Fastfunds Financial 10-Q 2007 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarter ended September 30, 2007
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________to_________

Commission File No. 333-1026-D

FASTFUNDS FINANCIAL CORPORATION

 (Exact Name of Registrant as Specified in its Charter)

Nevada	87-0425514
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

319 Clematis Street, Suite 703

West Palm Beach, Florida 33401

 (Address of principal executive offices) (Zip code)

(561) 514-9042

(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. xYes  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 Filer x

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

Number of shares of common stock outstanding at November 12, 2007: 7,331,507

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

PART I	FINANCIAL INFORMATION		Page
	Item 1.	Financial statements:
		Condensed consolidated balance sheets - September 30, 2007 (unaudited) and December 31, 2006	2
		Condensed consolidated statements of operations and comprehensive (loss) income - three and nine months ended September 30, 2007 and 2006 (unaudited)	3
		Condensed consolidated statement of changes in stockholders' equity deficiency and comprehensive loss - nine months ended September 30, 2007 (unaudited)	4
		Condensed consolidated statements of cash flows – nine months ended September 30, 2007 and 2006 (unaudited)	5
		Notes to condensed consolidated financial statements (unaudited)	6-15
	Item 2.	Management's discussion and analysis of financial condition and results of operations	16-20
	Item 3.	Quantitative and qualitative disclosures of market risk	21
	Item 4.	Disclosure controls and procedures	22
PART II	OTHER INFORMATION
	Item 1.	Legal proceedings	22
	Item 2.	Unregistered sales of equity securities and use of proceeds	22
	Item 3.	Defaults upon senior securities	22
	Item 4.	Submission of matters to a vote of security holders	22
	Item 5.	Other information	22
	Item 6.	Exhibits	23
	Signatures

 

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
	2007			2006
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	649		$	53,190
Accounts receivable,  net		220,500			-
Current portion of notes and advances receivable		50,000			140,000
Other current assets		4,213			12,727
Total current assets		275,362			205,917
Available-for-sale securities		618,000			-
Notes receivable (Note 3)		219,575			-
Property and equipment, net		5,569			14,047
Deferred loan costs		330,483			-
Intangible and other assets, net		200			200
		1,173,827			14,247
	$	1,449,189		$	220,164
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable	$	577,363		$	389,170
Due to HPI (Note 1)		75,000			2,151,572
Accrued expenses		693,048			630,774
Convertible and other promissory notes and current portion of long-term
debt (Note 4), including related parties of $139,300 (2007)		2,282,900			2,108,000
Derivative liabilities(notes 4 and 5)		727,840			461,521
Total current liabilities		4,356,151			5,741,037
Long-term debt, net of current portion		121,475			29,581
Commitments and contingencies (Notes 4 and 5)
Stockholders'  deficiency (Note 6):
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares
issued and outstanding		-			-
Common stock, $.001 par value; 250,000,000 shares authorized; 16,248,851
shares (2007) and 15,580,959 shares (2006) issued and 7,331,507 shares
(2007) and 15,580,959 shares (2006) outstanding		16,249			15,581
Additional paid-in capital		16,370,293			19,655,226
Investment in HPI common stock		-			(6,801,204	)
Notes, advances and interest receivable, related parties		(379,366	)		(6,266,843	)
Common treasury stock at cost; 8,917,344 shares (2007)		(4,547,845	)		-
Accumlated other comprehensive loss		(588,000	)		-
Accumulated deficit		(13,899,768	)		(12,153,214	)
Total stockholders' deficiency		(3,028,437	)		(5,550,454	)
	$	1,449,189		$	220,164

See notes to condensed consolidated financial statements.

2

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)
	Three months ended September 30,							Nine months ended September 30,
		2007			2006			2007			2006
Fee revenue, net		$	21,103		$	-		$	69,373		$	1,714,882
Other income			-			-			-			477,500
Total revenue			21,103			-			69,373			2,192,382
Operating expenses:
Fees to casinos			-			-			-			557,415
Salaries and benefits			-			-			-			303,489
Processing fees			16,328			16,528			54,634			230,889
Returned checks (collected)			(2,211	)		(3,826	)		(13,706	)		(11,362	)
Other			3,743			(406	)		11,859			132,643
Total operating expenses			17,860			12,296			52,787			1,213,074
Gross margin (loss)			3,243			(12,296	)		16,586			979,308
Selling, general and administrative			(407,294	)		(394,712	)		(1,187,813	)		(3,431,110	)
Gain on sale of assets (Note 1)			-			-			-			4,145,835
(Loss) income  from operations			(404,051	)		(407,008	)		(1,171,227	)		1,694,033
Other income (expense):
Interest expense, including related party interest for the three
months of $1,777 (2007) and $0 (2006) and for the nine months
of $1,777 (2007) and and $17,533 (2006).			(131,901	)		(59,086	)		(343,035	)		(1,363,314	)
Loss on debt extinguishment and restructuring			(55,000	)		(100,000	)		(245,571	)		(1,121,000	)
Interest income, including related party interest for the three
months of $125,000 (2006) and for the nine months
$2,739 (2007) and $274,657 (2006).			7			151,758			57,363			431,516
Total other expense			(186,894	)		(7,328	)		(531,243	)		(2,052,798	)
Loss  before income taxes			(590,945	)		(414,336	)		(1,702,470	)		(358,765	)
Income tax (expense) benefit (Note 7)			(75,000	)		238,327			(44,084	)		(365,673	)
Net loss		$	(665,945	)	$	(176,009	)	$	(1,746,554	)	$	(724,438	)
Comprehensive loss
Net loss		$	(665,945	)	$	(176,009	)	$	(1,746,554	)	$	(724,438	)
Unrealized loss on avaiable-for-sale securities			(155,000	)					(588,000	)
Comprehensive loss		$	(820,945	)	$	(176,009	)	$	(2,334,554	)	$	(724,438	)
Basic and diluted net loss per share		$	(0.09	)	$	(0.01	)	$	(0.24	)	$	(0.05	)
Weighted average number of common shares outstanding:
Basic and diluted			7,294,562			15,494,473			7,154,931			14,879,683

See notes to condensed consolidated financial statements.

