3

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TABLE OF CONTENTS

 

		Page
PROSPECTUS SUMMARY		5
SUMMARY FINANCIAL DATA		7
FORWARD-LOOKING STATEMENTS		8
RISK FACTORS		8
USE OF PROCEEDS		13
DETERMINATION OF OFFERING PRICE		13
DILUTION		13
SELLING STOCKHOLDERS		14
PLAN OF DISTRIBUTION		15
LEGAL PROCEEDINGS		16
MANAGEMENT		17
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT		19
DESCRIPTION OF SECURITIES		22
INTEREST OF NAMED EXPERTS AND COUNSEL		24
EXPERTS		24
INDEMNIFICATION		24
BUSINESS		25
WHERE YOU CAN FIND MORE INFORMATION		33
MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION		33
DESCRIPTION OF PROPERTY		38
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		38
MARKET FOR COMMON STOCK		40
DIVIDENDS		40
EXECUTIVE COMPENSATION		41
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS		F-1
PART II		II-1

 

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6

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THE OFFERING

 

By means of this prospectus, certain stockholders of Trulite are offering to sell up to 2,788,047 shares of Common Stock that they own, or that they may acquire upon exercise of warrants. In this prospectus, we refer to these persons as a selling stockholder or the selling stockholders. As of December 31, 2006, we had 11,785,491 shares of Common Stock issued and outstanding. The number of outstanding shares does not give effect to shares that may be issued pursuant to the exercise and/or conversion of currently outstanding options or warrants.

 

Trulite will not receive any proceeds from the sale of the shares by means of this prospectus.

 

The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include the lack of revenues, a history of loss, and the need for additional capital. See the “Risk Factors” section of this prospectus for additional risk factors.

 

SUMMARY FINANCIAL DATA

 

The financial data presented below should be read in conjunction with the more detailed financial statements and related notes included elsewhere in this prospectus, along with the section entitled “Management’s Discussion and Analysis and Plan of Operations.”

 

 

		Year Ended December 31,			Period From Inception (July 15, 2004) Through December 31,			Three Months Ended September 30,						Nine Months Ended September 30,
		2005			2004			2006			2005			2006			2005
Sales		$	16,667		$	1,750		$	-		$	-		$	8,333		$	-
Gross profit			4,451			1,100			-			-			2,421			-
Operating expenses			(830,658	)		(879,122	)		(726,165	)		(143,614	)		(2,630,696	)		(600,641	)
Other income (expense)			255			-			(4,055	)		2,777			(908	)		3,239
Net loss			(825,952	)		(878,022	)		(730,220	)		(140,837	)		(2,629,183	)		(597,402	)

 

Balance Sheet Data:

 

		As of			As of
		September 30,			December, 31
		2006			2005
Current assets			159,266			304,109
Total assets			195,259			337,147
Current liabilities			607,802			44,821
Total liabilities			607,802			44,821
Working capital (deficit)			(448,536	)		259,288
Stockholders' equity (deficit)			(412,543	)		292,326

 

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FORWARD-LOOKING STATEMENTS

 

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

 

·	general economic conditions in both foreign and domestic markets
·	cyclical factors affecting our industry
·	lack of growth in our industry
·	our ability to comply with government regulations
·	a failure to manage our business effectively and profitably
·	our ability to sell both new and existing products and services at profitable yet competitive prices

You should carefully consider these risks, uncertainties, and other information, disclosures, and discussions that contain cautionary statements identifying important factors that could cause actual results to differ materially from those provided in the forward-looking statements. Trulite undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The securities being offered are highly speculative and prospective investors should consider, among other things, the following factors related to our business, operations, and financial position.

 

RISK FACTORS

 

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals, including those described below. The risks described below are not the only ones we will face. Additional risks not presently known to us or that the Company currently deems immaterial may also impair our financial performance and business operations. If any of these risks actually occurs, our business, financial condition, or results of operations may be materially adversely affected. In such case, the trading price of our Common Stock could decline, and you may lose all or part of your investment. Before making any investment decision, you should also review and consider the other information set forth in this Prospectus and the exhibits thereto.

 

An investment in the Company is highly speculative in nature and involves an extremely high degree of risk. If any of the events, contingencies, circumstances, or conditions described in this risk factors section actually occurs, our business, financial condition, or results of operations could be seriously harmed.

 

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 and manufactured about thirty KH-3X units. The Kitty Hawk products were delivered to a selected customer in February and March 2006. Accordingly, there is only a limited basis upon which to evaluate our business and prospects. An investor in our Company should consider the challenges, expenses, and difficulties we will face as a development stage company seeking to develop and manufacture a new product in a relatively new market.

 

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

 

We received an audit report for the year ended December 31, 2005, from our independent registered accounting firm containing an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The Company has no significant operating history as of September 30, 2006, and since inception, the Company has not had significant revenues. Management raised additional equity and debt financing to fund operations and to provide additional working capital. However, there is no assurance that such financing will be in amounts sufficient to meet the Company’s needs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

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

 

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

 

To achieve and maintain competitiveness and continue our growth, we expect to raise substantial funds. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertanties and actual results could be better or worse as a result of a number of factors. We anticipate the need to raise additional capital to develop, promote, and distribute our 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 $2.0 million to $5.0 million in funding. It is anticipated that Trulite will need to raise these monies in 2007. These funds will be required for recruiting and hiring additional technical staff, for purchasing materials for the manufacture of KH-3X and Kitty Hawk 4 units, for labor costs associated with manufacturing, for marketing expenses, and for product development and enhancements to the Kitty Hawk product line.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Strategic relationships are critical to 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.

