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**March
                31, 2007** ̈
            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.)**


(Exact
      Name of Registrant as Specified in its Charter)








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








**201
      ELLIOTT AVENUE, SUITE 400**


**SEATTLE,
      WASHINGTON 98119**


(Address
      of principal executive offices) (Zip code)








**(206)
      223-0506**


(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 June 13, 2007: 29,357,444





HYDROGEN
      POWER, INC.





(FORMERLY
      KNOWN AS EQUITEX, INC.)





PART
                I
            FINANCIAL
                INFORMATION
            PageItem
                1.
            Financial
                statements:Condensed
                consolidated balance sheets -
              March
                31, 2007 (unaudited) and December 31, 2006
            2
                -
                3Condensed
                consolidated statements of operations-
              three
                months ended March 31, 2007 and 2006 (unaudited)
            4Condensed
                consolidated statement of changes in stockholders' equity (deficiency)
                -
                three months ended March 31, 2007 (unaudited)
            5Condensed
                consolidated statements of cash flows -
              three
                months ended March 31, 2007 and 2006 (unaudited)
            6
                -
                7Notes
                to condensed consolidated financial statements (unaudited)
            8
                -
                19Item
                2.
            Management's
                discussion and analysis of financial condition and results of
                operations
            20
                - 24Item
                3.
            Quantitative
                and qualitative disclosures of market risk
            25Item
                4.
            Disclosure
                controls and procedures
            26PART
                II
            OTHER
                INFORMATIONItem
                1.
            Legal
                proceedings
            26Item
                1A.
            Risk
                Factors
            26Item
                2.
            Changes
                in securities and use of proceeds
            26Item
                3.
            Defaults
                upon senior securities
            26Item
                4.
            Submission
                of matters to a vote of security holders
            26Item
                5.
            Other
                information
            26Item
                6.
            Exhibits
            26Signatures
            
            27












**HYDROGEN
                  POWER, INC.****(FORMERLY
                  EQUITEX, INC.)****CONDENSED
                  CONSOLIDATED BALANCE
                  SHEETS**March
                  31,
              
              December
                  31,2007
              
              2006(unaudited)ASSETSCurrent
                  assets:Cash
                  and cash equivalents
              
              $
              2,282,067
              
              $
              3,121,436Cash
                  held in trust
              
              
              64
              
              
              457,564Prepaid
                  expenses and other
              
              
              374,617
              
              
              568,093Receivables,
                  net
              
              
              
              
              
              230,944Assets
                  of discontinued operations
              
              
              
              
              
              140,213Total
                  current assets
              
              
              2,656,748
              
              
              4,518,250Goodwill
                  (Note 1)
              
              
              6,648,381Investment
                  in equity-method investee
              
              
              1,322,074Property,
                  equipment and leaseholds, net
              
              
              64,727
              
              
              78,059Notes
                  and interest receivable, net
              
              
              
              
              
              304,575Other
                  assets
              
              
              
              
              
              29,6858,035,182
              
              
              412,319$
              10,691,930
              
              $
              4,930,569




(Continued)


2




**HYDROGEN
                  POWER, INC.****(FORMERLY
                  EQUITEX, INC.)****CONDENSED
                  CONSOLIDATED BALANCE SHEETS
                  (CONTINUED)**March
                  31,
              
              December
                  31,2007
              
              2006(unaudited)LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
                  liabilities:Accounts
                  payable, including related parties of $30,401 (2007) and $18,867
                  (2006)
              
              $
              339,965
              
              $
              246,411Current
                  portion of sub-license fee payable to related party (Note
                  5)
              
              
              942,454
              
              
              329,774Accrued
                  expenses and other liabilities, including related party accruals
                  of
                  $52,555(2007)
                  and $37,555 (2006)
              
              
              214,222
              
              
              1,232,833Notes
                  and loans payable, related parties (Note 4)
              
              
              37,500
              
              
              37,500Current
                  portion of long-term debt (Note 4)
              
              
              1,311,362
              
              
              1,577,713Liabilities
                  of discontinued operations
              
              
              
              
              
              2,670,081Derivative
                  liabilities
              
              
              
              
              
              461,521Total
                  current liabilities
              
              
              2,845,503
              
              
              6,555,833Sub-license
                  fee payable to related party, net of current portion (Note
                  5)
              
              
              
              
              
              612,680Long-term
                  debt, net of current portion (Note 4)
              
              
              
              
              
              29,581Total
                  long-term liabilities
              
              
              
              
              
              642,2612,845,503
              
              
              7,198,094Commitments
                  and contingencies (Notes 4, 5 and 6)Redeemable
                  preferred stock (Note 6):Series
                  K convertible, 6% stated value $1,000 per share; $0.01 par value;
                  3,100
                  sharesauthorized
                  ; 0 shares (2007) and 445 shares (2006) issued and outstanding,
                  net ofdiscount
                  of $278,700 (2006)
              
              
              
              
              
              166,300Stockholders'
                  equity (deficiency) (Note 7):Preferred
                  stock, Series L convertible; $0.01 par value; 300,000 shares
                  authorized,issued
                  and outstanding 100,000 (2007) and 300,000 (2006);
                  liquidationpreference
                  $1,000 (2007) and $3,000 (2006)
              
              
              1,000
              
              
              3,000Common
                  stock, $0.01 par value; 50,000,000 shares authorized; 29,363,002
                  shares(2007)
                  and 16,262,571 shares (2006) issued; 29,357,444 shares (2007)
                  and14,710,976
                  shares (2006) outstanding
              
              
              293,631
              
              
              162,626Additional
                  paid-in capital
              
              
              79,329,461
              
              
              59,738,043Common
                  treasury stock at cost; 5,558 shares (2007) and 1,551,595 shares
                  (2006)
              
              
              (114,037
              )
              
              (6,915,241
              )Note
                  receivable
              
              
              
              
              
              (454,966
              )Accumulated
                  deficit
              
              
              (71,663,628
              )
              
              (54,967,287
              )Total
                  stockholders' equity (deficiency)
              
              
              7,846,427
              
              
              (2,433,825
              )$
              10,691,930
              
              $
              4,930,569




See
      notes
      to condensed consolidated financial statements.


3




**HYDROGEN
                  POWER, INC.****(FORMERLY
                  EQUITEX, INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF
                  OPERATIONS****THREE
                  MONTHS ENDED MARCH 31, 2007 AND 2006
                  (UNAUDITED)**2007
              
              2006Cost
                  incurred related to acquired technology, trade name and sub-license
                  agreement(Note
                  1)
              
              $
              12,779,926
              
              $Corporate
                  selling, general and administrative
              
              
              732,223
              
              
              841,924Research
                  and development costs
              
              
              230,30513,742,454
              
              
              841,924Other
                  income (expense):Interest
                  income
              
              
              45,077
              
              
              8,353Interest
                  expense, including related party interest of $15,000 (2007) and
                  $7,390
                  (2006)
              
              
              (94,786
              )
              
              (414,815
              )Loss
                  on disposal of subsidiaries
              
              
              (2,516,157
              )Equity
                  in loss of equity-method investee
              
              
              (388,021
              )(2,953,887
              )
              
              (406,462
              )Loss
                  from continuing operations before income taxes
              
              
              (16,696,341
              )
              
              (1,248,386
              )Income
                  tax expense (Note 8)
              
              
              
              
              
              (313,000
              )Loss
                  from continuing operations
              
              
              (16,696,341
              )
              
              (1,561,386
              )Income
                  from discontinued operations, net of income taxes (Note 3)
              
              
              
              
              
              1,519,193Net
                  loss
              
              
              (16,696,341
              )
              
              (42,193
              )Accretion
                  of preferred stock (Note 6)
              
              
              (278,700
              )
              
              (687,500
              )Deemed
                  preferred stock dividends (Note 6)
              
              
              
              
              
              (37,800
              )Net
                  loss applicable to common stockholders
              
              $
              (16,975,041
              )
              $
              (767,493
              )Basic
                  and diluted net loss per common share:Loss
                  from continuing operations
              
              $
              (0.59
              )
              $
              (0.25
              )Income
                  from discontinued operations
              
              
              -
              
              
              0.17Basic
                  and diluted net loss per share
              
              $
              (0.59
              )
              $
              (0.08
              )Weighted
                  average number of common shares outstanding:Basic
                  and diluted
              
              
              28,852,937
              
              
              9,017,417




See
      notes to condensed consolidated financial
      statements.


