UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549








**FORM
      10-Q**








x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the quarter ended**September
                30, 2006** ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15 (d)OF
                THE SECURITIES EXCHANGE ACT OF 1934For
                the transition period from _________
                to__________








Commission
      File No. **0-12374**




**HYDROGEN
      POWER, INC.**


**(Formerly
      known as Equitex, Inc. and Hydrogen Power International,
      Inc.)**


(Exact
      Name of Registrant as Specified in its Charter)





**Delaware**
            **84-0905189**(State
                or other jurisdiction of
              incorporation
                or organization)
            (IRS
                Employer Identification No.)








**7315
      East Peakview Avenue**


**Englewood,
      Colorado 80111**


(Address
      of principal executive offices) (Zip code)








**(303)
      796-8940**


(Registrant’s
      telephone number including area code)





Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months, and (2) has been subject to such filing requirements for
      the past 90 days. x Yes   ̈ No





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


Large
                Accelerated Filer ̈,
            
            Accelerated
                Filer ̈,
            
            Non-Accelerated
                Filerx











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





Number
      of
      shares of common stock outstanding at November 17, 2006:  13,632,045







HYDROGEN
        POWER, INC.
 
 (FORMERLY
        KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL, INC.)
 
 PART
                  I
              FINANCIAL
                  INFORMATION
              PageItem
                  1.
              Financial
                  statements:Report
                  of Independent Registered Public Accounting Firm
              2Condensed
                  consolidated balance sheets -
                September
                  30, 2006 (unaudited) and December 31, 2005
              3
                  -
                  4Condensed
                  consolidated statements of operations-
                three
                  and nine months ended September 30, 2006 and 2005 (unaudited)
              5Condensed
                  consolidated statement of changes in stockholders' equity - nine
                  months
                  ended September 30, 2006 (unaudited)
              6Condensed
                  consolidated statements of cash flows -
                nine
                  months ended September 30, 2006 and 2005 (unaudited)
              7
                  -
                  8Notes
                  to condensed consolidated financial statements (unaudited)
              9
                  -
                  23Item
                  2.
              Management's
                  discussion and analysis of financial condition and results of
                  operations
              24
                  - 29Item
                  3.
              Quantitative
                  and qualitative disclosures of market risk
              30Item
                  4.
              Disclosure
                  controls and procedures
              31PART
                  II
              OTHER
                  INFORMATIONItem
                  1.
              Legal
                  proceedings
              31Item
                  1A.
              Risk
                  Factors
              31
                  - 33Item
                  2.
              Changes
                  in securities and use of proceeds
              33
                  - 34Item
                  3.
              Defaults
                  upon senior securities
              34Item
                  4.
              Submission
                  of matters to a vote of security holders
              34Item
                  5.
              Other
                  information
              34Item
                  6.
              Exhibits
              34Signatures
              
              35









REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 Board
        of
        Directors
 Hydrogen
        Power, Inc.
 
 We
        have
        reviewed the accompanying condensed consolidated balance sheet of Hydrogen
        Power, Inc. (formerly known as Equitex, Inc. and Hydrogen Power International,
        Inc.) and subsidiaries as of September 30, 2006, the related condensed
        consolidated statements of operations for the three-month and nine-month
        periods
        ended September 30, 2006 and 2005, the condensed consolidated statement of
        changes in stockholders’ equity for the nine-month period ended September 30,
        2006, and the condensed consolidated statements of cash flows for the nine-month
        periods ended September 30, 2006 and 2005. These interim condensed consolidated
        financial statements are the responsibility of the Company’s
        management.
 
 We
        conducted our reviews in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). A review of interim financial
        information consists principally of applying analytical procedures to financial
        data and making inquiries of persons responsible for financial and accounting
        matters. It is substantially less in scope than an audit conducted in accordance
        with the standards of the Public Company Accounting Oversight Board (United
        States), the objective of which is the expression of an opinion regarding
        the
        financial statements taken as a whole. Accordingly, we do not express such
        an
        opinion.
 
 Based
        on
        our reviews, we are not aware of any material modifications that should be
        made
        to the accompanying condensed consolidated financial statements referred
        to
        above for them to be in conformity with accounting principles generally accepted
        in the United States of America.
 
 We
        have
        previously audited, in accordance with the standards of the Public Company
        Accounting Oversight Board (United States), the consolidated balance sheet
        of
        Hydrogen Power, Inc. and subsidiaries as of December 31, 2005, and the related
        consolidated statements of operations, changes in stockholders’ equity, and cash
        flows for the year then ended (not presented herein); and in our report dated
        April 10, 2006 (which includes an explanatory paragraph stating that on January
        31, 2006 FastFunds Financial Corporation, a majority-owned subsidiary of
        the
        Company, sold substantially all the assets of its wholly-owned subsidiary
        Chex
        Services, Inc. This subsidiary conducted most of the Company’s business
        operations and is presented as discontinued operations in the accompanying
        consolidated financial statements. In addition, on March 14, 2006, the Company
        acquired Hydrogen Power, Inc.) we expressed an unqualified opinion on those
        consolidated financial statements. In our opinion, the information set forth
        in
        the accompanying condensed consolidated balance sheet as of December 31,
        2005,
        is fairly stated, in all material respects, in relation to the consolidated
        balance sheet from which it has been derived.
 
 
 
 /s/
        GHP
        HORWATH, P.C.
 
 Denver,
        Colorado
 November
        20, 2006


2


**HYDROGEN
                  POWER, INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED BALANCE
                  SHEETS**September
                  30,
              
              December
                  31,2006
              
              2005(unaudited)ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              5,523,492
              
              $
              133,541Assets
                  of discontinued operations (including cash of $1,933,908) (Note
                  2)
              
              
              1,951,137Receivables,
                  net
              
              
              249,765
              
              
              252,089Prepaid
                  expenses and other
              
              
              583,426
              
              
              33,202Investment
                  in Hydrogen Power, Inc. (Note 1)
              
              
              
              
              
              2,526,300Assets
                  held for sale (Note 2)
              
              
              
              
              
              21,997,466Total
                  current assets
              
              
              8,307,820
              
              
              24,942,598Notes
                  and interest receivable, net, including related parties of $109,333
                  (2006)and
                  $381,136 (2005) (Note 3)
              
              
              359,333
              
              
              3,899,526Property,
                  equipment and leaseholds, net
              
              
              49,349
              
              
              52,178Intangible
                  and other assets, net (Note 1)
              
              
              19,410,053
              
              
              638,84619,818,735
              
              
              4,590,550$
              28,126,555
              
              $
              29,533,148
  (Continued)


3




**HYDROGEN
                  POWER, INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED BALANCE SHEETS
                  (CONTINUED)**September
                  30,
              
              December
                  31,2006
              
              2005(unaudited)LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Checks
                  issued in excess of cash in bank
              
              
              
              
              $
              1,105,379Accounts
                  payable
              
              $
              1,384,386
              
              
              768,189Accrued
                  expenses and other liabilities, including related party accruals
                  of$624,540
                  (2006) and $410,000 (2005) (Note 5)
              
              
              1,481,817
              
              
              3,043,543Convertible
                  and other promissory notes and current portion of long-term
                  debt,including
                  related party notes of $17,053 (2006) and $614,695 (2005) (Note
                  4)
              
              
              2,132,182
              
              
              15,275,386Liabilities
                  of discontinued operations (Note 2)
              
              
              4,781,158
              
              
              513,395Liabilities
                  associated with assets held for sale (Note 2)
              
              
              
              
              
              154,047Total
                  current liabilities
              
              
              9,779,543
              
              
              20,859,939Long-term
                  debt, net of current portion (Note 4)
              
              
              377,970
              
              
              2,108,423Liabilities
                  associated with assets held for sale
              
              
              
              
              
              2,867,000377,970
              
              
              4,975,42310,157,513
              
              
              25,835,362Commitments
                  and contingencies (Notes 4, 5 and 6)Redeemable
                  preferred stock (Note 6):Series
                  K, 6% stated value $1,000 per share; 3,100 shares
                  authorized;1,144
                  (2006) and 2,544 (2005) shares issued and outstanding, net
                  ofdiscount
                  of $718,700 (2006) and $2,412,700 (2005)
              
              
              425,300
              
              
              131,300Stockholders'
                  equity (Note 7):Preferred
                  stock, Series L convertible; $0.01 par value; 300,000 shares
                  authorized,issued
                  and outstanding (2006); liquidation preference
                  $3,000
              
              
              3,000Common
                  stock, $0.01 par value; 50,000,000 shares authorized;
                  14,625,992(2006)
                  and 8,495,849 (2005) issued; 13,374,397 shares (2006)
                  and8,486,112
                  shares (2005) outstanding
              
              
              146,259
              
              
              84,958Common
                  stock to be issued
              
              
              2,071Notes,
                  interest and stock subscription receivable
              
              
              (480,166
              )
              
              (682,002
              )Additional
                  paid-in capital
              
              
              58,277,507
              
              
              32,020,956Accumulated
                  deficit
              
              
              (33,939,688
              )
              
              (27,728,484
              )Less
                  treasury stock at cost; 1,251,595 shares (2006) and 9,737 shares
                  (2005)
              
              
              (6,465,241
              )
              
              (128,942
              )Total
                  stockholders' equity
              
              
              17,543,742
              
              
              3,566,486$
              28,126,555
              
              $
              29,533,148




See
      notes
      to condensed consolidated financial statements.


4




**HYDROGEN
                  POWER,
                  INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF
                  OPERATIONS****THREE
                  AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                  (UNAUDITED)**Three
                  months ended September 30,
              
              Nine
                  months ended September 30,2006
              
              2005
              
              2006
              
              2005Credit
                  card income, net of provision for losses
              
              $
              30,363
              
              $
              40,995
              
              $
              97,731
              
              $
              159,573Corporate
                  selling, general and administrative
              
              
              (2,168,317
              )
              
              (960,487
              )
              
              (4,559,356
              )
              
              (3,985,877
              )Loss
                  from operations
              
              
              (2,137,954
              )
              
              (919,492
              )
              
              (4,461,625
              )
              
              (3,826,304
              )Other
                  income (expense):Interest
                  income, including related party interest for thethree
                  months of $0 (2006) and $5,121 (2005) and$0
                  (2006) and $35,169 (2005) for the nine months
              
              
              54,600
              
              
              46
              
              
              119,742
              
              
              19,843Interest
                  expense, including related party interest for thethree
                  months of $369 (2006) and $2,474 (2005) and$9,861
                  (2006) and $8,153 (2005) for the nine months
              
              
              (317,477
              )
              
              (231,731
              )
              
              (1,024,397
              )
              
              (425,718
              )(262,877
              )
              
              (231,685
              )
              
              (904,655
              )
              
              (405,875
              )Loss
                  from continuing operations before income taxes
              
              
              (2,400,831
              )
              
              (1,151,177
              )
              
              (5,366,280
              )
              
              (4,232,179
              )Income
                  tax expense (Note 8)
              
              
              (237,000
              )
              
              
              
              
              (974,000
              )Loss
                  from continuing operations
              
              
              (2,637,831
              )
              
              (1,151,177
              )
              
              (6,340,280
              )
              
              (4,232,179
              )(Loss)
                  gain from discontinued operations, net of income taxes(Note
                  2)
              
              
              (282,009
              )
              
              (1,251,287
              )
              
              129,076
              
              
              (3,854,221
              )Net
                  loss
              
              
              (2,919,840
              )
              
              (2,402,464
              )
              
              (6,211,204
              )
              
              (8,086,400
              )Accretion
                  of preferred stock (Note 6)
              
              
              (842,000
              )
              
              (54,800
              )
              
              (1,694,000
              )
              
              (54,800
              )Deemed
                  preferred stock dividends (Note 6)
              
              
              (21,000
              )
              
              (158,566
              )
              
              (94,000
              )
              
              (158,566
              )Exchange
                  of Series G and I convertible preferred stock inexcess
                  of carrying value
              
              
              
              
              
              (212,000
              )
              
              
              
              
              (212,000
              )Net
                  loss applicable to common stockholders
              
              $
              (3,782,840
              )
              $
              (2,827,830
              )
              $
              (7,999,204
              )
              $
              (8,511,766
              )Basic
                  and diluted net loss per common share:Loss
                  from continuing operations
              
              $
              (0.28
              )
              $
              (0.22
              )
              $
              (0.73
              )
              $
              (0.72
              )(Loss)
                  income from discontinued operations
              
              
              (0.02
              )
              
              (0.17
              )
              
              0.01
              
              
              (0.59
              )Basic
                  and diluted net loss per share
              
              $
              (0.30
              )
              $
              (0.39
              )
              $
              (0.72
              )
              $
              (1.31
              )Weighted
                  average number of common shares outstanding:Basic
                  and diluted
              
              
              12,777,648
              
              
              7,245,296
              
              
              11,085,910
              
              
              6,503,077




See
      notes
      to condensed consolidated financial statements.


