.
      Actual results will inevitably differ from those estimates, and such differences
      may be material to the financial statements.




At
      this
      stage of our development, we believe that of our significant accounting polices,
      the following may involve a higher degree of judgment, estimation or complexity
      than other accounting policies.




**Impairment
      of Long Lived Assets**




We
      review
      the recoverability of our long-lived assets, such as property and equipment,
      when events or changes in circumstances occur that indicate the carrying value
      of the asset or asset group may not be recoverable. The assessment of possible
      impairment is based on our ability to recover the carrying value of the asset
      or
      asset group from the expected future pre-tax cash flows (undiscounted) of the
      related operations. If these cash flows are less than the carrying value of
      such
      asset, an impairment loss is recognized for the difference between estimated
      fair value and carrying value.




**Income
      Taxes** **





Since
      inception, the Company has incurred net operating losses and, accordingly,
      no
      provision for current income taxes has been recorded in these financial
      statements. In addition, no benefit for income taxes has been recorded in
      respect of the net deferred tax assets as management believes it is more likely
      than not that the deferred tax assets will not be fully realizable. Accordingly,
      the Company has provided for a full valuation allowance against its net deferred
      tax assets at December 31, 2006, and December 31, 2005.




20





**Revenue
      Recognition**




Although
      at this stage in our development we have had no significant revenues, we
      consider revenue recognition a critical accounting policy as it affects timing
      of earnings recognition. We recognize revenues on delivery and to date our
      operations have not involved any uncertainty of accounting treatment, subjective
      judgment or estimates over revenue recognition.




21





**Item
      7. Financial Statements.**





TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


FINANCIAL
      STATEMENTS




Report
                of Independent Registered Public Accounting Firm
            F-1Balance
                Sheets
            F-2Statements
                of Operations
            F-3Statements
                of Stockholders’ (Deficit) Equity
            F-4Statements
                of Cash Flows
            F-5Notes
                to Financial Statements
            F-6








22




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors of


Trulite,
      Inc.


Houston,
      Texas




We
      have
      audited the accompanying balance sheets of Trulite, Inc., (a development stage
      company) (the “Company”) as of December 31, 2006 and 2005, and the related
      statements of operations, stockholders’ equity (deficit), and cash flows for the
      years then ended, and for the period from inception (July 15, 2004) through
      December 31, 2006. These financial statements are the responsibility of the
      Company’s management. Our responsibility is to express an opinion on these
      financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Trulite, Inc. as of December 31,
      2006 and 2005, and the results of its operations and its cash flows for the
      years then ended, and for the period from inception (July 15, 2004) through
      December 31, 2006, in conformity with accounting principles generally accepted
      in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As shown in the financial statements, the
      Company has incurred significant losses and negative cash flows from operations
      since inception. Those conditions raise substantial doubt about the Company’s
      ability to continue as a going concern. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.








/s/
      UHY
      LLP





March
      30,
      2007


Houston,
      Texas




F-1


**Trulite,
        Inc. (a Development Stage Company)**
 **Balance
        Sheets**
  **December
                  31,**
              
              **December
                  31,****2006**
              
              **2005****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              275,957
              
              $
              235,982Due
                  from affiliate
              
              
              -
              
              
              23,773Accounts
                  receivable (net of allowance for doubtful accounts of
                  $0as
                  of December 31, 2006 and December 31, 2005)
              
              
              -
              
              
              16,667Patent
                  application fees
              
              
              19,843
              
              
              19,843Prepaid
                  expenses and other current assets
              
              
              13,372
              
              
              7,844Total
                  current assets
              
              
              309,172
              
              
              304,109Property
                  and equipment, net
              
              
              50,079
              
              
              33,038Total
                  assets
              
              $
              359,251
              
              $
              337,147**LIABILITIES
                  AND STOCKHOLDERS' (DEFICIT) EQUITY**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              301,907
              
              $
              44,821Notes
                  payable
              
              
              1,250,000
              
              
              -Total
                  current liabilities
              
              
              1,551,907
              
              
              44,821Commitments
                  and contingenciesStockholders'
                  (deficit) equity:8%
                  Cumulative Convertible, Series A Preferred Stock;$0.0001
                  par value, 1,500,000 shares authorized, 0 and 1,454,725shares
                  issued and outstanding as of December 31, 2006 andDecember
                  31, 2005, respectively. Liquidation value of $1.00per
                  share plus preferred dividend per share of $0.0623 and anaggregate
                  liquidation value of $1,545,354 as of December 31, 2005
              
              
              -
              
              
              90,843Common
                  Stock; $0.0001 par value, 20,000,000 shares
                  authorized,11,785,491
                  and 3,631,500 shares issued and outstanding as ofDecember
                  31, 2006 and December 31, 2005, respectively
              
              
              1,178
              
              
              363Additional
                  paid-in-capital
              
              
              9,537,426
              
              
              1,905,094Deficit
                  accumulated during the development stage
              
              
              (10,731,260
              )
              
              (1,703,974
              )Total
                  stockholders' (deficit) equity
              
              
              (1,192,656
              )
              
              292,326Total
                  liabilities and stockholders' (deficit) equity
              
              $
              359,251
              
              $
              337,147


The
        accompanying notes are an integral part of these financial
        statements


F-2




**Trulite,
        Inc. (a Development Stage Company)**
 **Statements
        of Operations**
  **Period
                  From****Inception****(July
                  15, 2004)****Year
                  Ended December 31,**
              
              **Through****2006**
              
              **2005**
              
              **December
                  31, 2006**Sales
              
              $
              8,333
              
              $
              16,667
              
              $
              26,750Cost
                  of sales
              
              
              5,912
              
              
              12,216
              
              
              18,778GROSS
                  PROFIT
              
              
              2,421
              
              
              4,451
              
              
              7,972Operating
                  expenses:Research
                  and development
              
              
              1,142,472
              
              
              410,958
              
              
              2,266,539Depreciation
              
              
              14,848
              
              
              6,823
              
              
              22,811General
                  and administrative
              
              
              2,264,463
              
              
              412,877
              
              
              2,842,213TOTAL
                  OPERATING EXPENSES
              
              
              3,421,783
              
              
              830,658
              
              
              5,131,563LOSS
                  FROM OPERATIONS
              
              
              (3,419,362
              )
              
              (826,207
              )
              
              (5,123,591
              )Other
                  income (expense):Interest
                  expense
              
              
              (29,726
              )
              
              (663
              )
              
              (30,389
              )Interest
                  income
              
              
              5,794
              
              
              5,329
              
              
              11,123Other
              
              
              -
              
              
              (4,411
              )
              
              (4,411
              )TOTAL
                  OTHER INCOME (EXPENSE)
              
              
              (23,932
              )
              
              255
              
              
              (23,677
              )LOSS
                  BEFORE INCOME TAXES
              
              
              (3,443,294
              )
              
              (825,952
              )
              
              (5,147,268
              )Income
                  taxes
              
              
              -
              
              
              -
              
              
              -NET
                  LOSS
              
              
              (3,443,294
              )
              
              (825,952
              )
              $
              (5,147,268
              )Preferred
                  stock dividends
              
              
              (39,275
              )
              
              (84,074
              )Deemed
                  dividend on conversion ofpreferred
                  stock to common stock
              
              
              (1,586,150
              )
              
              -NET
                  LOSS ATTRIBUTABLE TOCOMMON
                  STOCKHOLDERS
              
              $
              (5,068,719
              )
              $
              (910,026
              )NET
                  LOSS PER COMMON SHAREBasic
                  and diluted
              
