##### 



Exhibit 99.3
 HYDROGENICS CORPORATION
 
 Annual Information Form
 For the Fiscal Year Ended December 31, 2005
 March 14, 2006




---



##### 



TABLE OF CONTENTS
 1.
    
    FORWARD-LOOKING STATEMENTS
    
    
    12.
    
    CORPORATE STRUCTURE
    
    
    33.
    
    DESCRIPTION OF OUR BUSINESS
    
    
    4Overview
    
    
    4OnSite Generation
    
    
    4Power Systems
    
    
    5Test Systems
    
    
    6History
    
    
    6Industry Trends
    
    
    7Our Strategy
    
    
    9Corporate initiatives
    
    
    9Business unit initiatives
    
    
    10Our Products and Services
    
    
    10HySTAT Hydrogen Stations
    
    
    10HyPM® Fuel Cell Products
    
    
    11FCATS® Test Stations
    
    
    11Sales and Marketing
    
    
    12Customers
    
    
    12Research and Product Development
    
    
    14Intellectual Property
    
    
    15Manufacturing
    
    
    15Facilities
    
    
    15Human Resources
    
    
    16Legal Proceedings
    
    
    17Competition
    
    
    17OnSite Generation
    
    
    17Power Systems
    
    
    17Test Systems
    
    
    18Government Regulation
    
    
    184.
    
    DESCRIPTION OF SHARE CAPITAL
    
    
    185.
    
    DIVIDENDS
    
    
    196.
    
    MARKET FOR SECURITIES
    
    
    207.
    
    DIRECTORS AND OFFICERS
    
    
    218.
    
    INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    
    
    27Transactions with Viking Engineering & Tool Co.
    
    
    279.
    
    RISK FACTORS
    
    
    29Risk Factors Related To Our Financial Condition
    
    
    29Risk Factors Related To Our Business and Industry
    
    
    32Risk Factors Related To Our Products and Technology
    
    
    39Risk Factors Related To Ownership of Our Common Shares
    
    
    4210.
    
    TRANSFER AGENTS AND REGISTRARS
    
    
    4611.
    
    MATERIAL CONTRACTS
    
    
    4612.
    
    INTERESTS OF EXPERTS
    
    
    4613.
    
    ADDITIONAL INFORMATION
    
    
    46




---



##### 








---



##### 



1. Forward-Looking Statements
    
    
    our limited operating history and difficulty in assessing future growth prospects;
    
    our failure to raise additional capital as needed;
    
    our failure to develop, execute and implement our business plan;
    
    the failure of our markets to grow at anticipated rates;
    
    the delay or failure of hydrogen fuel cell and related technologies to commercialize as anticipated;
    
    the unavailability of hydrogen on a cost effective basis;
    
    our failure to develop products and services to meet customers needs, attract new
customers or enable us to expand into new markets;
    
    changes in laws, regulations, including codes and standards relating to our business;
    
    actions of our competitors;
    
    our failure to develop and maintain partnerships with governments, system integrators,
OEMs and other channel partners;
    
    the loss of suppliers of key materials and components;
    
    changes in technology;




---



##### 




    
    the failure of our investments in technology, capital expenditures and infrastructure to
increase our revenues or decrease our costs;
    
    our failure to recruit and retain qualified management and key employees;
    
    inadequate protection of our intellectual property rights; and
    
    impairment of our identifiable intangible assets and goodwill.
   - 2 -




---



##### 



2. Corporate Structure
 Canada Business Corporations Act
  Subsidiaries
    
    Jurisdiction of IncorporationHydrogenics Test Systems Inc. (formerly Greenlight
Power Technologies, Inc.)
    
    CanadaHydrogenics GmbH
    
    GermanyHydrogenics Japan Inc.
    
    Ontario, CanadaHydrogenics USA, Inc.
    
    Delaware, U.S.A.Stuart Energy Systems Corporation (Stuart Energy)
    
    CanadaHydrogenics Europe N.V.
    