5




**HYDROGEN
                  POWER,
                  INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
                  EQUITY****NINE
                  MONTHS ENDED SEPTEMBER 30, 2006
                  (UNAUDITED)**Preferred
                  stock
              
              Common
                  stock
              
              Commonstock
                  to be
              
              Additionalpaid-in
              
              Commontreasury
              
              Notes,
                  interestand stocksubscription
              
              Accumulated
              
              Totalstockholders'Shares
              
              Amount
              
              Shares
              
              Amount
              
              issued
              
              capital
              
              stock
              
              receivable
              
              deficit
              
              equityBalances,
                  January 1, 2006
              
              
              
              
              
              
              
              
              8,495,849
              
              $
              84,958
              
              
              
              
              $
              32,020,956
              
              $
              (128,942
              )
              $
              (682,002
              )
              $
              (27,728,484
              )
              $
              3,566,486Issuance
                  of common stock upon exercise of warrants (Note 7)
              
              
              
              
              
              
              
              
              70,000
              
              
              700
              
              
              
              
              
              104,300
              
              
              
              
              
              
              
              
              
              
              
              105,000Issuance
                  of common stock and warrants to consultants forservices
                  (Note 5)
              
              
              
              
              
              
              
              
              265,000
              
              
              2,650
              
              $
              750
              
              
              827,200
              
              
              
              
              
              
              
              
              
              
              
              830,600Issuance
                  of preferred stock, common stock, warrants andstock
                  to be issued to shareholders of HPI (Note 1)
              
              
              300,000
              
              $
              3,000
              
              
              2,338,990
              
              
              23,390
              
              
              1,321
              
              
              14,127,848
              
              
              
              
              
              
              
              
              
              
              
              14,155,559Issuance
                  of common stock to subsidiary in satisfactionof
                  amounts owed (Note 7)
              
              
              
              
              
              
              
              
              1,200,000
              
              
              12,000
              
              
              
              
              
              6,132,000
              
              
              (6,144,000
              )
              
              
              
              
              
              
              
              -Non-cash
                  compensation expense (Note 5)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              67,200
              
              
              
              
              
              67,200Conversion
                  of Series K preferred stock to common stock(Note
                  6)
              
              
              
              
              
              
              
              
              1,193,143
              
              
              11,931
              
              
              
              
              
              1,388,069
              
              
              
              
              
              
              
              
              
              
              
              1,400,000Accretion
                  of Series K preferred stock (Note 6)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,694,000
              )
              
              
              
              
              
              
              
              
              
              
              (1,694,000
              )Issuance
                  of common stock in consideration of extensionson
                  notes payable (Note 7)
              
              
              
              
              
              
              
              
              28,179
              
              
              282
              
              
              
              
              
              66,324
              
              
              
              
              
              
              
              
              
              
              
              66,606Issuance
                  of common stock in satisfaction of note payable,long-term
                  debt and accrued interest (Notes 4 and 7)
              
              
              
              
              
              
              
              
              617,524
              
              
              6,175
              
              
              
              
              
              2,013,755
              
              
              
              
              
              
              
              
              
              
              
              2,019,930Write-off
                  of stock subscription receivable (Note 7)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              135,000
              
              
              
              
              
              135,000Increase
                  in advances receivable
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (364
              )
              
              
              
              
              (364
              )Issuance
                  of warrants to noteholders (including $73,882for
                  subsidiary noteholders) (Notes 4 and 7)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              298,854
              
              
              
              
              
              
              
              
              
              
              
              298,854Extension
                  of warrant expiration and repricing (Note 7)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              80,899
              
              
              
              
              
              
              
              
              
              
              
              80,899Issuance
                  of common stock and warrants under privateplacement
                  (Note 7)
              
              
              
              
              
              
              
              
              60,000
              
              
              600
              
              
              
              
              
              239,400
              
              
              
              
              
              
              
              
              
              
              
              240,000Purchase
                  by subsidiary of 41,858 shares of common stock(Note
                  7)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (192,299
              )
              
              
              
              
              
              
              
              (192,299
              )Issuance
                  of common stock in satisfaction of subsidiaryliabilites
                  (Notes 4 and 7)
              
              
              
              
              
              
              
              
              357,307
              
              
              3,573
              
              
              
              
              
              1,596,914
              
              
              
              
              
              
              
              
              
              
              
              1,600,487Issuance
                  and repricing of subsidiary warrants (Notes 4 and 5)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              381,400
              
              
              
              
              
              
              
              
              
              
              
              381,400Issuance
                  of warrants and options (Note 7)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              693,588
              
              
              
              
              
              
              
              
              
              
              
              693,588Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (6,211,204
              )
              
              (6,211,204
              )Balances,
                  September 30, 2006
              
              
              300,000
              
              $
              3,000
              
              
              14,625,992
              
              $
              146,259
              
              $
              2,071
              
              $
              58,277,507
              
              $
              (6,465,241
              )
              $
              (480,166
              )
              $
              (33,939,688
              )
              $
              17,543,742




See
      notes to condensed consolidated financial
      statements.


6


**HYDROGEN
                  POWER, INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH
                  FLOWS****NINE
                  MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                  (UNAUDITED)**2006
              
              2005Cash
                  flow used in operating activities from operating
                  activities:Net
                  loss
              
              $
              (6,211,204
              )
              $
              (8,086,400
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Provision
                  for losses on notes and interest receivable, including bad debt
                  expense
              
              
              518,392
              
              
              1,812,282Loss
                  on disposal of assets
              
              
              
              
              
              295,934Gain
                  on sale of assets (Note 1)
              
              
              (4,145,835
              )Depreciation
                  and amortization
              
              
              1,287,685
              
              
              1,143,631Amortization
                  of discounts on convertible promissory notes payable related
                  tobeneficial
                  conversion features
              
              
              
              
              
              1,588,729Amortization
                  of discounts related to warrants attached to notes payable
              
              
              352,724
              
              
              203,694Expense
                  incurred upon issuance of stock and warrants
              
              
              2,054,915
              
              
              30,000Deferred
                  income taxes
              
              
              1,333,000Non-cash
                  compensation expense
              
              
              167,200Stock
                  based compensation
              
              
              693,588
              
              
              9,500Changes
                  in assets and liabilities, net of business acquisition and asset
                  sale:Decrease
                  in accounts receivable
              
              
              163,044
              
              
              692,299Decrease
                  Increase in other receivables
              
              
              13,226
              
              
              (41,984
              )Decrease
                  in interest receivable and other assets
              
              
              341,515
              
              
              156,741Decrease
                  in due to credit card holders
              
              
              (5,447
              )
              
              (42,627
              )(Decrease)
                  increase in accounts payable and accrued liabilities
              
              
              (1,710,440
              )
              
              971,471Total
                  adjustments
              
              
              1,063,567
              
              
              6,819,670Net
                  cash used in operating activities
              
              
              (5,147,637
              )
              
              (1,266,730
              )Cash
                  flows from investing activites:Cash
                  acquired in business acquisition of HPI (Note 1)
              
              
              2,203,121Net
                  (increase) decrease in credit card receivables
              
              
              (11,127
              )
              
              (678
              )Purchase
                  of furniture, fixtures and equipment
              
              
              
              
              
              (596,568
              )Issuances
                  of notes receivable
              
              
              (35,695
              )
              
              (3,011,073
              )Repayments
                  of notes receivable
              
              
              232,265
              
              
              813,064Proceeds
                  received from FFFC asset sale, net of costs (Note 1)
              
              
              12,712,784Net
                  cash provided by (used in) investing activities
              
              
              15,101,348
              
              
              (2,795,255
              )Cash
                  flows from financing activities:Decrease
                  in checks issued in excess of cash in bank
              
              
              (1,015,823
              )Proceeds
                  from private placement
              
              
              240,000
              
              
              1,998,996Sale
                  of treasury stock
              
              
              
              
              
              243,833Purchase
                  of treasury stock
              
              
              (192,299
              )Proceeds
                  from the exercise of warrants and options
              
              
              105,000
              
              
              906,644Increase
                  in deferred loan costs
              
              
              
              
              
              (169,000
              )Issuances
                  of notes payable, related parties and other
              
              
              
              
              
              4,078,000Borrowings
                  of notes payable, related parties and other
              
              
              695,000Repayments
                  of notes payable, related parties and other
              
              
              (10,734,983
              )
              
              (2,857,696
              )Net
                  cash (used in) provided by financing activities
              
              
              (10,903,105
              )
              
              4,200,777




(Continued)


7




**HYDROGEN
                  POWER, INC.****(FORMERLY
                  KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                  INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (CONTINUED)****NINE
                  MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                  (UNAUDITED)**2006
              
              2005(Decrease)
                  increase in cash and cash equivalents
              
              $
              (949,394
              )
              $
              138,792Cash
                  and cash equivalents, beginning of year, including cash and cash
                  equivalents includedin
                  assets held for sale (2005)
              
              
              8,406,794
              
              
              8,389,686Cash
                  and cash equivalents, end of period, including cash and cash equivalents
                  included inassets
                  of discontinued operations (2006)
              
              $
              7,457,400
              
              $
              8,528,478Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              1,473,586
              
              $
              1,215,172Cash
                  paid for income taxes
              
              $
              3,838
              
              $
              $23,851Non-cash
                  investing and financing activities:Issuance
                  of common stock in satisfaction of note payable, long-term debt,
                  accounts
                  payableand
                  accrued interest
              
              $
              1,662,413
              
              $
              460,132Issuance
                  of common stock in satisfaction of subsidiary liabilities
              
              $
              730,862
              
              $
              95,153Conversion
                  of Series K preferred stock to common stock
              
              $
              1,400,000Issuance
                  of common stock to subsidiary in satisfaction of amounts
                  owed
              
              $
              6,144,000Purchase
                  of Hydrogen Power, Inc. (Note 1)Fair
                  value of tangible assets acquired:Interest
                  receivable
              
              $
              (38,339
              )Prepaid
                  and other assets
              
              
              (85,681
              )Property
                  and equipment
              
              
              (14,906
              )Technology
                  and sub-license agreement
              
              
              (16,115,000
              )Trade
                  name
              
              
              (3,380,748
              )Liabilities
                  assumed:Accounts
                  payable and accrued expenses
              
              
              197,190Notes
                  payable
              
              
              3,000,000License
                  fee payable
              
              
              1,731,067Fair
                  value of common stock and warrants exchanged
              
              
              16,909,538Cash
                  acquired
              
              $
              2,203,121Beneficial
                  conversion feature and warrant issued in connection with Series
                  K
                  preferred stock
              
              
              
              
              $
              2,632,000Reduction
                  of related party note receivable in consideration for asset
                  transfer
              
              
              
              
              $
              17,900Beneficial
                  conversion feature and warrants issued in connection with notes
                  payable
              
              
              
              
              $
              742,659Fixed
                  assets sold to third party in exchange for extinguishment of accounts
                  payable
              
              
              
              
              $
              152,000Conversion
                  of Seires D preferred stock to common stock
              
              
              
              
              $
              408,000Convesion
                  of notes payable, accrued interest and accounts payable to common
                  stock
              
              
              
              
              $
              793,915Return
                  of common stock previously issued for conversion of accounts
                  payable
              
              
              
              
              $
              6,450Return
                  and retirement of subsidiary common stock in exchange for note
                  receivable
              
              
              
              
              $
              (81,000
              )Supplement
                  disclosure of non-cash investing and financing activities:Series
                  G preferred stock (face value)
              
              
              
              
              $
              370,000Series
                  I preferred stock (face value)
              
              
              
              
              
              1,600,000Liquidation
                  preferences on exchange
              
              
              
              
              
              529,500Accrued
                  penalties on Series I preferred stock
              
              
              
              
              
              128,000Deemed
                  dividends on Series G & I preferred stock
              
              
              
              
              
              427,500$
              3,055,000Cash
                  flows from discontinued operations:Net
                  cash (used in) provided by operating activities
              
              $
              (4,875,291
              )
              $
              754,146Net
                  cash provided by investing activities
              
              
              12,862,118
              
              
              237,423Net
                  cash used in financing activities
              
              
              (10,118,058
              )
              
              (691,988
              )$
              (2,131,231
              )
              $
              299,581




See
      notes to condensed consolidated financial
      statements.  8
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**




**1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting
                  policies:**
 
 **Business
        and organization:**
 
 On
        February 28, 2006, the Company (then known as “Equitex, Inc.”) held a special
        meeting of its shareholders authorizing the acquisition of Hydrogen Power,
        Inc.
        (“HPI”). Effective March 14, 2006, pursuant to an Agreement and Plan of Merger
        and Reorganization as amended (the “Merger Agreement”), the Company acquired all
        of the outstanding capital stock of HPI. On September 25, 2006, the Company
        filed a Certificate of Ownership with the Secretary of State of the State
        of
        Delaware pursuant to which HPI merged with and into the Company with the
        Company
        remaining as the surviving corporation to the merger. In connection with
        that
        merger, and as set forth in the Certificate of Ownership, the Company changed
        its corporate name to “Hydrogen Power, Inc.”. HPI, a Seattle based company,
        performs hydrogen-related testing, research and engineering, and has developed
        a
        patented system (HPI **Hydrogen
        Now**  TM )
        that
        creates pure hydrogen from aluminum and water. The
        patented technology allows hydrogen gas to be generated on-site and on-demand,
        and is designed to directly power any fuel cell or internal combustion engine
        application. The HPI process can supply hydrogen at customized rates and
        pressures, and may provide hydrogen transportation and supply solutions from
        small portable applications to large stationary systems.
 
 HPI
        has
        entered into a sub-license agreement with its former parent company, which
        gives
        HPI exclusive rights to use the Hydrogen Now technology developed by the
        University of British Columbia (“UBC”) and any improvements and to market,
        manufacture and distribute products using the technology in the United States,
        Mexico and Central and South America. The agreement also gives HPI non-exclusive
        rights to market and distribute products using the technology and any
        improvements in Canada and to use any trademarks, service marks, or logos
        associated with the technology in the United States, Canada, Mexico and Central
        and South America. The sub-license agreement is effective, with certain
        provisions for early termination, for as long as the underlying license
        agreement is in effect. The underlying license agreement is effective through
        the latest expiration date of the patents that are the subject of the licensed
        technology. At present, the latest patent expiration date is February 2021.
 
 HPI
        has
        not generated any significant revenues since its formation in December
        2003.
  Prior
        to
        these events, Equitex, Inc. was a holding company, and through January 31,
        2006,
        operated primarily through its majority-owned subsidiary FastFunds Financial
        Corporation (“FFFC”). As disclosed in the December 31, 2005 Form 10-K, the
        Company and FFFC also have several other non-operating wholly-owned
        subsidiaries. As of September 30, 2006, the Company owns and controls 80%
        of
        FFFC’s outstanding common stock. FFFC’s wholly-owned subsidiary Chex Services,
        Inc. (“Chex”), a Minnesota corporation, provided financial services prior to the
        sale of substantially all of Chex’s assets, which primarily consisted of check
        cashing, automated tell machine (ATM) access, and credit card advances to
        customers primarily at Native American owned casinos and gaming establishments
        (the “Asset Sale”). As a result of the Asset Sale, the operations of FFFC are
        presented retroactively as discontinued operations, and all of its operating
        assets, including liabilities, are presented as assets and liabilities of
        discontinued operations.
 
 **Basis
        of presentation:**
 
 The
        condensed consolidated interim financial statements of the Company as of
        September 30, 2006, and for the three and nine months ended September 30,
        2006
        and 2005, have been prepared by the Company without audit by the Company’s
        independent auditors. In the opinion of the Company’s management, all
        adjustments necessary to present fairly the financial position, results of
        operations, and cash flows of the Company as of September 30, 2006, and for
        the
        periods ended September 30, 2006 and 2005, have been made. Except as described
        below, those adjustments consist only of normal and recurring
        adjustments.
 