 

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 sufficient to meet a five 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. 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.

 

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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 that 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, 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 may be unsatisfactory to the Company and could result in additional costs to the Company.

 

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

 

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

 

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

 

One of the factors that generally affects the market price of publicly traded equity securities is the number of shares outstanding in relationship to assets, net worth, earnings or anticipated earnings. If a public market develops for the Company’s shares, or if the Company determines to register for sale to the public those shares of Common Stock granted in any business combination, 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
·	consumer reluctance to try new products and technologies

 

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

 

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

 

Although many governments have made the development of alternative energy sources, fuel cells in particular, a priority, we cannot assure you that these governments will not change their environmental policies or that any change would not negatively affect our business. Research for alternative energy is influenced by 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, or 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 be sure 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 in part on our five patent applications to protect our intellectual property. Additionally, we make every effort to protect our knowledge of our processes and procedures. Failure to protect our existing intellectual property could cause the loss of our exclusivity or the right to use the technology we developed. If we do not adequately protect our intellectual property rights, we may have to pay others for the right to use their technology.

 

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

 

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

 

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

 

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

 

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

 

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We believe we have taken due care and diligence to capture all intellectual property developed by Dr. Shurtleff during his tenure with the Company, and have taken other measures to ensure that the Company’s progress in the area of hydrogen fuel source development will not be impeded if Dr. Shurtleff leaves its employ. The Company is seeking to hire a chemist to provide expertise on fuel sources and control systems.

 

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

 

There is currently no trading market for our Common Stock.

 

Outstanding shares of the Company’s 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 to issue, without stockholder approval, preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock. As of December 31, 2005, there were 1,454,725 outstanding shares of Series A Preferred Stock. On May 2, 2006, all holders of these preferred shares converted them to shares of Common Stock. If additional shares of 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.

 

This registration statement contains forward-looking statements and information relating to us, our industry and to other businesses. These forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. When used in this prospectus, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject to risks and uncertainties that may cause our actual results to differ materially from those contemplated in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this registration form or to reflect the occurrence of unanticipated events.

 

 

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

 

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

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

 

USE OF PROCEEDS

 

Proceeds from this offering of Common Stock will inure directly to the selling stockholders. Trulite will not receive any proceeds from the sale of the Common Stock by the stockholders whose shares are being registered.

 

DETERMINATION OF OFFERING PRICE

 

The $2.50 per share offering price of the Common Stock was arbitrarily chosen using the last sales price of our Common Stock from our most recent private offering of Common Stock. There is no relationship between this price and our assets, earnings, book value or any other objective criteria of value.

Trulite intends to apply to the NASD over-the-counter bulletin board for the quotation of the Common Stock upon becoming a reporting entity under the Securities Exchange Act of 1934 , as amended (the “Exchange Act”) . If the Common Stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling stockholders. The offering price would thus be determined by market factors and the independent decisions of the selling stockholders.

 

DILUTION

 

The Common Stock to be sold by the selling stockholders is Common Stock that is currently issued and outstanding. Accordingly, there will be no dilution to existing stockholders resulting from sales of the shares of Common Stock offered hereby.

 

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SELLING STOCKHOLDERS

 

This prospectus relates to the sale of shares of Common Stock by certain stockholders of Trulite. The shares were issued for services rendered and in private offerings for cash.

 

Trulite will not receive any proceeds from the sale of the shares by the selling stockholders. Generally, purchasers of shares of Common Stock offered hereby may resell the shares they acquire by means of this prospectus from time to time in the public market. The costs of registering the shares offered hereby are being paid by Trulite. The following table identifies the selling stockholders and the shares that are being offered for sale by the selling stockholders.

 

