**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-K**





x
      ANNUAL REPORT PURSUANT
      SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934





o
      TRANSITION REPORT
      PURSUANT SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934





**Commission
      file number 000-51696**





**Trulite,
      Inc.**


(Exact
      name of small business issuer as specified in its charter)





**Delaware**
            
            **20-1372858**(State
                or other jurisdiction of
            
            (I.R.S.
                employerincorporation
                or organization)
            
            identification
                number)





**1401
      McKinney Street**


**Suite
      900**


**Houston,
      TX 77010**





(Address
      of principal executive offices)





Issuer's
      telephone number, including area code: (713) 888-0660





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-K or any
      amendment to this Form 10-K 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





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the
      best of registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K . o





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





Large
                accelerated filer:
              o
            
            Accelerated
                filer:
              o
            
            Non-accelerated
                filer:
              o(Do
                  not check if a smaller reporting
              company)
            
            Smaller
                reporting company:x




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
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant was approximately $4,552,955 as of
      June 30, 2007.





Number
      of
      shares outstanding of each of the issuer's classes of common stock, as of the
      latest practicable date: Common Stock, 21,201,270 shares outstanding at March
      31, 2008. Preferred Stock, no shares issued and outstanding at March 31,
      2008.





**DOCUMENTS
      INCORPORATED BY REFERENCE:** Portions
      of the definitive proxy statement for the Company’s 2008 annual meeting of
      stockholders, which is to be filed within 120 days after the end of the fiscal
      year ended December 31, 2007, are incorporated by reference into Part III of
      this Form 10-K, to the extent described in Part III.




2




PART
              IItem
              1.
            BusinessItem
              1A.
            Risk
              FactorsItem 1B.
            Unresolved Staff CommentsItem
              2.
            PropertyItem
              3.
            Legal
              ProceedingsItem
              4.
            Submission
              of Matters to a Vote of Security HoldersPART
              IIItem
                5.
            Market
              for Common Equity, Related Stockholder Matters and Issuer Purchases
              of Equity SecuritiesItem
              6.
            Selected Financial
              DataItem 7.
            Management's Discussion And Analysis
              Of
              Financial Condition And Results Of OperationsItem
              7A.
            Quantitative
              and Qualitative Disclosures About Market RiskItem
              8.
            Financial
              StatementsItem
              9.
            Changes
              in and Disagreements with Accountants on Accounting and Financial
              DisclosureItem
              9A (T).
            Disclosure
              Controls and ProceduresItem
              9B.
            Other
              InformationPART
              IIIItem
              10.
            Directors,
              Executive Officers and Corporate GovernanceItem
              11.
            Executive
              CompensationItem
              12.
            Security
              Ownership of Certain Beneficial Owners and Management and Related
              Stockholder MattersItem
              13.
            Certain
              Relationships and Related Transactions, and Director
              IndependenceItem
              14.
            Principal
              Accountant Fees and ServicesPART
              IVItem
              15.
            Exhibits
              and Financial Statement Schedules




3




**FORWARD-LOOKING
      STATEMENTS**





Certain
      statements made in this Annual Report on Form 10-K 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.




4




**PART
      I**





**Item
      1. Business.**




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




Trulite
      is an emerging technology company engaged in the development, production,
      sourcing, marketing and selling of portable, semi-portable and stationary
      products, components and power generation systems that can generate clean
      renewable power for use in off-grid applications requiring power up to one
      kilowatt. These products, components and systems include the integration of
      hydrogen fuel cells, photovoltaic solar panels, wind micro-turbines, batteries,
      charge controllers and inverters and can be used in both a prime as well as
      standby power system in both indoor as well as outdoor
      applications.





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 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
      six
      patent applications); one that transforms the hydrogen gas into electricity
      (the
      fuel cell stack, for which the Company has one filed patent); 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). This original Kitty Hawk system, produced in limited
      quantities in the first quarter of 2006, was capable of producing 15 net watts
      of power. During 2006, the Company developed an enhanced version of the Kitty
      Hawk, the KH-3X, with twice the power output of the initial Kitty Hawk product.
      The Company used the results of field testing and initial user response of
      the
      KH-3X in developing a more powerful and more advanced hybrid power generation
      product, the KH4. The Company has one patent application for the ability to
      utilize hybrid power sources.





The
      KH4
      system has the capability to produce 150 watts of continuous power and up to
      250
      watts of peak power. The integrated advanced technology lithium ion battery
      can
      provide immediate power if the unit is being used as a back-up for grid power.
      The system can manage the integration of power from photovoltaic solar panels
      and on-site wind micro-turbines together with power from the fuel cell to
      optimize the power available to meet the needs of the application. The two
      integral 400 watt-hour fuel cartridges that are standard with the KH4 can
      provide over seven hours of run time with the unit operating at 60% of capacity.
      In the proper storage conditions, the fuel cartridges can be stored indefinitely
      before use. The Company has identified and entered into initial discussions
      with
      potential key customers in anticipation of initial product shipments in late
      2008. The expected manufacturing, application development costs and capital
      operating requirement is expected to total $9.1 million during 2008, including
      capital expenditures of $1.2 million. Funding for product development and
      manufacturing are expected to come from the issuance of additional equity and
      debt instruments.





We
      generated $16,667, $8,333 and $2,883 in revenues from the sale of HydroCells
      and
      integrated power generation units and ancillary products in 2005, 2006 and
      2007,
      respectively.




5




**Overview
      of the Renewable Energy Industry**




There
      are
      a number of factors that we believe are creating significant changes in the
      landscape of the renewable energy industry, which in turn present significant
      opportunities for renewable portable power generation:




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
                for
                back-up during outages or as primary 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 in a proton exchange membrane fuel cell 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 or products with unique attributes for certain
      applications. Products will be commercialized at price points that make sense
      to
      both commercial and consumer markets.




Portable
      and semi-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
      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. 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.




6




**Our
      Products**




Trulite
      plans to produce two primary products: the HydroCell fuel source and the
      integrated fuel cell power generation system that uses the HydroCells. These
      core products will be offered as stand alone products but will also be the
      primary technology behind various hybrid systems that Trulite
      offers.




Our
      HydroCell is a technology that utilizes a cartridge filled with a chemical
      hydride (dry sodium borohydride) that, when injected with water, produces
      hydrogen on demand for portable and stationary power devices. Each cartridge
      is
      compact and lightweight. Power-to-weight ratio (the ability to generate the
      same
      or more energy by cutting the weight of the generating device) is one factor
      in
      gaining market acceptance for clean portable power sources. 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 an almost
      complete reactivity of the material.




The
      HydroCell fuel source can be marketed as a separate product and is a metallic
      cylinder 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 or otherwise abused,
      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. Our dry hydride technology for generating hydrogen makes it
      possible to build HydroCell cartridges capable of generating hydrogen for
      extended run times.




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.
            Cost
                - The HydroCell cartridges are inexpensive compared with the costs
                associated with generating an equal amount of energy from conventional
                energy sources because they provide clean
                energy;





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 an extended period of time
                without losing its energy
                density.




7


Our
      second product is the integrated fuel cell power generation system, consisting
      of the HydroCell, the fuel cell stack and the Company’s control technology that
      controls the flow of hydrogen for the actual generation of electricity.




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 and to optimize the
      process. 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. The control system also manages the
      use
      of power from all of the energy sources that can be used in this hybrid system
      including batteries, photovoltaic solar panels, wind micro-turbines, and of
      course the fuel cell itself.




We
      manufacture the fuel cell stack, and engage in new product development and
      product enhancements on the fuel cell stack. We first introduced the Kitty
      Hawk
      power system in September 2005. The initial Kitty Hawk products could 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, was
      capable of generating 30 net watts of usable power.





The
      KH-3X
      had 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
      KH4
      was introduced in August 2007 and is currently undergoing field testing at
      strategic customer sites. The product offers 150 watts of continuous power
      and
      up to 250 watts of peak power, consumes less internal power, weighs less per
      watt of power generated and is more rugged than the KH-3X and is quieter. The
      KH4 also offers remote indication via its integral communication port of fuel
      consumed, fuel remaining as well as other advanced diagnostic monitoring and
      control features through its integrated RFID technology. Additionally, the
      KH4
      can produce both AC as well as DC power providing superior flexibility in
      numerous customer and multiple market applications. We expect first sales of
      production quantities of the KH4 to commence in the fourth quarter of 2008,
      contingent on securing funding for manufacturing and application
      development.




**Market
      Focus**




We
      believe that the Company’s off-grid products have application in several markets
      where electrical power is needed, including; (i) recharging UPS battery back-up
      systems for computers where extended run times may be needed to provide
      unlimited runtime capabilities, (ii) telecommunications, such as back-up power
      for repeater stations, (iii) recharging batteries used in power tools on
      construction sites, (iv) emergency situations where grid power is not available
      (v) in the home or small business to power lights and small refrigerators and
      to
      power or recharge electronics, (vi) remote monitoring for security, industrial
      and other applications, (vii) recreational activities where grid power is not
      readily available such as camping, boating, fishing and hunting, (viii) off-grid
      power for remote displays and for traffic control applications, (ix) other
      applications where clean indoor power generation or portability are important,
      (x) portable back-up power for batteries in cars, trucks, boats and RV’s, and
      (xi) power for portable and mobile medical devices.




We
      are in
      the process of producing and delivering approximately 30 KH4 units that are
      being sold to customers for field testing. Based on the feedback from those
      tests, the product will be modified if appropriate for certain applications.
      Limited production of finished product for shipment into the marketplace is
      planned for Q3 of
      2008.
      Processes will be established and documented and the first level of automation
      will be introduced. By Q2 of 2009, the KH4 will be in full production resulting
      in further reductions in the cost of this product.




8




Trulite
      believes that the Company is in a unique position to succeed in the marketplace
      primarily because:





·
            Trulite’s
                management team and Board of Directors have substantial experience
                in
                electrical and portable power generation, in operating and growing
                businesses and in key disciplines such as manufacturing/supply chain
                management and marketing.





·
            Trulite
                plans to provide integrated power generation solutions for off-grid
                markets (which include back-up power) for requirements up to one
                kilowatt.





·
            Trulite
                offers hybrid products that can both generate and store power. Trulite
                incorporates advanced technology batteries into its solutions. This
                hybrid
                solution enables Trulite to provide instant-on back-up power, continuous
                power even with intermittent loads (such as refrigerators), continuous
                power even with intermittent power generation (such as solar or wind),
                and
                capacity for peak loads.





·
            By
                using dry sodium borohydride in the KH4, Trulite’s fuel source is more
                stable, less costly and able to produce more power per pound than
                other
                fuel technologies.





·
            Trulite
                has a more robust integration and control technology incorporated
                into its
                products that provides for the direct integration of the solar and
                wind
                power sources.





·
            Trulite
                plans to have its products available for shipment to the market in
                2008.