3

 

 

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY DEFICIENCY AND COMPREHENSIVE LOSS
NINE MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED)
		Common stock				Additional paid-in		Investment in parent		Notes, advances and interest receivable related		Common treasury		Accumulated other comprehensive		Accumulated		Total stockholders'
		Shares		Amount		capital		company		parties		stock		loss		deficit		deficiency
Balances, January 1, 2007		15,580,959	$	15,581	$	19,655,226	$	(6,801,204)	$	(6,266,843)	$	-	$	-	$	(12,153,214)	$	(5,550,454)
Return of Company common stock in satisfaction
	of notes, advances and interest receivable
	(Notes 1 and 6)					1,227,019				5,814,617		(4,547,845)						2,493,791
Issuance of common stock upon cashless
	exercise of warrants	181,686		182		(182)												-
Decrease in notes and advances receivable due
	from related parties, net (Note 6)									72,860								72,860
Options and warrants issued for services (Note 5)						821,420												821,420
Conversion of accounts payable to common stock		250,000		250		124,750												125,000
Issuance of common stock for services (Note 5)		150,000		150		112,350												112,500
Issuance of common stock in conjunction with debt
	restructuring	86,206		86		24,914												25,000
Reclassification of HPI common stock at fair value
	(Note 2)					(5,595,204)		6,801,204										1,206,000
Components of comprehensive loss:
	Net loss															(1,746,554)		(1,746,554)
	Unrealized loss on available-for-sale-securities													(588,000)				(588,000)
	Total comprehensive loss																	(2,334,554)
Balances, September 30, 2007		16,248,851	$	16,249	$	16,370,293	$	-	$	(379,366)	$	(4,547,845)	$	(588,000)	$	(13,899,768)	$	(3,028,437)

See notes to condensed consolidated financial statements.

4

 

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)
	2007			2006
Net cash used in operating activities	$	(486,720	)	$	(3,732,318	)
Cash flows from investing activities:
Cash acquired in redemption agreement transaction (Note 1)		2,363			-
Repayments on notes and interest receivable		225,000			160,461
Proceeds received from asset sale, net of costs (Note 1)					12,712,784
Issuance of note receivable		(50,000	)		-
Net cash provided by investing activities		177,363			12,873,245
Cash flows from financing activities:
Increase (decrease) in checks issued in excess of cash in bank		3,166			(1,015,823	)
Borrowings on notes and loans payable		266,400			400,000
Repayments on notes and loans payable		(4,000	)		(9,309,936	)
Purchase of parent company common stock		-			(192,299	)
Repayment on notes and advances receivable, related parties		-			212,555
Payment of deferred loan costs		(8,750	)		-
Notes and advances to related parties		-			(5,574,769	)
Net cash provided by (used in) financing activities		256,816			(15,480,272	)
Net decrease in cash and cash equivalents		(52,541	)		(6,339,345	)
Cash and cash equivalents, beginning of period		53,190			8,273,253
Cash and cash equivalents, end of period	$	649		$	1,933,908
Supplemental disclosure of cash flow information:
Cash paid for interest	$	277,677		$	1,218,720
Cash paid for income taxes	$	-		$	3,938
Supplemental disclosure of non-cash investing and financing activities:
Unrealized loss on available-for-sale securities	$	588,000
Conversion of accounts payable to common stock	$	125,000
Conversion of parent company note payable and accrued interest to
common stock				$	3,905,960
Receipt of parent company common stock in satisfaction of notes,
advances and interest receivable				$	6,144,000
Issuance of parent company common stock by parent company to third parties
in satisfaction of notes and interest payable				$	286,037

See notes to condensed consolidated financial statements.

5

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

1. Business and organization, basis of presentation, asset sale and management’s plans:

Business and organization:

FastFunds Financial Corporation (“FFFC” or the “Company”) is a holding company, and through January 31, 2006, operated primarily through its wholly-owned subsidiary Chex Services, Inc. (“Chex”).  As disclosed in the December 31, 2006 Form 10-K, FFFC also has several other non-operating wholly-owned subsidiaries.  FFFC and its subsidiaries are referred to as (the “Company”).  The Company is an equity investee of Hydrogen Power, Inc. (“HPI”) a public company, formerly known as Equitex, Inc.  As of September 30, 2007, HPI owns and controls approximately 48% of the Company’s outstanding common stock.

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”).

Basis of presentation:

Unaudited financial statements:

The accompanying condensed consolidated financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for all stated periods have been made.  Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s annual consolidated 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 Company’s 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 April 30, 2007.  Interim results of operations for the three and nine months ended September 30, 2007 and 2006 are not necessarily indicative of future operating results for the full year.  Certain amounts from the 2006 periods have been reclassified to conform to the presentation used in the current period.

Return of Company common stock from parent:

On January 2, 2007, pursuant to the terms of a Redemption, Stock, Sale and Release Agreement (the “Redemption Agreement”) by and between HPI and the Company, the Company (i) redeemed 8,917,344 shares of FFFC’s common stock held by HPI, (ii) acquired from HPI an aggregate of 5,000 shares of common stock of Denaris Corporation, a Delaware corporation (“Denaris”), (iii) acquired from HPI an aggregate of 1,000 shares of common stock of Key Financial Systems, Inc., a Delaware corporation (“Key Financial”), and (iv) acquired from HPI an aggregate of 1,000 shares of common stock of Nova Financial Systems, Inc., a Delaware corporation (“Nova Financial”).  Denaris was a majority-owned subsidiary of HPI, and Key Financial and Nova Financial were wholly-owned subsidiaries of HPI.  Denaris, Key Financial and Nova Financial do not have significant operations.  The shares of common stock of each entity transferred by HPI pursuant to the Redemption Agreement constituted all of HPI’s holdings in each entity.  The net book value of these entities was $342,568 (which consisted primarily of cash, accounts receivable, notes receivable and accounts payable).  In consideration of the redemption and acquisition of the shares of Denaris, Key Financial and Nova Financial, the Company released HPI from all outstanding payment obligations of HPI to the Company, which totaled $5,814,617 and HPI released the Company from all payment obligations of the Company to HPI, which totaled $2,151,572.  The Company accounted for the difference between the value of the assets received (carrying value) and the consideration exchanged as an increase to additional paid-in capital.