Name		Shares Owned			Shares Issuable Upon the Exercise of Warrants			Shares to be sold in this Offering			Share Ownership After Offering - Number of Shares(1)			Share Ownership After Offering -% of Class (2)
Blackman, Sherry			50,000 (3	)		50,000 (3	)		100,000			-			0.0	%
Boru Enterprises, Inc. (4)			200,000(5	)		250,000 (5	)		450,000			-			0.0	%
Forrester Financial, LLC (6)			200,000(3	)		200,000 (3	)		400,000			-			0.0	%
Gagne, Kevin			10,000 (3	)		10,000 (3	)		20,000			-			0.0	%
Jelco, LLC (7)			50,000(5	)		150,000 (5	)		200,000			-			0.0	%
Kaiser, Amy			10,000(3	)		10,000 (3	)		20,000			-			0.0	%
Keyser, Kelly			10,000 (3	)		10,000 (3	)		20,000			-			0.0	%
Ligums, John			50,000 (3	)		50,000 (3	)		100,000			-			0.0	%
Lovitz, Lawrence			25,000 (3	)		25,000 (3	)		50,000			-			0.0	%
Nielson, Andrew			1,120,745 (8	)		-			182,682			938,063			8.0	%
Ragsdale, Jonathan			7,500 (3	)		7,500 (3	)		15,000			-			0.0	%
Salvatore, Caroline			10,000 (3	)		10,000 (3	)		20,000			-			0.0	%
Shurtleff, Kevin			2,035,460 (8	)		-			101,773			1,933,687			16.4	%
Sutter, Irene			10,000 (3	)		10,000 (3	)		20,000			-			0.0	%
Weinstein, Frances			25,000 (3	)		25,000 (3	)		50,000			-			0.0	%
Contango Capital Partners, LP (9)			0 (3	)		592,500 (3	)		592,500			-			0.0	%
Abrahams, Raid			4,816 (10	)		-			241			4,575			0.0	%
Bendikson, Aaron			4,816 (10	)		-			241			4,575			0.0	%
Bor, Michael			9,631 (10	)		-			482			9,149			0.1	%
Burkart, Frazer			4,816 (10	)		-			241			4,575			0.0	%
Contango Capital Partnership Management LLC (11)			792 (10	)		-			40			752			0.0	%
Contango Venture Capital Corporation (12)			2,001,014 (10	)		-			100,051			1,900,963			16.1	%
Delph, Walter			4,816 (10	)		-			241			4,575			0.0	%
Fleiss, Eric			9,631 (10	)		-			482			9,149			0.1	%
Flores, William			500 (10	)		-			25			475			0.0	%
Guido, Greg			2,408 (10	)		-			120			2,288			0.0	%
Harsley, Martyn			24,078 (10	)		-			1,204			22,874			0.2	%
Henry, Robert			240,779 (10	)		-			12,039			228,740			1.9	%
Herndon, Rogers			77,049 (10	)		-			3,852			73,197			0.6	%
Huge, Don			48,156 (10	)		-			2,408			45,748			0.4	%
Janke, David			4,816 (10	)		-			241			4,575			0.0	%
Mobius Risk Group LLC			76,350 (10	)		-			3,818			72,532			0.6	%
Smith, Paul			33,709 (10	)		-			1,685			32,024			0.3	%
Smith, Peter			37,171 (10	)		-			1,859			35,312			0.3	%
Stapleton, Walker			4,816 (10	)		-			241			4,575			0.0	%
NewPoint Energy Solutions, LP (13)			5,331,622 (13	)		-			266,581			5,065,041			43.0	%
Cathedral Prep Seminary (14)			10,000 (15	)		-			10,000			-			0.0	%
Larizza, Lou			10,000 (15	)		-			10,000			-			0.0	%
Rosarran, Inc.			10,000 (15	)		-			10,000			-			0.0	%
St. Theresa Catholic Church			10,000 (15	)		-			10,000			-			0.0	%
Wehner, William			10,000 (15	)		-			10,000			-			0.0	%
Total Shares			11,785,491			1,400,000			2,788,047			10,397,444			88.22	%

 

(1) Includes shares of common stock issuable on exercise of options and warrants.

 

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(2) Calculated based on the number of shares of Common Stock held by the stockholder (excluding shares issuable on exercise of options and warrants) divided by the total number of outstanding shares of Common Stock (excluding shares issuable on exercise of outstanding options and warrants).

 

(3) 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 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.

 

(4) The sole member of the Board of Directors of Boru Enterprises, Inc. (“Boru”) is John Moran. Mr. Moran exercises voting and investment power on behalf of Boru.

 

(5) These securities were issued as compensation for services rendered to the Company.

 

(6) The sole member of the Board of Directors of Forrester Financial, LLC (“Forrester Financial”) is Ted Karkus. Ted Karkus exercises voting and investment power on behalf of Forrester Financial.

 

(7) Jelco, LLC (“Jelco”) is managed by John Ligums, who exercises voting and investment power on behalf of Jelco.

 

(8) These securities were issued in connection with an acquisition. Mr. Nielson has granted to Eric Ladd an option to purchase up to 473,968 of these shares of Common Stock.

 

(9) The general partner of Contango Capital Partners, LP (“CCP”) is Contango Capital Partnership Management LLC (“CCPM”). John Berger, Kenneth R. Peak, Todd Sullivan, Gerald Sullivan, Eric Melvin, and John D. White are the managers of CCPM and collectively exercise voting and investment power on behalf of CCP.

 

(10) CCP distributed these shares of Common Stock to its limited partners for no consideration.

 

(11) CCPM collectively is managed by John Berger, Kenneth R. Peak, Todd Sullivan, Gerald Sullivan, Eric Melvin, and John D. White, who together exercise voting and investment power on behalf of CCPM.

 

(12) Contango Venture Capital Corporation is owned by Contango Oil & Gas Company. Kenneth R. Peak, Lesia Brehmer, Sergio Castro and Marc Duncan are the executive officers of Contango Oil & Gas Company. The Board of Directors of Contango Oil & Gas Company consists of Kenneth R. Peak, Jay D. Brehmer, Darrell W. Williams, Charles M. Reimer and Steven L. Schoonover.

 

(13) Standard Renewable Energy Services, GP LLC is the General Partner of NewPoint Energy Solutions, LP. John Berger is the sole member and manager of Standard Renewable Energy Services GP, LLC and in that capacity has voting and dispositive power over these shares.

 

(14) Cathedral Prep Seminary is a not for profit organization managed by John Moran. John Moran exercises voting and investment power on behalf of Cathedral Prep Seminary.

 

(15) Boru distributed these shares of Common Stock, which were received as compensation for services to the Company, for no consideration.