    Belgium
 - 3 -




---



##### 



3. Description of Our Business
 Overview
    OnSite Generation
      - 4 -




---



##### 



P wer Systems
 de
facto
    ®
 - 5 -




---



##### 



Test Systems
      History
  - 6 -




---



##### 



2005
    
    2004(in millions)OnSite Generation
    
    $
    21.7
    
    
    $
    1.5Power Systems
    
    
    3.9
    
    
    
    4.1Test Systems(1)
    
    
    11.6
    
    
    
    11.0Total
    
    $
    37.2
    
    
    $
    16.7
 Note
 (1)
    
    Test Systems revenues include $1.8 million for testing services in 2004 and $2.7 million for
engineering services in 2005, primarily provided to General Motors.
 Industry Trends
   - 7 -




---



##### 



Sustained high prices for oil and natural gas.
 Increased government legislation worldwide promoting alternative energy sources including hydrogen.
 Increased awareness of the adverse impact of fossil fuels on our climate, environment and air
quality .
 The need for industrialized economies to access alternative source of energy to reduce their
dependency on fossil fuels.
  - 8 -




---



##### 



Our Strategy
  Corporate initiatives
 
    
    Pursue a diversified product portfolio linked to hydrogen.Our hydrogen products and
services span multiple product lines as well as geographic markets, insulating us from
unanticipated adoption rates in any market. By offering a diversified but complementary
product portfolio, we differentiate ourselves in the marketplace with our ability to supply
a bundled product offering, for example combining hydrogen refueling and fuel cell powered
forklift trucks to be used together in a single installation or deployment. Our experience
in commissioning more than 1,600 hydrogen products worldwide facilitates customer
acceptance and market penetration.
    
    Source components and sub-assemblies from cost effective jurisdictions.As our
production volumes increase and our manufacturing processes become more mature, we
anticipate sourcing components and sub-assemblies from more cost effective jurisdictions,
particularly Asia.
    
    Utilize third parties in sales and marketing, research and product development
activities.We concentrate our sales and marketing and research and product development
initiatives in those areas we consider most important to our business. We rely on and
provide assistance to third parties who have specialized resources as they conduct research
and product development in areas such membrane electrode assemblies, bi-polar plates and
various power conditioning components. Similarly, for sales and marketing we rely
extensively on OEM partners such as APC and John Deere, using their distribution channels
and after-sale support to reduce our capital requirements.
    
    Continue investing in qualified personnel.We believe that the skills of our management
team and other personnel are important factors in our progress to date. We intend to
continue our efforts and to attract, motivate and retain personnel to support our growth
strategies.
 - 9 -




---



##### 



Business unit initiatives
 
    
    Our primary initiatives for the OnSite Generation business include: (i)
improving gross margin realizations of our current products by improving manufacturing
processes and adopting more aggressive component pricing policies; (ii) launching a new
generation electrolysis product based on a scale up and improvement of our existing
alkaline electrolysis technology thereby allowing us to access the renewables market; (iii)
continuing to work with progressive oil and gas energy companies pursuing hydrogen
initiatives; (iv) focusing sales and marketing resources on activities with industrial gas
companies; and (v) introducing a PEM based electrolyzer to extend the lower capacity range
of our electrolysis products.
    
    Our primary initiatives for the Power Systems business include: (i) investing in
market and product development teams/initiatives to create demand in backup power and light
mobility markets, particularly Class 1 and 2 forklift trucks; (ii) investing in
manufacturing engineering activities that will enable us to increase our production
capacities; (iii) establishing agreements with a number of third parties to distribute our
products in targeted markets; and (iv) accelerating our research and product development
activities in the area of cost reduction.
    
    Our primary initiatives for the Test Systems business include: (i) improving
gross margins by reducing material costs; (ii) differentiating our products in the
marketplace by increasing the capabilities and features of our software; and (iii) pursuing
sales and marketing initiatives to secure orders from solid oxide and direct methanol fuel
cell customers.
 Our Products and Services
 ® ®
 HySTAT Hydrogen Stations
  
    
    HySTAT Generator. This product is suitable for producing continuous or batch
supplies of hydrogen typically for industrial processing applications and generates between
1-300 normal cubic meters per hour (Nm3/hr) of hydrogen.
    