6

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

1. Business and organization, basis of presentation, asset sale and management’s plans (continued)

Basis of presentation (continued):

Asset sale:

On December 22, 2005, FFFC and Chex entered into an Asset Purchase Agreement (the “APA”) with Game Financial Corporation (“Game”), pursuant to which FFFC and Chex agreed to sell all of its cash access contracts and certain related assets, which represented substantially all the assets of Chex. Such assets also represented substantially all of the operating assets of the Company on a consolidated basis. On January 31, 2006, FFFC and Chex completed the Asset Sale for $14 million pursuant to the APA and received net cash proceeds of $12,642,784 and realized a pre-tax book gain of $4,145,835.  As a result of the Asset Sale, the Company has no substantial continuing operations.  Therefore, the Company is not reporting and accounting for the sale of Chex’s assets as discontinued operations.

Additionally, FFFC and Chex entered into a Transition Services Agreement(the “TSA”) with Game pursuant to which FFFC and Chex agreed to provide certain services to Game to ensure a smooth transition of the sale of the cash-access financial services business.  Pursuant to the TSA, FFFC and Chex provided the necessary services for approximately three months and Game paid FFFC $150,000 per month.  The TSA terminated in May 2006, and as a result FFFC recorded $177,500 and $477,500 of other income pursuant to the agreement for the three and nine months ended September 30, 2006, respectively.

On March 14, 2006, FFFC loaned HPI $5 million of the total proceeds from the Asset Sale for one year at 10% per annum interest (Note 6).  Based on management’s evaluation of repayment intentions, and in consideration of SEC Staff Accounting Bulletin (“SAB”) Topic 4-E regarding receivables from affiliates, the total face value amount is presented as a reduction of stockholders’ equity at December 31, 2006.  This note was settled as part of the Redemption Agreement described above.

Pursuant to the APA and the TSA, FFFC and Chex owed Game approximately $300,000.  Game, FFFC and Chex agreed to settle the balance due for $275,000 (included in accounts payable on the balance sheet presented herein) with payment terms.  FFFC and Chex have not made any of the payments stipulated in the settlement and subsequently Game filed a complaint against Chex, FFFC and HPI seeking approximately $318,000.  FFFC and Chex have agreed to indemnify HPI.

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 includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.  The Company’s interim financial statements for the three and nine months ended September 30, 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 reported a net loss of $1,746,554 for the nine months ended September 30, 2007 and has a working capital deficit of approximately $4,081,000 and accumulated deficit of approximately $13.9 million as of September 30, 2007.  Moreover, the Company presently has no ongoing business operations or sources of revenue and has little resources with which to obtain or develop new operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not contain 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.

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.

The Company evaluates, on an ongoing basis, potential business acquisition/restructuring opportunities that become available from time to time, which management considers in relation to its corporate plans and strategies.

7

 FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

1. Business and organization, basis of presentation, asset sale and management’s plans (continued)

Going concern and management’s plans (continued):

On January 31, 2007, FFFC announced that it executed a letter of intent to acquire Industrial Systems, Inc. ("ISI"). ISI, founded in 1991 and based in Delta, Colorado, provides turn-key engineering procurement and construction services to the mining, energy and natural resources industries throughout the United States. The letter of intent calls for FFFC to acquire 100% of the outstanding securities of ISI in an all stock tax-free exchange. While specific details are being negotiated as part of a definitive agreement, terms of the letter of intent call for the existing stockholders of ISI to own approximately 65% of the Company's common stock at closing of the transaction, with the potential to earn an estimated additional 6% based on post-closing incentives. Completion of the transaction is subject to further due diligence by each party, negotiation and execution of a definitive agreement, and other customary pre-closing conditions.  If consummated, this transaction would likely be accounted for as public shell merger or a reverse acquisition with the Company being treated for accounting purposes as the accounting acquiree.

2. Summary of significant accounting policies:

A summary of our significant accounting policies is included in our 2006 Annual Report on Form 10-K.

Marketable equity securities:

At September 30, 2007 and December 31, 2006, the Company owned 1,546,036 shares of common stock of HPI, a marketable equity security.  At December 31, 2006, the Company presented its investment in HPI common stock as a component of stockholders’ equity deficiency at cost in a manner similar to treasury stock.  This presentation was based upon the Company’s consideration of the provisions of Emerging Issues Task Force (“EITF”) Issue No. 98-2, Accounting by a Subsidiary or Joint Venture for an Investment in the Stock of its Parent Company or Joint Venture Partner (“EITF 98-2”).  This EITF discusses that in the separate financial statements of a subsidiary; an investment in the common stock of a parent whose only significant asset is its investment in the subsidiary is essentially the same as stock of the subsidiary and should be classified as a reduction to stockholders’ equity.  During 2007, the Company transferred all of its securities classified as a component of stockholders’ equity deficiency to an available-for-sale security.  The cost of the securities at the date of the transfer was $6,801,000.  The fair value of the securities at the date of transfer was $1,206,000.  The difference at the date of the transfer between cost and fair value of the securities was recorded as a reduction to additional paid-in capital.  The transfer of securities resulted from the Company no longer being a subsidiary of HPI in 2007; therefore, the provisions of EITF 98-2 are no longer applicable.

Available for sale securities are carried at the estimated fair value ($618,000 at September 30, 2007) based upon quoted market prices, and they are classified as long-term assets in the Company’s September 30, 2007 consolidated balance sheet as management does not expect the securities to be realized in cash within the next year.  Unrealized gains and losses are computed on the basis of specific identification and are reported as a separate component on comprehensive income (loss), included as a separate item in shareholders’ equity deficiency.  Realized gains, realized losses, and declines in value, judged to be other-than-temporary, are included in other income (expense).  The unrealized loss reported at September 30, 2007 was $588,000.

Comprehensive income:

Statement of Financial Accounting Standards (“SFAS”) No. 130, Reporting Comprehensive Income, (“SFAS No. 130”) requires the reporting and display of comprehensive income and its components.  SFAS No. 130 requires unrealized gains and losses on the Company’s available-for-sale securities to be included in comprehensive income (loss).

8

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

2. Summary of significant accounting policies (continued):

Net loss per share:

Net loss per share of common stock is computed based on the weighted average number of common shares outstanding during the period. Stock options, warrants and common stock underlying convertible promissory notes at September 30, 2007 and 2006 were 4,329,280 and 2,443,280, respectively, and are not considered in the calculation for the three and nine months ended September 30, 2007 and 2006, as the impact of the potential common shares would be to decrease loss per share.  Therefore, diluted loss per share for the three and nine months ended September 30, 2007 and 2006 is equivalent to basic loss per share.

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 were any interest expense recognized during the quarter.