PLAN OF DISTRIBUTION

 

The selling stockholders and any of their pledgees, assignees, and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market, or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
·	an exchange distribution in accordance with the rules of the applicable exchange;
·	privately negotiated transactions;
·	short sales;
·	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
·	a combination of any such methods of sale; or
·	any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

 

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The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders may also transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The selling stockholders and any broker-dealers or agents involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us they do not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.

 

The Company has advised the selling stockholders that in the event of a “distribution” of the shares owned by the selling stockholders, such selling stockholders, any “affiliated purchasers,” and any broker-dealer or other person who participates in such distribution may be subject to Rule 102 under the Exchange Act until their participation in that distribution is completed. Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class as is the subject of the distribution. A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods.” Trulite has also advised the selling stockholders that Rule 101 under the Exchange Act prohibits any “stabilizing bid” or “stabilizing purchase” for the purpose of pegging, fixing, or stabilizing the price of the Common Stock in connection with this offering.

LEGAL PROCEEDINGS

 

Trulite is not a party to any legal proceedings nor is any of their property the subject of any proceeding, nor are they aware of any proceedings pending or of any actions that might give rise to any such proceedings.

 

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MANAGEMENT

 

Directors and Executive Officers

 

Set forth below are the present directors and executive officers of the Company. Note that there are no other persons who have been nominated or chosen to become directors nor are there any other persons who have been chosen to become executive officers. There are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Name		Age		Position
Jonathan Godshall		58		President, Chief Executive Officer, and Director
John Berger		33		Chairman of the Board of Directors
Richard Hoesterey		64		Director
General Randolph House		61		Director
Eric Melvin		43		Director
John Sifonis		65		Director
John White		58		Director
Kenneth Pearson		52		Chief Operating Officer
Wade Stubblefield		40		Chief Financial Officer

Jonathan Godshall, President, Chief Executive Officer and Director

 

Jonathan Godshall joined the Company in June 2006 as a management consultant. On August 11, 2006 Mr. Godshall became the President and CEO of the Company. Effective October 31, 2006, Mr. Godshall was elected a director of the Company. Mr. Godshall has extensive management experience in a variety of industries. From 1986 until 2001, he was the President and CEO of Igloo Products Corp., a position he held for fifteen years. Igloo’s primary product lines are ice chests and beverage coolers, and enjoy great brand recognition. During his tenure, Igloo’s revenues tripled and the company introduced over 100 new products. Prior to joining Igloo, Jonathan was the Vice President and General Manager of Anderson Clayton Foods, where he was responsible for over $325 million in sales and for manufacturing and operations in six food plants across the United States. From October 2002 until January 2004, he was the President and CEO of Home Fragrance Holdings, a candle company headquartered in Houston. Jonathan has experience in selling through most retail channels of distribution and through commercial and industrial channels as well. Mr. Godshall received an A.B. degree from the University of North Carolina in 1970, where he was a Morehead Scholar, and an MBA from the Harvard Business School in 1973. He has served on the Board of Directors of two privately held start-up companies and on the board of four privately held operating companies.

 

William Jackson Berger, Chairman of the Board of Directors.

 

William Jackson Berger (“John Berger”) has more than nine years of experience in the energy industry and has served as Chairman of the Board of Directors of Trulite since July 22, 2004. Mr. Berger is Chairman of the Board and Chief Executive Officer of SREG and Chief Executive Officer of Standard Renewable Energy, LP. Mr. Berger also serves as Chairman of the Board and Chief Executive Officer of Newpoint Energy Solutions, L.P. and Chairman of the Board of Directors of Galveston Bay Biodiesel, LP. During 1996-2001, Mr. Berger worked as a trader at Enron Corp., 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 University with a B.S. in civil engineering in 1996. In 2003, Mr. Berger graduated from Harvard Business School with an MBA.

 

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John Sifonis, Director.

 

John Sifonis joined the Company as its President and Chief Executive Officer and as a director in October 2004. Mr. Sifonis resigned as President and Chief Executive Officer of the Company August 11, 2006, but remains a director of the Company. 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.

 

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 board member of private and public companies. Mr. Hoesterey joined Components Corporation of America (“CCA”) in 1997, and has served as CCA’s President and Chief Executive Officer since 2000. 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 1st 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 in business at Rochester Institute of Technology. He also has an APICS Certification in Production and Inventory management.

 

General Randolph House, Director.

 

General House, a Director of the Company, 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, a subsidiary of Enron Corp. 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.

 

John White, Director

 

John White was named a director of the Company effective October 31, 2006. Since July 1, 2006, Mr. White has served as General Counsel and Senior Vice President of Government/Investor Relations of Standard Renewable Energy Group, LLC. From March 1, 2003 to June 30, 2006, Mr. White was a partner in the Houston, Texas office of Jones, Walker, Waechter, Poitevent, Carrere & Denegre LLP and from January 1, 2004 until June 30, 2006 was Managing Partner of that office. Mr. White was a partner in the law firm of Winstead Sechrest and Minick PC from February 1, 2002 until February 28, 2003. Mr. White is Chairman of the Texas A&M University System Board of Regents.