    HySTAT Refueling Station.This product is designed to refuel hydrogen-powered
vehicles generating up to 600 kg/day of high purity hydrogen at up to 10,000 psi. The
system is configured
 - 10 -




---



##### 



with a HySTAT hydrogen generator together with modules for compression, storage and
dispensing as required.
    
    HySTAT Energy Station. This product includes stationary hydrogen-fueled power
generation, with optional refueling equipment. The system can generate up to 600 kg/day of
high purity hydrogen and provide backup or intermittent power across a range of 5-65 kW.
The system includes all the components of a HySTAT Refueling Station with the addition of
a power module to produce backup power.
 HyPM ® Fuel Cell Products
 ® ® ®
 
    
    HyPM®Fuel Cell Power Modules. Our HyPM® power module
runs on high purity hydrogen and produces DC power in standard outputs of 8, 12, 16 and 65
kW. This product is suitable for a wide range of stationary, mobile and portable power
applications. The HyPM® XR model is targeted at backup power applications and
the HyPM® LP model is targeted at mobility applications.
    
    HyPM®Fuel Cell Power Pack. Our HyPM® Power Pack includes
a standard HyPM® power module integrated with hydrogen storage tanks and
ultracapacitors which provide higher power in short bursts. This product has the same
form, fit and function as large battery packs used in devices such as forklift trucks.
    
    Integrated Fuel Cell Systems. Our integrated fuel cell systems are built around
our HyPM® power modules and are targeted to portable and stationary applications
including portable and auxiliary power units for military applications and direct current
or DC backup power system for cellular tower sites.
    
    Engineering Development Services. We also enter into engineering development
contracts with certain customers for new or custom products.
 FCATS ® Test Stations
  - 11 -




---



##### 



Sales and Marketing
  Customers
    
    
    General Motors.In October 2001, we entered into an agreement with General Motors to
accelerate the development of fuel cell technology. This agreement includes shared
intellectual property rights and joint efforts in fuel cell product development,
engineering, prototyping, testing, branding and marketing strategies. In connection with
this agreement, we issued General Motors approximately 11.4 million of our common shares,
or approximately 21% of our then outstanding common shares, and warrants to purchase
approximately 2.5 million additional shares. This agreement positions us for what we
anticipate will eventually become the largest market for fuel cell applications and
provides an opportunity to demonstrate our products in other early market applications.
    
    American Power Conversion (APC).In November 2004, we entered into a collaborative
development agreement with American Power Conversion Corp. (NASDAQ: APCC) and we announced
an order for 25 fuel cell power modules to be incorporated into their backup power
products. APC is a leading global supplier of high availability systems for
network-critical physical infrastructure. Our HyPM® XR is a key component of APCs new
InfraStruXure product line. We continue to work with APC to define product requirements
to accelerate market adoption.
    
    Deere & Company.In August 2002, we launched a new development effort with Deere &
Company that culminated in the delivery of an innovative power module used to power a John
Deere
 - 12 -




---



##### 



commercial work vehicle. In July 2004, we entered into a five-year agreement with Deere &
Company to facilitate the commercialization of fuel cells and hydrogen fuel generation
systems.
    
    Chevron.In May 2004, we executed a master services agreement with ChevronTexaco
Technology Ventures LLC and subsequently secured multiple work orders to integrate a fully
packaged hydrogen generator based on ChevronTexaco Technology Ventures proprietary
reformer technology. This agreement positions us in the emerging transportation market for
hydrogen with a world leading multinational corporation pursuing hydrogen business
opportunities.
    
    Cheung Kong Infrastructure Holdings Limited (CKI).We are working with Cheung Kong
Infrastructure Holdings Limited to demonstrate a HySTAT hydrogen fueling station, together
with a hydrogen-powered bus that CKI plans to demonstrate in Hong Kong. An important part
of the process to commercialize our HySTAT and hydrogen power products in the Hong Kong
and Asia Pacific markets relates to codes and standards acceptance. We have been working
with CKI on educating the applicable local regulators on the safety of our hydrogen
products. CKI is a large, publicly listed company based in Hong Kong with utility and
infrastructure-related holdings in Hong Kong, China, Australia and the Philippines.
    
