**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**Form
      10-KSB**





(Mark
      One)





**|X|
      ANNUAL REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      fiscal year ended December 31, 2005





**|_|
      TRANSITION REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      transition period from ______________ to ______________





*Commission
      File Number 0-51696*


_______________________________________________





**Trulite,
      Inc.**





(Exact
      name of registrant as specified in its charter)





_______________________________________________




Delaware
                (State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              24-5711620
                (I.R.S.
                  Employer
                Identification
                  No.)Three
                  Riverway, Suite 1700
                Houston,
                  TX
                (Address
                  of principal executive offices)
              
              77056
                (zip
                  code)Registrant’s
                  telephone number, including area code:(817)
                  846-9898


______________________________________________





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)

















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





Check
      whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange
      Act). Yes No X





Indicate
      by check mark if disclosure of delinquent filers in response to Item 405 of
      Regulation S-B (§229.405 of this chapter) 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-KSB. |_|





Issuer’s
      revenue for the most recent fiscal year: $16,667





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act).


Yes
      |_|
      No |X ].





As
      of
      June 7, 2006, there were 11,785,491 shares of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE:**





None.





**FORWARD-LOOKING
      STATEMENTS**





Certain
      statements made in this Annual Report on Form 10-KSB are “forward-looking
      statements” (within the meaning of the Private Securities Litigation Reform Act
      of 1995) regarding the plans and objectives of management for future operations.
      Such statements involve known and unknown risks, uncertainties and other factors
      that may cause actual results, performance or achievements of Trulite, Inc.
      (the
“Company”) to be materially different from any future results, performance or
      achievements expressed or implied by such forward-looking statements. The
      forward-looking statements included herein are based on current expectations
      that involve numerous risks and uncertainties. The Company's plans and
      objectives are based, in part, on assumptions involving the continued expansion
      of business. Assumptions relating to the foregoing involve judgments with
      respect to, among other things, future economic, competitive and market
      conditions and future business decisions, all of which are difficult or
      impossible to predict accurately and many of which are beyond the control of
      the
      Company. Although the Company believes its assumptions underlying the
      forward-looking statements are reasonable, any of the assumptions could prove
      inaccurate and, therefore, there can be no assurance the forward-looking
      statements included in this Report will prove to be accurate. In light of the
      significant uncertainties inherent in the forward-looking statements included
      herein, the inclusion of such information should not be regarded as a
      representation by the Company or any other person that the objectives and plans
      of the Company will be achieved.









































**PART
      I**





**Item
      1. Business.**




**Introduction**





Trulite,
      Inc. (“Trulite”, “we”, “us”, “our”, the “Company” or the “Registrant”) was
      incorporated in Delaware on July 15, 2004. Later that month, Trulite purchased
      all membership interests of Trulite Technology, LC (“Trulite Technology”), a
      Utah limited liability company, and merged with Trulite Technology, whereby
      the
      Company was the surviving entity. The Company is engaged in researching,
      developing, manufacturing and commercializing hydrogen fuel cell products and
      maintains its principal offices at Three Riverway, Suite 1700, Houston, Texas
      77056. Its telephone number is (817) 846-9898.





**Historical**





Trulite,
      Inc. (“Trulite”, “we”, “us”, “our”, the “Company” or the “Registrant”) was
      incorporated in Delaware on July 15, 2004. Later that month, Trulite purchased
      all membership interests of Trulite Technology, LC (“Trulite Technology”), a
      Utah limited liability company, and merged with Trulite Technology, whereby
      Trulite survived the merger. The Company is engaged in researching, developing,
      manufacturing and commercializing hydrogen generation and storage technology
      and
      integrated fuel cell products.





In
      January, 2002, members of Trulite Technology submitted a proposal in response
      to
      a Small Business Innovation Research (“SBIR”) solicitation from the Defense
      Threat Reduction Agency (“DTRA”) to research and develop a high energy density,
      hydrogen source to ultimately power nuclear, chemical and biological detection
      equipment in the field. The intended applications of the hydrogen fuel source
      were for use by the military as a source of portable power.





Trulite
      Technology, LC was incorporated in May 20, 2002, upon receipt of notification
      from the DTRA that Trulite Technology would receive a 6 month, $100,000, Phase
      1
      SBIR award to develop a hydrogen fuel source (that is, a technology for
      producing hydrogen gas) that could convert hydrogen gas into electricity. All
      patent, software and other technical rights in any products are retained by
      Trulite.





Work
      on
      the project commenced in August 2002, and in January, 2003, Trulite Technology
      built and tested its first, dry, chemical hydride, hydrogen fuel source. In
      January, 2003 Trulite Technology submitted a proposal to the United States
      Air
      Force (“USAF”) for a very high energy density hydrogen source for larger fuel
      cell systems. Trulite Technology received notification from the USAF in May,
      2003 that it had been selected for another six month, $100,000 Phase 1 SBIR
      award. All patent, software and other technical rights in any products are
      retained by Trulite.





In
      January, 2004, Trulite Technology received an order from Jadoo Power Systems
      for
      two prototype chemical hydride cartridges. These were shipped in March, 2004.
      Trulite Technology also received an order from the Naval Research Laboratory
      for
      four larger cartridges. These were shipped in July, 2004. In October of 2003,
      Trulite had been introduced to William Jackson Berger (a.k.a. “John Berger”) of
      Contango Capital Partners, LP (“CCP”) through Jadoo Power Systems. CCP became
      interested in Trulite Technology’s hydrogen source technology and Trulite
      Technology concluded its first round of private funding with CCP in July, 2004.
      Also in July, 2004, Trulite Technology merged with, and transferred all if
      its
      interests to, the Company, a newly-formed Delaware corporation.


1


Trulite
      is an emerging technology company engaged in the development and production
      of
      portable and stationary products that produce hydrogen for the generation of
      electricity for the commercial and consumer markets. The Company has developed,
      tested, sold and delivered its first hydrogen storage product - the HydroCell,
      an environmentally-friendly alternative to battery power. The Company has
      submitted two patent applications for the HydroCell.





In
      August, 2005, the Company demonstrated its first complete, commercially
      packaged, integrated, hydrogen fuel cell power system. In September 2005, the
      Company introduced its Kitty Hawk system. The product consists of three
      technologies: one that generates hydrogen gas from powered chemical compounds
      (the HydroCell); one that transforms the hydrogen gas into electricity (the
      fuel
      cell stack) and one that controls the flow of hydrogen for the actual generation
      of electricity (the control technology). The Company believes the Kitty Hawk
      is
      the least expensive energy source on the market capable of producing 25 Watts
      of
      power for several hours (as an example, 25 Watts of power is sufficient to
      power
      a DVD player for several hours while concurrently charging a cell phone).





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





The
      Company is currently developing enhanced versions of the Kitty Hawk system:
      the
      Kitty Hawk 3X and the Kitty Hawk 4. The Kitty Hawk 3X is designed to be a 50
      Watt integrated power system that will be able to generate electricity for
      3-4
      hours. The first set of ten Kitty Hawk 3X systems is expected to be manufactured
      and available in early July, 2006 to selected commercial customers for field
      testing. It is anticipated that an additional forty units will be manufactured
      by the end of August, 2006 for sale to selected commercial customers for more
      comprehensive and expansive field testing. Field testing of the units is
      expected to last 6 weeks. Upon completion of field testing of the Kitty Hawk
      3X,
      we anticipate units will be available for sale and delivery into selected
      commercial and consumer markets some time during the fourth quarter of 2006.
      Funding for product development and manufacturing are expected to come from
      bridge loans provided by CCP and external investors.





Trulite
      is also developing the Kitty Hawk 4 system, a more robust and powerful Kitty
      Hawk system capable of generating up to two times the power output of the
      current Kitty Hawk 3X unit. The Kitty Hawk 4 system is designed to be a 100
      Watt
      integrated power system able to generate electricity for up to 4 hours. The
      Kitty Hawk 4 system is anticipated to be available for field testing by the
      end
      of the first quarter, 2007. We anticipate manufacturing between 80 to 100 units
      for sale to selected commercial customers for field testing. Field testing
      is
      anticipated to take 8 to 10 weeks. Upon completion of field testing of the
      Kitty
      Hawk 4 system by the end of the second quarter of 2007, we anticipate units
      will
      be available for sale and delivery into selected commercial and consumer
      markets. Funding for product development and manufacturing are expected to
      come
      from bridge loans provided by CCP, external investors and revenues generated
      from sales of the Kitty Hawk 4 units.





In
      the
      second quarter of 2006, we anticipate hiring a Chief Operating Officer and
      a
      Vice President of Product Development. The objectives of hiring additional
      senior management personnel will be to ensure the successful operations of
      the
      Company and to ensure the on-going product development of the Kitty Hawk
      integrated power system.








2


**Overview
      of the Alternative Fuel Industry**





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





1)
      Conventional hydrocarbon energy sources (oil and natural gas) face increasing
      problems with maintaining supply in the face of growing global demand (Simmons
      & Co, a Houston based investment bank focused on energy, predicts oil will
      average $200 per barrel in 2010);





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
      US
      and other countries due to aging infrastructure, necessitating an alternative
      off-grid power source;





3)
      The
      increasing proliferation of electronic devices from cell phones to portable
      digital movie and music players to personal computers are becoming increasingly
      power hungry as their capabilities increase; it is becoming more challenging
      for
      conventional battery technology to keep pace with increasing power requirements
      resulting in power supply problems in these devices;





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
      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. Trulite also believes both portable and stationary
      hydrogen fuel cell products provide practical, cost efficient solutions to
      the
      reliability and longevity demands of today’s high technology devices, as well as
      providing new, alternative solutions to existing power requirement problems
      by
      providing reliable alternative power sources.





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 key to initial successes.





A
      fuel
      cell is a non-mechanical device (it is a very thin membrane similar to a
      computer chip) which converts hydrogen gas (the fuel source) and oxygen into
      electricity and water. The water is a non-toxic by-product resulting from the
      process of generating electricity and is eliminated during the electricity
      conversion process. Each fuel cell (that is, each “chip”) produces a given
      amount of power when the hydrogen and water are combined (the power output
      is
      measured in watts). When several fuel cells are combined or “stacked”, they
      create a fuel cell stack. For example, when several fuel cells are combined
      into
      a fuel cell stack, the fuel cell stack is capable of producing in excess of
      25
      watts of power. The power output is capable, for example, of powering a DVD
      player and charging a cell phone simultaneously.





There
      will be winners and losers in the commercialization process as the technology
      develops. However, it is too early to tell which technologies will ultimately
      dominate in certain applications, although the future direction appears clear
      in
      some major application areas, such as Proton Exchange Membrane Fuel Cell (PEMFC)
      technology in fuel cell cars.





3


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 reducing
      per
      unit costs. Products will be commercialized at price points that make sense
      to
      both commercial and consumer markets. Stationary and portable applications
      currently lead the way, as fuel cells replace batteries in the portable and
      stationary, light industrial and transportation applications.





Portable
      applications such as 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, reduce production costs, establish
      codes and standards for fuel cell technology, build a skilled labor force,
      develop a hydrogen infrastructure and create public awareness and
      acceptance.


An
      industry survey indicated that approximately 60% of the companies surveyed
      are
      focusing their efforts on PEM (Proton Exchange Membrane) fuel cells (or closely
      related Direct Methanol fuel cell) technologies. PEM fuel cells continue to
      be
      of most interest to fuel cell developers. The report 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.





The
      industry survey also indicated that approximately 38 companies are expected
      to
      offer pre-commercial (demonstration units) or commercial products in 2006.
      General trends indicate that in the next three to five years delays in product
      launch might occur due to either fuel cell performance issues or non technical
      issues such as lack of codification of codes and standards. These delays may
      result in slow adoption of fuel cell products in both the commercial and
      consumer markets.





**Products**





Trulite
      has two products: the HydroCell, a hydrogen generation and storage product,
      and
      the Kitty Hawk power system, a commercially packaged, integrated, hydrogen
      fuel
      cell power system.





Trulite’s
      HydroCell is a technology that utilizes a cartridge filled with a chemical
      hydride (sodium borohydride) that, when injected with water, produces hydrogen
      on demand for portable and stationary power devices. Each cartridge can generate
      up to 500 milliliters/minute of hydrogen. Each cartridge is compact and
      lightweight, weighing only 175 grams. Power to weight ratio (the ability to
      generate the same or more energy by cutting the weight of the generating device)
      is one of many important factors in gaining market acceptance for alternative
      power sources. The HydroCell technology enables fuel cells to run at least
      two
      to three (2-3) times longer than existing fuel cell and battery technology,
      while weighing significantly less than these technologies. The key to the
      HydroCell's efficient design is that it uses moist air exiting a Proton Exchange
      Membrane (PEM) fuel cell to produce hydrogen for the PEM fuel cell stack. Water
      recycling not only enables the HydroCell to produce several liters of hydrogen
      from a lightweight package, but also means that the HydroCell produces hydrogen
      only when the fuel cell stack is operating. The proprietary control technology
      used inside the HydroCell and the cartridges make possible the safe production
      of hydrogen. The internal cartridge components allow the energy dense chemical
      hydride to react with the injected water in a controlled manner while providing
      for complete reactivity of the material.





The
      initial product we seek to market (the HydroCell) is a metallic cylinder
      approximately 2 inches in diameter and 6 inches in height which holds the
      chemical hydride. When water is injected into the cylinder, it creates a
      chemical reaction which generates hydrogen gas. The hydrogen gas is transformed
      into electricity via the fuel cell, which then powers the product in which
      it is
      installed. The container is sealed to prevent moisture from entering the
      cylinder and to ensure the chemical hydride does not escape the cylinder. The
      cylinder is robust and will not break if dropped, resulting in a reliable,
      robust product which is easy to manufacture.





4


Trulite
      believes 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 Trulite cartridge can be kept in storage for
      a
      minimum of three years without losing its energy density. In other words, the
      energy level doesn’t get weaker over time. We believe the Hydrocell has the
      highest energy density of any known portable hydrogen source currently available
      in the market. This is a significant difference from offerings from some of
      our
      competitors, as we believe there are no “dry hydride” technologies currently
      available to the consumer market. Trulite’s dry hydride technology for
      generating hydrogen makes it possible to build HydroCell cartridges capable
      of
      generating hydrogen for up to 72 hours continuously by increasing the size
      of
      the cartridge and adding more chemical hydride.





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





-
      SAFETY:
      Hydrogen is produced only as it is needed, resulting in increasing
      safety;




-
      RELIABILITY: The HydroCell has few moving parts, making it a reliable fuel
      source;





-
      REUSABILITY AND COST: The HydroCell capsules are inexpensive compared with
      the
      costs associated with generating an equal amount of energy from conventional
      energy sources over the life span of one HydroCell cartridge, thus reducing
      the
      total cost of ownership to consumer;





-
      DISPOSABILITY: The HydroCell capsules are disposable. The by-product is an
      inert, solid, chemical oxide with minimal health hazard capable of being
      discarded in landfills; and;





-
      SHELF
      LIFE: The HydroCell can lie dormant for up to thirty-six (36) months without
      losing its energy density.





The
      Company has submitted two patent applications for the HydroCell.





The
      second product we seek to market is the Kitty Hawk power system, a commercially
      packaged, integrated, hydrogen fuel cell power system. The Kitty Hawk product
      consists of three technologies: one that generates hydrogen gas from powered
      chemical compounds (the HydroCell, which is patented); one that transforms
      the
      hydrogen gas into electricity (the fuel cell stack, which is unpatented) and
      one
      that controls the flow of hydrogen for the actual generation of electricity
      (the
      control technology, which is unpatented). The Kitty Hawk unit is rectangular
      in
      shape, weighs almost eight pounds and is easily portable.