 Certain
        information and note disclosures normally included in the Company’s annual
        financial statements prepared in accordance with accounting principles generally
        accepted in the United States of America have been condensed or omitted.
        These
        condensed consolidated financial statements should be read in conjunction
        with a
        reading of the consolidated financial statements and notes thereto included
        in
        the Company’s Form 10-
  9
 **HYDROGEN
                POWER, INC.**
 
 **(FORMERLY
                KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
                INC.)**
 
 **NOTES
                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
                MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                (UNAUDITED)**
  **1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting policies
                  (continued):**
 
 **Basis
        of presentation (continued):**
 
 K
        annual
        report filed with the Securities and Exchange Commission (“SEC”) on April 17,
        2006. The results of operations for the three and nine months ended September
        30, 2006, are not necessarily indicative of the results to be expected for
        the
        full year.
 
 On
        January 25, 2005, the Company effected a one-for-six reverse stock split.
        As a
        result of the reverse split, the number of shares outstanding and per share
        information for all prior periods have been retroactively restated to reflect
        the new capital structure.
 
 The
        interim condensed consolidated financial statements presented herein include
        the
        financial statements of Hydrogen Power, Inc. and its wholly-owned subsidiaries,
        Key Financial Systems, Inc. (“Key”) and Nova Financial Systems, Inc. (“Nova”),
        and our majority-owned subsidiaries, FFFC and Denaris Corporation (“Denaris”) as
        of September 30, 2006 and December 31, 2005, and effective March 14, 2006,
        HPI.
        The excess of the losses for the nine months ended September 30, 2006 and
        2005
        applicable to minority interest has been charged to the Company and therefore
        no
        minority interest is reflected in the Company’s condensed consolidated balance
        sheets. All significant intercompany accounts and transactions have been
        eliminated in consolidation.
 
 **Recent
        events:**
 
 ***Asset
        Sale:***
 
 On
        December 22, 2005, FFFC and Chex entered into an Asset Purchase Agreement
        (the
“APA”) with Game Financial Corporation (“Game”), pursuant to which FFFC and Chex
        agreed to sell substantially all of its cash access contracts and certain
        related assets, which represented substantially all the assets of Chex and
        FFFC.
 
 On
        January 31, 2006, FFFC and Chex completed the Asset Sale for $14 million
        pursuant to the APA and received cash proceeds of $13,710,630 ($12,712,784
        after
        certain transactions related costs) and realized a pre-tax book gain of
        approximately $4 million.
 
 Additionally,
        FFFC and Chex entered into a Transition Services Agreement (the “TSA”) with Game
        pursuant to which FFFC and Chex agreed to provide certain services to Game
        to
        ensure a smooth transition of the sale of the cash-access financial services
        business. Pursuant to the TSA, FFFC and Chex provided the necessary services
        and
        Game paid FFFC $150,000 per month. The TSA expired May 19, 2006, and FFFC
        recorded $477,500 of other income (included in loss from discontinued
        operations) pursuant to the agreement for the nine months ended September,
        30,
        2006.
 
 ***Acquisition
        of HPI:***
 
 Pursuant
        to the Merger Agreement the purchase price of HPI consisted of the issuance
        of
        2,338,990 shares of the Company’s common stock and the Company has reserved
        132,122 shares to be issued upon exercise of options to purchase 1,550,000
        shares of HPI common stock outstanding immediately prior to the time of the
        merger. These shares were valued at $9,909,159 based on the market price
        of the
        Company’s common stock of $4.01 on July 6, 2005 (the date the terms of the
        merger agreement were agreed to by the Company and the HPI shareholders).
        Pursuant to a Share Exchange Agreement dated December 5, 2005 with a shareholder
        of HPI, prior to the effective date of the merger, the Company issued 700,000
        shares of its common stock in exchange for 850,000 shares of HPI common stock.
        These shares were valued at $2,526,300, which represented a 10% discount
        to the
        July 6, 2005, market price. The discount was applied to recognize restrictions
        on the marketability of the common stock issued. Additionally, the Company
        recorded acquisition costs of $227,162 in connection with the
        transaction.
 
  10
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
   
 
 **1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting policies
                  (continued):**
 
 **Recent
        events (continued):**
 
 ***Acquisition
        of HPI (continued):***
 
 The
        Company also issued warrants to purchase up to 1,600,000 shares of its common
        stock at an exercise price of $3.00 per share in exchange for all outstanding
        warrants of HPI at the date of merger. The warrants are exercisable for the
        remainder of the unexpired term of the original HPI warrants through February
        2007. The warrants were valued at $4,246,400 based on the Black-Scholes option
        pricing model.
 
 The
        Company also issued to the stockholders of HPI 300,000 shares of its Series
        L
        Preferred Stock (the “Preferred Stock”). The Preferred Stock is convertible into
        the Company’s common stock in three equal installments of 100,000 shares each
        (referred to as the L-1, L-2 and L-3 Preferred Stock, respectively), on the
        180 th ,
        270 th and
        360 th day
        following closing of the merger, respectively, with each installment convertible
        into 40% of the Company’s common stock outstanding immediately prior to such
        conversion. The conversion of the Preferred Stock is subject to the achievement
        by HPI of certain performance benchmarks as defined in the Certificate of
        Designation of Series L Preferred Stock, the satisfaction of which is to
        be
        determined by the Company in its sole discretion. In the event all three
        series
        of Series L Preferred Stock are converted into HP common stock, the former
        stockholders of HPI would own approximately 73% of the Company’s common stock on
        a post-transaction basis (assuming that the Company does not, prior to the
        conversion of the L-3 Preferred Stock, issue any additional shares of common
        stock other than pursuant to conversion of the Series L Preferred Stock).
        As of
        the date of this quarterly report, none of the preferred stock has been
        converted to common stock.
 
 The
        following represents the preliminary purchase price allocation at the date
        of
        the HPI acquisition:
 
 Cash
                  and equivalents
              
              $
              2,203,121Interest
                  receivable
              
              
              38,339Prepaid
                  expenses
              
              
              85,681Property,
                  plant and equipment
              
              
              14,906Technology
                  and sub-license agreement
              
              
              16,115,000Trade
                  name
              
              
              3,380,748Accounts
                  payable and accrued expenses
              
              
              (197,190
              )Note
                  payable
              
              
              (3,000,000
              )License
                  fee payable
              
              
              (1,731,067
              )$
              16,909,538
 
 The
        purchase price allocation is not considered final as of the date of this
        report,
        as the Company, along with its independent valuation advisors are still
        reviewing and completing the analysis of the underlying assumptions and
        calculations used in the above allocation. The Company has estimated a fifteen
        year useful life for the technology and sub-license agreement as well as
        the
        trade name. The actual allocation of the purchase price and the resulting
        effect
        on income (loss) from operations may differ significantly from the amounts
        included herein.
 
 As
        a
        condition to the Merger Agreement, the Company was required to make a $5
        million
        contribution of capital to HPI, which proceeds were transferred to HPI at
        closing. On March 14, 2006, the Company and FFFC entered into a Secured
        Promissory Note (the “Note”), a Stock Pledge Agreement (the “Pledge”) and a
        Profit Participation Agreement through which FFFC loaned the Company $5 million.
        The Note is due March 14, 2007, and accrues interest at 10% per annum. Pursuant
        to the Pledge, the Company has pledged all of its shares of HPI to FFFC to
        guarantee payment of the Note. Additionally, the parties executed the Profit
        Participation Agreement, whereby the Company granted to FFFC a net profit
        interest, as defined in the loan documents, in the amount of 10% of the net
        profit derived from the operations of HPI during the period the Note is
        outstanding.
 
  11
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting policies
                  (continued):**
 
 **Recent
        events (continued):**
 
 ***Acquisition
        of HPI (continued):***
 
 The
        Company is currently negotiating the terms of an agreement and series of
        transactions with the management of HPI that may result in a change in control
        of the Company’s board of directors and effect a change in the Company’s
        management. In addition, the negotiations may require the Company to divest
        a
        majority of its holdings of equity in FFFC and eliminate all intercompany
        obligations between the Company and FFFC. As of the date of this quarterly
        report, no agreements have been reached and no assurance can be given that
        one
        will be reached.
 
 **Pro
        forma information:**
 
 The
        following pro forma information has been prepared assuming the Asset Sale
        and
        Acquisition of HPI had taken place at the beginning of each of the respective
        periods. The pro forma information includes adjustments to eliminate the
        location revenues and expenses related to the financial services that Chex
        provided prior to the Asset Sale and assumes a 15-year amortizable life related
        to the intangible assets acquired in the Acquisition of HPI. Revenues represent
        fees pursuant to the TSA.
 
 The
        pro
        forma information is not necessarily indicative of the results of operations
        as
        they would have been had the transactions been consummated on the assumed
        date.
 
 Three
                  months ended
                September
                  30,
              Nine
                  months ended
                September
                  30,2006
              
              2005
              
              2006
              
              2005Revenues
              
              $
                  30,000
              
              $
                  41,000
              
              $
                  575,000
              
              $
                  637,000Net
                  loss
              
              (2,659,000)
              
              (4,259,000)
              
              (10,122,000)
              
              (14,386,000)Net
                  loss applicable to common stockholders
              
              (3,522,000)
              
              (4,572,000)
              
              (11,910,000)
              
              (14,812,000)Basic
                  and diluted loss per common share
              
              (0.28)
              
              (0.44)
              
              (1.02)
              
              (1.55)Shares
                  used in per share calculation
              
              12,777,648
              
              10,284,286
              
              11,711,355
              
              9,542,067
 
 **Management’s
        plans:**
 
 The
        Company incurred a net loss of $6,211,204 for the nine months ended September
        30, 2006, and the loss from continuing operations was $6,340,280. Additionally,
        the Company incurred previous significant losses, including a net loss of
        $8,842,237 and $7,457,983 for the years ended December 31, 2005 and 2004,
        respectively. Although the net losses included certain non-cash expenses
        of
        approximately $6,408,000 (2006), $4,937,000 (2005) and $4,051,000 (2004),
        it was
        becoming increasingly difficult for the Company to continue to fund its current
        operations and any future growth. Additionally, due to intense competition
        in
        the market and the lack of assurance that FFFC would be able to obtain renewals
        of its existing casino contracts, or to obtain contracts with new customers
        and
        FFFC’s difficulty in attracting and retaining experienced employees, the Company
        decided to complete the Asset Sale.
 
 Management
        believes that the Asset Sale and its plans will provide sufficient resources
        to
        fund its 2006 debt payments and working capital needs, which will consist
        primarily of supporting the development stage operations of HPI, payment
        of
        salaries, rent and utilities for the foreseeable future, as well as allow
        the
        Company to meet its reporting compliance obligations as a SEC issuer through
        at
        least September 30, 2007.
 
  12
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting policies
                  (continued):**
 
 **Stock
        based compensation:**
 
 During
        the first quarter of fiscal 2006, the Company adopted the provisions of,
        and
        accounts for stock-based compensation in accordance with the Financial
        Accounting Standards Board’s (“FASB”) Statement of Financial Accounting
        Standards No. 123 - revised 2004 (“SFAS 123R”) “Share-Based Payment” which
        replaced Statement of Financial Accounting Standards No. 123 (“SFAS 123”),
“Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25
        (“APB 25”), “Accounting for Stock Issued to Employees”.
 
 Under
        the
        fair value recognition provisions of this statement, stock-based compensation
        cost is measured at the grant date based on the fair value of the award and
        is
        recognized as expense on a straight-line basis over the requisite service
        period, which is the vesting period. The Company elected the
        modified-prospective method, under which prior periods are not revised for
        comparative purposes. The valuation provisions of SFAS 123R apply to new
        grants
        and to grants that were outstanding as of the effective date and are
        subsequently modified.
 
 The
        Company has various stock option plans which allow the Company to grant options
        to purchase shares of its common stock to attract, retain and motivate
        employees, consultants and directors. Options are generally granted with
        an
        exercise price equal to the Company’s market price of its common stock on the
        date of the grant and vest immediately upon issuance. All options outstanding
        during the periods ended September 30, 2006 and 2005 were fully-vested and
        exercisable. During the quarter ended September 30, 2006, the Company granted
        40,000 options to a consultant to purchase shares of common stock at $2.00
        per
        share and 407,500 options to purchase common stock to directors, officers,
        employees and consultants at $1.60 per share (the exercise prices were equal
        to
        the market value of the common stock on the date of the grant). These options
        were valued at $649,138 and are included in corporate selling, general and
        administrative expense for the three and nine months ended September 30,
        2006. A
        summary of each plan and their outstanding balances at September 30, 2006,
        is as
        follows:
 
 Options
                  outstanding
              1999
                  Plan
              
              2003
                  Plan
              
              2005
                  Plan
              
              TotalJanuary
                  1, 2006
              1,667
              
              484,966
              
              
              
              486,633Granted
              
              
              
              
              447,500
              
              447,500Expired
              (1,667)
              
              
              
              
              
              (1,667)September
                  30, 2006
              0
              
              484,966
              
              447,500
              
              932,466Weighted
                  average exercise price
              -
              
              $5.23
              
              $1.64
              
              $3.51Weighted
                  average remaining life
              -
              
              2.5
                  years
              
              5.0
                  years
              
              3.7
                  yearsAggregate
                  intrinsic value
              $0
              
              $0
              
              $0
              
              $0
 
 During
        the three and nine months ended September 30, 2005, FFFC granted to its officers
        and directors 385,000 options to purchase shares of common stock at an exercise
        price of $1.10 per share (the market value of FFFC’s common stock on the date of
        the grant). The Company did not grant any options during the three and nine
        months ended September 30, 2005.
 