 

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Kenneth Pearson, Chief Operating Officer

 

Kenneth Pearson became the Chief Operating Officer and Vice President of Product Development of the Company effective January 1, 2007. From November 2005 until January 2007, Mr. Pearson was an independent consultant. From 2001 until 2005, he was the Chief Operating Officer of Jadoo Power Systems Inc., where he launched the company and its products. Jadoo’s primary product lines are portable fuel cell power, metal hydride storage and refilling products. During his tenure, he created and managed Jadoo’s infrastructure, product development team and strategy, intellectual property strategy, supply chain relationships and a state of the art fuel cell development and manufacturing facility. Over the past 28 years Mr. Pearson has developed a track record in the management of technology companies in a broad range of industries from fuel cells, medical devices, electronics and aerospace. Mr. Pearson holds a BSME degree and has over four additional years of formal management training. He also is certified in operations by the Association for Operations Management. Mr. Pearson held a position on Jadoo Power Systems Board of Directors for three years and was elected to the National Hydrogen Associations Board of Directors in 2004.

 

Wade Stubblefield, Chief Financial Officer

 

Wade Stubblefield has served the Company as Chief Financial Officer since December 14, 2006, and since October 2006 has served as Chief Financial Officer of Standard Renewable Energy Group, LLC. From April 2004 to October 2006, Mr. Stubblefield served as Vice President and Corporate Controller of Group 1 Automotive, Inc., a Fortune 500 automotive retailer. At the time, Group 1 Automotive's operations encompassed 95 auto dealerships concentrated in 14 geographic locations. From December 2001 to April 2004, Mr. Stubblefield served as Managing Director of Enron’s Wholesale and Retail Estate, where he was responsible for financial and accounting matters during post-bankruptcy operations. This organization consisted of 35 subsidiaries with 100 divisions and a net asset value of approximately $6.0 billion. From August 1999 to December 2001, Mr. Stubblefield served as Vice President of Financial Operations for Enron Energy Services, a division of Enron Corp. with total annual sales of commodity and services approaching $6.0 billion, total assets of approximately $4.5 billion, and approximately 7,000 employees.

 

The term of office of each director expires at the Company’s annual meeting of stockholders or until his successor is duly elected and qualified. Directors are not compensated for serving as such. Officers serve at the discretion of the Board of Directors.

 

No officer or director has, during the past five years, been involved in (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, (b) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), (c) any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities or (d) a finding by a court of competent jurisdiction (in a civil action), the SEC, or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.

 

The Company’s Board of Directors has established an Audit Committee. Currently, there are no members of 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.

 

PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT

 

The following table sets forth, as of the date of this Registration Statement, the number of shares of Common Stock owned of record and beneficially by executive officers and directors, and persons who hold 5% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group

 

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Name and Address		Amount and Nature of Beneficial Ownership			Percentage of Class(1)
NewPoint Energy Solutions, LP (a) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			5,331,622			45.2	%
Kevin Shurtleff (b) 573 East 950 North Orem, UT 84097			2,734,763(c	)		21.9	%
Andrew Nielson 340 South 800 West Orem, UT 84058			1,120,745 (d	)		9.5	%
Eric Ladd 4987 West Woodbend Road West Jordan, UT 84084			648,794 (e	)		5.22	%
John Berger (f) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			6,101,192 (g	)		48.6	%
Contango Capital Partners, L.P. (h) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			768,778 (i	)		6.1	%
John Sifonis (j) P.O. Box 201887 Arlington, TX 76006-1887			123,206 (k	)		1.0	%
General Randolph House (l) 905 Carmel Place College Station, TX 77845			3,423 (m	)		0.03	%
Eric Melvin (n) Three Riverway   Suite 1700 Houston, TX 77056			769,570 (o	)		6.1	%
John White (p) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			769,570 (q	)		6.1	%
Contango Venture Capital Corporation (r) 3700 Buffalo Speedway, Suite 960 Houston, TX 77098			2,001,014 (s	)		16.98	%
Richard Hoesterey (t) 7852 La Cosa Drive Dallas, TX 75248			0			—
Jonathan H. Godshall (u) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			0			—
Wade Stubblefield (v) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			0			—
Kenneth Pearson (w) 5 Houston Center 1401 McKinney Street, Suite 900 Houston, Texas 77010-4035			15,000 (x	)		.1	%
All Directors and Officers as a Group (9 individuals)			6,242,821 (y	)		49.17	%

  

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(1)	Percentage calculated on a fully diluted basis.

 

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(a)	Standard Renewable Energy Services, GP LLC is the General Partner of NewPoint Energy Solutions, LP. John Berger is the sole member and manager of Standard Renewable Energy Services, GP LLC and in that capacity has voting and dispositive power over these shares.

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

(c)	Represents 2,035,460 shares of Common Stock and currently exercisable options to purchase up to 699,303 shares of Common Stock at a price of $.88 per share.

(d)	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 until March 2, 2014.

(e)

Represents currently exercisable 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.

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

(g)

Includes warrants to purchase 592,500 shares of Common Stock owned by CCP , options to purchase 176,278 shares of Common Stock owned by CCP, and 792 shares owned by CCPM. Although he does not have sole voting or dispositive power over the warrants and options owned by CCP, as a manager of the general partner of CCP he may be deemed to be the beneficial owner thereof. Includes 5,331,622 shares owned by NewPoint Energy Solutions, LP. Mr. Berger is the sole member and manager of Standard Renewable Energy Services, GP LLC, the general partner of Newpoint Energy Solutions, LP, and in that capacity has voting and dispositive power over these shares.

(h)

The general partner of Contango Capital Partners, LP (“CCP”) is Contango Capital Partnership Management LLC (“CCPM”). John Berger, Kenneth R. Peak, Todd Sullivan, Gerald Sullivan, Eric Melvin, and John D. White are the managers of CCPM and collectively exercise voting and investment power on behalf of CCP.