    Leading Global Industrial Gas Companies.We have previously established preferred
supplier agreements with Air Liquide S.A., Air Products and Chemicals, Inc., BOC Gases and
Linde A.G., four of the leading global industrial gas companies. While these contracts
have expired, we anticipate that they will be renewed in 2006. Typically, these agreements
provide that we will be the preferred supplier of onsite, electrolysis-based hydrogen
generators for industrial applications to the applicable industrial gas company. We
believe that these relationships represent valuable sales channels, while providing
validation of our technology from highly credible partners.
    
    Shell Hydrogen.In June 2003, we entered into a development, marketing and sales agency
agreement with Shell Hydrogen, a global business of the Royal Dutch/Shell Group of
Companies, wherein Shell Hydrogen was granted access to our prototype
HomeFueler, which is expected to be an advanced, small-scale electrolyzer
developed specifically for home hydrogen production and capable of refueling an individual
car overnight. Under this agreement, Shell Hydrogen obtained certain rights to act as an
agent for the HomeFueler and committed to conduct certain market analysis of
the potential of home hydrogen refueling.
    
    Statkraft and EHN.In October 2003, we entered into a joint cooperation agreement with
Statkraft SF (Statkraft) and Corporación Energía Hidroeléctrica de Navarra S.A. (EHN)
to assess, demonstrate and develop advanced renewable energy-based hydrogen production and
distribution solutions. Both Statkraft and EHN have purchased initial equipment for
evaluation and demonstration of vehicle and stationary power applications.
    
    Military OEM.In December 2005 we entered into a multi-year joint cooperation agreement
with a military OEM. For reasons of confidentiality, we cannot disclose the name of this
OEM. In conjunction with the signing of the cooperation agreement, we were awarded an $8
million contract for multiple units of its HyPM® 500 series fuel cell power
modules.
 - 13 -




---



##### 



Research and Product Development
     
    
    OnSite Generation. Our research activities are focused on performance improvements of
our electrolyzer cell stacks. Our product development activities are focused on large scale
electrolyzers to store renewable or other zero-emission energy as hydrogen, thereby helping
to address the intermittency problem associated with most renewable energies, or to refuel
vehicles from locally-produced non-fossil sources. Our product development also focuses on
small scale PEM electrolyzers which we believe will have greater demand due to their lower
cost and size in the small capacity range of <10 Nm3/h. Our larger-scale and
lower-scale product developments aim to make Hydrogenics the one-stop shop for all needs
of OnSite hydrogen generation.
    
    Power Systems.At the stack, or component level, we are focused on testing, adapting and
integrating new materials, design concepts, manufacturing techniques and on cost reduction.
At the module or product level, we are focused on cost reduction and on meeting market
specific requirements for durability and performance. Our product development also focuses
on reducing the packaging size, allowing the same power module to deploy in both mobile and
stationary applications.
    
    Test Systems.Our research and product development activities are centered on increasing
the features of our software to allow our customers to better diagnose, monitor and
optimize their fuel cell activities.
 - 14 -




---



##### 



Intellectual Property
    Manufacturing
     Facilities
  
    
    Mississauga, Ontario, Canada.Our 96,000 square foot facility in Mississauga, Ontario
serves as our corporate headquarters and Power Systems manufacturing facility and is leased
until August 31,
 - 15 -




---



##### 



2010. Principal activities at this facility include the manufacture and assembly of our fuel
cell power and reformer based products, research and product development for our fuel cell
power products, hydrogen generation products and fuel cell testing services as well as our
corporate activities.
    
    Oevel-Westerlo, Belgium.Our 21,445 square foot facility in Oevel-Westerlo, Belgium
serves as our manufacturing facility for our OnSite Generation business and is leased until
August 30, 2008. Principal activities at this facility include the manufacture and
assembly of our hydrogen generation equipment, water electrolysis research and product
development as well as administrative functions related to our OnSite Generation business.
    