4




**HYDROGEN
                  POWER,
                  INC.****(FORMERLY
                  EQUITEX,
                  INC.)****CONDENSED
                  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  (DEFICIENCY)****THREE
                  MONTHS ENDED MARCH 31, 2007
                  (UNAUDITED)**Preferred
                  stock, Series L
              
              Common
                  stock
              
              Additionalpaid-in
              
              Commontreasury
              
              Note
              
              Accumulated
              
              Totalstockholders'equityShares
              
              Amount
              
              Shares
              
              Amount
              
              capital
              
              stock
              
              receivable
              
              deficit
              
              (deficiency)Balances,
                  January 1, 2007
              
              
              300,000
              
              $
              3,000
              
              
              16,262,571
              
              $
              162,626
              
              $
              59,738,043
              
              $
              (6,915,241
              )
              $
              (454,966
              )
              $
              (54,967,287
              )
              $
              (2,433,825
              )Issuance
                  of common stock and options to shareholdersof
                  Old HPI in conversion of Series L-1 and L-2Preferred
                  Stock
              
              
              (200,000
              )
              
              (2,000
              )
              
              12,594,622
              
              
              125,946
              
              
              19,304,361
              
              
              
              
              
              
              
              
              
              
              
              19,428,307Issuance
                  of common stock in satisfaction of notes payable,long-term
                  debt and accrued interest
              
              
              
              
              
              
              
              
              22,556
              
              
              226
              
              
              26,390
              
              
              
              
              
              
              
              
              
              
              
              26,616Modification
                  of warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              99,200
              
              
              
              
              
              
              
              
              
              
              
              99,200Conversion
                  of Series K preferred stock and unpaid dividendsto
                  common stock
              
              
              
              
              
              
              
              
              483,253
              
              
              4,833
              
              
              440,167
              
              
              
              
              
              
              
              
              
              
              
              445,000Accretion
                  of Series K preferred stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (278,700
              )
              
              
              
              
              
              
              
              
              
              
              (278,700
              )Disposition
                  of subsidiary common stock ownership to FFFC
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,801,204
              
              
              454,966
              
              
              
              
              
              7,256,170Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (16,696,341
              )
              
              (16,696,341
              )Balances,
                  March 31, 2007
              
              
              100,000
              
              $
              1,000
              
              
              29,363,002
              
              $
              293,631
              
              $
              79,329,461
              
              $
              (114,037
              )
              $
              -
              
              $
              (71,663,628
              )
              $
              7,846,427




See
      notes to condensed consolidated financial
      statements.


5




**HYDROGEN
                  POWER, INC.****(FORMERLY
                  EQUITEX, INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH
                  FLOWS****THREE
                  MONTHS ENDED MARCH 31, 2007 AND 2006
                  (UNAUDITED)**2007
              
              2006Cash
                  flows from operating activities:Net
                  loss
              
              $
              (16,696,341
              )
              $
              (42,193
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Expense
                  incurred related to acquired technology, trade name and sub-license
                  agreement
              
              
              12,779,926Provision
                  for losses on notes, stock subscription and interest receivables,
                  including baddebt
                  expense
              
              
              
              
              
              75,000Gain
                  on sale of assets
              
              
              
              
              
              (4,145,835
              )Loss
                  on disposal of subsidiaries (Note 1)
              
              
              2,516,157Equity
                  in loss of equity-method investee
              
              
              388,021Depreciation
                  and amortization
              
              
              36,406
              
              
              514,510Amortization
                  of discounts related to warrants attached to notes payable
              
              
              31,614
              
              
              229,699Stock
                  based compensation expense
              
              
              
              
              
              16,800Expense
                  incurred upon issuance or modification of stock and
                  warrants
              
              
              99,200
              
              
              778,754Deferred
                  income taxes
              
              
              
              
              
              1,333,000Non-cash
                  compensation expense
              
              
              150,000Changes
                  in assets and liabilities, net of the effects of
                  acquisition:Decrease
                  in accounts receivable
              
              
              512
              
              
              110,177Decrease
                  (increase) in other receivables
              
              
              28,462
              
              
              (13,504
              )Increase
                  in interest receivable and other assets
              
              
              (27,276
              )
              
              (29,165
              )Decrease
                  in accounts payable and accrued liabilities
              
              
              (270,242
              )
              
              (743,445
              )Total
                  adjustments
              
              
              15,732,780
              
              
              (1,874,009
              )Net
                  cash used in operating activities
              
              
              (963,561
              )
              
              (1,916,202
              )Cash
                  flows from investing activites:Proceeds
                  received from asset sale, net of costs
              
              
              
              
              
              12,642,784Cash
                  and cash equivalents acquired in business acquisition (Note
                  1)
              
              
              
              
              
              2,203,121Cash
                  and cash equivalents disposed of pursuant to redemption agreement
                  (Note
                  1)
              
              
              (55,553
              )Purchases
                  of property, equipment and leaseholds
              
              
              (4,808
              )
              
              (5,000
              )Repayments
                  of notes receivable, other
              
              
              
              
              
              25,461Net
                  cash (used in) provided by investing activities
              
              
              (60,361
              )
              
              14,866,366Cash
                  flows from financing activities:Decrease
                  in checks issued in excess of cash in bank
              
              
              
              
              
              (1,086,904
              )Issuances
                  of notes payable, related parties and other
              
              
              
              
              
              565,000Repayments
                  of notes payable, related parties and other
              
              
              (272,947
              )
              
              (8,347,595
              )Net
                  cash used in financing activities
              
              
              (272,947
              )
              
              (8,869,499
              )




(Continued)


6


**HYDROGEN
                  POWER, INC.****(FORMERLY
                  EQUITEX, INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (CONTINUED)****THREE
                  MONTHS ENDED MARCH 31, 2007 AND 2006
                  (UNAUDITED)**2007
              
              2006Increase
                  (decrease) in cash and cash equivalents
              
              
              (1,296,869
              )
              
              4,080,665Cash
                  and cash equivalents, beginning of year
              
              
              3,579,000
              
              
              8,406,794Cash
                  and cash equivalents, end of year
              
              $
              2,282,131
              
              $
              12,487,459Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              21,514
              
              $
              743,184Cash
                  paid for income taxes
              
              $
              -
              
              $
              -Non-cash
                  investing and financing activities:Issuance
                  of common stock in satisfaction of note payable, long-term debt
                  and
                  accrued interest
              
              $
              26,616
              
              $
              979,963Conversion
                  of Series K preferred stock to common stock
              
              $
              445,000
              
              $
              200,000Issuance
                  of common stock to subsidiary in satisfaction of amounts
                  owed
              
              
              
              
              $
              6,144,000Issuance
                  of common stock in satisfaction of subsidiary liability
              
              
              
              
              $
              380,862




See
      notes to condensed consolidated financial
      statements.


7
 **HYDROGEN
              POWER, INC.**
 
 **(FORMERLY
              KNOWN AS EQUITEX, INC.)**
 
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
              MONTHS ENDED MARCH 31, 2007 AND 2006
              (UNAUDITED)**




**1.**  **Organization
      and basis of presentation and management’s plans:**





**Organization
      and basis of presentation:**





Hydrogen
      Power, Inc. (formerly Equitex, Inc.), (the “Company”), a Delaware corporation,
      was formed in 1983 as a business development company (“BDC”). In April 1998, the
      Company’s stockholders authorized a change in the nature of its business and
      withdrew its election as a BDC, which became effective in January 1999. On
      February 28, 2006, the Company’s (then known as “Equitex, Inc.”) shareholders
      authorized the acquisition (the “Acquisition”) of Hydrogen Power, Inc. (“Old
      HPI”). Effective March 14, 2006, pursuant to an Agreement and Plan of Merger and
      Reorganization as amended (the “Merger Agreement”) and through a series of other
      transactions whereby the result was Old 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. Old HPI, a
      Seattle based company, performs hydrogen-related testing, research and
      engineering, and has developed a patented system ( **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 Hydrogen Now process can supply hydrogen at customized rates
      and pressures, and may provide safe, cost-effective and stand-alone hydrogen
      solutions for small scale portable and stationary applications.