The
      control technology is an integrated, programmable electronic circuit (that
      is,
      the circuit can be programmed to perform specific tasks) that is used to control
      the flow of hydrogen and oxygen to the fuel stack. The purpose of the control
      technology is to ensure the proper amount of hydrogen is generated to power
      the
      device which 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, which results in power loss and the unit’s inability to power the
      devices attached to the Kitty Hawk.





5


Trulite
      manufactures the fuel cell stack, develops product enhancements and engages
      in
      new product development on the fuel cell stack. The Kitty Hawk power system
      was
      introduced by Trulite in September, 2005. The Kitty Hawk product uses the
      HydroCell system to generate hydrogen for up three hours and is capable of
      generating 25 watts of useable power. That is, although the product generates
      approximately 40 to 50 watts of power, the system requires approximately 15
      to
      20 watts of power internally to run the unit. The result is 25 watts of usable
      power, which is more than sufficient to run a radio while concurrently charging
      a cell phone. Trulite manufactured and delivered twenty-five units to selected
      customers in February and March, 2006.





Although
      the Kitty Hawk power system is an integrated, hydrogen fuel cell power system,
      the HydroCell can be marketed and sold separately to companies wanting a dry
      hydride technology for generating hydrogen. For example, Trulite has sold the
      HydroCell to Protonex for military applications. Although the fuel cell stack
      can be marketed and sold separately, Trulite has no plans to either market
      or
      sell the fuel cell stack separately. Trulite has no plans to market and sell
      the
      control technology separately.





**Current
      Status of Projects**





Trulite
      is currently developing the next generation of the Kitty Hawk (the KH-3X),
      which
      is expected to have a number of enhancements: improved physical design; noise
      reduction; faster start up cycle (several seconds versus 2 to 3 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 35 to 40 watts of power. Each of these enhancements
      will require several steps including designing and building the enhancement;
      testing the enhancement to ensure it performs as specified; incorporating and
      testing the enhancement in the Kitty Hawk unit; and, finally testing the Kitty
      Hawk unit in a customer environment.





The
      design, build and test of the enhancements began in March, 2006 and are expected
      to be completed by the middle of June, 2006. The testing of the enhancements
      is
      an on-going process. As each enhancement is built, it is tested. Each time
      a new
      enhancement is added to the Kitty Hawk unit, the entire Kitty Hawk 3X system
      is
      tested to ensure all of the enhancements work as an integrated system. Beginning
      in mid-June, 2006, ten units will be manufactured for delivery to selected
      customers for field testing. If the Kitty Hawk 3X unit successfully completes
      field testing by the end of September, 2006, it is expected to be commercially
      available for sale and delivery into selected commercial and consumer markets
      shortly thereafter.





Trulite
      is also developing the Kitty Hawk 4. The product will be designed to have a
      power output two times great than the Kitty Hawk 3X. Product enhancements to
      the
      Kitty Hawk 4 will include: reducing the overhead required to run the Kitty
      Hawk
      4 power system; increased ruggedness; and enhanced ergonomics and physical
      design. Each of these enhancements will also require going through the proving
      process set forth above prior to commercial availability.





The
      design of the Kitty Hawk 4 system is anticipated to commence in September,
      2006
      and is anticipated to be completed by December, 2006. The Kitty Hawk 4 system
      is
      anticipated to be available for field testing by the end of the first quarter
      of
      2007. Field testing is anticipated to take eight to ten weeks. Upon completion
      of field testing of the Kitty Hawk 4 system, expected to be by the end of the
      second quarter of 2007, we anticipate units will be available for sale and
      delivery into selected commercial and consumer markets.





6


In
      November, 2005, Trulite established a manual production line sufficient to
      meet
      a 5 fuel cell per month and 35 HydroCell (the hydrogen cartridge) per month
      rate. Our near term goal is for the manufacturing facilities to ramp up to
      meet
      a potential demand of 20 fuel cells per month and 200 HydroCells per month.
      At
      such time as demand reaches a run rate of 80 fuel cells per month and 800
      HydroCells per month, we anticipate that manufacturing will transition from
      manual to automated processes. Thereafter, outsourcing relationships are
      expected to be established for a few simple, non-proprietary sub-components.
      Full outsourcing likely will begin once volume demand approaches 250 fuel cells
      per month and 1500 HydroCells per month. This outsourcing event will trigger
      the
      beginning of the shift to a final assembly and test facility at our own
      manufacturing site located in Texas.





In
      2005,
      Trulite generated $16,667 in revenues from the sale of the HydroCell. There
      are
      outstanding purchase orders for the sale of Kitty Hawk and HydroCells units
      valued at $11,178.





Management
      intends to focus its initial efforts on the industrial remote monitoring (the
      monitoring and remote sensing of oil and gas pipelines, oil wells and gas wells)
      and recreational camping markets, both of which have a need for a large amount
      of portable power on demand.





**Market
      Opportunities**





The
      anticipated opportunity in the recreational camping market for remote power
      devices comparable to the Kitty Hawk product was based upon analyzing the
      available products in this sector such as the Anton Bauer 2702 battery charger,
      SunWize AC 40/65 40 Watt remote power system, the Frezzi M1000P video power
      charger, the HPC 6624A 40 Watt power system as well as several other companies
      which provide products comparable to the Kitty Hawk power system. Trulite
      believes the Kitty Hawk product is well suited for recreational camping
      applications such as providing power for travel refrigerators/coolers, cell
      phone chargers, portable TVs, portable DVD players, and powering air and water
      purification units.





The
      Company plans to distribute its consumer Kitty Hawk products through three
      different channels: (1) direct to consumer sales (expected to be on a limited
      basis); (2) bundling; and (3) retail stores. The Company also plans on using
      the
      Internet, through sites such as eBay, Amazon, Overstock and Yahoo, to sell
      directly to consumers on a limited basis in order to test market its products,
      as well as establish consumer price points. The Company is also targeting
      original equipment manufacturers (“OEM”) in an attempt to bundle its products
      with those of the OEM. Advantages to partnering with an OEM include leveraging
      the OEM’s customer base and cross-selling Trulite’s products with existing OEM
      products. Lastly, the Company intends to attempt to market the Kitty Hawk to
      major high-end retail stores, such as REI, Northface, Patagonia and Brookstone,
      Orvis and Cabela’s in an attempt to attract the high end camping
      market.





**Business
      Strategy**





The
      Company believes the HydroCell powered Kitty Hawk is substantially less
      expensive than comparable energy sources capable of producing 25 watts of power
      for several hours in this market segment. Based upon interviews with outside
      engineers from a major energy company, as well as analysis developed by
      Trulite’s own engineers, the power output of the Kitty Hawk system is capable of
      supporting typical user applications in the pipeline and well head markets.
      Trulite is currently testing a HydroCell capable of powering a Kitty Hawk system
      for seventy two continuous hours. Product enhancements are planned to develop
      a
      HydroCell capable of generating 10,000 watt hours of power which is equivalent
      to running a Kitty Hawk unit for seven hundred and twenty contiguous hours.





7


Trulite’s
      strategy is to leverage its unique hydrogen generation technology and its fuel
      stack technology to develop and sell integrated fuel cell products to address
      end-user applications in two identified markets: Industrial Remote Monitoring
      and Recreational Off-Site. Trulite’s business model is based upon the sale of
      its product, the Kitty Hawk, to specific target markets as an integrated
      solution. That is, since Trulite is able to bundle the fuel source with the
      fuel
      cell, Trulite is able to sell the integrated unit in line with the price point
      of competing fuel cell products. Trulite believes it is the only known source
      of
      the dry power fuel source and consequently, expects to receive follow up orders
      for HydroCell replacement cartridges. For example, for each Kitty Hawk unit
      sold, Trulite estimates a customer will purchase 25 HydroCell cartridges every
      year in the consumer market. Ongoing sales of replacement cartridges could
      represent a continuous revenue stream resulting in the generation of profits
      over the life of the Kitty Hawk unit.





Trulite
      seeks to make its hydrogen source technology the de-facto standard in the
      industry and, through the sale of its Kitty Hawk integrated power system
      product, capture a significant percentage of the industrial and consumer markets
      in which the Company intends to enter. The following are the main components
      of
      Trulite’s strategy.





·
            **Narrow
                Market Focus**





Trulite
      is focusing its initial efforts on two distinct markets:





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





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





-
      As the
      price of crude oil remains high, formerly abandoned or plugged wells are coming
      on-line thanks to smaller oil producers, thereby substantially increasing the
      size of the total available market. It is even more important for these smaller
      producers to address operational issues such as increased reliability and
      reduced operating expenses;





-
      We feel
      this market segment represents one of our best opportunities to implement our
      existing products (the HydroCell and the Kitty Hawk power system) and generate
      near-term revenue; and





-
      The
      management team of Trulite has a deep knowledge of this segment, as well as
      numerous industry relationships at the most senior levels of
      management.





The
      Company believes the HydroCell powered Kitty Hawk is less expensive than
      comparable sources of energy on the market capable of producing 25 watts of
      power for several hours. Based upon interviews with engineers from a major
      energy company, as well as analysis developed by Trulite’s own engineers, the
      power output of the Kitty Hawk system is capable of supporting typical user
      applications in the pipeline and well head markets. Trulite is currently testing
      a HydroCell capable of powering a Kitty Hawk system for seventy two continuous
      hours. Product enhancements are planned to develop a HydroCell that is capable
      of generating 10,000 watt hours of power which is equivalent to running a Kitty
      Hawk unit for seven hundred and twenty contiguous hours.





8


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





-
      Belief
      that environmentalism continues its rise and this segment of the market is
      willing to pay a premium for environmentally friendly technology;





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





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





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





Trulite
      has received numerous comments and feedback from the initial set of Kitty Hawk
      users related to the performance, design and use of the product. The input
      from
      these initial customers was used to develop the product enhancement plan for
      subsequent versions of the Kitty Hawk power system.





·
            **Utilize
                Strategic Relationships**





Strategic
      relationships are critical to Trulite for research, product development and
      volume manufacturing. As used in this context, these relationships are
      transactions with companies to perform specific activities on Trulite’s behalf
      and for which Trulite does not have or may not want to develop the competencies
      to accomplish these activities. In return, Trulite will offer activities or
      provide competencies that are not available to the companies. 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. Trulite expects
      to seek out relationships with companies for product design and product
      development. As the Company enters into volume production, Trulite intends
      to
      seek out strategic relationships for manufacturing, distribution and logistics.





Trulite
      currently does 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 the opportunity before making a final determination.





·
            **Continuous
                Technology and Product
                Innovation**





Trulite
      is committed to continuous technology and product innovation as a means of
      achieving and maintaining sustainable competitive advantage. Trulite’s 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 transferred to the Company’s advanced
      manufacturing team in Houston, Texas for product development and optimization.





9


Once
      the
      product is tested and optimized, it is turned over to the manufacturing team
      for
      volume production. The manufacturing team is responsible for continuous
      innovation of the product’s performance, as well as design for manufacture.
      Trulite’s goal is to enhance its existing product line every quarter and develop
      at least one new product every fiscal year.





·
            **Strong
                Corporate Culture**





Trulite
      believes 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:





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





- *Frugality:* Both
      Trulite and its strategic relationships 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.
      Trulite intends to make investments in technology and people in order to retain
      and enhance its competitive position and return a fair profit to its
      stakeholders.





**Intellectual
      Property**





We
      have
      filed two patent applications for the Hydrocell, and we make every effort to
      protect our knowledge of our processes and procedures.





**Competition**





Trulite
      has two products: the HydroCell, a hydrogen generation and storage product,
      and
      the Kitty Hawk power system, a commercially packaged, integrated, hydrogen
      fuel
      cell power system. Trulite’s Kitty Hawk power system is an integrated system
      consisting of the HydroCell hydrogen generation and storage product; the fuel
      cell which converts hydrogen into electricity; and the control technology,
      which
      controls the flow of hydrogen to the fuel cell.





Trulite
      believes its HydroCell technology to be unique and offers significant advantages
      over hydrogen generation technology offered by its 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.





Our
      primary competition for hydrogen generation technology  is
      Millennium Cell, Inc. (MCEL). MCEL, a development stage company, develops
      hydrogen batteries comprised of a fuel cell and hydrogen storage technology
      for
      use in portable electronic devices for the military, medical, industrial, and
      consumer markets. MCEL utilizes a “wet” sodium hydride technology for the
      generation of hydrogen. The fuel blends used in the hydrogen battery technology
      are comprised of a combination of water, sodium borohydride, and other
      chemicals. As compared to MCEL’s wet hydride technology, the HydroCell does not
      lose energy density during long periods of storage (up to three years). We
      believe there are technical limitations with respect to weight and shelf life
      that limit MCEL’s ability to achieve higher levels of energy density.





10


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




**Employees**





Trulite
      currently has 12 full time employees, 11 of whom are involved in research and
      development.  The 12 th employee
      is involved with the financial affairs of Trulite.





**RISK
      FACTORS**





**The
      information in this Form 10-KSB contains forward-looking statements. These
      statements relate to future events or future financial performance. In some
      cases, forward-looking statements can be identified by terminology such as
      “may,” “will,” “should,” “could,” “expects,” “hopes,” “believes,” “plans,”
“anticipates,” “estimates,” “predicts,” “potential,” or “continue” or the
      negative of such terms and other comparable terminology. These statements are
      only predictions. In evaluating these statements, readers should specifically
      consider various factors, including the risks outlined below. These factors
      may
      cause the Company’s actual results to differ materially from any forward-looking
      statement.**





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





The
      Company is a development stage company that was formed in July 2004 to further
      the research and development of fuel source and fuel cell systems. To date,
      we
      have manufactured and marketed only twenty-five Kitty Hawk integrated power
      systems to selected customers. The Kitty Hawk products were delivered to
      selected customers in February and March, 2006. Accordingly, there is only
      a
      limited basis upon which you can 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.





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





To
      achieve and maintain competitiveness and continue our growth, we expect to
      raise
      substantial funds. Our forecasts for the period for which our financial
      resources will be adequate to support our operations involves risks and
      uncertanties and actual results could fail as a result of a number of factors.
      We anticipate the need to raise additional capital to develop, promote and
      distribute our product. Such additional funding may be raised through public
      or
      private equity or debt financings. Additional funding may not be available
      under
      favorable terms, if at all. If adequate funds are not available, we may be
      required to curtail operations significantly or to obtain funds on terms not
      as
      favorable as we would hope. Trulite hopes to raise an additional $10 million
      in
      funding. It is anticipated that Trulite will need to raise an additional $5
      million in funds by the end of the third quarter of 2006 and an additional
      $5
      million in funds by the end of the second quarter of 2007. These funds will
      be
      required for recruiting and hiring additional technical staff, purchasing
      materials for the manufacture of Kitty Hawk 3X and Kitty Hawk 4 units, labor
      costs associated with manufacturing, and for product development and
      enhancements to the Kitty Hawk product line.





11


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





The
      quest
      for alternate energy sources is being undertaken by numerous governments,
      corporations, univeristies and other institutions and individuals throughout
      the
      world. Many of these participants have far greater experience and resources
      than
      Trulite and have been engaged in these activities for a longer period of time.
      In the event that commerical 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 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 or 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
      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
      we
      will do so in time to meet our product commercialization schedule or to satisfy
      the requirements of our customers or shareholders.