    Burnaby, British Columbia, Canada.Our 54,000 square foot facility in Burnaby, British
Columbia serves as our manufacturing facility for our Test Systems business and is leased
until December 31, 2009. Principal activities at this facility include the manufacture and
assembly of our test products, test products research and product development as well as
administrative functions related to our Test Systems business.
    
    Gladbeck, Germany.Our Power Systems group maintains a 6,458 square foot facility in
Gladbeck, Germany which is leased until November 2010. This facility is used to provide
fuel cell integration services for European customers and serves as our European office for
fuel cell activities of our Power Systems business.
    
    Tokyo, Japan.Our Test Systems division maintains a 1,200 square foot facility in
Tokyo, Japan. This facility is used as a sales and service office for both our Power and
Test Systems groups as well as a maintenance facility for our Test Systems business.
   Human Resources
   - 16 -




---



##### 



Legal Proceedings
  Competition
 OnSite Generation
    Power Systems
  - 17 -




---



##### 



Test Systems
   Government Regulation
  4. Description of Share Capital
    - 18 -




---



##### 



5. Dividends
  - 19 -




---



##### 



6. Market For Securities
  TSX
    
    NASDAQ2005
    
    High (C$)
    
    Low (C$)
    
    Volume
    
    High (US$)
    
    Low (US$)
    
    VolumeJanuary
    
    
    5.79
    
    
    
    4.95
    
    
    
    968,203
    
    
    
    4.85
    
    
    
    4.02
    
    
    
    4,236,717February
    
    
    5.59
    
    
    
    4.88
    
    
    
    955,641
    
    
    
    4.49
    
    
    
    3.90
    
    
    
    4,456,705March
    
    
    6.45
    
    
    
    5.09
    
    
    
    2,200,554
    
    
    
    5.38
    
    
    
    4.20
    
    
    
    12,457,415April
    
    
    5.56
    
    
    
    4.68
    
    
    
    617,199
    
    
    
    4.53
    
    
    
    3.73
    
    
    
    5,897,079May
    
    
    5.00
    
    
    
    4.21
    
    
    
    1,091,807
    
    
    
    4.03
    
    
    
    3.33
    
    
    
    5,325,230June
    
    
    4.90
    
    
    
    3.85
    
    
    
    899,683
    
    
    
    3.98
    
    
    
    3.10
    
    
    
    6,659,997July
    
    
    4.59
    
    
    
    3.92
    
    
    
    936,945
    
    
    
    3.72
    
    
    
    3.21
    
    
    
    6,583,172August
    
    
    4.93
    
    
    
    3.93
    
    
    
    1,014,263
    
    
    
    4.17
    
    
    
    3.20
    
    
    
    11,389,550September
    
    
    5.07
    
    
    
    4.15
    
    
    
    937,354
    
    
    
    4.30
    
    
    
    3.61
    
    
    
    8,540,262October
    
    
    4.81
    
    
    
    3.31
    
    
    
    1,983,432
    
    
    
    4.10
    
    
    
    2.79
    
    
    
    8,591,851November
    
    
    3.95
    
    
    
    2.95
    
    
    
    1,222,236
    
    
    
    3.34
    
    
    
    2.57
    
    
    
    8,425,843December
    
    
    3.71
    
    
    
    2.93
    
    
    
    1,407,146
    
    
    
    3.21
    
    
    
    2.50
    
    
    
    7,786,955
 - 20 -




---



##### 



7. Directors and Officers
  Province or State and
    
    
    
    Director or ExecutiveName
    
    Country of Residence
    
    Title
    
    Officer SinceNorman M. Seagram(1)(2)(3)(4)
    
    Ontario, Canada
    
    Chairman of the Board of Directors(5)
    
    2000Dr. Hugo Vandenborre
    
    Kasterlee, Belgium
    
    Vice Chairman of the Board of Directors(5)
    
    2005Frank Colvin
    
    Michigan, United States
    
    Director(5)
    
    2001Peter C. Johnson(3)(4)
    
    Ontario, Canada
    
    Director(5)
    
    2005Donald J. Lowry(1)(2)
    
    Alberta, Canada
    
    Director(5)
    