3. Notes and interest receivable:

Notes and interest receivable at September 30, 2007 and December 31, 2006, consist of the following:

	September 30,		December 31,
	2007		2006
Note receivable, ISI	$	50,000
Note receivable (Denaris) from Paymaster Jamaica (see Redemption Agreement) (Note 1); interest at 10%, collateralized by a pledge of Paymaster Jamaica common shares by Paymaster Jamaica's president; note matures in August 15, 2008; payments of interest only due semi-annually beginning August 15, 2003 through maturity (received principal payments of $30,425 plus interest of $54,575 through September 30, 2007); a valuation allowance of $250,000 has been recorded against this receivable at September 30, 2007		469,575
Notes receivable; non-interest bearing; net of $256,316 discount; imputed interest rate of 12%; collateralized by mortgages on three parcels of real property in Florida; a valuation allowance of $336,500 was recorded against this receivable at December 31, 2006; $149,000 was received in January 2007 as full settlement			$	201,500
Notes receivable from Equitex 2000, Inc., an affiliate of HPI; a valuation allowance of $205,000 was recorded against this receivable at December 31, 2006				205,000
Note receivable; interest at 10%; matured November 2005; currently in default; a valuation allowance of $50,000 has been recorded against this receivable at September 30, 2007		50,000		50,000

9

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

3. Notes and interest receivable (continued):

	September 30,			December 31,
	2007			2006
		569,575			456,500
Less current maturities		(50,000	)		(140,000	)
Notes and advances receivable, net of current portion, before valuation allowance		519,575			316,500
Less valuation allowance		(300,000	)		(316,500	)
Notes receivable, long-term	$	219,575		$	-

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

Convertible and other promissory notes and long-term debt at September 30, 2007 and December 31, 2006, consist of the following:

	September 30,		December 31,
	2007		2006
Notes payable to individual investors [A]	$	2,108,000	$	2,108,000
Notes payable, related parties		139,300
Notes payable, other		35,600
Convertible debentures, net of discount of $16,025 (2007) and $20,419 (2006) [B]		121,475		29,581
		2,404,375		2,137,581
Less current portion		2,282,900		2,108,000
Long-term debt, net of current portion	$	121,475	$	29,581

 [A] These notes payable (the “Promissory Notes”) became due on February 28, 2007.  The Company renewed $283,000 of the Promissory Notes on the same terms and conditions as previously existed.  In April 2007 the Company, through a financial advisor, restructured $1,825,000 of the Promissory Notes (the “Restructured Notes”).  The Restructured Notes carry a stated interest rate of 15% and mature on February 28, 2008.

The chairman of the board of the Company has personally guaranteed up to $1 million of the Restructured Notes and two other non-related individuals each guaranteed $500,000 of the Restructured Notes.  In consideration of their guarantees the Company granted warrants to purchase a total of 1,600,000 shares of common stock of the Company at an exercise price of $0.50 per share, expiring in March 2010.  The warrants were valued at $608,000 using the Black-Scholes option pricing model and are being amortized over the one-year term of the Restructured Notes.  Additionally, the Company is to compensate the financial advisor 2% of the Restructured Notes and issued 150,000 shares of common stock to the financial advisor (Note 5).  As of November 14, 2007, the Company has not paid the interest due for the three months ended September 30, 2007, and accordingly is in default of the Promissory Notes.  Additionally, holders of $285,000 of the Promissory Notes have demanded repayment.  In August 2007, two individuals purchased $150,000 of the Restructured Notes from a noteholder.  In consideration for the transaction, the Company issued 86,206 shares of its common stock valued at $0.29 per share, or $25,000, and is included in interest expense for the three and nine months ended September 30, 2007.  Additionally, $265,000 of the Restructured Notes has been requested to be repaid to the Noteholders.

10

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

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

[B] During the nine months ended September 30, 2007, the Company entered into purchase agreements with accredited investors for the issuance and sale of $87,500 of 10% unsecured convertible debentures in private transactions (the “Debentures”).  In 2007 the Company received $78,750 from these transactions net of $8,750 of debt issuance costs, which will be amortized over the three-year term of the Debentures.  The Debentures are convertible at 75% of the average closing bid price per share of the Company’s common stock for the twenty days immediately preceding the date of conversion.  The Debentures cannot be converted until nine months after the issuance date of each Debenture.

The Company has determined that the conversion feature represents an embedded derivative.  Since the Debentures are convertible into a variable number of shares upon conversion, the conversion feature is not considered to be conventional and therefore must be bifurcated from the debt host and accounted for as a derivative liability.  Accordingly, the fair value of these derivative instruments of $24,515 has been recorded as a liability in the consolidated balance sheet with the corresponding amount recorded as a discount to the Debentures.  The change in the fair value of the derivative liability will be remeasured at each balance sheet reporting date with any difference recorded as other income (expense) in the consolidated statement of operations.

At September 30, 2007, the Company revalued this derivative liability.  Therefore, for the period from December 31, 2006 to September 30, 2007, on the debentures that were issued in 2006, as well as on the debentures issued in 2007 from their issuance date to September 30, 2007, the Company increased the previously recorded liabilities by $43,804 resulting in a recorded derivative liability of $79,840 at September 30, 2007.

5. Commitments and contingencies:

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, but could have a material adverse impace on the financial position or cash flows of the Company.

Consulting agreements:

In February 2006, the Company entered into a consulting agreement with a financial advisor (a former officer of the Company) to provide assistance to the Company in the placement of debt or equity financing with prospective investors.  The term of the agreement is for three years, but can be terminated at any time by either party with 60 days notice.  The advisor is to be compensated if the advisor is successful in completing a debt or equity financing for or on behalf of the Company.  In 2006, the financial advisor assisted the Company in restructuring and or obtaining $3,404,061 of investor notes.  Pursuant to the agreement, the advisor was paid $134,972 and received 75,000 shares of HPI common stock, valued at $224,215.  In addition, the advisor received warrants to purchase up to 436,206 shares of the Company’s common stock at an exercise price of $1.00 per share.  The warrants were valued at $355,000 based upon the Black-Scholes option-pricing model.

Pursuant to the Restructured Notes (Note 4), the Company issued 150,000 shares of its common stock and is to pay the consultant $36,500.  The shares were valued at $112,500 and the total cost of $149,000 is being amortized over the one year renewal on the Restructured Notes.