The
      applications we are targeting initially can be categorized into three market
      groups:





***Back-up
      Power:*** With
      the
      increased frequency and duration of power outages experienced on the grid due
      to
      peak demands exceeding capacity, to many parts of the grid wearing out, and
      to
      weather and other natural disasters, businesses and homes have increased demands
      for back-up power to provide for the continued operation of critical electrical
      devices, appliances, lights and other equipment. While batteries have played
      and
      will continue to play a large role in this back-up power, the market has
      increased interest in finding solutions that will provide extended run time
      and
      reliability. Trulite’s KH4 portable power generator provides an excellent
      solution for many of these requirements since it can be safely used indoors
      or
      outdoors and can be located wherever the power is needed. The KH4 is expected
      to
      be used primarily to recharge batteries in these applications but can also
      provide the primary power for many devices if necessary during a power outage.
      For example, the KH4 has sufficient power to recharge several cell phones or
      other communications devices at the same time. It can provide the power to
      repeater stations that are associated with towers for cell phones and satellite
      data transmission. It can power many medical devices that must continue to
      function when grid power is not available. The KH4 can recharge the
      uninterrupted power supply (“UPS”) battery devices used to power desktop
      computers or small servers when the power fails, and it can recharge the
      batteries in laptop computers and run laptops indefinitely. In combination
      with
      a battery that would be used to handle the peak electrical demand on the
      cyclical start-up, the KH4 could also power a typical household refrigerator
      or
      freezer for an extended period of time. Companies with applications in the
      telecommunications, satellite data transmission, UPS, and first responder
      markets have expressed interest in the KH4 power generator and in the higher
      output clean generators that Trulite plans to develop.




9




***Off-Grid
      Power:*** Gasoline
      or diesel generators and/or batteries are the primary sources for power in
      applications that cannot conveniently be connected to the grid. Generators
      are
      typically cumbersome, noisy, environmentally unfriendly, maintenance intensive
      and potentially dangerous due to the associated carbon monoxide. Generators
      must
      be refueled continuously. The Trulite power generation system is quieter,
      requires little maintenance and does not generate any harmful or environmentally
      unfriendly byproducts (heat and water, which
      is
      re-used in the Trulite process, are the only byproducts). The HydroCell fuel
      canisters can be stored indefinitely before use and are much more convenient
      and
      easy to use than containers of gasoline. As a result, companies with
      applications in off-grid shelters, battery charging for uses such as portable
      hand tools and communication devices in the field, video cameras, recreational
      vehicles, trucks, sports vehicles, boating and other recreational activities
      have expressed interest in the KH4 product. The KH4 clean power generators
      can
      also provide a product line extension in generator markets to fill niche
      applications that cannot be properly served with current generator
      products.





***Remote
      Monitoring:*** Many
      applications require powering electrical devices with relatively low power
      requirements to monitor activities in disperse locations. These requirements
      range from the monitoring equipment found on oil and gas wells or on pipelines
      to security cameras used in a variety of locations. These applications are
      frequently powered by photovoltaic solar panel and battery systems today.
      However, if the solar panels do not get sufficient power due to rain or cloudy
      conditions for an extended period of time, then the battery cannot be recharged
      and someone has to be dispatched to the remote location to charge or replace
      the
      battery. If a Trulite power generator is included in a hybrid system, then
      the
      fuel cell can be automatically activated when sufficient solar power is not
      available to recharge the battery and to keep the system operating. 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.
      Companies and government agencies with remote monitoring applications have
      expressed interest in the KH4 product, which provides sufficient power for
      many
      of their current applications.





**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.





The
      KH4
      product and the related HydroCells will be transferred to manufacturing
      operation in 2008. The manufacturing team will continue the design for
      manufacturing of the product. They will establish appropriate manufacturing
      and
      quality control procedures. As part of the process to reduce the cost of the
      product, the manufacturing team will also design and implement automation where
      justified. The product cost for the initial products will be high since it
      takes
      time to source the automation equipment and the high capacity tooling for many
      of the components. Also, it will be necessary to start the manufacturing process
      to fully identify the potential automation applications in some instances.
      Most
      of the automation and high capacity tooling are expected to be in place in
      2009.





**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.




10


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 nine patent applications for the HydroCells, the control
      system and the fuel cells. 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.




We
      believe our HydroCell and the integrated power system products have created
      a
      business model that gives us a competitive advantage. We also believe that
      the
      use of the dry sodium borohydride fuel source provides a competitive advantage
      due to the extended shelf life and convenience of these fuel canisters. We
      believe our business model affords us the opportunity to sell the integrated
      power system products in line with the price point of other fuel cell products
      that we believe are under development.





**Employees**




We
      currently have 18 full-time employees, all of whom are involved in research
      and
      development. The Company’s Chief Financial Officer works for Trulite on a part
      time basis with the associated costs allocated to the Company by Standard
      Renewable Energy Group, LLC (“SREG”). The Company also hires temporary employees
      from time to time as needed.





11




**Item
      1A. 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 50 KH-3X units and 19 prototype and beta KH4 units.
      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.




**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, 2007, 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, 2007, 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 financial
      statements.**




Since
      our
      inception, we have restated our 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 this Form 10-K, 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
      have a need for additional capital as we continue to execute our business
      plan.**




To
      achieve and maintain competitiveness and continue our growth, we need to
      raise approximately $10.0 – $15.0
      million to
      develop, promote, and distribute our products. These funds will be required
      for
      capital expenditures to build out the product line, hiring additional technical
      staff, for purchasing materials for the manufacture of KH4 units, for labor
      costs associated with manufacturing, marketing expenses and other operating
      costs and for product development and enhancements to the entire product
      line.




**The
        Company may make appropriate filings to cease to be a reporting company under
        the Securities Exchange Act of 1934, as amended.**




The
        Company may, if management determines in connection with future financings
        or
        otherwise that it is in the best interest of the Company and its stockholders,
        make appropriate filings to cease to be a reporting company under the Securities
        Exchange Act of 1934, as amended. If the Company chooses to do so, its
        stockholders no longer will have access to current information regarding
        the
        Company contained in periodic reports filed by the Company with the Securities
        and Exchange Commission. Additionally, the Company's Common Stock would no
        longer be eligible for trading on the OTCBB which would adversely affect
        the
        liquidity for the Common Stock.




12


**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.




**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.
      Thereafter, outsourcing relationships are expected to be established.




13





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.




**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
                systems





2.
            the
                emergence of newer and more competitive
                technology





3.
            the
                future cost of raw materials





4.
            regulatory
                requirements





5.
            consumer
                perceptions regarding the safety of our
                product





14





6.
            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 systems, 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.




**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 nine 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, if and when issued,
      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.




15


**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.




**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
      31,
      2008, 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.




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





16





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
      1B. Unresolved Staff Comments**





None.





**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 of
      $3,000 as of December 31, 2007. Lease expense in 2007 totaled $32,848. The
      lease
      expires May 31, 2008.




**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.**





The
      Company is authorized by its Certificate of Incorporation, which was amended
      on
      May 4, 2007, to issue an aggregate of 51,500,000 shares of capital stock,
      comprising of 50,000,000 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 31, 2008, 21,201,270 shares of Common
      Stock and no shares of Preferred Stock were issued and outstanding.





As
      of
      March 10, 2008, there were 40 record holders of 21,201,270 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.





17


The
      following table sets forth, for the quarters indicated, the high and low closing
      sale prices as reported on NASDAQ.




**2007****High**
            
            **Low**First
                Quarter Ending March 31
            
            
            N/A
            
            
            N/ASecond
                Quarter Ending June 30
            
            $
            1.25
            
            $
            1.00Third
                Quarter Ending September 30
            
            $
            .90
            
            $
            .41Fourth
                Quarter Ending December 31
            
            $
            .86
            
            $
            .40





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. 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.





Information
      regarding the Company’s equity compensation plans is incorporated by reference
      to the Company’s definitive proxy statement (“Proxy Statement”) for its 2008
      annual meeting of stockholders.





**Item
      6. Selected Financial Data**





Not
      applicable.





**Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**





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, 2007 and 2006, with their explanatory notes included
      as part of this Form 10-K.





*Overview
      and Plan of Operation*





Trulite
      is engaged in the development, production, sourcing, marketing and selling
      of
      portable, semi-portable and stationary products, components and systems that
      can
      generate power for use in off-grid applications requiring power up to one
      kilowatt. These products, components and systems include hydrogen fuel cells,
      photovoltaic solar panels, wind micro-turbines, batteries, charge controllers
      and inverters. Solar panels and on-site wind micro-turbines provide intermittent
      power that frequently must be stored to meet requirements when the panels are
      not producing. The Trulite fuel cells can provide power when the solar panels
      or
      wind turbines are not operating for extended and consistent power
      availability.





The
      Company announced the development of its new KH4 product in 2007. This hydrogen
      fuel cell generator can produce 150 watts of continuous power and up to 250
      watts of peak power. The integrated advanced technology lithium ion battery
      can
      provide immediate power if the fuel cell is being used as a back-up for grid
      power. The system can manage the integration of power from solar panels and
      on-site wind micro-turbines together with power from the fuel cell to optimize
      the power available to meet the needs of the application. The KH4 uses dry
      sodium borohydride as the hydrogen source. The two 400 watt-hour fuel cartridges
      that are standard with the KH4 can provide over seven hours of run time with
      the
      unit operating at 60% of capacity. In the proper storage conditions, the fuel
      cartridges can be stored indefinitely before use. The Company has nine patents
      pending for the technology involved in the KH4 and other products.




18


Trulite
      has recently expanded its product offering to include smaller photovoltaic
      solar
      power systems and small on-site wind micro-turbines power systems. These
      products will be offered in the marketplace prior to the new KH4 product being
      available in production quantities but will be able to work in conjunction
      with
      the KH4.





Trulite
      believes that its off-grid products have application in several markets where
      electrical power is needed. The products can be used to recharge batteries
      such
      as those used in power tools on construction sites. Power can be provided in
      emergency situations where grid power is not available in the home or small
      business to recharge batteries, to power lights and small refrigerators and
      to
      power or recharge electronics. Power can also be provided for remote monitoring
      and electronics for security, industrial, telecommunications, and other
      applications. The products can also be used for recreational activities where
      grid power is not readily available such as camping, boating, fishing and
      hunting. Off-grid power is also useful for remote displays and for traffic
      control applications. The Trulite products can also be used to recharge
      uninterruptible power supply (“UPS”) battery back-up systems for computers where
      extended run times may be needed. Portable back-up power for batteries in cars,
      trucks, boats and RV’s also provides market opportunities.




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, 2006, and 2007, the Company had revenue
      of $16,667, $8,333, and $2,883, respectively. We expect increasing commercial
      sales during 2008, contingent on securing funding for manufacturing and
      application development. 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 $4,295,722 million in research
      and
      development and anticipate that we will spend at least $9.1 million in 2008
      for
      manufacturing and application development costs and operating capital
      requirements. 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
      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 approximately $10.0 - $15.0 million in
      2008. 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.





19




The
      following table summarizes our results of operations for the twelve months
      ended
      December 31, 2007 and 2006:




**Twelve Months Ended December 31,****2007**
            
            **2006**Sales
            
            $
            2,883
            
            $
            8,333Cost
                of sales
            
            
            2,674
            
            
            5,912GROSS
                PROFIT
            
            
            209
            
            
            2,421Operating
                expenses:Research
                and development
            
            
            1,928,582
            
            
            1,216,616Depreciation
            
            
            26,097
            
            
            14,848General
                and administrative
            
            
            2,338,642
            
            
            2,190,319TOTAL
                OPERATING EXPENSES
            
            
            4,293,321
            
            
            3,421,783LOSS
                FROM OPERATIONS
            
            
            (4,293,112
            )
            
            (3,419,362
            )Other
                income (expense):Interest
                expense
            
            
            (436,708
            )
            
            (29,726
            )Interest
                income
            
            
            4,499
            
            
            5,794TOTAL
                OTHER INCOME (EXPENSE)
            
            
            (432,209
            )
            
            (23,932
            )LOSS
                BEFORE INCOME TAXES
            
            
            (4,725,321
            )
            
            (3,443,294
            )Income
                taxes
            
            
            -
            
            
            -NET
                LOSS
            
            $
            (4,725,321
            )
            $
            (3,443,294
            )




**Revenues**




For
      the
      year ended December 31, 2007, revenues totaled $2,833 versus $8,333 for the
      year
      ended December 31, 2006.