              $
              (0.37
              )
              $
              (0.23
              )Preferred
                  and deemed dividends
              
              
              (0.18
              )
              
              (0.02
              )Attributable
                  to common stockholders
              
              $
              (0.55
              )
              $
              (0.25
              )WEIGHTED
                  AVERAGE COMMONSHARES
                  OUTSTANDING:Basic
              
              
              9,139,510
              
              
              3,607,433Diluted
              
              
              9,139,510
              
              
              3,607,433


The
        accompanying notes are an integral part of these financial
        statements


F-3


**Trulite,
        Inc. (a Development Stage Company)**
 **Statements
        of Stockholders' (Deficit) Equity**
 **For
        the Periods From Inception (July 15, 2004) Through December 31,
        2006**
  **8%
                  Cumulative****Convertible
                  Series A**
              
              
              
              
              
              **Additional****Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total***Cash
                  issuances:*July
                  28, 2004; issuance of preferred stock at $1.00 per share
              
              
              100,000
              
              $
              10
              
              
              -
              
              $
              -
              
              $
              99,990
              
              $
              -
              
              $
              100,000November
                  5, 2004; issuance of preferred stock at $1.00 per share
              
              
              190,000
              
              
              19
              
              
              -
              
              
              -
              
              
              189,981
              
              
              -
              
              
              190,000November
                  12, 2004; issuance of preferred stock at $1.00 per share
              
              
              10,000
              
              
              1
              
              
              -
              
              
              -
              
              
              9,999
              
              
              -
              
              
              10,000*Non-cash
                  issuances:*July
                  22, 2004; preferred stock issued in the acquisitionof
                  Trulite Technology, LC based on fair value of stock issuedof
                  $1.00 per share
              
              
              20,000
              
              
              2
              
              
              -
              
              
              -
              
              
              19,998
              
              
              -
              
              
              20,000July
                  22, 2004; common stock issued in the acquisitionof
                  Trulite Technology, LC based on fair value of stock issuedof
                  $0.20 per share (post April 2005 split)
              
              
              -
              
              
              -
              
              
              2,962,300
              
              
              296
              
              
              592,164
              
              
              -
              
              
              592,460July
                  28, 2004; common stock issued for management servicesbased
                  on fair value of stock issued of $0.20 per share(post
                  April 2005 split)
              
              
              -
              
              
              -
              
              
              343,850
              
              
              34
              
              
              68,736
              
              
              -
              
              
              68,770Accretion
                  of dividends
              
              
              -
              
              
              6,624
              
              
              -
              
              
              -
              
              
              (6,624
              )
              
              -
              
              
              -*Net
                  loss*
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (878,022
              )
              
              (878,022
              )Balance,
                  December 31, 2004
              
              
              320,000
              
              
              6,656
              
              
              3,306,150
              
              
              330
              
              
              974,244
              
              
              (878,022
              )
              
              103,208*Cash
                  issuances:*February
                  1, 2005; issuance of preferred stock, at $1.00 per share
              
              
              200,000
              
              
              20
              
              
              -
              
              
              -
              
              
              199,980
              
              
              -
              
              
              200,000June
                  1, 2005; issuance of preferred stock at $0.80 per share
              
              
              934,725
              
              
              93
              
              
              -
              
              
              -
              
              
              749,907
              
              
              -
              
              
              750,000*Non-cash
                  issuances:*January
                  28, 2005; common stock issued for management servicesbased
                  on fair value of stock issued of $0.20 per share (post April 2005
                  split)
              
              
              -
              
              
              -
              
              
              325,350
              
              
              33
              
              
              65,037
              
              
              -
              
              
              65,070Accretion
                  of dividends
              
              
              -
              
              
              84,074
              
              
              -
              
              
              -
              
              
              (84,074
              )
              
              -
              
              
              -*Net
                  loss*
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (825,952
              )
              
              (825,952
              )Balance,
                  December 31, 2005
              
              
              1,454,725
              
              
              90,843
              
              
              3,631,500
              
              
              363
              
              
              1,905,094
              
              
              (1,703,974
              )
              
              292,326*Cash
                  issuances:*April
                  13, 2006; issuance of common stock and warrants
              
              
              -
              
              
              -
              
              
              1,000,000
              
              
              100
              
              
              999,900
              
              
              -
              
              
              1,000,000*Non-cash
                  issuances:*April
                  26, 2006; common stock issued for consulting servicesbased
                  on fair value of stock issued of $0.95 per share
              
              
              -
              
              
              -
              
              
              300,000
              
              
              30
              
              
              284,970
              
              
              -
              
              
              285,000April
                  26, 2006; warrants to purchase common stock issuedfor
                  consulting services based on fair value of warrants issued
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              162,155
              
              
              -
              
              
              162,155Accretion
                  of dividends
              
              
              -
              
              
              39,275
              
              
              -
              
              
              -
              
              
              (39,275
              )
              
              -
              
              
              -May
                  2, 2006; accretion of preferred stock for deemeddividend
                  on conversion of accrued dividends to common stock
              
              
              -
              
              
              161,388
              
              
              -
              
              
              -
              
              
              (161,388
              )
              
              -
              
              
              -May
                  2, 2006; accretion of preferred stock for deemed dividendon
                  conversion to common stock
              
              
              -
              
              
              1,424,762
              
              
              -
              
              
              -
              
              
              (978,493
              )
              
              (446,269
              )
              
              -May
                  2, 2006; conversion of preferred stock to common stock
              
              
              (1,454,725
              )
              
              (1,716,268
              )
              
              6,853,991
              
              
              685
              
              
              6,853,306
              
              
              (5,137,723
              )
              
              -Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              511,157
              
              
              -
              
              
              511,157*Net
                  loss*
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,443,294
              )
              
              (3,443,294
              )Deficit,
                  December 31, 2006
              
              
              -
              
              $
              -
              
              
              11,785,491
              
              $
              1,178
              
              $
              9,537,426
              
              $
              (10,731,260
              )
              $
              (1,192,656
              )


The
        accompanying notes are an integral part of these financial
        statements


F-4


**Trulite,
        Inc. (a Development Stage Company)**
 **Statements
        of Cash Flows**
  **Period
                  From****Inception****(July
                  15, 2004)****Year
                  Ended Ended December 31,**
              
              **Through****2006**
              
              **2005**
              
              **December
                  31, 2006**CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (3,443,294
              )
              $
              (825,952
              )
              $
              (5,147,268
              )Adjustments
                  to reconcile net loss to netcash
                  used in operating activities:Depreciation
              
              
              14,848
              
              
              6,823
              
              
              22,811Common
                  stock issued for consulting services
              
              
              285,000
              
              
              -
              
              
              285,000Common
                  stock issued for management fees
              
              
              -
              
              
              65,070
              
              
              133,840Stock-based
                  compensation expense
              
              
              511,157
              
              
              -
              
              
              511,157Warrants
                  issued for consulting services
              
              
              162,155
              
              
              -
              
              
              162,155Write-off
                  of research and development expenses
              
              
              -
              
              
              -
              
              
              606,798Changes
                  in operating assets and liabilities:Due
                  from affiliate
              
              
              23,773
              
              
              (23,773
              )
              
              -Accounts
                  receivable
              
              
              16,667
              
              
              (13,967
              )
              
              -Patent
                  application fees
              
              
              -
              
              
              (13,378
              )
              