Old
      HPI
      in 2004 entered into a sub-license agreement with Global Hydrofuel Technologies,
      Inc. (“GHTI”), its former parent company and a shareholder of the Company, which
      gave Old 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 gave Old 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 between its parent and UBC 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.





Old
      HPI
      has not generated any significant revenues since its formation in December
      2003.





Prior
      to
      the acquisition of Old HPI, the Company was a holding company, and through
      January 31, 2006, operated primarily through its majority-owned subsidiary
      FastFunds Financial Corporation (“FFFC”). As of March 31, 2007, the Company
      owned approximately 48% 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”).





**Basis
      of presentation:**





The
      condensed consolidated interim financial statements of the Company as of March
      31, 2007, and for the three months ended March 31, 2007 and 2006, 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 March 31, 2007, and for the periods ended March 31, 2007 and
      2006,
      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-K annual report filed with the Securities and Exchange
      Commission (“SEC”) on May 18, 2007. The results of operations for the three
      months ended March 31, 2007, are not necessarily indicative of the results
      to be
      expected for the full year.





8
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**1.**  **Organization
      and basis of presentation and management’s plans
      (continued):**





**Basis
      of presentation (continued):**





The
      interim condensed consolidated financial statements presented herein include
      the
      financial statements of the Company as of and for the three months ended March
      31, 2007. For the three months ended March 31, 2006, the financial statements
      included herein are of the Company and also include Old HPI effective March
      14,
      2006 (the date of the acquisition). As a result of the Redemption Agreement
      (defined and described below), the operating results of FFFC and its
      wholly-owned subsidiaries, Key Financial Systems, Inc. (“Key”), Nova Financial
      Systems, Inc. (“Nova”) and its majority-owned subsidiary, Denaris Corporation
      (“Denaris”) are not consolidated as of March 31, 2007 and for the period ending
      March 31, 2006 have been retroactively restated and are included in income
      from
      discontinued operations on the consolidated statement of operations. As of March
      31, 2007, the Company is accounting for its 48% ownership of FFFC on the equity
      method as a one-line presentation on the balance sheet (investment in
      equity-method investee) and on the consolidated statement of operations (equity
      in loss of equity-method investee). All significant intercompany accounts and
      transactions have been eliminated in consolidation.





***Return
      of subsidiary common stock:***





On
      January 2, 2007, pursuant to the terms of a Redemption, Stock Sale and Release
      Agreement (the “Redemption Agreement””) by and between the Company and FFFC,
      FFFC (i) redeemed 8,917,344 shares of its common stock held by the Company,
      (ii)
      acquired from the Company 5,000,000 shares of common stock of Denaris, (iii)
      acquired from the Company 1,000 shares of common stock of Key, and (iv) acquired
      from the Company 1,000 shares of common stock of Nova. Denaris was a majority
      owned subsidiary of the Company, and Key and Nova were wholly owned subsidiaries
      of the Company. Each of Denaris, Nova and Key are inactive entities with no
      operating or intellectual property assets. The shares of common stock of each
      entity transferred by the Company pursuant to the Redemption Agreement
      constituted all of the Company’s holdings in each entity. In consideration of
      the redemption and acquisition of the shares of Denaris, Key and Nova, FFFC
      released the Company from all outstanding payment obligations of the Company
      to
      FFFC, including obligations for a $5 million note dated March 14, 2006 in favor
      of FFFC. The outstanding balance on the note, including principal and interest
      accrued, as of the date of the Redemption Agreement was $5,402,398. The Company
      recognized a loss of $2,516,157 on the Redemption Agreement due to losses of
      FFFC based on the Company's ownership percentages being applied to reducing
      the
      Company’s investment account.





Subsequent
      to FFFC redeeming its shares of common stock pursuant to the Redemption
      Agreement, the Company owned 3,500,000 shares of common stock of FFFC. As of
      March 31, 2007, this represents approximately 48% of the outstanding common
      stock of FFFC. So long as the Company holds 10% or more of the outstanding
      equity or voting interest in FFFC, it has agreed to vote its shares of capital
      stock of FFFC in the same manner and proportion as other stockholders of FFFC
      vote their shares (the “Voting Arrangement”). Due to the ownership percentage
      being below 50% and pursuant to the terms of the Voting Arrangement in the
      Redemption Agreement, management of the Company has determined that they do
      not
      have any significant control of FFFC. Accordingly, the Company is no longer
      consolidating FFFC and its subsidiaries (Key, Nova and Denaris) in its financial
      statements, and is now accounting for its 48% ownership of FFFC on the equity
      method as described above in basis of presentation.





The
      summarized financial results of FFFC and its subsidiaries for the three months
      ended March 31, 2007 were as follows:





Revenues,
                net
            $
                23,560Gross
                margin
            1,132Net
                loss
            745,623





***Acquisition
      of Old HPI:***





Pursuant
      to the Merger Agreement the Company, in March 2006, acquired 100% of Old HPI.
      The initial consideration consisted of 3,038,990 shares of the Company's common
      stock, 132,122 shares of our common stock reserved for the exercise of options
      to purchase 1,550,000 shares of Old HPI common stock and warrants issued to
      purchase up to 1,600,000 shares of the Company’s common stock, the initial terms
      of which


9
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**1.**  **Organization
      and basis of presentation and management’s plans
      (continued):**





**Basis
      of presentation (continued):**





***Acquisition
      of Old HPI (continued):***





included
      an exercise price of $3.00 and an expiration date of February 2007. The total
      value of the initial consideration was $16,729,864 and the total initially
      allocated to identifiable intangible assets was $19,316,074. In February 2007,
      the Company modified the terms of the warrants by reducing the exercise price
      to
      $2.00 and extending the expiration date to August 2007. As a result of these
      modifications, the Company recognized an additional expense of $99,200 based
      upon the Black-Scholes option pricing model and such expense is included in
      corporate selling, general and administrative expense in the consolidated
      statement of operations for the three months ending March 31, 2007.





The
      Company also issued to the stockholders of Old HPI 300,000 shares of its Series
      L Preferred Stock (the “Preferred Stock”). The Preferred Stock, issued in three
      equal amounts (referred to as the L-1, L-2 and L-3 Preferred Stock,
      respectively), whereby each amount is convertible into 40% of the Company’s
      common stock on the 180 th ,
      270 th and
      360 th day
      following closing of the merger, respectively. The conversion of the Preferred
      Stock is subject to the achievement by Old 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 Board of Directors of the
      Company in its sole discretion. The benchmarks include HPI’s use of its hydrogen
      technology to develop prototype generators for various micro and portable power
      applications and for various macro power applications such as fuel cells and
      internal combustion engines (the “Benchmarks”). Based on the achievement of the
      benchmarks, on January 3, 2007, the Company issued, upon the conversion of
      the
      L-1 and L-2 preferred stock, an aggregate of 12,594,622 shares of the its common
      stock, and an additional 711,431 shares of its common stock have been reserved
      for issuance upon the exercise of Old HPI outstanding options. The Company
      has
      valued the 12,594,622 shares (the “Additional Shares”) of its common stock at
      $18,640,041 (based on the market price of the common stock on the date the
      Company issued the shares). The value of the 711,431 shares of common stock
      reserved for issuance upon the exercise of Old HPI options was $788,266 based
      on
      the Black Scholes option pricing model. Accordingly, $19,428,307 has been added
      to the purchase price allocation during the three months ending March 31, 2007.
      Immediately following the conversion of the Series L-1 and L-2 Preferred Stock
      into common stock on January 3, 2007, the former shareholders of Old HPI held
      an
      aggregate of 15,633,612 shares of the Company’s common stock, constituting
      approximately 54.1% of the Company’s outstanding stock. The former majority
      shareholder of Old HPI, GHTI, holds approximately 49.3% of the Company’s
      outstanding common stock. Additionally, former optionholders of Old HPI hold
      options to purchase an aggregate of 843,553 shares of the Company’s common
      stock.





Coinciding
      with the issuance of the Series L-1 and L-2 Preferred Stock, on January 2,
      2007,
      the Company appointed four new directors to the Company and the prior directors
      of the Company contemporaneously resigned their positions.





