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Exhibit 99.2
 (HYDROGENICS CORP. LOGO)
 Hydrogenics Corporation




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Hydrogenics Corporation
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 www.sedar.com www.sec.gov
 Forward-looking Statements and Risk Factors
  Overview
     2005 Annual MD&A
    
    Page 2




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Hydrogenics Corporation
 Outlook
     Selected Annual Information
 Years ended December 31($000s except for per share amounts)
    
    2005
    
    
    2004
    
    
    2003Revenue
    
    $
    37,191
    
    
    $
    16,656
    
    
    $
    26,660Net loss
    
    
    (37,374
    )
    
    
    (33,539
    )
    
    
    (22,091
    )Loss per share (basic and fully diluted)
    
    
    (0.41
    )
    
    
    (0.53
    )
    
    
    (0.42
    )Dividends per share
    
    Nil
    
    Nil
    
    NilTotal assets
    
    
    214,657
    
    
    
    117,861
    
    
    
    91,438Total liabilities
    
    
    19,150
    
    
    
    8,648
    
    
    
    10,470Cash, cash equivalents and short-term investments
    
    
    85,790
    
    
    
    89,062
    
    
    
    46,708
 Overall Financial Performance
   2005 Annual MD&A
    
    Page 3




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Hydrogenics Corporation
    Critical Accounting Policies and Estimates
  Valuation of Goodwill and Intangible Assets
    Product Warranty Provision
   2005 Annual MD&A
    
    Page 4




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Hydrogenics Corporation
  Stock-Based Compensation
  Allowance for Doubtful Accounts
  Provision for Obsolete Inventory
  Valuation of Future Income Tax Assets
  Recently Issued Accounting Standards
  i) Canadian Standards
 Liabilities and equity
  Financial instruments
   2005 Annual MD&A
    
    Page 5




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Hydrogenics Corporation
  Comprehensive income
  Equity
  (ii) U.S. standards
 Inventory costs
  Share-based payments
  Business Acquisitions
 Stuart
Energy
   2005 Annual MD&A
    
    Page 6




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Hydrogenics Corporation
    Results of Operations
 Revenues
 (in $000s of dollars)
    
    2005
    
    
    2004
    
    
    2003OnSite Generation
    
    $
    21,748
    
    
    $
    1,505
    
    
    $
    Power Systems
    
    
    3,861
    
    
    
    4,106
    
    
    
    6,008Test Systems
    
    
    11,582
    
    
    
    11,045
    
    
    
    20,652$
    37,191
    
    
    $
    16,656
    
    
    $
    26,660
  OnSite Generation
   Power Systems
   2005 Annual MD&A
    
    Page 7




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Hydrogenics Corporation
  Test Systems
    Cost of revenues
 OnSite Generation
   Power Systems
    2005 Annual MD&A
    
    Page 8




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Hydrogenics Corporation
 Test Systems
   Selling, general and administrative expenses
  Employee stock-based compensation expense
  Research and product development expenses
  Amortization of property, plant and equipment
  Amortization of intangible assets
  2005 Annual MD&A
    
    Page 9




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Hydrogenics Corporation
   Impairment of intangible assets
 Integration costs
  Provincial capital tax expense
  Interest income, net
  Foreign currency
  Income tax
   Net loss
  2005 Annual MD&A
    
    Page 10




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Hydrogenics Corporation
  
    
    OnSite Generation incurred a net loss of $13.2 million for the year ended December 31,
2005 compared to a net loss of $2.3 million in 2004 as a result of the acquisition of
Stuart Energy in January 2005 and corresponding increased operating costs. Upon completing
the acquisition, we implemented a comprehensive rationalization program to decrease our
operating costs and we substantially anticipate maintaining these reduced cost levels.
Included in this net loss is a $1.3 million increase in the fair value of work-in-process
inventory recognized in accordance with Canadian GAAP on the acquisition of Stuart Energy
as well as charges totaling $1.3 million relating primarily to repair or replace units
delivered by Stuart Energy prior to the acquisition. Also included in the net loss is $6.5
million of amortization charges taken on intangible assets recognized on the acquisition of
Stuart Energy.
    
    Power Systems incurred a net loss of $12.1 million for the year ended December 31, 2005
compared to a net loss of $7.5 million in 2004 as a result of decreased revenues
attributable to completion of the General Motors engineering services contract in 2004 and
increased R&D expenses during the year.
    
    Test Systems incurred a net loss of $2.3 million for the year ended December 31, 2005
compared to a net loss of $13.8 million in 2004 as a result of higher revenues, decreased
operating costs and lower amortization of intangible assets.
    
    Corporate & Other costs for the year ended December 31, 2005 were $9.7 million compared
to $9.9 million in 2004 primarily as a result of cost reduction initiatives during the year
offset by the appreciation of the Canadian dollar relative to the U.S. dollar during 2005
as compared with 2004.
   
    
    OnSite Generation incurred a net loss of $2.3 million for the year ended December 31,
2004 compared to a net loss of $nil in 2003 as a result of entering this market in 2004.
    