              (19,843
              )Prepaid
                  expenses and other current assets
              
              
              (5,528
              )
              
              (928
              )
              
              (6,907
              )Grants
                  receivable
              
              
              -
              
              
              -
              
              
              850Accounts
                  payable and accrued expenses
              
              
              257,086
              
              
              (4,627
              )
              
              293,798Net
                  cash used in operating activities
              
              
              (2,178,136
              )
              
              (810,732
              )
              
              (3,157,609
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of property and equipment
              
              
              (31,889
              )
              
              (29,751
              )
              
              (66,434
              )Net
                  cash used in investing activities
              
              
              (31,889
              )
              
              (29,751
              )
              
              (66,434
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESIssuance
                  of common stock
              
              
              1,000,000
              
              
              -
              
              
              1,000,000Issuance
                  of notes payable
              
              
              1,250,000
              
              
              -
              
              
              1,250,000Issuance
                  of preferred stock
              
              
              -
              
              
              950,000
              
              
              1,250,000Net
                  cash provided by financing activities
              
              
              2,250,000
              
              
              950,000
              
              
              3,500,000NET
                  INCREASE IN CASH AND CASH EQUIVALENTS
              
              
              39,975
              
              
              109,517
              
              
              275,957CASH
                  AND CASH EQUIVALENTS, beginning of period
              
              
              235,982
              
              
              126,465
              
              
              -CASH
                  AND CASH EQUIVALENTS, end of period
              
              $
              275,957
              
              $
              235,982
              
              $
              275,957NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:Common
                  stock issued for consulting services
              
              $
              285,000
              
              $
              -
              
              $
              285,000Common
                  stock issued for management fees
              
              $
              -
              
              $
              65,070
              
              $
              133,840Warrants
                  issued for consulting services
              
              $
              162,155
              
              $
              -
              
              $
              162,155Common
                  stock options issued for compensation
              
              $
              511,157
              
              $
              -
              
              $
              511,157Preferred
                  stock issued for acquisition
              
              $
              -
              
              $
              -
              
              $
              20,000Common
                  stock issued for acquisition
              
              $
              -
              
              $
              -
              
              $
              592,460Cash
                  paid for interest
              
              $
              28,897
              
              $
              -
              
              $
              28,897


The
        accompanying notes are an integral part of these financial
        statements


F-5


TRULITE
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      YEARS ENDED DECEMBER 31, 2006 AND 2005


**Note
      1 - Nature of Operations**





Trulite,
      Inc. (the “Company”) was incorporated on July 15, 2004, in the State of
      Delaware. The Company is a development stage entity and is primarily engaged
      in
      the development of compact, lightweight hydrogen fuel cell systems.





For
      the
      year ended December 31, 2006, and since inception (July 15, 2004), the Company
      has not had significant revenues. The Company has no significant operating
      history as of December 31, 2006. The accompanying financial statements have
      been
      prepared assuming the Company will continue as a going concern. From inception
      (July 15, 2004) through December 31, 2006, management has raised additional
      equity and debt financing to fund operations and to provide additional working
      capital. However, there is no assurance that future such financing will be
      in
      amounts sufficient to meet the Company’s needs.





The
      accompanying financial statements do not include any adjustments to reflect
      the
      possible future effects on the recoverability and classification of assets
      or
      the amounts and classifications of liabilities that may result from the possible
      inability of the Company to continue as a going concern.





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





*Cash
      and Cash Equivalents.* Cash
      and
      cash equivalents include short-term investments with original maturities of
      three months or less.





*Accounts
      Receivable and Allowance for Doubtful Accounts.* Accounts
      receivable are reported at outstanding principal less allowance for doubtful
      accounts. Earnings are charged with a provision for doubtful accounts based
      on a
      current review of the collectibility of the accounts. Accounts deemed
      uncollectible are applied against the allowance for doubtful
      accounts.





*Concentrations
      of Credit Risk* .
      The
      Company maintains cash balances at a financial institution which at times
      exceeds federally insured amounts. The Company has not experienced any material
      losses in such accounts.





*Revenue
      Recognition* .
      Revenue
      from sales is recognized on delivery.





*Property
      and Equipment* .
      Property and equipment is carried at cost. The Company depreciates property
      and
      equipment using the straight-line method over the estimated useful lives of
      the
      related assets ranging from 3 to 7 years. Maintenance and repairs are charged
      to
      expense as incurred and expenditures for major improvements are capitalized.
      Gains and losses from retirement or replacement of property and equipment are
      included in operations.





Depreciation
      expense was $14,848 and $6,823 for the years ended December 31, 2006 and 2005,
      respectively.





*Research
      and Development Costs.* Expenditures
      for research activities relating to product development and improvement are
      charged to expense as incurred.





*Impairment
      of Long-Lived Assets* .
      The
      Company reviews the recoverability of its long-lived assets, such as property
      and equipment, when events or changes in circumstances occur that indicate
      the
      carrying value of the asset or asset group may not be recoverable. The
      assessment of possible impairment is based on the Company’s ability to recover
      the carrying value of the asset or asset group from the expected future pre-tax
      cash flows (undiscounted) of the related operations. If these cash flows are
      less than the carrying value of such asset, an impairment loss is recognized
      for
      the difference between estimated fair value and carrying value.





*Income
      Taxes.* The
      liability method is used in accounting for income taxes. Under this method,
      deferred tax assets and liabilities are determined based on differences between
      financial reporting and tax bases of assets and liabilities and are measured
      using the enacted tax rates and laws that will be in effect when the differences
      are expected to reverse. The realizability of deferred tax assets are evaluated
      annually and a valuation allowance is provided if it is more likely than not
      that the deferred tax assets will not give rise to future benefits in the
      Company’s tax returns.





*Use
      of Estimates.* The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




F-6


TRULITE
        INC.
 (A
        DEVELOPMENT STAGE COMPANY)
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED DECEMBER 31, 2006 AND 2005




*Stock-Based
      Compensation.* Prior
      to
      January 1, 2006, the Company accounted for its stock option plan using the
      intrinsic value method of accounting provided under APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and related interpretations. This
      was permitted by SFAS No. 123, “Accounting for Stock-Based Compensation,”
under which no compensation expense was recognized for stock options.
      Stock-based compensation expense using the fair value method under SFAS 123
      was
      included as a pro forma disclosure in the financial statement footnotes and
      such
      disclosure continues to be provided herein for periods prior to
      2006.





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of SFAS No. 123(R), “Share-Based Payment,” using the modified-prospective
      transition method. Under this transition method, compensation cost recognized
      in
      2006 includes: (a) compensation cost for all stock-based payments granted
      through December 31, 2005, for which the requisite service period had not
      been completed as of December 31, 2005, based on the grant date fair value
      estimated in accordance with the original provisions of SFAS No. 123 and
      (b) compensation cost for all stock-based payments granted subsequent to
      December 31, 2005, based on the grant date fair value estimated in
      accordance with the provisions of SFAS 123(R). As permitted under the transition
      rules for SFAS 123(R), results for prior periods have not been
      restated.





*New
      Accounting Pronouncements:*





In
      May 2005, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting
      Changes and Error Corrections” which replaces Accounting Principles Board
      Opinion (“APB”) No. 20, “Accounting Changes,” and SFAS No. 3,
“Reporting Accounting Changes in Interim Financial Statements-An Amendment of
      APB Opinion No. 28.” SFAS No. 154 provides guidance on the accounting
      for and reporting of accounting changes and error corrections. SFAS No. 154
      is effective for accounting changes and correction of errors made in fiscal
      years beginning after December 15, 2005. The adoption of SFAS No. 154
      did not have an effect on the Company’s financial statements.