During
      the three months ended March 31, 2007, based on the additional consideration
      of
      $19,428,307 the Company recorded an expense of $12,779,926 and goodwill of
      $6,648,381. The goodwill recorded is a result of the total amount to be
      allocated of $38,744,381 exceeding the identifiable intangible assets acquired
      of $32,096,000 (as determined in a valuation report by an independent third
      party). The following table represents the purchase price allocation as of
      March
      31, 2007:





Cash
                and cash equivalents
            
            $
                2,203,121Interest
                receivable
            
            38,339Prepaid
                expenses
            
            85,681Vehicle
            
            14,906Technology
                and sub-license agreement
            
            28,894,926Trade
                name
            
            3,201,074Goodwill
            
            6,648,381Accounts
                payable and accrued expenses
            
            (197,190)





10
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**1.**  **Organization
      and basis of presentation and management’s plans
      (continued):**





**Basis
      of presentation (continued):**





***Acquisition
      of Old HPI (continued):***





Note
                payable
            
            (3,000,000)License
                fee payable
            
            (1,731,067)$36,158,171





In
      conjunction with the issuance of the Additional Shares of its common stock
      and
      change in control described above, the new management of the Company, in
      completing an updated analysis of the underlying assumptions and calculations
      used in the above allocation, determined that the additional costs of
      $12,779,926 related to the acquired technology, trade name and sub-license
      agreement should be expensed in the first quarter of 2007. Management’s analysis
      included the determination that the most viable potential market applications
      for the licensed technology are a different subset than those originally being
      pursued by Old HPI, and accordingly, the additional costs related to the
      acquired technology and potential applications thereon have been expensed in
      the
      first quarter of 2007.





Based
      on
      the terms and conditions of the Benchmarks in the Certificate of Designation
      of
      the Series L Preferred Stock, the conversion of the Series L-3 did not occur
      and
      would not be convertible unless extended or amended by the Company, which
      requires the approval of the majority shareholder (‘the “Majority Holder”).
      Management believes that the eventual conversion of Series L-3 may occur under
      the original terms (40% of the Company’s common stock outstanding) or other
      terms which would be satisfactory to the Company and the Majority Holder. If
      the
      Series L-3 is converted to common stock and additional shares of common stock
      are reserved for issuance upon the exercise of Old HPI options, the purchase
      price of Old HPI and goodwill will increase by the aggregate market value of
      the
      common stock issued and the Black-Scholes option pricing model on the common
      stock reserved, respectively.





**Pro
      forma information:**





The
      following pro forma information has been prepared assuming the Acquisition
      of
      Old HPI had taken place at the beginning of each of the periods presented.
      The
      pro forma information includes the full period results of the Company and Old
      HPI and assumes that total costs of $32.1 million related to acquiring its
      technology, trade name and sub-license agreement are expensed in each of the
      periods presented.





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.





March
                31,
            
            March
                31,2007
            
            2006Revenues
            
            $
            -
            
            $
            -Net
                loss from continuing operations before other expense and income
                taxes
            
            
            (33,058,000
            )
            
            (33,255,000
            )Net
                loss
            
            
            (36,012,000
            )
            
            (32,463,000
            )Net
                loss applicable to common stockholders
            
            
            (36,291,000
            )
            
            (33,188,000
            )Basic
                and diluted loss per common share
            
            
            (1.24
            )
            
            (1.41
            )Weighted
                average shares used in loss per share calculation
            
            
            29,255,579
            
            
            23,518,957





11
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**1.**  **Organization
      and basis of presentation and management’s plans
      (continued):**





**Going
      concern and management’s plans:**





In
      the
      Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
      2006, the Report of the Independent Registered Public Accounting Firm included
      an explanatory paragraph that described substantial doubt about the Company’s
      ability to continue as a going concern. The Company’s interim financial
      statements for the three months ended March 31, 2007 have been prepared on
      a
      going concern basis, which contemplates the realization of assets and the
      settlement of liabilities and commitments in the normal course of business.
      The
      Company incurred a net loss of approximately $16.7 million for the three months
      ended March 31, 2007, and incurred previous significant losses of $27,238,803
      and $8,842,237 for the years ended December 31, 2006 and 2005, respectively.
      Additionally, the Company has used cash in operations of approximately $964,000
      for the three months ended March 31, 2007 and, $5,799,000 for the year ended
      December 31, 2006. Although the net losses included certain non-cash expenses
      for the three months ended March 31, 2007 of approximately $16,001,000 and
      $21,000,000 for the year ended December 31, 2006, the Company also incurred
      research and development costs related to expenses in continuing to develop
      a
      commercial application of its licensed technology and in the design and
      engineering of prototypes in addition to corporate, selling, general and
      administrative expenses. Additionally, at March 31, 2007, the Company has a
      working capital deficit of approximately $189,000 and an accumulated deficit
      of
      approximately $71.7 million. Based on the losses that were being incurred at
      FFFC, it was becoming increasingly difficult to continue to fund its operations.
      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 difficulty in attracting and
      retaining experienced employees, the Company decided to complete the Asset
      Sale.
      Presently, the Company has no revenues and limited resources.





These
      factors raise substantial doubt about the Company’s ability to continue as a
      going concern. There can be no assurance that the Company will have adequate
      resources to fund future operations, if any, or that funds will be available
      to
      the Company when needed, or if available, will be available on favorable terms
      or in amounts required by the Company. The consolidated financial statements
      do
      not include any adjustments relating to the recoverability and classification
      of
      assets or the amounts and classification of liabilities that might be necessary
      should the Company be unable to continue as a going concern.





The
      Company’s objective is to continue to develop and eventually market its licensed
      proprietary hydrogen production process for use in commercial applications
      the
      require hydrogen, but where hydrogen storage and/or distribution is too costly
      or not feasible. Our management believes based on their product and market
      review that our hydrogen production process may be a commercially viable
      process. The Company plans on continuing its testing and evaluation of the
      commercial application of the licensed technology and the design and engineering
      of prototypes.





The
      Company will need additional funds to continue the aforementioned work as well
      as to meet its existing obligations as they become due. Sources of cash that
      may
      be available to the Company include the sale of equity securities through
      private placements of our common stock and/or preferred stock, as well as the
      exercise of stock options and/or warrants, all of which may cause dilution
      to
      our shareholders. We may also be able to borrow funds from related and/or third
      parties. Currently, the Company does not have a revolving loan agreement with
      any financial institution, nor can the Company provide any assurance it will
      be
      able to enter into any such agreement in the future, or be able to raise funds
      through further issuance of debt or equity in the Company.





**2.**  **Summary
      of significant accounting policies:**





**Goodwill:**





Goodwill
      represents the excess of the purchase price over the estimated fair value of
      the
      net identified tangible and intangible assets of the acquired business. In
      accordance with Statement of Financial Accounting Standards (“FAS”)
      No. 142, *Goodwill
      and Other Intangible Assets,* the
      Company tests goodwill for impairment on an annual basis, or if indicators
      of
      potential impairment exist, using a fair-value based approach. The Company
      currently has one operating segment and reporting unit. As such, the Company
      evaluates


12
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**2.**  **Summary
      of significant accounting policies (continued):**





**Goodwill
      (continued):**





impairment
      based on certain external factors, such as its market capitalization. No
      impairment of goodwill has been identified during any of the periods presented.





**Reclassifications:**





In
      addition to retroactively restating FFFC, Nova and Denaris as discontinued
      operations, certain minor reclassifications of amounts reported in the 2006
      consolidated financial statements have been made to conform to the 2007
      presentation.





**Recently
      issued accounting pronouncements:**





The
      Company adopted the provisions of Financial Standards Accounting Board
      Interpretation No. 48 (“FIN 48”), *“Accounting
      for Uncertainty in Income Taxes” - an Interpretation of FASB Statement No. 109
      (“FIN 48”)* on
      January 1, 2007. There were no unrecognized tax benefits and there was no effect
      on the Company’s financial condition or results of operations as a result of
      implementing FIN 48. The Company files income tax returns in the U.S. federal
      jurisdiction and various state and jurisdictions. The Company is no longer
      subject to U.S. federal tax examinations for years before 1995, and state tax
      examinations for years before 1995. Management does not believe there will
      be
      any material changes in our unrecognized tax positions over the next 12 months.
      The Company’s policy is to recognize interest and penalties accrued on any
      unrecognized tax benefits as a component of income tax expense. As of the date
      of adoption of FIN 48, there was no accrued interest or penalties associated
      with any unrecognized tax benefits, nor was any interest expense recognized
      during the quarter.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, The Fair Value Option for Financial Assets and Financial Liabilities,
      (“FAS
      159”). FAS 159 permits entities to choose to measure many financial instruments
      and certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. FAS159 is effective
      for financial statements issued for fiscal years beginning after November 15,
      2007. The Company has not yet determined the impact of adopting FAS 159 on
      the
      Company’s financial position.