**Gross
      profit**




For
      the
      twelve months ended December 31, 2007, gross profit was $209 compared to $2,421
      for 2006.




**Operating
      expenses**




Operating
      expenses were $4,293,321 for the year ended December 31, 2007. This compares
      to
      operating expenses of $3,421,783 for 2006. Research and development expenses
      increased to $1,928,582 for 2007, compared to $1,216,616 for 2006. The increase
      in research and development during the twelve month period ended December 31,
      2007 was due to a scale up of research and development of the KH4 150-watt
      power
      system. Depreciation expense increased $11,249 during 2007. General and
      administrative expense during the twelve month period ended December 31, 2007
      increased $148,323. This increase is a result of an increase of $489,519 in
      management and administrative services, a non-cash charge of $177,147, which
      was
      recognized due to the modification of the conversion feature of the June 2007
      Note and Warrant Purchase Agreement, an increase of $188,531 in sales and
      marketing expense, an increase of insurance cost of $28,231, an increase in
      website expense and other administrative expenses of $30,247, offset by a
      decrease in professional fees of $477,713 and a decrease of stock based
      compensation of $287,639.




20




Non-cash
      charges of $494,143 were recognized in general and administrative expenses
      in
      2007, which consisted of stock based compensation of $223,518, issuance of
      common stock and warrants for consulting services of $93,478, and a charge
      of
      $177,147 recognized due to the modification of the conversion feature of the
      June Note and Warrant Purchase Agreement.




Non
      cash
      charges of $958,312 were recognized in general and administrative expenses
      in
      2006, which consisted of stock based compensation of $511,157 and $447,155
      recognized through the issuance of common stock and warrants for consulting
      services.





**Other
      Income (Expense)**




For
      the
      year ended December 31, 2007, other income (expense) was a loss of $432,209,
      as
      compared to a loss of $23,932 for 2006, primarily as a result of higher interest
      expense on outstanding borrowings.




**Deemed
      dividend on warrant modification**





On
      February 22, 2007, the Company’s Board of Directors agreed to extend the term of
      warrants, until April 13, 2008, that were issued on April 13, 2006 in connection
      with the issuance of common stock for cash consideration of $1.00 per share.
      These warrants entitle the holders to purchase an additional 1,000,000 shares
      of
      common stock of the Company at an original exercise price of $1.50 per common
      share (amended to $0.50 per share on November 19, 2007), that were originally
      set to expire on April 13, 2007. A difference of $104,881 in the fair value
      of
      these warrants after modification, when compared to their fair value immediately
      prior to the modification, was recorded as a deemed dividend in the first
      quarter of 2007.





On
      November 19, 2007, the Board of Directors of the Company approved the amendment
      of all warrants to purchase the common stock of the Company to reflect an
      exercise price of $0.50 per share. A
      difference of $234,197 in the fair value of these warrants after modification,
      when compared to their fair value immediately prior to the modification, was
      recorded as a deemed dividend in the fourth quarter of 2007.




**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.




21




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. The Company for the year
      ended December 31, 2007, financed its operations through the issuance of common
      stock and warrants and the exercise of stock options for $1,426,188. In
      addition, the Company borrowed $2,284,400 through a combination of promissory
      notes with related parties and third party financing.




**Cash
      position, sources and uses of cash, and debt conversion in
      2007**




Our
      cash
      position at December 31, 2007, was $374,134 as compared to $275,957 at December
      31, 2006.




Our
      operating activities for the year ended December 31, 2007, used cash in the
      amount of $3,560,951, as compared to $2,178,136 used in 2006. Cash used in
      operating activities for 2007 and 2006, reflected a net loss of $4,725,321
      and
      $3,443,294, 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, a non cash
      charge related to the conversion of notes payable in 2007, and a significant
      increase in amount due to affiliates during 2007.




The
      Company used $51,460 and $31,889 in investing activities for the purchase of
      property and equipment, as well as patent application fees, for the years ended
      December 31, 2007 and 2006, respectively.




The
      Company had cash inflows from financing activities in 2007 of $1,426,188 from
      the issuance of common stock and warrants, and exercise of common stock options. On
      November 26, 2007, the Company entered into a Common Stock Purchase Agreement
      with SREG. Pursuant to the terms of the Purchase Agreement, the Company sold
      a
      total of 2,400,000 unregistered shares of the Company’s common stock, $0.0001
      par value to SREG for total proceeds of $1,200,000, or $0.50 per share. The
      Company had $2,284,400 from the issuances of promissory notes during 2007.
      During 2007, $289,500 due to SREG for accrued interest and management and
      administrative services provided by SREG was re-characterized as part of the
      promissory note dated August 20, 2007. The Company had cash inflows from
      financing activities in 2006 of $1,000,000 from the issuance of common stock
      and
      warrants and $1,250,000 from the issuance of promissory notes.





On
      April
      14, 2006, the Company raised additional equity of $1,000,000 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 (amended
      to $0.50 per share on November 19, 2007) that
      expire on April 13, 2007. The value of the warrants was included as additional
      paid in capital.




22




The
      Company incurred indebtedness from Contango Venture Capital
      Corporation ** (“CVCC”)
      through issuance of promissory notes as follows:





**Issue date**
            
            **Maturity**
            
            **Principal**
            
            **Interest rate**August
                9, 2006
            
            December 31, 2007 (As amended)
            
            $
            125,000
            
            12.25% (As amended)November
                22, 2006
            
            December 31, 2007 (As amended)
            
            $
            400,000
            
            12.25% (As amended)February
                6, 2007
            
            December 31, 2007 (As amended)
            
            $
            240,000
            
            12.25% (As amended)May
                30, 2007
            
            February 19, 2008
            
            $
            240,000
            
            11.25%August 20, 2007
            
            May 16, 2008
            
            $
            250,000
            
            12.25%





On
      November 26, 2007, the Company and CVCC, entered into a Third Amendment to
      Subscription Agreement (the “CVCC Amended Subscription Agreement”) whereby, in
      consideration of cancellation of the entire principal balance of, and accrued
      but unpaid interest on, the promissory notes dated August 9, 2006, November
      22,
      2006 and February 6, 2007, made by the Company in favor of CVCC (the “CVCC
      Notes”), the $844,628 outstanding under the CVCC Notes, which included $79,628
      of accrued and unpaid interest, was converted into 1,260,639 unregistered shares
      of the Company’s common stock.





On
      November 26, 2007, the Company and CVCC entered into a Subscription Agreement
      (the “November 2007 CVCC Subscription Agreement”), whereby, in consideration of
      cancellation of the entire principal balance of, and accrued but unpaid interest
      on, the promissory notes dated May 30, 2007 and August 20, 2007, made by the
      Company in favor of CVCC (the “CVCC New Notes”), the $511,912 outstanding under
      the CVCC New Notes, which included $21,912 of accrued and unpaid interest,
      was
      converted into 764,048 unregistered shares of the Company’s common stock.





The
      CVCC
      Amended Subscription Agreement and the November 2007 CVCC Subscription Agreement
      are substantive conversion options in accordance with the Emerging Issue Task
      Force (“EITF”) Issue No. 06-06, “Debtor’s Accounting for a Modification (or
      Exchange) of Convertible Debt Instruments” (“Issue No. 06-06”) and in accordance
      with EITF Issue No. 96-19, “Debtor’s Accounting for a Modification or Exchange
      of Debt Instruments” (“Issue No. 96-19”), were accounted for as an
      extinguishment of debt. Management of CVCC allowed for the conversion of CVCC
      Notes and CVCC New Notes at a stock price of $0.67 per share, which was greater
      than the estimated fair value of the Company’s common stock $0.50 per share on
      the date of conversion. An additional 688,393 shares of common stock, at an
      estimated fair value of $344,197, which would have been issued to CVCC if the
      CVCC Notes and CVCC New Notes were converted at the estimated fair value of
      the
      Company’s common stock, was credited to additional paid-in capital.





As
      of
      December 31, 2007, CVCC owned approximately 19% of the Company’s common
      stock.





The
      Company had incurred indebtedness from Standard
      Renewable Energy Group, LLC and a wholly owned subsidiary (“SREG”) through
      issuance of promissory notes as follows:





**Issue date**
            
            **Maturity**
            
            **Principal**
            
            **Interest rate**August
                9, 2006
            
            December
              31, 2007 (As amended)
            
            $
            125,000
            
            12.25%
              (As amended)September
                21, 2006
            
            December
              31, 2007 (As amended)
            
            $
            250,000
            
            12.25%
              (As amended)October
                26, 2006
            
            December
              31, 2007 (As amended)
            
            $
            250,000
            
            12.25%
              (As amended)November
                28, 2006
            
            December
              31, 2007 (As amended)
            
            $
            100,000
            
            12.25%
              (As amended)February
                6, 2007
            
            December
              31, 2007 (As amended)
            
            $
            360,000
            
            12.25%
              (As amended)May
                31, 2007
            
            February
              19, 2008
            
            $
            360,000
            
            11.25%August
                20, 2007
            
            May
              16, 2008
            
            $
            375,000
            
            12.25%




23




On
      November 26, 2007, the Company and SREG entered into a Third Amendment to
      Subscription Agreement (the “SREG Amended Subscription Agreement”) whereby, in
      consideration of cancellation of the entire principal balance of, and accrued
      but unpaid interest on, the promissory notes dated August 9, 2006, September
      21,
      2006, October 26, 2006, November 28, 2006 and February 6, 2007, made by the
      Company in favor of SREG (the “SREG Notes”), the $1,130,524 outstanding under
      the SREG Notes, which included $45,524 of accrued and unpaid interest, was
      converted into 2,261,048 unregistered shares of the Company’s common
      stock.





On
      November 26, 2007, the Company and SREG entered into a Subscription Agreement
      (the “November 2007 SREG Subscription Agreement”), whereby, in consideration of
      cancellation of the entire principal balance of, and accrued but unpaid interest
      on, the promissory notes dated May 31, 2007 and August 20, 2007, made by the
      Company in favor of SREG (the “SREG New Notes”), the $758,530 outstanding under
      the SREG New Notes, which included $23,530 of accrued and unpaid interest,
      was
      converted into 1,517,060 unregistered shares of the Company’s common
      stock.





The
      SREG
      Amended Subscription Agreement and the November 2007 SREG Subscription Agreement
      are substantive conversion options in accordance with EITF Issue No. 06-06,
      “Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt
      Instruments” (“Issue No. 06-06”) and in accordance with EITF Issue No. 96-19,
“Debtor’s Accounting for a Modification or Exchange of Debt Instruments” (“Issue
      No. 96-19”), were accounted for as an extinguishment of debt. There was no gain
      or loss recognized on extinguishment.





As
      of
      December 31, 2007, SREG owned approximately 54% of the Company’s common
      stock.