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments.” SFAS No. 155 provides entities with relief from having
      to separately determine the fair value of an embedded derivative that would
      otherwise have to be bifurcated from its host contract in accordance with SFAS
      No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS
      No. 155 allows an entity to make an irrevocable election to measure such a
      hybrid financial instrument at fair value in its entirety, with changes in
      fair
      value recognized in earnings. SFAS No. 155 is effective for all financial
      instruments acquired, issued or subject to a remeasurement event occurring
      after
      the beginning of an entity’s first fiscal year that begins after September 15,
      2006. The Company believes that the adoption of SFAS No. 155 will not have
      a
      material impact on its financial statements.





In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Serving of Financial Assets
      an Amendment to FASB Statement No. 140.” Once effective, SFAS No. 156 will
      require entities to recognize a servicing asset or liability each time they
      undertake an obligation to service a financial asset by entering into a serving
      contract in certain situations. This statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially measured
      at fair value and permits a choice of either the amortization or fair value
      measurement method for subsequent measurements. The effective date of this
      statement is for annual periods beginning after September 15, 2006,
      with earlier adoption permitted as the beginning of an entity’s fiscal year
      provided the entity has not issued any financial statements for that year.
      The
      Company does not believe that this pronouncement will have a material impact
      on
      its financial statements.





In
      June 2006, the FASB issued Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.”
This Interpretation prescribes a recognition threshold and measurement attribute
      for the financial statement recognition and measurement of a tax position taken
      or expected to be taken in a tax return, and provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. This Interpretation is effective for fiscal years
      beginning after December 15, 2006. The Company is currently assessing the
      impact of the interpretation on its future results of operations and financial
      position.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements.” SFAS No. 157 defines fair value and applies to other
      accounting pronouncements that require or permit fair value measurements and
      expands disclosures about fair value measurements. SFAS No. 157 is
      effective for fiscal years beginning after November 15, 2007 and interim
      periods within those fiscal years. The Company is currently evaluating the
      impact of adopting SFAS No. 157 on its financial statements.




F-7





TRULITE
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      YEARS ENDED DECEMBER 31, 2006 AND 2005






In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting
      For Defined Benefit Pension and Other Postretirement Plans - an amendment of
      FASB Statements No. 87, 88, 106 and 132(R).” The standard requires
      companies to recognize the funded status (plan obligations less the fair value
      of plan assets) of pension and other postretirement benefit plans on their
      balance sheets, effective for fiscal years ending after December 15, 2006.
      The statement will also require fiscal year-end measurements of plan assets
      and
      benefit obligations, effective for fiscal years ending after December 15,
      2008. SFAS No. 158 will have no effect on the Company’s financial
      statements, as the Company does not maintain defined benefit pension or other
      postretirement plans.





In
      February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial
      Assets and Financial Liabilities," which permits the choice to measure certain
      financial assets and liabilities at their fair value at specified election
      dates. The new standard is effective for the Company on January 1, 2008, unless
      early adoption is elected. We do not expect the new standard to have any
      material impact on our financial position and results of operation.





In
      September 2006, the SEC issued Staff Accounting Bulletin (“SAB”)
      No. 108, to address diversity in practice in quantifying financial
      statement misstatements and the potential for the build up of improper amounts
      on the balance sheet. SAB No. 108 identifies the approach that registrants
      should take when evaluating the effects of unadjusted misstatements on each
      financial statement, the circumstances under which corrections of misstatements
      should result in a revision to financial statements, and disclosures related
      to
      the correction of misstatements. SAB No. 108 is effective for any report
      for an interim period of the first fiscal year ending after November 16,
      2006. The Company is currently evaluating the impact of adopting SAB
      No. 108 on its financial statements.





**Note
      3 - Stock-Based Compensation**





The
      Company has granted options to purchase common stock to employees, consultants
      and outside directors under the Trulite, Inc. Stock Option Plan, as amended
      and
      restated (the “Plan”). A total of 3,110,805 shares are reserved for issuance,
      and as of December 31, 2006, 765,841 shares remained available for grant, under
      the Plan. Prior to January 1, 2006, the Company accounted for grants of options
      using the intrinsic value method under the recognition and measurement
      principles of Accounting Principles Board Opinion (“APB”) No. 25,
      Accounting for Stock Issued to Employees and related interpretations, and
      applied SFAS No. 123, Accounting for Stock-Based Compensation, as amended by
      SFAS No. 148, Accounting for Stock-Based Compensation - Transition and
      Disclosure, for disclosure purposes only. Under APB No. 25, stock-based
      compensation cost related to stock options was not recognized in net income
      (loss) since the options granted under those plans had exercise prices greater
      than or equal to the market value of the underlying stock on the date of
      grant.





Effective
      January 1, 2006, the Company adopted SFAS No. 123R (revised 2004), Share-Based
      Payment, which revises SFAS No. 123 and supersedes APB No. 25. SFAS No. 123R
      requires that all share-based payments to employees be recognized in the
      financial statements based on their fair values at the date of grant. The
      calculated fair value is recognized as expense over the requisite service
      period, net of estimated forfeitures, using the straight-line method under
      SFAS
      No. 123R. The statement was adopted using the modified prospective method of
      application which requires compensation expense to be recognized in the
      financial statements for all unvested stock options beginning in the quarter
      of
      adoption. No adjustments to prior periods have been made as a result of adopting
      SFAS No. 123R. Under this transition method, compensation expense for
      share-based awards granted prior to January 1, 2006, but not yet vested as
      of
      January 1, 2006, and not previously amortized through the pro forma disclosures
      required by SFAS No. 123, will be recognized in the Company’s financial
      statements over their remaining service period. The cost was based on the
      grant-date fair value estimated in accordance with the original provisions
      of
      SFAS No. 123. As required by SFAS No. 123R, compensation expense recognized
      in
      future periods for share-based compensation granted prior to adoption of the
      standard will be adjusted for the effects of estimated forfeitures.




For
      the
      year ended December 31, 2006, the total stock-based compensation expense
      recognized was $511,157. Basic and diluted loss per common share was therefore
      $0.06 lower for the year ended December 31, 2006, than if the Company had
      continued to account for the stock-based compensation under APB 25.




The
      total
      unrecognized compensation cost at December 31, 2006, relating to non-vested
      share-based compensation arrangements granted under the Plan, was $581,603.
      That
      cost is expected to be recognized over four years, with a weighted average
      period of 3.5 years.