**3.**  **Discontinued
      operations:**





Income
      from discontinued operations for the three months ended March 31, 2006 of FFFC,
      Key, Nova and Denaris were as follows:





Revenues
            
            $
            2,048,245Operating
                expenses
            
            
            3,218,150Loss
                from operations
            
            
            (1,169,905
            )Gain
                on sale of assets
            
            
            4,145,835Other
                expenses
            
            
            (428,737
            )Income
                before income taxes
            
            
            2,547,193Income
                tax expense
            
            
            1,028,000Net
                income
            
            $
            1,519,193





**4.**  **Convertible
      and other promissory notes and long-term debt:**





Convertible
      and other promissory notes and long-term debt at March 31, 2007 and December
      31,
      2006, consist of the following:





13
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**4.**  **Convertible
      and other promissory notes and long-term debt (continued):**





March
                31,
            
            December
                31,2007
            
            2006Notes
                payable to individual investors (due February 2008)
            
            
            
            
            $
            2,108,000Note
                payable to a former director (due March 31, 2007; in
                default)
            
            $
            37,500
            
            
            37,500Convertible
                promissory notes; interest at 10% per annum; collateralized by all
                assets
                of Chex and the Company’s stock ownership in FFFC; due December 2007; net
                of discount of $84,307 (2007) and $115,921 (2006)**[A]**
            
            
            1,311,362
            
            
            1,577,713Convertible
                debentures; due in full December 2009; unsecured; net of discount
                of
                $20,419 (2006)
            
            
            
            
            
            29,5811,348,862
            
            
            3,752,794Less
                amounts included in liabilities of discontinued operations
                (2006)
            
            
            
            
            
            (2,108,000
            )Less
                current maturities
            
            
            (1,348,862
            )
            
            (1,615,213
            )Long-term
                debt, net of current portion
            
            $
            -
            
            $
            29,581





**[A]**  In
      March
      2004, the Company 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 the Company and are collateralized by
      all
      assets of Chex as defined in the security agreement. The Notes require the
      Company to maintain cash balances of 140% of the outstanding principal
      balance.





In
      contemplation of the Redemption Agreement (Note 1), on December 29, 2006, the
      Company obtained the consent of the Lenders to complete the transactions
      contemplated by the Redemption Agreement. Contemporaneously with receipt of
      the
      consent, the Company entered into a Note and Security Amendment Agreement (the
      “Amended Note”) dated December 29, 2006 with the Lenders, pursuant to which the
      Company agreed to amend certain terms of the Notes, including increasing the
      interest rate applicable to the Notes from 7% per annum to 10% per annum,
      resulting in an increase to the monthly payment amount of approximately $14,300.
      Additionally, the default interest rate increased from 10% to 13%.




The
      Notes
      are convertible into common stock of the Company at $6.885 per share up to
      an
      amount equal to 4.99% of the Company's outstanding common stock. The Company
      has
      the right to make any monthly payment of principal and interest in shares of
      its
      common stock. If the Company exercises its rights, the common stock is to be
      issued based on 80% of the average bid price for the lower of the three or
      twenty days prior to the payment due date. 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. For the three months ending March 31, 2007,
      the Company issued 22,556 shares of its common stock valued at $26,616 as
      partial payment for principal and interest to the Lenders, with additional
      principal amounts paid in cash to the Lenders. However, the total paid in the
      three months ended March 31, 2007 was $109,765 less than the principal and
      interest due for the period and the principal and interest amounts due in April
      and May have not been paid. Accordingly, the Company is delinquent $407,560
      and
      is discussing a new amortization of the total remaining face value of the Notes
      of $1,395,669 with the Lenders.





14
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**4.**  **Convertible
      and other promissory notes and long-term debt (continued):**





The
      Notes
      contain certain standard anti-dilution provisions requiring the Company to
      pay
      the Lenders as collateral, the pro-rata number of shares the Lenders would
      receive in any spin-off or dividend from the Company as if the remaining
      principal balance under the Note was fully converted at $6.885 per share. The
      Lenders also received warrants to acquire up to 133,334 shares of the Company's
      common stock at an exercise price of $9.00 per share. The warrants are
      exercisable for a period of five years, and include a cashless exercise
      provision. These warrants were valued at $358,400 based upon the Black-Scholes
      option-pricing model, and therefore $358,400 of the total costs was allocated
      to
      the warrants, resulting in an imputed interest rate of 7.5%. In June 2004,
      the
      Company reduced the exercise price of these warrants to $7.65 per share. In
      August 2004, the Company reduced the exercise price of these warrants to $4.26
      per share. As a result of the additional allocation resulting from these
      reductions in exercise price, the Company allocated an additional $102,800
      to
      these warrants. The Company reduced the carrying value of the Notes by this
      amount and is amortizing the discount to interest expense over the 45-month
      term
      of the Notes. Accordingly, $31,614 has been recorded as interest expense in
      the
      consolidated statements of operations during the three months ended March 31,
      2007 and 2006, respectively. In addition, warrants to acquire up to 50,000
      shares of common stock of the Company, exercisable at $6.00 per share for a
      period of two years, were issued to an advisory firm in connection with the
      transaction. These warrants were valued at $164,700 based upon the Black-Scholes
      option-pricing model. The Company also paid cash of $320,000 for legal services
      and finders' fees in connection with the transaction. The Company recorded
      the
      value of these warrants and the cash paid as deferred loan costs and is
      amortizing these costs over the 45-month term of the Notes. Accordingly, $32,313
      is included in general and administrative expense in the consolidated statements
      of operations during the three months ended March 31, 2007 and 2006,
      respectively. At March 31, 2007 and December 31, 2006, deferred loan costs
      were
      $96,939 and $129,252, respectively.





**5.**  **Commitments
      and contingencies:**





**Sub-license
      agreement:**





As
      discussed in Note 1, Old HPI entered into a sub-license agreement (the “SL
      Agreement”) with GHTI (a related party) in 2004. The SL Agreement included
      substantially all the rights of the original underlying license agreement
      between GHTI and UBC. The SL Agreement gives the Company exclusive rights to
      use
      the Hydrogen Now technology developed by 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 SL Agreement also gives the Company
      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
      SL
      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. GHTI acquired the license with UBC under
      a
      royalty arrangement and is not currently in default under its license agreement
      with UBC.





Amounts
      owed under the SL Agreement with GHTI are non-interest bearing. The obligation
      was originally stated at its net present value of $2,615,200 using an effective
      interest rate of 6%. Remaining minimum payments required under the SL Agreement
      are due as follows:





March
                31,
            
            Total
            
            Amount
                representing interest
            
            Principal
                amount due2007
            
            $
                387,903
            
            $
                58,129
            
            $
                329,7742008
            
            666,667
            
            53,987
            
            612,680$
                1,054,570
            
            $
                112,116
            
            $
                942,454





15
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**5.**  **Commitments
      and contingencies (continued):**





**Sub-license
      agreement (continued):**





The
      March
      31, 2007 payment of principal and interest aggregating approximately $388,000
      is
      delinquent, and since all amounts owed are payable within the next twelve
      months, $942,454 of principal amount due and $52,555 of unpaid interest is
      included in current liabilities in the condensed consolidated balance sheet
      at
      March 31, 2007. Included in interest expense for the three months ended March
      31, 2007 and 2006 (from March 14, 2006, the date of the acquisition of Old
      HPI)
      in the consolidated statements of operations is $15,000 and $4,565,
      respectively, related to this obligation.