In conjunction with the Asset Sale, a former FFFC director and Chex officer signed a five-year non-compete agreement with the buyer and also signed a release, waiving his right to any future commissions that he was previously entitled to.  The Company agreed to compensate the officer $100,800 annually, over the five-year term of the non-compete agreement.  Such compensation is to be applied to reduce the loan and interest receivable due from the officer (Note 6).  If the officer breaches his non-compete agreement, the officer is no

11

 FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

5. Commitments and contingencies (continued):

Consulting agreements (continued):

longer entitled to compensation and will be liable for any amount remaining on the loan.  During the three and nine months ended September 30, 2007, the Company recorded consulting expenses of $25,200 and $75,600 and the note receivable from an officer has been reduced by $75,600, for the nine months ended September 30, 2007.

Guaranty:

In March 2004, HPI closed on $5 million of debt financing and issued convertible promissory notes to two financial institutions (the “Lenders”).  The proceeds from the promissory notes were immediately thereafter loaned to Chex.  The promissory notes are collateralized, among other things, by all of the assets of Chex, and by 3.5 million shares of FFFC common stock owned by HPI.  In conjunction with the Asset Sale, the Lenders consented to the sale of assets that secured their notes.  In contemplation of the Redemption Agreement described above, on December 29, 2006, HPI and the Company obtained the consent of the Lenders to complete the transactions contemplated by the Redemption Agreement. Contemporaneously with receipt of the consent, FFFC (as successor in interest to Chex) reconfirmed its obligations under the guaranty and security agreements previously provided by Chex.  The guaranty and security agreements do not expire until the notes are paid in full.  Accordingly, if HPI defaults on the obligations specified under the promissory notes, the Company could be required by the Lenders to perform under the guarantee and security agreements.  On August 6, 2007, HPI received a notice of default from the Lenders.  On August 16, 2007, the Lenders and HPI entered into a Forebearance Agreement in consideration of HPI paying $300,000 (paid on August 14, 2007) and making a final payment (the “Final Payment”) of $646,981 by October 15, 2007.  The Final Payment has not been made and the Company is discussing the matter with the Lenders.  No liability has been recorded for this liability as required, as performance under the guarantee is not considered probable.

HPI Stock Price Guaranty:

In May 2006, HPI and the Company negotiated a settlement regarding convertible notes with a face value of $200,000 issued by the Company, whereby HPI issued 180,000 shares of its common stock. In connection with the Settlement Agreement, a Stock Sale and Lock-up Agreement, Registration Agreement and an Escrow Agreement were also entered into (the “Agreements”).   Terms of the Agreements stipulate a price protection clause whereby the Company under certain circumstances must reimburse the former debt holders if the market price of the HPI common stock issued to them in the settlement is below $4.00 per share at the time they sell the stock.  As a result, the Company has recorded a derivative liability due to the debt holders at September 30, 2007 and December 31, 2006 of $648,000 and $450,000, respectively, and an expense of $198,000 (2007) and $450,000 (2006), representing the difference between the market value of the common stock as of each date and the $4.00 stated in the settlement agreement. The amounts are included on the balance sheet in derivative liabilities and on the statement of operations in loss on extinguishment of debt. 

6. Stockholders’ equity deficiency:

Notes, advances and interest receivable from related parties:

Chex has notes receivable due from related parties under various loan agreements.  In addition, the Company has made advances to HPI to fund its operations. In accordance with the Securities Exchange Commission’s Staff Accounting Bulletin No. 79, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lessor Business Components of Another Entity, certain expenses paid by the Company on behalf of HPI have been charged to the receivables.

12

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

6. Stockholders’ equity deficiency (continued):

Notes, advances and interest receivable from related parties (continued):

The following table summarizes the activity for the year ended December 31, 2006 and for the nine months ended September 30, 2007:

	September 30,			December 31,
	2007			2006
Beginning principal balances	$	5,867,185		$	6,070,785
Loan to HPI					5,000,000
Cash advances					424,310
Issuance of HPI warrants to third party for settlement of Chex obligation					73,882
Share price guaranty from HPI					126,582
Return of Company common stock in accordance with the Redemption Agreement		(5,412,219	)
Chex cash disbursements and accounts payable allocated to HPI and Denaris					459
Cash repayments					(400	)
Issuance of HPI common stock to third party for settlement of Chex obligation					(212,155	)
Consulting fees applied to officer receivable		(75,600	)		(31,334	)
Receipt of 1,200,000 shares of HPI common stock in payment of principal balance owed as of January 31, 2006, from HPI and Denaris					(5,584,944	)
Ending principal balances [A]		379,366			5,867,185
Interest receivable from parent company (and its subsidiary)					399,658
Ending principal and interest balances	$	379,366		$	6,266,843

[A] The principal balance at September 30, 2007 and December 31, 2006 are as follows:

	September 30,		December 31,
	2007		2006
HPI	$	-	$	5,412,219
FFFC officer		379,366		454,966
	$	379,366	$	5,867,185

7. Income taxes:

Income tax expense for the nine months ended September 30, 2006 was approximately $366,000.  The 2006 amount is primarily related to $359,000 the Company recorded as estimated deferred income tax expense as a result of the Asset Sale in January 2006.  This expense represents the use of HPI’s net operating losses, as the Company does not have sufficient loss carryforwards available to offset the total taxable gain on the Asset Sale.  Income tax expense for the nine months ended September 30, 2007 was $4,084 and is primarily related to alternative minimum taxes of $75,000, offset by refunds received from various state tax returns.

13

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

8. Stock based compensation:

The Company has one stock option plan and also grants options and warrants to consultants outside of its stock option plan pursuant to individual agreements.

During the nine months ended September 30, 2007, the Company granted officers and directors 70,000 options to purchase shares of common stock at an exercise price of $0.75 per share (the market value of the common stock on the date of the grant).  The options were valued at $30,920 based upon the Black-Scholes option pricing model (a $0.44 grant date fair value per option).  The options were fully-vested at the date of the grant and therefore, the Company recorded $30,920 of non-cash expense during the nine months ended September 30, 2007.

In January 2007 the Company issued warrants to purchase 500,000 shares of its common stock to a third party for professional services.  The warrants have an exercise price of $0.50 per share and expire in January 2010.  They were valued at $163,500 based upon the Black-Scholes option pricing model.  As the services have been provided, the $163,500 has been included in selling, general and administrative expense for the nine months ending September 30, 2007.