**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
      OEM’s. We cannot guarantee that OEMs will manufacture these products. If they
      manufacture such products, no assurances can be given 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 Trulite for research, product development and
      volume manufacturing. Trulite will seek out strategic relationships for product
      design and development. As the Company enters into volume production, Trulite
      will seek out strategic relationships for manufacturing, distribution and
      logistics.





12


Outsourcing
      is expected to happen in phases. First, Trulite will work with raw material
      and
      individual component manufacturing. The Company will control all the
      development, manufacturing and quality internally for the initial small volume
      ramp up to 1,000 HydroCell cartridges per month. During this time, the Company
      will seek to develop relationships with suppliers, which will enable the Company
      to move some subassemblies out to them and automate the core technology
      in-house. These relationships will continue to be built as market demand
      increases. The second phase of outsourcing will begin once volume demand
      approaches 1,500 cartridges per month. This volume is expected to trigger the
      beginning of a shift to a final assembly and test facility in Houston, Texas.





The
      Company does not believe it 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 the Company 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 which the Company 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 the Company uses 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, through natural disaster or environmental
      restrictions, could have a material adverse effect on the business, financial
      condition and results of operations of the Company.





Although
      the Company believes it has established a close relationship with its principal
      manufacturers and distributors, its future success may depend on its ability
      to
      maintain these relationships and establish new ones as the Company increases
      its
      sales volume and geographic customer base. If relationships with current
      manufacturers and distributors were to be interrupted for any reason, it may
      be
      difficult for the Company to locate other sources with similar or greater
      production and distribution capacity, which could have a material adverse effect
      on the Company’s business, financial condition and results of operations.
      Furthermore, the establishment of new manufacturing and distribution
      relationships involves numerous uncertainties including costs, terms of payment
      and timeliness of delivery, all of which such terms and conditions may be
      unsatisfactory to the Company and could result in additional costs to the
      Company.





**We
      may not receive the assets and other technology as a result of the anticipated
      dissolution of Synexus.**





As
      set
      forth elsewhere herein, Synexus is expected to dissolve in the near future
      and
      its equipment is expected to be transferred to CCP. CCP
      is
      then expected to transfer the equipment to Trulite. **** In
      the
      event CCP does not receive the equipment from
      Synexus or
      CCP
      does not transfer the equipment to us, as anticipated, our costs of operations
      and future business prospects will be materially and adversely affected as
      we
      will need to find another source for fuel cell stack technology or undertake
      to
      develop such technology on our own. In the event CCP or Trulite receives such
      equipment, CCP or Trulite may be subject to claims from creditors of Synexus
      or
      other third parties having relationships with Synexus, which could prevent
      or
      delay CCP’s transfer of the equipment to us or materially subject us to a risk
      of litigation or otherwise materially adversely affect our future business
      prospects.








13


**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 which generally affect 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, 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 Common Stock.
      Those rights may include voting rights, liquidation preferences and conversion
      rights. To the extent we convey senior rights, the value of our 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:





-
            the
                competitive cost of fuel cell systems,


-
            the
                emergence of newer and more competitive
                technology,


-
            the
                future cost of raw materials,


-
            regulatory
                requirements,


-
            consumer
                perceptions regarding the safety of our product,
                and


-
            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.


14


**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 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 government
      regulations and policies concerning energy research or conservation. Depending
      on the nature of the government regulations, it could be easier and more cost
      efficient, or more difficult and costly, to raise funds, conduct research,
      manufacture, market or sell our products in a given country. Government
      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 continue to face significant competition.**





Our
      products, the HydroCell hydrogen generation system and the Kitty Hawk integrated
      power system are expected to face significant competition. Many companies with
      substantially greater resources are developing similar hydride hydrogen
      generation technologies and are enhancing their fuel cell technologies. We
      cannot assure that customers will use Trulite 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
      on our two patent applications to protect our intellectual property.
      Additionally, we make every effort to protect our knowledge of our processes
      and
      procedures. Failure to protect our existing intellectual property could cause
      the loss of our exclusivity or the right to use the technology we developed.
      If
      we do not adequately protect our intellectual property rights, we may have
      to
      pay others for the right to use their technology.





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





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


15


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





Our
      management team consists of several scientists, including the Company’s founder,
      Dr. Kevin Shurtleff. 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 we will be able to attract and
      retain such personnel. Our inability to do so could negatively impact our
      success.





**There
      is currently no trading market for our Common Stock.**





Outstanding
      shares of Common Stock cannot be offered, sold, pledged or otherwise transferred
      unless subsequently registered pursuant to, or exempt from registration under,
      the Securities Act of 1933, as amended (the “Securities Act”) and any other
      applicable federal or state securities laws or regulations. These restrictions
      will limit the ability of our stockholders to liquidate their investment.





**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, without stockholder approval, to issue 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 December
      31, 2005, there were 1,454,725 outstanding shares of Preferred Stock. All of
      the
      preferred is Series A 8% Cumulative Convertible Preferred Stock, par value
      $0.0001 per share. On May 2, 2006, all holders of these shares converted them
      to
      shares of Common Stock. If additional shares of Series A 8% Cumulative
      Convertible Preferred Stock are issued, such shares could affect the rights
      of
      holders of our Common Stock.





**Forward-looking
      statements should not be relied on because they are inherently
      uncertain.**





Certain
      statements and information contained in this Form 10-KSB regarding matters
      that
      are not historical facts are forward-looking statements, as that term is defined
      under applicable securities laws. These include statements concerning the
      Company’s future, proposed and anticipated activities, certain trends with
      respect to its revenue, operating results, capital resources and liquidity,
      and
      certain trends with respect to the markets in which the Company competes or
      its
      industry in general. Forward-looking statements, by their very nature, include
      risks and uncertainties, many of which are beyond the Company’s control.
      Accordingly, actual results may differ, perhaps materially, from those
      anticipated in or implied by such forward-looking statements.




**Item
      2. Property.**





The
      Company leases space in Bluffdale, Utah. The facility serves as Trulite’s
      research, product development and manufacturing center. The facility encompasses
      approximately 5,500 square feet rented by the Company at a monthly rate of
      $1,350 for a total lease commitment in 2006 of $6,750. The lease expired on
      May
      31, 2006. We renewed the lease for nine months, and the extension expires on
      February 28, 2007. The Company has no other leases.





16


**Item
      3. Legal Proceedings.**





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





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





None.





**PART
      II**





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





**Common
      Stock and Preferred Stock**





The
      Company is authorized by its Certificate of Incorporation to issue an aggregate
      of 21,500,000 shares of capital stock, comprised of 20,000,000 shares of common
      stock, par value $.0001 per share (the "Common Stock") and 1,500,000 shares
      of
      preferred stock, par value $.0001 per share (the “Preferred Stock”). As of June
      7, 2006, 11,785,491 shares of Common Stock and no shares of Preferred Stock
      were
      issued and outstanding.





Common
      Stock





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





On
      April
      10, 2005, the Board of Directors authorized a five for one split on all Common
      Stock issued prior to that date. The Preferred Stock outstanding as of April
      10,
      2005 would also split five for one if any preferred holder prior to that time
      converted the preferred to Common Stock at some later date.





As
      of
      June 7, 2006, there were 55 record holders of 11,785,491 shares of Common Stock.





The
      Common Stock is not listed on a publicly-traded market.





Preferred
      Stock





Trulite
      is authorized by its Certificate of Incorporation to designate and issue up
      to
      1,500,000 shares of Preferred Stock. The Company has designated Series A 8%
      Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”). The
      Series A Preferred Stock ranks, as to the payment of dividends and the
      distribution of assets upon liquidation or winding up of the Company, (i) senior
      to or on parity with all other classes and series of the Preferred Stock and
      (ii) senior to the Common Stock. Holders of Series A Preferred Stock are
      entitled to receive preferential cumulative dividends at an annual rate of
      8% of
      the original issue price, payable at the option of the Company in cash or in
      shares of Series A Preferred Stock. Any dividends declared by the Board are
      payable quarterly. Upon any liquidation, winding up or dissolution of the
      Company, holders of the Series A Preferred Stock receive $1.00 per share (the
      original issue price) plus any dividends, whether or not declared by the Board,
      accrued and unpaid.





17


Each
      share of the Series A Preferred Stock may be converted, in whole or part, at
      the
      option of the holder, at any time, into a number of duly authorized, validly
      issued, fully paid and non assessable shares of Common Stock, as is determined
      by dividing the original issue price of the Series A Preferred Stock by the
      conversion price, which is subject to adjustment, but which was $1.00 per share
      upon issuance. Each share of the Series A Preferred Stock automatically converts
      into shares of Common Stock on or after (i) the closing of a underwritten,
      public sale of Common Stock, at a price per share which results in the Company
      having a market value of at least $50,000,000 or (ii) the date specified by
      written consent by the holders of a majority of the outstanding shares of the
      Series A Preferred Stock.





Each
      holder of shares of the Series A Preferred Stock is 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 held by such holder are convertible.





The
      conversion price of the Series A Preferred Stock is subject to adjustment:
      (i)
      upon any stock split, dividend or other distribution (whether of Common Stock
      or
      other form of distribution), (ii) if the Common Stock issuable upon conversion
      of the Series A Preferred Stock shall be changed to the same or different number
      of shares of any class or classes of stock, whether by reclassification,
      exchange, combination, substitution or otherwise, (iii) upon any capital
      reorganization of the Company or a merger or consolidation of the Company with
      or into another corporation or other business entity, or the sale of all or
      substantially all of the Company’s properties or assets, (iv) if the Company
      issues any securities convertible into or exchangeable for, directly or
      indirectly, Common Stock (“Convertible Securities”), other than the Series A
      Preferred Stock, or any rights or warrants or options to purchase any such
      Common Stock or Convertible Securities, shall be issued or sold (collectively,
      the “Common Stock Equivalents”) and the price per share for which additional
      shares of Common Stock may be issuable thereafter pursuant to such Common Stock
      Equivalent shall be less than the applicable conversion price of the Series
      A
      Preferred Stock then in effect or if, after any such issuance of Common Stock
      Equivalents, the price per share for which additional shares of Common Stock
      may
      be issuable thereafter is amended or adjusted, and such price as so amended
      shall be less than the applicable conversion price of the Series A Preferred
      Stock, (v) upon any merger or consolidation, dependent on the price paid by
      or
      to the Company in such transaction or (vi) if the Company, at any time prior
      to
      the latest to occur of the (A) first anniversary of the issuance date of the
      Series A Preferred Stock or (B) date of the consummation of a financing
      transaction of the Company resulting in at least $500,000 of gross proceeds
      to
      the Company, issues any options to purchase Common Stock to any employees of
      the
      Company.





The
      Company cannot amend, alter or repeal the preferences, rights, powers or other
      terms of the Series A Preferred Stock to adversely affect the Series A Preferred
      Stock without the written consent or affirmative vote of at least 66.6% of
      the
      then-outstanding shares of the Series A Preferred Stock.





As
      of
      December 31, 2005, there were three record holders of 1,454,725 shares of Series
      A Preferred Stock. On May 2, 2006, these three holders converted their shares
      of
      Series A Preferred Stock into 6,562,630 shares of Common Stock. As of the date
      hereof, there are no shares of Series A Preferred Stock issued and outstanding.


18


**Dividend
      Policy**





The
      Company paid no dividends during the fiscal year ended December 31, 2005.





On
      April
      13, 2006, the Company’s Board of Directors approved the issuance 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 28, 2004 to March 31, 2005. 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 previous holders of the Series A Preferred Stock. Accordingly, 291,361
      shares of Common Stock were issued: 283,118 shares to CCP; 2,576 shares to
      Dr.
      Kevin Shurtleff; and 5,667 shares to Andrew Nielson. The stock certificates
      evidencing these dividends have not yet been issued. The holders of the Series
      A
      Preferred Stock have since converted their shares to shares of Common Stock,
      and
      no more dividends shall be declared and paid on those shares of Series A
      Preferred Stock.





**Equity
      Compensation Plans**





Plan
                Category
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            Weighted-average
                exercise price of outstanding options, warrants and rights
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))***(a)***
            ***(b)***
            ***(c)***Equity
                compensation plans approved by security holders
            0
            0
            0Equity
                compensation plans not approved by security holders (1)
            1,647,031
              100,000
                (2)
            $.88
              $1.00
            1,363,774Total
            1,747,031
                (3)
            $.89
            1,363,774


-----------


(1)
      The
      Company’s Board of Directors adopted the Trulite, Inc. Stock Option Plan (the
“Plan”) on April 11, 2005. In April 2005, the Company granted options to
      Randolph House, Evan Hughes, Jerry Metz and John Sifonis. Options were granted
      again in July 2005 to Howard, Paul and Stephen Anderson, Chris Brydon and Jim
      Longaker. In October 2005, options were granted to Randolph House, Evan Hughes,
      Tom Samson, Jerry Metz and John Sifonis. In January 2006, options were granted
      to Jenny Ligums. In April 2006, options were granted to Chris Brydon, CCP,
      Evan
      Hughes, Eric Ladd, Jim Longaker, John Patton and Kevin Shurtleff.





(2)
      In
      May 2006, options to purchase 20,000 shares of Common Stock were granted to
      Bill
      Flores, Richard Hoesterey, John Berger, Eric Melvin and John Sifonis.





(3)
      All
      of the options were pursuant to the Plan. These options have an exercise price
      of $.88 per share. All options granted under the Plan vest, so long as the
      employee remains employed by the Company, within four years of the grant,
      according to a vesting schedule contained therein. The options granted under
      the
      Plan may not be exercised more than seven years after the date of the grant.




19


The
      Plan
      is to be administered by the Board of Directors and consists of up to 3,110,805
      shares of Common Stock which may be granted in the form of options to employees,
      directors, consultants and advisors to the Company. The number of options,
      option price, vesting and exercise schedules and the duration of all options
      shall all be determined by the Board of Directors at the time of grant;
      provided, however, that the option price of any options granted under the Plan
      shall be not less than fair market value at the time of grant. Incentive stock
      options expire no later than seven years after the date of grant.





**Recent
      Sales of Unregistered Securities**





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





On
      April
      13, 2006, pursuant to Rule 504 of Regulation D promulgated under the Securities
      Act, Trulite issued 1,000,000 shares of Common Stock and 1,000,000 one-year
      warrants to purchase Common Stock, at an exercise price of $1.50 per share,
      to
      12 accredited investors for an aggregate purchase price of
      $1,000,000.





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





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





**Item
      6. Management’s Discussion and Plan of Operations**





General





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, 2005 and the period from inception (July 15, 2004)
      to
      December 31, 2004, with their explanatory notes for the years included as part
      of the Form 10SB.





Overview





Trulite
      Technology, LC was created in May 2002 to develop a hydrogen fuel source for
      fuel cells. The intended applications were use by the military as a source
      of
      portable power and use by consumers as a source of recreational or back up
      power. This entity was funded by grants from two governmental agencies to
      conduct fuel cell research and development. In July 2004 Trulite Technology,
      LC
      merged with, and transferred all if its interests to the Company, then a
      newly-formed Delaware corporation. In the fourth quarter of 2005, the Company
      initiated production of demonstration products for sale to selected individuals.
      The demonstration units were manufactured at the Company’s research facilities
      in Utah.