**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.





**Other
      transactions with officers and directors:**





In
      February 2006, the Company entered into an agreement with KN Consulting, a
      company owned by John Martin, a director (effective January 2007 director of
      the
      Company, director of Old HPI for 2006 through September), to purchase technical
      and management advisement on engineering programs and prototype development.
      The
      agreement is on a month-to-month basis and $12,000 is included in research
      and
      development costs in the consolidated statements of operations for the three
      months ending March 31, 2007 and $7,500 for the three months ended March 31,
      2006 (from March 14, 2006, the date of the Acquisition of Old HPI)
      .





On
      December 29, 2006, the Company entered into a consulting agreement (the
“Consulting Agreement”) with HF Services, LLC (“HF Services”). HF Services is
      owned by Henry Fong, who at the time of the Consulting Agreement was entered
      into, was a director of the Company. Pursuant to the Consulting Agreement,
      HF
      Services will assist the Company in securities matter and compliance with
      applicable securities rules and regulations. The Consulting Agreement has a
      one-year term and provides for a $20,000 per month fee. Accordingly, $60,000
      is
      included in selling, general and administrative expense for the thee months
      ended March 31, 2007 in the consolidated statement of operations.





**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 (Note 12). 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
      $164,500 for the three months ended March 31, 2006. In January 2007, based
      on
      the conversion of the remaining 455 shares of Series K, the Company accreted
      $278,700, with an offset to additional paid-in capital. In January 2007 the
      remaining 445 shares of Series K Preferred Stock,


16
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**6.**  **Redeemable
      preferred stock (continued):**





**Series
      K convertible preferred stock (continued):**





plus
      the
      unpaid dividends, were converted to an aggregate of 483,253 shares of common
      stock of the Company, at a conversion price of $0.97 for the 445 shares of
      Series K Preferred Stock and cumulative unpaid dividends of $36,490 (accrued
      at
      December 31, 2006) were converted at $1.49 per share.





**7.**  **Stockholders’
      equity (deficiency):**





**Options:**





A
      summary
      of the status of stock options outstanding and exercisable and weighted average
      exercise prices at March 31, 2007 and December 31, 2006 are as
      follows:





2003
                Plan
            2005
                Plan
            TotalWeighted
            
            Weighted
            
            Weightedaverage
            
            average
            
            averageexercise
            
            exercise
            
            exerciseShares
            price
            Shares
            price
            Shares(1)
            priceDecember
                31, 2006 and March 31, 2007
            484,966
            $
                5.23
            447,500
            $
                1.64
            932,466
            $
                3.51





All
      options outstanding at March 31, 2007 are exercisable and expire from May 2008
      through September 2011.





The
      exercise prices of all options outstanding at March 31, 2007 were in excess
      of
      the market price of the Company’s common stock at that date and thus there is no
      intrinsic value.





The
      following table sets forth the exercise price range, number of shares, weighted
      average exercise price and remaining contractual lives by groups of options
      as
      of March 31, 2007.





Number
            
            Weighted
            
            WeightedExercise
            of
                options
            
            Average
            
            averageprice
                range
            Outstanding
            
            exercise
                price
            
            remaining
                life$1.60
                - $2.00
            447,500
            
            $1.64
            
            4.48$4.08
                - $6.18
            484,966
            
            $5.23
            
            1.95932,466
            
            $3.51
            
            3.16





**Warrants:**





A
      summary
      of the status of common stock warrant transactions for the three months ended
      March 31, 2007 are as follows:





WeightedaverageShares
            
            exercise
                priceOutstanding
                at January 1, 2007
            2,982,775
            
            $3.14GrantedExercisedExpired
            (2,500)
            
            (27.30)Outstanding
                at March 31, 2007
            2,980,275
            
            $2.59





17
 **HYDROGEN
            POWER, INC.**
 
 **(FORMERLY
            KNOWN AS EQUITEX, INC.)**
 
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THREE
            MONTHS ENDED MARCH 31, 2007 AND 2006
            (UNAUDITED)**




**7.**  **Stockholders’
      equity (deficiency) (continued):**





**Warrants
      (continued):**





The
      following table sets forth the exercise price range, number of shares, weighted
      average exercise price and remaining contractual lives by groups of warrants
      as
      of March 31, 2007.





Number
            
            Weighted
            
            WeightedExercise
            of
                warrants
            
            average
            
            averageprice
                range
            outstanding
            
            exercise
                price
            
            remaining
                life$1.50
                - $3.00
            2,407,938
            
            $1.99
            
            1.18$3.01
                - $4.50
            136,666
            
            $4.13
            
            0.88$5.00
                - $6.00
            435,671
            
            $5.41
            
            1.062,980,275
            
            $2.59
            
            1.18





**8.**  **Income
      taxes:**





Income
      tax expense for the three months ended March 31, 2006 was $313,000. This amount
      is primarily related to income taxes as a result of the Asset Sale in January
      2006. In addition, the Company has not recognized a tax benefit related to
      the
      net operating losses generated during the three months ended March 31, 2007,
      as
      realization of the deferred tax asset is not considered more likely than not
      and
      therefore an allowance has been applied against this amount.





18




**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 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. (formerly Equitex, Inc.) (the “Company”) through January 31, 2006,
      operated primarily through its then majority-owned subsidiary FastFunds
      Financial Corporation (“FFFC”). As disclosed in the December 31, 2006 Form 10-K,
      the Company and FFFC also have several other non-operating wholly-owned
      subsidiaries. As of March 31, 2007, the Company owns approximately 48% 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 2006 operations
      of
      FFFC are presented as discontinued operations, and as of December 31, 2006,
      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. (“Old HPI”). This
      acquisition, which the Company accounted for as a purchase, is described
      below.





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, 2006, 2005 and
      2004. The
      financial results presented for the three months ended March 31, 2007 are those
      of the Company. The financial results for the three months ended March 31,
      2006
      are those of the Company and since March 14, 2006, Old HPI. Pursuant to the
      terms of a Redemption, Stock Sale and Release Agreement (the “Redemption
      Agreement”), FFFC, Denaris, Key and Nova’s results for 2006 are presented in a
      one-line presentation and are included in the results in “income from
      discontinued operations”.





BUSINESS
      ACQUISITION :





*Acquisition
      of Old HPI*





Pursuant
      to an Agreement and Plan of Merger and Reorganization, as amended, (the “Merger
      Agreement”) the Company, in March 2006, acquired 100% of Old HPI. The initial
      consideration consisted of 3,038,990 shares of our common stock, 132,122 shares
      of our common stock reserved for the exercise of options to purchase 1,550,000
      shares of Old HPI common stock and warrants issued to purchase up to 1,600,000
      shares of our common stock, the initial terms of which included an exercise
      price of $3.00 and an expiration date of February 2007. The total value of
      the
      initial consideration was $16,729,864 and the total initially allocated to
      identifiable intangible assets was $19,316,074. In February 2007, the Company
      modified the terms of the warrants by reducing the exercise price to $2.00
      and
      extending the expiration date to August 2007. As a result of these
      modifications, the Company recognized


19


an
      additional expense of $99,200 based upon the Black-Scholes option pricing model
      and such expense is included in selling, general and administrative expense
      in
      the consolidated statement of operations for the three months ending March
      31,
      2007.





The
      Company also issued to the stockholders of Old HPI 300,000 shares of its Series
      L Preferred Stock (the “Preferred Stock”). The Preferred Stock, issued in three
      equal amounts (referred to as the L-1, L-2 and L-3 Preferred Stock,
      respectively), whereby each amount is convertible into 40% of the Company’s
      common stock on the 180 th ,
      270 th and
      360 th day
      following closing of the merger, respectively. The conversion of the Preferred
      Stock is subject to the achievement by Old 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 Board of Directors of the
      Company in its sole discretion. The benchmarks include HPI’s use of its hydrogen
      technology to develop prototype generators for various micro and portable power
      applications and for various macro power applications such as fuel cells and
      internal combustion engines (the “Benchmarks”). Based on the achievement of the
      benchmarks, on January 3, 2007, the Company issued, upon the conversion of
      the
      L-1 and L-2 preferred stock, an aggregate of 12,594,622 shares of the its common
      stock, and an additional 711,431 shares of its common stock have been reserved
      for issuance upon the exercise of Old HPI outstanding options. The Company
      has
      valued the 12,594,622 shares (the “Additional Shares”) of its common stock at
      $18,640,041 (based on the market price of the common stock on the date the
      Company issued the shares). The value of the 711,431 shares of common stock
      reserved for issuance upon the exercise of Old HPI options was $788,266 based
      on
      the Black Scholes option pricing model. Accordingly, $19,428,307 has been added
      to the purchase price allocation during the three months ending March 31, 2007.
      Immediately following the conversion of the Series L-1 and L-2 Preferred Stock
      into common stock on January 3, 2007, the former shareholders of Old HPI held
      an
      aggregate of 15,633,612 shares of the Company’s common stock, constituting
      approximately 54.1% of the Company’s outstanding stock. The former majority
      shareholder of Old HPI, GHTI, holds approximately 49.3% of the Company’s
      outstanding common stock. Additionally, former optionholders of Old HPI hold
      options to purchase an aggregate of 843,553 shares of the Company’s common
      stock.