(i)	Represents currently exercisable options to purchase up to 176,278 shares of Common Stock at a price of $.88 per share and warrants to purchase 592,500 shares of Common Stock at a strike price of $1.50 per share.

(j)	Mr. Sifonis a director of Trulite. Mr. Sifonis resigned as President and CEO effective August 11, 2006.

(k)	Represents currently exercisable options to purchase up to 119,506 shares of Common Stock at a price of $.88 per share and 3,700 shares of Common Stock at a price of $1.00 per share.

(l)	General House is a director of Trulite.

(m)	Represents currently exercisable options to purchase up to 3,423 shares of Common Stock at a price of $.88 per share.

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

(o)

Consists of warrants to purchase 592,500 shares of Common Stock owned by CCP , options to purchase 176,278 shares of Common Stock owned by CCP, and 792 shares owned by CCPM. Although Mr. Melvin does not have sole voting or dispositive power over the shares owned by CCP, as a manager of the general partner of CCP he may be deemed a beneficial owner thereof.

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

(q)

Consists of warrants to purchase 592,500 shares of Common Stock owned by CCP and options to purchase 176,278 shares of Common Stock owned by CCP, and 792 shares owned by CCPM. Although Mr. White does not have sole voting or dispositive power over the shares owned by CCP, as a manager of the general partner of CCP he may be deemed a beneficial owner thereof.

(r)

Contango Venture Capital Corporation is owned by Contango Oil & Gas Company. Kenneth R. Peak, Lesia Bautina, Sergio Castro and Marc Duncan are the executive officers of Contango Oil & Gas Company. The Board of Directors of Contango Oil & Gas Company consists of Kenneth R. Peak, Jay D. Brehmer, Darrell W. Williams, Charles M. Reimer and Steven L. Schoonover.

(s)	Represents 2,001,014 shares of Common Stock owned by Contango Venture Capital Corporation.

(t)	Mr. Hoesterey was appointed to the Company’s Board of Directors on May 5, 2006.

(u)	Mr. Godshall was appointed President and Chief Operating Officer on August 7, 2006 and became a director effective October 31, 2006.

(v)	Mr. Stubblefield is the Chief Financial Officer of Trulite.

(w)	Mr. Pearson is the Chief Operating Officer of Trulite.

(x)	Represents currently exercisable options to purchase 15,000 shares of Common Stock.

(y)	Consists of 5,336,114 shares of Common Stock and an aggregate of 906,707 shares of Common Stock issuable upon exercise of options and warrants.

 

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DESCRIPTION OF SECURITIES

 

General

 

(a) Common and Preferred Stock.

 

The Company is authorized by its Certificate of Incorporation to issue an aggregate of 21,500,000 shares of capital stock, comprising 20,000,000 shares of Common Stock, and 1,500,000 shares of preferred stock, par value $.0001 per share (the “Preferred Stock”). As of December 31, 2006, 11,785,491 shares of capital stock, consisting of 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.

 

Preferred Stock

 

Trulite is authorized by its Certificate of Incorporation to designate and issue up to 1,500,000 shares of Preferred Stock. As of December 31, 2006, the Company had no shares of Preferred Stock outstanding.

 

The description of certain matters relating to the securities of the Company is a summary and is qualified in its entirety by the provisions of the Company’s Certificate of Incorporation and bylaws, copies of which have been filed as exhibits to the Company’s Form 10-SB/A filed with the SEC on June 8, 2006.

 

Stock Options, Warrants, and Other Rights

 

Trulite adopted an option plan to provide for the issuance 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. During 2005, the Company granted options to purchase 466,692 shares of Common Stock with an exercise price of $0.88, whereas the fair value of a share of Common Stock on the dates of grant was $0.18. All of these options vest over four years and have a seven-year contractual life. During 2006, the Company granted options to purchase 2,441,662 shares of common stock under the Plan. With respect to 1,282,536 of these shares, the exercise price is $0.88 per common share, whereas the fair value of a share of common stock on the date of grant was $0.95. With respect to options to purchase the additional 1,159,126 shares of common stock, the exercise price is $1.00 per common share. 1,167,604 of these options were vested upon grant during 2006, whereas the remaining 1,274,058 granted during 2006 vest over four years and have varying contractual lives ranging from four to seven years.. 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.

 

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, along with warrants to acquire an additional 1,000,000 shares of Common Stock at an exercise price of $1.50 per share, to various investors for $1.00 per share of Common Stock issued in a private placement.

 

In March 2006, Trulite entered into a consulting agreement with Boru Enterprises, Inc. (“Boru”). This consulting agreement was amended and restated in August 2006. The agreement contemplates that Boru will (i) assist in the Company identifying an NASD member to make a Rule 15c2 11 filing; (ii) coordinate with the Company and its counsel in filing with the SEC, this Registration Statement on Form SB-2; (iii) after the Registration Statement on Form SB-2 is declared effective, introduce the Company to NASD member firms that may have an interest in helping the Company raise capital in the public markets; (iv) identify potential investors to the Company so that the Company or NASD member firms engaged by the Company may discuss a potential investment directly with the potential investors; and (v) provide other general consulting advice regarding the process for going public. 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 (i) issued to Boru 250,000 shares of Common Stock, which are included in this prospectus and (ii) issued to Boru warrants having a five-year term to purchase 250,000 shares of Common Stock at a strike price of $3.00 per share. Of the 250,000 shares of Common Stock and the warrants issued as compensation, Boru retained 200,000 shares of Common Stock and warrants to purchase 250,000 shares of Common Stock. The remaining 50,000 shares of Common Stock were issued by Boru to five different charities, in 10,000 share increments.