The
      Company, from inception (July 15, 2004) through December 31, 2004, had $1,750
      in
      sales and $16,667 in sales for the year ended December 31, 2005.  The
      revenue for both years was with a related party. We believe the main sources
      of
      initial revenue will be revenues from the oil and gas pipeline monitoring market
      and the high end recreational camping consumer market. Management anticipates
      revenues to increase quarter over quarter during 2006 as our manufacturing
      operation in Houston comes on line and the demand for our product
      increases.





20


**Selected
      statements of operating data for the twelve months ended December 31, 2005.**





Please
      see the audited Financial Statements of the Company for this period set forth
      on
      Pages


F-1
      -
      F-15.




*FOR
        THE PERIOD FROM INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004 AND* *FOR
        THE TWELVE MONTHS ENDING DECEMBER 31, 2005*
  (Audited)
              
              (Audited)Period
                  fromJuly
                  15, 2004InceptionYear
                  Ended
              
              throughDecember
                  31,
              
              December
                  31,2005
              
              2004SALES
              
              $
              16,667
              
              $
              1,750COST
                  OF SALES
              
              
              12,216
              
              
              650GROSS
                  MARGIN
              
              
              4,451
              
              
              1,100TOTAL
                  OPERATING EXPENSES
              
              
              830,658
              
              
              879,122OPERATING
                  LOSS
              
              
              (826,207
              )
              
              (878,022
              )OTHER
                  INCOME (EXPENSE)
              
              
              255
              
              
              -LOSS
                  FROM OPERATIONS BEFORE INCOME TAXES
              
              
              (825,952
              )
              
              (878,022
              )INCOME
                  TAXES
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (825,952
              )
              $
              (878,022
              )PREFERRED
                  DIVIDENDS
              
              
              (84,074
              )
              
              (6,624
              )NET
                  LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
              
              $
              (910,026
              )
              $
              (884,646
              )NET
                  LOSS PER COMMON SHARE:Basic
              
              $
              (0.25
              )
              $
              (0.28
              )Diluted
              
              
              (0.25
              )
              $
              (0.28
              )WEIGHTED
                  AVERAGE COMMON SHARES:Basic
              
              
              3,606,542
              
              
              3,157,001Diluted
              
              
              3,606,542
              
              
              3,157,001





21


Revenues
      and Gross Margins





Revenue
      for the twelve month period ended December 31, 2005 was $16,667, as compared
      to
      $1,750 for the period from July 15, 2004 (inception) through December 31, 2004.
      Gross margin for the twelve month period ended December 31, 2005 was $4,451
      as
      compared to a gross margin of $1,100 for the period July 15, 2004 (inception)
      through December 31, 2004. During these periods, the Company was a research
      and
      development company. In the fourth quarter of 2005, the Company began low volume
      production of its demonstration products.





Operating
      Expenses





Expenses
      from operations were $830,658 for the twelve months ended December 31,
      2005.  This compares to operating expenses of $879,122 for the period July
      15, 2004 (inception) through December 31, 2004. This is an overall decrease
      of
      6%. Operating expenses consisted of research and development, depreciation,
      and
      general and administrative expenses. Research and development expenses decreased
      to $410,958 for the twelve months ended December 31, 2005 compared to $713,109
      for the five and one half month period from July 15, 2004 (inception) through
      December 3l, 2004. The overall decrease of 42% was mainly due to the research
      and development costs that occurred from the business combination on July 22,
      2004, which resulted in a one time expense of $606,098. The decrease was offset
      by higher research and development costs and the longer period of twelve months
      for 2005 as compared to five and one half months for 2004. Depreciation
      increased 500% from 2005 as compared to 2004 and this is mainly attributed
      to
      the longer time period of operations in that 2005 was twelve months and 2004
      was
      five and one half months and the purchase of additional equipment. For the
      twelve months ended December 31, 2005, general and administrative expenses
      increased to $412,877 from $164,873 as compared to the five and one half month
      period from July 15, 2004 (inception) through December 31, 2004. The overall
      increase of 154% is attributed to the longer time period and the increase cost
      of audits and legal fees of $122,434 for the purpose of going
      public.





Loss
      from
      Operations





Losses
      from operations were $825,952 for the twelve months ended December 31, 2005
      as
      compared to operating losses of $878,022 for the period July 15, 2004
      (inception) through December 31, 2004. This
      is a
      6% decrease for the twelve months ending December 31, 2005 as compared to the
      five and half months from July 15, 2004 (inception) through December 31, 2004.
      The decrease was due to decreases in operating expenses.





Other
      Income and Expense





Other
      income and expenses for the twelve months ended December 31, 2005 totaled $255,
      as compared to $0 for the period from July 15, 2004 (inception) through December
      31, 2004. This increase was due to the Company’s investing part of its proceeds
      of approximately $950,000 raised from a private placement of its preferred
      stock
      in a savings account at a local bank.





Net
      Loss





Net
      loss
      for the twelve months ended December 31, 2005 was $825,952, as compared to
      $878,022 for the period from July 15, 2004 (inception) through December 31,
      2004. The loss decreased due to increased activity in research and development
      purchase of an insurance policy, hiring of a chief financial officer and the
      costs of a public offering.





22


To
      date,
      we have financed operations through the private placement of equity securities.
      In June 2005, we raised $750,000 through a private placement of 934,725 shares
      of preferred stock. The Company has since had another private placement of
      equity securities in April 2006 in which we raised $1,000,000 through a private
      placement of 1,000,000 shares of common stock and an equal amount of warrants.
      We have not employed any significant leverage of debt. However, there can be
      no
      assurance we will not undertake debt obligations in the future in order to
      finance our operations.





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
      worth of preferred stock, with $100,000 of such preferred stock sold in July,
      2004 and $200,000 sold in November, 2004. The Company, for the year ended
      December 31, 2005, financed its operations through the sale of an aggregate
      of
      $950,000 of preferred stock, with $200,000 of such stock sold in February 2005
      and the balance of $750,000 in June 2005 along with sales of three Kitty Hawk
      units. The Company had another private placement in April 2006 and raised
      $1,000,000 through the sale of 1,000,000 shares of common stock and 1,000,000
      warrants.





Cash
      position and sources and uses of cash





Our
      cash
      position at December 31, 2005 was $235,982, as compared to $126,465 at December
      31, 2004.





Our
      operating activities in 2005 used cash in the amount of $810,732 as compared
      to
      the period July 15, 2004 (inception) to December 31, 2004 of $168,741. Cash
      used
      in operating activities for the twelve month period ended December 31, 2005
      and
      for this five and half month period in 2004 reflected a net loss of $825,952
      and
      $878,022 respectively. The Company had $29,751 and $4,794 of cash out flows
      used
      in investing activities from the purchase of property and equipment for the
      year
      ended 2005 and 2004 respectively. The Company had cash flows from financing
      activities of $950,000 and $300,000 from issuances of preferred stock as set
      forth in the year 2005 and 2004 respectively.





Capital
      Resources Going Forward





The
      Company had $126,465 at December 31, 2004, and $235,982 in cash and cash
      equivalents at December 31, 2005. Our intended plan of operations for the twelve
      month period beginning January 1, 2006 is to manufacture, sell and distribute
      our product in 2006, and to continue to develop our product. 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, 2005 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 net capital and that the best way to do this is through the
      sale
      of additional securities. For more information on cash flows, please see the
      statement of cash flows included in the Company’s financial statements appearing
      elsewhere herein.





23


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 may also seek to satisfy indebtedness through the private issuance
      of debt or other securities. 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.





Off
      Balance Sheet Arrangements





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





Critical
      Accounting Policies





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





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





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





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





**Impairment
      of Long Lived Assets**





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.


24




**Revenue
      Recognition**





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





Being
      a
      new company we are unable to comment on the accuracy of any prior estimates
      or
      assumptions, however, we believe that our estimates are based on reasonable
      judgment.





























































































































25




**Item
      7. Financial Statements.**





TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


FINANCIAL
      STATEMENTS


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005







C
      O N
      T E N T S




PageReport
                  of Independent Registered Public Accounting Firm
              F-2Balance
                  Sheet
              F-3Statement
                  of Operations
              F-4Statement
                  of Stockholders’ Equity
              F-5Statement
                  of Cash Flows
              F-6Notes
                  to Financial Statements
              F-7
    F-1







12
                Greenway Plaza, Suite 1202
                Houston,
                    Texas77046-1289
                  Phone713-561-6500
                  Fax713-968-7128
                  Webwww.uhy-us.com




Report
      of Independent Registered Public Accounting Firm








To
      the
      Board of Directors


Trulite,
      Inc.


Houston,
      Texas





We
      have
      audited the accompanying balance sheets of Trulite, Inc., (a development stage
      company) (the “Company”) as of December 31, 2005 and 2004, and the
      related statements of operations, stockholders’ equity and cash flows for the
      year ended December 31, 2005 and for the period from inception (July 15, 2004)
      through December 31, 2004. 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 audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





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





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





As
      more
      fully described in Note L, the financial statements for the period from
      inception (July 14, 2004) through December 31, 2004, and for the year ended
      December 31, 2005, have been restated for the correction of certain errors.











Houston,
      Texas


May
      16,
      2006







F-2


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


BALANCE
      SHEETS (RESTATED)




December
                31,2005
            
            2004ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            235,982
            
            $
            126,465Due
                from affiliate
            
            
            23,773
            
            
            -Accounts
                receivable - affiliate (net of allowance for doubtful accounts of
                $0)
            
            
            16,667
            
            
            2,700Patent
                applications fees
            
            
            19,843
            
            
            6,465Prepaid
                expenses and other current assets
            
            
            7,844
            
            
            6,916TOTAL
                CURRENT ASSETS
            
            
            304,109
            
            
            142,546PROPERTY
                AND EQUIPMENTEquipment
            
            
            41,001
            
            
            11,250Less:
                accumulated depreciation
            
            
            7,963
            
            
            1,140NET
                PROPERTY AND EQUIPMENT
            
            
            33,038
            
            
            10,110TOTAL
                ASSETS
            
            $
            337,147
            
            $
            152,656LIABILITIES
                AND STOCKHOLDERS’ EQUITYCURRENT
                LIABILITIESAccrued
                expenses
            
            $
            44,821
            
            $
            37,603Accounts
                payable - affiliate
            
            
            -
            
            
            11,845TOTAL
                CURRENT LIABILITIES
            
            
            44,821
            
            
            49,448COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -STOCKHOLDERS’
                EQUITY8%
                Cumulative Convertible, Series A Preferred stock; $0.0001 par value,
                1,500,000 shares authorized, 1,454,725 and 320,000 shares issued
                and
                outstanding as of December 31, 2005 and December 31, 2004, respectively.
                Liquidation value of $1.00 per share plus preferred dividend per
                share of
                $0.0623 and $0.0207 as of December 31, 2005 and December 31, 2004,
                respectively. (Aggregate liquidation value of $1,545,354 and $326,624
                as
                of December 31, 2005 and December 31, 2004, respectively)
            
            
            90,843
            
            
            6,656Common
                stock; $0.0001 par value, 20,000,000 shares authorized, 3,631,500
                and
                3,306,150 shares issued and outstanding as of December 31, 2005 and
                December 31, 2004, respectively
            
            
            363
            
            
            330Additional
                paid-in-capital
            
            
            1,905,094
            
            
            974,244Deficit
                accumulated during the development stage
            
            
            (1,703,974
            )
            
            (878,022
            )TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            292,326
            
            
            103,208TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            337,147
            
            $
            152,656




See
      accompanying notes to financial statements.


F-3


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


STATEMENTS
      OF OPERATIONS (RESTATED)







Year
                  EndedDecember
                31,
            
            
            Period from
                    Inception
                  (July 15, 2004)
                  through
                  December 31,
            
            
            Cumulative
                AmountsJuly 15,
                      2004(Inception)throughDecember 31,2005
            
            
            2004
            
            
            2005SALES
            
            $
            16,667
            
            $
            1,750
            
            $
            18,417COST
                OF SALES
            
            
            12,216
            
            
            650
            
            
            12,866GROSS
                MARGIN
            
            
            4,451
            
            
            1,100
            
            
            5,551OPERATING
                EXPENSESResearch
                and development
            
            
            410,958
            
            
            713,109
            
            
            1,124,067Depreciation
            
            
            6,823
            
            
            1,140
            
            
            7,963General
                and administrative
            
            
            412,877
            
            
            164,873
            
            
            577,750TOTAL
                OPERATING EXPENSES
            
            
            830,658
            
            
            879,122
            
            
            1,709,780OPERATING
                LOSS
            
            
            (826,207
            )
            
            (878,022
            )
            
            (1,704,229
            )OTHER
                INCOME (EXPENSE)Interest
                expense
            
            
            (663
            )
            
            -
            
            
            (663
            )Interest
                income
            
            
            5,329
            
            
            -
            
            
            5,329Other
            
            
            (4,411
            )
            
            -
            
            
            (4,411
            )TOTAL
                OTHER INCOME (EXPENSE)
            
            
            255
            
            
            -
            
            
            255LOSS
                BEFORE INCOME TAXES
            
            
            (825,952
            )
            
            (878,022
            )
            
            (1,703,974
            )INCOME
                TAXES
            
            
            -
            
            
            -
            
            
            -NET
                LOSS
            
            
            (825,952
            )
            
            (878,022
            )
            $
            (1,703,974
            )PREFERRED
                DIVIDENDS
            
            
            (84,074
            )
            
            (6,624
            )NET
                LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
            
            $
            (910,026
            )
            $
            (884,646
            )NET
                LOSS PER COMMON SHARE:Basic
            
            $
            (0.25
            )
            $
            (0.28
            )Diluted
            
            $
            (0.25
            )
            $
            (0.28
            )WEIGHTED
                AVERAGE COMMON SHARES:Basic
            
            
            3,606,542
            
            
            3,157,001Diluted
            
            
            3,606,542
            
            
            3,157,001


See
        accompanying notes to financial statements.