The
      Company, currently based in Seattle, Washington, performs hydrogen-related
      testing, research and engineering, and has developed a patented system (Hydrogen
      Now TM )
      that
      creates pure hydrogen from the reaction of aluminum and water. The patented
      technology allows hydrogen gas to be generated on-site and on-demand, without
      electricity, thus offering the potential to overcome transportation and storage
      problems. This process has the potential to supply hydrogen at customized rates
      and pressures.





Our
      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 too costly or not feasible. Our
      management believes, based on their product and market review, that our hydrogen
      production process may be a commercially viable process for: (1) small volume
      hydrogen production for various industrial applications; and (2) fuel cell
      applications where on-demand hydrogen is required or is an advantage such as
      for
      selected portable power, stationary and mobile back-up generator power, and
      small scale transportation applications. Our new Principal Executive Officer
      is
      currently assessing, with his advisors, the technology and possible applications
      thereof. Thus, possible application areas, and any others contained in this
      document should be considered tentative.





Our
      functional technology development laboratory is equipped to carry out
      hydrogen-related testing, research and engineering. We have 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.
      We
      are at the early stage of testing and evaluating the commercial application
      of
      the licensed technology and the design and engineering of prototypes.





*Return
      of subsidiary common stock*





On
      January 2, 2007, pursuant to the terms of a Redemption Agreement by and between
      the Company and FFFC, FFFC (i) redeemed 8,917,344 shares of its common stock
      held by the Company, (ii) acquired from the Company 5,000,000 shares of common
      stock of Denaris, (iii) acquired from the Company 1,000 shares of common stock
      of Key, and (iv) acquired from the Company 1,000 shares of common stock of
      Nova.
      Denaris was a majority owned subsidiary of the Company, and Key and Nova were
      wholly owned subsidiaries of the Company. Each of Denaris, Nova and Key are
      inactive entities with no operating or intellectual property assets. The shares
      of common stock of each entity transferred by the Company pursuant to the
      Redemption Agreement constituted all of the Company’s holdings in each entity.
      In consideration of the redemption and acquisition of the shares of Denaris,
      Key
      and Nova, FFFC released the Company from all outstanding payment obligations
      of
      the Company to FFFC, including obligations for a $5 million note dated March
      14,
      2006 in favor of FFFC. The outstanding balance on the note, including principal
      and interest accrued, as of the date of the Redemption Agreement was $5,402,398.





20





Subsequent
      to FFFC redeeming its shares of common stock pursuant to the Redemption
      Agreement, the Company owned 3,500,000 shares of common stock of FFFC. As of
      March 31, 2007, this represents approximately 48% of the outstanding common
      stock of FFFC. So long as the Company holds 10% or more of the outstanding
      equity or voting interest in FFFC, it has agreed to vote its shares of capital
      stock of FFFC in the same manner and proportion as other stockholders of FFFC
      vote their shares (the “Voting Arrangement”). Due to the ownership percentage
      being below 50% and pursuant to the terms of the Voting Arrangement in the
      Redemption Agreement, management of the Company has determined that they do
      not
      have any significant control of FFFC. Accordingly, the Company is no longer
      consolidating FFFC and its subsidiaries (Key, Nova and Denaris) in its financial
      statements.





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 $12,642,784 and realized
      a
      pre-tax book gain of $4,145,835.





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 $300,000 for the three months
      ended March 31, 2006 pursuant to the terms of the TSA.





LIQUIDITY
      AND CAPITAL RESOURCES





For
      the
      three months ended March 31, 2007, net cash used in operating activities was
      $963,561 compared to $1,916,202 for the three months ended March 31, 2006.
      The
      net loss for the three months ended March 31, 2007 increased to $16,696,341
      from
      $42,193 for the three months ended March 31, 2006. The increase in net loss
      was
      primarily attributable to costs of $12,779,926 incurred in acquiring the
      technology, trade name and sub-license agreement (“Acquisition Costs”) of Old
      HPI and our loss of $2,516,157 from the transactions provided for in the
      Redemption Agreement and a loss of $388,021 on our investment in FFFC. The
      results for the three months ended March 31, 2006 included income from
      discontinued operations of $1,519,193, which was comprised of gain on the Asset
      Sale of $4,145,835, offset by operating losses of FFFC of approximately
      $2,700,000 and an increase in deferred income taxes of $1,020,000. Adjustments
      to the current period’s results included non-cash expenses of approximately
      $16,001,000, significantly comprised of $12,799,926 of Acquisition Costs,
      $2,516,157 loss on disposal of subsidiaries, $388,021 loss on investments,
      $249,200 of non-cash compensation expense and modification of warrants and
      $68,020 of depreciation and amortization. The 2006 adjustments were
      approximately $1,198,000, significantly comprised of $796,000 of expenses
      related to stock and warrants issued, $1,333,000 of deferred income taxes,
      $744,000 for depreciation and amortization and $75,000 for an increase to
      allowance on a note receivable.





Net
      cash
      used in investing activities for the three months ended March 31, 2007 was
      $60,361 compared to net cash provided by investing activities of $14,866,366
      for
      the three months ended March 31, 2006. Net cash provided in 2006 investing
      activities was primarily attributable to the net proceeds of $12,642,784 from
      the Asset Sale and $2,203,121 cash acquired in the HPI acquisition.





Net
      cash
      used in financing activities for the three months ended March 31, 2007 was
      $272,947 compared to $8,869,499 for the three months ended March 31, 2006.
      The
      activity for the three months ended March 31, 2007 was the repayment of notes
      payable. The 2006 activity included the receipt of $565,000 from the issuances
      of notes payable. In addition, the Company repaid $8,347,595 of notes payable
      and $1,086,904 of checks issued in excess of bank cash from the proceeds of
      the
      Asset Sale.





For
      the
      three months ended March 31, 2007, net cash decreased by $1,296,869 compared
      to
      an increase of $4,080,665 for the three months ended March 31, 2006. Ending
      cash
      at March 31, 2007, was $2,282,131 compared to $12,847,459 at March 31, 2006.
      The
      2006 cash balance includes cash included in discontinued operations of
      $6,169,261.





RESULTS
      OF OPERATIONS





Financial
      statements for the three months ended March 31, 2006 have been retroactively
      reclassified to include Nova and Denaris in the previously reported discontinued
      operations of FFFC and Key.





21





CORPORATE
      SELLING, GENERAL AND ADMINISTRATIVE





For
      the
      three months ended March 31, 2007, corporate expenses include those of the
      Company and for the three months ended March 31, 2006 are those of the Company
      and from March 14, 2006 Old HPI (the date of the acquisition). Total corporate
      expenses for the three months ended March 31, 2007 and 2006 were comprised
      as
      follows:





2007
            
            2006Employee
                costs
            
            $
            147,866
            
            $
            144,019Accounting
                and legal
            
            
            97,978
            
            
            89,261Consulting
                and other professional costs
            
            
            146,594
            
            
            98,324Impairment
                of notes receivable
            
            
            
            
            
            75,000Stock,
                options and warrant costs
            
            
            249,200
            
            
            194,130Other
            
            
            90,585
            
            
            241,190$
            732,223
            
            $
            841,924





Employee
      costs for the three months ended March 31, 2007, increased by $3,847 compared
      to
      the three months ended March 31, 2006. The increase was caused by the inclusion
      in the 2007 period of $147,278 of Old HPI’s salaries for the entire period
      compared to $37,727 for the period from March 14, 2006 (the date of acquisition)
      in 2006. This increase was offset by there being no expenses in the current
      period compared to employee costs of $106,292 incurred for the three months
      ended March 31, 2006 for the Company prior to the acquisition of Old HPI.