 Had
        compensation cost for stock based awards issued by FFFC to employees, officers
        and directors been determined based on the fair values at the grant dates
        for
        awards under the plans consistent with the fair value recognition provision
        of
        SFAS No. 123, the Company’s results would have been changed to the pro forma
        amounts indicated below:
 
 Three
                  months ended September 30,
              
              Nine
                  months ended September 30,2005
              
              2005Net
                  loss
              
              $
                  (2,402,464)
              
              $
                  (8,086,400)
 
  13
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **1.**
              **Business
                  and organization, basis of presentation, recent events, management’s plans
                  and significant accounting policies
                  (continued):**
 
 **Stock
        based compensation (continued):**
 
 Three
                  months ended
                September
                  30,
              
              Nine
                  months ended
                September
                  30,2005
              
              2005ADD:
                  Stock-based employee compensation expense included in reported
                  net loss,
                  net of taxes
              
              9,500
              
              9,500DEDUCT:
                  Total stock-based compensation expense determined under fair value
                  based
                  method for all awards, net of taxes
              
              (191,500)
              
              (191,500)Pro
                  forma net loss
              
              $
                  (2,584,464)
              
              $
                  (8,268,400)Net
                  loss per share:Basic
                  and diluted - as reported
              
              $
                  (0.39)
              
              $
                  (1.31)Basic
                  and diluted - pro forma
              
              $
                  (0.42)
              
              $
                  (1.34)
 
 **Recently
        issued accounting pronouncements:**
 
 In
        July
        2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
        Uncertainty in Income Taxes: an interpretation of FASB Statement No. 109”. This
        interpretation clarifies the accounting for uncertainty in income taxes
        recognized in an entity’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and
        measurement principles for financial statement disclosure of tax positions
        taken
        or expected to be taken on a tax return. This interpretation is effective
        for
        fiscal years beginning after December 15, 2006. The Company is currently
        assessing the impact the adoption of FIN 48 will have on its consolidated
        financial statements.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
        statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles, and expands disclosures about
        fair
        value measurements. This statement applies under other accounting pronouncements
        that require or permit fair value measurements. SFAS No. 157 is effective
        for
        fiscal years beginning after November 15, 2007. The Company is currently
        assessing the impact the adoption of SFAS No. 157 will have on its consolidated
        financial statements.
 
 In
        September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108 in
        order to eliminate the diversity of practice surrounding how public companies
        quantify financial statement misstatements. In SAB 108, the SEC staff
        established an approach that requires quantification of financial statement
        misstatements based on the effects of the misstatements on each of the company’s
        financial statements and the related financial statement disclosures. SAB
        108 is
        effective for fiscal years ending after November 15, 2006. Management does
        not
        believe this adoption of SAB No. 108 will have an impact on its consolidated
        financial statements.
 
 **2.**
              **Discontinued
                  operations and assets held for
                  sale:**
 
 ***FFFC:***
 
 The
        carrying amount at September 30, 2006 and December 31, 2005, of assets and
        liabilities of FFFC are presented as discontinued operations at September
        30,
        2006, and as assets held for sale and liabilities associated with assets
        for
        sale at December 31, 2005, as follows:
 
  14
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **2.**
              **Discontinued
                  operations and assets held for sale
                  (continued):**
 
 ***FFFC
        (continued):***
 
 ASSETS
              
              2006
              
              2005Cash
                  and cash equivalents
              
              $
              1,933,908
              
              $
              8,273,253Accounts
                  receivable
              
              
              
              
              
              163,044Notes
                  and interest receivable
              
              
              
              
              
              75,461Property
                  and equipment, net
              
              
              16,816
              
              
              1,077,802Goodwill
              
              
              
              
              
              5,636,000Intangible
                  and other assets
              
              
              
              
              
              2,183,902Deferred
                  tax asset
              
              
              
              
              
              4,200,000Other
                  assets
              
              
              200
              
              
              388,004$
              1,950,924
              
              $
              21,997,466LIABILITIESChecks
                  issued in excess of cash in bank
              
              $
              89,556Accounts
                  payable
              
              
              332,275Accrued
                  expenses
              
              
              439,871
              
              $
              69,800Notes
                  payable to individuals
              
              
              3,404,061Capital
                  lease obligations
              
              
              
              
              
              84,247Deferred
                  tax liability
              
              
              
              
              
              2,867,000$
              4,265,763
              
              $
              3,021,047
 
 Losses
        from discontinued operations for the three and nine months ended September
        30,
        2006 and 2005 of FFFC were as follows:
 
 Three
                  months ended
                September
                  30,
              
              Nine
                  months ended
                September
                  30,2006
              
              2005
              
              2006
              
              2005Revenues
              
              
              
              
              $
              4,980,377
              
              $
              2,192,382
              
              $
              13,966,926Operating
                  expenses
              
              $
              (407,008
              )
              
              (5,552,493
              )
              
              (4,294,390
              )
              
              (15,132,418
              )Loss
                  from operations
              
              
              (407,008
              )
              
              (572,116
              )
              
              (2,102,008
              )
              
              (1,165,492
              )Gain
                  on sale of assets
              
              
              
              
              
              
              
              
              4,145,835Other
                  expenses
              
              
              (113,328
              )
              
              (669,623
              )
              
              (1,548,551
              )
              
              (2,657,812
              )Income
                  tax benefit (expense)
              
              
              238,327
              
              
              (8,000
              )
              
              (365,673
              )
              
              (24,000
              )Net
                  (loss) income
              
              $
              (282,009
              )
              $
              (1,249,739
              )
              $
              129,603
              
              $
              (3,847,304
              )
 
 ***Key:***
 
 The
        carrying amounts of assets and liabilities of Key (presented as discontinued
        operations) at September 30, 2006 and December 31, 2005 are as
        follows:
 
 September
                  30,
              
              December
                  31,2006
              
              2005Cash
              
              $
              213
              
              $
              140Accounts
                  payable
              
              $
              515,395
              
              $
              513,395
 
  15
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **2.**
              **Discontinued
                  operations and assets held for sale
                  (continued):**
 
 ***Key
        (continued):***
 
 Key
        had
        no revenues for the three and nine months ended September 30, 2006 and 2005.
        Losses incurred by Key for the three and nine-months ended September 30,
        2006
        were $0 and $527 and for the three and nine-months ended September 30, 2005
        were
        $1,548 and $6,917, respectively.
 
 **3.**
              **Notes
                  and interest receivable:**
 
 Notes
        receivable at September 30, 2006 and December 31, 2005, consist of the
        following:
 
 2006
              
              2005Notes
                  receivable, HPI**[A]**
              
              
              
              $
              3,000,000Notes
                  receivable from Equitex 2000, Inc., an affiliate of the Company
                  through
                  common control
              $
              1,118,870
              
              
              1,190,674Note
                  receivable, Chex customer
              
              201,500
              
              
              336,500Note
                  receivable, Paymaster Jamaica
              
              500,000
              
              
              500,000Notes
                  receivable from various Chex employees
              
              
              
              
              25,461Notes
                  receivable from Coast ATM, LLC
              
              50,000
              
              
              50,0001,870,370
              
              
              5,102,635Interest
                  receivable, related party
              
              95,463
              
              
              158,852Notes
                  receivable, net of current portion, before valuation
                  allowance
              
              1,965,883
              
              
              5,261,487Less
                  valuation allowance**[B]**
              
              (1,606,500)
              
              
              (1,286,500)359,333
              
              
              3,974,987Less
                  net amount included in assets of discontinued operations (2006)
                  and assets
                  held for sale (2005)
              
              
              
              
              (75,461)Notes
                  and interest receivable, net, long-term
              $
              359,333
              
              $
              3,899,526
 
 **[A]**   In
        September 2005, in connection with the Merger Agreement, the Company loaned
        HPI
        $3,000,000 under a Secured Convertible Promissory Note (the “SCPN”). The SCPN
        was to mature on September 16, 2008. The Company agreed to forgive payment
        of
        the $3 million plus accrued interest as a condition of closing. In March
        2006,
        the Company accounted for the forgiveness as a contribution of capital and
        the
        proceeds were transferred to HPI at closing.
 
 **[B]**  A
        summary
        of the valuation allowance is as follows:
 
 2006
              
              2005Equitex
                  2000, Inc.
              
              $
              1,105,000
              
              $
              700,000Paymaster
                  Jamaica
              
              
              250,000
              
              
              250,000Chex
                  customer
              
              
              201,500
              
              
              336,500Coast
                  ATM, LLC
              
              
              50,000$
              1,606,500
              
              $
              1,286,500
 
 **4.**
              **Convertible
                  and other promissory notes and long-term
                  debt:**
 
 Convertible
        and other promissory notes and long-term debt at September 30, 2006 and December
        31, 2005, consist of the following:
 
  16
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **4.**
              **Convertible
                  and other promissory notes and long-term debt
                  (continued):**
 
 September
                  30,
              
              December
                  31,2006
              
              2005Notes
                  payable to individual investors
              
              $
              3,404,061
              
              $
              11,301,497Notes
                  payable to affiliates through common ownership
              
              
              2,709
              
              
              380,351Convertible
                  promissory notes, net of discount of $432,815 (2006) and $765,833
                  (2005)
                  **[A]**
              
              
              2,383,585
              
              
              5,287,323Note
                  payable to officers
              
              
              14,344
              
              
              234,344Notes
                  payable to third parties
              
              
              109,514
              
              
              180,294Obligations
                  under capital leases
              
              
              
              
              
              84,2475,914,213
              
              
              17,468,056Less
                  amounts included in liabilities of discontinued operations (2006)
                  and
                  liabilities associated with assets held for sale (2005)
              
              
              (3,404,061
              )
              
              (84,247
              )Less
                  current maturities
              
              
              (2,132,182
              )
              
              (15,275,386
              )Long-term
                  debt, net of current portion
              
              $
              377,970
              
              $
              2,108,423
 
 **[A]**  In
        December 2004, FFFC closed on the sale of $1,774,064 of unsecured convertible
        promissory notes (the “Convertible Notes”) with various note holders (the
“Holders”). The Convertible Notes carried a stated interest rate of 9.5% per
        annum, had a 9-month original term, and were convertible at the holders’ option
        (including any unpaid interest) into shares of FFFC common stock at a rate
        of
        $1.00 per share for a three-year period commencing on the due date. The Holders
        also received warrants to purchase an aggregate of 1,774,064 shares of FFFC
        common stock at an exercise price of $2.00 per share. During the year ended
        December 31, 2005, FFFC repaid $611,564 of these Convertible Notes. During
        the
        nine months ended September 30, 2006, FFFC repaid an additional $1,012,500
        of
        these Convertible Notes. In consideration of not meeting the original payment
        term on certain amounts, FFFC agreed to issue 200,000 shares of its common
        stock
        to the Holders. The Holders also agreed to surrender 800,000 of the FFFC
        warrants originally received to purchase 800,000 shares of FFFC common stock.
        The value of the 200,000 shares of FFFC common stock issued did not exceed
        the
        value of the 800,000 FFFC warrants at the time of the exchange and accordingly,
        no additional expense was recorded.
 
 In
        May
        2006, FFFC and the Company negotiated a settlement regarding the remaining
        $150,000 of these Convertible Notes, whereby the Company issued 42,182 shares
        of
        its common stock to the Holders in exchange for payment of the Convertible
        Notes. The fair market value of the 42,182 shares of common stock issued
        by the
        Company was $212,155, and accordingly, $62,155 is included in interest expense
        (included in loss from discontinued operations) for the nine months ended
        September 30, 2006. The Company also issued warrants to purchase 21,091 shares
        of its common stock at $5.10 per share, expiring three years after the date
        of
        issuance. The warrants were valued at $73,882 based on the Black-Scholes
        option-pricing model, which is included in interest expense (included in
        loss
        from discontinued operations) for the nine months ended September 30, 2006.
        Additionally, FFFC agreed to lower the exercise
        price of warrants to purchase 300,000 shares of its common stock from $2.00
        to
        $1.75 per share. As a result of this reduction in the exercise price, FFFC
        recognized an additional $26,400 of interest expense (included in loss from
        discontinued operations) for the nine months ended September 30, 2006.
 
 As
        of
        December 31, 2005, FFFC also had $200,000 of outstanding convertible promissory
        notes issued in June 2004. These notes carried interest at 5% per annum,
        and
        unless converted, were due in April 2007. The notes were convertible into
        shares
        of FFFC common stock at $0.10 per share based on certain criteria. In May
        2006,
        the Company negotiated a settlement regarding these convertible notes, whereby
        the Company issued 180,000 shares of its common stock. The fair market value
        of
        the 180,000 shares of common stock issued by the Company as of the date of
        the
        settlement was $870,000 and accordingly, an additional $670,000 was recognized
        as a loss on extinguishment of debt (included in loss from discontinued
        operations) for the nine months ended September 30, 2006. In addition, FFFC
        recorded $351,000 of expenses related to the settlement of $200,000 of
        convertible debt. The settlement terms stipulate a price protection clause
        whereby the Company must reimburse the former debt holders if the
  17
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
   
 
 **4.**
              **Convertible
                  and other promissory notes and long-term debt
                  (continued):**
 
 market
        price of the Company’s common stock issued to them in the settlement is below
        $4.00 per share at the time they sell the stock. As a result, the Company
        has
        recorded a liability of $432,000 and an additional loss on extinguishment
        of
        debt of $81,000 and $351,000 (included in discontinued operations) for the
        three
        and nine months ended September 30, 2006, respectively, representing the
        difference between the market value of the shares issued as of September
        30,
        2006 and the $4.00 stated in the settlement agreement. Pursuant to the terms
        of
        the settlement agreement, HP is required to file a registration statement
        covering the resale of these shares of common stock and is to use its best
        efforts to cause the same to be effective on or before June 26, 2006. The
        Company is in the process of registering these shares. However, as the
        registration statement has not yet been declared effective, FFFC has incurred
        certain liquidating damages per the terms of the settlement agreement.
        Accordingly, $19,000 has been recorded as a liability and is included in
        loss on
        debt extinguishment (included in loss from discontinued operations) as of
        and
        for the three and nine months ended September 30, 2006.
 
 **5.**
              **Commitments
                  and contingencies:**
 
 **Bonus
        to officer:**
 
 In
        June
        2003, the Company’s Board of Directors approved a bonus arrangement with the
        Company’s president. The bonus arrangement provides for an annual bonus to be
        calculated quarterly based on 5% of the increase in the market value of the
        Company’s common stock, accrued quarterly, beginning with the closing price as
        reported by Nasdaq or other exchange on December 31 of each year, and ending
        with the closing price on December 31 of the following year. Payments under
        the
        bonus arrangement are to be made at the discretion of the Company’s management
        from time to time, as cash flow permits. There was no compensation expense
        recorded under this arrangement for the three and nine months ended September
        30, 2006, as the market value of the Company’s common stock has not increased
        since January 1, 2006. Compensation expense recorded under this arrangement
        was
        $611,000 and $696,000 for the three and nine months ended September 30, 2005.
        As
        of September 30, 2006 and December 31, 2005, approximately $410,000 is included
        in accrued liabilities.
 