On
      June
      26, 2007, the Company pursuant to the terms of a Note and Warrant Purchase
      Agreement dated June 26, 2007 (the “June Purchase Agreement”), sold a total of
      6.66 units (“Units”), each Unit comprising (i) a convertible promissory note (a
“Note”), in the original principal amount of $75,000, and (ii) a warrant (a
“Warrant”), to purchase 100,000 shares of the Company's common stock at a price
      of $1.00 per share. The Company sold a total of $500,000 in principal amount
      of
      Notes and Warrants to purchase a total of 666,666 shares of Common Stock for
      total proceeds of $500,000. Each Note bears interest at a rate of 15% per annum.
      Principal and accrued but unpaid interest on each Note are payable in full
      on
      June 26, 2008. Amounts outstanding under each Note may be prepaid without
      penalty. The unpaid principal balance due under each Note, together with any
      accrued but unpaid interest, may be converted into unregistered shares of Common
      Stock at a conversion price of $0.75 per share. Each Warrant is exercisable
      until June 26, 2010, at an exercise price of $0.50 per share (As amended, see
      Note 7) and has a cashless exercise feature. On November 26, 2007, the
      convertible promissory notes dated June 26, 2007, with a principal amount of
      $500,000, together with accrued and unpaid interest of $31,442, was converted
      into 1,062,884 unregistered shares of its common stock at a reduced conversion
      price of $0.50 per share. The Company recognized an expense of $177,147 related
      to the reduced conversion price, in accordance with SFAS No. 84, “Induced
      Conversions of Convertible Debt.





On
      November 7, 2007, the Company, pursuant to the terms of a Note and Warrant
      Purchase Agreement dated November 7, 2007 (the “November Purchase Agreement”),
      sold a total of seventeen units (“Units”), at a price of $25,000 per Unit, with
      each Unit comprising (i) an unsecured promissory note (a “Note”), in the
      original principal amount of $25,000, and (ii) a warrant (a “Warrant”) to
      purchase 25,000 shares of the Company’s common stock, $0.0001 par value (“Common
      Stock”), at a price of $.50 per share. The Company sold a total of $425,000 in
      principal amount of Notes and Warrants to purchase a total of 425,000 shares
      of
      Common Stock. Each Note bears interest at a rate of 15% per annum. Principal
      and
      accrued but unpaid interest on each Note are payable in full on April 30, 2008.
      Amounts outstanding under each Note may be prepaid without penalty. Each Warrant
      is exercisable until November 7, 2008, at an exercise price of $.50 per share,
      subject to adjustment as provide in the Warrant and has a cashless exercise
      feature.




24




**Capital
      Resources Going Forward**




Our
      intended plan of operations for 2008 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, 2007, 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.





In
      February and March 2008, the Company pursuant to the terms of a Note and Warrant
      Purchase Agreement, sold a total of five units (the “Units”), each Unit
      comprising (i) a 15% interest bearing unsecured promissory note in the principal
      amount of $25,000, with a six-month maturity date (the “Notes”), and (ii) a one
      year common stock warrant to purchase 50,000 shares of the Company’s Common
      Stock at an exercise price of $0.50 per share (the “Warrants”). The price of
      each unit was $25,000. The Company sold a total of $125,000 in principal amount
      of Notes and Warrants to purchase a total of 250,000 shares of Common Stock
      for
      total proceeds of $125,000.




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, 2007, 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, 2007, 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.





**Contractual
      Obligations**





The
      Company had an employment agreement with its President that expires July 31,
      2008, under which the committed obligation is $110,000 at December 31, 2007.
      The
      Company had no other contractual obligations as of December 31,
      2007.





**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.




25




**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.





*Impairment
      of Long Lived Assets*





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.





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.





*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 the 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.





**Item
      7A.**  **Quantitative
      and Qualitative Disclosures About Market Risk**





Not
      applicable.




26




**Item
      8. 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 Cash Flows
            
            F-4Statements
                of Stockholders’ Deficit
            
            F-5Notes
                to Financial Statements
            
            F-7









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, 2007 and 2006, and the related
      statements of operations, stockholders’ deficit, and cash flows for the years
      then ended, and for the period from inception (July 15, 2004) through December
      31, 2007. 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.





We
      were
      not engaged to examine management’s assertion about the effectiveness of the
      Company’s internal control over financial reporting as of December 31, 2007,
      included in the accompanying Form 10-K for the year ended December 31, 2007,
      and
      accordingly, we do not express an opinion thereon.





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,
      2007 and 2006, 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, 2007, 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 and has negative working capital as of December 31, 2007. 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
      31,
      2008


Houston,
      Texas




F-1


**Trulite,
      Inc. (a Development Stage Company)**


**Balance
      Sheets**





**December 31,**
            
            **December 31,****2007**
            
            **2006****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            374,134
            
            $
            275,957Prepaid
                expenses and other current assets
            
            
            23,793
            
            
            13,372Total
                current assets
            
            
            397,927
            
            
            289,329Property
                and equipment, net
            
            
            53,322
            
            
            50,079Patent
                application fees
            
            
            41,963
            
            
            19,843Total
                assets
            
            $
            493,212
            
            $
            359,251**LIABILITIES
                AND STOCKHOLDERS' DEFICIT**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            260,238
            
            $
            239,544Due
                to affiliates
            
            
            57,363
            
            
            62,363Notes
                payable to affiliates
            
            
            -
            
            
            1,250,000Notes
                payable, net of unamortized discount of $28,778 as of December 31,
                2007
            
            
            396,222
            
            
            -Total
                current liabilities
            
            
            713,823
            
            
            1,551,907Commitments
                and contingenciesStockholders'
                deficit:8%
                Cumulative Convertible, Series A Preferred Stock; $0.0001 par value,
                1,500,000 shares authorized, 0 shares issued and outstanding as of
                December 31, 2007 and December 31, 2006.
            
            
            -
            
            
            -Common
                Stock; $0.0001 par value, 50,000,000 and 20,000,000 shares authorized,
                21,201,270 and 11,785,491 shares issued and outstanding as of December
                31,
                2007 and December 31, 2006, respectively.
            
            
            2,120
            
            
            1,178Additional
                paid-in-capital
            
            
            15,572,927
            
            
            9,537,425Deficit
                accumulated during the development stage
            
            
            (15,795,658
            )
            
            (10,731,259
            )Total
                stockholders' deficit
            
            
            (220,611
            )
            
            (1,192,656
            )Total
                liabilities and stockholders' deficit
            
            $
            493,212
            
            $
            359,251





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****Twelve Months Ended**
            
            **(July 15, 2004)****December 31,**
            
            **Through****2007**
            
            **2006**
            
            **December 31, 2007**Sales
            
            $
            2,883
            
            $
            8,333
            
            $
            29,633Cost
                of sales
            
            
            2,674
            
            
            5,912
            
            
            21,059GROSS
                PROFIT
            
            
            209
            
            
            2,421
            
            
            8,574Operating
                expenses:Research
                and development
            
            
            1,928,582
            
            
            1,216,616
            
            
            4,295,722Depreciation
            
            
            26,097
            
            
            14,848
            
            
            48,908General
                and administrative
            
            
            2,338,642
            
            
            2,190,319
            
            
            5,085,058TOTAL
                OPERATING EXPENSES
            
            
            4,293,321
            
            
            3,421,783
            
            
            9,429,688LOSS
                FROM OPERATIONS
            
            
            (4,293,112
            )
            
            (3,419,362
            )
            
            (9,421,114
            )Other
                income (expense):Interest
                expense
            
            
            (436,708
            )
            
            (29,726
            )
            
            (467,097
            )Interest
                income
            
            
            4,499
            
            
            5,794
            
            
            15,622TOTAL
                OTHER INCOME (EXPENSE)
            
            
            (432,209
            )
            
            (23,932
            )
            
            (451,475
            )LOSS
                BEFORE INCOME TAXES
            
            
            (4,725,321
            )
            
            (3,443,294
            )
            
            (9,872,589
            )Income
                taxes
            
            
            -
            
            
            -
            
            
            -NET
                LOSS
            
            
            (4,725,321
            )
            
            (3,443,294
            )
            $
            (9,872,589
            )Preferred
                stock dividends
            
            
            -
            
            
            (39,275
            )Deemed
                dividend on conversion of preferred stock to common stock
            
            
            -
            
            
            (1,586,150
            )Deemed
                dividend on warrant modifications
            
            
            (339,078
            )
            
            -NET
                LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
            
            $
            (5,064,399
            )
            $
            (5,068,719
            )NET
                LOSS PER COMMON SHAREBasic
                and diluted
            
            $
            (0.37
            )
            $
            (0.37
            )Preferred
                and deemed dividends
            
            
            (0.03
            )
            
            (0.18
            )Attributable
                to common stockholders
            
            $
            (0.40
            )
            $
            (0.55
            )WEIGHTED
                AVERAGE COMMON SHARES OUTSTANDING:Basic
            
            
            12,766,702
            
            
            9,139,510Diluted
            
            
            12,766,702
            
            
            9,139,510





The
      accompanying notes are an integral part of these financial
      statements.




F-3




**Trulite,
      Inc. (a Development Stage Company)**


**Statements
      of Cash Flows**





**Period From****Inception****(July 15, 2004)****Twelve Months Ended December 31,**
            
            **Through****2007**
            
            **2006**
            
            **December 31, 2007**CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (4,725,321
            )
            $
            (3,443,294
            )
            $
            (9,872,589
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            26,097
            
            
            14,848
            
            
            48,908Amortization
                of debt discount
            
            
            147,322
            
            
            -
            
            
            147,322Common
                stock issued for consulting services
            
            
            75,000
            
            
            285,000
            
            
            360,000Common
                stock issued for management fees
            
            
            -
            
            
            -
            
            
            133,840Stock-based
                compensation expense
            
            
            223,518
            
            
            511,157
            
            
            734,675Warrants
                issued for consulting services
            
            
            18,478
            
            
            162,155
            
            
            180,633Debt
                conversion expense
            
            
            177,147
            
            
            
            
            
            177,147Write-off
                of research and development expenses
            
            
            -
            
            
            -
            
            
            606,798Changes
                in operating assets and liabilities:Due
                to/from affiliate
            
            
            455,094
            
            
            86,136
            
            
            517,457Accounts
                receivable
            
            
            -
            
            
            16,667
            
            
            -Prepaid
                expenses and other current assets
            
            
            (10,421
            )
            
            (5,528
            )
            
            (17,328
            )Grants
                receivable
            
            
            -
            
            
            -
            
            
            850Accounts
                payable and accrued expenses
            
            
            52,135
            
            
            194,723
            
            
            283,570Net
                cash used in operating activities
            
            
            (3,560,951
            )
            
            (2,178,136
            )
            
            (6,698,717
            )CASH
                FLOWS FROM INVESTING ACTIVITIESPurchases
                of fixed and intangible assets
            
            
            (51,460
            )
            
            (31,889
            )
            
            (137,737
            )Net
                cash used in investing activities
            
            
            (51,460
            )
            
            (31,889
            )
            
            (137,737
            )CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from issuance of common stock
            
            
            1,200,000
            
            
            1,000,000
            
            
            2,200,000Proceeds
                from exercise of stock options
            
            
            50,088
            
            
            -
            
            
            50,088Proceeds
                from issuance of common stock warrants with debt financing
            
            
            176,100
            
            
            -
            
            
            176,100Proceeds
                from issuance of preferred stock
            
            
            -
            
            
            -
            
            
            1,250,000Proceeds
                from issuance of notes payable
            
            
            748,900
            
            
            -
            
            
            748,900Proceeds
                from issuance of notes payable to affiliates
            
            
            1,535,500
            
            
            1,250,000
            
            
            3,534,400Net
                cash provided by financing activities
            
            
            3,710,588
            
            
            2,250,000
            
            
            7,959,488NET
                INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            98,177
            