Accounting
      and legal expense increased by $8,717 for the three months ended March 31,
      2007
      compared to March 31, 2006. The increase was primarily attributable to expenses
      incurred by Old HPI of approximately $92,000 for the three months ended March
      31, 2007, compared to expenses incurred of $89,261 for the three months ended
      March 31, 2006 by the Company. The current period expenses are comprised of
      $57,052 of general legal costs, $22,640 related to patent applications and
      associated costs and $12,460 of accounting expenses. The Company anticipates
      its
      accounting and legal costs for the quarter ending June 30, 2007 to be higher
      than the expenses for the quarter ended March 31, 2007. The Company is incurring
      additional costs due to the change in control and the associated incremental
      legal and accounting costs.





For
      the
      three months ended March 31, 2007, consulting and other professional costs
      increased to $146,594 from $98,324 for the three months ended March 31, 2006.
      The current period costs consist of $60,000 pursuant to a one-year consultant
      agreement that provides for consideration of $20,000 per month, whereby a
      company owned by the Company’s former chairman will provide certain services
      related to corporate and public reporting matters through December 2007, a
      one
      time cost of $42,165 for the executive recruiting firm who located our current
      chief financial officer, $30,000 paid to a member of our Board of Directors
      for
      his services (ongoing at $10,000 per month) as special counsel and secretary,
      $10,000 for consulting services as provided by our former chief financial
      officer and $4,429 paid to a technology consultant. The Company anticipates
      its
      consulting and other professional costs to increase during the quarter ending
      June 30, 2007 compared to March 31, 2007 as a result of the continuing
      agreements and additional expenses incurred in preparation and filing of its
      financial statements.





During
      the three months ended March 31, 2006, the Company increased the allowance
      related to notes receivable from Equitex 2000, Inc. by $75,000. For the three
      months ended March 31, 2007 and 2006, the Company recognized expenses of
      $249,200 and $194,130, respectively, for the issuance of stock, options and
      warrants. Other expenses for the three months ended March 31, 2007 include
      the
      general operating costs of the Company and for the three months ended March
      31,
      2006 include Company costs, as well as Old HPI from March 14, 2006 (the date
      of
      acquisition).





OTHER
      INCOME (EXPENSE):





Consolidated
      other expenses for the three months ended March 31, 2007 was $2,953,887 compared
      to $406,462 for the three months ended March 31, 2006. During the three months
      ended March 31, 2007, pursuant to transactions described in the Redemption
      Agreement, the Company recognized an expense of $2,516,157 related to the
      partial disposition of its investments in FFFC, and the disposition of Key,
      Nova
      and Denaris. The Company also recorded a loss of $388,021 on its investment
      in
      FFFC for the three months ending March 31, 2007. Interest expense decreased
      by
      $320,029 for the three months ended March 31, 2007 compared to March 31, 2006.
      The decrease was primarily attributable to non-cash interest expense of
      approximately $230,000 related to the settlement of various obligations to
      note
      holders for the three months ended March 31, 2006. Interest income increased
      by
      $36,724 for the three months ended March 31, 2007 compared to March 31,
      2006.


22




DISCONTINUED
      OPERATIONS





Discontinued
      operations for 2006 have been reclassified to add Denaris and Nova to previous
      discontinued operations of FastFunds and Key. The income from discontinued
      operations was $1,519,193 for the three months ended March 31,
      2006.





The
      results were comprised of as follows:





Three
                months ended
              March
                31, 2006FastFunds
            
            $
            1,509,733Key
            
            
            (527
            )Denaris
            
            
            (2,521
            )Nova
            
            
            12,508$
            1,519,193





The
      results of FastFunds for the three months ended March 31, 2006 are as
      follows:





Revenues
            
            $
            2,011,952Location
                expenses
            
            
            (1,233,170
            )Location
                support expenses
            
            
            (1,958,147
            )Other
                expenses
            
            
            (428,737
            )Gain
                on sale of assets
            
            
            4,145,835Income
                tax expense
            
            
            (1,028,000
            )Net
                income
            
            $
            1,509,733





INCOME
      TAX EXPENSE





Income
      tax expense for the three months ended March 31, 2006 was $313,000 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 three months ended March 31, 2007, 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 March
      31,
      2007.





RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





The
      Company adopted the provisions of Financial Standards Accounting Board
      Interpretation No. 48 (“FIN 48”), *“Accounting
      for Uncertainty in Income Taxes” - an Interpretation of FASB Statement No. 109
      (“FIN 48”)* on
      January 1, 2007. There were no unrecognized tax benefits and there was no effect
      on the Company’s financial condition or results of operations as a result of
      implementing FIN 48. The Company files income tax returns in the U.S. federal
      jurisdiction and various state and jurisdictions. The Company is no longer
      subject to U.S. federal tax examinations for years before 1995, and state tax
      examinations for years before 1995. Management does not believe there will
      be
      any material changes in our unrecognized tax positions over the next 12 months.
      The Company’s policy is to recognize interest and penalties accrued on any
      unrecognized tax benefits as a component of income tax expense. As of the date
      of adoption of FIN 48, there was no accrued interest or penalties associated
      with any unrecognized tax benefits, nor was any interest expense recognized
      during the quarter.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, The Fair Value Option for Financial Assets and Financial Liabilities,
      (“FAS
      159”). FAS 159 permits entities to choose to measure many financial instruments
      and certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. FAS159 is effective
      for financial statements issued for fiscal years beginning after November 15,
      2007. The Company has not yet determined the impact of adopting FAS 159 on
      the
      Company’s financial position.


23




**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:





March
                31,
            
            December
                31,Contractual
                obligation
            
            2007
            
            2006
            
            Interest
                rateNotes
                payable
            
            $
            
            $
                2,145,500
            
            Fixed
                10% - 15%Long-term
                debt
            
            1,395,669
            
            1,743,634
            
            Fixed
                10%Operating
                lease obligations
            
            200,000
            
            224,000
            
            Fixed
                10%Debt
                outstanding, before note discounts (1)
            
            $
                1,595,669
            
            $
                4,113,134





(1)
            Excludes
                discount of $84,307 (2007) and $136,340 (2006) to the carrying value
                of
                the notes that are included in the Company’s balance sheet as of March 31,
                2007 and December 31, 2006.


24




**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 at ensuring
      that the material information required to be disclosed in our Exchange Act
      reports is recorded, processed, summarized and reported as required in
      applicable SEC rules and forms except as noted below. There have been no changes
      in the Company’s internal controls over financial reporting that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      controls over financial reporting.





In
      connection with the 2006 audit, our independent registered public accounting
      firm has advised us and our Board of Directors that there are material
      weaknesses in our internal controls and procedures. The identified material
      weaknesses primarily relate to the limited number of Company employees engaged
      in the authorization, recording, processing and reporting of transactions,
      as
      well as the overall financial reporting process. These material weaknesses
      have
      caused significant delays in our financial reporting process. In addition,
      during the 2006 audit, we were not able to timely produce adequate documentation
      supporting all transactions underlying the financial statements. We are
      currently considering taking certain steps to correct the material weaknesses
      by
      enhancing our reporting process in future. Enhancing our internal controls
      to
      correct the material weaknesses will result in increased costs to
      us.








**PART
      II.**  **OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





None





**Item
      2.**  **Unregistered
      Sales of Securities**





None





**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





25




**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:
                June 15, 2007
            By:/s/
                David J. CadeDavid
                J. CadePrincipal
                Executive Officer andPrincipal
                Accounting Officer





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








Date:
                June 15, 2007
            /S/
                JOHN J. MARTINJohn
                J. Martin, DirectorDate:
                June 15, 2007
            /S/
                JAMES H. DIFFENDORFERJames
                H. Diffendorfer, DirectorDate:
                June 15, 2007
            /S/
                VIRENDRA CHAUDHARYVirendra
                Chaudhary, DirectorDate:
                June 15, 2007
            /S/
                GURINDER DILAWARIGurinder
                Dilawari, Director











26