 

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On April 25, 2006, Trulite entered into a consulting agreement with Jelco, Inc. (“Jelco”) for investment banking services. Pursuant to the agreement, Jelco agreed to (i) assist the Company in 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 agreement terminates on April 25, 2008. In exchange for these services, the Company issued to Jelco 50,000 shares of Common Stock, which are included in this registration statement and warrants having a five-year term to purchase 150,000 shares of Common Stock at a strike price of $3 per share. Jelco shall pay all of its reasonable expenses. John Ligums controls Jelco. Separately, Mr. Ligums’ son, Jeb Ligums, purchased 50,000 shares of Common Stock in April 2006 in connection with the Company’s private placement, and Mr. Ligums’ daughter, Jenny Ligums, owns options to purchase 5,000 shares of Common Stock.

 

Comparative Share Data:

 

Shares offered by this prospectus by the selling stockholders:   2,788,047

 

As of December 31, 2006, we had 11,785,491 outstanding shares of Common Stock, excluding shares which may be issued upon the exercise of currently outstanding warrants and options.

 

The issuance of additional shares and the eligibility of issued shares for resale will dilute our Common Stock and may lower its price. Investors in this offering will suffer immediate dilution, since the price paid for the securities offered will likely be more then the net tangible book value of our Common Stock. Net tangible book value is calculated by dividing our total assets, less intangible assets and liabilities, by the number of outstanding shares of Common Stock.

 

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Other Shares Which May Be Issued:

 

The following table lists additional shares of Common Stock which may be issued as the result of the exercise of outstanding warrants and options:

 

Shares issuable upon exercise of warrants, options and other convertible securities

3,847,061(1)

 

(1) See “Stock Options, Warrants and Other Rights” set forth above for a description of the terms and conditions pursuant to which other shares may be issued.

 

Transfer Agent

 

Continental Stock Transfer & Trust Company is the transfer agent for the Common Stock.

 

 

Management intends to seek a long-term business plan that will allow our securities to be traded without the aforesaid the “penny stock” limitations. However, we cannot predict whether our securities will be exempt from the SEC’s penny stock regulations for listing on Nasdaq or some other national exchange, or be able to maintain the maintenance criteria necessary to insure continued listing. If our securities fail to qualify for the exemption or fail to qualify or meet the relevant maintenance criteria after qualification in the future, this may result in the discontinuance of the inclusion of our securities on a national exchange. However, trading, if any, in our securities may then continue in the non-Nasdaq over-the-counter market. As a result, a stockholder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our securities.

 

Holders of Common Stock are entitled to receive dividends as may be declared by our Board of Directors and, in the event of liquidation, to share pro rata in any distribution of assets after payment of liabilities. The Board of Directors is not obligated to declare a dividend. We have not paid any dividends on our Common Stock and do not have any current plans to do so. See “Certain Relationships and Related Transactions” above for a discussion of agreements between the Company and Boru and the Company and John Ligums.

 

DIVIDENDS

 

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

 

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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, 2006, 2005 and 2004.

 

Name and Position		Year			Salary			Bonus			Other Compensation
Jonathan H. Godshall, President			2006		$	120,000(1	)		—		Options to purchase 676,626 shares of Common Stock at $1.00 per share (3).
Kevin Shurtleff, Employee			2006		$	65,000			—		Options to purchase 699,303 shares of Common Stock at $.88 per share (4).
			2005		$	42,500			—		—
			2004		$	42,500			—		—
John Sifonis, Former President and CEO			2006		$	12,000(2	)		—		Options to purchase 20,000 shares of Common Stock at $1.00 per share (5).
			2005		$	42,000			—		—
			2004		$	120,000			—		Options to purchase 291,478 shares of Common Stock at $.88 per share (5).
James A. Longaker, Former Chief Financial Officer and Secretary			2006		$	65,000			—		Option to purchase 35,000 shares of Common Stock at $.88 per share (5).
			2005		$	65,000			—		Option to purchase 20,000 shares of Common Stock at $.88 per share (5).
			2004			—			—		—

 

(1) Mr. Godshall’s employment as President and CEO of the Company commenced in August 2006. His 2006 annual base salary was $120,000 (of which he received $44,615 during 2006) increasing to $200,000 on the earlier of November 30, 2006 and the completion of a financing round.

 

(2) Mr. Sifonis’ employment as President and CEO terminated in August 2006 and the Company ceased making salary payments to Mr. Sifonis at that time. Actual salary paid to Mr. Sifonis in 2006 was $54,000.

 

(3) All listed options vest over a four year period beginning in 2007 with 25% vesting each year.

 

(4) All listed options vested in April 2006.

 

(5) All listed options were to vest over a four-year period in 18.5%, 22.5%, 26.5%, and 32.5% increments. Vesting ceased upon termination of employment.

 

Employment Agreements

 

The Company is currently a party to employment agreements with Jonathan Godshall, the Company’s President; Eric Ladd; Dr. Kevin Shurtleff; Christopher Brydon; and John Patton. Additionally, portions of the employment agreement between John Sifonis and the Company survive Mr. Sifonis’ resignation as the Company’s President and Chief Executive Officer.