    Power Systems incurred a net loss for the year ended December 31, 2004 of $7.5 million
compared to a net loss of $13.5 million in 2003 primarily as a result of reduced
amortization of intangible assets.
    
    Test Systems incurred a net loss for the year ended December 31, 2004 of $13.8 million
compared to a net loss of $4.1 million in 2003 largely the result of decreased revenues and
the write-off of intangible assets in 2004.
  Shares Outstanding
   2005 Annual MD&A
    
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Hydrogenics Corporation
     Quarterly Results of Operations
  Quarter Ended (Unaudited)($000s
of dollars  except for per share amounts)March
    
    
    June 30,
    
    
    September
    
    
    December
    
    
    March
    
    
    June 30,
    
    
    September
    
    
    December31, 2004
    
    
    2004
    
    
    30, 2004
    
    
    31, 2004
    
    
    31, 2005
    
    
    2005
    
    
    30, 2005
    
    
    31, 2005Revenue
    
    $
    4,075
    
    
    $
    3,578
    
    
    $
    3,509
    
    
    $
    5,494
    
    
    $
    11,304
    
    
    $
    6,293
    
    
    $
    10,537
    
    
    $
    9,057Net Loss
    
    
    (7,451
    )
    
    
    (8,481
    )
    
    
    (7,269
    )
    
    
    (10,338
    )
    
    
    (11,222
    )
    
    
    (9,499
    )
    
    
    (7,517
    )
    
    
    (9,136
    )Net Loss per Share
(Basic and Fully
Diluted )
    
    
    (0.12
    )
    
    
    (0.13
    )
    
    
    (0.11
    )
    
    
    (0.16
    )
    
    
    (0.13
    )
    
    
    (0.10
    )
    
    
    (0.08
    )
    
    
    (0.10
    )
    2005 Annual MD&A
    
    Page 12




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Hydrogenics Corporation
   Fourth Quarter Results
    Liquidity and Capital Resources
   .
   2005 Annual MD&A
    
    Page 13




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Hydrogenics Corporation
      Contingent Off-Balance Sheet Arrangements and Contractual Obligations
     2005 Annual MD&A
    
    Page 14




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Hydrogenics Corporation
      OperatingLong-term debt
    
    
    leases
    
    
    TotalPayments due in
    
    ($000s)
    
    
    ($000s)
    
    
    ($000s)2006
    
    $
    175
    
    
    $
    1,140
    
    
    $
    1,3152007
    
    
    151
    
    
    
    1,173
    
    
    
    1,3242008
    
    
    171
    
    
    
    1,142
    
    
    
    1,3132009
    
    
    
    
    
    
    965
    
    
    
    9652010 and thereafter
    
    
    
    
    
    
    435
    
    
    
    435$
    497
    
    
    $
    4,855
    
    
    $
    5,352
  Long-term Debt
  
    
    Repayable financing from a Canadian government agency.Government agencies, and in
particular the Canadian government, have provided substantial support to the development of
the fuel cell sector in the form of R&D grants, as well as repayable financing. Although
this amount is repayable based on a percentage of our gross revenue and is therefore
success-based, we anticipate that we will have gross revenue sufficient to generate a
liability for the entire amount, being 150% of the original amount received.
    
    Unsecured non-interest bearing term loan. In 2002, we acquired certain proprietary
intellectual property related to our vehicle-to-grid initiatives in exchange for an
interest free loan. Although the loan is non-interest bearing, we charge imputed interest
on the loan to interest expense.
    
    Capital leases of office equipment.Where appropriate for reasons such as cash flow and
changes in technology, we use leases as an additional source of financing. In cases where
substantially all of the
  2005 Annual MD&A
    
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Hydrogenics Corporation
   Operating Leases
  Related Party Transactions
   Risks and Uncertainties
   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.
  2005 Annual MD&A
    
    Page 16




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Hydrogenics Corporation
   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.
     2005 Annual MD&A
    
    Page 17




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Hydrogenics Corporation
 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.
  Our operating results may be subject to currency fluctuation.
    2005 Annual MD&A
    
    Page 18




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Hydrogenics Corporation
  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.
  
    
    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.
  2005 Annual MD&A
    
    Page 19




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Hydrogenics Corporation
 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.
  Changes in government policies and regulations could hurt the market for our products.
     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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
  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.
      We face competition for fuel cell power products from developers and manufacturers of traditional
technologies and other alternative technologies.
    2005 Annual MD&A
    
    Page 21




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Hydrogenics Corporation
  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.
   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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
  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.
  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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
  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.
  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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
  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.
  
    
    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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
  
    
    pay substantial damages;
    
    cease the development, manufacture, use, sale or importation of products that infringe
upon such intellectual property rights;
    
    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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
   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.
  U.S. investors may not be able to enforce U.S. civil liability judgments against us or our
directors, controlling persons and officers.
    2005 Annual MD&A
    
    Page 27




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Hydrogenics Corporation
  
    
    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.
 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.
   2005 Annual MD&A
    
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Hydrogenics Corporation
 Disclosure Controls
   2005 Annual MD&A
    
    Page 29