In March 2007 the Company issued warrants to purchase 800,000 shares of its common stock to the Chairman of the Board of the Company and additional warrants to purchase an aggregate of 800,000 shares of its common stock was issued to two third parties.  The warrants have an exercise price of $0.50 and expire in March 2010.  The warrants were valued at $608,000 using the Black Scholes option pricing model and are being amortized over a one-year term as the warrants were issued in connection with obtaining financing from a third party (Note 4).  As a result, $150,000 and $350,000 is included in selling, general and administrative expense for the three and nine months ending September 30, 2007, respectively.

Also in March 2007, the Company granted warrants to purchase 50,000 shares of its common stock to a third party in consideration of a promissory note issued to the third party from ISI.  The warrants have an exercise price of $0.50 and expire in March 2010.  The Company valued the warrants at $19,000 based upon the Black Scholes option pricing model.  As the services have been provided, $19,000 has been included in selling, general and administrative expense for the nine months ending September 30, 2007.

The weighted average grant date fair value of warrants granted during the nine months ended September 30, 2007 was $0.37.

Options are generally granted with an exercise price equal to the Company’s market price of its common stock on the date of the grant and vest immediately upon issuance.  All options outstanding at September 30, 2007 are fully-vested and exercisable.  A summary of outstanding balances at January 1, and September 30, 2007 is as follows:

		Weighted-	Weighted-	Aggregate
		Average	Average	Intrinsic
	Options	exercise price	Remaining contractual life	Value
Outstanding at January 1, 2007	385,000	$1.10	5.65	$0
Options granted	70,000	$0.75	9.37	$0
Outstanding at September 30, 2007	455,000	$1.05	6.22	$0

The fair value of options and warrants granted to purchase the Company’s common stock were estimated on the date of the grant using the Black Scholes option pricing model with the following assumptions used for the 2007 grants:

14

FASTFUNDS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

8. Stock based compensation (continued):

Expected dividend yield	0
Expected stock price volatility	88.5% - 90%
Risk fee interest rate	4.75%
Expected life of options	3 – 5 years

The expected term of stock options issued to employees represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends.  The expected life of stock options and warrants issued to third parties is the contractual life.  The expected volatility is based on the historical price volatility of FFFC’s common stock.   The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options.  The dividend yield represents FFFC’s anticipated cash dividend over the expected life of the stock options.

15

ITEM TWO

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

FastFunds Financial Corporation (“FFFC”) is a holding company and through January 31, 2006 operated primarily through its wholly-owned subsidiary Chex Services, Inc. (“Chex”).  As disclosed in the December 31, 2006 10-K, FFFC also has several other non-operating wholly-owned subsidiaries.  FFFC and its subsidiaries are referred to as (the “Company”).  The Company is an equity investee of Hydrogen Power, Inc. (“HPI”), a public company, formerly known as Equitex, Inc.  As of September 30, 2007, HPI owns approximately 48% of the Company’s outstanding common stock.

On December 22, 2005, FastFunds and Chex entered into an Asset Purchase Agreement (the “APA”) with Game Financial Corporation (“Game”), pursuant to which FastFunds an Chex agreed to sell all of their cash access contracts and certain related assets, which represented substantially all the assets of Chex (the “Asset Sale”). Such assets also represented substantially all of the operating assets of FFFC on a consolidated basis. On January 31, 2006, FFFC and Chex completed the Asset Sale for $14 million pursuant to the APA and received net cash proceeds of $12,642,784 after adjustments for certain transaction related expenses and liabilities assumed by Game.

Additionally, 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 expired May 19, 2006, and the Company received $477,500 pursuant to the terms of the TSA.

RETURN OF COMPANY COMMON STOCK FROM PARENT:

On January 2, 2007, pursuant to the terms of a Redemption, Stock, Sale and Release Agreement (the “Redemption Agreement”) by and between HPI and the Company, the Company (i) redeemed 8,917,344 shares of FFFC’s common stock held by HPI, (ii) acquired from HPI an aggregate of 5,000 shares of common stock of Denaris Corporation, a Delaware corporation (“Denaris”), (iii) acquired from HPI an aggregate of 1,000 shares of common stock of Key Financial Systems, Inc., a Delaware corporation (“Key Financial”), and (iv) acquired from HPI an aggregate of 1,000 shares of common stock of Nova Financial Systems, Inc., a Delaware corporation (“Nova Financial”).  Denaris was a majority owned subsidiary of HPI, and Key Financial and Nova Financial were wholly owned subsidiaries of HPI.  Denaris, Key Financial and Nova Financial do not have significant operations.  The shares of common stock of each entity transferred by HPI pursuant to the Redemption Agreement constituted all of HPI’s holdings in each entity.  In consideration of the redemption and acquisition of the shares of Denaris, Key Financial and Nova Financial, FFFC released HPI from all outstanding payment obligations of HPI to the Company, which totaled $5,814,617 and HPI released the Company from all payment obligations of the Company to HPI, which

totaled $2,151,572.  Due to the related party nature of the transaction, the Company accounted for the difference between the consideration received and the consideration given up as a capital transaction, which increased additional paid-in capital by $1,227,019.

16

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 statements presented for the three and nine months ended September 30, 2007 and 2006 include FFFC and its wholly-owned subsidiaries, which primarily reflect the operations of Chex through the date of the Asset Sale.

In light of the foregoing, and the Company’s sale of substantially all of its assets in January 2006, the historical data presented below is not indicative of future results. You should read this information in conjunction with the audited consolidated financial statements of the Company, including the notes to those statements (Item 8), and the following “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”.

The Company’s financial statements for the nine months ended September 30, 2007 and the year ended December 31, 2006 have been prepared on a going concern basis, which contemplates the realization of its remaining assets and the settlement of liabilities and commitments in the normal course of business.  The Company has incurred significant losses since its inception and has a working capital deficit of approximately $4,081,000, and an accumulated deficit of approximately $13,900,000 as of September 30, 2007.  Moreover, it presently has no ongoing business operations or sources of revenue, and little available resources with which to obtain or develop new operations.

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 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.