 **Subsidiary
        executive compensation:**
 
 In
        July
        2005, FFFC’s Board of Directors authorized a proposal for a stock based
        compensation plan (the “Plan”) for its CEO. In August 2005, the FFFC Board of
        Directors retained an independent consultant to review the Plan for
        reasonableness. As a result of that review, in September 2005, the FFFC Board
        of
        Directors approved the Plan, which consists of the following: i) a fully-vested
        warrant to purchase up to 125,000 shares of FFFC’s $.001 par value common stock
        for a period of three years at an exercise price of $1.81 per share (the
        10 day
        average market price of the stock from the date of the proposal); ii) a number
        of shares of common stock of FFFC based on 5% of the increase in the market
        value of FFFC’s common stock on an annual basis, with the exception of the first
        payment, which shall be for the period from July 1, 2005 to December 31,
        2005;
        and, iii) a grant of 125,000 fully-vested options under FFFC’s 2004 Stock Option
        Plan. Each option has an exercise price of $1.10 (the market value of the
        common
        stock on the date of grant) with an expiration of September 2015.
 
 No compensation
              expense has been recorded for the nine months ended September 30, 2006
              under the
              Plan, as the market value of FFFC common stock has not increased from
              January 1,
              2006.
 
 **Board
        of Directors compensation:**
 
 In
        September 2006, the Board of Directors approved a compensation plan for its
        directors, which included a one-time payment of approximately $30,000 in
        the
        aggregate, to the three independent directors of the Company. The plan also
        authorizes an annual fee to be paid to each of the three independent directors
        of $12,240 effective January 1, 2006. The Board of Directors also approved
        the
        issuance of 225,000 stock options to the directors in the aggregate, for
        services performed (Note 7).
 
  18
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **5.**
              **Commitments
                  and contingencies
                  (continued):**
 
 **Subsidiary
        board of director’s compensation:**
 
 In
        September 2005 FFFC’s Board of Directors authorized a new compensation plan for
        its directors, which includes the grant of 30,000 options to purchase FFFC
        common stock to each director on an annual basis, as well as annual compensation
        of $25,000 to each director, to be paid monthly. Accordingly, in September
        2005,
        60,000 options to purchase FFFC common stock were granted with an exercise
        price
        of $1.10 (the market value of the common stock on the date of the grant)
        for
        services provided during 2004 and 2005 and cash compensation of approximately
        $29,200 was paid to each FFFC director for the period of July 2004 through
        August 30, 2005. Additionally, FFFC’s secretary was granted 20,000 options at
        $1.10 per share (the market value of the common stock on the date of the
        grant).
        All options are fully-vested at the date of the grant. Beginning with the
        monthly fee due September 1, 2006, the Board of Directors temporarily suspended
        the monthly payment.
 
 **Litigation:**
 
 The
        Company is involved in various claims and legal actions arising in the ordinary
        course of business. In the opinion of management, the ultimate disposition
        of
        these matters will not have a material adverse impact either individually
        or in
        the aggregate on consolidated results of operations, financial position or
        cash
        flows of the Company.
 
 **Consulting
        agreements:**
 
 In
        February 2006, FFFC entered into a consulting agreement with a financial
        advisor
        (a former officer of FFFC) to provide assistance to FFFC in the placement
        of
        debt or equity financing with prospective investors. The term of the agreement
        is for three years, but can be terminated at any time by either party with
        60
        days notice. The advisor is compensated during the term of the consulting
        agreement as the advisor is deemed successful in completing debt or equity
        financings for or on behalf of FFFC. Through September 30, 2006, the financial
        advisor assisted FFFC in restructuring and or obtaining $3,404,061 of investor
        notes. Pursuant to the agreement, the advisor was paid $134,972 and received
        75,000 shares of the Company’s common stock, valued at $224,215, accordingly,
        $71,808 and $224,215 is included in loss from discontinued operations for
        the
        three and nine months ended September 30, 2006.
 
 In
        addition, the advisor received warrants to purchase up to 436,206 shares
        of
        FFFC’s common stock at an exercise price of $1.00 per share. The warrants were
        valued at $355,000 based upon the Black-Scholes option-pricing model which
        was
        included loss from discontinued operations for the nine months ended September
        30, 2006.
 
 In
        conjunction with the Asset Sale, a FFFC director and former officer (the
        “Director”) signed a five-year non-compete agreement with the buyer and also
        signed a release, waiving his right to any future commissions that he was
        previously entitled to. The Company agreed to compensate the Director $100,800
        annually, over the five-year term of the non-compete agreement. Such
        compensation is to be applied to reduce the loan and interest receivable
        from
        the Director. If the Director breaches his non-compete agreement, the Director
        is no longer entitled to compensation and will be liable for any amount
        remaining on the loan. Accordingly, FFFC
        recognized $25,200 and $67,200 for the three and nine months ended September
        30,
        2006, respectively, (included in loss from discontinued operations) and the
        interest and note receivable was reduced by $67,200.
 
 On
        July
        31, 2006, the Company entered into a consulting agreement with a third party
        to
        provide financial services. Under the consulting agreement, which has a term
        of
        one year, the financial advisor is to receive a total of 300,000 shares of
        the
        Company’s common stock, of which 225,000 shares have been issued and 75,000
        shares are to be issued on December 31, 2006. The 300,000 shares were valued
        at
        $555,000 or $1.85 per share (the market price of the common stock on the
        date of
        the agreement). The cost of the services is being amortized on a straight-line
        basis as earned over the one year term of the agreement. Accordingly,
        approximately $46,000 for the three and nine months ended September 30, 2006
        is
        included in corporate selling, general and administrative expense. Pursuant
        to
        the consulting agreement, the advisor is
  19
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **5.**
              **Commitments
                  and contingencies
                  (continued):**
 
 **Consulting
        agreements (continued):**
 
 required
        to provide strategic corporate advice relating to potential mergers,
        acquisitions and dispositions and other corporate transactions, including
        such
        services provided to the Company with respect to its acquisition of Hydrogen
        Power, Inc., reasonably requested by Company from time to time during the
        term
        of the consulting agreement.
 
 On
        July
        31, 2006 the Company entered into a consulting agreement with a third party
        to
        provide financial services to the Company. Pursuant to the agreement, which
        has
        a term of one year, the Company issued 40,000 shares of common stock and
        a
        warrant to purchase 150,000 shares of common stock at an exercise price of
        $1.98
        per share (the market price of the common stock on the date of the agreement),
        expiring three years from the date of issuance. The 40,000 shares of common
        stock were valued at $74,000 or $1.85 per share (the market price of the
        common
        stock on the date of the agreement). The warrant to purchase 150,000 shares
        of
        common stock was valued at $201,600 based upon the Black-Scholes option-pricing
        model. The cost of the services is being amortized on a straight-line basis
        as
        earned over the one year term of the agreement. Accordingly, approximately
        $54,000 for the three and nine months ended September 30, 2006 is included
        in
        corporate selling, general and administrative expense.
 
 **6.**
              **Redeemable
                  preferred stock:**
 
 **Series
        K convertible preferred stock:**
 
 In
        August
        2005, the Company issued 3,055 shares of 6% Series K convertible preferred
        stock
        (the “Series K Preferred Stock”) along with warrants to purchase 175,000 shares
        of common stock in exchange for all outstanding shares of Series G and I
        preferred stock. The Company reduced the carrying value of the Series K
        Preferred Stock by the relative fair value of the warrants ($355,000), which
        was
        based on the Black-Scholes option-pricing model, with an offset to additional
        paid-in capital. The Series K Preferred Stock is convertible at the
        holder’s option at any time through June 2009 into shares of the Company’s
        common stock at a conversion price equal to the lesser of (i) $2.75 per share
        and (ii) 65% of the 5 day average closing bid price of the Company’s common
        stock as specified in the agreement, provided that the percentage of the
        5 day
        average closing bid price shall increase to 75% upon the occurrence of certain
        events. The holder of each share of the Series K Preferred Stock is entitled
        to
        cumulative dividends at 6% per annum, payable quarterly, with an 18% dividend
        default rate. Dividends are payable in cash or shares (at market value) of
        the
        Company’s common stock. The beneficial conversion feature was valued at
        $2,277,000 using the effective conversion price. As a result, the Company
        reduced the carrying value of the Series K Preferred Stock for this amount
        with
        an offset to additional paid-in capital. The warrants and beneficial conversion
        feature are being accreted over the four- year
        term
        of the Series K Preferred Stock, and as a result, loss applicable to common
        stockholders was increased by $390,000 for the nine months ended September
        30,
        2006. Additionally, during the nine months ended September 30, 2006, based
        on
        the conversion of 1,400 shares of Series K since December 31, 2005, the Company
        accreted an additional $1,304,000, with an offset to additional paid-in
        capital.
 
 In
        the
        event the common stock of the Company achieves certain benchmarks, the Series
        K
        Preferred Stock is redeemable by the Company at a redemption price of $1,350
        per
        share plus accrued and unpaid dividends. In the event the holders do not
        elect
        to convert the Series K Preferred Stock during the conversion period, the
        Series
        K Preferred Stock is required to be redeemed by the Company at stated value
        plus
        accrued unpaid dividends. Due to the terms and conditions of the Series K
        Preferred Stock, which may require redemption which is outside the control
        of
        the Company, the Series K Preferred Stock is not included in stockholders’
equity at September 30, 2006. During the nine months ended September 30,
        2006,
        1,400 shares of the Series K Preferred Stock, plus cumulative unpaid dividends
        of $70,750, were converted into 1,193,143 shares of common stock, at a
        conversion prices of $1.11 to $2.75 per share for the 1,400 shares of Series
        K
        Preferred Stock and $1.70 to $5.13 for the unpaid dividends.
 
  20
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **7.**
              **Stockholders’
                  equity:**
 
 **Notes,
        interest and stock subscription receivable:**
 
 At
        September 30, 2006, notes and interest receivable from a Director of Chex
        of
        $480,166 are presented as a reduction in stockholders’ equity based on
        management’s evaluation of repayment intentions. The notes are due on demand and
        the Company is no longer accruing interest on these notes due to uncertainty
        as
        to collection. The notes are collateralized by unregistered shares of the
        Company’s common stock. Pursuant to the consulting agreement between FFFC and
        the Director, all compensation earned under the agreement will be applied
        to
        these receivables.
 
 At
        December 31, 2005, $135,000 is presented as a stock subscription receivable
        related to 25,000 shares of FFFC common stock that were issued to convertible
        noteholders. The $135,000 was written off during the second quarter of 2006
        in
        conjunction with the settlement agreement with the convertible noteholders
        as
        described in Note 4.
 
 **Issuances
        of common stock:**
 
 During
        the nine months ended September 30, 2006, the Company issued 414,236 shares
        of
        common stock valued at $1,439,142 as payment on long-term debt and accrued
        interest of $1,194,770. The stock was issued at 80% to 85% of market value
        and
        accordingly, the Company recorded additional expense of $86,173 and $244,372,
        for the three and nine months ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company issued 203,288 shares
        of
        its common stock to third parties to satisfy convertible promissory notes
        and
        accrued interest aggregations of $467,642. The stock issued was valued at
        $580,788, (representing approximately a 20% discount to the ten day average
        market price prior to the conversion) and accordingly, the Company has included
        $49,174 and $113,146 in additional interest expense for the three and nine
        months ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company issued 357,307 shares
        of
        common stock valued at $1,600,487 to satisfy $730,861 of convertible notes
        and
        other liabilities of FFFC. The stock was issued at approximately 85% of market
        value, and accordingly, the Company recorded an additional expense of $71,808
        and $869,626 (included in loss from discontinued operations) for the three
        and
        nine months ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company issued 60,000 shares
        of
        common stock and warrants to purchase 60,000 shares of the Company’s common
        stock to third parties in conjunction with a private placement. The warrants
        have a term of three years and an exercise price of $5.00. The Company received
        $240,000 in the private placement. The market price of the common stock on
        the
        date of the grant was $4.61 per share.
 
 During
        the nine months ended September 30, 2006, the Company issued 28,179 shares
        of
        common stock valued at $66,606 in consideration of not meeting the due date
        on a
        promissory note. Accordingly, $33,391 and $66,606 is included in interest
        expense for the three and nine months ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company issued 70,000 shares
        of
        common stock upon the exercise of warrants to purchase 70,000 shares of common
        stock. The Company received proceeds of $105,000 upon the exercise.
 
  21
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **7.**
              **Stockholders’
                  equity (continued):**
 
 **Treasury
        stock transactions:**
 
 In
        March
        2006, the Company issued 1,200,000 shares of its common stock to FFFC in
        satisfaction of $6,144,000 in notes, advances and interest payable that the
        Company and its majority-owned subsidiary owed FFFC and Chex.
 
 During
        the nine months ended September 30, 2006, FFFC purchased 41,858 shares of
        the
        Company’s common stock  from a third party for $192,299 or $4.59 per share
        (the market price of the Company’s common stock on the purchase date). The cost
        of the shares has been added to treasury stock.
 
 **Options:**
 
 In
        September 2006, the Board of Directors granted options to employees, directors,
        officers and consultants to purchase 447,500 shares of common stock at an
        exercise price ranging from $1.60 to $2.00 per share (the market price of
        the
        common stock on each of the grant dates), expiring five years from the grant
        date. The options were valued at $649,138 based on the Black-Scholes option
        pricing model and are included in corporate selling, general and administrative
        for the three and nine months ended September 30, 2006, as they vested
        immediately upon issuance.
 
 **Warrants:**
 
 During
        the nine months ended September 30, 2006, the Company issued warrants to
        noteholders as part of a settlement to purchase 66,750 shares of the Company’s
        common stock for a period of three years at exercise prices of $2.00 and
        $4.71
        per share. The market prices as of the date of the issuances ranged from
        $3.22
        to $5.15. These warrants were valued at $224,972 based on the Black-Scholes
        option pricing model and are included in corporate general, selling and
        administrative expense for the nine months ended September 30,
        2006.
 