 

John Sifonis entered into an employment agreement with the Company as of October 20, 2004 (the “Sifonis Agreement”). The Sifonis Agreement contains customary confidentiality and non-disclosure provisions that survive the termination of Mr. Sifonis’ employment with the Company, as well as a 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 that survives the termination of Mr. Sifonis’ employment with the Company for a period of two years.

 

In August 2006, the Company entered into an employment agreement with Jonathan Godshall, pursuant to which Mr. Godshall is employed as President and Chief Executive Officer of the Company for a one-year term. Under the employment agreement, Mr. Godshall received an annual base salary of $120,000, that was scheduled to increase to $200,000 per year upon the earlier of (i) November 30, 2006 and (ii) the completion of a financing round. Effective January 1, 2007, Mr. Godshall accepted a decrease in his annual salary paid by the Company to $100,000. The employment agreement provides that if Mr. Godshall is terminated without cause or he terminates for good reason (as such terms are defined in the employment agreement), then he will be entitled to receive his base salary for six months following such termination and his unexercised stock options will continue to vest for twelve months following such termination. In addition, if the Company does not renew the employment agreement at the end of the one-year term, Mr. Godshall will be entitled to receive his base salary for four months.

 

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On August 7, 2006, the Board granted Mr. Godshall a stock option to acquire 676,626 shares of Common Stock, at an exercise price of $1.00 per share and which vests 25% on each of June 15, 2007, June 15, 2008, June 15, 2009, and June 15, 2010. The stock option expires on August 7, 2013. In addition, Mr. Godshall’s employment agreement provides that the Board will grant him additional stock options to acquire a number of shares equal to 5% of any new stock issued and any new stock options granted after August 7, 2006, such grant to occur on the earlier of (i) December 31, 2006 or (ii) the completion of a financing round. As of December 31, 2006, neither of these events had occurred, and therefore no additional options will be granted under this arrangement. The exercise price of Mr. Godshall’s stock options are based on the fair market value on the date of grant and have vesting terms consistent with other stock options granted by the Company. All of such stock options will automatically vest upon a change in control, merger, or buyout of the Company.

 

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 a one-time bonus of $5,000 on December 7, 2006. 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”) which expired January 1, 2007. Dr. Shurtleff has become a month-to-month, at will employee, but otherwise remains 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 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 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.

 

Ken Pearson entered into an employment agreement (the “Pearson Employment Agreement”) on January 1, 2007. Mr. Pearson is employed as the Company’s Chief Operating Officer. The initial term of employment ends May 31, 2007 and if Trulite elects not to renew the Pearson Employment Agreement at the end of this initial term, Trulite is obligated to pay Mr. Pearson his salary for an additional 120 days as severance. The Pearson Employment Agreement provides for an annual base salary of $155,000. The Pearson Employment Agreement includes confidentiality and non-competition provisions.

Effective June 1, 2006, the Company entered into a consulting agreement with Ken Pearson (the “Pearson Consulting Agreement”), pursuant to which Mr. Pearson performed certain services. Mr. Pearson’s roles and responsibilities included: product development, regulatory and government regulations, strategic product and technology alliances and acquisitions, advanced supply chain agreements and alliances, research and development, intellectual property management and strategy formulation, and operational responsibilities. In exchange for his services, the Company paid Mr. Pearson compensation equal to a prorated fee of $115,000 per year ($9,583 per month). Additionally, the Company paid Mr. Pearson a $15,000 signing bonus. In December 2006, the Board of Directors also awarded Mr. Pearson a $15,000 performance bonus based on agreed upon performance goals. Pursuant to the Pearson Consulting Agreement, Mr. Pearson received an option on August 7, 2006 to purchase 15,000 shares of Common Stock, at an option price of $1.00 per share, which option is fully vested. Mr. Pearson also received an option to purchase 300,000 shares of Common Stock at an option share price of $1.00 effective August 7, 2006. The grant of the options is subject to the terms and conditions set forth in the Company’s Amended and Restated Stock Option Plan. In December 2006, the Board of Directors also awarded Mr. Pearson options to purchase an additional 40,000 shares of Common Stock. The term of this agreement was for seven months beginning June 1, 2006 and ending on December 31, 2006. This agreement contained customary confidentiality and non-disclosure provisions to be in effect during and following the termination of the agreement, as well as a one-year 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.

 

Securities authorized for issuance under equity compensation plans as of December 31, 2006.

 

Plan Category		Number of securities to be issued upon exercise of outstanding options and rights (a)			Weighted-average exercise price of outstanding options and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders			0			0			0
Equity compensation plans not approved by security holders (1)(2)			2,447,061		$	0.94			663,744
Total			2,447,061		$	0.94			663,744

 

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(1)

The Company’s Board of Directors adopted the Trulite, Inc. Stock Option Plan (the “Plan”) on April 11, 2005.  The Plan is to be administered by the Company’s Board of Directors and consists of up to 3,110,805 shares of Common Stock in a stock option pool which may be granted in the form of options to employees, directors, consultants and advisors to the Company. The number of options, option price, vesting and exercise schedules and the duration of all options shall all be determined by the Company’s Board of Directors at the time of grant; 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.

 

(2)

Does not include warrants to purchase an aggregate of 1,400,000 shares of common stock held by purchasers of the Offering, Boru and Jelco.

 

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TRULITE, INC.