    2000Pierre Rivard
    
    Ontario, Canada
    
    President, Chief Executive Officer
and Director(5)
    
    1995V. James Sardo(2)(3)(4)
    
    Ontario, Canada
    
    Director(5)
    
    2003Andrew T.B. Stuart(1)
    
    Ontario, Canada
    
    Director(5)
    
    2005Wesley Twiss(1)(3)
    
    Alberta, Canada
    
    Director(5)
    
    2003Joseph Cargnelli
    
    Ontario, Canada
    
    Chief Technology Officer and Director(5)
    
    1996Lawrence E. Davis
    
    Ontario, Canada
    
    Chief Financial Officer
    
    2005Salil Munjal
    
    Ontario, Canada
    
    Vice President, Corporate Development, General
    
    2005Counsel and Corporate SecretaryJennifer Barber
    
    Ontario, Canada
    
    Vice President, Finance and Corporate Controller
    
    2005Jonathan Lundy
    
    Ontario, Canada
    
    President, Power Systems
    
    2000Mel Ogmen
    
    British Columbia, Canada
    
    President, Test Systems
    
    2004Bart Van Ouytsel
    
    Geel, Belgium
    
    President, OnSite Generation
    
    2005Dr. Ravi B. Gopal
    
    Ontario, Canada
    
    Vice President, Applications Development
    
    1998John Werderman
    
    Washington, United States
    
    Vice President, Business Development, Power Systems
    
    2006
 
 Notes:(1)
    
    Member of the Audit Committee.(2)
    
    Member of the Nomination and Corporate Governance Committee.(3)
    
    Member of the Human Resources and Compensation Committee.(4)
    
    Member of the Executive Advisory Committee.(5)
    
    Each director will hold office until the next annual meeting of shareholders to be held on
May 24, 2006, or until his successor is duly elected or appointed.  Norman M. Seagram
 - 21 -




---



##### 



Dr. Hugo Vandenborre
 Frank Colvin
 Peter C. Johnson
 Donald J. Lowry,
 Pierre Rivard,
 - 22 -




---



##### 



V. James Sardo
 Andrew T.B. Stuart
 Wesley Twiss
 Joseph Cargnelli,
 - 23 -




---



##### 



Lawrence E. Davis
 Salil Munjal
 Jennifer Barber
 Jonathan Lundy
 Dr. Mel Ogmen
 - 24 -




---



##### 



Bart Van Ouytsel
 Dr. Ravi B. Gopal
 John Werderman
    - 25 -




---



##### 



- 26 -




---



##### 



8. Interest of Management and Others in Material Transactions
 Transactions with Viking Engineering & Tool Co.
  Transactions with General Motors Corporation
    - 27 -




---



##### 



- 28 -




---



##### 



9. Risk Factors
 An investment in our common shares involves risk. Investors should carefully consider the risks
described below and the other information contained in, and incorporated into, this annual
information form, including managements discussion and analysis and our financial statements for
the year ended December 31, 2005. The risks described below are not the only ones we face.
Additional risks and uncertainties, including those that we do not know about now or that we
currently deem immaterial, may also adversely affect our business.
 Risk Factors Related To Our Financial Condition
 We have a limited operating history, and because our mix of revenues in the recent past does not
reflect our current business strategy, it may be difficult to assess our business and future
prospects.
  Because we expect to continue to incur net losses, we may not be able to implement our business
strategy, and the price of our common shares may decline.
  - 29 -




---



##### 



Our quarterly operating results are likely to fluctuate significantly and may fail to meet the
expectations of securities analysts and investors, and cause the price of our common shares to
decline.
   We may be unable to raise additional capital to pursue our commercialization plans and may be
forced to discontinue product development, reduce our sales and marketing efforts or forego
attractive business opportunities.
   - 30 -




---



##### 



Our ability to grow revenue and future prospects depend to a certain extent on our relationship
with General Motors and General Motors commitment to the commercialization of fuel cell markets.
  