F-4


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


STATEMENTS
      OF STOCKHOLDERS’ EQUITY


FOR
      THE
      CUMULATIVE PERIOD FROM INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2005
      (RESTATED)




Deficit8%
                  Cumulative
              
              
              
              
              
              
              
              AccumulatedConvertible
                  Series A
              
              
              
              
              
              Additional
              
              During
                  thePreferred
                  Stock
              
              Common
                  Stock
              
              Paid-in
              
              DevelopmentShares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Stage
              
              TotalCash
                  issuancesJuly
                  28, 2004, 100,000 shares @ $1.00 per share
              
              
              100,000
              
              $
              10
              
              
              -
              
              $
              -
              
              $
              99,990
              
              $
              -
              
              $
              100,000November
                    5, 2004, 190,000 shares @ $1.00 per share
              
              
              190,000
              
              
              19
              
              
              -
              
              
              -
              
              
              189,981
              
              
              -
              
              
              190,000November
                  12, 2004, 10,000 shares @$1.00 per share
              
              
              10,000
              
              
              1
              
              
              -
              
              
              -
              
              
              9,999
              
              
              -
              
              
              10,000Non
                  cash issuancesJuly
                    22, 2004, 20,000 shares @ $1.00 per share for acquisition
                    of Trulite Technology, LC based on fair value of the
                    stock
              
              
              20,000
              
              
              2
              
              
              -
              
              
              -
              
              
              19,998
              
              
              -
              
              
              20,000July
                    22, 2004, 592,460 shares @ $1.00 per share for acquisition
                    of Trulite Technology, LC based on fair value of the stock (post
                    stock split 2,962,300 shares) (see Note H)
              
              
              -
              
              
              -
              
              
              2,962,300
              
              
              296
              
              
              592,164
              
              
              -
              
              
              592,460July
                  28, 2004, 68,770 shares @ $1.00 per share for management services
                  based on
                  fair value of services received (post stock split, 343,850 shares)
                  (see
                  Note H)
              
              
              -
              
              
              -
              
              
              343,850
              
              
              34
              
              
              68,736
              
              
              -
              
              
              68,770Accretion
                  of dividends on 8% cumulative convertible Series A preferred
                  stock
              
              
              -
              
              
              6,624
              
              
              -
              
              
              -
              
              
              (6,624
              )
              
              -
              
              
              -Net
                  loss from inception (July 14, 2004) through December 31,
                  2004
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (878,022
              )
              
              (878,022
              )Balances,
                  December 31, 2004
              
              
              320,000
              
              
              6,656
              
              
              3,306,150
              
              
              330
              
              
              974,244
              
              
              (878,022
              )
              
              103,208Cash
                  issuancesFebruary
                    1, 2005, 200,000 shares@1.00 per share
              
              
              200,000
              
              
              20
              
              
              -
              
              
              -
              
              
              199,980
              
              
              -
              
              
              200,000June
                    1, 2005, 934,725 shares $0.802375 per share
              
              
              934,725
              
              
              93
              
              
              -
              
              
              -
              
              
              749,907
              
              
              -
              
              
              750,000Non
                  cash issuancesJanuary
                  28, 2005, 65,070 shares @ $1.00 per share for management services
                  based on
                  fair value of  services received (post stock split, 325,350 shares)
                  (see Note H)
              
              
              -
              
              
              -
              
              
              325,350
              
              
              33
              
              
              65,037
              
              
              -
              
              
              65,070Accretion
                  of dividends on 8% cumulative convertible Series A preferred
                  stock
              
              
              -
              
              
              84,074
              
              
              -
              
              
              -
              
              
              (84,074
              )
              
              -
              
              
              -Net
                  loss for year ended December 31, 2005
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (825,952
              )
              
              (825,952
              )Balances,
                  December 31, 2005
              
              
              1,454,725
              
              
              90,843
              
              
              3,631,500
              
              
              363
              
              
              1,905,094
              
              
              (1,703,974
              )
              
              292,326




See
        accompanying notes to financial statements.


F-5





TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


STATEMENTS
      OF CASH FLOWS (RESTATED)




Year
                  EndedDecember
                31,
            
            Period
                from
              Inception
              (July
                    15, 2004)
                    through
                    December
                      31,
            
            Cumulative
              Amounts
              July
                15, 2004
              (Inception)
              through
              December
                31,2005
            
            2004
            
            2005CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (825,952
            )
            $
            (878,022
            )
            $
            (1,703,974
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            6,823
            
            
            1,140
            
            
            7,963Management
                fees
            
            
            65,070
            
            
            68,770
            
            
            133,840Research
                and development expenses
            
            
            -
            
            
            606,798
            
            
            606,798Effect
                of changes in operating assets and liabilities (net of effects of
                acquisition of Trulite Technology, LC for the period from inception
                (July
                15, 2004) through December 31, 2004):Due
                from affiliate
            
            
            (23,773
            )
            
            -
            
            
            (23,773
            )Accounts
                receivable
            
            
            (13,967
            )
            
            (2,700
            )
            
            (16,667
            )Patent
                application fees
            
            
            (13,378
            )
            
            (6,465
            )
            
            (19,843
            )Prepaid
                expenses and other current assets
            
            
            (928
            )
            
            (451
            )
            
            (1,379
            )Grants
                receivable
            
            
            -
            
            
            850
            
            
            850Accrued
                expenses
            
            
            7,218
            
            
            29,494
            
            
            36,712Accounts
                payable - affiliate
            
            
            (11,845
            )
            
            11,845
            
            
            -NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (810,732
            )
            
            (168,741
            )
            
            (979,473
            )CASH
                FLOWS FROM INVESTING ACTIVITIESPurchase
                of property and equipment
            
            
            (29,751
            )
            
            (4,794
            )
            
            (34,545
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (29,751
            )
            
            (4,794
            )
            
            (34,545
            )CASH
                FLOWS FROM FINANCING ACTIVITIESIssuance
                of preferred stock
            
            
            950,000
            
            
            300,000
            
            
            1,250,000NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            950,000
            
            
            300,000
            
            
            1,250,000NET
                INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            109,517
            
            
            126,465
            
            
            235,982CASH
                AND CASH EQUIVALENTS,
              Beginning
                of period
            
            
            126,465
            
            
            -
            
            
            -CASH
                AND CASH EQUIVALENTS,End
                of period
            
            $
            235,982
            
            $
            126,465
            
            $
            235,982NON
                CASH INVESTING AND FINANCING ACTIVITIESStock
                issued for acquisition of Trulite Technology, LC:8%
                Cumulative Convertible Series A Preferred Stock
            
            $
            -
            
            $
            20,000
            
            $
            20,000Common
                stock
            
            
            -
            
            
            592,460
            
            
            592,460$
            -
            
            $
            612,460
            
            $
            612,460Common
                stock issued for management services
            
            $
            65,070
            
            $
            68,770
            
            $
            133,840Cash
                paid for interest
            
            $
            663
            
            $
            -
            
            $
            663





See
      accompanying notes to financial statements.




F-6


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      A -
      NATURE OF OPERATIONS





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





For
      the
      year ending December 31, 2005 and for the period from inception (July 15, 2004)
      through December 31, 2004, the Company did not have significant revenues. The
      Company has no significant operating history as of December 31, 2005. The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. During the year ended December 31, 2005, management
      raised additional equity 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.





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.





Effective
      February 22, 2006, the Company’s Form 10-SB/A (General Form for Registration of
      Securities of Small Business Issuers) was deemed effective with the United
      States Securities and Exchange Commission.








NOTE
      B -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





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





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





As
      of and
      for the year ended December 31, 2005, all of the Company’s sales and accounts
      receivables were from an affiliated entity.





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





Revenue
      Recognition :
      Revenue
      from sales is recognized on delivery.





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





Depreciation
      expense was $6,823 and $1,140 for the year ended December 31, 2005 and for
      the
      period from inception (July 15, 2004) through December 31, 2004,
      respectively.


F-7


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004





NOTE
      B -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





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





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





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





Stock-Based
      Compensation Plan :
      The
      Company accounts for stock-based employee compensation using the intrinsic
      value
      method prescribed in Accounting Principles Board Opinion No. 25, *Accounting
      for Stock Issued to Employees* (“APB
      No. 25”) and related interpretations in accounting for its stock-based
      compensation arrangements as opposed to the alternative fair value accounting
      provided for under SFAS No. 123, *Accounting
      for Stock-Based Compensation* .
      Under
      APB No. 25, no compensation expense is recognized if the exercise price of
      the
      Company’s employee stock options equals or exceeds the market price of the
      underlying stock on the date of grant.





Pro
      forma
      information is required by SFAS No. 123 to reflect the estimated effect on
      net
      income as if the Company had accounted for the stock option grants using the
      fair value method described in that statement. Fair value was estimated at
      the
      date of grants using the Minimum Value method, computed by (a) the estimated
      current price of the stock reduced to exclude the present value of any expected
      dividends during the option’s life minus (b) the present value of the exercise
      price, with the following weighted average assumptions being used: risk-free
      interest rate of 5.5% and dividend yield of zero, and expected lives of seven
      years.




F-8


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      B -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





The
      following table illustrates the effect on the net loss and earnings per share
      if
      the fair value based method had been applied.




Year
                    EndedDecember 31,2005
            
            
            Period
                          fromInception(July 15, 2004)throughDecember
                  31,2004Net
                loss attributable to common shareholders as reported
            $
            (910,026
            )
            $
            (884,646
            )Less:
                Stock-based employee compensation expense included in reported net
                loss,
                net of related tax effects
            
            -
            
            
            -Add:
                Total stock-based employee compensation expense determined under
                fair
                value based method net of related tax effects
            
            -
            
            
            -Pro
                forma net loss
            $
            (910,026
            )
            $
            (884,646
            )Loss
                per share:Basic
                - as reported
            $
            (0.25
            )
            $
            (0.28
            )Basic
                - pro forma
            $
            (0.25
            )
            $
            (0.28
            )Diluted
                - as reported
            $
            (0.25
            )
            $
            (0.28
            )Diluted
                - pro forma
            $
            (0.25
            )
            $
            (0.28
            )





New
      Accounting Pronouncement :
      In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 123R (“FAS-123R), *Share-Based
      Payment* ,
      which
      is a revision of Statement of Financial Accounting Standards No. 123 (“FAS-123), *Accounting
      for Stock-Based Compensation* .
      In
      addition to requiring supplemental disclosures, FAS-123R addresses the
      accounting for share-based payment transactions in which a company receives
      goods or services in exchange for (a) equity instruments of the company or
      (b)
      liabilities that are based on the fair value of the company’s equity instruments
      or that may be settled by the issuance of such equity instruments. FAS-123R
      focuses primarily on accounting for transactions in which a company obtains
      employee services in share-based payment transactions. The Statement eliminates
      the ability to account for share-based compensation transactions using
      Accounting Principles Board Opinion No. 25 (“APB-25”), *Accounting
      for Stock Issued to Employees* ,
      and
      generally requires that such transactions be accounted for using a fair value
      based method. Accordingly, proforma disclosure is no longer an
      alternative.


F-9


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      B -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Under
      FAS-123R, nonpublic entities, including those that become public entities after
      June 15, 2005, that used the minimum value method of measuring equity share
      options and similar instruments for either recognition or pro forma disclosure
      purposes under Statement 123 shall apply this Statement prospectively to new
      awards and to awards modified, repurchased, or cancelled after the required
      effective date. Those entities shall continue to account for any portion of
      awards outstanding at the date of initial application using the accounting
      principles originally applied to those awards (either the minimum value method
      under Statement 123 or the provisions of Opinion 25, and its related
      interpretive guidance).





As
      of the
      required effective date, the Company will adopt the provisions of FAS-123R
      using
      the modified prospective application method. The modified prospective
      application method applies to new awards and to awards modified, repurchased
      or
      cancelled after the required effective date. Additionally, compensation cost
      for
      the portion of awards for which the requisite service has not been rendered
      that
      are outstanding as of the required effective date shall be recognized as the
      requisite service is rendered on or after the required effective date. The
      compensation cost for that portion of awards shall be based on the grant-date
      fair value of those awards as calculated for either recognition or proforma
      disclosures under Statement 123.




NOTE
      C -
      BUSINESS COMBINATION




On
      July
      22, 2004, the Company completed the purchase of Trulite Technology, LC, a
      privately held Utah manufacturer of fuel cells at an aggregate purchase price
      of
      $612,460, by issuing to the owners of Trulite Technology, LC 20,000 shares
      of
      Trulite, Inc.’s 8% cumulative convertible Series A preferred stock and 592,460
      shares of Trulite, Inc.’s common stock (2,962,300 shares of common stock, post
      stock split) (see Note H).





The
      allocation of the aggregate acquisition cost to the assets acquired and
      liabilities assumed based on fair values, was as follows:





Grants
                receivable
            
            $
            850Equipment
            
            
            6,456Current
                assets
            
            
            6,465Purchased
                research and development
            
            
            606,798Total
                assets acquired
            
            
            620,569Accounts
                payable
            
            
            (6,675
            )Accrued
                expenses
            
            
            (1,434
            )Total
                liabilities assumed
            
            
            (8,109
            )Net
                assets acquired
            
            $
            612,460





The
      purchased research and development was expensed immediately following the
      acquisition of Trulite Technology, LC as it was determined to have no
      alternative future use.


F-10


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      D -
      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, which principally comprises the benefit
      of the net operating loss carryforward of approximately $579,000 and $299,000
      as
      of December 31, 2005 and 2004, respectively, 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, 2005 and 2004. During the year ended
      December 31, 2005, the valuation allowance for net deferred tax assets increased
      by approximately $280,000.





As
      of
      December 31, 2005, the Company has a net operating loss carryforward of
      approximately $1,704,000 which will expire in the years 2024 and 2025 if not
      utilized earlier.




NOTE
      E - RESEARCH AND DEVELOPMENT COSTS





Expenditures
      for research activities relating to product development and improvement are
      charged to expense as incurred. Such expenditures amounted to $410,958 for
      the
      year ended December 31, 2005 and $713,109 for the period from inception (July
      15, 2004) through December 31, 2004 (inclusive of purchased research and
      development of $606,798).




NOTE
      F -
      SERIES A PREFERRED STOCK





The
      8%
      Cumulative Convertible Series A Preferred Stock (“Series A Preferred Stock”) has
      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 has 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 $84,074 and $6,624 during the year ended
      December 31, 2005 and for the period from inception (July 15, 2004) through
      December 31, 2004, respectively.





Each
      share of Series A Preferred Stock is convertible at any time into common shares
      of the Company by dividing the original issue price by a conversion price as
      defined. 520,000 shares of Series A Preferred Stock are convertible into common
      shares on a five for one basis due to the subsequent common stock split (see
      Note H).





The
      Series A Preferred Stock is 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 is 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 is convertible.


F-11


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      G -
      RELATED PARTY TRANSACTIONS





During
      the year ended December 31, 2005, all sales were to an entity affiliated to
      Contango Capital Partners, LP (a preferred stockholder of the Company). Accounts
      receivable from this affiliated entity amounted to $16,667 and is included
      in
      accounts receivable in the accompanying balance sheet as of December 31,
      2005.





As
      consideration for certain administrative services performed, the Company issued
      65,070 and 68,770 shares of its common stock to Contango Capital Partners,
      LP in
      January 2005 and July 2004, respectively, (325,350 and 343,850 shares of common
      stock, post stock split) (see Note H). The Company based the value of these
      common shares upon the hours spent providing such services at hourly rates
      commonly paid for these types of services.





During
      the year ended December 31, 2005, the Company advanced certain funds to an
      affiliated entity. These advances were on a non-interest basis with no fixed
      terms of repayment, and amounted to $23,773 as of December 31,
      2005.





During
      the period from inception (July 15, 2004) through December 31, 2004, the Company
      paid a fee of $25,000 to Contango Capital Partnership Management, LLC (a related
      party) for services provided in connection with the capital formation of the
      Company. As of December 31, 2004, the amount payable to Contango Capital
      Partnership Management, LLC was $11,845. This liability was repaid in full
      in
      2005.




NOTE
      H -
      COMMON STOCK SPLIT





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




NOTE
      I -
      COMMON STOCK OPTIONS





In
      March
      2005, the Company established the Trulite, Inc. Stock Option Plan (the “Plan”).
      The Plan is administered by the Board of Directors (the “Board”) of the Company
      or a committee of the Board and provides for the grant of 1,721,665 shares
      of
      the Company’s common stock to eligible employees, directors, consultants and
      advisors as non-qualified stock options or incentive stock options. Option
      exercise price, number of options, duration and time of exercise are as
      determined by the Board except that incentive stock options are to be granted
      within ten years from date of adoption of the Plan and incentive stock options
      must be exercised no later than seven years from date of grant. During the
      year
      ended December 31, 2005, the Company granted incentive stock options to certain
      employees and officers for 446,692 shares of its common stock at an exercise
      price of $0.88 per share, as adjusted to reflect the five-for-one split of
      the
      Company’s common stock. These options vest over a four year period from date of
      grant and in accordance with the terms of the Plan expire in seven years from
      date of grant.





No
      options were forfeited during the year ended December 31, 2005. As of December
      31, 2005, the Company had options outstanding on 446,692 shares, none of which
      were exercisable, at an average remaining contractual life of 6.49 years at
      a
      weighted average exercise price of $0.88 per share.