 During
        the nine months ended September 30, 2006, the Company issued warrants (to
        FFFC
        convertible noteholders as part of a settlement) to purchase 21,091 shares
        of
        the Company’s common stock for a period of three years at an exercise price of
        $5.10 per share (the market price of the common stock on the date the terms
        of
        the settlement were reached). These warrants were valued at $73,882 based
        on the
        Black-Scholes option pricing model and are included in loss from discontinued
        operations for the nine months ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company reduced the exercise
        price
        of warrants to purchase 155,000 shares of common stock from $4.71 to $2.00
        and
        extended the terms for five years. The repriced and extended warrants were
        valued at $80,899 in excess of the remaining value of the original warrants
        at
        the date of the modifications based on the Black-Scholes option-pricing model.
        Accordingly, $68,267 and $80,899 are included in interest expense for the
        three
        and nine months ended September 30, 2006.
 
 In
        March
        2006, in conjunction with the HPI acquisition, the Company issued warrants
        to
        purchase 1,600,000 shares of the Company’s commons tock for a one year period,
        at an exercise price of $3.00 per share. The warrants were valued at $4,246,400
        based on the Black-Scholes option pricing model and are included as part
        of the
        purchase price of HPI.
 
 In
        September 2006, the Company lowered the exercise price of the warrants to
        purchase 362,666 shares of common stock that were issued in 2005 in conjunction
        with a private placement from $5.50 to $1.50 per share for those warrant
        holders
        who cared to exercise their warrants prior to September 29, 2006. As an
        additional incentive for the warrant holders to exercise their warrants,
        the
        Company authorized the issuance of one new warrant to purchase one share
        of the
        Company’s common stock for each two shares issued upon exercise of the original
        warrant. As of September 30, 2006, warrants to purchase 70,000 shares of
        common
        stock were exercised and accordingly, the Company issued warrants to purchase
        35,000 shares of common stock with an
  22
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC. AND HYDROGEN POWER INTERNATIONAL,
              INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 
 **NINE
              MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
              (UNAUDITED)**
  **7.**
              **Stockholders’
                  equity (continued):**
 
 **Warrants
        (continued):**
 
 exercise
        price of $2.25 per share, expiring five years from the date of issuance.
        The
        warrants were valued at $44,450 based on the Black-Scholes option-pricing
        model
        and are included in corporate general, selling and administrative expense
        for
        the three and nine months ended September 30, 2006.
 
 **8.**
              **Income
                  taxes:**
 
 Income
        tax expense for the three and nine months ended September 30, 2006, was $237,000
        and $974,000, respectively. This amount represents income taxes recorded
        as a
        result of the Asset Sale in January 2006.  In addition, the Company has not
        recognized a tax benefit related to net operating losses generated during
        the
        nine months ended September 30, 2006, as realization of the deferred tax
        asset
        is not considered more likely than not, and therefore an allowance has been
        applied against this amount.
 
  23
  **ITEM
        2.**
 **MANAGEMENT’S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS**
 
 
 THIS
        REPORT MAY CONTAIN CERTAIN “FORWARD-LOOKING” STATEMENTS AS SUCH TERM IS DEFINED
        IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 OR BY THE SECURITIES
        AND
        EXCHANGE COMMISSION IN ITS RULES, REGULATIONS AND RELEASES, WHICH REPRESENT
        THE
        COMPANY’S EXPECTATIONS OR BELIEFS, INCLUDING BUT NOT LIMITED TO, STATEMENTS
        CONCERNING THE COMPANY’S OPERATIONS, ECONOMIC PERFORMANCE, FINANCIAL CONDITION,
        GROWTH AND ACQUISITION STRATEGIES, INVESTMENTS, AMOUNTS RECEIVABLE FROM NET
        FIRST NATIONAL BANK, AND FUTURE OPERATIONAL PLANS, FOR THIS PURPOSE, ANY
        STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY
        BE
        DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE GENERALITY
        OF THE
        FOREGOING, WORDS SUCH AS “MAY”, “WILL”, “EXPECT”, “BELIEVE”, “ANTICIPATE”,
“INTENT”, “COULD”, “ESTIMATE”, “MIGHT”, OR “CONTINUE” OR THE NEGATIVE OR OTHER
        VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY
        FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
        RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANY’S CONTROL, AND
        ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON THE VARIETY OF IMPORTANT
        FACTORS, INCLUDING UNCERTAINTY RELATED TO THE COMPANY’S OPERATIONS, MERGERS OR
        ACQUISITIONS, GOVERNMENTAL REGULATION, THE VALUE OF THE COMPANY’S ASSETS AND ANY
        OTHER FACTORS DISCUSSED IN THIS AND OTHER COMPANY FILINGS WITH THE SECURITIES
        AND EXCHANGE COMMISSION.
 
 GENERAL
 
 Hydrogen
        Power, Inc. (“HP or the “Company”) formerly known as Equitex, Inc. and Hydrogen
        Power International, Inc. is a holding company, and through January 31, 2006,
        operated primarily through its majority-owned subsidiary FastFunds Financial
        Corporation (“FFFC”). As disclosed in the December 31, 2005 Form 10-K, HP and
        FFFC also have several other non-operating wholly-owned subsidiaries. As
        of
        September 30, 2006, HP owns and controls 80% of FFFC’s outstanding common
        stock.
 
 FFFC’s
        wholly-owned subsidiary Chex Services, Inc. (“Chex”), a Minnesota corporation,
        provided financial services prior to the sale of substantially all of Chex’s
        assets, which primarily consisted of check cashing, automated teller machine
        (ATM) access, and credit card advances to customers primarily at Native American
        owned casinos and gaming establishments (the “Asset Sale”).
 
 The
        Asset
        Sale is discussed below. As a result of the Asset Sale, the operations of
        FFFC
        are presented retroactively as discontinued operations, and all of its operating
        assets, including liabilities, are presented as assets and liabilities of
        discontinued operations.
 
 On
        March
        14, 2006, the Company acquired Hydrogen Power, Inc. (“HPI”). This acquisition is
        described below. HP is currently negotiating the terms of an agreement and
        series of transactions with the management of HPI that may result in a change
        in
        control of HP’s board of directors and effect a change in HP’s management. In
        addition, the negotiations may require HP to divest all or substantially
        all of
        its holdings of equity in FFFC and eliminate all intercompany obligations
        between HP and FFFC. As of the date of this quarterly report no agreements
        have
        been reached and no assurance can be given that one will be
        reached.
 
 OVERVIEW
 
 The
        following discussion and analysis of our financial condition and results
        of
        operations should be read in conjunction with the consolidated financial
        statements and notes thereto for the years ended December 31, 2005, 2004
        and
        2003. The
        financial results presented for the three and nine-months ended September
        30,
        2006 and 2005 are those of FastFunds Financial Corporation (“FFFC”), Key
        Financial Systems, Inc. (“Key”), Nova Financial Systems, Inc. (“Nova”) and
        Denaris Corporation (“Denaris”), on a consolidated basis with those of HP and
        since March 14, 2006, HPI. FFFC sold substantially all of its assets in January
        2006 and Key ceased “run-off” operations in the fourth quarter of 2003,
        accordingly, FFFC’s and Key’s results for both periods are presented in a
        one-line presentation and are included in “income (loss) from discontinued
        operations”.
 
  24
   
 BUSINESS
        ACQUISITION :
 
 On
        February 28, 2006, the Company held a special meeting of its shareholders.
        At
        that meeting the shareholders approved and authorized the acquisition of
        HPI, as
        well as certain related common stock issuances. The acquisition, which
        management has accounted for as a purchase, closed on March 14,
        2006.
 
 Per
        the
        terms of the merger agreement, as amended, the Company issued to the former
        shareholders of HPI 2,338,990 shares of its common stock and has reserved
        132,122 shares of its common stock to be issued upon exercise of options
        to
        purchase 1,550,000 shares of HPI common stock outstanding immediately prior
        to
        the time of the merger. The shares were valued at $9,909,159 which is based
        upon
        the quoted market price of the Company’s common stock on July 6, 2005 ($4.01 per
        share), the date the terms of the merger agreement were agreed to by the
        Company
        and HPI’s shareholders.
 
 Pursuant
        to a Share Exchange Agreement dated December 5, 2005 with a shareholder of
        HPI,
        Aton Select Fund Limited (“Aton”), prior to the effective time of the merger, HP
        issued 700,000 shares of its common stock in exchange for 850,000 shares
        of HPI
        common stock held by Aton. These shares were valued at $2,526,300, a 10%
        discount to the July 6, 2005 market price. The Share Agreement was contemplated
        in the merger agreement, and accordingly, the total shares issued or reserved
        to
        HPI shareholders were 3,171,112, or approximately 29% of the Company’s common
        stock outstanding at the time of the merger.
 
 The
        Company also issued to the stockholders of HPI 300,000 shares of its Series
        L
        Preferred Stock (the “Preferred Stock”). The Preferred Stock is convertible into
        HP common stock in three equal installments of 100,000 shares each (referred
        to
        as the L-1, L-2 and L-3 Preferred Stock, respectively), on the 180 th ,
        270 th and
        360 th day
        following closing of the merger, respectively, with each installment convertible
        into 40% of HP common stock outstanding immediately prior to such conversion.
        The conversion of the Preferred Stock is subject to the achievement by HPI
        of
        certain performance benchmarks as defined in the Certificate of Designation
        of
        Series L Preferred Stock, the satisfaction of which is to be determined by
        HP in
        its sole discretion. In the event all three series of Series L Preferred
        Stock
        are converted into HP common stock, the former stockholders of HPI would
        own
        approximately 73% of HP’s common stock on a post-transaction basis (assuming
        that HP does not, prior to the conversion of the L-3 Preferred Stock, issue
        any
        additional shares of common stock other than pursuant to conversion of the
        Series L Preferred Stock). As of the date of this quarterly report no Preferred
        Stock has been converted to common stock.
 
 In
        addition, the Company issued warrants to purchase up to 1,600,000 shares
        of HP
        common stock at an exercise price of $3.00 per share in exchange for all
        outstanding warrants of HPI at the date of merger. The warrants are exercisable
        for the remainder of the unexpired term of the original HPI warrants through
        February 2007. The warrants were valued at $4,246,400 based on the Black-Scholes
        option pricing model.
 
 In
        July
        and September 2005, the Company loaned to HPI an aggregate of $3,000,000
        to be
        used for the exploitation and commercialization of HPI’s technology. The Company
        agreed to forgive payment of the $3,000,000 plus accrued interest as a condition
        of closing. The Company accounted for the forgiveness as a contribution of
        capital to the Merger Sub and the proceeds were transferred to HPI at
        closing.
 
 HPI,
        a
        development stage company, based in Seattle, Washington, performs
        hydrogen-related testing, research and engineering, and has developed a patented
        system (HPI **Hydrogen
        Now** TM )
        that
        creates pure hydrogen from aluminum and water. The
        patented technology allows hydrogen gas to be generated on-site and on-demand,
        and is designed to directly power any fuel cell or internal combustion engine
        application. The HPI process can supply hydrogen at customized rates and
        pressures, and may provide hydrogen transportation and supply solutions from
        small portable applications to large stationary systems.
 
 Hydrogen
        Power’s objective is to develop and market our licensed proprietary hydrogen
        production process for use in commercial applications that require hydrogen,
        but
        where hydrogen storage and/or distribution is not feasible. HPI management
        believes, based on its preliminary research, that its hydrogen production
        process may be a commercially viable process for fuel cell applications where
        on-demand hydrogen is required or is an advantage. Fuel cells that use hydrogen
        are being considered for the following applications, although use of
        hydrogen-based fuel cells for these applications has been of limited commercial
        application to date and there is no widespread adoption of hydrogen-based
        fuel
        cells:
 
 ·
              Fuel
                  cells for transportation, including buses, trucks and automobiles;
                  and
 
 ·
              Portable
                  and small-scale fuel cell based stationary power generation, including
                  power for mobile electronics, small power equipment, residential
                  and
                  commercial/institutional power generation
                  systems.
 
  25
  Where
        fuel cells are used for transportation and for portable and small-scale
        stationary power generation, it may be advantageous for the hydrogen to be
        created on-demand when required, rather than being stored in pressurized
        storage
        vessels. As Hydrogen Power’s licensed process has the potential to offer a means
        of creating hydrogen on demand and due to the potential commercial demand
        for
        hydrogen-based fuel cells, we believe that investigation of our licensed
        hydrogen generation process and hydrogen generation reactors for use in
        commercial applications is warranted.
 
 Hydrogen
        Power has a fully functional product development laboratory equipped to carry
        out hydrogen-related testing, research and engineering. Hydrogen Power has
        also
        made working arrangements with two university laboratories - the Department
        of
        Metals and Materials Engineering at the University of British Columbia, Canada
        and the Department of Metals at the University of Washington, Seattle - to
        make
        use of the larger, more sophisticated pieces of equipment already available
        at
        those facilities. Hydrogen Power is at the early stage of testing and evaluating
        the commercial application of the licensed technology and the design and
        engineering of prototypes.
 
 Under
        the
        terms of the Merger Agreement, the Company agreed to utilize the first $10
        million of the net proceeds received from the Asset Sale (discussed below)
        towards the exploitation and commercialization of HPI’s intellectual property.
As a condition to close, the Company was required to make a $5 million
        contribution (of a total required contribution of $10 million) to capital
        of
        HPI, which proceeds were transferred to HPI at closing. The remaining $5
        million
        contribution has not yet been made. On March 14, 2006, the Company and FFFC
        entered into a Secured Promissory Note (the “Note”), a Stock Pledge Agreement
        (the “Pledge”) and a Profit Participation Agreement through which FFFC loaned
        the Company $5 million. The Note is due March 14, 2007, and accrues interest
        at
        10% per annum. Pursuant to the Pledge, the Company has pledged all of its
        shares
        of HPI to FFFC to guarantee payment of the Note. Additionally, the parties
        executed the Profit Participation Agreement, whereby the Company granted
        to FFFC
        a net profit interest, as defined in the loan documents, in the amount of
        10% of
        the net profit derived from the operations of HPI during the period the Note
        is
        outstanding.
 