On January 31, 2007, FFFC announced that it executed a letter of intent to acquire Industrial Systems, Inc. ("ISI"). ISI, founded in 1991 and based in Delta, Colorado, provides turn-key engineering procurement and construction services to the mining, energy and natural resources industries throughout the United States. The letter of intent calls for FFFC to acquire 100% of the outstanding securities of ISI in an all stock tax-free exchange. While specific details are being negotiated as part of a definitive agreement, terms of the letter of intent call for the existing stockholders of ISI to own approximately 65% of the Company's common stock at closing of the transaction, with the potential to earn an estimated additional 6% based on post-closing incentives. Completion of the transaction is subject to further due diligence by each party, negotiation and execution of a definitive agreement, and other customary pre-closing conditions.  If consummated, this transaction would likely be accounted for as a public shell merger or a reverse acquisition with the Company being treated for financial reporting purposes as the accounting acquiree.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended September 30, 2007, net cash used in operating activities was $486,720 compared to $3,732,318 for the nine months ended September 30, 2006.  Net loss was $1,746,544 for the nine months ended September 30, 2007 compared to $724,438 for the nine months ended September 30, 2006. The net loss in the current period includes non-cash expenses of approximately $1,095,500.  The non-cash expenses are $563,420 of costs associated with the issuance of common stock, warrants and options, $328,993 of costs related to expenses associated with debt extinguishment and $203,115 of depreciation and amortization and non-cash interest expense.  The 2006 net loss was a result of the gain on the Asset Sale of $4,145,835 offset by deferred income taxes of $359,000, costs of $1,121,000 related to expenses associated with debt extinguishment and other operating losses of $3,390,273.

Net cash provided by investing activities for the nine months ended September 30, 2007 was $177,363 compared to $12,873,245 for the nine months ended September 30, 2006. Net cash provided by investing activities for the nine months ended September 30, 2007 was a result of payments received on notes and interest receivable of $225,000, advances made on notes receivable of $50,000 and cash and cash equivalents of $2,363 acquired pursuant to the transaction of the Redemption Agreement.  Net cash provided by investing activities for the nine months ended September 30, 2006, was primarily attributable to the net proceeds received on the Asset Sale of $12,712,784, of which $5,000,000 was loaned to HPI.

17

Net cash provided by financing activities for the nine months ended September 30, 2007 was $256,816 compared to net cash used in financing activities of $15,480,272 for the nine months ended September 30, 2006. For the nine months ended September 30, 2007, the Company received net proceeds of $266,400 on the issuance of notes payable.  The significant activity for the nine months ended September 30, 2006 included the Company receiving proceeds of $400,000 on the issuance of notes payable and utilizing the proceeds from the Asset Sale, the Company repaid checks issued in excess of cash balances, notes payable and long-term debt totaling $15,900,528.

For the nine months ended September 30, 2007, cash and cash equivalents decreased by $52,541 compared to a decrease in cash and cash equivalents of $6,339,345 for the nine months ended September 30, 2006.  Ending cash and cash equivalents at September 30, 2007 was $649 compared to $1,933,908 at September 30, 2006.

We have limited cash and cash equivalents on hand and need to raise funds to continue to be able to support our operating expenses and to meet our other obligations as they become due.  Sources available to us that we may utilize include the sale of our or HPI’s equity securities, as well as the exercise of outstanding options and warrants, which may cause dilution to our stockholders.

REVENUES

Total revenues for the three and nine months ended September 30, 2007 were $21,103 and $69,373 compared to $0 and $2,192,382 for the three and nine months ended September 30, 2006.  Revenues in the current period consist of credit card income on Nova’s remaining portfolio.  Effective January 31, 2006, the Company sold substantially all of its operating assets and accordingly, the nine month results from 2006 reflect fees from providing financial services of $1,714,882, as well as $477,500 of fees received under the TSA from the buyer of the assets.

OPERATING EXPENSES

Operating expenses for the three and nine months ended September 30, 2007 are primarily comprised of expenses related to third party servicing fees of Nova’s remaining credit card portfolio.  FFFC operating expenses for the nine months ended September 30, 2006 were $1,213,074, which primarily consisted of fees to casinos, processing fess and salaries and benefits.

CORPORATE OPERATING EXPENSES

Corporate operating expenses for the three and nine months ended September 30, 2007 were $407,294 and $1,187,813, respectively and for the three and nine months ended September 30, 2006 were $394,712 and $3,431,110, respectively.  The expenses were comprised of the following:

	Three months ended					Nine months ended
	September 30,					September 30,
	2007		2006			2007		2006
Salaries and benefits	$	12,918	$	(8,764	)	$	39,151	$	468,891
Stock-based compensation		150,000		-			563,420		355,000
Accounting, legal and consulting		156,837		235,007			415,007		937,877
Travel and entertainment		1,754		17,520			8,358		63,607
Advertising		-		-			-		3,446
Depreciation and amortization		2,826		1,846			8,478		342,489
Provision for valuation allowances		-		-			-		484,054
Other		82,959		149,103			153,399		775,746
	$	407,294	$	394,712		$	1,187,813	$	3,431,110

For the three and nine months ended September 30, 2007, corporate operating expenses are primarily related to FFFC. For the nine months ended September 30, 2006, corporate operating expenses were related to both  FFFC, as well as Chex’s Minneapolis administrative office which through January 31, 2006, supported the operating locations and was closed on May 31, 2006.

18

Salaries and benefits decreased significantly for the three and nine months ended September 30, 2007 compared to the three and nine months ended September 30, 2006 period primarily as a result of the elimination of the Minneapolis administrative staff during the second quarter of 2006.  As of May 31, 2006, the Company vacated that office and will not be incurring any future staffing costs related to the Chex operations.  Currently, the Company has one salaried employee.

Stock based compensation expense for the three and nine months ended September 30, 2007 was $150,000 and $563,420 and primarily consists of the amortization of common stock, options and warrants issued related to guaranty fees and other costs related to the Restructured Notes.  Stock based compensation for the nine months ended September 30, 2006 was from the issuance, of 436,206 warrants to purchase the Company’s common stock at $1.00 per share, valued at $355,000 under the Black-Scholes option pricing model.

Accounting, legal and consulting expenses decreased significantly for the three and nine months ended September 30, 2007 compared to the three and nine months ended September 30, 2006. The decrease for the nine months ended September 30, 2007 was primarily as a result of decreases in consulting and professional fees of $372,380 and $112,984, respectively.  The 2006 consulting costs related to costs associated with refinancing investor notes were comprised of $134,972 of cash and $152,407 of HPI common stock.  FFFC has consulting agreements with two officers who provide various consulting services to the Company. These continuing agreements require the Company to pay approximately $15,000 per month.