    
    alter its commitment to fuel cell technology in favor of competing technologies;
    
    delay its introduction of fuel cell products and vehicles; or
    
    increase the internal development of fuel cell products or purchase them from another supplier.
  We currently depend upon a relatively limited number of customers for a majority of our revenues
and a decrease in revenue from these customers could materially adversely affect our business,
financial condition and results of operations.
  - 31 -




---



##### 



Our operating results may be subject to currency fluctuation.
   Certain external factors may affect the value of identifiable intangible assets and goodwill, which
may require us to recognize an impairment charge.
  Our insurance may not be sufficient.
  Risk Factors Related To Our Business and Industry
 Significant markets for fuel cell and other hydrogen energy products may never develop or may
develop more slowly than we anticipate, which would significantly harm our revenues and may cause
us to be unable to recover the losses we have incurred and expect to incur in the development of
our products.
 - 32 -




---



##### 




    
    the emergence of more competitive technologies and products, including other
environmentally clean technologies and products that could render our products obsolete;
    
    the future cost of hydrogen and other fuels used by our fuel cell systems;
    
    the future cost of MEAs used in our fuel cell systems;
    
    the future cost of platinum, a key metal used in our fuel cell systems;
    
    the regulatory requirements of agencies, including the development of uniform codes and
standards for fuel cell products, hydrogen refueling infrastructure and other hydrogen
energy products;
    
    government support of fuel cell technology, hydrogen storage technology and hydrogen
refueling technology;
    
    the manufacturing and supply costs for fuel cell components and systems;
    
    the perceptions of consumers regarding the safety of our products;
    
    the willingness of consumers to try new technologies;
    
    the continued development and improvement of existing power technologies; and
    
    the future cost of fuels used in existing technologies.
 Hydrogen may not be readily available on a cost-effective basis, in which case our fuel cell
products may be unable to compete with existing power sources, and our revenues and results of
operations would be materially adversely affected.
  - 33 -




---



##### 



Changes in government policies and regulations could hurt the market for our products.
     - 34 -




---



##### 



The development of uniform codes and standards for hydrogen-powered vehicles and related hydrogen
refueling infrastructure may not develop in a timely fashion, if at all.
   We currently face and will continue to face significant competition from other developers and
manufacturers of fuel cell power products, hydrogen generation systems and test and diagnostic
equipment. If we are unable to compete successfully, we could experience a loss of market share,
reduced gross margins for our existing products and a failure to achieve acceptance of our proposed
products.
     - 35 -




---



##### 



We face competition for fuel cell power products from developers and manufacturers of traditional
technologies and other alternative technologies.
   Our strategy for the sale of fuel cell power products depends upon developing partnerships with
governments and systems integrators, OEMs, suppliers and other market channel partners who will
incorporate our products into theirs.
  - 36 -




---



##### 



We are dependent upon third party suppliers for key materials and components for our products. If
these suppliers become unable or unwilling to provide us with sufficient materials and components
on a timely and cost-effective basis, we may be unable to manufacture our products cost-effectively
or at all, and our revenues and gross margins would suffer.
  We will need to recruit, train and retain key management and other qualified personnel to
successfully expand our business.
  - 37 -




---



##### 



We may not be able to manage successfully the expansion of our operations.
  If we do not properly manage foreign sales and operations, our business could suffer.
  We may acquire technologies or companies in the future, and these acquisitions could disrupt our
business and dilute our shareholders interests.
  
    
    diversion of managements attention from other business concerns;
    
    failure to effectively assimilate the acquired technology, employees or other assets of
the company into our business;
    
    the loss of key employees from either our current business or the acquired business; and
    
    assumption of significant liabilities of the acquired company.
  - 38 -




---



##### 



We have no experience manufacturing our products on a large scale basis, and if we do not develop
adequate manufacturing processes and capabilities to do so in a timely manner, we will be unable to
achieve our growth and profitability objectives.
  Risk Factors Related To Our Products and Technology
 We may never complete the development of commercially viable fuel cell power products and/or
commercially viable hydrogen generation systems for new hydrogen energy applications, and if we
fail to do so, we will not be able to meet our business and growth objectives.
  We must lower the cost of our fuel cell and hydrogen generation products and demonstrate their
reliability, or consumers will be unlikely to purchase our products and we will therefore not
generate sufficient revenues to achieve and sustain profitability.
  - 39 -