            
            39,975
            
            
            1,123,034CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            275,957
            
            
            235,982
            
            
            -CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            374,134
            
            $
            275,957
            
            $
            1,123,034NON-CASH
                INVESTING AND FINANCING ACTIVITIES:Preferred
                stock issued for acquisition
            
            $
            -
            
            $
            -
            
            $
            20,000Common
                stock issued for acquisition
            
            $
            -
            
            $
            -
            
            $
            592,460Common
                stock issued for consulting services
            
            $
            75,000
            
            $
            285,000
            
            $
            360,000Common
                stock issued for management fees
            
            $
            -
            
            $
            -
            
            $
            133,840Warrants
                issued for consulting services
            
            $
            18,478
            
            $
            162,155
            
            $
            180,633Common
                stock options issued for compensation
            
            $
            223,518
            
            $
            511,157
            
            $
            734,675Common
                stock issued through coversion of notes payable, including accrued
                interest of $31,442
            
            $
            531,442
            
            $
            -
            
            $
            531,442Common
                stock issued through coversion of notes payable to affiliates, including
                accrued interest of $170,593
            
            $
            3,245,593
            
            $
            -
            
            $
            3,245,593Additional
                paid-in capital credited through an expense recognized due to the
                induced
                conversion of notes payable
            
            $
            177,147
            
            $
            -
            
            $
            177,147Affiliate
                payable relieved through issuance of note payable
            
            $
            289,500
            
            $
            -
            
            $
            289,500Cash
                paid for interest
            
            $
            -
            
            $
            28,897
            
            $
            28,897





The
      accompanying notes are an integral part of these financial
      statements.




F-4




**Trulite,
      Inc. (a Development Stage Company)**


**Statements
      of Stockholders' Deficit**


**For
      the Periods From Inception (July 15, 2004) Through December 31,
      2007**





**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 acquisition of Trulite Technology,
                LC based on fair value of stock issued of $1.00 per share
            
            
            20,000
            
            
            2
            
            
            -
            
            
            -
            
            
            19,998
            
            
            -
            
            
            20,000July
                22, 2004; common stock issued in the acquisition of Trulite Technology,
                LC
                based on fair value of stock issued of $0.20 per share (post April
                2005
                split)
            
            
            -
            
            
            -
            
            
            2,962,300
            
            
            296
            
            
            592,164
            
            
            -
            
            
            592,460July
                28, 2004; common stock issued for management services based 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 services based 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 services based 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 issued for 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 deemed dividend on conversion
                of
                accrued dividends to common stock
            
            
            -
            
            
            161,388
            
            
            -
            
            
            -
            
            
            (161,388
            )
            
            -
            
            
            -May
                2, 2006; accretion of preferred stock for deemed dividend on conversion
                to
                common stock
            
            
            -
            
            
            1,424,762
            
            
            -
            
            
            -
            
            
            (978,494
            )
            
            (446,268
            )
            
            -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
            )Balance,
                December 31, 2006
            
            
            -
            
            
            -
            
            
            11,785,491
            
            
            1,178
            
            
            9,537,425
            
            
            (10,731,259
            )
            
            (1,192,656
            )




The
      accompanying notes are an integral part of these financial
      statements.




F-5




**Trulite,
      Inc. (a Development Stage Company)**


**Statements
      of Stockholders' Deficit** (Continued)


**For
      the Periods From Inception (July 15, 2004) Through December 31,
      2007**





**8% Cumulative****Convertible Series A**
            
            
            
            
            
            **Additional****Preferred Stock**
            
            **Common Stock**
            
            **Paid-in**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Total***Cash
                issuances:*April
                1, 2007; exercise of stock options
            
            
            -
            
            
            -
            
            
            100
            
            
            -
            
            
            88
            
            
            -
            
            
            88September
                9, 2007; exercise of stock options
            
            
            -
            
            
            -
            
            
            50,000
            
            
            5
            
            
            49,995
            
            
            -
            
            
            50,000November
                26, 2007; issuance of common stock
            
            
            -
            
            
            -
            
            
            2,400,000
            
            
            240
            
            
            1,199,760
            
            
            -
            
            
            1,200,000*Non-cash
                issuance:*June
                26, 2007; common stock issued for consulting services based on fair
                value
                of stock issued of $0.75 per share
            
            
            -
            
            
            -
            
            
            100,000
            
            
            10
            
            
            74,990
            
            
            -
            
            
            75,000November
                26, 2007; issuance of common stock through converion of related party
                notes payable
            
            
            -
            
            
            -
            
            
            5,802,795
            
            
            581
            
            
            3,245,012
            
            
            -
            
            
            3,245,593November
                26, 2007; issuance of common stock through induced conversion of
                notes
                payable and recognition of conversion expense of $177,147
            
            
            -
            
            
            -
            
            
            1,062,884
            
            
            106
            
            
            708,483
            
            
            -
            
            
            708,589February,
                22, 2007; deemed dividend on warrant modification
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            104,881
            
            
            (104,881
            )
            
            -April
                19, 2007; warrants to purchase common stock issued for consulting
                services
                based on fair value of warrants issued
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            18,478
            
            
            -
            
            
            18,478June
                26, 2007; warrants issued with convertible debt
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            135,300
            
            
            -
            
            
            135,300November
                7, 2007; warrants issued with notes payable
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            40,800
            
            
            -
            
            
            40,800November
                19, 2007; deemed dividend on warrant modification
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            234,197
            
            
            (234,197
            )
            
            -Stock-based
                compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            223,518
            
            
            -
            
            
            223,518*Net
                Loss*
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,725,321
            )
            
            (4,725,321
            )**Balance,
                December 31, 2007**
            
            
            -
            
            $
            -
            
            
            21,201,270
            
            $
            2,120
            
            $
            15,572,927
            
            $
            (15,795,658
            )
            $
            (220,611
            )




The
        accompanying notes are an integral part of these financial
        statements.




F-6


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**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 engaged in the
      development, production, sourcing, marketing and selling of portable,
      semi-portable and stationary products, components and systems that can generate
      power for use in off-grid applications requiring power up to one kilowatt.
      These
      products, components and systems include hydrogen fuel cells, photovoltaic
      solar
      panels, wind micro-turbines, batteries, charge controllers and inverters. Solar
      panels and on-site wind micro-turbines provide intermittent power that
      frequently must be stored to meet requirements when the panels are not
      producing. The Trulite fuel cells can provide power when the solar panels or
      wind turbines are not operating for extended and consistent power
      availability.





For
      the
      year ended December 31, 2007, and since inception (July 15, 2004), the Company
      has not had significant revenues. The Company has no significant operating
      history as of December 31, 2007. The accompanying financial statements have
      been
      prepared assuming the Company will continue as a going concern. From inception
      (July 15, 2004) through December 31, 2007, 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 collectability of the accounts. Accounts deemed
      uncollectible are applied against the allowance for doubtful
      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 three to seven 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.





*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.




F-7


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      2 – Summary of Significant Accounting Policies** (Continued)





*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.





The
      Company’s estimates are based on the information available to it at the time
      that it prepares the income tax provision. The Company generally files its
      annual income tax returns several months after its fiscal year-end. Income
      tax
      returns are subject to audit by federal, state, and local governments, generally
      years after the returns are filed. These returns could be subject to material
      adjustments or differing interpretations of the tax laws.





Effective
      January 1, 2007, the Company adopted Financial
      Accounting Standards Board (“FASB”) Interpretation
      Number 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which is
      intended to clarify the accounting for income taxes prescribing a minimum
      recognition threshold for a tax provision before being recognized in the
      consolidated financial statements. FIN 48 also provides guidance on
      derecognition, measurement, classification, interest and penalties, accounting
      in interim periods, disclosure and transition. In accordance with the
      requirements of FIN 48, the Company evaluated all tax years still subject to
      potential audit under state and federal income tax law in reaching its
      accounting conclusions. As a result, the Company concluded it did not have
      any
      unrecognized tax benefits or any additional tax liabilities after applying
      FIN
      48 as of the January 1, 2007 adoption date or for the fiscal year ended December
      31, 2007. The adoption of FIN 48 therefore had no impact on the Company’s
      consolidated financial statements. See Note 10 to the Company’s consolidated
      financial statement for further discussion.





*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.




*Stock-Based
      Compensation.* A t
      December 31, 2007, the Company had a stock-based employee compensation plan.
      The
      Company accounts for stock grants issued under the plan in accordance with
      the
      recognition and measurement principles of Statement of Financial Accounting
      Standards (“SFAS”) No. 123R, “Share-Based Payment” (“SFAS No. 123R”). SFAS No.
      123R requires that expense resulting from all share-based payment transactions
      be recognized in the financial statements at fair value.





*Reclassifications* Certain
      reclassifications have been made to conform prior period amounts to the current
      period presentation. These reclassifications had no effect on net loss or
      stockholders’ deficit.





*New
      Accounting Pronouncements*





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. For non-financial assets
      and
      liabilities that are recognized or disclosed at fair value in the financial
      statements at least annually as well as for all financial assets and
      liabilities, SFAS No. 157 is effective in financial statements issued for fiscal
      years beginning after November 15, 2007. For non-financial assets and
      liabilities that are not recognized or disclosed at fair value in the financial
      statements on a recurring basis, SFAS No. 157 is effective in financial
      statement issued for fiscal years beginning after November 15, 2008. The Company
      is currently evaluating the impact of adopting SFAS No. 157 on its
      financial statements.




F-8


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      2 – Summary of Significant Accounting Policies** (Continued)





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. The Company does not expect the new standard to
      have a material impact on its financial position or results of
      operation.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
      No. 141(R)”). SFAS No. 141(R) requires the Company to continue to follow
      the guidance in SFAS No. 141 for certain aspects of business combinations,
      with additional guidance provided defining the acquirer, recognizing and
      measuring the identifiable assets acquired, the liabilities assumed, and any
      noncontrolling interest in the acquiree, assets and liabilities arising from
      contingencies, defining a bargain purchase and recognizing and measuring
      goodwill or a gain from a bargain purchase. This statement is effective for
      all
      business combinations for which the acquisition date is on or after the
      beginning of an entity’s first fiscal year that begins after December 15,
      2008. The Company will implement SFAS No. 141(R) for any business
      combinations occurring at or subsequent to January 1,
      2009.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements,” an Amendment of ARB No. 51,
“Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160
      establishes accounting and reporting standards for the noncontrolling interest
      in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
      a
      noncontrolling interest in a subsidiary is an ownership interest in the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. This statement is effective as of the beginning of an
      entity’s first fiscal year that begins after December 15, 2008 with
      retrospective application. SFAS No. 160 will not impact the Company’s financial
      statements.