F-12


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      J -
      COMMITMENTS





*Leases*





Rent
      expense during the year ended December 31, 2005 was $10,925 and $1,958 for
      the
      period from inception (July 15, 2004) through December 31, 2004 and is included
      in general and administrative expenses in the accompanying statements of
      operations.





As
      of
      December 31, 2005, future rental commitment for a lease expiring in May 2006
      is
      approximately $7,000.





*Employment
      Agreements*





As
      of
      December 31, 2005, the Company had employment agreements with certain employees
      that expire through 2007, under which the total obligations were approximately
      $279,000.




NOTE
      K -
      NET LOSS PER SHARE




Year
                Ended
              December
                31,
              2005
            
            Period
                from
              Inception
              (July
                15, 2004)
              through
              December
                31,
              2004Numerator:Net
                loss per statements of operations
            
            $
            (825,952
            )
            $
            (878,022
            )Increase
                net loss by:Accretion
                of preferred dividends
            
            
            (84,074
            )
            
            (6,624
            )Net
                loss applicable to common stockholders
            
            $
            (910,026
            )
            $
            (884,646
            )Denominator:Denominator
                for basic earnings per share - weighted average shares
                outstanding
            
            
            3,606,542
            
            
            3,157,001Effect
                of potentially dilutive common shares:Convertible
                preferred stock
            
            
            -
            
            
            -Denominator
                for diluted earnings per share - weighted average shares
                outstanding
            
            
            3,606,542
            
            
            3,157,001Basic
                loss per share
            
            $
            (0.25
            )
            $
            (0.28
            )Diluted
                loss per share
            
            $
            (0.25
            )
            $
            (0.28
            )


F-13


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      K -
      NET LOSS PER SHARE (Continued)





Basic
      and
      diluted net loss per share for the year ended December 31, 2005 and from the
      period from inception (July 15, 2004) through December 31, 2004 is the same
      since the effect of all common stock equivalents is antidilutive to the
      Company’s net loss in accordance with Statement of Financial Accounting Standard
      128, *Earnings
      per Share* .





The
      following securities were not included in the computation of diluted loss per
      share as its effect would have been anti-dilutive:






Year
                    Ended
                    December
                      31,
                    2005
            
            
            Period
                from
              Inception
              (July
                15, 2004)
              through
              December
                31,
              20048%
                Cumulative Convertible, Series A Preferred Stock
            
            
            3,435,725
            
            
            1,600,000








NOTE
      L -
      RESTATEMENT OF FINANCIAL STATEMENTS





Subsequent
      to the issuance of the financial statements for the period from inception (July
      15, 2004) through December 31, 2004, and for the year ended December 31, 2005,
      management of the Company determined that certain purchased research and
      development items acquired from the purchase of Trulite Technology, LC,
      were incorrectly recorded as an intangible asset (unpatented technology) subject
      to amortization. Such amounts should have been recognized as an expense in
      the
      period of purchase. Accordingly, the financial statements for the period from
      inception (July 15, 2004) through December 31, 2004, and for the year
      ended December 31, 2005 have been restated to properly reflect the elimination
      of the intangible asset with an increase in research and development expense
      in
      the amount of $606,798 and a reduction of amortization expense in the amount
      of
      $30,340 for the period from inception (July 15, 2004) through December 31,
      2004,
      and a reduction in amortization expense for the year ended December 31, 2005
      by
      $60,680. Due to this correction, basic and diluted loss per share decreased
      from
      $(0.28) to $(0.25) for the year ended December 31, 2005, and increased from
      $(0.09) to $(0.28) for the year ended December 31, 2004. There were no income
      tax effects from this restatement.




NOTE
      M -
      SUBSEQUENT EVENTS





In
      January 2006, the Company granted options for 5,000 shares to a consultant
      at an
      exercise price of $0.88 per share. These options vest over four years and expire
      in seven years.





In
      March
      2006 the Company entered into an employment agreement with an executive. Under
      the terms of this agreement the Company will pay the executive an annual salary
      of $65,000 up to January 1, 2007, after which date the executive’s
      employment converts to a month to month relationship with the Company. The
      executive was also granted an option to purchase 699,302 fully vested shares
      of
      the Company’s common stock at an exercise price of $0.88 per share on April 13,
      2006 which expire April 3, 2010.


F-14


TRULITE,
      INC.


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      FINANCIAL STATEMENTS (RESTATED)


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005 AND FOR THE PERIOD


FROM
      INCEPTION (JULY 15, 2004) THROUGH DECEMBER 31, 2004




NOTE
      M -
      SUBSEQUENT EVENTS (Continued)





In
      March
      2006, the Company entered into a consulting agreement for investment banking
      services. Under the terms of this agreement, in exchange for investment banking
      services, the Company is required to issue 250,000 shares of restricted common
      stock and 250,000 five year warrants to purchase the Company’s common stock at
      an exercise price of $3 per share.





In
      March
      2006, the Company amended its Stock Option Plan and increased the number of
      shares allowed for grant as options by 1,389,140 shares. Options totaling
      1,175,339 (inclusive of the options for 699,303 shares mentioned above) were
      granted by the Company in April 2006.





In
      April
      2006, the Company declared a dividend of $129,973 on the 8% Cumulative
      Convertible, Series A Preferred Stock. This dividend is payable in the Company’s
      common stock.





In
      April
      2006, the Company entered into a consulting agreement for investment banking
      services. Under the terms of this agreement, in exchange for investment banking
      services, the Company is required to issue 50,000 shares of its restricted
      common stock and 150,000 five year warrants to purchase the Company’s common
      stock at an exercise price of $3 per share.





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





In
      May
      2006, the Company granted 100,000 options at an exercise price of $1.00 per
      share to certain officers and directors. These options vest over a four year
      period that expires May 2013.





In
      May
      2006, all of the preferred stockholders agreed to convert their shares of Series
      A Preferred Stock to Common shares of the Company.











F-15


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





None.




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





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





In
      accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was
      completed under the supervision and with the participation of the Company’s
      management, including the Company’s principal executive officer and principal
      financial officer, of the effectiveness of the design and operation of the
      Company’s disclosure controls and procedures as of the end of the period covered
      by this Annual Report. Based on that evaluation, the Company’s management
      including the President, Principal Financial Officer and Secretary, concluded
      that the Company’s disclosure controls and procedures are effective, to provide
      reasonable assurance that information required to be disclosed in the Company’s
      reports filed or submitted under the Exchange Act is recorded, processed,
      summarized, and reported within the time periods specified in the Commission’s
      rules and forms. There have been no changes to the Company’s internal controls
      over financial reporting that occurred during our last fiscal quarter of the
      year ended December 31, 2005, that materially affected, or were reasonably
      likely to materially affect, our internal controls over financial
      reporting.





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





**Part
      III**





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





(a)
      Identification of Directors and Executive Officers. The following table sets
      forth certain information regarding Trulite’s directors and executive officers
      for the fiscal year ended December 31, 2005:





Name
              Age
              PositionJohn
                  Sifonis
              66
              President
                  and DirectorJames
                  A. Longaker
              60
              Chief
                  Financial Officer and SecretaryKevin
                  Shurtleff (1)
              41
              Vice-President
                  and Director
   26
  William
                  Jackson Berger
              32
              Chairman
                  of the Board of DirectorsWilliam
                  Flores (2)
              52
              DirectorRichard
                  Hoesterey (3)
              63
              DirectorGeneral
                  Randolph House
              59
              DirectorEric
                  Melvin
              40
              DirectorThomas
                  Samson
              65
              Director





(1)
            Dr.
                Shurtleff resigned from his position as member of the Board of Directors
                and Vice President of Technology on March 24, 2006. Dr. Shurtleff
                continues to work for Trulite as an
                employee.


(2)
            Mr.
                Flores was appointed as a member of the Board of Directors on April
                13,
                2006.


(3)
            Mr.
                Hoesterey was appointed to the Company’s Board of Directors on May 5,
                2006.





**John
      Sifonis, President and Director.**





John
      Sifonis joined Trulite in 2004. Prior to joining the Company, from July, 1998
      to
      October, 2004 Mr. Sifonis was the Managing Director of the Internet Business
      Solutions Group at Cisco Systems, Inc. Prior to joining Cisco Systems, Inc.,
      from December, 1991 to July, 1998, Mr. Sifonis was the Chief Executive Officer
      of SAI International, LLC. Prior to forming SAI International, from January,
      1976 to August, 1989 Mr. Sifonis was a Senior Partner in the Management
      Consulting Group of Ernst & Young. While at Ernst & Young, Mr. Sifonis
      also served as the National Director of the Strategic Management Consulting
      Group. He received a Bachelor of Science Degree in Management Science from
      Case
      Institute of Technology in 1963 and has completed additional post graduate
      studies at Case Institute in Operations Research.





**James
      A. Longaker, Chief Financial Officer and Secretary.**





James
      A.
      Longaker is the Company’s Chief Financial Officer and Secretary. Prior to
      joining Trulite in May of 2005, Mr. Longaker worked from December 2001 to May
      2005 as a partner at the Forte Group, LLC, a management consulting firm that
      specialized in emerging businesses. From February 1999 to December 2001, Mr.
      Longaker worked as a consultant with Glass and Associates serving as an interim
      Chief Financial Officer for companies in financial difficulty. From 1990 to
      1999, he had his own business working with distressed companies. Mr. Longaker
      received his bachelor’s degree from Louisiana Polytechnic Institute and a
      Master’s degree in Business Administration in 1969 from Louisiana State
      University. Mr. Longaker has four certifications: Certified Public Accountant
      licensed to practice public accounting in Louisiana and Texas, Certified Fraud
      Examiner, Certified Turnaround Professional and a Certified Insolvency and
      Restructuring Advisor.





**William
      Jackson Berger, Chairman of the Board of Directors.**





William
      Jackson Berger (a.k.a. “John Berger”) has more than nine years of experience in
      the energy industry. Prior to joining Trulite, during 1996-2001, Mr. Berger
      worked as a trader at Enron, an energy trading entity. From January 2002 through
      December 2003, Mr. Berger was employed by the Federal Energy Regulatory
      Commission, advising on trading activities in the natural gas and power markets.
      In addition, he assisted the FERC with regard to how a commercial trading
      operation is set up with information services and models to predict power loads
      of utilities. He also helped analyze regulatory issues with distributed
      generation and interconnection into the power grid. Finally, he was able to
      show
      the FERC how to analyze the impact of credit quality of market participants
      on
      liquidity in the power and natural gas markets. He also served as an advisor
      to
      the drafters of the Standard Market Design regulatory document, which is
      currently being considered by the United States Congress. Mr. Berger graduated
      cum laude from Texas A&M with a B.S. in civil engineering in 1996. In 2003,
      Mr. Berger graduated from Harvard Business School.


27




**William
      Flores, Director.**





William
      (Bill) Flores, a director of Trulite, is currently the President and Chief
      Executive Officer of Phoenix Exploration Company, a private equity funded oil
      and gas company focused upon exploration and acquisition operations along the
      Gulf Coast and in the shallow and medium water depths of the Gulf of Mexico.
      Prior to forming Phoenix Exploration in January 2006, Mr. Flores was a Senior
      Vice President and Chief Financial Officer with Gryphon Exploration Company
      from
      January 2002 until August 2006. Gryphon Exploration Company was a private equity
      funded (formed in October 2000 by Warburg Pincus) oil and gas company with
      operations concentrated in the Gulf of Mexico. From August 1999 through October
      2002, Mr. Flores was a self-employed investor/consultant. During this period,
      Mr. Flores managed investments and served as a consultant to two small privately
      held corporations operating in the oilfield service and e-commerce industries.
      He also served on the boards of a private company and two non-profit entities.
      Mr. Flores received an MBA from Houston Baptist University in 1985 and a BBA
      in
      Accounting from Texas A &M University in 1976. He is also a Certified Public
      Accountant (Texas).





**Richard
      K. Hoesterey, Director**





Richard
      (Dick) Hoesterey, a director of Trulite, is an experienced executive with over
      thirty-five years in general management and manufacturing operations management
      in a variety of industries including electronics, industrial goods and power
      regulation. His management experience includes roles as officer and/or board
      member of private and public companies. Mr. Hoesterey is currently the President
      and Chief Executive Officer of Components Corporation of America, a position
      he
      has held since 1997. Components Corporation of America (CCA) operates as a
      holding company and currently has three wholly-owned subsidiary companies which
      function as self contained, stand-alone companies. These businesses are focused
      on design, manufacture and sale of electrical control technology components
      and
      subsystems for industrial, commercial, military, and government markets. Prior
      to becoming the CEO of Components Corporation, Mr. Hoesterey was a Senior
      Partner with Thomas Group, Inc. from 1990 to 1997. In this capacity, he was
      a
      Program Results Manager and Change Agent for several clients. From 1986 to
      1990,
      Mr. Hoesterey was an Executive Vice President for EPI Technologies. In the
      capacity of Executive Vice President, he directed the growth and development
      of
      the Component Processing Division. He also directed the corporate level
      functions of Human Resources, Facilities and Sales. From 1984 to 1986, Mr.
      Hoesterey was a Director, Material Services with Compaq Telecommunications
      Corporation, a start-up company in the Computer Telephone industry. He was
      responsible for Purchasing, Production Planning & Control and Material
      Services. From 1978 to 1986, Mr. Hoesterey was employed by Harris Corporation
      in
      a number of management positions including Director/Plant Manager, Equipment
      Refurbishment; Director, Manufacturing Systems Implementation; and, Director,
      Materials. From 1969 to 1976, Mr. Hoesterey worked for the Xerox Corporation
      in
      a number of management positions in the areas of operations, logistics, new
      product introductions, business improvement programs, and several MRP
      implementations. From 1966 to 1969, Mr. Hoesterey was a 1 st Lieutenant in the U.S. Army. Mr. Hoesterey received a BBA in Industrial
      Management from Clarkson University in 1965 and has completed additional post
      graduate studies for his MBA at Rochester Institute of Technology. He also
      has
      an APICS Certification in Production and Inventory management.


28




**General
      Randolph House, Director.**





General
      House is a retired U.S. Army Lieutenant General. Prior to his retirement in
      2003, General House served the Army for thirty-three years. Notably, General
      House was Deputy Commandant, US Army Command and General Staff College at Fort
      Leavenworth, Kansas. In 1996, General House was assigned to the Pentagon as
      Senior Military Assistant to the Secretary of Defense, Dr. William Perry. In
      1997, General House was assigned as the Assistant Chief of Staff for
      Installation Management, Department of the Army. Later that year, he assumed
      command of the Eighth United States Army and Chief of Staff, United Nations
      Command/Combined Forces Command/United States Forces in Seoul, Korea. In 1998,
      General House received his second three star assignment as the Deputy
      Commander-in-Chief and Chief of Staff, United States Pacific Command. General
      House earned a Bachelor’s Degree in 1968 from Texas A&M University. He also
      received a Master’s Degree from Clemson University.





**Eric
      Melvin, Director.**





Eric
      Melvin, a director of Trulite, is the founder, President and Chief Executive
      Officer of Mobius Risk Group, a provider of energy risk management outsourcing
      and advisory services. Prior to forming Mobius Risk Group, from 2000 to 2001,
      Mr. Melvin worked as the VP, New Business Ventures at Enron Energy Services,
      an
      Energy Trading entity. Mr. Melvin received his BGS from the University of
      Michigan, Ann Arbor in 1985. He also earned a JD from the University of Detroit,
      School of Law in 1990.