F-8


TRULITE
        INC.
 (A
        DEVELOPMENT STAGE COMPANY)
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED DECEMBER 31, 2006 AND 2005


During
      2006, the Company granted options to purchase 2,339,465 shares of common stock
      under the Plan. With respect to 1,175,339 of these shares, the exercise price
      is
      $0.88 per common share, which is equivalent to the fair value of a share of
      common stock on the date of grant. With respect to 5,000 of these shares, the
      exercise price is $0.88 per common share, whereas the fair value of a share
      of
      common stock on the date of grant was $0.18. With respect to options to purchase
      the additional 1,159,126 shares of common stock, the exercise price is $1.00
      per
      common share. 1,065,407 of these options were vested upon grant, whereas the
      remaining 1,274,058 vest over four years and have varying contractual lives
      ranging from four to seven years. For the year ended December 31, 2005, the
      Company granted 466,692 options to purchase shares of common stock with an
      exercise price of $0.88, whereas the fair value of a share of common stock
      on
      the date of grant was $0.18. All of these options vest over four years and
      have
      a seven-year contractual life. The weighted average assumptions for the periods
      indicated are noted in the following table:


**For
                  the Year Ended December 31,****2006**
              
              **2005**Risk
                  free rate
              
              
              4.85
              %
              
              4.14
              %Expected
                  life (in years)
              
              
              3.5
              
              
              4.8Expected
                  volatility
              
              
              71
              %
              
              83
              %Expected
                  dividends
              
              $
              -
              
              $
              -Fair
                  value
              
              $
              0.47
              
              $
              0.06





The
      Company estimates the fair value of stock options under SFAS No. 123R at the
      date of grant using a Black-Scholes-Merton valuation model, which is consistent
      with the valuation technique previously utilized to value options for the
      footnote disclosures required under SFAS No. 123. The risk-free rate is based
      on
      the U.S. Treasury yield curve in effect at the time of grant. The expected
      term
      (estimated period of time outstanding) of options granted in 2006 is based
      on
      the “simplified” method of estimating expected term for “plain vanilla” options
      allowed by SEC Staff Accounting Bulletin No. 107, and varies based on the
      vesting period and contractual term of the option. Expected volatility for
      options granted in 2006 is based on an evaluation of similar companies’ trading
      activity. The Company has not issued any cash dividends on its common
      stock.





The
      following summary presents information regarding outstanding options as of
      December 31, 2006, and the changes during the twelve months then
      ended:


**Shares**
              
              **Weighted
                  Average**
              
              **Weighted
                  Average**
              
              **Aggregate****Under**
              
              **Exercise
                  Price**
              
              **Remaining**
              
              **Intrinsic****Options**
              
              **Per
                  Share**
              
              **Contractual
                  Term**
              
              **Value**Outstanding
                  at January 1, 2006
              
              
              466,692
              
              $
              0.88Granted
              
              
              2,339,465
              
              
              0.94Exercised
              
              
              (100
              )
              
              0.88Forfeited
              
              
              (461,293
              )
              
              0.89Outstanding
                  at December 31, 2006
              
              
              2,344,764
              
              
              0.94
              
              
              5.0
                  years
              
              $
              84,402Vested
                  or expected to vest at December 31, 2006
              
              
              2,216,918
              
              
              0.94
              
              
              
              
              
              83,314Exercisable
                  at December 31, 2006
              
              
              1,080,268
              
              $
              0.88
              
              
              3.3
                  years
              
              $
              74,569




The
      following table provides the pro forma net loss attributable to common stock
      and
      net loss per common share had the Company applied the fair value method of
      SFAS
      No. 123 for the year ended December 31, 2005. The pro forma effects
      presented are not necessarily indicative of the pro forma effects in future
      years:




F-9


TRULITE
        INC.
 (A
        DEVELOPMENT STAGE COMPANY)
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED DECEMBER 31, 2006 AND 2005


**Twelve
                  Months****Ended****December
                  31, 2005**Net
                  loss attributable to common stockholders, as reported
              
              $
              (910,026
              )Add:
                  Stock-based employee compensation expenseincluded
                  in reported net loss
              
              
              -Deduct:
                  Total stock-based employee compensation expensedetermined
                  under fair value based method
              
              
              2,414Pro
                  Forma net loss attributable to common stock
              
              $
              (912,440
              )Loss
                  per shareBasic
                  - as reported
              
              $
              (0.25
              )Basic
                  - pro forma
              
              $
              (0.25
              )Loss
                  per shareDiluted
                  - as reported
              
              $
              (0.25
              )Diluted
                  - pro forma
              
              $
              (0.25
              )




**Note
      4 - Property and Equipment**


**At
                  December 31,****2006**
              
              **2005**Office
                  equipment
              
              $
              59,249
              
              $
              27,360Manufacturing
                  equipment
              
              
              9,491
              
              
              9,491Test
                  equipment
              
              
              4,150
              
              
              4,150Total
                  fixed assets
              
              
              72,890
              
              
              41,001Accumulated
                  depreciation
              
              
              (22,811
              )
              
              (7,963
              )Property
                  and equipment, net
              
              $
              50,079
              
              $
              33,038





**Note
      5 - Accounts Payable and Accrued liabilities**


**At
                  December 31,****2006**
              
              **2005**Accounts
                  payable
              
              $
              197,267
              
              $
              24,531Accrued
                  expenses
              
              
              104,640
              
              
              20,290$
              301,907
              
              $
              44,821





As
      of
      December 31, 2006, $62,363 of the $197,267 accounts payable is to Standard
      Renewable Energy Group, LLC (“SREG”). SREG owns NewPoint Energy Solutions, LP
      (“NewPoint”), the owner of approximately 45.2% of the Company’s common
      stock.





**Note
      6 - Income taxes**


The
        Company did not incur any income tax expense due to operating losses and
        the
        related increase in the valuation allowance. The
        Company has established a valuation allowance for the full amount of the
        deferred tax assets as management does not currently believe that it is more
        likely than not that these assets will be recovered in the foreseeable
        future.
  The
        reconciliation of
        income taxes at the statutory rate of 35% applied to the loss before taxes
        for
        the years ended December 31, 2006 and 2005, respectively, are as
        follows:


F-10


TRULITE
        INC.
 (A
        DEVELOPMENT STAGE COMPANY)
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED DECEMBER 31, 2006 AND 2005


At
                  December 31,2006
              
              2005Computed
                  income tax benefit
              
              $
              (1,205,153
              )
              $
              (289,083
              )Increase
                  in valuation allowance
              
              
              1,205,153
              
              
              289,083Tax
                  expense
              
              $
              -
              
              $
              -


The
        tax
        effects of the temporary differences that give rise to deferred tax assets
        and
        liabilities at December 31, 2006and
        2005are
        as
        follows:
 At
                    December 31,2006
                
                2005Deferred
                    tax assets (liabilities):Loss
                    carryforwards
                
                $
                1,342,459
                
                $
                377,575Stock-based
                    expense
                
                

          235,659
                
                
                -Other
                    temporary differences
                
                
                10,953
                
                
                6,3431,589,071
                
                
                383,918Less
                    valuation allowance
                
                
                (1,589,071
                )
                
                (383,918
                )Net
                    deferred tax asset
                
                $
                -
                
                $
                -


At
        December 31, 2006, the Company had net operating loss carryforwards for
        federal income tax purposes of $1, 342,459
        that are available to offset future
        taxable income. To
        the
        extent not utilized, the net operating loss carryforwards will expire in 2026 .
  **Note
        7 - Series A Preferred Stock**





In
      May
      2006, all of the Company’s 8% Cumulative Convertible Series A Preferred Stock
      was converted into the Company’s common stock.





The
      8%
      Cumulative Convertible Series A Preferred Stock (“Series A Preferred Stock”) had
      a liquidation value of $1.00 per share plus dividends whether or not earned
      or
      declared from the issuance date thereof at the annual rate of eight percent
      (8%)
      (the “Preferred Dividends”) of $1.00 per share (the “Original Issue Price”),
      payable at the option of the Company in cash or in shares of Series A Preferred
      Stock. In addition, the Preferred Stock had preferential treatment in
      liquidation to all Common Stock and any other stock of the Company ranking
      junior to the Series A Preferred Stock. Accretion of cumulative dividends
      outstanding on these shares was $39,275 and $84,074 for the twelve months ended
      December 31, 2006 and 2005, respectively.