 SALE
        OF
        FFFC ASSETS
 
 On
        December 22, 2005, FFFC and Chex entered into an Asset Purchase Agreement
        (the
“APA”) with Game Financial Corporation (“Game”), pursuant to which FFFC and Chex
        agreed to sell substantially all of its cash access contracts and certain
        related assets, which represented substantially all the assets of Chex and
        FFFC.
 
 On
        January 31, 2006, FFFC and Chex completed the Asset Sale for $14 million
        pursuant to the APA and received cash proceeds of $13,710,630 ($12,712,784
        after
        certain transactions related costs) and realized a pre-tax book gain of
        approximately $4 million.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 The
        Company’s liquidity and capital resources during the nine months ended September
        30, 2006, have been primarily provided through the January 31, 2006, Asset
        Sale
        which provided the Company with net cash proceeds of $13,710,630 ($12,712,784
        after adjustments for certain transaction related expenses and liabilities
        assumed by Game).
 
 In
        connection with the Asset Sale, FFFC and Chex entered into a Transition Services
        Agreement (the “TSA”) with Game pursuant to which FFFC and Chex agreed to
        provide certain transitional services to Game for the cash-access financial
        services business. Pursuant to the TSA, FFFC and Chex provided the necessary
        services for approximately three months and Game paid FFFC $150,000 per month.
        The TSA terminated May 19, 2006 and FFFC received $477,500 pursuant to the
        terms
        of the TSA.
 
 For
        the
        nine months ended September 30, 2006, net cash used in operating activities
        was
        $5,147,637 compared to $1,266,730 for the nine months ended September 30,
        2005.
        The net loss for the nine months ended September 30, 2006 decreased to
        $6,211,204 from $8,086,400 for the nine months ended September 30, 2005.
        The
        decrease in net loss was primarily attributable to the gain on the Asset
        Sale of
        $4,145,835. The gain was offset by losses of FFFC of approximately $4,851,000
        and an increase in deferred income taxes of $1,333,000 (including $365,673
        in
        discontinued operations). Adjustments to the current period’s results included
        non-cash expenses of approximately $6,407,000, significantly comprised of
        $2,054,915 of expenses related to stock and warrants issued, $1,333,000 of
        deferred income taxes, $860,788 of non-cash and stock based expenses, $1,287,685
        for depreciation and amortization and $518,392 for increases to allowances
        on
        notes receivable and bad debt expense.
 
 Net
        cash
        provided by investing activities for the nine months ended September 30,
        2006
        was $15,101,348 compared to cash used in investing activities of $2,795,255
        for
        the nine months ended September 30, 2005. Net cash provided in 2006 investing
        activities was primarily attributable to the net proceeds of $12,712,784
        from
        the Asset Sale and $2,203,121 cash acquired in the HPI acquisition.
 
  26
  Net
        cash
        used in financing activities for the nine months ended September 30, 2006
        was
        $10,903,105 compared to cash provided by financing activities for the nine
        months ended September 30, 2005 of $4,200,777. The significant activity for
        the
        nine months ended September 30, 2006 included the receipt of $695,000 from
        the
        issuances of notes payable and $240,000 received from a private placement
        and
        $105,000 received from the exercise of warrants. In addition, the Company
        repaid
        $10,734,983 of notes payable and $1,015,823 of checks issued in excess of
        bank
        cash from the proceeds of the Asset Sale. The significant activity for the
        nine
        months ended September 30, 2005, included the Company receiving proceeds
        of
        $4,078,000 upon the issuance of notes payable, receiving $243,833 upon the
        sale
        of 82,308 shares of treasury stock by Chex, proceeds of $1,998,996 received
        from
        the private placement and proceeds received of $906,644 upon the exercise
        of
        options and warrants. These proceeds were used for the repayment of notes
        payable of $2,857,696.
 
 For
        the
        nine months ended September 30, 2006, net cash decreased by $949,394 compared
        to
        an increase of $138,792 for the nine months ended September 30, 2005. Ending
        cash at September 30, 2006, was $7,457,400 compared to $8,528,478 at September
        30, 2005. The cash balances include cash included in discontinued operations
        of
        $1,933,908 and $8,067,556 at September 30, 2006 and 2005,
        respectively.
 
 RESULTS
        OF OPERATIONS
 
 Financial
        statements for the three and nine months ended September 30, 2006 and 2005
        report the Company’s subsidiaries FFFC and Key as discontinued
        operations.
 
 REVENUES
 
 Consolidated
        revenues from continuing operations, which consist of credit card income
        on
        Nova’s remaining portfolio, for the three and nine months ended September 30,
        2006, was $30,363 and $97,731 compared to consolidated revenues of $40,995
        and
        $159,573 for the three and nine months ended September 30, 2005.
 
 CORPORATE
        SELLING, GENERAL AND ADMINISTRATIVE
 
 Corporate
        expenses include those of HP, Denaris, Nova and as of March 14, 2006, HPI.
        Total
        corporate activity expenses for the three and nine months ended September
        30,
        2006 and 2005 were comprised as follows:
 
 Three
                  months ended
                September
                  30,
              Nine
                  months ended
                September
                  30,2006
              
              2005
              
              2006
              
              2005Employee
                  costs
              
              $
                  382,581
              
              $
                  739,881
              
              $
                  920,028
              
              $
                  1,048,154Accounting
                  and legal
              
              371,034
              
              141,171
              
              691,261
              
              661,638Impairment
                  of notes receivable
              
              
              
              
              
              200,000
              
              1,901,911Stock,
                  options and warrant costs
              
              428,275
              
              
              
              658,382Other
              
              986,427
              
              79,435
              
              2,089,685
              
              374,174$2,168,317
              
              $
                  960,487
              
              $4,559,356
              
              $3,985,877
 
 Employee
        costs for the three months ended September 30, 2006, were $357,300 lower
        than
        for the three months ended September 30, 2005. The decrease was caused by
        the
        inclusion in the 2005 period of $610,570 of officer’s bonuses, which were not
        incurred in 2006. This decrease was offset by the inclusion of HPI costs
        of
        $235,000 for the three months ended September 30, 2006. Employee costs for
        the
        nine months ended September 30, 2006 decreased by $128,126 from the nine
        months
        ended September 30, 2005. Included in the 2006 period are costs of $551,033
        related to HPI. The 2005 costs include $696,073 of officer’s bonus, which were
        not incurred in 2006. Accounting and legal expense increased by $229,863 and
        $29,623 for the three and nine months ended September 30, 2006 compared to
        September 30, 2005. The increase was primarily attributable to expenses incurred
        by HPI of approximately $130,000 and $280,000 for the three and nine months
        ended September 30, 2006.
 
 During
        the nine months ended September 30, 2006, the Company increased the allowance
        related to notes receivable from Equitex 2000, Inc. by $200,000, compared
        to an
        increase of $1,901,911 (of which $1,596,911 was related to iGames) for the
        nine
        months ended September 30, 2005.
 
 For
        the
        three and nine months ended September 30, 2006, the Company recognized an
        expense of $428,275 and $658,382 for the issuance of stock, options and
        warrants. Other expenses for the nine months ended September 30, 2006 and
        2005
        include the general operating costs of HP, Denaris, Nova and from March 14,
        2006, HPI. The 2006 results include operating expenses of HPI of $162,433
        and
        $384,329 for the three and nine months ended September 30, 2006 (from March
        14,
        2006, the date of the acquisition of HPI), as well as $268,000 and $601,000
        for
        the three
  27
   and
        nine
        months ended September 30, 2006 for amortization related to the intangible
        assets acquired in the acquisition of HPI.
 
 OTHER
        INCOME (EXPENSE):
 
 Consolidated
        other expenses for the three and nine months ended September 30, 2006 was
        $262,877 and $904,655 compared to other expenses of $231,685 and $405,875
        for
        the three and nine months ended September 30, 2005. Interest expense increased
        by $85,746 and $598,679 for the three and nine months ended September 30,
        2006
        compared to September 30, 2005. The increase was primarily attributable to
        the
        increase in non-cash interest expense of approximately $230,000 and $630,000
        related to the settlement of various obligations to note holders for the
        three
        and nine months ended September 30, 2006. Interest income decreased by $54,554
        and $99,899 for the three and nine months ended September 30, 2006 compared
        to
        September 30, 2005.
 
 DISCONTINUED
        OPERATIONS
 
 Discontinued
        operations represent the operations of FastFunds and Key. The loss from
        discontinued operations was $282,009 for the three months ended September
        30,
        2006 compared to $1,281,287 for the three months ended September 30, 2005.
        The
        gain from discontinued operations was $129,076 for the nine months ended
        September 30, 2006, compared to a loss of $3,854,221 for the nine months
        ended
        September 30, 2005.
 
 The
        results were comprised of as follows:
 
 Three
                  months ended
                September
                  30,
              
              Nine
                  months ended
                September
                  30,2006
              
              2005
              
              2006
              
              2005FastFunds
              
              $
                  (282,009)
              
              $(1,249,739)
              
              $129,603
              
              $
                  (3,847,304)Key
              
              
              
              (1,548)
              
              (527)
              
              (6,917)$
                  (282,009)
              
              $(1,251,287)
              
              $129,076
              
              $(3,854,221)
 
 The
        results of FastFunds for the three and nine months ended September 30, 2006
        and
        2005 are as follows:
 
 Three
                  months ended
                September
                  30,
              
              Nine
                  months ended
                September
                  30,2006
              
              2005
              
              2006
              
              2005Revenues
              
              
              
              $
                  4,980,377
              
              $
                  2,192,382
              
              $
                  13,966,926Location
                  expenses
              
              $
                  (12,296)
              
              (3,643,216)
              
              (1,213,074)
              
              (10,308,586)Location
                  support expenses
              
              (394,712)
              
              (1,909,277)
              
              (3,081,316)
              
              (4,823,832)Other
                  expenses
              
              (113,328)
              
              (669,622)
              
              (1,548,551)
              
              (2,657,812)Gain
                  on sale of assets
              
              
              
              
              
              4,145,835Income
                  tax benefit (expense)
              
              238,327
              
              (8,000)
              
              (365,673)
              
              (24,000)Net
                  (loss) income
              
              $
                  (282,009)
              
              $(1,249,738)
              
              $
                  129,603
              
              $
                  (3,847,304)
 
 INCOME
        TAX EXPENSE
 
 Income
        tax expense for the three and nine months ended September 30, 2006 was $237,000
        and 924,000, respectively, and is primarily related to the income taxes as
        a
        result of the Asset Sale in January 2006. In addition, the Company has not
        recognized a tax benefit related to net operating losses generated during
        the
        nine months ended September 30, 2006, as realization of the deferred tax
        asset
        is not considered more likely than not and therefore an allowance has been
        applied against this amount.
 
 CONTRACTUAL
        OBLIGATIONS
 
 There
        were no new material contractual obligations during the quarter ended September
        30, 2006.
 
 RECENTLY
        ISSUED ACCOUNTING PRONOUNCEMENTS
 
 In
        July
        2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
        Uncertainty in Income Taxes: an interpretation of FASB Statement No. 109”. This
        interpretation clarifies the accounting for uncertainty in income taxes
        recognized in an entity’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and
        measurement principles for financial statement disclosure of tax positions
        taken
        or expected to be taken on a tax return. This interpretation is effective
        for
        fiscal years beginning after
  28
   December
        15, 2006. The Company is currently assessing the impact the adoption of FIN
        48
        will have on its consolidated financial statements.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
        statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles, and expands disclosures about
        fair
        value measurements. This statement applies under other accounting pronouncements
        that require or permit fair value measurements. SFAS No. 157 is effective
        for
        fiscal years beginning after November 15, 2007. The Company is currently
        assessing the impact the adoption of SFAS No. 157 will have on its consolidated
        financial statements.
 
 In
        September 2006, the SEC issued SAB No. 108 in order to eliminate the diversity
        of practice surrounding how public companies quantify financial statement
        misstatements. In SAB 108, the SEC staff established an approach that requires
        quantification of financial statement misstatements based on the effects
        of the
        misstatements on each of the company’s financial statements and the related
        financial statement disclosures. SAB 108 is effective for fiscal years ending
        after November 15, 2006. Management does not believe the adoption of SAB
        No. 108
        will have an impact on its consolidated financial statements.
 
  29
   
 **ITEM
        3.**
 **QUANTITATIVE
        AND QUALITATIVE DISCLOSURES OF MARKET RISK**
 
 Market
        risk is the potential loss arising from adverse changes in market rates and
        prices, such as interest rates and a decline in the stock market. The Company
        does not enter into derivatives or other financial instruments for trading
        or
        speculative purposes. The Company has limited exposure to market risk related
        to
        changes in interest rates. The Company does not currently invest in equity
        instruments of public or private companies for business or strategic
        purposes.
 
 The
        principal risks of loss arising from adverse changes in market rates and
        prices
        to which the Company and its subsidiaries are exposed relate to interest
        rates
        on debt. The Company has only fixed rate debt, as follows:
 
 September
                  30,
              
              
              December
                  31,Contractual
                  obligation
              
              2006
              
              
              2005
              
              Interest
                  rateNotes
                  payable(1)
              
              $
                  3,404,061
              (2)
              
              $11,301,497
              
              Fixed
                  9% - 15%Convertible
                  promissory notes
              
              2,816,400
              
              
              4,690,656
              
              Fixed
                  7%Convertible
                  promissory notes
              
              
              
              
              1,362,500
              
              Fixed
                  5% - 10%Notes
                  payable, officers
              
              17,053
              
              
              614,695
              
              Fixed
                  8% - 10%Notes
                  payable, other
              
              109,514
              
              
              200,000
              
              Fixed
                  6%Operating
                  lease obligations(2)
              
              
              
              
              84,247
              
              Fixed
                  6.5% - 7%Debt
                  outstanding, before note discounts
              
              $
                  6,347,028
              
              
              $18,253,595
 
 (1)
              Notes
                  are unsecured and mature in March
                  2007.
 (2)
              Included
                  in liabilities as discontinued operations (2006) and as liabilities
                  associated with assets held for sale
                  (2005).
 
 Amounts
        above exclude discounts recorded on the face value of the related debt. As
        most
        of the Company’s average outstanding indebtedness is renewed annually and
        carries a fixed rate of interest, a change in interest rates is not expected
        to
        have a material impact on the consolidated financial position, results of
        operations or cash flows of the Company during the year ending December 31,
        2006.
 