**Note
      3 – Property and Equipment**





Property
      and Equipment consists of the following:





**December 31,**
            
            **December 31,****2007**
            
            **2006**Office
                and other equipment
            
            $
            79,657
            
            $
            59,249Manufacturing
                equipment
            
            
            15,450
            
            
            9,491Test
                equipment
            
            
            7,123
            
            
            4,150Total
                fixed assets
            
            
            102,230
            
            
            72,890Accumulated
                depreciation
            
            
            (48,908
            )
            
            (22,811
            )Property
                and equipment, net
            
            $
            53,322
            
            $
            50,079




F-9


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      4 – Accounts Payable and Accrued liabilities**





**December 31,**
            
            **December 31,****2007**
            
            **2006**Accounts
                payable
            
            $
            137,732
            
            $
            134,905Accrued
                expenses
            
            
            122,506
            
            
            104,639$
            260,238
            
            $
            239,544




**Note
      5 – Notes Payable to Affiliates and Conversion to Common
      Stock**





*Contango
      Venture Capital Corporation (“CVCC”)*





The
      Company had incurred indebtedness from CVCC through issuance of promissory
      notes
      as follows:





**Issue date**
            
            **Maturity**
            
            **Principal**
            
            **Interest rate**August
                9, 2006
            
            December
              31, 2007 (As amended)
            
            $
            125,000
            
            12.25%
              (As amended)November
                22, 2006
            
            December
              31, 2007 (As amended)
            
            $
            400,000
            
            12.25%
              (As amended)February
                6, 2007
            
            December
              31, 2007 (As amended)
            
            $
            240,000
            
            12.25%
              (As amended)May
                30, 2007
            
            February
              19, 2008
            
            $
            240,000
            
            11.25%August
                20, 2007
            
            May
              16, 2008
            
            $
            250,000
            
            12.25%





On
      November 26, 2007, the Company and CVCC, entered into a Third Amendment to
      Subscription Agreement (the “CVCC Amended Subscription Agreement”) whereby, in
      consideration of cancellation of the entire principal balance of, and accrued
      but unpaid interest on, the promissory notes dated August 9, 2006, November
      22,
      2006 and February 6, 2007, made by the Company in favor of CVCC (the “CVCC
      Notes”), the $844,628 outstanding under the CVCC Notes, which included $79,628
      of accrued and unpaid interest, was converted into 1,260,639 unregistered shares
      of the Company’s common stock.





On
      November 26, 2007, the Company and CVCC entered into a Subscription Agreement
      (the “November 2007 CVCC Subscription Agreement”), whereby, in consideration of
      cancellation of the entire principal balance of, and accrued but unpaid interest
      on, the promissory notes dated May 30, 2007 and August 20, 2007, made by the
      Company in favor of CVCC (the “CVCC New Notes”), the $511,912 outstanding under
      the CVCC New Notes, which included $21,912 of accrued and unpaid interest,
      was
      converted into 764,048 unregistered shares of the Company’s common stock.





The
      CVCC
      Amended Subscription Agreement and the November 2007 CVCC Subscription Agreement
      are substantive conversion options in accordance with the Emerging Issue Task
      Force (“EITF”) Issue No. 06-06, “Debtor’s Accounting for a Modification (or
      Exchange) of Convertible Debt Instruments” (“Issue No. 06-06”) and in accordance
      with EITF Issue No. 96-19, “Debtor’s Accounting for a Modification or Exchange
      of Debt Instruments” (“Issue No. 96-19”), were accounted for as an
      extinguishment of debt. Management of CVCC allowed for the conversion of CVCC
      Notes and CVCC New Notes at a stock price of $0.67 per share, which was greater
      than the estimated fair value of the Company’s common stock $0.50 per share on
      the date of conversion. An additional 688,393 shares of common stock, at an
      estimated fair value of $344,197, which would have been issued to CVCC if the
      CVCC Notes and CVCC New Notes were converted at the estimated fair value of
      the
      Company’s common stock, was credited to additional paid-in capital.





As
      of
      December 31, 2007, CVCC owned approximately 19% of the Company’s common
      stock.




F-10


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      5 – Notes Payable to Affiliates and Conversion to Common Stock** (Continued)




Standard
      Renewable Energy Group, LLC and a wholly
      owned subsidiary (“SREG”)




The
      Company had incurred indebtedness from SREG through issuance of promissory
      notes
      as follows:





**Issue
                date**
            
            **Maturity**
            
            **Principal**
            
            **Interest
                rate**August
                9, 2006
            
            December
              31, 2007 (As amended)
            
            $
            125,000
            
            12.25%
              (As amended)September
                21, 2006
            
            December
              31, 2007 (As amended)
            
            $
            250,000
            
            12.25%
              (As amended)October
                26, 2006
            
            December
              31, 2007 (As amended)
            
            $
            250,000
            
            12.25%
              (As amended)November
                28, 2006
            
            December
              31, 2007 (As amended)
            
            $
            100,000
            
            12.25%
              (As amended)February
                6, 2007
            
            December
              31, 2007 (As amended)
            
            $
            360,000
            
            12.25%
              (As amended)May
                31, 2007
            
            February
              19, 2008
            
            $
            360,000
            
            11.25%August
                20, 2007
            
            May
              16, 2008
            
            $
            375,000
            
            12.25%





On
      November 26, 2007, the Company and SREG entered into a Third Amendment to
      Subscription Agreement (the “SREG Amended Subscription Agreement”) whereby, in
      consideration of cancellation of the entire principal balance of, and accrued
      but unpaid interest on, the promissory notes dated August 9, 2006, September 21,
      2006, October 26, 2006, November 28, 2006 and February 6, 2007, made by the
      Company in favor of SREG (the “SREG Notes”), the $1,130,524 outstanding under
      the SREG Notes, which included $45,524 of accrued and unpaid interest, was
      converted into 2,261,048 unregistered shares of the Company’s common
      stock.





On
      November 26, 2007, the Company and SREG entered into a Subscription Agreement
      (the “November 2007 SREG Subscription Agreement”), whereby, in consideration of
      cancellation of the entire principal balance of, and accrued but unpaid interest
      on, the promissory notes dated May 31, 2007 and August 20, 2007, made by the
      Company in favor of SREG (the “SREG New Notes”), the $758,530 outstanding under
      the SREG New Notes, which included $23,530 of accrued and unpaid interest,
      was
      converted into 1,517,060 unregistered shares of the Company’s common
      stock.





The
      SREG
      Amended Subscription Agreement and the November 2007 SREG Subscription Agreement
      are substantive conversion options in accordance with EITF Issue No. 06-06,
      “Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt
      Instruments” (“Issue No. 06-06”) and in accordance with EITF Issue No. 96-19,
“Debtor’s Accounting for a Modification or Exchange of Debt Instruments” (“Issue
      No. 96-19”), were accounted for as an extinguishment of debt. There was no gain
      or loss recognized on extinguishment.





As
      of
      December 31, 2007, SREG owns approximately 54% of the Company’s common
      stock.





**Note
      6 – Note and Warrant Purchase Agreements**





On
      June
      26, 2007, the Company pursuant to the terms of a Note and Warrant Purchase
      Agreement dated June 26, 2007 (the “June Purchase Agreement”), sold a total of
      6.66 units (“Units”), each Unit comprising (i) a convertible promissory note (a
“Note”), in the original principal amount of $75,000, and (ii) a warrant (a
“Warrant”), to purchase 100,000 shares of the Company's common stock at a price
      of $1.00 per share. The Company sold a total of $500,000 in principal amount
      of
      Notes and Warrants to purchase a total of 666,666 shares of Common Stock for
      total proceeds of $500,000. Each Note bears interest at a rate of 15% per annum.
      Principal and accrued but unpaid interest on each Note are payable in full
      on
      June 26, 2008. Amounts outstanding under each Note may be prepaid without
      penalty. The unpaid principal balance due under each Note, together with any
      accrued but unpaid interest, may be converted into unregistered shares of Common
      Stock at a conversion price of $0.75 per share. Each Warrant is exercisable
      until June 26, 2010, at an exercise price of $0.50 per share (As amended, see
      Note 7) and has a cashless exercise feature. On November 26, 2007, the
      convertible promissory notes dated June 26, 2007, with a principal amount of
      $500,000, together with accrued and unpaid interest of $31,442, was converted
      into 1,062,884 unregistered shares of its common stock at a reduced conversion
      price of $0.50 per share. The Company recognized a debt conversion expense
      of
      $177,147 related to the reduced conversion price, in accordance with SFAS No.
      84, “Induced Conversions of Convertible Debt, which is included in general and
      administrative expenses in the statement of operations for the year ended
      December 31, 2007.




F-11


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      6 – Note and Warrant Purchase Agreements** (Continued) ****





On
      November 7, 2007, the Company, pursuant to the terms of a Note and Warrant
      Purchase Agreement dated November 7, 2007 (the “November Purchase Agreement”),
      sold a total of seventeen units (“Units”), at a price of $25,000 per Unit, with
      each Unit comprising (i) an unsecured promissory note (a “Note”), in the
      original principal amount of $25,000, and (ii) a warrant (a “Warrant”) to
      purchase 25,000 shares of the Company’s common stock, $0.0001 par value (“Common
      Stock”), at a price of $.50 per share. The Company sold a total of $425,000 in
      principal amount of Notes and Warrants to purchase a total of 425,000 shares
      of
      Common Stock. Each Note bears interest at a rate of 15% per annum. Principal
      and
      accrued but unpaid interest on each Note are payable in full on April 30, 2008.
      Amounts outstanding under each Note may be prepaid without penalty. Each Warrant
      is exercisable until November 7, 2008, at an exercise price of $.50 per share,
      subject to adjustment as provide in the Warrant and has a cashless exercise
      feature.





In
      accordance with the guidelines of APB No. 14, “Accounting for Convertible Debt
      and Debt Issued with Stock Purchase Warrants,” the
      proceeds of the November Purchase Agreement and the June Purchase Agreement
      were
      allocated to the Warrants and to the Notes based on the relative fair values
      of
      the two instruments at the date of issuance. The
      fair
      value of the Warrants was determined using the Black-Scholes pricing model,
      assuming a risk-free interest rate of 3.71 % and 4.63%, a volatility factor
      of
      50% and 63%, dividend yields of 0% and a contractual life of one and three
      years
      for the November and June Purchase Agreements, respectively. Of
      the
      $425,000 of proceeds received from the November Purchase Agreement $40,800
      was
      recorded to additional paid-in capital to recognize the issuance of the Warrants
      and as a discount to the face amount of the Notes of $425,000. The discount
      will
      be amortized to interest expense through the date of maturity, April 30, 2008.
      Of the $500,000 of proceeds received from the June Purchase Agreement, $135,300
      was recorded to additional paid-in capital to recognize the issuance of the
      Warrants and as a discount to the face amount of the Notes of $500,000. The
      discount will be amortized to interest expense through date of maturity, June
      26, 2008. The convertible feature contained in the Notes of the June Purchase
      Agreement was not a beneficial conversion feature in accordance with EITF
      98-5, “Accounting for Convertible Securities with Beneficial Conversion Features
      or Contingently Adjustable Conversion Ratios,” and thus no portion of the
      proceeds was allocated to the conversion feature of the Notes.





**Note
      7 – Stockholders’ Equity**





*Common
      Stock*





On
      April
      13, 2006, the Company raised additional equity of $1,000,000 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 (amended
      to $0.50 per share on November 19, 2007) that
      expire on April 13, 2007. The value of the warrants was included as additional
      paid in capital.





On
      April
      26, 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 (amended to $0.50 per share on
      November 19, 2007). 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.





On
      February 22, 2007, the Company’s Board of Directors agreed to extend the term of
      warrants, until April 13, 2008, that were issued on April 13, 2006 in connection
      with the issuance of common stock for cash consideration of $1.00 per share.
      These warrants entitled the holders to purchase an additional 1,000,000 shares
      of common stock of the Company at an original exercise price of $1.50 per common
      share (amended to $0.50 per share
      on
      November 19, 2007), that were originally set to expire on April 13, 2007. A
      difference of $104,881 in the fair value of these warrants after modification,
      when compared to their fair value immediately prior to the modification, was
      recorded as a deemed dividend in the first quarter of 2007.