Each
      share of Series A Preferred Stock was convertible at any time into common shares
      of the Company by dividing the original issue price by a conversion price as
      defined. The Series A Preferred Stock was redeemable at the option of the
      majority holders in cash at $1.00 per share plus all accrued and unpaid
      Preferred Dividends on the fifth anniversary of the date of initial issuance
      or
      other events relating to change in 25% or more of the outstanding voting stock
      of the Company or a merger or consolidation as defined. Each holder of Series
      A
      Preferred Stock was entitled to the number of votes equal to the number of
      whole
      shares of Common Stock into which the shares of Series A Preferred Stock was
      convertible.





On
      May 2,
      2006, 1,454,725 shares of Series A Preferred Stock were converted into 6,562,630
      shares of common stock. In addition, the cumulative accreted dividends of
      $129,973 were converted into 291,361 shares of common stock. Upon the conversion
      of the Series A Preferred Stock, the Company recorded a non-cash charge of
      $1,424,762 to reflect the deemed dividend on conversion in accordance with
      EITF
      Topic D-42, “The Effect on the Calculation of Earnings per Share for the
      Redemption or Induced Conversion of Preferred Stock.” In addition, the Company
      recorded a non-cash charge of $161,388 to reflect the deemed dividend on
      conversion of accreted dividends. The total of the two “deemed dividends” was
      $1,586,150. The amount of charge is equal to the difference in the value at
      the
      time of exchange of the shares of common stock exchanged for the preferred
      stock
      minus the value of the shares that the holders of the preferred stock otherwise
      would have had the right to receive upon conversion of the preferred stock.
      The
      charge did not affect the Company’s reported revenue, operating income, net
      loss, assets, liabilities or stockholders’ (deficit) equity.





F-11





TRULITE
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      YEARS ENDED DECEMBER 31, 2006 AND 2005




**Note
      8 - Notes Payable and Other Related Party Transactions**





On
      August
      1, 2006, the Company subleased office space from Standard Renewable Energy
      Group, LLC, (“SREG”). SREG owns NewPoint Energy Solutions, LP (“NewPoint”), the
      owner of approximately 45.2% of the Company’s common stock. The monthly rent is
      $1,905 beginning August 1, 2006 (rental expense for the year was $9,525), with
      future rental commitment for a lease expiring in July 2007 of approximately
      $13,335.





During
      the twelve months ended December 31, 2006, SREG billed the Company $71,121
      for
      management and administrative services.





On
      August
      9, 2006, the Company incurred indebtedness of $250,000 pursuant to the terms
      of
      two $125,000 promissory notes. Under the terms of the first promissory note,
      the
      Company borrowed $125,000 from Contango Venture Capital Corporation, LLC
      (“CVCC”) which beneficially owns approximately 17.0% of the Company’s common
      stock. Under the terms of the second promissory note, the Company borrowed
      $125,000 from Standard Renewable Energy LP, also a wholly owned subsidiary
      of
      SREG. Both notes bear interest at a rate of 11.25% until February 8, 2007,
      at
      which time the rate will become the prime rate plus 3%. Both notes mature on
      May
      1, 2007, and may be prepaid by the Company at any time without
      penalty.





On
      September 21, 2006, the Company incurred indebtedness of $250,000 pursuant
      to
      the terms of a promissory note to SREG.  The note bears interest at a rate
      of 11.25% until May 21, 2007, at which time the rate will become the prime
      rate
      plus 3%. The note matures on June 18, 2007, and may be prepaid by the Company
      at
      any time without penalty.





On
      October 26, 2006, the Company incurred indebtedness of $250,000 pursuant to
      the
      terms of a promissory note with SREG. The note bears interest at a rate of
      11.25% until April 24, 2007, at which time the rate will become the prime rate
      plus 3%. The note matures on July 22, 2007, and may be prepaid by the Company
      at
      any time without penalty.




On
      November 22, 2006, the Company incurred indebtedness of $400,000 pursuant to
      the
      terms of a promissory note with CVCC. The note bears interest at a rate of
      11.25% until April 24, 2007, at which time the rate will become the prime rate
      plus 3%. The note matures on July 22, 2007, and may be prepaid by the Company
      at
      any time without penalty.




On
      November 28, 2006, the Company incurred indebtedness of $100,000 pursuant to
      the
      terms of a promissory note with SREG. The note bears interest at a rate of
      11.25% until April 24, 2007, at which time the rate will become the prime rate
      plus 3%. The note matures on July 22, 2007, and may be prepaid by the Company
      at
      any time without penalty.





**Note
      9 - Stockholders’ Equity**





Common
      Stock Split





In
      April
      2005, the Company’s Board of Directors authorized a five-for-one split of the
      Company’s common stock. In conjunction with the stock split, the Company amended
      its certificate of incorporation to increase its authorized common stock to
      20,000,000 shares and retained the par value of $0.0001 per share. Accordingly,
      all references to the number of common shares authorized and common shares
      issued and outstanding in the accompanying financial statements have been
      adjusted to reflect the effects of the common stock split on a retroactive
      basis.





Warrants:





The
      Company raised additional equity of $1,000,000 during April 2006 through the
      issuance of common stock for cash consideration of $1.00 per share. These
      issuances of common stock also included one year warrants to purchase an
      additional 1,000,000 shares of common stock of the Company at an exercise price
      of $1.50 per common share that expires on April 13, 2007. The value of the
      warrants is included as additional paid in capital.





During
      2006, the Company also entered into two consulting agreements for investment
      banking services, under which the Company was required to issue 300,000 shares
      of restricted common stock and 400,000 five-year warrants to purchase the
      Company’s common stock at $3.00 per share. One of the agreements terminates on
      April 25, 2008, and the second terminates on June 30, 2008.
      The fair value of the warrants, utilizing the Black-Scholes method and assuming
      a risk-free interest rate of 4.97%, expected volatility of 77%, expected life
      of
      5 years and no dividend yield, resulted in a fair value of $162,155, which
      was
      recorded as a component of general and administrative expense in the second
      quarter of 2006.




F-12


TRULITE
        INC.
 (A
        DEVELOPMENT STAGE COMPANY)
 NOTES
        TO
        FINANCIAL STATEMENTS
 FOR
        THE
        YEARS ENDED DECEMBER 31, 2006 AND 2005


**Note
      10 - Commitments**





*Leases*





Rent
      expense during the twelve months ended December 31, 2006 and 2005, was $42,198
      and $10,925, respectively. Rent expense is included in general and
      administrative expenses in the accompanying statements of
      operations.





As
      of
      December 31, 2006, total future rental commitments under all operating leases
      (all of which expire in 2007) total $35,913.





*Other*





The
      Company had employment agreements with certain employees that expire through
      2007, under which the committed obligations totaled $222,500 at December 31,
      2006.