 
  30
  **ITEM
        4.**
 **DISCLOSURE
        CONTROLS AND PROCEDURES**
 
 A
        review
        and evaluation was performed by the Company’s management, including the
        Company’s Chief Executive Officer and Treasurer, of the effectiveness of the
        design and operation of the Company’s disclosure controls and procedures (as
        defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities
        Exchange Act of 1934, as amended)  as of the end of the last day of the
        period of the accompanying financial statements. Based on that review and
        evaluation, management has concluded that the Company’s current disclosure
        controls and procedures, as designed and implemented, were effective. There
        have
        been no changes in the Company’s internal controls over financial reporting
        identified in connection with such evaluation that occurred during the Company’s
        last fiscal quarter that has materially affected, or is reasonably likely
        to
        materially affect, the Company’s internal control over financial reporting.
        Nevertheless, we have limited Company resources devoted to financial
        reporting.  The Company is currently evaluating its accounting resources
        needed to accommodate future non-routine, complex accounting
        issues.
 
 **PART
        II.**  **OTHER
        INFORMATION**
 
 **Item
        1.**  **Legal
        Proceedings**
 
 None
 
 **Item
        1A.**  **Risk
        Factors**
 
 **The
        conversion of outstanding preferred stock and the exercise of options and
        warrants, at prices below the market price of our common stock could cause
        a
        decrease in the market price of our common stock.**
 
 On
        August
        25, 2005, we issued 3,055 shares of Series K preferred stock in exchange
        for all
        of our previously outstanding Series G preferred stock and Series I preferred
        stock (for which there were approximately $3,055,000 in redemption value
        plus
        unpaid dividends). As of October 25, 2006, 1,911 shares of our Series K
        preferred stock had been converted into 1,379,915 shares of our common stock
        leaving 1,144 shares of Series K preferred stock outstanding. The conversion
        of
        our outstanding preferred stock into an indeterminable number of shares of
        our
        common stock as illustrated below, and the exercise of options and warrants
        into
        a maximum of 3,967,132 shares of our common stock at the currently applicable
        weighted-average exercise price of approximately $4.15 per common share,
        may be
        below the market price of our common stock at the time such securities are
        exercised and converted.
 
 Depending
        on the market price of our common stock at the time of the conversion or
        exercise of these convertible securities, any issuance of common stock upon
        conversion or exercise at then-below-market prices may cause a decrease in
        the
        market price of our common stock.
 
 **Our
        stockholders may experience significant dilution upon the conversion of our
        outstanding preferred stock.**
 
 Series
        K Preferred Stock
 
 Our
        common stockholders may experience substantial dilution from the conversion
        of
        our Series K preferred stock. As of October 25, 2006, 1,911 shares of our
        Series
        K preferred stock has been converted into 1,379,915 shares of our common
        stock.
        The conversion price of our Series K preferred stock is the lesser of $2.75
        or
        65% of the market price of our common stock for the five trading days prior
        to
        conversion, subject to certain adjustments. This conversion feature allows
        holders of the preferred stock to purchase an increasing number of common
        shares
        as a result of decreasing market prices of our common stock. The terms of
        our
        certificate of designation for Series K preferred stock prevented us from
        issuing more than 1,368,300 shares of our common stock upon conversion of
        our
        Series K preferred stock without stockholder approval as long as we were
        trading
        on a stock exchange. Given our recent delisting from the Nasdaq Stock Market,
        that 20% cap is no longer in effect. The terms of our certificate of designation
        for Series K preferred stock do prevent us from issuing to any single beneficial
        holder of the Series K preferred stock more than 4.99% of our outstanding
        common
        stock at any one time. Should any requested conversion by a beneficial holder
        of
        our Series K preferred stock potentially cause that holder to own in excess
        of
        4.99% of our common stock, only that number of shares of common stock up
        to and
        equal to 4.99% may be issued.
 
 Since
        we
        cannot know the conversion price of the Series K preferred stock until notice
        of
        conversion has been provided by a holder, we cannot currently determine how
        many
        shares of common stock we will actually issue upon conversion of the preferred
        stock. The following table sets forth, for illustrative purposes only, the
        effect of increasing and decreasing stock prices on the conversion price
        per
        share and number of shares issuable upon conversion of the Series K preferred
        stock, based on the closing market price of our common stock ($1.85) on October
        25, 2006.
 
  31
   
 Price
                  per share of common stock
              Conversion
                  price of Series K preferred stock (1)
              Aggregate
                  number of shares of common stock convertible from all Series K
                  preferred
                  stock (2) (3)
              Percentage
                  of outstanding common stock (3) (4)$1.85
              $1.20
              951,351
              6.98%$1.39
                  (5)
              $0.90
              1,268,468
              9.31%$0.93
                  (6)
              $0.60
              1,902,703
              13.96%$2.31
                  (7)
              $1.50
              761,081
              5.58%$2.78
                  (8)
              $1.80
              634,234
              4.65%
 
 (1)
          The conversion price is 65% of the market price of our common stock if
        the market price per share is less than $5.50, and 75% of the market price
        of
        our common stock if the market price is more than $5.50 for 20 consecutive
        trading days (and certain other conditions related to trading volume are
        met),
        provided, however, that the conversion price cannot be higher than $2.75
        per
        share.
 (2)
         Based on 1,144 shares of Series K preferred stock currently outstanding,
        having an aggregate stated value of $1,144,000.
 (3)
          The certificate of designation for the Series K preferred stock prevents
        us from issuing common stock that would allow any beneficial holder to own
        greater than 4.99% of our outstanding common stock at any given time, currently
        equal to 661,410 shares.
 (4)
          Based upon 13,632,045 shares of our common stock outstanding as of
        October 25, 2006.
 (5)
          Reflects a 25% reduction from the average closing price of $1.85.
 (6)
          Reflects a 50% reduction from the average closing price of $1.85.
 (7)
          Reflects a 25% increase from the average closing price of $1.85.
 (8)
          Reflects a 50% increase from the average closing price of $1.85.
 
 Series
        L Preferred Stock
 
 As
        part
        of our acquisition of HPI, we issued to the former stockholders of HPI 300,000
        shares of Series L Preferred Stock (the “Preferred Stock”). The Preferred Stock
        is convertible into common stock of the Company in three tranches of 100,000
        shares each (referred to as the L-1, L-2 and L-3 Preferred Stock, respectively),
        on the 180th, 270th and 360th day following closing of the merger, respectively;
        each tranche shall be convertible into 40% of our common stock outstanding
        on
        the respective date of conversion. The conversion of the Preferred Stock
        will be
        subject to the achievement by HPI of certain performance benchmarks as defined
        in the Certificate of Designation of Series L Preferred Stock, including
        HPI’s
        use of its hydrogen technology to develop prototype generators, with marketable
        value, for various micro and portable power applications and for various
        macro
        power applications such as fuel cells and internal combustion engines. The
        successful achievement of these benchmarks, and thus the conversion of the
        Preferred Stock, shall be determined by the Company in its sole discretion.
 
 In
        the
        event all three series of Series L Preferred Stock are converted into our
        common
        stock, the former stockholders of HPI would own approximately 75% of our
        common
        stock on a post-transaction basis (assuming that we do not, prior to the
        conversion of the L-3 Preferred Stock, issue any additional shares of common
        stock other than pursuant to conversion of the Series L Preferred Stock).
        Based
        upon 13,632,045 shares of our common stock outstanding as of October 25,
        2006,
        we would issue approximately 23,775,000 shares of our common stock if all
        of the
        Series L1, L2 and L3 shares were converted. As a result, our current
        stockholders would experience substantial dilution if all shares of Series
        L
        Preferred Stock are converted.
 
 **The
        conversion of outstanding convertible notes at prices below the market price
        of
        our common stock could cause substantial dilution to our current stockholders
        and a decrease in the market price of our common stock.**
 
 In
        March
        2004, we closed on $5,000,000 of convertible promissory notes (the "Notes")
        with
        two financial **** institutions
        (the "Lenders"). The Notes carry a stated interest rate of 7% per annum and
        have
        a 45-month term. Interest only payments were due April 2004 through June
        2004.
        Beginning in July 2004, principal and interest payments amortize over the
        remaining 42-month period. The Notes are senior to all other debt of Hydrogen
        Power and are collateralized by all assets of Chex as defined in the
        agreements.
 32
  The
        Notes
        are convertible into Hydrogen Power common stock at $6.885 per share up to
        an
        amount equal to 4.99% of our outstanding common stock. We have the right
        to make
        any monthly payment of principal and interest in shares of our common stock.
        If
        we exercise our right, the common stock was to be issued based on 85% of
        the
        average bid price for 20 trading days prior to the payment due date. During
        the
        third quarter of 2006, we agreed with the lender to alter the terms of the
        optional stock payment provision of the loans given the difficulty of obtaining
        closing bid prices on non-listed stocks. The payment can now be issued at
        80% of
        the average closing price of our common stock for the three or twenty days
        immediately prior to the payment date, whichever is lower. The maximum number
        of
        shares that can be delivered as payment is to be equal to 10% of the average
        monthly trading volume for the month prior to the payment due date. The Company
        may also issue common shares each month in an amount not to exceed 10% of
        the
        prior month's total share volume as payment, to be applied to the outstanding
        principal balance up to a value of $100,000. Certain of these provisions
        can be,
        and have been, waived by the lender allowing us to make larger portions of
        some
        monthly payments in common stock. During 2005, we issued a total of 207,230
        shares of its common stock valued at $863,840 as partial payments to the
        Lenders, with the other portions paid in cash to the Lenders, resulting in
        full
        payment. From January to October 2006, we issued an additional 265,523 shares
        of
        our common stock valued at $594,833 as partial payment with the balance of
        each
        payment made in cash, resulting in full payment.
 
 In
        September 2005, we issued an aggregate of $1,500,000 of additional convertible
        promissory notes to the Lenders. The notes bear interest at 10% and have
        a
        24-month term. Interest only payments were due October 2005 through December
        2005 and beginning in January 2006 monthly principal and interest payments
        of
        $78,157 are due over the remaining 21-month term. In addition to the collateral
        described in the initial loans above, we pledged 7.7 million of its shares
        of
        FFFC common stock. The principal balance of the notes, with accrued interest,
        is
        convertible at the option of the lender, at a conversion price of $5.50.
        We have
        the right, subject to certain limitations, to make any monthly payment of
        principal and interest in shares of our common stock. The common stock is
        to be
        issued based on 85% of the average bid price for 20 trading days prior to
        the
        payment due date. From January to October 2006, we issued 188,833 shares
        of our
        common stock valued at $504,071 as partial payment with the balance of each
        payment made in cash, resulting in full payment.
 
 As
        a
        result of our issuance of common stock in consideration for all or part of
        the
        monthly payments on these notes, our stockholders may experience substantial
        dilution unless we make all of our payments in cash, or the notes are paid
        in
        full. Depending on the market price of our common stock at the time of the
        conversion of these loans, any issuance of common stock at then-below-market
        prices may cause a decrease in the market price of our common stock.
 
 **We
        have a history of converting certain portions of our outstanding notes payable
        and other debts to common stock causing dilution to our
        stockholders.**
 
 In
        the
        past, we have converted certain notes payable, accounts payable and other
        liabilities to equity by issuing shares of our common stock. Currently, our
        board of directors has authorized us to allow the conversion of certain notes
        and other debts outstanding to equity and be paid in our common stock at
        prices
        up to 15% below the current trailing 10 day average closing price. As a result
        of this policy, our stockholders may experience substantial dilution should
        we
        be successful in converting these debts to equity.
  **Item
        2.**  **Changes
        in Securities**
 
 During
        the period from July through October 2006, the Company issued 234,166 shares
        of
        common stock to two unaffiliated institutional investors in payment of
        convertible notes and accrued interest totaling $352,341, which equals $1.50
        per
        share.
 
 During
        the period from July through October 2006, the Company issued 265,000 shares
        of
        common stock pursuant to two consulting contracts. The shares were valued
        at
        $490,250, which represents the number of shares issued multiplied by the
        value
        of the common stock ($1.85) on the date the consulting contracts were
        executed.
 
 During
        the period from July through October 2006, the Company issued 422,255 shares
        of
        common stock to six unaffiliated accredited investors upon the conversion
        of
        debt totaling $723,151, or $1.71 per share.
 
 During
        the period from July through October 2006, the Company issued 70,000 shares
        of
        common stock upon the exercise of warrants by six unaffiliated accredited
        investors at an exercise price of $1.50 per share.
 
 In
        July
        2006, 1,200 shares of Series K Preferred Stock, plus cumulative unpaid dividends
        of $64,944, were converted into 1,119,284 shares of common stock at conversion
        prices of $1.11 per share for the preferred stock and $1.70 per share for
        the
        dividends.
 
  33
  HPI
        offered and sold the securities in reliance on an exemption from federal
        registration under Section 4(2) of the Securities Act of 1933 and Rule 506
        promulgated thereunder. The Company relied on this exemption and rule based
        on
        the fact that there were a limited number of investors, all of whom were
        accredited investors and (i) either alone or through a purchaser representative,
        had knowledge and experience in financial and business matters such that
        each
        was capable of evaluating the risks of the investment, and (ii) we had obtained
        subscription agreements from such investors indicating that they were purchasing
        for investment purposes only. The securities were not registered under the
        Securities Act and may not be offered or sold in the United States absent
        registration or an applicable exemption from registration requirements. The
        disclosure contained herein does not constitute an offer to sell or a
        solicitation of an offer to buy any securities of the Company, and is made
        only
        as permitted by Rule 135c under the Securities Act.
 
 **Item
        3.**  **Defaults
        upon Senior Securities**
 
 None.
 
 **Item
        4.**  **Submission
        of Matters to a Vote of Security Holders**
 
 None.
 
 **Item
        5.**  **Other
        Information**
 
 None.
 
 **Item
        6.**  **Exhibits**
 
 Exhibits
 
 31.1
              Certification
                  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  200232.1
              Certification
                  pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002
 
  34
   
 
 
 
 **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the Registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
 
 Hydrogen
                  Power, Inc.(Registrant)Date:November
                  20, 2006
              By:/s/
                  Henry FongHenry
                  FongPresident,
                  Treasurer andChief
                  Financial Officer
 
 
 
 35