Mail Stop 0408
January 25, 2006
By U.S. Mail and Facsimile to (212) 997-4242
John Sifonis
President
Trulite, Inc.
Three Riverway
Suite 1700
Houston, Texas 77056
Re: Trulite, Inc.
Registration Statement on Form 10-SB
Filed December 23, 2005
File No. 0-51696
Dear Mr. Sifonis:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
Item 1 - Description of Business, page 2
1. Please revise this section throughout to make it more readily
comprehensible to the average investor. There are numerous
instances
where the discussion could be reorganized or statements could be
fleshed out slightly to aid in clear understanding. The
following
comments attempt to point out certain areas where a fuller
explanation would be helpful, but you should not necessarily limit
your revisions to these specific areas.
2. Please disclose the history of Trulite Technology, LC. We note
the brief disclosure at the beginning of the MD&A section. Please
provide a fuller discussion here, including the nature of the
funding
provided by the "two governmental agencies," the identification of
those agencies, the circumstances under which the funding was
provided, and whether the company still intends to produce
products
for the U.S. military.
3. Please provide a clear business plan in the form of milestones,
indicating the specific steps needed to make the company
operational
and successful, the timing of those steps in weeks, months, or
quarters, the costs, the source of funds and the expected date of
first revenues. The business plan should be historical as well as
forward looking and should indicate where the company currently
stands with respect to its plan.
Business Development, page 2
4. In the second paragraph you state that the company has
partnered
with other fuel cell companies; please identify them.
Business of Issuer, page 2
5. It is not clear why the company`s primary goal would be to
produce
a product that "unequivocally proves" that fuel cells are superior
to
batteries. This seems to be a fairly abstract purpose. Please
revise to clarify this language.
6. It is difficult to tell from your discussion exactly at what
stage
your HydroCell product is currently. Please revise here and
elsewhere, as appropriate, to clarify your meaning when you say
that
the company is "well-positioned to deliver end-user
applications...."
7. When you discuss sales and delivery to related parties, such as
Synexus, please state this relationship clearly.
8. We note your discussion beginning on page 16 regarding the risk
of
reliance on third parties. It appears that much of this
information
is pertinent to your Business discussion. Please revise to
include
this information, as appropriate, identifying the academic
institutions.
9. Please provide a broad discussion of the alternative energy
source/fuel cell industry, how extensive it is, where it is
headed,
and where the company locates itself in this industry. We note in
this regard the statement on page 19 that many governments have
made
the development of fuel cells a priority.
Products, page 2
10. Please discuss the issue of price with respect to your
marketing
your products and competing products. We note the risk factor
discussion on page 16.
Distribution and Sales, page 4
11. Clarify what is meant by "alliance partners and oil field
service
companies."
Market Opportunity, page 5
12. Clarify the statement that the HydroCell will "outlast"
traditional battery power.
13. What are the bases for your statements in the final sentence
regarding growth in your potential markets? Are these statements
based on specific sources? If so, please send us copies of those
sources, and mark them to indicate clearly where the statistics
provided in the disclosure are found.
Industrial Remote Monitoring, page 5
14. Clarify the basis for the statement that your product "has the
reliability critical to this industry."
Utilize Strategic Partners, page 7
15. Please revise to clarify the following:
* What is the nature of the "directed research projects" and what
are
the "selected academic institutions," and what do you mean by
"partnering"?
* What do you mean by "strategic partners," i.e., what would be
the
nature of these partnerships?
* How does entering into a "strategic partnership" with Synexus
avoid
the need of the company to be "beholden to any fuel cell
provider"?
Isn`t the company dependent on Synexus?
* You later suggest that you may acquire Synexus. Please disclose
fully the status of your plans in that regard.
Professional, Efficient Execution, page 7
16. What is the basis for the statement that the stated set of
principles will "ensure successful execution"?
Competition, page 8
17. With respect to the last sentence of the second paragraph,
please
clarify in what ways the HydroCell`s performance was determined to
be
"superior" to MCEL`s.
Employees, page 9
18. The section that begins "reports to security holders" appears
to
be out of place. Please revise or advise.
19. Your bylaws provide for annual meetings. As a 1934 Act
registrant, you will be required to send annual reports and proxy
statements for those meetings. Please reconcile your statements
in
this regard with the Proxy Rules.
20. Please clarify how many of your employees are currently
involved
with research, development, marketing, and so on.
Risk Factors, page 14
21. We note in your introductory paragraph the statement that
there
may be other risks to investing the company apart from those
discussed in this section. Please revise to delete this language.
You must disclose all risks that you believe are material at this
time. Discussing the possibility of risks that are currently
unknown
or appear immaterial is unnecessarily confusing.
Management`s Discussion and Analysis or Plan of Operation
Critical Accounting Policies, page 14
22. Refer to Section V of Release Nos. 33-8350/34-48960 and revise
this section to address the following for your critical accounting
policy:
* Specifically identify why each policy is considered critical by
management.
* Discuss if you could have selected estimates in the current
period
that would have had a materially different impact on your
financial
presentation.
* Discuss why your accounting estimates bear the risk of change
and
describe the potential impact on your financial statements.
* Discuss how accurate your estimates and assumptions have been in
the past and how much they have changed in the past.