**Note
      11 - Net Loss Per Share**


**Twelve
                  Months Ended December 31,****2006**
              
              **2005**Numerator:Net
                  loss
              
              $
              (3,443,294
              )
              $
              (825,952
              )Increases
                  to Net Loss:Preferred
                  stock dividends
              
              
              (39,275
              )
              
              (84,074
              )Deemed
                  dividend on conversionof
                  preferred stock to common stock
              
              
              (1,586,150
              )
              
              -Net
                  loss attributable to common stockholders
              
              $
              (5,068,719
              )
              $
              (910,026
              )DenominatorBasic
                  earnings per share - weighted averagecommon
                  shares outstanding
              
              
              9,139,510
              
              
              3,607,433Weighted-average
                  dilutive effect of stock-basedawards
                  and common stock issuable upon conversionof
                  preferred stock, net of assumed repurchase oftreasury
                  stock
              
              
              -
              
              
              -Fully-diluted
                  earnings per share - weightedaverage
                  common shares outstanding
              
              
              9,139,510
              
              
              3,607,433Net
                  loss per common shareBasic
                  and diluted
              
              $
              (0.37
              )
              $
              (0.23
              )Preferred
                  and deemed dividends
              
              
              (0.18
              )
              
              (0.02
              )Attributable
                  to common stockholders
              
              $
              (0.55
              )
              $
              (0.25
              )




Basic
      and
      diluted net loss per share for the years ended December 31, 2006, and 2005,
      is
      the same since the effect of all common stock equivalents are antidilutive
      to
      the Company’s net loss in accordance with Statement of Financial Accounting
      Standards No. 128, Earnings per Share *.*





The
      following weighted average securities are not included in the computation of
      diluted loss per share as their effect would have been
      anti-dilutive:




F-13





TRULITE
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS


FOR
      THE
      YEARS ENDED DECEMBER 31, 2006 AND 2005


**Twelve
                  Months Ended December 31,****2006**
              
              **2005**Common
                  stock options
              
              
              1,610,461
              
              
              208,679Common
                  stock warrants
              
              
              986,301
              
              
              -8%
                  cumulative convertibleseries
                  A preferred stock
              
              
              486,237
              
              
              1,407,935





**Note
      12 - Subsequent Events**





On
      February 6, 2007, the Company incurred indebtedness of $360,000 pursuant to
      the
      terms of a promissory note with SREG. The note bears interest at a rate of
      11.25% until August 6, 2007, at which time the rate will become the prime rate
      plus 3%. The note matures on October 31, 2007, and may be prepaid by the Company
      at any time without penalty.




On
      February 6, 2007, the Company incurred indebtedness of $240,000 pursuant to
      the
      terms of a promissory note with CVCC. The note bears interest at a rate of
      11.25% until August 6, 2007, at which time the rate will become the prime rate
      plus 3%. The note matures on October 31, 2007, and may be prepaid by the Company
      at any time without penalty.




On
      February 22, 2007, the Company’s Board of Directors agreed to extend the term of
      the warrants, until April 13, 2008, that were issued during April 2006 in
      connection with the issuance of common stock for cash consideration of $1.00
      per
      share. See Note 9. These warrants entitled the holders to purchase an additional
      1,000,000 shares of common stock of the Company at an exercise price of $1.50
      per common share that expires on April 13, 2007.





F-14


**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**





There
      have been no disagreements with our independent registered public accounting
      firms of the nature described in Item 304(b) of Regulation S-B promulgated
      under
      the Exchange Act.  Effective February 12, 2007, UHY Mann Frankfort
      Stein & Lipp CPAs, LLP, the Company’s prior independent auditors, notified
      Trulite that it had ceased to provide audit services to the Company, and
      accordingly, resigned as the independent registered public accountants of the
      Company on that date.  Effective on February 22, 2007, the Company engaged
      UHY LLP as the Company’s independent registered public accountant for the
      Company’s fiscal year ending December 31, 200 6 . 
      As part of our engagement, UHY LLP audited the balance sheet as of December
      31,
      2006, and the related statements of operations, stockholders’ equity (deficit), and cash
      flows for the year then ended.




**Item
      8A. Controls and Procedures.**





The
      Company’s management is responsible for establishing and maintaining a system of
      disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
      under the Exchange Act) that is designed to ensure that information required
      to
      be disclosed by the Company in the reports that the Company files or submits
      under the Exchange Act is recorded, processed, summarized and reported, within
      the time periods specified in the Commission’s rules and forms. Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed by an issuer in
      the
      reports that it files or submits under the Exchange Act is accumulated and
      communicated to the issuer’s management, including its principal executive
      officer or officers and principal financial officer or officers, or persons
      performing similar functions, as appropriate to allow timely decisions regarding
      required disclosure.





In
      accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was
      completed under the supervision and with the participation of the Company’s
      management, including the Company’s principal executive officer and principal
      financial officer, of the effectiveness of the design and operation of the
      Company’s disclosure controls and procedures as of the end of the period covered
      by this Annual Report. Based on that evaluation, the Company’s management
      including the President, Principal Financial Officer and Secretary, concluded
      that the Company’s disclosure controls and procedures are effective, to provide
      reasonable assurance that information required to be disclosed in the Company’s
      reports filed or submitted under the Exchange Act is recorded, processed,
      summarized, and reported within the time periods specified in the Commission’s
      rules and forms. There have been no changes to the Company’s internal controls
      over financial reporting that occurred during our last fiscal quarter of the
      year ended December 31, 2006, that materially affected, or were reasonably
      likely to materially affect, our internal controls over financial
      reporting.




**Item
      8B. Other Information.** None.




**Part
      III**




**Item
      9. Directors and Executive Officers of the Registrant.**





Information
      in response to this Item is incorporated herein by reference to our definitive
      proxy statement to be filed pursuant to Regulation 14A within 120 days after
      the
      end of the fiscal year covered by this form 10-KSB.





**Item
      10. Executive Compensation.**





Information
      in response to this Item is incorporated herein by reference to our definitive
      proxy statement to be filed pursuant to Regulation 14A within 120 days after
      the
      end of the fiscal year covered by this form 10-KSB.





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**





Information
      in response to this Item is incorporated herein by reference to our definitive
      proxy statement to be filed pursuant to Regulation 14A within 120 days after
      the
      end of the fiscal year covered by this form 10-KSB.





**Item
      12. Certain Relationships and Related Transactions.**





Information
      in response to this Item is incorporated herein by reference to our definitive
      proxy statement to be filed pursuant to Regulation 14A within 120 days after
      the
      end of the fiscal year covered by this form 10-KSB.





**Item
      13. Exhibits.**




23




Index
      to
      Exhibits




Number
            
            Description3.1(1)
            
            Certificate
                of Incorporation3.2(1)
            
            Certificate
                of Amendment to the Certificate of Incorporation3.3(1)
            
            Bylaws3.4(1)
            
            Application
                of Certificate of Authority (Texas)3.5(13)
            
            Amendment
                to Bylaws4.1(1)
            
            Certificate
                of Designation of the 8% Cumulative Convertible Preferred Stock,
                Series
                A4.2(1)
            
            Certificate
                of Amendment to the Certificate of Designation of the 8% Cumulative
                Convertible Preferred Stock, Series A10.1(1)
            
            Employment
                Agreement of John Sifonis10.2(1)
            
            April
                2005 Option Agreement of John Sifonis10.3(1)
            
            October
                2005 Option Agreement of John Sifonis10.4(1)
            
            Employment
                Agreement of Kevin Shurtleff10.5(1)
            
            Employment
                Agreement of Jerry Metz10.6(1)
            
            April
                2005 Option Agreement of Jerry Metz10.7(1)
            
            October
                2005 Option Agreement of Jerry Metz10.8(1)
            
            Employment
                Agreement of James A. Longaker10.9(1)
            
            July
                2005 Option Agreement of James A. Longaker10.10(1)
            
            Employment
                Agreement of Eric Ladd10.11(1)
            