**Thomas
      Samson, Director.**





Thomas
      (Tom) Samson, a director of Trulite, is the President and Chief Executive
      Officer of Teamwork Dynamics, Inc. which he founded in 1990. Teamwork Dynamics
      (formerly WeCoachTeams, Inc.) is a professional services firm providing
      executive level support to CEOs of firms seeking to drive results though the
      focused actions of executive and management teams based on collaborative problem
      solving, individual commitments and personal accountability. During the past
      decade Mr. Samson has personally undertaken, through Teamwork Dynamics, a number
      of client assignments which have included roles as CEO, President, COO and
      CIO.
      Mr. Samson is a Certified Public Accountant with over twenty-five years in
      the
      public accounting profession where he was a partner with Arthur Young &
Company, one of the accounting profession’s big eight accounting firms. During
      his career with Arthur Young, he focused on technology industries and started
      Arthur Young’s Technology Center which served the investors and management of
      technology companies from startup to full operations. He received his BSBA
      degree from Creighton University.





The
      term
      of office of each director expires at the Company's annual meeting of
      stockholders or until their successors are duly elected and qualified. Directors
      are not compensated for serving as such. Officers serve at the discretion of
      the
      board of Directors.





(b)
      Significant Employee. As of December 31, 2005,
      the
      Company had no significant employees.





(c)
      Family Relationships. None.


29




(d)
      Involvement in Certain Legal Proceedings. There have been no events under any
      bankruptcy act, no criminal proceedings and no judgments, injunctions, orders
      or
      decrees material to the evaluation of the ability and integrity of any director,
      executive officer, promoter or control person of Registrant during the past
      five
      years.




(e)
      Audit
      Committee Financial Expert. The Board approved Mr. Thomas Samson as a Director
      on October 19, 2005. Mr. Samson has formed an Audit and Budget Committee and
      holds the position as Chairman of the Audit Committee. Under the SEC rules,
      Mr.
      Samson qualifies as an audit committee financial expert.  Mr. Samson is a
      Certified Public Accountant with 25 years experience in public accounting where
      he was a partner with Arthur Young, which at that time was one of the big eight
      accounting firms.  Mr. Samson has extensive experience preparing, auditing,
      analyzing and evaluating financial statements comparable to those he is expected
      to encounter in connection with Trulite’s financial statements. He also has
      experience in internal controls, working with boards of directors, preparing,
      auditing and analyzing financial statements and has used his knowledge of
      accounting principles and understanding of financial statements and GAAP in
      connection with accounting for estimates, accruals and reserves.





On
      April
      13, 2006, the Board approved Mr. William Flores as a Director. Mr. Flores will
      also serve on the Audit Committee.





In
      April,
      2006, Trulite formed a compensation committee. The committee has three members:
      Mr. John Berger, General Randolph House and Mr. Richard Hoesterey.  Mr.
      Hoesterey is the Chairman of the compensation committee.








**COMPLIANCE
      WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934**




Section 16(a)
      of the Exchange Act, as amended requires the Company’s directors and officers,
      and persons who beneficially own more than 10% of a registered class of the
      Company’s equity securities, to file reports of beneficial ownership and changes
      in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4
      and 5. Officers, directors and greater than 10% stockholders are required by
      SEC
      regulation to furnish the Company with copies of all Section 16(a) forms
      they file.




Based
      solely on the Company’s review of the copies of the forms received by it during
      the fiscal year ended December 31, 2005 and written representations that no
      other reports were required, the Company believes that no person who, at any
      time during such fiscal year, was a director, officer or beneficial owner of
      more than 10% of the Company’s common stock failed to comply with all
      Section 16(a) filing requirements during such fiscal year, except to the
      following filings: (a) Form 3 filed by General Randolph House on March 7, 2006
      and (b) Form 3 filed by Andrew Nielson on March 16, 2006.




**CODE
      OF ETHICS**




We
      have
      not adopted a Code of Business Conduct and Ethics that applies to our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions in that our sole officer
      and
      director serves in all the above capacities.











30


**Item
      10. Executive Compensation.**





The
      following table sets forth the cash compensation paid by the Company to its
      President and all other executive officers for services rendered during the
      fiscal years ended December 31, 2005 and 2004 and the compensation expected
      to
      be paid for the fiscal year ended December 31, 2006.




Name
                  and Position
              Year
              Salary
              Bonus
              Other
                  CompensationKevin
                  Shurtleff, Vice President
              2006
                2005
                2004
              $65,000
                $42,500
                $42,500
              --
                --
              Options
                  to purchase 699,303 shares of Common Stock at $.88 per share
                  (1).John
                  Sifonis, President
              2006
                2005
                2004
              $120,000
                $42,000
                $12,000
              --
                --
              Options
                  to purchase 291,478 shares of Common Stock at $.88 per share (2);
                  And
                  options to purchase 20,000 shares of Common Stock at $1.00 per
                  share
                  (3).James
                  A. Longaker, Chief Financial Officer and Secretary
              2006
                2005
                2004
              $65,000
                $65,000
              $20,000
              Option
                  to purchase 20,000 shares of Common Stock at $.88 per share. (1)
                  and
                  another 35,000 shares of Common Stock at $0.88 per share
                  (3).




(1)
      All
      listed options vested in April 2006.


(2)
      All
      listed options vest over a four year period as follows: 18.5% in 2006, 22.50%
      in
      2007, 26.50% in 2008 and 32.50% in 2009.


(3)
      All
      listed options vest over a four year period as follows: 18.5% in 2007, 22.50%
      in
      2008, 26.50% in 2009 and 32.50% in 2010.





**Option
      Holdings**





The
      Company has issued and outstanding options to purchase 1,747,031 shares of
      its
      Common Stock, of which 1,126,799 are presently exercisable or exercisable within
      60 days from the date hereof. All of the options were granted pursuant to the
      Trulite, Inc. Stock Option Plan, as discussed herein.





The
      Company has issued and outstanding warrants to purchase 1,400,000 shares of
      Common Stock. The Company issued 1,000,000 one-year warrants to purchase one
      share of Common Stock at a strike price of $1.50 per share to 12 accredited
      investors a private placement on April 13, 2006. The Company issued 400,000
      five-year warrants to purchase one share of Common Stock at a strike price
      of $3
      per share to Jelco, Inc. as compensation for consulting services to be provided
      pursuant to the agreement between the Company and John Ligums, as hereinafter
      discussed.





31


The
      Company also issued and outstanding to Boru Enterprises 250,000 warrants to
      purchase common shares at a strike price of $3 per share.





We
      currently do not have any existing or proposed SAR grants. ****





**Director
      Compensation**





We
      do not
      currently pay any cash fees to our Directors, but we pay Directors' expenses
      in
      attending board meetings. During the year ended December 31, 2005 no director
      expenses were reimbursed.





**Employment
      Agreements**





The
      Company is currently a party to employment agreements with John Sifonis, the
      Company’s President, James A. Longaker, the Company’s Secretary and Chief
      Financial Officer, Jerry Metz, Eric Ladd, Dr. Kevin Shurtleff, Christopher
      Brydon and John Patton.





John
      Sifonis entered into an employment agreement with the Company as of October
      20,
      2004 (the “Sifonis Agreement”). The Sifonis Agreement continued until January 1,
      2005, whereupon the employment of Mr. Sifonis by the Company became a month
      to
      month, at will employment, but otherwise still subject to the Sifonis Agreement.
      Pursuant to the Sifonis Agreement, Mr. Sifonis receives a management fee of
      $1,000 per month (such amount was increased to $3,500 per month in July, 2005)
      and options to purchase Common Stock of approximately three percent (3%) of
      the
      outstanding equity of the Company at the time the options were granted. These
      options vest on an annual basis over a four year period. The Sifonis Agreement
      contains customary confidentiality and non-disclosure provisions, as well as
      a
      two year, worldwide non-compete provision with respect to any business that
      competes in whole or in part with the services, products or activities of the
      Company relating to its hydrogen fuel technology.





James
      A.
      Longaker is the Chief Financial Officer of Trulite, Inc. He was hired on May
      23,
      2005 and is responsible for all activities and processes related to financial
      management and reporting of the Company. These activities include preparing
      the
      financial statements of the Company, preparing financial reports for senior
      management of the Company and working directly with the auditors (UHY) in the
      preparation of all required financial statements. Mr. Longaker is also the
      Secretary of the Company and, as such, is responsible for assembling the minutes
      of the Board meeting for review and approval by the Board and senior management
      of the Company. Mr. Longaker has a base salary of $65,000 per year and is
      eligible for $20,000 in bonuses based upon attaining specific performance goals
      agreed upon by Mr. Longaker and the CEO of the Company. Mr. Longaker received
      20,000 options for shares of Common Stock when he became an employee. Employment
      with the Company is for no specified period and constitutes “at-will”
employment. As a result, both the Company and Mr. Longaker are free to terminate
      his employment at any time, for any reason or for no reason. Mr. Longaker is
      entitled, during the term of his employment, to the Company’s standard vacation
      and benefits covering employees. Mr. Longaker signed the Company’s standard form
      of Confidential Information, Inventions Assignment, and Non-Competition
      Agreement.





Jerry
      Metz is the Vice President, Manufacturing and reports to the CEO of Trulite,
      Inc. He was hired on March 29, 2005 and is responsible for all activites and
      processes related to the manufacture of the Kitty Hawk product line. He is
      also
      responsible for establishing and maintaining vendor relationships, supply chain
      management, quality control and for formulating the Company’s outsourcing
      strategy. Mr. Metz receives a base salary of $113,000 per year and is eligible
      for $20,000 in bonuses based upon attaining specific performance goals agreed
      upon by Mr. Metz and the CEO of the Company. Mr. Metz received 62,315 options
      for Common Stock when he became an employee. Employment with the Company is
      for
      no specified period and constitutes “at-will” employment. As a result, both the
      Company and Mr. Metz are free to terminate his employment at any time, for
      any
      reason or for no reason. Mr. Metz is entitled during the term of his employment
      to the Company’s standard vacation and benefits covering employees. Mr. Metz
      signed the Company’s standard form of Confidential Information, Inventions
      Assignment, and non-competition agreement.


32





Eric
      Ladd
      entered into an amended employment agreement with the Company as of March 26,
      2006 (the “Ladd Agreement”). Mr. Ladd’s position with the Company is a Control
      and Systems Engineer. The Ladd Agreement continues until January 31, 2007,
      whereupon the employment of Mr. Ladd will become a month to month, at will
      employment, but otherwise still subject to the Ladd Agreement. Mr. Ladd agrees
      to work full time in service to the Company and receives an annual salary of
      $80,000. In addition, Mr. Ladd received an $11,000 sign on bonus and is also
      eligible to receive a one time bonus of $5,000 on or before December 22, 2006.
      The total commitment on behalf of the Company is approximately $83,000. The
      Ladd
      Agreement contains customary confidentiality and non-disclosure provisions,
      as
      well as a two year, worldwide non-compete provision with respect to any business
      that competes in whole or in part with the services, products or activities
      of
      the Company relating to its hydrogen fuel technology.





Dr.
      Kevin
      Shurtleff entered into a second amended employment agreement with the Company
      as
      of March 27, 2006 (the “Shurtleff Agreement”). Dr. Shurtleff’s employment
      continues until January 1, 2007, whereupon the employment of Dr. Shurtleff
      will
      become a month to month, at will employment, but otherwise still subject to
      the
      Shurtleff Agreement. Dr. Shurtleff agrees to spend 20 hours a week in service
      to
      the Company and receives an annual salary of $65,000. The total commitment
      on
      behalf of the Company is approximately $49,000. The Shurtleff Agreement contains
      customary confidentiality and non-disclosure provisions, as well as a one year,
      worldwide non-compete provision with respect to any business that competes
      in
      whole or in part with the services, products or activities of the Company
      relating to its hydrogen fuel technology.





Christopher
      Brydon entered into an employment agreement (the “Brydon Agreement”) on April 5,
      2006. Mr. Brydon is employed as a Senior Design Engineer and Team Leader. The
      Brydon Agreement continues until April 30, 2007, whereupon the employment of
      Mr.
      Brydon will become a month to month, at will employment, but otherwise still
      subject to the Brydon Agreement. Mr. Brydon is a full time employee and receives
      an annual salary of $76,000. The total commitment on behalf of the Company
      is
      approximately $84,000. The Brydon Agreement contains customary confidentiality
      and non-disclosure provisions, as well as a one year, worldwide non-compete
      provision with respect to any business that competes in whole or in part with
      the services, products or activities of the Company relating to its hydrogen
      fuel technology.





John
      Patton entered into an employment agreement (the “Patton Agreement”) on April 5,
      2006. Mr. Patton is employed as a Senior Design Engineer and Team Leader. The
      Patton Agreement continues until April 30, 2007, whereupon the employment of
      Mr.
      Patton will become a month to month, at will employment, but otherwise still
      subject to the Patton Agreement. Mr. Patton is a full time employee and receives
      an annual salary of $58,000. The total commitment on behalf of the Company
      is
      approximately $63,000. The Patton Agreement contains customary confidentiality
      and non-disclosure provisions, as well as a one year, worldwide non-compete
      provision with respect to any business that competes in whole or in part with
      the services, products or activities of the Company relating to its hydrogen
      fuel technology.








33


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





The
      following table sets forth certain information, as of the date hereof, regarding
      (i) each person known by the Company to be the beneficial owner of more than
      5%
      of the outstanding Common Stock, (ii) each director and officer of the Company
      and (iii) all officers and directors as a group.





Name
                and Address
            Amount
                and Nature of Beneficial Ownership
            Percentage
                of ClassKevin
                Shurtleff (a)
              14807
                South Heritagecrest Way, Suite A
              Bluffdale,
                UT 84065
            2,734,763
                (b)
            21.9%Andrew
                Nielson
              14807
                South Heritagecrest Way, Suite A
              Bluffdale,
                UT 84065
            1,120,745
                (c)
            9.51%Eric
                Ladd
              4987
                West Woodbend Road
              West
                Jordan, UT  84084
            648,794
                (d)
            5.22%John
                Berger (e)
              Three
                Riverway
              Suite
                1700
              Houston,
                TX 77056
            1,489,206
                (f)
            11.86%Contango
                Capital Partners, L.P. (g)
              Three
                Riverway
              Suite
                1700
              Houston,
                TX 77056
            768,778
                (h)
            6.12%John
                Sifonis (i)
              P.O.
                Box 201887
              Arlington,
                TX 76006-1887
            46,113
                (j)
            0.39%General
                Randolph House (k)
              Three
                Riverway
              Suite
                1700
              Houston,
                TX 77056
            3,423
                (l)
            0.03%James
                A. Longaker (m)
              2002
                Woodland Valley Drive
              Kingwood,
                TX 77339
            3,700
                (n)
            0.03%





34





Eric
                Melvin (o)
              Three
                Riverway
              Suite
                1700
              Houston,
                TX 77056
            0
            --Thomas
                F. Samson (p)
              1307
                Barrington Drive
              Coppell,
                TX 75019
            0
            --William
                Flores (q)
              25
                Beacon Hill
              Sugar
                Land, TX 77479
            433,402
            3.68%Contango
                Venture Capital Corporation (r)
              3700
                Buffalo Speedway, Suite 960
              Houston,
                TX 77098
            2,001,014
            16.98%Richard
                Hoesterey (s)
              7852
                La Cosa Drive
              Dallas,
                TX 75248
            0
            0%Gerald
                Sullivan
              2
                Colony Park Drive
              Galveston,
                TX 77551
            815,879
            6.92%All
                Directors and Officers as a Group (8 individuals)
            1,975,844
            15.67%


-----------


(a)
            Dr.
                Shurtleff resigned from his position as member of the Board of Directors
                and Vice President of Technology on March 24, 2006. Dr. Shurtleff
                continues to work for Trulite as an
                employee. (b)
            Represents 2,035,460 shares of Common Stock and
              options
              to purchase up to 699,303 shares of Common Stock at a price of $.88
              per
              share, which such options vest on April 10,
              2006.