Travel and entertainment expense decreased for the three and nine months ended September 30, 2007 compared to September 30, 2006 primarily as a result of the elimination of travel associated with the closure of the Company’s Minneapolis office in the second quarter of 2006.

Other costs included in corporate operating expenses decreased for the three and nine months ended September 30, 2007 compared to the three and nine months ended September 30, 2006. The decrease for the nine months ended September 30, 2007 was a result of expenses incurred in 2006 that did not occur in 2007 related to the closure of the Minneapolis office.

OTHER INCOME (EXPENSE)

Other expenses, net for the three and nine months ended September 30, 2007 were $149,644 and $531,243 compared to $7,328 and $2,052,798 for the three and nine months ended September 30, 2006.  Included in other expenses for the three and nine months ended September 30, 2006 is the $100,000 and $1,121,000, respectively,  of expenses recognized on debt extinguishment.  Interest expense for the three and nine months ended September 30, 2007 and 2006 is summarized as:

	Three months ended				Nine months ended
	September 30,				September 30,
	2007		2006		2007		2006
Beneficial conversion features							$	586,521
HPI $5 million note payable								17,533
Notes payable to individual investors	$	82,372	$	59,086	$	223,997		443,001
Amortization of deferred loan costs and note discounts		49,529				119,038		242,377
Warrants issued								73,882
	$	131,901	$	59,086	$	343,035	$	1,363,314

Interest income decreased to $57,363 for the nine months ended September 30, 2007 from $431,516 for the nine months ended September 30, 2006.  The decrease for the nine months ended September 30, 2007 was due primarily to the interest income of approximately $275,000 on cash balances in 2006 as a result of the proceeds from the Asset Sale, as well as approximately $149,000 recorded on the $5.0 million HPI Note issued in March 2006.  The 2007 interest income is primarily comprised of approximately $54,575 received from Paymaster Jamaica.  Also included in other expenses for the nine months ended September 30, 2007, was approximately $245,000 of costs pursuant to a settlement agreement whereby the Company guaranteed the price on 180,000 shares of HPI

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common stock issued as payment to the convertible notes payable holders.  The settlement terms stipulate a registration rights penalty clause and a price protection clause whereby the Company must reimburse the former debt holders if the market price of the HPI common stock issued to them in the settlement is below $4.00 per share at the time they sell the stock.  As a result, the Company has recorded a derivative liability of approximately $648,000 at September 30, 2007 representing the difference between the market value of the shares issued as of September 30, 2007 and the $4.00 stated in the settlement agreement.

INCOME TAX EXPENSE

Income tax expense for the nine months ended September 30, 2006 was $365,673.  The 2006 amount is primarily related to $359,000 the Company recorded as deferred income tax expense as a result of the Asset Sale in January 2006.  This expense represents the use of HPI’s net operating losses, as the Company does not have sufficient loss carryforwards available to offset the total taxable gain on the Asset Sale.  Income tax expense for the three and nine months ended September 30, 2007 was $75,000 and $44,084, respectively.  The 2007 amount is primarily related to alternative minimum taxes due of $75,000 offset by refunds received from various state tax returns.

CONTRACTUAL OBLIGATIONS

No material changes outside the ordinary course of business during the quarter ended September 30, 2007.

CRITICAL ACCOUNTING POLICIES

Accounting for our Marketable Equity Securities

We classify all of our cash equivalents and short-term investments that are free of trading restrictions, or become free of trading restrictions within one year, as “available-for-sale.”  We carry these investments at fair value, based on quoted market prices, and unrealized gains and losses, net of taxes, are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity.  Realized gains and losses are recognized when realized on our consolidated statements of income.  We have a policy in place to review our equity holdings on a regular basis to evaluate whether or not each security has experienced an other-than-temporary decline in fair value.  Our policy includes, but is not limited to, reviewing the Company’s cash position, earnings/revenue outlook, stock price performance over the past nine months, liquidity and management/ownership.  If we believe that an other-than-temporary decline exists in one of our marketable equity securities, it is our policy to write down these equity investments to the market value and record the related write-down as an investment loss on our consolidated statements of income.

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.

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ITEM THREE

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. Other than HPI common stock held as available-for-sale-securities, 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 subsidiary are exposed relate to the market prices of common stock of HPI and the Company. The Company has only fixed rate debt at September 30, 2007 and December 31, 2006.

	September 30,		December 31,
	2007		2006
Available-for-sale-securities (1)	$	618,000	$	-
Derivative liabilities (2,3)		727,840		461,521
Convertible debentures (3)		137,500		50,000
	$	1,483,340	$	511,521

(1) Available-for-sale-securities are comprised of 1,546,036 shares of HPI common stock.  At September 30, 2007, the market value of the common stock was $0.40 per share.  If the market price of the HPI common stock declines, it could reduce the fair value of the shares of common stock.

(2) The Company has given a price guaranty under certain circumstances to former noteholders on the value of 180,000 shares of HPI common stock they received in a settlement of $4.00 per share.  At September 30, 2007, the common stock had a market value of $0.40 per share.  Accordingly, as of September 30, 2007 the Company has recorded a liability of $648,000, and an expense of $198,000 for the nine months ended September 30, 2007.  These amounts may increase in the future if the market price of the HPI common stock declines.

(3) Convertible debentures exclude $16,025 and $20,419 of discounts at September 30, 2007 and December 31, 2006, respectively.  The debentures are convertible at 75% of the average closing bid price per share of the Company’s common stock for the twenty days immediately proceeding the date of conversion.  As of September 30, 2007, $79,840 is included in derivative liabilities.  This amount can increase if there is a decrease in the market price of the Company’s common stock.

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ITEM FOUR

DISCLOSURE CONTROLS AND PROCEDURES

A review and evaluation was performed by the Company's management, including the Company's Acting Chief Executive Officer (the "CEO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that review and evaluation, the CEO has concluded that as of September 30, 2007 disclosure controls and procedures, as 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 application 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 and the 2007 quarterly reviews, 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

             Refer to Note 5 of the Condensed Consolidated Financial Statements

Item 2.              Unregistered Sales of Equity Securities and Use of Proceeds

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.

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Item 6.              Exhibits

Exhibit Number	Description
31.1	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith)
32.1	CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith)

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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.

	FastFunds Financial Corporation
	(Registrant)
Date: November  14, 2007	By: /s/ Barry Hollander
	Barry Hollander
	Acting Chief Executive Officer
	Principal Executive Officer and
	Principal Accounting Officer