---



##### 



Any failures or delays in field tests of our products could negatively affect our customer
relationships and increase our manufacturing costs.
  The components of our products may contain defects or errors that could negatively affect our
customer relationships and increase our development, service and warranty costs.
  Rapid technological advances or the adoption of new codes and standards could impair our ability to
deliver our products in a timely manner and, as a result, our revenues would suffer.
  We depend upon intellectual property and our failure to protect that intellectual property could
adversely affect our future growth and success.
  - 40 -




---



##### 




    
    any of the United States, Canadian or other patents owned by us or third party patents
licensed to us will not be invalidated, circumvented, challenged, rendered unenforceable,
or licensed to others; or
    
    any of our pending or future patent applications will be issued with the breadth of
protection that we seek, if at all.
     Our involvement in intellectual property litigation could negatively affect our business.
  
    
    pay substantial damages;
    
    cease the development, manufacture, use, sale or importation of products that infringe
upon such intellectual property rights;
 - 41 -




---



##### 




    
    discontinue processes incorporating the infringing technology;
    
    expend significant resources to develop or acquire non-infringing intellectual property; or
    
    obtain licenses to the relevant intellectual property.
  Our products use flammable fuels that are inherently dangerous substances and could subject us to
product liabilities.
  Risk Factors Related To Ownership of Our Common Shares
 If at any time we qualify as a passive foreign investment company under United States tax laws, our
shareholders may be subject to adverse tax consequences.
   - 42 -




---



##### 



A limited number of shareholders collectively own a significant portion of our common shares and
may act, or prevent corporate actions, to the detriment of other shareholders.
  Future sales of common shares by our principal shareholders could cause our share price to fall and
reduce the value of a shareholders investment.
  Our articles of incorporation authorize us to issue an unlimited number of common and preferred
shares, and significant issuances of common or preferred shares could dilute the share ownership of
our shareholders, deter or delay a takeover of us that our shareholders may consider beneficial or
depress the trading price of our common shares.
  - 43 -




---



##### 



U.S. investors may not be able to enforce U.S. civil liability judgments against us or our
directors, controlling persons and officers.
    
    
    the U.S. court where the judgment was rendered had no jurisdiction according to
applicable Canadian law;
    
    the judgment was subject to ordinary remedy (appeal, judicial review and any other
judicial proceeding which renders the judgment not final, conclusive or enforceable under
the laws of the applicable state) or was not final, conclusive or enforceable under the
laws of the applicable state;
    
    the judgment was obtained by fraud or in any manner contrary to natural justice or
rendered in contravention of fundamental principles of procedure;
    
    a dispute between the same parties based on the same subject matter has given rise to a
judgment rendered in a Canadian court or has been decided in a third country and the
judgment meets the necessary conditions for recognition in a Canadian court;
    
    the enforcement of the judgment of the U.S. court was inconsistent with public policy,
as the term is applied by the Canadian court;
    
    the judgment enforces obligations arising from foreign penal laws or laws that deal with
taxation or the taking of property by a foreign government; or
    
    there has not been compliance with applicable Canadian laws dealing with the limitation
of actions.
 - 44 -




---



##### 



Our share price is volatile and we may continue to experience significant share price and volume
fluctuations.
  
    
    performance of other companies in the fuel cell or alternative energy business;
    
    news announcements, securities analysts reports and recommendations and other
developments with respect to our industry or our competitors; or
    
    changes in general economic conditions.
 Shareholders would likely receive much less than the amount they paid for their shares if we
liquidate our assets and distribute the proceeds.
  As of March 10, 2006 there were 6,326,053 options to purchase our common shares. If these
securities are exercised, our shareholders will incur substantial dilution.
  - 45 -




---



##### 



10. TRANSFER AGENTS AND REGISTRARS
  11. MATERIAL CONTRACTS
  12. INTERESTS OF EXPERTS
  13. ADDITIONAL INFORMATION
 www.sedar.com
 - 46 -