F-12
 Trulite,
          Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 **For
          the Years Ended December 31, 2007 and 2006**
 **Note
        7 – Stockholders’ Equity** (Continued)


On
      November 19, 2007, the Board of Directors of the Company approved the amendment
      of any and all warrants to purchase the common stock of the Company to reflect
      an exercise price of $0.50 per share. Outstanding warrants as of December 31,
      2007 are as follows:


**Date**
                  **Issued**
                
                **Expiration**
                  **Date**
                
                **Original**
                  **Exercise Price**
                
                **Amended Exercise**
                  **Price**
                
                **# of Common Shares
                    for which Warrant is Exercisable**4/13/2006
                
                
                4/13/2008
                
                $
                1.50
                
                $
                0.50
                
                
                1,000,0004/26/2006
                
                
                4/26/2011
                
                $
                3.00
                
                $
                0.50
                
                
                400,0004/19/2007
                
                
                4/19/2009
                
                $
                1.20
                
                $
                0.50
                
                
                120,0006/26/2007
                
                
                6/26/2010
                
                $
                1.00
                
                $
                0.50
                
                
                666,66611/7/2007
                
                
                11/7/2008
                
                $
                0.50
                
                $
                0.50
                
                
                425,000**2,611,666**


A
      difference of $234,197 in the fair value of these warrants after modification,
      when compared to their fair value immediately prior to the modification, was
      recorded as a deemed dividend in the fourth quarter of 2007.





On
      November 26, 2007, the Company entered into a Common Stock Purchase Agreement
      with SREG. Pursuant to the terms of the Purchase Agreement, the Company sold
      a
      total of 2,400,000 unregistered shares of the Company’s common stock, $0.0001
      par value to SREG for total proceeds of $1,200,000, or $0.50 per share.





On
      November 26, 2007, the Company entered into the CVCC Amended Subscription
      Agreement and the November 2007 CVCC Subscription Agreement under which it
      issued 2,024,687 unregistered shares of its common stock. See Note
      5.





On
      November 26, 2007, the Company entered into the SREG Amended Subscription
      Agreement and the November 2007 SREG Subscription Agreement under which it
      issued 3,778,108 unregistered shares of its common stock. See Note
      5.





On
      November 26, 2007, the Company issued 1,062,884 unregistered shares of its
      common stock through the conversion of the convertible promissory notes dated
      June 26, 2007. See Note 6.





On
      June
      26, 2007, the Company agreed to issue 100,000 unregistered shares of common
      stock to a consultant who provided services to the Company in connection with
      the consummation of the transactions contemplated by the June Purchase
      Agreement, including providing advice regarding the terms of the Notes and
      Warrants and identifying potential investors. The Company recognized $75,000
      as
      a component of general and administrative expenses, the estimated fair value
      of
      the shares issued.





On
      May 4,
      2007, the Company amended its certificate of incorporation to increase the
      authorized capital stock of the Company from 21,500,000 shares to 51,500,000
      shares of capital stock, consisting of 50,000,000 shares of common stock and
      1,500,000 shares of preferred stock.





On
      April
      19, 2007, the Company issued two-year warrants to purchase the Company’s common
      stock at $1.20 per share (amended to $0.50 per share on November 19, 2007),
      for
      consulting services from a former employee. The fair value of the warrants,
      utilizing the Black-Scholes method and assuming a risk-free interest rate of
      4.64%, expected volatility of 59%, expected life of 2 years and no dividend
      yield, resulted in a fair value of $18,478, which was recorded as a component
      of
      general and administrative expense.




F-13


Trulite,
        Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 **For
        the Years Ended December 31, 2007 and 2006**


**Note
      7 – Stockholders’ Equity** (Continued)





*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.





**Note
      8 – 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 5,000,000 shares are reserved for issuance
      and, as of December 31, 2007, 1,626,421 shares remained available for grant
      under the Plan.





For
      the
      year ended December 31, 2007 and 2006, total stock-based compensation expense
      recognized was $223,518 and $511,157, respectively. The total unrecognized
      compensation cost at December 31, 2007, relating to non-vested share-based
      compensation arrangements granted under the Plan, was $793,895. That cost is
      expected to be recognized over a weighted average period of 3.1
      years.





During
      the year ended December 31, 2007, the Company granted options to purchase
      1,125,916 shares of common stock under the plan. With respect to 375,916 of
      these options, the exercise price is $1.00 per common share. With respect to
      750,000 of these options the exercise price is $0.75 per common share. The
      exercise price was determined based on management’s estimate of fair value on
      the date of grant. The options vest over a weighted average period of 3.8 years
      and have a contractual life of seven years. 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. The fair value
      of
      these options was based upon the weighted average assumptions noted
      below:


F-14
 Trulite,
          Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 **For
          the Years Ended December 31, 2007 and 2006**
 **Note
        8 – Stock-Based Compensation** (Continued)




**For the Year Ended December 31,****Assumptions**
            
            **2007**
            
            **2006**Risk
                free rate
            
            
            4.76
            %
            
            4.85
            %Expected
                life (in years)
            
            
            4.7
            
            
            3.5Expected
                volatility
            
            
            64
            %
            
            71
            %Expected
                dividends
            
            $
            -
            
            $
            -Fair
                value
            
            $
            0.47
            
            $
            0.47




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. 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 option grants 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
      has
      historically been 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, 2007, and the changes during the twelve months then
      ended:





**Option
                Activity****Shares**
            
            **Weighted Average**
            
            **Weighted Average**
            
            **Aggregate****Under**
            
            **Exercise Price**
            
            **Remaining**
            
            **Intrinsic****Options**
            
            **Per Share**
            
            **Contractual Term**
            
            **Value**Outstanding
                at January 1, 2007
            
            
            2,447,060
            
            $
            0.94Granted
            
            
            1,125,916
            
            
            0.83Exercised
            
            
            (50,000
            )
            
            1.00Forfeited/Cancelled
            
            
            (97,300
            )
            
            1.00Outstanding
                at December 31, 2007
            
            
            3,425,676
            
            
            0.90
            
            
            4.9
                years
            
            $
            -Vested
                or expected to vest at December 31, 2007
            
            
            3,230,941
            
            
            0.90
            
            
            
            
            
            -Exercisable
                at December 31, 2007
            
            
            1,478,330
            
            $
            0.90
            
            
            3.3
                years
            
            $
            -





**Note
      9 – Research and Development Costs**





Expenditures
      for research activities relating to product development and improvement are
      charged to expense as incurred. For the year ended December 31, 2007 and 2006,
      research and development costs were $1,928,582 and $1,216,616,
      respectively.





**Note
      10 – 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, 2007 and 2006.




F-15


Trulite,
      Inc.


(A
      Development Stage Company)


Notes
      to
      Financial Statements


**For
      the Years Ended December 31, 2007 and 2006**




**Note
      10 – Income taxes** (Continued)





The
      Company adopted the provisions of FIN 48 on January 1, 2007. After application
      of the provisions of FIN 48, it was not necessary for the Company to recognize
      any liability for unrecognized tax benefits or adjustment to the balance of
      retained earnings as of January 1, 2007. The Company’s policy is to classify
      interest and penalties related to unrecognized tax benefits in income tax
      expense. As of January 1, 2007, the Company had no accrued interest and
      penalties related to unrecognized tax benefits. As of January 1, 2007, after
      the
      implementation of FIN 48, the Company had no unrecognized tax benefits.
      Therefore, there is no amount, if recognized, that would affect the effective
      tax rate.





The
      Company files an income tax return in the U.S. federal jurisdiction. For federal
      tax purposes, the Company’s 2004 through 2006 tax years remain open for
      examination by the tax authorities under the normal three year statute of
      limitations. The adoption of FIN 48 on January 1, 2007 did not have a material
      effect on the Company’s results of operations or financial
      condition.




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, 2007 and 2006, respectively,
      are
      as follows:




Year Ended December 31,2007
            
            2006Computed
                income tax benefit
            
            $
            (1,653,862
            )
            $
            (1,205,153
            )Qualified
                stock compensation
            
            
            78,231
            
            
            178,905Debt
                conversion expense
            
            
            62,001
            
            
            -Other
                permanent differences
            
            
            1,623
            
            
            3,485Increase
                in valuation allowance
            
            
            1,512,007
            
            
            1,022,763Tax
                expense
            
            $
            -
            
            $
            -





The
      tax
      effects of the temporary differences that give rise to deferred tax assets
      and
      liabilities at December 31, 2007 and 2006 are as follows:




At December 31,2007
            
            2006Deferred
                tax assets:Loss
                carryforwards
            
            $
            2,885,165
            
            $
            1,398,286Stock-based
                expense
            
            
            261,205
            
            
            228,487Other
                temporary differences
            
            
            10,045
            
            
            17,6353,156,415
            
            
            1,644,408Less
                valuation allowance
            
            
            (3,156,415
            )
            
            (1,644,408
            )Net
                deferred tax asset
            
            $
            -
            
            $
            -




As
      of
      December 31, 2007, the Company had net operating loss carryforwards of
      approximately $8.2 million. To the extent not utilized, the net operating loss
      carryforwards will begin to expire in 2024.




F-16


Trulite,
      Inc.


(A
      Development Stage Company)


Notes
      to
      Financial Statements


**For
      the Years Ended December 31, 2007 and 2006**


**Note
      11 – Commitments and Contingencies**





*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. ****




*Leases*





Rent
      expense for the year ended December 31, 2007 and 2006 was $32,848 and $35,737,
      respectively. Rent expense is included in general and administrative expenses
      in
      the accompanying statements of operations. The Company’s lease agreement will
      expire in May 2008, with future rental commitments of approximately
      $15,000 .




*Other*





The
      Company had an employment agreement with its President that expires July 31,
      2008, under which the committed obligation is $110,000 at December 31,
      2007.




**Note
      12 – Related Party Transactions**





*Due
      to affiliates*





As
      of
      December 31, 2007 and 2006, ** amounts ** due
      to
      affiliates consisted of $57,363 and $62,363 due to SREG for management and
      administrative services, respectively.





During
      the twelve month period ended December 31, 2007 and 2006, SREG billed the
      Company $454,907 and $71,121, respectively, for management and administrative
      services.





*Interest
      expense*





For
      the
      year ended December 31, 2007, the Company incurred interest expense of $144,875
      and $101,184, respectively, related to promissory notes with SREG and CVCC.
      For
      the year ended December 31, 2006, the Company incurred interest expense of
      $19,082 and $10,644, respectively, related to promissory notes with SREG and
      CVCC.




F-17


Trulite,
      Inc.