* Include quantitative disclosure of your sensitivity to change
based
on other outcomes that are reasonably likely to occur and that
would
have a material effect on the company.
23. Please include all accounting policies that affect estimates
that
could have a material effect on your financial results, including
but
not limited to your accounting policies for recoverability of
unpatented technology and share based payments. Alternatively,
tell
us why such disclosures are not required.
There may be conflicts of interest..., page 15
24. Please revise to clarify the nature of the potential conflicts
and the risks involved. In particular, explain why there is a
material risk that management may compromise its fiduciary duties
to
stockholders.
25. The second paragraph of this risk factor appears to be out of
place. Please revise as necessary.
Changes in environmental policies..., page 19
26. Clarify the nature and potential impact of governmental
regulations.
Control by management, page 20
27. Please revise to state that the 54.38% of the shares are owned
by
Mr. Shurtleff.
28. Discuss the voting rights agreement between Trulite and CCP.
Description of Property, page 21
29. Please disclose the company`s plans with regard to the
expiration
of the lease.
Security Ownership of Certain Beneficial Owners and Management,
page
21
30. Please revise the table to show that John Berger is a
beneficial
owner of the shares held by Contango Capital Partners.
Directors, Executive Officers, Promoters and Control Persons, page
23
31. In John Berger`s biographical sketch, please clarify the
statement that he served as an advisor to the FERC. In what
capacity
did he advise them?
32. Please explain the term Audit Committee Financial Expert.
Does
Mr. Thompson qualify as a financial expert under the Commission`s
rules?
33. Please revise to state, if true, that Mr. Shurtleff has
committed
to spend one half of his business time to the company.
34. Please disclose the material terms of the employment
agreements
filed as exhibits.
35. Please disclose the material terms of the stock option plan.
Certain Relationships and Related Transactions, page 27
36. Please revise MD&A to specifically disclose and discuss that
sales revenues generated to date have resulted from transactions
with
related parties.
37. Please revise here and in the footnotes to the financial
statements to disclose how you account for amounts received from
Synexus, including the basis for your accounting.
Description of Securities, page 28
Preferred Stock, page 28
38. Please revise your disclosure of the conversion terms of your
preferred stock to disclose what any adjustments to the conversion
price of the stock would be.
39. Please revise this section to disclose the triggering events,
as
referenced on page 30, that could result in the conversion of
these
securities.
Recent Sales of Unregistered Securities, page 32
40. Please disclose the exemption claimed in the transaction
discussed.
Financial Statements of Trulite Technology, LC, beginning on page
F-2
41. Please have the independent accounting firm revise its report
pursuant to AS 1 issued by the PCAOB.
Financial Statements
General
Trulite Technology, LC Financial Statements, page F-2
General
42. Please revise to provide all of the disclosures required by
paragraph 5 of APB 12, both here and in the Trulite, Inc.
financial
statements.
Note B - Summary of Significant Accounting Policies, page F-7
43. Please tell us the GAAP literature you relied on to record
your
grant revenue net with your research and development expenditures.
Also revise here and in the Business section to disclose all
material
terms of the grant.
Trulite, Inc. Financial Statements, page F-10
Note C - Business Combination, page F-17
44. Please revise to disclose how you determined the value of the
shares issued in this transaction.
45. Please revise to disclose how you considered paragraph 11 of
SFAS
141 and EITF 02-5 in determining that purchase business
combination
accounting was appropriate for this acquisition. Provide us a
schedule of the owners Trulite Technology LC, including the
ownership
percentages, and of the majority shareholders of Trulite, Inc.,
including the ownership percentages, immediately after the
acquisition.
46. Please revise to disclose the value assigned to both the
common
and preferred shares issued in this transaction and the number of
common shares into which the preferred shares where convertible
when
issued.
47. Please revise to disclose the method(s) used to determine the
fair value of the acquired assets and liabilities.
48. Please revise here and in the front of the document to
disclose
the specific nature of the unpatented technology recorded as an
asset
in this acquisition, including how it will be used to generate
income
in the future.
49. Please revise to disclose how you considered the guidance of
paragraph 11 of SFAS 142 in determining that your unpatented
technology qualifies for an indefinite useful life. Be specific.
Also, disclose how you consider recoverability.
Note F - Series A Preferred Stock
50. Please revise to disclose how you have accounted for the
accrued
dividends on these shares.
Note I - Common Stock Options, page F-19
51. Please revise to include the pro forma disclosures required by
paragraph 45 of SFAS 123 as amended by SFAS 148. We note that you
assert that the net loss for the nine months ended September 30,
2005
would not have changed, however we believe these disclosures are
important.
Note K - Net Loss Per Share, page F-20
52. Please revise to include the disclosure requirements of
paragraph
40(c) of SFAS 128.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
You may contact Rebekah Moore, Staff Accountant, at (202)
551-
3463 or Paul Cline, Senior Accountant at (202) 551-3851 if you
have
questions regarding comments on the financial statements and
related
matters. Please contact Gregory Dundas at (202) 551-3436 or me at
(202) 551-3698 with any other questions.
Sincerely,
Mark Webb
Legal Branch Chief
cc: David N. Feldman, Esq.
Feldman Weinstein LLP
420 Lexington Avenue, Suite 2620
New York, New York 10170
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John Sifonis
Trulite, Inc.
January 25, 2006
Page 9