(c)
            Effective
                March 2, 2005, Mr. Nielson gave an option to Eric Ladd to purchase
                up to
                473,968 shares of his Common Stock for an aggregate purchase price
                of
                $48,000, exercisable at any time.


(d)
            Represents
                options to purchase 174,826 shares of Common Stock from the Company
                and a
                currently exercisable option to purchase up to 473,968 shares of
                Common
                Stock from Andrew Nielson for an aggregate purchase price of $48,000.
                This
                option to purchase Mr. Nielson’s Common Stock expires March 2, 2014.


(e)
            Mr.
                Berger is the Chairman of the Board of Directors of Trulite and the
                managing partner of CCP.


(f)
            Represents
                720,428 shares of Common Stock Mr. Berger owns in his individual
                name and
                warrants to purchase 592,500 shares of Common Stock and options to
                purchase 176,278 shares of Common Stock owned by CCP. Although he
                does not
                have sole dispositive power over the warrants and options owned by
                CCP, he
                may be deemed to be the beneficial owner thereof. (g)
            The general partners of CCP are John Berger, Kenneth
              R.
              Peak, Todd Sullivan, Gerald Sullivan, Eric Melvin and John D.
              White. (h)
            Represents options to purchase up to 176,278 shares
              of
              Common Stock at a price of $.88 per share, which such options vest
              on
              April 10, 2006, and warrants to purchase 592,500 shares of Common Stock
              at
              a strike price of $1.50 per share.


35


(i)
            Mr.
                Sifonis is the President and a director of
                Trulite.


(j)
            Represents
                options to purchase up to 46,113 shares of Common Stock at a price
                of $.88
                per share, which such options vest on April 11,
                2006.


(k)
            General
                House is a director of Trulite.


(l)
            Represents
                options to purchase up to 3,423 shares of Common Stock at a price
                of $.88
                per share, which such options vest on April 11,
                2006.


(m)
            Mr.
                Longaker is the Chief Financial Officer and Secretary of Trulite.


(n)
            Represents
                options to purchase up to 3,700 shares of Common Stock at a price
                of $.88
                per share, which such options vest on July 15,
                2006.




(o)
            Mr.
                Melvin is a director of Trulite.




(p)
            Mr.
                Samson is a director of Trulite.


(q)
            Mr.
                Flores is a director of Trulite.


(r)
            Contango
                Venture Capital Corporation, LLC is owned by Contango Oil & Gas
                Company, which is managed by Kenneth R. Peak, Lesia Bautina, Sergio
                Castro
                and Marc Duncan. The Board of Directors of Contango Oil & Gas Company
                includes Kenneth R. Peak, Jay D. Brehmer, Darrell W. Williams, Charles
                M.
                Reimer and Steven L. Schoonover.


(s)
            Mr.
                Hoesterey was appointed to the Company’s Board of Directors on May 5,
                2006.




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





The
      initial investor in the Company was Trulite Energy Partners, L.P., which
      invested $100,000 and received 100,000 shares of Preferred Stock on July 28,
      2005. Trulite Energy Partners, L.P. merged with and into CCP. John Berger,
      the
      Chairman of the Board of Directors of Trulite, is the Chairman of the Board
      of
      Directors of CCP and the managing partner of Contango Capital Partnership
      Management LLC (“CCPM”), an entity which is the general partner of CCP. The
      Company had a management agreement with CCPM, which was transferred to CCP.
      In
      exchange for managing the day-to-day operations of the Company, CCP received
      68,770 shares of Common Stock (343,850 shares of common stock, post stock split)
      on July 28, 2004, and six months later received an additional 65,070 shares
      of
      Common Stock (325,350 shares of common stock, post stock split). The management
      agreement with CCP ended on January 28, 2005, and no further payments are due
      or
      owing from Trulite.





We
      currently share office space with Synexus, and Synexus reimburses Trulite for
      its portion of the facility in Utah, salaries paid by Trulite on its behalf
      and
      other additional expenses. As of December 31, 2005, Synexus owed Trulite
      $23,773. Historically, Synexus pays its amount owed to Trulite each quarter.
      Synexus has its own funding and cash to pay its current expenses. There is
      no
      note, interest payable or fixed term. Please see Note G of the attached
      financial statements. Also, William Flores, a member of the Company’s Board of
      Directors, formerly served as a director of Synexus.





Trulite
      had revenue in 2004 of $1,750 and in 2005 of $16,667. All of the revenue was
      obtained from Protonex. CCP owns approximately 6.4% of Protonex’s stock and John
      Berger, Chairman of Trulite and a partner with CCP, is a member of the Board
      of
      Directors of Protonex. The revenues derived from Protonex were from military
      contracts obtained by Protonex and Trulite, Inc. was chosen through a
      competitive bidding process as the sub-contractor on the projects.





On
      March
      31, 2006, the Company entered into lock-up agreements (the “Lock-Up Agreements”)
      with each of CCP, Dr. Kevin Shurtleff, James Longaker, John Sifonis and Eric
      Ladd (for purposes of this paragraph only, the “Stockholders”). Pursuant to the
      Lock-Up Agreements, the Stockholders shall not, without the prior written
      consent of the Company or the managing underwriter, if any, during the period
      commencing on the date of the final prospectus relating to a public offering
      of
      the Company’s equity securities and ending on the date specified by the Company
      or the managing underwriter, if any, enter into certain transactions with
      respect to the equity securities of the Company.





36


In
      March
      2006, Trulite entered into a consulting agreement with Boru Enterprises, Inc.
      (“Boru”). Pursuant to the agreement, Boru shall (i) assist in the Company
      identifying an NASD member to make the 15C-211 filing; (ii) assist the Company
      in raising additional capital; (iii) facilitate the Company’s registration of
      its securities; and (iv) provide the Company with other consulting services.
      The
      term of the agreement has not been determined, though both Boru and the Company
      anticipate such services to be provided by Boru for at least two years. In
      exchange for these services, the Company shall (i) issue to Boru 250,000 shares
      of Common Stock, which shall be included in the Company’s anticipated filing of
      a registration statement on Form SB-2 and (ii) issue to Boru 250,000 five-year
      warrants to purchase Common Stock at a strike price of $3 per share. Boru shall
      pay all of its reasonable expenses. Of the 250,000 shares of Common Stock and
      the 250,000 warrants to be issued as compensation, Boru is retaining 200,000
      shares of Common Stock and 200,000 warrants. The remaining 50,000 shares of
      Common Stock shall be issued to five different charities, 10,000 shares to
      each.
      John Moran, the President of Boru, owns stock in Empire Financial Group, Inc.,
      of which the Company has approved the future engagement for its market maker.





On
      April
      25, 2006, Trulite entered into a consulting agreement with John Ligums of Jelco,
      LLC (“Jelco”) for investment banking services. Pursuant to the agreement, Jelco
      shall (i) assist in the Company identifying an NASD member to make the 15C-211
      filing; (ii) assist the Company in raising additional capital; (iii) facilitate
      the Company’s registration of its securities; and (iv) provide the Company with
      other consulting services. The term of the agreement has not been determined,
      though both Mr. Ligums and the Company anticipate such services to be provided
      by Jelco for at least two years. In exchange for these services, the Company
      shall issue to Jelco 50,000 shares of Common Stock, which shall be included
      in
      the Company’s anticipated filing of a registration statement on Form SB-2 and
      150,000 five-year warrants to purchase Common Stock at a strike price of $3
      per
      share. Jelco shall pay all of its reasonable expenses. Separately, Mr. Ligums’
son, Jeb Ligums, purchased 50,000 shares of Common Stock in April 2006, as
      discussed in Part II Item 4, and Mr. Ligums’ daughter, Jenny Ligums, owns
      options to purchase 5,000 shares of Common Stock. Jenny Ligums was formerly
      employed by CCP and now works with an affiliate of CCP.





On
      May 5,
      2006, the Board of Directors of the Company approved the future engagement
      of
      Empire Financial Group, Inc. (“Empire”) as its market maker. Empire shall assist
      the Company in its filing of its 15c-211, which is expected occur in the near
      future. No written agreement has yet been entered into. John Ligums, who entered
      into the consulting agreement with Trulite on behalf of Jelco, owns stock in
      Empire. Further, John Moran, the President of Boru, which Trulite has also
      engaged as a consultant, also owns stock in Empire.
































37


**Item
      13. Exhibits.**





Index
      to
      Exhibits




ExhibitNumber
              Description---------
              ----------------3.1*
              Certificate
                  of Incorporation3.2*
              Certificate
                  of Amendment to the Certificate of Incorporation3.3*
              Bylaws3.4*
              Application
                  of Certificate of Authority (Texas)4.1*
              Certificate
                  of Designation of the 8% Cumulative Convertible Preferred Stock,
                  Series
                  A4.2*
              Certificate
                  of Amendment to the Certificate of Designation of the 8% Cumulative
                  Convertible Preferred Stock, Series A, as amended10.1*
              Employment
                  Agreement of John Sifonis10.2*
              April
                  2005 Option Agreement of John Sifonis10.3*
              October
                  2005 Option Agreement of John Sifonis10.4*
              Employment
                  Agreement of Kevin Shurtleff10.5*
              Employment
                  Agreement of Jerry Metz10.6*
              April
                  2005 Option Agreement of Jerry Metz10.7*
              October
                  2005 Option Agreement of Jerry Metz10.8*
              Employment
                  Agreement of James A. Longaker10.9*
              July
                  2005 Option Agreement of James A. Longaker10.10*
              Employment
                  Agreement of Eric Ladd10.11*
              Trulite,
                  Inc. Stock Option Plan10.12*
              Contribution
                  Agreement10.13*
              Waiver
                  Agreement10.14*
              Preferred
                  Stock Purchase Agreement10.15*
              Addendum
                  to Preferred Stock Purchase Agreement10.16*
              Investor’s
                  Rights Agreement10.17*
              Right
                  of First Refusal and Co-Sale Agreement10.18**
              Option
                  Agreement with Synexus Energy, Inc.10.19***
              Stockholder
                  Lock-Up Agreement with Contango Capital Partners, LP10.20***
              Consulting
                  Agreement with Boru Enterprises, Inc.10.21***
              Memorandum
                  of Understanding with Synexus Energy, Inc.10.22***
              Grant
                  Documents from The Defense Threat Reduction Agency and the United
                  States
                  Air Force10.23****
              Consulting
                  Agreement with Jelco, Inc.10.24****
              Consulting
                  Agreement with Ascend Renewable Technologies, LLC10.25****
              Employment
                  Agreement of Christopher Brydon10.26****
              Employment
                  Agreement of Eric Ladd10.27****
              Employment
                  Agreement of John Patton10.28****
              Employment
                  Agreement of Kevin Shurtleff10.29****
              Stockholder
                  Lock-Up Agreement with James Longaker10.30****
              Stockholder
                  Lock-Up Agreement with John Sifonis10.31****
              Stockholder
                  Lock-Up Agreement with Kevin Shurtleff10.32****
              Stockholder
                  Lock-Up Agreement with Eric Ladd10.33****
              Amended
                  Stock Option Plan10.34****
              Stock
                  Option Agreement with John Berger
   38
  10.35****
              Stock
                  Option Agreement with Christopher Brydon10.36****
              Stock
                  Option Agreement with William Flores10.37****
              Stock
                  Option Agreement with Richard Hoesterey10.38****
              Stock
                  Option Agreement with Evan Hughes10.39****
              Stock
                  Option Agreement with Eric Ladd10.40****
              Stock
                  Option Agreement with Jenny Ligums10.41****
              Stock
                  Option Agreement with James Longaker10.42****
              Stock
                  Option Agreement with Eric Melvin10.43****
              Stock
                  Option Agreement with John Patton10.44****
              Stock
                  Option Agreement with Kevin Shurtleff31.1
              Certification
                  of the Company’s Principal Executive Officer pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
                  Report on Form 10-KSB for the year ended December 31, 200531.2
              Certification
                  of the Company’s Principal Financial Officer pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
                  Report on Form 10-KSB for the year ended December 31, 200532.1
              Certification
                  of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes Oxley
                  Act of
                  2002.32.2
              Certification
                  of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes Oxley
                  Act of
                  2002.*
              Filed
                  as an exhibit to the Company's registration statement on Form 10-SB,
                  as
                  filed with the Securities and Exchange Commission on December 23,
                  2005,
                  and incorporated herein by this reference.**
              Filed
                  as an exhibit to the Company's registration statement on Form 10-SB/A,
                  as
                  filed with the Securities and Exchange Commission on February 23,
                  2006,
                  and incorporated herein by this reference.***
              Filed
                  as an exhibit to the Company's registration statement on Form 10-SB/A,
                  as
                  filed with the Securities and Exchange Commission on April 21,
                  2006, and
                  incorporated herein by this reference.****
              Filed
                  as an exhibit to the Company's registration statement on Form 10-SB/A,
                  as
                  filed with the Securities and Exchange Commission on June 8, 2006,
                  and
                  incorporated herein by this
                  reference.


______________





39


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





UHY
      Mann
      Frankfort Stein & Lipp, LLP (“UHY”) is the Company's independent registered
      public accounting firm.





AUDIT
      FEES and AUDIT-RELATED FEES





UHY
      fees
      billed for assurance and related services related to the audit or review of
      the
      Company’s financial statements were $102,480.30 and $37,021.95 for the fiscal
      years ended December 31, 2005 and December 31, 2004, respectively. The nature
      of
      the services comprising these fees was two separate audits of the December
      31,
      2005 financial statements and the review of the March 31, 2006 financial
      statements.





TAX
      FEES





UHY
      fees
      billed for professional services for tax compliance, tax advice, and tax
      planning were $0 and $2,119 for the fiscal years ended December 31, 2005 and
      December 31, 2004, respectively. The nature of the services comprising these
      fees was assistance with the Company’s tax returns.





ALL
      OTHER
      FEES





UHY
      fees
      billed for other products and services were $0 and $0 for the fiscal years
      ended
      December 31, 2005 and December 31, 2004, respectively. The nature of the
      services comprising these fees was assistance with the filing of the Company’s
      registration statement on Form10-SB.



































40


**SIGNATURES**





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





**TRULITE,
                INC.**Dated:
              June 7, 2006
            By:
            /s/ John
              SifonisJohn Sifonis
              President




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




Title
              
              Date/s/
                John Berger
              
              Chairman
                of the Board of Directors
              
              June
                7,
                2006John
                Berger/s/
                General Randolph House
              
              Director
              
              June
                7,
                2006General Randolph House/s/
                Thomas Samson
              
              Director
              
              June
                7,
                2006Thomas Samson/s/
                Eric Melvin
              
              Director
              
              June
                7,
                2006Eric Melvin/s/
                William Flores
              
              Director
              
              June
                7,
                2006William
                  Flores/s/
                Richard Hoesterey
              
              Director
              
              June
                7,
                2006Richard
                  Hoesterey







41