(A
      Development Stage Company)


Notes
      to
      Financial Statements


**For
      the Years Ended December 31, 2007 and 2006**


**Note
      13 – Net Loss Per Share**




**Twelve Months Ended December 31,****2007**
              
              **2006**Numerator:Net
                  loss
              
              $
              (4,725,321
              )
              $
              (3,443,294
              )Increases
                  to Net Loss:Preferred
                  stock dividends
              
              
              -
              
              
              (39,275
              )Deemed
                  dividend on conversion of preferred stock to common stock
              
              
              -
              
              
              (1,586,150
              )Deemed
                  dividend on warrant extension
              
              
              (339,078
              )
              
              -Net
                  loss attributable to common stockholders
              
              $
              (5,064,399
              )
              $
              (5,068,719
              )DenominatorBasic
                    earnings per share - weighted averagecommon
                    shares outstanding
              
              
              12,766,702
              
              
              9,139,510Weighted-average
                  dilutive effect of stock-based awards and common stock issuable
                  upon
                  conversion of preferred stock, net of assumed repurchase of treasury
                  stock
              
              
              -
              
              
              -Fully-diluted
                  earnings per share - weighted average common shares
                  outstanding
              
              
              12,766,702
              
              
              9,139,510Net
                  loss per common shareBasic
                  and diluted
              
              $
              (0.37
              )
              $
              (0.37
              )Preferred
                  and deemed dividends
              
              
              (0.03
              )
              
              (0.18
              )Attributable
                  to common stockholders
              
              $
              (0.40
              )
              $
              (0.55
              )




Basic
      and
      diluted net loss per share are the same since the effect of all common stock
      equivalents are anti-dilutive 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:


Anti-dilutive
                  securities
  **Twelve Months Ended December 31,****2007**
              
              **2006**Common
                  stock options
              
              
              2,924,069
              
              
              1,610,461Common
                  stock warrants
              
              
              1,809,246
              
              
              986,3018%
                  cumulative convertible series A preferred stock
              
              
              -
              
              
              486,237Convertible
                  debt (if-converted)
              
              
              2,904,519
              
              
              -




**Note
      14 – Subsequent Event**





In
      February and March 2008, the Company pursuant to the terms of a Note and Warrant
      Purchase Agreement, sold a total of five units (the “Units”), each Unit
      comprising (i) a 15% interest bearing unsecured promissory note in the principal
      amount of $25,000, with a six-month maturity date (the “Notes”), and (ii) a one
      year common stock warrant to purchase 50,000 shares of the Company’s Common
      Stock at an exercise price of $0.50 per share (the “Warrants”). The price of
      each unit was $25,000. The Company sold a total of $125,000 in principal amount
      of Notes and Warrants to purchase a total of 250,000 shares of Common Stock
      for
      total proceeds of $125,000.




F-18




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





None.





**Item
      9A(T). Disclosure Controls and Procedures.**





**Disclosure
      Controls and Procedures**





In
      an
      effort to ensure that the information the Company must disclose in its filings
      with the Securities and Exchange Commission is recorded, processed, summarized,
      and reported on a timely basis, the Company’s chief executive officer and chief
      financial officer have evaluated the effectiveness of the Company’s disclosure
      controls and procedures as defined in Exchange Act Rules 13a-15(e) and
      15d-15(e), as of December 31, 2007. Based on such evaluation, such officers
      have concluded that, as of December 31, 2007, the Company’s disclosure
      controls and procedures were effective in timely alerting them to information
      relating to the Company required to be disclosed in the Company’s periodic
      reports filed with the SEC.





**Management’s
      Report on Internal Control Over Financial Reporting**





The
      Company’s management is responsible for establishing and maintaining adequate
      internal control over financial reporting, as such term is defined in
      Rule 13a-15(f) of the Securities Exchange Act of 1934, as a process
      designed by, or under the supervision of, the company's principal executive
      and
      principal financial officers and effected by the company's board of directors,
      management and other personnel, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with accounting principles generally
      accepted in the United States of America and includes those policies and
      procedures that:





·
            Pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect the transactions and dispositions of the assets of
                the
                company;





·
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with accounting
                principles generally accepted in the United States of America and
                that
                receipts and expenditures of the company are being made only in accordance
                with authorizations of management and directors of the company;
                and





·
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of the company's assets
                that
                could have a material effect on the financial
                statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Therefore, even those systems determined to
      be
      effective can provide only reasonable assurance with respect to financial
      statement preparation and presentation. Also, projections of any evaluation
      of
      effectiveness to future periods are subject to risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate. Under the supervision and
      with
      the participation of management, including the Chief Executive Officer and
      the
      Chief Financial Officer, an evaluation was conducted on the effectiveness of
      the
      Company’s internal control over financial reporting based on criteria
      established in the Internal Control—Integrated Framework issued by the Committee
      of Sponsoring Organizations of the Treadway Commission. Management concluded
      that the Company maintained effective internal control over financial reporting
      as of December 31, 2007. This annual report does not include an attestation
      report of the Company’s registered public accounting firm regarding internal
      control over financial reporting. Management’s report was not subject to
      attestation by the Company’s registered public accounting firm pursuant to
      temporary rules of the Securities and Exchange Commission that permit the
      Company to provide only management’s report in this annual report.





26


**Changes
      in Internal Control Over Financial Reporting**





There
      has
      been no change in the Company’s internal control over financial reporting during
      the quarter ended December 31, 2007 that has materially affected, or is
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.





**Item
      9B. Other Information.**





None.




**Part
      III**




**Item
      10. Directors, Executive Officers and Corporate
      Governance.**





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-K.





**Item
      11. 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-K.





**Item
      12. 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-K.





**Item
      13. Certain Relationships and Related Transactions, and Director
      Independence.**





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-K.





**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-K.





**Part
      IV**





**Item
      15. Exhibits and Financial Statement Schedules**





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 Bylaws3.6(17)
            
            Amended
                and Restated 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
                A




27





Number
            
            Description10.2(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
                offering10.48(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.




28





Number
            
            Description10.58(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 Corporation10.63(16)
            
            Consulting
                Agreement, dated April 4, 2007, by and between Trulite and Fenway
                Advisory
                Group10.64(16)
            
            Form
                of Warrant Agreement issued to Fenway Advisory Group10.65(16)
            
            Subscription
                Agreement, dated April 5, 2006, by and between Trulite, Inc. and
                Standard
                Renewable Energy Group, LP10.66(16)
            
            Subscription
                Agreement, dated April 5, 2006, by and between Trulite, Inc. and
                Standard
                Renewable Energy Group, LLC10.67(16)
            
            Subscription
                Agreement, dated April 5, 2006, by and between Trulite, Inc. and
                Contango
                Venture Capital Corporation10.68(16)
            
            Form
                of Amendment to Warrant10.69(17)
            
            Amendment
                to Subscription Agreement, dated April 24, 2006, by and between Trulite,
                Inc. and Standard Renewable Energy Group, LP10.70(17)
            
            Amendment
                to Subscription Agreement, dated April 24, 2006, by and between Trulite,
                Inc. and Standard Renewable Energy Group, LLC10.71(17)
            
            Amendment
                to Subscription Agreement, dated April 24, 2006, by and between Trulite,
                Inc. and Contango Venture Capital Corporation10.72A(17)
            
            Stockholder
                Lock-Up Agreement with Andrew J. Nielsen10.72B(18)
            
            Promissory
                Note dated May 30, 2007, made by Trulite in favor of Contango Venture
                Capital Corporation10.73(18)
            
            Promissory
                Note dated May 31, 2007, made by Trulite in favor of Standard Renewable
                Energy Group, LLC10.74(19)
            
            Form
                of Convertible Promissory Note10.75(19)
            
            Form
                of Warrant10.76(19)
            
            Note
                and Warrant Purchase Agreement dated June 26, 200710.76A(20)
            
            Agreement,
                dated July 10, 2007 between Trulite, Inc. and HPC Capital
                Management10.76B(21)
            
            Amendment
                To Promissory Note, dated June 29, 2007, made by Trulite, Inc., in
                favor
                of Standard Renewable Energy Group, LLC.10.76C(21)
            
            Amendment
                To Promissory Note, dated June 29, 2007, made by Trulite, Inc., in
                favor
                of Contango Venture Capital Corporation.10.77(21)
            
            Amendment
                To Promissory Note, dated June 29, 2007, made by Trulite, Inc., in
                favor
                of Standard Renewable Energy, LP.10.78(21)
            
            Second
                Amendment To Subscription Agreement, dated June 29, 2007, made by
                Trulite,
                Inc., in favor of Standard Renewable Energy Group, LLC.10.79(21)
            
            Second
                Amendment To Subscription Agreement, dated June 29, 2007, made by
                Trulite,
                Inc., in favor of Contango Venture Capital Corporation.10.80(21)
            
            Second
                Amendment To Subscription Agreement, dated June 29, 2007, made by
                Trulite,
                Inc., in favor of Standard Renewable Energy, LP.10.81(22)
            
            Promissory
                Note, dated August 20, 2007, made by Trulite, Inc., in favor of Contango
                Venture Capital Corporation.10.82(22)
            
            Promissory
                Note, dated August 20, 2007, made by Trulite, Inc., in favor of Standard
                Renewable Energy Group, LLC.10.83(23)
            
            Form
                of Promissory Note10.84(23)
            
            Form
                of Warrant10.85(23)
            
            Note
                and Warrant Purchase Agreement dated November 7, 200710.86(24)
            
            Third
                Amendment to Subscription Agreement - SRE, LP10.87(24)
            
            Third
                Amendment to Subscription Agreement - SREG10.88(24)
            
            Third
                Amendment to Subscription Agreement - CVCC10.89(24)
            
            November
                26, 2007 Subscription Agreement - SREG10.90(24)
            
            November
                26, 2007 Subscription Agreement - CVCC10.91(24)
            
            SREG
                Common Stock Purchase Agreement10.92(24)
            
            Form
                of April 13, 2006 Warrants, as
                Amended




29




Number
            
            Description10.93(24)
            
            Form
                of April 26, 2006 Warrants, as Amended10.94(24)
            
            Form
                of April 19, 2007 Warrants, as Amended31.1(25)
            
            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(25)
            
            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(25)
            
            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(25)
            
            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)
            Previously
                filed as an exhibit to Post-Effective Amendment No. 1 to Form SB-2/A,
                filed April 6, 2007(17)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated May 23, 2007 and
                incorporated herein by reference(18)`
            Previously
                filed as an exhibit to the Company’s Form 8-K dated May 30, 2007 and
                incorporated herein by reference(19)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated June 26, 2007 and
                incorporated herein by reference(20)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated July 10, 2007 and
                incorporated herein by reference(21)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated July 30, 2007 and
                incorporated herein by reference(22)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated August 20, 2007 and
                incorporated herein by reference(23)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated November 7, 2007 and
                incorporated herein by reference(24)
            Previously
                filed as an exhibit to the Company’s Form 8-K dated November 26, 2007 and
                incorporated herein by reference(25)
            Filed
                herewith




30




SIGNATURES





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





Dated:
                March 31, 2008
            **TRULITE,
              INC.**By:
            /s/
                Jonathan GodshallJonathan
                GodshallChief
                Executive Officer (Principal 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.




/s/
              Jonathan Godshall
            Director
              and Chief Executive Officer
            March
              31, 2008Jonathan Godshall
            (Principal Executive Officer)/s/
                G. Wade Stubblefield
            Chief Financial
              Officer
            March
              31, 2008G. Wade Stubblefield
            (Principal Executive Officer)/s/
                John Berger
            Chairman
              of the Board of Directors
            March
              31, 2008John
              Berger/s/
                Richard Hoesterey
            Director
            March
              31, 2008Richard
                Hoesterey/s/
              General Randolph House
            Director
            March
              31, 2008General
                Randolph House/s/
              W. Kyle Willis
            Director
            March
              31, 2008W.
                Kyle Willis/s/
              John Sifonis
            Director
            March
              31, 2008John Sifonis/s/
              John White
            Director
            March
              31, 2008John White






31