            Trulite,
                Inc. Stock Option Plan10.12(1)
            
            Contribution
                Agreement10.13(1)
            
            Waiver
                Agreement10.14(1)
            
            Preferred
                Stock Purchase Agreement10.15(1)
            
            Addendum
                to Preferred Stock Purchase Agreement10.16(1)
            
            Investor’s
                Rights Agreement10.17(1)
            
            Right
                of First Refusal and Co-Sale Agreement10.18(4)
            
            Option
                Agreement with Synexus Energy, Inc.10.19(5)
            
            Stockholder
                Lock-Up Agreement with Contango Capital Partners, LP10.20(5)
            
            Consulting
                Agreement with Boru Enterprises, Inc.10.21(5)
            
            Memorandum
                of Understanding with Synexus Energy, Inc.10.22(5)
            
            Grant
                Documents from The Defense Threat Reduction Agency and the United
                States
                Air Force10.23(6)
            
            Consulting
                Agreement with Jelco, Inc.10.24(6)
            
            Consulting
                Agreement with Ascend Renewable Technologies, LLC10.25(6)
            
            Employment
                Agreement of Christopher Brydon10.26(6)
            
            Employment
                Agreement of Eric Ladd10.27(6)
            
            Employment
                Agreement of John Patton10.28(6)
            
            Employment
                Agreement of Kevin Shurtleff10.29(6)
            
            Stockholder
                Lock-Up Agreement with James Longaker10.30(6)
            
            Stockholder
                Lock-Up Agreement with John Sifonis10.31(6)
            
            Stockholder
                Lock-Up Agreement with Kevin Shurtleff10.32(6)
            
            Stockholder
                Lock-Up Agreement with Eric Ladd10.33(6)
            
            Amended
                Stock Option Plan10.34(6)
            
            Stock
                Option Agreement with John Berger10.35(6)
            
            Stock
                Option Agreement with Christopher Brydon10.36(6)
            
            Stock
                Option Agreement with William Flores10.37(6)
            
            Stock
                Option Agreement with Richard Hoesterey10.38(6)
            
            Stock
                Option Agreement with Evan Hughes10.39(6)
            
            Stock
                Option Agreement with Eric Ladd10.40(6)
            
            Stock
                Option Agreement with Jenny Ligums10.41(6)
            
            Stock
                Option Agreement with James Longaker10.42(6)
            
            Stock
                Option Agreement with Eric Melvin10.43(6)
            
            Stock
                Option Agreement with John Patton10.44(6)
            
            Stock
                Option Agreement with Kevin Shurtleff10.45(7)
            
            Consulting
                Agreement with Ken Pearson10.46(7)
            
            Consulting
                Agreement with Jonathan Godshall10.47(8)
            
            Form
                of Warrant Agreement for the April 13, 2006 private
                offering






24






10.48(8)
            
            Form
                of Warrant Agreement for the Boru and Jelco issuances10.49(8)
            
            Resignation
                Letter of Thomas Samson10.50(9)
            
            Revised
                Consulting Agreement with Boru Enterprises, Inc.10.51(10)
            
            Employment
                Agreement dated August 7, 2006 with Jonathan Godshall.10.52(10)
            
            Promissory
                Note dated August 9, 2006 made by Trulite in favor of Contango Venture
                Capital Corporation, LLC10.53(10)
            
            Promissory
                Note dated August 9, 2006 made by Trulite in favor of Standard Renewable
                Energy Group, L.P.10.54(14)
            
            Stock
                Option Agreement with Contango Capital Partners, LP10.55(14)
            
            Stock
                Option Agreement with John Berger (May 2006)10.56(11)
            
            Promissory
                Note dated September 21, 2006 made by Trulite in favor of Standard
                Renewable Energy Group, LLC10.57(3)
            
            Employment
                Agreement dated January 1, 2007 with Kenneth Pearson.10.58(12)
            
            Promissory
                Note, dated October 26, 2006, made by Trulite, Inc., in favor of
                Standard
                Renewable Energy Group, LLC10.59(12)
            
            Promissory
                Note, dated November 28, 2006, made by Trulite, Inc., in favor of
                Standard
                Renewable Energy Group, LLC10.60(12)
            
            Promissory
                Note, dated November 22, 2006, made by Trulite, Inc., in favor of
                Contango
                Venture Capital Corporation10.61(15)
            
            Promissory
                Note dated February 6, 2007, made by Trulite in favor of Standard
                Renewable Energy Group, LLC10.62(15)
            
            Promissory
                Note dated February 6, 2007, made by Trulite in favor of Contango
                Venture
                Capital Corporation31.1(16)
            
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2(16)
            
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232.1(16)
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2(16)
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002




(1)
            Previously
                filed as an exhibit to Form 10-SB, filed December 23,
                2005(2)
            Previously
                filed as an exhibit to Form SB-2, filed June 6, 2006(3)
            Previously
                filed as an exhibit to Form SB-2/A, filed January
                30,2007(4)
            Previously
                filed as an exhibit to Form 10-SB/A, filed February 23,
                2006(5)
            Previously
                filed as an exhibit to Form 10-SB/A, filed April 21,
                2006(6)
            Previously
                filed as an exhibit to Form 10-SB/A, filed June 8, 2006(7)
            Previously
                filed as an exhibit to Form 10-SB/A, filed July 7, 2006(8)
            Previously
                filed as an exhibit to Form 10-SB/A, filed July 28,
                2006(9)
            Previously
                filed as an exhibit to Form 10-SB/A, filed October 6,
                2006(10)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated August 7, 2006
                and incorporated herein by reference(11)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated September 19, 2006 and
                incorporated herein by reference(12)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated October 26, 2006 and
                incorporated herein by reference(13)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated October 31, 2006 and
                incorporated herein by reference(14)
            Previously
                filed as an exhibit to Form 10-SB/A, filed December 22,
                2006(15)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated January 1, 2007 and
                incorporated herein by reference(16)
            Filed
                herewith







25




**Item
      14. Principal Accountant Fees and Services**





Information
      in response to this Item is incorporated herein by reference to our definitive
      proxy statement to be filed pursuant to Regulation 14A within 120 days after
      the
      end of the fiscal year covered by this form 10-KSB.




26


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.


**TRULITE,
                INC.**Dated:
                March 30, 2007
            By:
            /s/ Jonathan
                GodshallJonathan
                GodshallPresident
                and Chief Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following persons on behalf of Registrant and in the
      capacities and on the dates indicated.




Title
            
            Date/s/ Jonathan
                Godshall
            
            Director,
                President, and Chief Executive Officer
            
            March
              30, 2007Jonathan
                Godshall
            
            (Principal
              Executive Officer)/s/
G.Wade
              Stubblefield
            
            Chief
              Financial Officer
            
            March
              30, 2007G.Wade
              Stubblefield
            
            (Principal
              Financial Officer)/s/
                John Berger
            
            Chairman
                of the Board of Directors
            
            March
                30, 2007John
                Berger/s/
                Richard Hoesterey
            
            Director
            
            March
                30, 2007Richard
                Hoesterey/s/
                General Randolph House
            
            Director
            
            March
                30, 2007General
                Randolph House/s/
                Eric Melvin
            
            Director
            
            March
                30, 2007Eric
                Melvin/s/
                John Sifonis
            
            Director
            
            March
                30, 2007John
                Sifonis/s/
                John White
            
            Director
            
            March
                30, 2007John
                White






27